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                                                                   EXHIBIT 10.20

CONFIDENTIAL

                        SEPARATION AGREEMENT AND RELEASE

       This Separation Agreement and Release (together with its attachments, the
"Agreement") is made and entered into as of December 11, 2001 by and between
Transmeta Corporation, a Delaware corporation (together with its subsidiaries,
successors and assigns, the "Company"), and Mark K. Allen (the "Executive").

       WHEREAS, the Executive has been employed by the Company, most recently as
its President and Chief Executive Officer ("CEO");

       WHEREAS, the Executive and the Company terminated that employment
relationship, and the Executive resigned as President and CEO of the Company and
as a member of the Company's Board of Directors, effective October 16, 2001;

       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 as of October 16, 2001, the Executive's
employment relationship with the Company is terminated. The Executive resigns as
President and Chief Executive Officer, as a member of the Company's Board of
Directors, and each other office and position in the Company, effective October
16, 2001.

       2. Severance Payment. The Company shall continue to pay to the Executive
the equivalent of his normal salary, subject to ordinary tax withholding, in
accordance with its ordinary payroll schedule through and including December 31,
2001. The Company shall also make to the Executive a final lump sum severance
payment of $425,000 in two equal installments, subject to the Executive's
continued compliance with the terms and covenants set out in this Agreement,
according to the following schedule: the first installment shall be paid on
January 2, 2002, and the second and final installment shall be paid on or before
July 1, 2002. The Executive acknowledges that such $425,000 represents a gross
amount before all applicable federal, state and local withholding taxes that are
required to be deducted by the Company.

       3. 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 April 16, 2003, whichever
occurs first.


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       4. Reimbursements. The Company shall promptly reimburse the Executive for
any reasonable business expenses properly incurred by the Executive through
October 16, 2001 and duly submitted by the Executive for reimbursement.

       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 stock option granted to the
Executive on July 26, 2001 to purchase 250,000 shares of the Company's common
stock at an exercise price of $3.11 per share is hereby canceled and terminated
in full. The Executive acknowledges and agrees that he has not exercised that
option to purchase any shares of the Company's common stock and that, effective
as of the date of this Agreement, he shall have no surviving right, title or
interest in that stock option.

       b. The Parties acknowledge that they previously entered into that certain
Stock Repurchase Agreement on November 27, 2001 (the "Stock Repurchase
Agreement"), pursuant to which (1) the Company exercised its right to repurchase
at the market price of $3.22 per share all 2,000,000 shares of the Company's
common stock that originated in the stock option granted to the Executive by the
Company on January 4, 2000 to purchase such shares for $3.00 per share (the
"Stock Option"), (2) the Company paid the price for that stock repurchase by
canceling debt owed by Executive under the promissory note issued by the
Executive for the purpose of exercising the Stock Option (the "Note") in an
amount equal to the repurchase price, and (3) the Company canceled the Note and
any and all remaining debts or obligations owed by the Executive under the Note.
The Executive acknowledges that he is solely responsible for any and all tax
consequences arising from or relating to the cancellation of the Note by the
Company; provided, however, that the Company shall make timely and appropriate
tax withholding payments in a total amount not to exceed $220,000 in the
aggregate on behalf of or for the benefit of the Executive relating to the
cancellation of the Note.

       c. 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 sections 5.a and 5.b 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, 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


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through the Effective Date 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 Effective Date, or (iii) the Company's right
to enforce the terms and conditions of the Stock Repurchase Agreement, or (iv)
the Company's right to enforce the terms and conditions of the Proprietary
Rights Agreement, or (v) the Company's right to enforce the terms and conditions
of the Indemnity Agreement, its Certificate of Incorporation or its Bylaws, or
(vi) 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. 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, 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 Effective Date 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
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 dated 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 Effective Date, or (iii) the Executive's right to enforce the terms
and conditions of the Stock Repurchase Agreement, or (iv) 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. 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.


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       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 favor at the time of executing the release, which if known by him must
have materially affected his settlement with the debtor."

       d. 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 the date of this Agreement to
revoke and cancel this Agreement by written notice to the Company; and that this
Agreement shall not become effective or enforceable until the eighth day
following its execution (the "Effective Date").

       7. Cooperation. For the period that commences on the Effective Date and
expires on October 16, 2003, the Executive hereby agrees to assist the Company,
upon reasonable request by the Company and subject to 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 such Dispute or
regulatory request or filing related to a matter of which he had knowledge or
for which he was responsible prior to October 16, 2001, 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.


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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, directors and employees 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:

              (i) 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; or,

              (ii) disclosing this Agreement, or making any truthful statement,
       to the extent (x) necessary to enforce this Agreement or (y) in response
       to a subpoena, legal process or as required by law or by any court,
       arbitrator or administrative or legislative body (including any committee
       thereof) with apparent jurisdiction to order such person to disclose or
       make accessible such information.

       9. Non-Competition. For the remainder of the one-year period that
commenced on October 16, 2001, the Executive shall not manage, operate, control
or materially participate in the management, or operation or control of, or be
connected as an officer, employee, partner, director, consultant, member of a
technical advisory board or similar body or otherwise become affiliated with,
any company that develops, designs or sells, in direct competition with the
Company, any x86 compatible microprocessor product (a "Competitor").
Notwithstanding the foregoing, the Executive shall not be deemed to be in
violation of this Section 9 solely as a result of his passive ownership of not
more than two percent (2%) of the voting stock or other equity securities of a
Competitor. The Executive warrants and represents that, as of the Effective
Date, he is in compliance with this Section 9.

       10. Confidentiality and Protection of Proprietary Information.

       a. The Executive hereby reaffirms his obligations pursuant to that
certain Agreement Regarding Proprietary Information & Inventions, effective as
of January 4, 2000, between the Executive and the Company (the "Proprietary
Rights Agreement"), to which agreement the Executive acknowledges that he is
bound; provided, however, that


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the provisions of paragraph 11 of this Agreement ("Non-Solicitation") shall
supersede the provisions of paragraph 10.b of the Proprietary Rights Agreement.

       b. The Executive hereby agrees and covenants that he shall 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
Confidential Information in written or other tangible form) and shall not retain
any copies, duplicates, reproductions or excerpts thereof, except as otherwise
provided hereunder. The Executive represents and warrants to the Company that he
has returned to the Company all property or data of Company of any type
whatsoever, 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
Employee's possession or control. Anything to the contrary notwithstanding,
nothing in this Section 10 shall prevent the Executive from retaining 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.

       c. Notwithstanding the foregoing, the provisions of this Section 10 shall
not apply (i) to any disclosure or use of Confidential 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 Confidential Information, (iii) to any
disclosure of Confidential Information reasonably required to enforce the terms
of this Agreement, or (iv) to any Confidential Information that becomes
generally known to the public other than as a result of any violation of this
Agreement by the Executive.

       11. Non-Solicitation. For the remainder of the two-year period that
commenced on October 16, 2001, 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 11 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.


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       12. 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.

       13. 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 13). 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.

       14. 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.

       15. 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.

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

       17. 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.


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       18. 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:  Mark K. Allen

                                   Executed this 12th day of December, 2001.


                                   /s/ Mark K. Allen
                                   -----------------------------
                                   Mark K. Allen




                                   THE COMPANY: Transmeta Corporation

                                   Executed this 11th day of December, 2001.

                                   Transmeta Corporation

                                   By: /s/ Richard Hugh Barnes
                                       -------------------------
                                       R. Hugh Barnes
                                       President & Chief Operating Officer

                    Address:       3940 Freedom Circle
                                   Santa Clara, California 95054
                                   Telephone:  408-919-3000


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