**Exhibit 10.9****CHAIR AND BOARD SERVICE 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 “Chair”) and Pixelworks, Inc., an Oregoncorporation (the “Company”).R E C I T A L S     A. Chair has served as both the CEO and Chair of the Company since its founding. Effective asof December 31, 2006, he has resigned as CEO, and will thereafter no longer be an employee of theCompany.     B. The Company and Chair wish to confirm the fees and benefits the Company will provide to theChair, while he continues in that office.AGREEMENT     For good and valuable consideration the receipt and sufficiency of which the partiesacknowledge, the parties agree as follows:     1. Title. Chair’s formal title will be Chairman of the Board of Directors.     2. Tenure. Chair will serve as Chairman of the Board of Directors at the pleasure ofthe Board, contingent upon his continued status as a member of the Board of Directors.     3. Fee and Options. Chair will receive, for his services as Chair and as a member ofthe Board of Directors, an annual fee of Seventy-Five Thousand Dollars ($75,000) (or such higheramount as may be approved from time-to-time by the Board), payable quarterly. Chair will alsoreceive annual awards of equity compensation (options or otherwise) in conformance with policiesgenerally applicable to the Company’s Board of Directors.     4. Medical Benefits. During his service on the Board of Directors, Company will makecomprehensive health insurance coverage available to Chair and Chair’s family, equivalent to thatprovided to its senior executives in the United States, either through its existing plan or bysecuring amendments, extensions, or parallel instantiations of that plan or that will permit it tobe applicable to Chair. Chair will pay the actual premium cost of coverage he wishes to obtainunder this paragraph.     5. Electronic Communications. During his service on the Board of Directors, Companywill supply Chair with a laptop, PDA/Blackberry or equivalent, e-mail service, and IT support forall of the foregoing, on a basis equivalent to, and on equipment as current as, that providedgenerally to senior officers of the Company. Upon his departure from the Board, and subject onlyto compliance with the Company’s policies concerning confidentiality applicable to board membersgenerally, Chair will be entitled to acquire the aforesaid equipment at a price to be mutuallydetermined, but not to exceed the depreciated value at which the equipment is being maintained onCompany’s books.**Page 1—****Chair and Board Service Agreement**(Allen Alley)
 

 
     6. Travel, Expenses. When Chair travels or incurs other expenses on Company’s behalfat the request or with the pre-approval of the Company’s CEO, he will be reimbursed for hisexpenses of doing so in accordance with Company’s standard expense, travel, and accommodationpolices as applicable to Company’s officers generally.     7. Transitional Matters.          (a) Transitional Fee Supplement. To facilitate the transition of the Company’sleadership to an interim CEO and ultimately to a new permanent CEO, the Board recognizes it mayneed Chair’s services in 2007 at a level disproportionate to what is ultimately expected insubsequent years. Accordingly, the total fee payable for Chair’s services in 2007 will besupplemented by an additional Twenty-Five Thousand Dollars ($25,000). The total fee will remainpayable on a quarterly basis.          (b) Option Acknowledgement. Chair’s service as Chairman of the Board of Directorsrepresents a continuation of his board service, and not a new role. Accordingly, he will notreceive any initial service options under standard board policies. However, if re-elected to theBoard in 2007, Chair will be entitled to receive options issuable upon his re-election, subject tosuch conditions as apply generally to outside (non-employee) board members upon their re-electionto the Board.     8. 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 under the rules andauspices of the American Arbitration Association. The arbitrator may grant injunctions or otherrelief in such dispute or controversy. The decision of the arbitrator shall be final, conclusiveand binding on the parties to the arbitration. Judgment may be entered on the arbitrator’sdecision in any court 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. Chair 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.     9. Miscellaneous Provisions.          (a) 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 Chair and byan authorized officer of the Company (other than the Chair). No waiver by either party of anybreach of, or of compliance with, any condition or provision of this Agreement by the other partyshall be considered a waiver of any other condition or provision or of the same condition orprovision at another time.**Page 2—**Chair and Board Service Agreement****(Allen Alley)**
 

 
          (b) Integration. This Agreement, the Indemnity Agreement in place between Chair andCompany, and any outstanding stock option agreements represent the entire agreement andunderstanding between Chair and Company with respect to his service as a non-employee member of theBoard of Directors, provided that, for clarification purposes, this Agreement shall notaffect any agreements between the Company and Chair regarding intellectual property matters orconfidential information of the Company.          (c) 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.          (d) 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.          (e) Withholding Taxes. Payments made pursuant to this Agreement shall, if required bylaw, be subject to withholding of applicable taxes.          (f) 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.******