exv10w16





Exhibit 10.16









Severance Benefits for Executive Officers (as of July 24, 2008)




     Ultra Clean Holdings, Inc. (together with its subsidiary Ultra Clean Technology Systems and
Service, Inc., hereafter referred to as “Ultra Clean” or “the Company”) hereby offers the severance
benefits set forth below to specified Company executives upon certain events of termination of
their employment. This severance policy may be amended or terminated by the Company at any time,
except that following a Change of Control (as defined in the Company’s Stock Incentive Plan), the
policy may not be terminated or amended to adversely affect a participant for 12 months thereafter.



     Eligible
Executives. Executives may be eligible to receive severance benefits if (a)(i) they
are employed in the role of an “executive officer” (as defined in Rule 3b-7 under the Securities
Exchange Act of 1934) of the Company as determined by the Board of Directors or the Compensation
Committee thereof from time to time (such positions currently consisting of the Chief Executive
Officer, Chief Financial Officer, Chief Operating Officer, Senior Vice President of Engineering and
Senior Vice President of Sales), or (ii) they are employed in such other key position determined by
the Board of Directors or the Compensation Committee thereof from time to time as eligible to
receive severance benefits pursuant to this policy, and (b) they are notified in writing by the
Director of Human Resources that they are eligible to receive severance benefits pursuant to the
terms and conditions of this policy.



     Involuntary
Termination. An eligible executive qualifies for severance benefits pursuant to
this policy if Ultra Clean terminates his or her employment without Cause (as defined below) and
the executive signs and lets become effective a release of claims that he or she may hold against
Ultra Clean, its affiliated entities and the directors, officers, employees, representatives and
agents of Ultra Clean and its affiliated entities (collectively, “Ultra Clean and its Affiliates”),
in a form acceptable to Ultra Clean, including a provision that the executive will not make any
statement or take any action that would disparage or harm Ultra Clean and its Affiliates.
Executives who might otherwise be eligible for severance benefits pursuant to this policy shall not
qualify for benefits if they resign their employment or are discharged for cause. For the purpose
of this policy, “Cause” shall exist if (a) the executive is convicted of, or pleads guilty or no
contest to, a criminal offense; (b) the executive engages in any act of fraud or dishonesty; (c)
the executive breaches any agreement with Ultra Clean; (d) the executive commits any material
violation of Ultra Clean policy; or (e) executive fails, refuses or neglects to perform the
services required of the executive in his position at the Company. Nothing in this policy changes
the at-will nature of employment of each eligible executive.



     Severance
Benefits. (a) An eligible executive in the position of Chief Executive Officer who
qualifies for severance benefits pursuant to this policy shall receive the following severance
benefits:



 









 





	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Bonus and Incentive	 	Payment of	 	 
	Base
Salary Multiple	 	Compensation
Multiple	 	COBRA Costs	 	Equity Acceleration
	150% of the
executive’s
then-current annual
base salary

	 	150% of the
executive’s average
annual cash bonus
and cash incentive
compensation as
determined by the
Company over the
prior three years
(i.e. [(Year 1 +
Year 2 + Year 3) /
3] x 1.5)
	 	18 months
	 	Immediate vesting
of unvested and
outstanding Equity
Awards that would
vest within 18
months






     (b) An eligible executive in the position of Chief Financial Officer or Chief Operating
Officer who qualifies for severance benefits pursuant to this policy shall receive the following
severance benefits:



	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Bonus and Incentive	 	Payment of	 	 
	Base
Salary Multiple	 	Compensation
Multiple	 	COBRA Costs	 	Equity Acceleration
	100% of the
executive’s
then-current annual
base salary

	 	100% of the
executive’s average
annual cash bonus
and cash incentive
compensation as
determined by the
Company over the
prior three years
(i.e. [(Year 1 +
Year 2 + Year 3) /
3])
	 	12 months
	 	Immediate vesting
of unvested and
outstanding Equity
Awards that would
vest within 12
months





For the purpose of clause (a) and (b) of this paragraph, “Equity Awards” means all options to
purchase shares of Company common stock as well as any and all other stock-based awards granted to
the executive, including but not limited to stock bonus awards, restricted stock, restricted stock
units or stock appreciation rights, except for performance stock awards which remain subject to
performance criteria as of the executive’s termination date.




     (c) An eligible executive in the position of Senior Vice President of Engineering, or Senior
Vice President of Sales, any other eligible “executive officer” of the Company not eligible for
benefits under paragraphs (a) and (b) above, or any other key employee determined by the Board of
Directors or the Compensation Committee thereof as eligible to receive severance benefits pursuant
to this policy, shall receive the following severance benefits:



	 	 	 	 	 
	 	 	Bonus and Incentive	 	 
	Base Salary Multiple	 	Compensation Multiple	 	Payment of COBRA Costs
	75% of the executive’s
then-current annual
base salary

	 	50% of the executive’s
average annual cash
bonus and cash
incentive compensation
as determined by the
Company over the prior
three years (i.e.
[(Year 1 + Year 2 +
Year 3) / 3] x 0.5)
	 	9 months






 









 






     Payment
of Benefits. The foregoing severance payments (other than the COBRA costs) shall be
paid in a lump sum to the executive in cash as soon as administratively practicable after the
termination date, and, in any event, no later than two and one-half (2-1/2) months after the end of
the taxable year of the executive in which the termination date occurs. The COBRA costs shall be
paid as incurred (by subsidizing or reimbursing the premium payments) but shall end if, prior to
the end of the period of time set forth above, the executive commences alternative employment and
becomes eligible for group medical coverage.



     Section 409A.
The payments and benefits under this policy are intended to qualify for the
short-term deferral exception to Section 409A of the Internal Revenue Code described in Treasury
Regulation Section 1.409A-1(b)(4) to the maximum extent possible and, to the extent they do not so
qualify, are intended to qualify for the involuntary separation pay plan exception to Section 409A
described in Treasury Regulation Section 1.409A-1(b)(9)(iii) to the maximum extent possible. To
the extent Section 409A is applicable to this policy, notwithstanding any other provision of this
policy to the contrary, if an eligible executive is a “specified employee” within the meaning of
Section 409A on the date of termination of employment, to the extent required in order to comply
with Section 409A, amounts that would otherwise be payable under this policy during the six-month
period immediately following the termination date shall instead be paid on the first business day
after the date that is six months following the termination date.



     Miscellaneous.
This policy shall be governed by and construed in accordance with the laws of
the state of California, without reference to principles of conflict of laws. All amounts due
hereunder shall be subject to applicable tax withholding. The severance benefits paid under this
policy shall be in lieu of any severance benefits under any other Company plans, programs,
policies, agreements or practices and shall be reduced by any severance or notice period required
by any applicable federal, state or local law (including without limitation the WARN Act) in
connection with any termination of an executive’s employment. To the extent required by law, the
Company shall furnish to participants a summary plan description containing additional information.
This policy shall be assumed by any successors or assigns of the Company.