**Exhibit 10.10****CEO TRANSITION AGREEMENT**     This Agreement (the “Agreement”) is made and entered into effective as of December 12, 2006(the “Effective Date”), by and between Allen Alley (the “Executive”) and Pixelworks, Inc., anOregon corporation (the “Company”).R E C I T A L S     A. Executive has elected to step down as the Company’s CEO, remaining on the Company’s Boardof Directors as Chair, effective December 31, 2006 (the “Employment End Date”). As of January 1,2007, Executive will no longer be an employee of the Company.     B. The Company and Executive wish to confirm certain transition agreements between them, andenter into this Agreement for that purpose.AGREEMENT     For good and valuable consideration the receipt and sufficiency of which the partiesacknowledge, the parties agree as follows:     1. Confirmation of Resignation. Executive tenders his resignation as CEO of, and asan employee of, the Company effective as of the Employment End Date. The Company acceptsExecutive’s resignation and, accordingly, Executive’s employment with the Company shall terminateas of the Employment End Date.     2. Public Announcement. Executive and Company shall coordinate the publicannouncement of his resignation as CEO, to be issued December 13, 2006 before market open.     3. Recognition of Amounts Due. On the Employment End Date, Company shall payexecutive the following amounts:          (a) Pay and Bonus Accrued. Executive shall receive all base salary and bonusesaccrued and earned through the Employment End Date. Settlement of bonuses due may be delayed to adate not later than the date on which 2006 executive bonuses are otherwise paid to seniorexecutives of the Company.          (b) Medical Severance Benefits. If Executive is eligible for and properly electsCOBRA continuation of his Company-provided group health benefits, Company shall pay the premiumsfor such continuation coverage for up to twelve (12) months following the Employment End Date.          (c) Accrued Vacation; Expenses. The Company shall pay the Executive all of theExecutive’s accrued and unused vacation through the Termination Date; and following submission ofproper expense reports by the Executive, the Company shall reimburse the Executive for all expensesreasonably and necessarily incurred by the Executive in connection with the business of the Companyprior to the Employment End Date. These payments shall be made promptly upon termination andwithin the period of time mandated by law.**Page 1 — CEO****Transition Agreement****(Allen Alley)**
 

 
     4. Founder Transition Benefits. In special recognition of Executive’s status as thefounding CEO of the Company, Company further provides these benefits. As a condition of receivingthese benefits, Executive agrees to execute on or after December 31, 2006 and within the timereasonably provided by the Company, and not to thereafter revoke, a general release of claims in aform both reasonable and materially standard to the Company, provided that it shall not release hisrights under his option agreements, or agreements signed essentially contemporaneously herewith andgoverning his service on the Board of Directors, or his rights under his 2006 Indemnity Agreementwith the Company.          (a) Furnishings. Company will provide Executive with office equipment and furnishingssuitable to equip one executive office. Executive shall be entitled to select such furnishings andequipment from furnishings previously used by Company, and identified by Company as surplus.Company shall arrange for their delivery to, and installation in, an office location selected byExecutive, provided the location is within fifty miles of the Company’s offices located inTualatin, Oregon.          (b) PixelStone. Company will use good faith and commercially reasonable efforts toprotect its signature sculpture known in the Company as the “PixelStone,” and if at any time theCompany no longer wishes to keep the “PixelStone” on public display at its Company headquarterswherever those may then be located (or takes it off public display at its Company headquarters anddoes not return it to display within one year), the Company shall arrange at its expense to deliverit safely to Executive with a certificate passing title of it to Executive, and thereafterExecutive shall be entitled to display it as part of his personal collection of art and memorabiliawherever and however he may choose.          (c) Severance. In addition to any other benefits payable to Executive hereunder,Company shall pay Executive six annual installments of $51,000 each, due on the last day of eachyear, with the first such payment due December 31, 2006 and the last due December 31, 2011. Thedue date of all such payments shall accelerate, and any payments remaining then unpaid shall beimmediately due and payable, on the date Executive ceases to serve as a member of the Board ofDirectors if: 1) termination of his service was not at his choice, as expressed in writing to theCompany, or 2) though at his choice, his resignation followed within ninety days and cited as causeat least one of the following events: (i) He is removed as Chairman of the Board of Directors bythe Board, or is not re-elected to that office except by his own choice not to stand for election;(ii) the Company enters into a transaction in which a condition is his departure from the Board;(iii) the Company enters into a transaction in which a condition is the replacement or removal of amajority of the Board, whether or not he is called out for replacement or removal; (v) the Companyenters into or experiences any transaction or proceeding as a consequence of which effectivecontrol of the Company no longer lies with the Company’s Board of Directors, including withoutlimitation a merger or consolidation with another company; stock sale or formation of a controlgroup as a result of which voting control of 50% or more of the Company’s voting securities is inthe hands of a single entity or group; bankruptcy, assignment for benefit of creditors, orliquidation of the Company, or any other proceeding with like effect.     5. Stock Options. Company and Executive acknowledge that Executive’s stock optionsremain governed by the terms and conditions of the stock option grants and stock optionplan pursuant to which the options were issued and that, pursuant thereto because Executivewill**Page 2 — CEO****Transition Agreement****(Allen Alley)**
 

