Current assets

SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release (together with its attachments, the “Agreement”) is made and entered into as of June 15, 2007, by and between Transmeta Corporation, a Delaware corporation (together with its subsidiaries, successors and assigns, the “Company”), and David R. Ditzel (the “Executive”).

     WHEREAS, the Executive has been employed by the Company since its founding and has held a series of management positions, most recently as the Company’s Chief Technology Officer (“CTO”) until that position was eliminated effective March 31, 2007, pursuant to a workforce reduction announced February 2, 2007;

     WHEREAS, the Executive and the Company have terminated the Executive’s employment relationship with the Company, effective May 31, 2007;

     WHEREAS, the Company believes that it is in the best interest of its shareholders to enter into a comprehensive separation agreement and release with the Executive;

     WHEREAS, the Executive and the Company (the “Parties”) desire to settle fully and finally any and all differences between them, and so have negotiated and agreed to a final settlement of their respective rights, obligations and liabilities;

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Executive and the Company hereby agree as follows:

     1. The Parties agree that Executive’s employment relationship with the Company terminated as of May 31, 2007 (the “Separation Date”). The Parties acknowledge that the Executive’s position as Chief Technology Officer of the Company was eliminated as of March 31, 2007, and that the Executive resigned that office and each other office and position in the Company or any of its subsidiaries, with the sole exception of his position as a member of the Company’s Board of Directors, as of March 31, 2007. The Executive hereby retires from and resigns his position as a member of the Company’s Board of Directors effective as of the date of this Agreement.

     2. Severance Payment. The Company shall make to the Executive a final lump sum severance payment of $210,000 according to the following schedule: (a) the first installment of $105,000 shall be paid on or before June 30, 2007; (b) the second installment of $55,000 shall be paid on or before December 31, 2007; and (c) the third and final installment of $50,000 shall be paid on or before June 30, 2008. The Executive acknowledges that this sum represents a gross amount before all applicable federal, state and local withholding taxes that are required to be deducted by the Company.

     3. Health Benefits. Pursuant to the provisions of COBRA, the Company will continue to pay for the Executive’s present election of group health benefits for the

Executive and his dependents until he finds employment providing comparable health benefits, or through and including September 30, 2007, whichever comes first.

     4. Reimbursements. The Company shall promptly reimburse the Executive for any reasonable business expenses properly incurred by the Executive through May 31, 2007 and duly submitted by the Executive for reimbursement. By or before the Effective Date, the Company will pay to Executive all expense reimbursements, accrued vacation, outstanding benefits, salary and any similar payments, if any, owed by the Company to Executive as of the separation date of May 31, 2007.

     5. Stock Options. With respect to the stock options granted to the Executive by the Company, the Parties acknowledge and agree to the following:

     a. The Parties acknowledge and agree that the Company has granted to the Executive certain options to purchase the Company’s common stock as follows: (1) a March 1999 grant to purchase up to 500,000 shares of the Company’s common stock at an exercise price of $0.65 per share; (2) a July 2001 grant to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $3.11 per share; (3) an April 2002 grant to purchase up to 240,000 shares of the Company’s common stock at an exercise price of $2.46 per share; (4) a November 2002 grant to purchase up to 130,000 shares of the Company’s common stock at an exercise price of $1.05 per share; (5) a May 2003 grant to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $1.57 per share; (6) a May 2004 grant to purchase up to 100,000 shares of the Company’s common stock at an exercise price of $2.15 per share; (7) a May 2005 grant to purchase up to 433,000 shares of the Company’s common stock at an exercise price of $0.75 per share; and (8) a June 2006 grant to purchase up to 250,000 shares of the Company’s common stock at an exercise price of $1.48 per share (collectively, the “Stock Options”). The Parties acknowledge and agree that each of the Stock Options is governed by the terms of their respective grant agreements.

     b. The Executive acknowledges and agrees that the Company has not issued to him any option to purchase common stock of the Company other than the stock options described above in subsection 5.a of this Agreement, and that he has no other right, title or interest in or to any option or right to acquire common stock of the Company.

