**CONFIDENTIAL** **EXHIBIT 10.21**
SEPARATION AGREEMENT AND RELEASE
     This Separation Agreement and Release (together with its attachments, the “Agreement”) ismade and entered into as of March 31, 2005 by and between Transmeta Corporation, a Delawarecorporation (together with its subsidiaries, successors and assigns, the “Company”), and Matthew R.Perry (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 March 31, 2005;
     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 March 31, 2005, the Executive’s employment relationship withthe Company is terminated. The Executive hereby 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 March 31, 2005.
     2. Severance Payment. The Company shall make to the Executive a final lump sum severancepayment of $445,000 in two installments, subject to the Executive’s continued compliance with theterms and covenants set out in this Agreement, according to the following schedule: the firstinstallment of $300,000 shall be paid on or before April 15, 2005, and the second and finalinstallment of $145,000 shall be paid on the earlier of (a) the Monday following the Company’s nextannual meeting of stockholders or (b) June 30, 2005. The Executive acknowledges that such $445,000sum represents a gross amount before all applicable federal, state and local withholding taxes thatare required to be deducted 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 dependents until he finds employment providing comparable health benefits, orthrough and including March 31, 2006, whichever occurs first.
 

 

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     4. Housing Benefits. The Company will continue to reimburse the Executive for all regularpayments under the Executive’s present residential lease agreement through the expiration of thatlease agreement on or about June 30, 2005, and, if necessary, at an equivalent rate thereafteruntil he first finds other employment or through and including March 31, 2006, whichever occursfirst.
     5. Reimbursements. The Company shall promptly reimburse the Executive for any reasonablebusiness expenses properly incurred by the Executive through March 31, 2005 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 March 31,2005.
     6. 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 Executive certainoptions to purchase the Company’s common stock as follows: (1) an April 2002 grant to purchase upto 2,000,000 shares of the Company’s common stock at an exercise price of $2.46 per share; (2) aNovember 2002 grant to purchase up to 1,000,000 shares of the Company’s common stock at an exerciseprice of $1.05 per share; (3) a May 2003 grant to purchase up to 1,000,000 shares of the Company’scommon stock at an exercise price of $1.57 per share; and (4) a May 2004 grant to purchase up to200,000 shares of the Company’s common stock at an exercise price of $2.15 per share (the “StockOptions”). The Parties acknowledge and agree that each of the Stock Options is governed by theterms of their respective grants.
     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 6.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.
     7. 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, andeach of the Executive’s heirs, family members, executors, administrators and attorneys, and anysuccessor or assign of any of the foregoing (collectively, the “Released Executive Parties”), fromany claim, charge, action or cause of action that any of the Releasing Company Parties may haveagainst any of the Released Executive Parties, whether known or unknown, from the beginning of time through theEffective Date based upon any act, fact, omission, matter, cause or thing whatsoever, whether ornot related to or arising out of the Executive’s employment with the Company or the terminationthereof. Notwithstanding the foregoing, this release shall not extend to or discharge (i) theCompany’s right to enforce the terms and conditions of
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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 andconditions of the Proprietary Rights Agreement, or (iv) the Company’s right to enforce the termsand 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 arerequired to be deducted by the Company for any reason, all of which rights and claims shall bepreserved. The Company represents and warrants that it currently knows of no basis for any claimsby it against any Released Executive Party, and that neither the Company nor anyone acting on itsbehalf has filed any claim, action, suit, complaint or proceeding against any Released ExecutiveParty 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 andassigns (collectively, the Releasing Executive Parties”), knowingly and voluntarily releases anddischarges the Company and its subsidiaries and affiliates, the respective current and formerofficers, employees, attorneys, agents and directors of the Company and its subsidiaries andaffiliates, and any successor or assign of any of the foregoing (collectively, the “ReleasedCompany Parties”), from any claim, charge, action or cause of action that any of the ReleasingExecutive 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 employmentwith the Company or the termination thereof. Notwithstanding the foregoing, this release shall notextend to or discharge any rights to or claims for indemnification or contribution, includingassociated expenses and attorneys fees and the advancement of either of the foregoing, thatExecutive currently has or may in the future have under any of the following: the Certificate ofIncorporation or By-Laws of the Company, under any applicable insurance policy, under that certainIndemnity Agreement dated as of April 10, 2002 between Executive and the Company (the “IndemnityAgreement”), or under any other provision or principle of law, or otherwise. In addition, thisrelease shall not extend to or discharge (i) the Executive’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 Executive’s right to enforce the terms and conditions of the Indemnity Agreementor the Company’s Certificate of Incorporation or its Bylaws, all of which rights and claims shallbe preserved. The Executive represents and warrants that he currently knows of no basis for anyclaims by him against any Released Company Party, and that neither he nor anyone acting on hisbehalf has filed any claim, action, suit, complaint or proceeding against any Released CompanyParty 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 notlimited to, any rights or claims under United States federal, state or local law for wrongful orabusive discharge, or for discrimination based upon race, color, ethnicity, sex, age, nationalorigin, 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
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available to them, respectively, pursuant to section 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 favor at the time of executing the release, which if known by him must have materially affectedhis settlement with the debtor.”