 
continue to serve on the Company’s Board of Directors, Executive’s stock options from Companywill continue to vest in accordance with their terms, and remain exercisable through their fullterm expiration dates (except as that date may later be shortened through Executive’s departurefrom the Board of Directors).     6. Arbitration.          (a) Any dispute or controversy arising out of, relating to, or in connection with thisAgreement, or the interpretation, validity, construction, performance, breach, or terminationthereof, shall be settled by binding arbitration to be held in Portland, Oregon in accordance withthe National Rules for the Resolution of Employment Disputes then in effect of the AmericanArbitration Association (the “Rules”). The arbitrator may grant injunctions or other relief insuch dispute or controversy. The decision of the arbitrator shall be final, conclusive and bindingon the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in anycourt having jurisdiction.          (b) The arbitrator(s) shall apply Oregon law to the merits of any dispute or claim, withoutreference to conflicts of law rules. The arbitration proceedings shall be governed by federalarbitration law and by the Rules, without reference to state arbitration law. Executive herebyconsents to the personal jurisdiction of the state and federal courts located in Oregon for anyaction or proceeding arising from or relating to this Agreement or relating to any arbitration inwhich the parties are participants.     7. Miscellaneous Provisions.          (a) No Duty to Mitigate. The Executive shall not be required to mitigate the amountof any payment contemplated by this Agreement, nor shall any such payment be reduced by anyearnings that the Executive may receive from any other source.          (b) Waiver. No provision of this Agreement may be modified, waived or dischargedunless the modification, waiver or discharge is agreed to in writing and signed by the Executiveand by an authorized officer of the Company (other than the Executive). No waiver by either partyof any breach of, or of compliance with, any condition or provision of this Agreement by the otherparty shall be considered a waiver of any other condition or provision or of the same condition orprovision at another time.          (c) Integration. This Agreement and any outstanding stock option agreements representthe entire agreement and understanding between the parties as to the subject matter herein andsupersede all prior or contemporaneous agreements, whether written or oral, with respect to thisAgreement and any stock option agreement, provided that, for clarification purposes, thisAgreement shall not affect any agreements between the Company and Executive regarding intellectualproperty matters or confidential information of the Company.          (d) Choice of Law. The validity, interpretation, construction and performance of thisAgreement shall be governed by the internal substantive laws, but not the conflicts of law rules,of the State of Oregon.**Page 3 — CEO****Transition Agreement****(Allen Alley)**
 

 
          (e) Severability. The invalidity or unenforceability of any provision or provisionsof this Agreement shall not affect the validity or enforceability of any other provision hereof,which shall remain in full force and effect.          (f) Employment Taxes. All payments made pursuant to this Agreement shall be subjectto withholding of applicable income and employment taxes.          (g) Counterparts. This Agreement may be executed in counterparts, each of which shallbe deemed an original, but both of which together will constitute one and the same instrument.     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of theCompany by its duly authorized officer, as of the day and year first above written.     *COMPANY:*PIXELWORKS, INC.