     6. Mutual Releases.

     a. Release by the Company. In consideration of the Executive entering into this Agreement, to the fullest extent permitted by law, the Company, on behalf of itself and its subsidiaries, successors and assigns (collectively, the “Releasing Company Parties”), knowingly and voluntarily releases and discharges the Executive, and each of the Executive’s heirs, family members, executors, administrators and attorneys, and any successor or assign of any of the foregoing (collectively, the “Released Executive Parties”), from any claim, charge, action or cause of action that any of the Releasing Company Parties may have against any of the Released Executive Parties, whether known or unknown, from the beginning of time through the date of this Agreement based

upon any act, fact, omission, matter, cause or thing whatsoever, whether or not related to or arising out of the Executive’s employment with the Company or the termination thereof. Notwithstanding the foregoing, this release shall not extend to or discharge (i) the Company’s right to enforce the terms and conditions of this Agreement, or (ii) any rights or claims that might arise after the date of this Agreement, or (iii) the Company’s right to enforce the terms and conditions of the Proprietary Information Agreement, or (iv) the Company’s right to enforce the terms and conditions of the Indemnity Agreement, its Certificate of Incorporation or its Bylaws, or (v) the Company’s right to collect any applicable federal, state or local withholding taxes that are required to be deducted by the Company for any reason, all of which rights and claims shall be preserved, or (vi) the Company’s right to enforce the terms and conditions of each agreement and plan governing the issuance of each stock option referenced in Section 5.a, as well as the stock issued upon exercise of that stock option. The Company represents and warrants that it currently knows of no basis for any claims by it against any Released Executive Party, and that neither the Company nor anyone acting on its behalf has filed any claim, action, suit, complaint or proceeding against any Released Executive Party in any agency, court or other forum or tribunal.

     b. Release by the Executive. In consideration of the Company entering into this Agreement, to the fullest extent permitted by law, the Executive, on behalf of himself and his heirs, executors, administrators, successors and assigns (collectively, the Releasing Executive Parties”), knowingly and voluntarily releases and discharges the Company and its subsidiaries and affiliates, the respective current and former officers, employees, attorneys, agents and directors of the Company and its subsidiaries and affiliates, and any successor or assign of any of the foregoing (collectively, the “Released Company Parties”), from any claim, charge, action or cause of action that any of the Releasing Executive Parties may have against any of the Released Company Parties, whether known or unknown, from the beginning of time through the date of this Agreement based upon any act, fact, omission, matter, cause or thing whatsoever, whether or not related to or arising out of the Executive’s employment with the Company or the termination thereof. Notwithstanding the foregoing, this release shall not extend to or discharge any claims that Executive may not release as a matter of law, including but not limited to any rights to or claims for indemnification or contribution, including associated expenses and attorneys fees and the advancement of either of the foregoing, that Executive currently has or may in the future have under any of the following: the Certificate of Incorporation or By-Laws of the Company, under any applicable insurance policy, under that certain Indemnity Agreement effective as of September 13, 2000 between Executive and the Company (the “Indemnity Agreement”), or under any other provision or principle of law, or otherwise. In addition, this release shall not extend to or discharge (i) the Executive’s right to enforce the terms and conditions of this Agreement, or (ii) any rights or claims that might arise after the date of this Agreement, or (iii) the Executive’s right to enforce the terms and conditions of the Indemnity Agreement or the Company’s Certificate of Incorporation or its Bylaws, all of which rights and claims shall be preserved, or (iv) the Executive’s right to enforce the terms and conditions of each agreement and plan governing the issuance of each stock option referenced in Section 5.a, as well as the stock issued upon exercise of that stock option. Nothing in this Section 6.b shall prohibit

Executive from filing a charge or complaint with a government agency such as but not limited to the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor, the California Department of Fair Employment and Housing, or other applicable agency. The Executive represents and warrants that he currently knows of no basis for any claims by him against any Released Company Party, and that neither he nor anyone acting on his behalf has filed any claim, action, suit, complaint or proceeding against any Released Company Party in any agency, court or other forum or tribunal.

     c. The releases and discharges provided in subsections 6.a and 6.b above include, but are not limited to, any rights or claims under United States federal, state or local law for wrongful or abusive discharge, or for discrimination based upon race, color, ethnicity, sex, age, national origin, religion, disability, sexual orientation, including rights or claims under the Age Discrimination in Employment Act of 1967 (“ADEA”). The Executive and the Company each expressly waives any right or benefit that otherwise would be available to them, respectively, pursuant to section 1542 of the Civil Code of the State of California, which statute provides as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

     d. It is understood and agreed that this Agreement represents a compromise settlement of a disputed claim or claims, and that neither this Agreement itself nor the furnishing of the consideration for this Agreement shall be deemed or construed as an admission of liability or wrongdoing of any kind by the Company.

     e. The Executive affirms that that he has been advised by the Company to consult with an attorney of his choice concerning the terms and conditions set forth herein; that he has availed himself of that right; that he has been given at least twenty-one (21) days within which to consider this release and its consequences; that he has seven (7) days after signing this Agreement to revoke and cancel this Agreement by written notice to the Company; that this Agreement shall not become effective or enforceable until the eighth day following its execution (the “Effective Date”); and that Executive, if he chooses to sign this Agreement, should do so no earlier than May 31, 2007.

