SEPARATION AGREEMENT AND RELEASE
Exhibit 10.31
CONFIDENTIAL
SEPARATION AGREEMENT AND RELEASE
This Separation Agreement and Release (together with its attachments, the “Agreement”) is
made and entered into as of February 1, 2007 by and between Transmeta Corporation, a Delaware
corporation (together with its subsidiaries, successors and assigns, the “Company”), and Xxxxxx X.
Xxxxx (the “Executive”).
WHEREAS, the Executive has been employed by the Company 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 February 1, 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 as of February 1, 2007, the Executive’s employment relationship
with the 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 February 1, 2007.
2. Severance Payment. The Company shall make to the Executive a final lump sum severance
payment of $420,000 in two installments, 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.d below) and according to the following schedule: the first installment of $210,000 shall be
paid on or before February 15, 2007, and the second and final installment of $210,000 shall be paid
on or before April 10, 2007. The Executive acknowledges that such $420,000 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 February
1, 2008, 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 February 1, 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 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 certain
options to purchase the Company’s common stock as follows: (1) a March 2003 grant to purchase up
to 750,000 shares of the Company’s common stock at an exercise price of $1.15 per share; (2) a May
2003 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 common
stock at an exercise price of $2.15 per share; (4) a March 2005 agreement to purchase up to
1,000,000 shares of the Company’s common stock at an exercise price of $0.93 per share; and (5) a
June 2006 grant to purchase up to 750,000 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 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
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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 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 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 March 24, 2003 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 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
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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 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 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.
e. 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 signing this Agreement
to revoke and cancel this Agreement by written notice to the Company; that this Agreement shall not
become effective or enforceable until the eighth day following its execution (the “Effective
Date”); and that Executive, if he chooses to sign this Agreement, should do so no earlier than
February 1, 2007.
7. Cooperation. For the period that commences on the Effective Date and expires on February
1, 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, 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 that such Dispute or
regulatory request or filing related to a matter of which he had knowledge or for which he was
responsible prior to February 1, 2007, 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.
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CONFIDENTIAL
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. 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
and directors 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
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. Further, nothing in this Section 8 shall prohibit the Executive from providing truthful
information 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 Agreement
Regarding Proprietary Information and Inventions, effective as of March 24, 2003, between the
Executive and the Company (the “Proprietary Information Agreement”), to which agreement the
Executive acknowledges that he is bound; provided, however, that the provisions of Section 10 of
this Agreement (“Non-Solicitation”) shall supersede the provisions of paragraph 10.b of the
Proprietary Information 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 Proprietary Information, as defined in the Proprietary Information Agreement,
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 9 shall prevent the Executive from retaining papers and
other materials of a personal nature, including personal diaries and Rolodexes, information showing
his
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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. For the one-year period that commenced on February 1, 2007, the Executive shall not
manage, operate, control or materially participate in the management, operation or control of any
other company in any position or role that would reasonably be expected to put him in material
breach of his obligations to the Company pursuant to the Proprietary Information Agreement. The
Executive warrants and represents that, as of the Effective Date, he is in compliance with this
Section 9.c.
d. Notwithstanding the foregoing, the provisions of this Section 9 shall not apply (i) to any
disclosure or use of Proprietary 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 Proprietary Information, (iii) to any disclosure of Proprietary
Information reasonably required to enforce the terms of this Agreement, or (iv) to any Proprietary
Information that becomes generally known to the public other than as a result of any violation of
this Agreement by the Executive.
10. Non-Solicitation. For the one-year period that commenced on February 1, 2007, 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 10 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.
11. 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.
12. 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 12). 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.
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CONFIDENTIAL
13. 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.
14. 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. Specifically, should a court, arbitrator or agency conclude that a
particular claim may not be released as a matter of law, it is the intention of the Parties that
the general release and the waiver of unknown claims herein shall otherwise remain effective to
release any and all other claims.
15. Governing Law. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of California.
16. 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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CONFIDENTIAL
17. 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: Xxxxxx X. Xxxxx | ||||
| Executed this 2nd day of February, 2007. | ||||
| /S/ XXXXXX X. XXXXX | ||||
| THE COMPANY: Transmeta Corporation | ||||
| Executed this 2nd day of February, 2007. | ||||
| Transmeta Corporation |
| By: | /S/ XXXX X’XXXX XXXXXXX | |||
| Xxxx X’Xxxx Xxxxxxx | ||||
| Executive Vice President, General Counsel & Secretary | ||||
| Address: | 0000 Xxxxxxx Xxxxxx Xxxxx Xxxxx, Xxxxxxxxxx 00000 Telephone: 000-000-0000 |
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CONSULTING AGREEMENT
This Consulting Agreement (the “Agreement”) is entered into as of February 1, 2007, by and
between Xxxxxx X. Xxxxx (“Swift” or the “Consultant”) and Transmeta Corporation, a Delaware
corporation (“Transmeta” or the “Company”) (each a “Party” and, collectively, the “Parties”).
