SEPARATION AGREEMENT AND RELEASE

Exhibit 10.34

SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release (together with its attachments, the “Agreement”) is made and entered into as of August 14, 2007, by and between Transmeta Corporation, a Delaware corporation (together with its subsidiaries, successors and assigns, the “Company”), and Ralph J. Harms (the “Executive”).

     WHEREAS, the Executive has been employed by the Company as its Chief Financial Officer (“CFO”);

     WHEREAS, the Executive and the Company desire to terminate that employment relationship as of August 31, 2007, and the Executive intends to resign his office as CFO of the Company effective on or before August 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 the Executive’s employment relationship with the Company is terminated effective August 31, 2007. The Executive hereby resigns as CFO and each other office and position in the Company effective August 31, 2007, or at such earlier date as the Company appoints a CFO as his successor.

     2. Severance Payment. The Company shall make to the Executive a final lump sum severance payment of $41,666.67 on August 31, 2007, subject to the Executive’s continued compliance with the terms and covenants set out in this Agreement, following the Effective Date (as defined in Section 6.e below). The Executive acknowledges that such $41,666.67 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 October 31, 2007, whichever occurs first.

     4. Reimbursements. The Company shall promptly reimburse the Executive for any reasonable business expenses properly incurred by the Executive through August 31, 2007 and duly submitted by the Executive for reimbursement. 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 August 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 July 2006 grant to purchase up to 750,000 shares of the Company’s common stock at an exercise price of $1.37 per share (the “Stock Options”). The Parties acknowledge and agree that the Stock Options are governed by the terms of the original grant agreement.

     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 section 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 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 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 rights to enforce the terms and conditions of each agreement and plan governing the issuance of the Stock Options 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 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 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 July 25, 2006 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 Indemnity Agreement or Executive’s right for indemnity under the Company’s Certificate of Incorporation or Bylaws, or under any state law, 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