SiliconBeat

Bryant Riley, who filed a shareholder lawsuit against Transmeta in January and said in May he intended to mount a proxy fight at the company’s next annual meeting to have himself and a cohort nominated to its board, will now be nominated to the board by the company itself, according to an agreement announced Tuesday.

Transmeta also agreed to increase its board size from seven to nine directors, and to immediately name to it J. Michael Gullard, who serves on the board of directors at Alliance Semiconductor along with Riley and Melvin Keating, whom Riley had originally nominated along with himself to the Transmeta board.

Riley also agreed to acquire no more than 13 percent of Transmeta’s stock until at least the completion of the company’s shareholder meeting in 2010 and to support the company’s own slate of director nominees.

Riley, whose Riley Investment Management controls 1.36 million shares or 11.2 percent of Santa
Clara chip-designer Transmeta, sued the company after demanding “books and records” from
it to investigate “potential wrongdoing, mismanagement, waste of corporate assets and breaches of fiduciary duties” by members of Transmeta’s board. Riley was particularLy incensed by a $10 million bonus the company said it would pay its general counsel “simply for doing his job and settling an intellectual property lawsuit against Intel ten months after it was filed, and likely settling for less money than was reasonable due to the incentive to settle,” according to an SEC filing.

The same day it filed its law suit, RIM offered to buy the rest of Transmeta’s stock for $15.50 a share, an offer that company refused about a month later.

As part of the settlement announced Tuesday Riley agreed to drop the law suit, with both sides
agreeing to cover their own legal costs.

Transmeta shares rose 50 cents, or 3.8 percent, to $13.61 Wednesday.