XXXXXXXX
WHEREAS, Swift has substantial professional experience and knowledge relating to the sales,
marketing, and development of business opportunities involving Transmeta’s computing and low power
semiconductor technologies, and has served as the Company’s Senior Vice President of Marketing from
March 2003 to March 2005, and as President and CEO of the Company from March 2005 through January
2007; and
WHEREAS, the Company now desires to engage the services of Swift as a consultant, and Swift is
willing to render, and to hold himself available to render, consulting services to the Company upon
the terms and conditions herein set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties
agree as follows:
1. Services. For the term of this Agreement, Swift shall serve as a consultant to the
Company, and shall be available to perform, and shall perform, for the Company consulting services
relating to sales, marketing, and the development of business opportunities involving Transmeta’s
computing and low power semiconductor technologies as reasonably requested by the Company’s
President and Chief Executive Officer (the “Services”). Swift shall personally perform all of the
Services provided for in this Agreement.
2. Compensation. In consideration for Swift’s performance of Services pursuant to this
Agreement, the Company shall pay Swift a consulting fee of $1600 per day. Swift shall maintain and
submit to the Company periodic statements for Services rendered. The Company will pay such
statements on a monthly basis. Notwithstanding any other provision of this Agreement, however, the
Parties agree that during any three-month period covered by this Agreement, the number of
consulting days shall not exceed five (5) days in aggregate, and the Company’s aggregate payments
to Consultant for Services shall not exceed $32,000 during 2007. In addition, all stock options
that were previously granted to Swift as a Transmeta employee (the “Stock Options”) will remain
exercisable through and until the Termination Date of this Agreement (as defined below in Paragraph
4) and subject to the terms of Swift’s original stock option grant agreements, including provisions
allowing exercise of stock options, to the extent vested and exercisable, until
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the Termination Date. To the extent not exercised, all Stock Options will terminate on the
Termination Date of this Agreement. The Stock Options will cease vesting on January 31, 2007 and
will hereafter be exercisable only for the number of shares vested, and to the extent exercisable,
on January 31, 2007. The Company acknowledges that the compensation for Services provided for in
this Paragraph 2 shall be in addition to the Severance Payment to which Swift is entitled pursuant
to that certain Separation and Release Agreement between the Parties dated January 31, 2007 (the
“Separation Agreement”).
3. Expenses. The Company shall reimburse Consultant for his reasonable expenses in accordance
with the Company’s policies. Consultant shall keep and submit to the Company records of such
expenses.
4. Term and Termination. This Agreement shall terminate as of December 31, 2007 unless
extended or earlier terminated by the Parties (the “Termination Date”). Either Party may terminate
this Agreement at any time for any reason after August 30, 2007 with 30 days notice, and, upon such
termination, neither Party shall have any obligations hereunder to the other except for payment for
Services previously rendered or expenses previously incurred.
5. Relationship of the Parties. Swift’s consulting relationship to the Company will be that
of an independent contractor. Nothing in this Agreement is intended or shall be construed to
constitute Swift as, and Swift acknowledges that he is not, an employee of the Company. Swift
acknowledges that his performance of Services pursuant to this Agreement will not entitle him to
receive any vacation payments, or to participate in any of the Company’s employee benefits plans,
arrangements, stock options or distributions relating to any bonus, insurance or similar benefits
provided for the Company’s employees.
6. Indemnification. If Swift is made a party to, or is threatened to be made a party to, or
is involved in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he provided Services pursuant to this Agreement, then
Swift shall be indemnified and held harmless by the Company, to the fullest extent permitted by
applicable law, against all expenses, liability and loss (including attorneys’ fees, judgments,
fines, excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred
or suffered by Swift in connection therewith; provided, that Swift shall not be so indemnified or
held harmless in any action, suit or proceeding brought by the Company against Swift or, with
respect to a criminal action or proceeding, if Swift had reasonable cause to believe that his
conduct in question was unlawful.
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7. Governing Law. This Agreement shall be construed in accordance with the laws of the State
of California, without giving effect to the principles of conflict of laws.
CONSULTANT
|
TRANSMETA CORPORATION | |
/s/ XXXXXX X. XXXXX
|
/S/ XXXXXX X. XXXXXXX | |
Xxxxxx X. Xxxxx
|
By Xxxxxx X. Xxxxxxx | |
| President and Chief Executive Officer |
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