**Exhibit 10.31****CONFIDENTIAL**SEPARATION AGREEMENT AND RELEASE     This Separation Agreement and Release (together with its attachments, the “Agreement”) ismade and entered into as of February 1, 2007 by and between Transmeta Corporation, a Delawarecorporation (together with its subsidiaries, successors and assigns, the “Company”), and Arthur L.Swift (the “Executive”).     WHEREAS, the Executive has been employed by the Company as its President and Chief ExecutiveOfficer (“CEO”);     WHEREAS, the Executive and the Company terminated that employment relationship, and theExecutive resigned as President and CEO of the Company and as a member of the Company’s Board ofDirectors, effective February 1, 2007;     WHEREAS, the Company believes that it is in the best interest of its shareholders to enterinto a comprehensive separation agreement and release with the Executive;     WHEREAS, the Executive and the Company (the “Parties”) desire to settle fully and finally anyand all differences between them, and so have negotiated and agreed to a final settlement of theirrespective rights, obligations and liabilities;     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which ishereby acknowledged, the Executive and the Company hereby agree as follows:     1. The Parties agree that as of February 1, 2007, the Executive’s employment relationshipwith the Company is terminated. The Executive hereby resigns as President and Chief ExecutiveOfficer, as a member of the Company’s Board of Directors, and each other office and position in theCompany, effective February 1, 2007.     2. Severance Payment. The Company shall make to the Executive a final lump sum severancepayment of $420,000 in two installments, subject to the Executive’s continued compliance with theterms and covenants set out in this Agreement, following the Effective Date (as defined in Section6.d below) and according to the following schedule: the first installment of $210,000 shall bepaid on or before February 15, 2007, and the second and final installment of $210,000 shall be paidon or before April 10, 2007. The Executive acknowledges that such $420,000 sum represents a grossamount before all applicable federal, state and local withholding taxes that are required to bededucted by the Company.     3. Health Benefits. Pursuant to the provisions of COBRA, the Company will continue to payfor the Executive’s present election of group health benefits for the Executive and his dependentsuntil he finds employment providing comparable health benefits, or through and including February1, 2008, whichever occurs first.Page 1 of 8
 

 
**CONFIDENTIAL**     4. Reimbursements. The Company shall promptly reimburse the Executive for any reasonablebusiness expenses properly incurred by the Executive through February 1, 2007 and duly submitted bythe Executive for reimbursement. By or before the Effective Date, the Company will pay toExecutive all expense reimbursements, accrued vacation, outstanding benefits, salary and anysimilar payments, if any, owed by the Company to Executive as of the separation date of February 1,2007.     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 certainoptions to purchase the Company’s common stock as follows: (1) a March 2003 grant to purchase upto 750,000 shares of the Company’s common stock at an exercise price of $1.15 per share; (2) a May2003 grant to purchase up to 75,000 shares of the Company’s common stock at an exercise price of$1.57 per share; (3) a May 2004 grant to purchase up to 125,000 shares of the Company’s commonstock at an exercise price of $2.15 per share; (4) a March 2005 agreement to purchase up to1,000,000 shares of the Company’s common stock at an exercise price of $0.93 per share; and (5) aJune 2006 grant to purchase up to 750,000 shares of the Company’s common stock at an exercise priceof $1.48 per share (collectively, the “Stock Options”). The Parties acknowledge and agree thateach 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 topurchase common stock of the Company other than the stock options described above in subsection 5.aof this Agreement, and that he has no other right, title or interest in or to any option or rightto 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 voluntarilyreleases 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 actionthat 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 Effective Date based upon any act,fact, omission, matter, cause or thing whatsoever, whether or not related to or arising out of theExecutive’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 andconditions of this Agreement, or (ii) any rights or claims that might arise after the EffectiveDate, or (iii) the Company’s right to enforce the terms and conditions of the ProprietaryInformation Agreement, or (iv) the Company’s right to enforce the terms and conditions of theIndemnity Agreement, its Certificate of Incorporation or its Bylaws, or (v) the Company’s right tocollect any applicable federal, state or local withholding taxes that are required to bePage 2 of 8
 