     7. Cooperation. For the period of one year following the date of this Agreement, the Executive hereby agrees to assist the Company, upon reasonable request by the Company, and subject to reasonable accommodation of the Executive’s personal and business schedule, in connection with any pending or future dispute, litigation, arbitration or similar proceeding or investigation (“Dispute”) or any regulatory request or filing involving the Company, any of its directors, or any of the directors of any of its subsidiaries, provided that such Dispute or regulatory request or filing related to a matter of which he had knowledge or for which he was responsible prior to the date of this Agreement, and that such request for assistance is neither unduly burdensome nor unreasonable. The Company shall promptly reimburse the Executive for, or promptly advance to the Executive, all costs and expenses reasonably incurred by the Executive in connection with rendering assistance to the Company in connection with any such

Dispute or regulatory request or filing, including without limitation reasonable fees and disbursements of separate counsel for the Executive if the Executive reasonably determines that the matter is of a nature which indicates that he should have separate representation. Such expenses shall be reimbursed or advanced promptly after the Executive’s submission to the Company of statements in such reasonable detail as the Company may require. Time devoted by the Executive to assisting the Company pursuant to this Section 7 shall not be required to exceed 20 hours in any month.

     8. Publicity and Non-Disparagement.

     a. Unless and until the Company publicly discloses this Agreement, the Executive shall neither discuss any aspect of the terms of this Agreement with, nor disclose all or any portion of this Agreement to, any person or organization. Notwithstanding anything elsewhere to the contrary, the Executive may in any event discuss this Agreement with, and disclose all or any portion of this Agreement to, his spouse and his legal, tax and financial advisors.

     b. The Executive agrees that he shall not intentionally make any public statement to third parties, the public, the press or the media, or any administrative agency that is intended to disparage the Company or to cause injury to the Company or any of its officers, directors, or employees. The Company agrees that it shall use its reasonable best efforts to cause its officers and directors not knowingly to make any public statement to third parties, the public, the press or the media, or any administrative agency intending to disparage the Executive.

     c. Notwithstanding the foregoing, nothing in this Section 8 shall prevent any person from responding publicly to incorrect, disparaging or derogatory public statements to the extent reasonably necessary to correct or refute such public statements, provided, in the case of the Executive, that, prior to making any such responses or statements, he has informed the Company of their substance and tenor reasonably in advance and discussed his intended course of action with it. Further, nothing in this Section 8 shall prohibit the Executive from providing truthful information in response to a proper subpoena or other legal process.

     9. Confidentiality and Protection of Proprietary Information.

     a. The Executive hereby reaffirms his obligations pursuant to that certain Agreement Regarding Proprietary Information and Inventions, dated October 2, 1995, between the Executive and the Company (the “Proprietary Information Agreement”), to which agreement the Executive acknowledges that he is bound; provided, however, that the provisions of Section 10 of this Agreement (“Non-Solicitation”) shall supersede the provisions of paragraph 10.b of the Proprietary Information Agreement.

     b. The Executive hereby agrees and covenants that he shall use his best efforts to return or cause to be returned to the General Counsel of the Company any and all property of the Company of any kind or description whatsoever which on the Effective

