Transmeta Announces Agreement with Riley Investment Management, LLC

SANTA CLARA, Calif.–(EMWNews)–Transmeta Corporation (NASDAQ:TMTA) today announced that it has entered

into a settlement agreement and release with the entities and persons

affiliated with Riley Investment Management, LLC, resolving all proxy

matters and other issues relating to Transmeta.

The agreement provides, among other things, for the following:

• Transmeta will promptly increase the total number of directors on its

  Board of Directors from seven to nine, divided evenly among its three

  Classes

• Transmeta’s Board of Directors will promptly

  elect J. Michael Gullard to join the Board as a director in Class I

  and appoint him to its Compensation Committee

• Transmeta will include Bryant R. Riley in its proxy materials as a

  nominee for election to the Board of Directors as a director in Class

  II and use its reasonable best efforts to cause Mr. Riley’s

  election to the Board at its 2008 annual meeting, which has not been

  scheduled but is expected to be held on or before September 30, 2008

• the Riley entities will vote their shares in favor of Transmeta’s

  slate of nominees for election to the Board of Directors at the company’s

  2008 annual meeting, and will not solicit proxies in connection with

  that meeting

• the Riley entities will abide by certain confidentiality and

  standstill obligations through the completion of Transmeta’s

  2010 annual meeting, including an agreement not to acquire an

  aggregate beneficial ownership position of more than 13% of Transmeta’s

  outstanding common stock. The Riley entities currently own

  approximately 1,357,364 shares of Transmeta common stock, representing

  approximately 11.2 percent of Transmeta’s

  outstanding shares.

• the Riley entities and Transmeta will file a joint stipulation to

  dismiss with prejudice the RIM shareholder derivative litigation

  against Transmeta’s directors and officers,

  with each party to bear its own fees and costs

• the Riley entities and Transmeta entered into a general mutual release

  of claims.

“We are pleased to have achieved this

agreement with the Riley Group and believe that it best serves the

interests of Transmeta and its shareholders,”

said Les Crudele, president and CEO of Transmeta. “Through

this agreement, Transmeta and RIM will avoid a costly and disruptive

proxy contest at a time when the company is exploring a full range of

strategic alternatives to enhance shareholder value. We look forward to

working with both Mr. Gullard and Mr. Riley.”

J. Michael Gullard has served since 1984 as a general partner of

Cornerstone Management, a venture capital and consulting firm that

provides strategic focus and direction for technology companies,

primarily in the software and data communications industries. He also

serves on the board of directors of Alliance Semiconductor, JDA Software

Group, Inc., Proxim Wireless, Inc. and Planar Systems, Inc., each a

Nasdaq listed company, and DynTek, Inc. From 1992 to 2004, he served as

Chairman of NetSolve, Incorporated, a provider of IT infrastructure

management services on an outsourced basis. From 1996 to 2004, Mr.

Gullard also served as Chairman of Merant PLC (formerly Micro Focus

Group Ltd.), a provider of change management software tools. Earlier in

his career, Mr. Gullard held several executive and management positions

at Telecommunications Technology Inc. and Intel Corporation. Mr. Gullard

holds a B.A. degree in economics from Stanford University and an M.B.A.

degree from the Stanford Graduate School of Business.

Bryant R. Riley is both founder and Chairman of B. Riley & Co.,

Inc., a Southern California based brokerage firm providing research and

trading ideas primarily to institutional investors. Mr. Riley is also

the founder and Chairman of Riley Investment Management, LLC, an

investment adviser which provides investment management services. He

also serves on the board of directors of Alliance Semiconductor, Aldila,

Inc., DDi Corporation, and Silicon Storage Technology, Inc., each a

Nasdaq listed company. Prior to 1997, Mr. Riley held a variety of

positions in the brokerage industry, primarily as an Institutional

Salesman and Trader. From October 1993-January 1997 he was a co-head of

Equity at Dabney-Resnick, Inc., a Los Angeles based brokerage firm. From

1991-1993 he was a co-founder of Huberman-Riley, a Texas based brokerage

firm. Mr. Riley graduated from Lehigh University in 1989 with a B.S. in

finance.

“I appreciate the opportunity to be elected

to the Board of Transmeta,” said Bryant R.

Riley. “During the past several weeks, I have

met the independent directors and feel confident that we can work

together to enhance value for Transmeta shareholders. I look forward to

working closely with the other directors to benefit the company and its

shareholders.”

About Transmeta Corporation

Transmeta Corporation develops and licenses innovative computing,

microprocessor and semiconductor technologies and related intellectual

property. Founded in 1995, we first became known for designing,

developing and selling our highly efficient x86-compatible

software-based microprocessors, which deliver a balance of low power

consumption, high performance, low cost and small size suited for

diverse computing platforms. We are presently focused on developing and

licensing our advanced power management technologies for controlling

leakage and increasing power efficiency in semiconductor and computing

devices, and in licensing our computing and microprocessor technologies

to other companies. To learn more about Transmeta, visit www.transmeta.com.

Safe Harbor Statement

This release contains forward-looking statements made pursuant to the

safe harbor provisions of the Private Securities Litigation Reform Act

of 1995. Such statements speak only as of the date of this release, and

we will not necessarily provide updates of our projections or other

forward-looking statements. Investors are cautioned that such

forward-looking statements are subject to many risks and uncertainties,

and may differ materially or adversely from our actual results or future

events. Important risk factors that could have material or adverse

effects on our results include practical operational challenges

following our recent restructuring and change of business model, the

potential loss of key technical and business personnel, uncertainty

about the adoption and market acceptance of our technology offerings by

current and potential customers and licensees, our inability to predict

or ensure that third parties will license our technologies or use our

technologies to generate royalties, difficulties in developing our

technologies in a timely and cost effective manner, patents and other

intellectual property rights, and other risk factors. We urge investors

to review our filings with the Securities and Exchange Commission,

including our most recent reports on Forms 10-K, 10-Q and 8-K, which

describe these and other important risk factors that could have an

adverse effect on our results. We undertake no obligation to revise or

update publicly any forward-looking statement for any reason.

Transmeta and LongRun2 are trademarks of Transmeta Corporation. All

other product or service names mentioned herein are the trademarks of

their respective owners.

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