 
**CONFIDENTIAL**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 governingthe issuance of each stock option referenced in Section 5.a, as well as the stock issued uponexercise of that stock option. The Company represents and warrants that it currently knows of nobasis for any claims by it against any Released Executive Party, and that neither the Company noranyone acting on its behalf has filed any claim, action, suit, complaint or proceeding against anyReleased 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 theCompany 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 actionthat 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 theExecutive’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 matterof 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 Certificateof Incorporation or By-Laws of the Company, under any applicable insurance policy, under thatcertain Indemnity Agreement effective as of March 24, 2003 between Executive and the Company (the“Indemnity Agreement”), or under any other provision or principle of law, or otherwise. Inaddition, this release shall not extend to or discharge (i) the Executive’s right to enforce theterms and conditions of this Agreement, or (ii) any rights or claims that might arise after theEffective Date, or (iii) the Executive’s right to enforce the terms and conditions of the IndemnityAgreement or the Company’s Certificate of Incorporation or its Bylaws, all of which rights andclaims shall be preserved, or (iv) the Executive’s right to enforce the terms and conditions ofeach agreement and plan governing the issuance of each stock option referenced in Section 5.a, aswell as the stock issued upon exercise of that stock option. Nothing in this Section 6.b shallprohibit Executive from filing a charge or complaint with a government agency such as but notlimited to the Equal Employment Opportunity Commission, the National Labor Relations Board, theDepartment of Labor, the California Department of Fair Employment and Housing, or other applicableagency. The Executive represents and warrants that he currently knows of no basis for any claimsby him against any Released Company Party, and that neither he nor anyone acting on his behalf hasfiled any claim, action, suit, complaint or proceeding against any Released Company Party in anyagency, court or other forum or tribunal.     c. The releases and discharges provided in subsections 6.a and 6.b above include, but are notlimited to, any rights or claims under United States federal, state or local law forPage 3 of 8
 

 
**CONFIDENTIAL**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 AgeDiscrimination in Employment Act of 1967 (“ADEA”). The Executive and the Company each expresslywaives any right or benefit that otherwise would be available to them, respectively, pursuant tosection 1542 of the Civil Code of the State of California, which statute provides as follows: “Ageneral release does not extend to claims which the creditor does not know or suspect to exist inhis or her favor at the time of executing the release, which if known by him or her must havematerially affected his or her settlement with the debtor.”     d. It is understood and agreed that Agreement represents a compromise settlement of adisputed claim or claims, and that neither this Agreement itself nor the furnishing of theconsideration for this Agreement shall be deemed or construed as an admission of liability orwrongdoing of any kind by the Company.     e. The Executive affirms that that he has been advised by the Company to consult with anattorney of his choice concerning the terms and conditions set forth herein; that he has availedhimself of that right; that he has been given at least twenty-one (21) days within which toconsider this release and its consequences; that he has seven (7) days after signing this Agreementto revoke and cancel this Agreement by written notice to the Company; that this Agreement shall notbecome effective or enforceable until the eighth day following its execution (the “EffectiveDate”); and that Executive, if he chooses to sign this Agreement, should do so no earlier thanFebruary 1, 2007.     7. Cooperation. For the period that commences on the Effective Date and expires on February1, 2008, 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, inconnection with any pending or future dispute, litigation, arbitration or similar proceeding orinvestigation (“Dispute”) or any regulatory request or filing involving the Company, any of itsdirectors, or any of the directors of any of its subsidiaries, provided that such Dispute orregulatory request or filing related to a matter of which he had knowledge or for which he wasresponsible prior to February 1, 2007, and that such request for assistance is neither undulyburdensome nor unreasonable. The Company shall promptly reimburse the Executive for, or promptlyadvance to the Executive, all costs and expenses reasonably incurred by the Executive in connectionwith rendering assistance to the Company in connection with any such Dispute or regulatory requestor filing, including without limitation reasonable fees and disbursements of separate counsel forthe Executive if the Executive reasonably determines that the matter is of a nature which indicatesthat he should have separate representation. Such expenses shall be reimbursed or advancedpromptly after the Executive’s submission to the Company of statements in such reasonable detail asthe Company may require. Time devoted by the Executive to assisting the Company pursuant to thisSection 7, shall not be required to exceed 20 hours in any month.Page 4 of 8
 

 
**CONFIDENTIAL**     8. Publicity and Non-Disparagement.     a. Unless and until the Company publicly discloses this Agreement, the Executive shallneither discuss any aspect of the terms of this Agreement with, nor disclose all or any portion ofthis 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 thisAgreement to, his spouse and his legal, tax and financial advisors.     b. The Executive agrees that he shall not intentionally make any public statement to thirdparties, the public, the press or the media, or any administrative agency that is intended todisparage the Company or to cause injury to the Company or any of its officers, directors, oremployees. The Company agrees that it shall use its reasonable best efforts to cause its officersand directors not knowingly to make any public statement to third parties, the public, the press orthe media, or any administrative agency intending to disparage the Executive.     c. Notwithstanding the foregoing, nothing in this Section 8 shall prevent any person fromresponding publicly to incorrect, disparaging or derogatory public statements to the extentreasonably necessary to correct or refute such public statements, provided, in the case of theExecutive, that, prior to making any such responses or statements, he has informed the Company oftheir substance and tenor reasonably in advance and discussed his intended course of action withit. Further, nothing in this Section 8 shall prohibit the Executive from providing truthfulinformation 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 AgreementRegarding Proprietary Information and Inventions, effective as of March 24, 2003, between theExecutive and the Company (the “Proprietary Information Agreement”), to which agreement theExecutive acknowledges that he is bound; provided, however, that the provisions of Section 10 ofthis Agreement (“Non-Solicitation”) shall supersede the provisions of paragraph 10.b of theProprietary Information Agreement.     b. The Executive hereby agrees and covenants that he shall return or cause to be returned tothe General Counsel of the Company any and all property of the Company of any kind or descriptionwhatsoever which on the Effective Date is in his possession or under his control (including, butnot 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 orexcerpts thereof, except as otherwise provided hereunder. The Executive represents and warrants tothe Company that he has returned to the Company all property or data of Company of any typewhatsoever, including but not limited to any planning data, personnel data, historical or projectedfinancial data, compensation data, computer software and any and all documents in hardcopy orelectronic format, that has been in Employee’s possession or control. Anything to the contrarynotwithstanding, nothing in this Section 9 shall prevent the Executive from retaining papers andother materials of a personal nature, including personal diaries and Rolodexes, information showinghisPage 5 of 8
 