Date is in his possession or under his control (including, but not limited to, any Proprietary Information, as defined in the Proprietary Information Agreement, in written or other tangible form) and shall not retain any copies, duplicates, reproductions or excerpts thereof that are knowingly in his possession, except as otherwise provided hereunder. The Company and Executive agree that the Executive shall not be required to extensively search through the materials he accumulated over his tenure with the Company to determine whether any such materials constitute Proprietary Information of the Company. The Executive represents and warrants to the Company that he will continue to cooperate in returning to the Company all of the Company’s property or data of any type whatsoever that he determines to be in his possession, including but not limited to any planning data, personnel data, historical or projected financial data, compensation data, computer software and any and all documents in hardcopy or electronic format, that has been in the Executive’s possession or control as a result of his employment with the Company. Anything to the contrary notwithstanding, nothing in this Section 9 shall prevent the Executive from retaining (i) papers and other materials of a personal nature, including personal diaries and Rolodexes, information showing his compensation or relating to reimbursement of expenses, information that he reasonably believes may be needed for tax purposes, and copies of plans, programs and agreements relating to his employment with the Company, or (ii) copies of papers or information that the Executive reasonably determines would be appropriate for him to retain in his capacity as a consultant to the Company and subject to the Proprietary Information Agreement.

     c. For the one-year period that commenced on May 31, 2007, the Executive shall not manage, operate, control or materially participate in the management, operation or control of any other company in any position or role that would reasonably be expected to put him in material breach of his obligations to the Company pursuant to the Proprietary Information Agreement. The Executive warrants and represents that, as of the Effective Date, he is in compliance with this Section 9.c.

     d. Notwithstanding the foregoing, the provisions of this Section 9 shall not apply (i) to any disclosure or use of Proprietary Information in connection with providing services or assistance pursuant to Section 7, (ii) to any disclosure that may be required by law or by any court, arbitrator, or administrative or legislative body with apparent jurisdiction to order the Executive to disclose or provide any such Proprietary Information, (iii) to any disclosure of Proprietary Information reasonably required to enforce the terms of this Agreement, or (iv) to any Proprietary Information that becomes generally known to the public other than as a result of any violation of this Agreement by the Executive.

     10. Non-Solicitation. For the one-year period that commenced on May 31, 2007, the Executive shall not, directly or indirectly, without the prior written consent of the Company, knowingly solicit, induce, or attempt to induce, either for himself or on behalf of any company or business organization in which he serves as an officer, employee, partner, director, or consultant, any employee or consultant of the Company to terminate his, her or its employment or consulting relationship with the Company, whether for

employment or to consult with a third party or otherwise. Anything to the contrary notwithstanding, the Company agrees that this Section 10 does not prohibit the Executive from (i) responding in any manner to an unsolicited request from any present or former employee of the Company for advice or information on employment matters, or (ii) responding to an unsolicited request for an employment reference for any present or former employee of the Company, by providing a reference setting out his personal views about such present or former employee.

     11. Indemnification. Notwithstanding anything in this Agreement to the contrary, the Company and Executive agree that the Indemnity Agreement, and the parties’ respective obligations thereunder, shall remain in full force and effect.

     12. Notice. Any notice, request, or other communication given in connection with this Agreement shall be in writing and shall be deemed to have been given (i) when delivered personally to the recipient or (ii) provided that a written acknowledgement of receipt is obtained, three days after being sent by prepaid certified or registered mail, or two days after being sent by a nationally recognized overnight courier, to the address specified below for the recipient (or to such other address as the recipient shall have specified by ten days’ advance written notice given in accordance with this Section 12). Such communication should be addressed to the Executive at his principal residence and to the Company at its corporate headquarters to the attention of the General Counsel.

     13. Entire Agreement. Except as expressly set forth herein, this Agreement contains the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations, and undertakings, whether written or oral, between the parties with respect thereto. This Agreement may be modified only by a written document signed by the Executive and a duly authorized officer of the Company. Any waiver by any person of any provision of this Agreement shall be effective only if in writing and signed by the person against whom enforcement of the waiver is sought. For any waiver or modification to be effective, it must specifically refer to this Agreement and to the terms or provisions being modified or waived. No waiver of any provision of this Agreement shall be effective as to any other provision of this Agreement except to the extent specifically provided in an effective written waiver.

     14. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. Specifically, should a court, arbitrator or agency conclude that a particular claim may not be released as a matter of law, it is the intention of the Parties that the general release and the waiver of unknown claims herein shall otherwise remain effective to release any and all other claims.

     15. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of California.

     16. Headings. The headings of the Sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

     17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. Signatures delivered by facsimile shall be effective for all purposes.

     IN WITNESS WHEREOF, the Parties have executed this Agreement.

