SEPARATION AGREEMENT AND RELEASE

Exhibit 10.33

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.

&nb