 
**CONFIDENTIAL**compensation or relating to reimbursement of expenses, information that he reasonably believesmay be needed for tax purposes, and copies of plans, programs and agreements relating to hisemployment with the Company.     c. For the one-year period that commenced on February 1, 2007, the Executive shall notmanage, operate, control or materially participate in the management, operation or control of anyother company in any position or role that would reasonably be expected to put him in materialbreach of his obligations to the Company pursuant to the Proprietary Information Agreement. TheExecutive warrants and represents that, as of the Effective Date, he is in compliance with thisSection 9.c.     d. Notwithstanding the foregoing, the provisions of this Section 9 shall not apply (i) to anydisclosure or use of Proprietary Information in connection with providing services or assistancepursuant 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 Executiveto disclose or provide any such Proprietary Information, (iii) to any disclosure of ProprietaryInformation reasonably required to enforce the terms of this Agreement, or (iv) to any ProprietaryInformation that becomes generally known to the public other than as a result of any violation ofthis Agreement by the Executive.     10. Non-Solicitation. For the one-year period that commenced on February 1, 2007, theExecutive 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 orbusiness 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 consultingrelationship with the Company, whether for employment or to consult with a third party orotherwise. Anything to the contrary notwithstanding, the Company agrees that this Section 10 doesnot prohibit the Executive from (i) responding in any manner to an unsolicited request from anypresent 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 employeeof the Company, by providing a reference setting out his personal views about such present orformer employee.     11. Indemnification. Notwithstanding anything in this Agreement to the contrary, the Companyand Executive agree that the Indemnity Agreement, and the parties’ respective obligationsthereunder, shall remain in full force and effect.     12. Notice. Any notice, request, or other communication given in connection with thisAgreement shall be in writing and shall be deemed to have been given (i) when delivered personallyto the recipient or (ii) provided that a written acknowledgement of receipt is obtained, three daysafter being sent by prepaid certified or registered mail, or two days after being sent by anationally recognized overnight courier, to the address specified below for the recipient (or tosuch other address as the recipient shall have specified by ten days’ advance written notice givenin accordance with this Section 12). Such communication should be addressed to the Executive athis principal residence and to the Company at its corporate headquarters to the attention of theGeneral Counsel.Page 6 of 8
 

 
**CONFIDENTIAL**     13. Entire Agreement. Except as expressly set forth herein, this Agreement contains theentire agreement between the parties concerning the subject matter hereof and supersedes all prioragreements, understandings, discussions, negotiations, and undertakings, whether written or oral,between the parties with respect thereto. This Agreement may be modified only by a writtendocument signed by the Executive and a duly authorized officer of the Company. Any waiver by anyperson of any provision of this Agreement shall be effective only if in writing and signed by theperson against whom enforcement of the waiver is sought. For any waiver or modification to beeffective, it must specifically refer to this Agreement and to the terms or provisions beingmodified or waived. No waiver of any provision of this Agreement shall be effective as to anyother provision of this Agreement except to the extent specifically provided in an effectivewritten waiver.     14. Severability. In the event that any provision or portion of this Agreement shall bedetermined to be invalid or unenforceable for any reason, the remaining provisions or portions ofthis Agreement shall be unaffected thereby and shall remain in full force and effect to the fullestextent permitted by law. Specifically, should a court, arbitrator or agency conclude that aparticular claim may not be released as a matter of law, it is the intention of the Parties thatthe general release and the waiver of unknown claims herein shall otherwise remain effective torelease any and all other claims.     15. Governing Law. This Agreement shall be governed by and construed and interpreted inaccordance with the laws of the State of California.     16. Headings. The headings of the Sections contained in this Agreement are for convenienceonly and shall not be deemed to control or affect the meaning or construction of any provision ofthis Agreement.Page 7 of 8
 

 
**CONFIDENTIAL**     17. Counterparts. This Agreement may be executed in one or more counterparts, each of whichshall be deemed to be an original but all of which together shall constitute one and the sameinstrument. 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 RELEASEINCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.       THE EXECUTIVE: Arthur L. Swift         Executed this 2nd day of February, 2007.         /S/ ARTHUR L. SWIFT     Arthur L. Swift         THE COMPANY: Transmeta Corporation         Executed this 2nd day of February, 2007.         Transmeta Corporation           By:  /S/  JOHN O’HARA HORSLEY    John O’Hara Horsley    Executive Vice President,General Counsel & Secretary          Address: 3990 Freedom Circle