     d. 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 the date of thisAgreement to revoke and cancel this Agreement by written notice to the Company; and that thisAgreement shall not become effective or enforceable until the eighth day following its execution(the “Effective Date”).
     8. Cooperation. For the period that commences on the Effective Date and expires on March 31,2006, 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 March 31, 2005, 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 8, shall not be required to exceed 20 hours in any month.
     9. 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 this Agreement to, his legal, taxand 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
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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 9 shall prevent any person from:
     (i) responding publicly to incorrect, disparaging or derogatory public statements tothe extent reasonably necessary to correct or refute such public statements, provided, inthe case of the Executive, that, prior to making any such responses or statements, he hasinformed the Company of their substance and tenor reasonably in advance and discussed hisintended 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 asrequired by law or by any court, arbitrator or administrative or legislative body(including any committee thereof) with apparent jurisdiction to order such person todisclose or make accessible such information.
     10. Confidentiality and Protection of Proprietary Information.
     a. The Executive hereby reaffirms his obligations pursuant to that certain AgreementRegarding Proprietary Information & Inventions, effective as of April 10, 2002, between theExecutive and the Company (the “Proprietary Rights Agreement”), to which agreement the Executiveacknowledges that he is bound; provided, however, that the provisions of paragraph 11 of thisAgreement (“Non-Solicitation”) shall supersede the provisions of paragraph 10.b of the ProprietaryRights 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 Confidential Information in written or other tangible form) and shall notretain any copies, duplicates, reproductions or excerpts thereof, except as otherwise providedhereunder. The Executive represents and warrants to the Company that he has returned to theCompany all property or data of Company of any type whatsoever, including but not limited to anyplanning data, personnel data, historical or projected financial data, compensation data, computersoftware and any and all documents in hardcopy or electronic format, that has been in Employee’spossession or control. Anything to the contrary notwithstanding, nothing in this Section 10 shallprevent the Executive from retaining papers and other materials of a personal nature, includingpersonal diaries and Rolodexes, information showing his compensation or relating to reimbursementof expenses, information that he reasonably believes may be needed for tax purposes, and copies ofplans, programs and agreements relating to his employment with the Company.
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     c. Notwithstanding the foregoing, the provisions of this Section 10 shall not apply (i) toany disclosure or use of Confidential Information in connection with providing services orassistance pursuant to Section 8, (ii) to any disclosure that may be required by law or by anycourt, arbitrator, or administrative or legislative body with apparent jurisdiction to order theExecutive to disclose or provide any such Confidential Information, (iii) to any disclosure ofConfidential Information reasonably required to enforce the terms of this Agreement, or (iv) to anyConfidential Information that becomes generally known to the public other than as a result of anyviolation of this Agreement by the Executive.
     11. Non-Solicitation. For the one-year period that commenced on March 31, 2005, 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 11 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.
     12. 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.
     13. 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 14). 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.
     14. 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
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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.
     15. 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.
     16. Governing Law. This Agreement shall be governed by and construed and interpreted inaccordance with the laws of the State of California.
     17. 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.
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     18. 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 RELEASE INCLUDES A RELEASE OF ALL KNOWN ANDUNKNOWN CLAIMS.       THE EXECUTIVE: Matthew R. Perry       Executed this2nd dayof April, 2005.                      /s/ Matthew R. Perry                    Matthew R. Perry       THE COMPANY: Transmeta Corporation       Executed this2nd dayof April, 2005.       Transmeta Corporation      By:           /s/ John O’Hara Horsley                 John O’Hara Horsley             Vice President, General Counsel & Secretary       Address: 3990 Freedom Circle   Santa Clara, California 95054   Telephone: 408-919-3000
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