PLEASE READ CAREFULLY. THIS SEPARATION AGREEMENT AND RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

				THE EXECUTIVE: David R. Ditzel
				Executed this 15th day of June, 2007.
				/S/ DAVID R. DITZEL
				David R. Ditzel
				THE COMPANY: Transmeta Corporation
				Executed this 15th day of June, 2007.
				Transmeta Corporation
				By:		/S/ JOHN O’HARA HORSLEY
						John O’Hara Horsley
						Executive Vice President,
						General Counsel & Secretary
		Address:		2540 Mission College Blvd.
				Santa Clara, California 95054
				Telephone: 408 ###-###-####

CONSULTING AGREEMENT

     This Consulting Agreement (the “Agreement”) is entered into as of June 15, 2007, by and between David R. Ditzel (“Ditzel” or the “Consultant”) and Transmeta Corporation, a Delaware corporation (“Transmeta” or the “Company”) (each a “Party” and, collectively, the “Parties”).

RECITALS

     WHEREAS, Ditzel has substantial professional experience and knowledge relating to technology licensing and the development of business opportunities involving the licensing of Transmeta’s computing and low power semiconductor technologies, and has served as the Chief Technology Officer of the Company from March 2001 through March 2007; and

     WHEREAS, the Company now desires to engage the services of Ditzel as a consultant, and Ditzel is willing to render, and to hold himself available to render, consulting services to the Company upon the terms and conditions herein set forth.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

     1. Services. For the term of this Agreement, Ditzel shall serve as a consultant to the Company, and shall be available to perform, and shall perform, for the Company consulting services relating to technology licensing and the development of business opportunities involving the licensing of Transmeta’s computing and low power semiconductor technologies as reasonably requested by the Company’s President and Chief Executive Officer (the “Services”). Ditzel shall personally perform all of the Services provided for in this Agreement.

     2. Compensation. In consideration for Ditzel’s performance of Services pursuant to this Agreement, the Company shall pay Ditzel a consulting fee of $1600 per day. Ditzel shall maintain and submit to the Company periodic statements for Services rendered. The Company will pay such statements on a monthly basis. In addition, all stock options that were previously granted to Ditzel as a Transmeta employee (the “Stock Options”) will cease vesting but remain exercisable through and until the Termination Date of this Agreement (as defined below in Paragraph 4) and subject to the terms of Ditzel’s original stock option grant agreements, including provisions allowing exercise of the Stock Options, to the extent vested and exercisable, within three months after the Termination Date. The Company acknowledges that the compensation for Services provided for in this Paragraph 2 shall be in addition to the Severance Payment to which Ditzel is entitled pursuant to that certain Separation and Release Agreement between the Parties dated June 15, 2007 (the “Separation Agreement”).

     3. Expenses. The Company shall reimburse Consultant for his reasonable expenses in accordance with the Company’s policies. Consultant shall keep and submit to the Company records of such expenses.

     4. Term and Termination. This Agreement shall terminate as of June 30, 2008 unless extended or earlier terminated by the Parties (the “Termination Date”). Either Party may terminate this Agreement at any time for any reason with 30 days notice, and, upon such termination, neither Party shall have any obligations hereunder to the other except for payment for Services previously rendered or expenses previously incurred.

     5. Relationship of the Parties. Ditzel’s consulting relationship to the Company will be that of an independent contractor. Nothing in this Agreement is intended or shall be construed to constitute Ditzel as, and Ditzel acknowledges that he is not, an employee of the Company. Ditzel acknowledges that his performance of Services pursuant to this Agreement will not entitle him to receive any vacation payments, or to participate in any of the Company’s employee benefits plans, arrangements, stock options or distributions relating to any bonus, insurance or similar benefits provided for the Company’s employees.

     6. Indemnification. If Ditzel is made a party to, or is threatened to be made a party to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he provided Services pursuant to this Agreement, then Ditzel shall be indemnified and held harmless by the Company, to the fullest extent permitted by applicable law, against all expenses, liability and loss (including attorneys’ fees, judgments, fines, excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by Ditzel in connection therewith; provided, that Ditzel shall not be so indemnified or held harmless in any action, suit or proceeding brought by the Company against Ditzel or, with respect to a criminal action or proceeding, if Ditzel had reasonable cause to believe that his conduct in question was unlawful.

     7. Governing Law. This Agreement shall be construed in accordance with the laws of the State of California, without giving effect to the principles of conflict of laws.

CONSULTANT		TRANSMETA CORPORATION
/S/ DAVID R. DITZEL		/S/ LESTER M. CRUDELE
David R. Ditzel		By Lester M. Crudele
		President and Chief Executive Officer