8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

     CURRENT REPORT
Pursuant To Section 13 Or 15(d) of
The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 14, 2005

ULTRA CLEAN HOLDINGS, INC.(Exact Name of Registrant as Specified in Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

000-50646	61-1430858
(Commission File Number)	(IRS Employer Identification No.)
150 INDEPENDENCE DRIVE,
MENLO PARK, CA	94025
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 323-4100

n/a
(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Compensation of the Board of Directors

On April 15, 2005, the Nominating and Corporate Governance Committee of the Board of Directors of Ultra Clean Holdings, Inc. (“Ultra Clean”) revised Ultra Clean’s non-employee director compensation policy so that continuing directors will receive annual option grants in addition to the initial option grants under the previous policy.

Under the revised policy, each non-employee director will continue to be paid a $20,000 annual retainer fee, a $5,000 annual fee per committee on which the director serves and a $5,000 annual fee per committee on which the director serves as the chairperson. Upon joining Ultra Clean’s Board of Directors, each non-employee director will be granted an option to purchase 15,000 shares of Ultra Clean’s common stock that will vest over four years. In addition, immediately following each annual stockholders’ meeting, each continuing non-employee director will be granted an option to purchase 7,500 shares (or, if the director has served less than a year, a smaller pro rata number of shares) of Ultra Clean’s common stock that will also vest over four years. Each option granted to a non-employee director will have an exercise price equal to the fair market value of Ultra Clean common stock on the grant date. Two of Ultra Clean’s directors, David ibnAle and Dipanjan Deb, have waived their rights to receive cash or equity compensation for their service on Ultra Clean’s Board of Directors and its committees.

Employment Agreement with Kevin L. Griffin

On April 19, 2005, Ultra Clean entered into an employment agreement with Kevin L. Griffin, who is serving as Vice President, Chief Administrative Officer and Acting Chief Financial Officer. Under this agreement, Mr. Griffin will continue to receive a base salary of $200,000 and participate in an executive bonus plan. In the event that Mr. Griffin is terminated by Ultra Clean without cause before March 24, 2006, he will receive a cash payment equal to $20,000, 6 months of accelerated vesting of his stock options, full accelerated vesting of the restricted stock that he acquired in November 2002 and 12 months of health benefits.

Separation and Release Agreement with Former Chief Financial Officer

As previously reported on Form 8-K, Phillip A. Kagel resigned as Ultra Clean’s Chief Financial Officer on March 24, 2005. In connection with his separation of employment, Mr. Kagel’s employment agreement with Ultra Clean was terminated and Ultra Clean entered into a Separation Agreement with Mr. Kagel dated April 14, 2005, pursuant to which Ultra Clean agreed to pay Mr. Kagel seven months of salary and health benefits.

2004 Bonuses

Ultra Clean has paid annual performance bonuses for 2004 to its executive officers in the aggregate amount of $308,500. This number excludes sales commissions paid in 2004.

Item 1.02 Termination of a Material Definitive Agreement

The information set forth in Item 1.01 under the caption “Separation and Release Agreement with Former Chief Financial Officer” is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

   Exhibit 10.1: Employment Agreement with Kevin L. Griffin dated April 19, 2005.
   Exhibit 10.2: Separation Agreement with Phillip A. Kagel dated April 14, 2005.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ULTRA CLEAN HOLDINGS, INC.
Date:	April 19, 2005	By:	/s/ Clarence Granger
			Name:	Clarence Granger
			Title:	Chief Executive Officer

Exhibit Index

Exhibit Number	Description
10.1	Employment Agreement with Kevin L. Griffin dated April 19, 2005.
10.2	Separation Agreement with Phillip A. Kagel dated April 14, 2005.

EX-10.1

Exhibit 10.01

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (“Agreement”) dated as of April 19, 2005 by and among Ultra Clean Holdings, Inc., a Delaware corporation (“Parent”), Ultra Clean Technology Systems and Service, Inc. (together with Parent, the “Company”), and Kevin L. Griffin (“Employee”).

WHEREAS, Employee is currently employed by the Company;

WHEREAS, the Company and Employee entered into the Employment Agreement dated as of November 15, 2002, as amended March 2, 2004 (as amended, the “Former Employment Agreement”), the Confidentiality and Non-Disclosure Agreement dated November 15, 2002 (the “Confidentiality Agreement”) and the Indemnification Agreement dated March 1, 2004 (the “Indemnification Agreement”);

WHEREAS, the term of the Former Employment Agreement expired as of November 15, 2004;

WHEREAS, the Company has granted Employee options to purchase common stock of the Company listed on Exhibit A hereto (the “Options”), pursuant to the Company’s 2003 Stock Incentive Plan;

WHEREAS, the Company and Employee entered into a Restricted Securities Purchase Agreement dated November 26, 2002, pursuant to which the Company granted to Employee shares of common stock of the Company subject to certain vesting requirements (the “Bonus Shares”) listed on Exhibit B hereto; and

WHEREAS, Employee and the Company desire to continue Employee’s employment with the Company on the terms and conditions set forth below;

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties set forth in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1
POSITION; TERM OF AGREEMENT

Section 1.01. Position. (a) Employee shall initially serve as Vice President, Chief Administrative Officer and Acting Chief Financial Officer of the Company and report to the Chief Executive Officer. Employee shall have such duties and authority, consistent with such position, as shall be determined from time to time by the Company.

(b)  During his employment with the Company, Employee will devote substantially all of his business time to the performance of his duties under this Agreement and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict with the rendition of such services either directly or indirectly, without the prior written consent of the Company’s Board of Directors (the “Board”).

Section 1.02. Term. The term of this Agreement (the “Employment Term”) shall commence on the date hereof and end on March 24, 2006, subject to earlier termination if Employee’s employment is terminated by written notice by either party (subject to Section 3.01) or extension of the Employment Term by mutual written agreement of the parties hereto.

ARTICLE 2
COMPENSATION AND BENEFITS

Section 2.01. Base Salary. The Company shall pay Employee an initial base salary (the “Base Salary”) at the annualized rate of $200,000, payable in accordance with the payroll and personnel practices of the Company from time to time. Employee’s compensation package shall be subject to periodic review by the Company.

Section 2.02. Bonus. Employee shall be eligible to participate in an executive bonus plan in accordance with the terms and conditions of such plan as determined by the Board or the Compensation Committee.

Section 2.03. Benefits. (a) During the Employment Term, Employee shall be eligible for employee benefits (including fringe benefits, vacation and health, accident and disability insurance, and retirement plan participation) substantially similar to those benefits made available generally to similarly situated employees of the Company.

ARTICLE 3
TERMINATION OF EMPLOYMENT

Section 3.01. Benefits Upon Involuntary Termination.

(a)   In the event that Employee’s employment is terminated by the Company without Cause (as defined below) during the Employment Term, Employee shall be entitled to the following benefits (the “Severance Benefits”), subject to Employee signing and not revoking a release of claims in a form reasonably acceptable to the Company and Employee’s continued compliance with the covenants set forth in the Confidentiality Agreement:

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(i)  The Company shall make a lump sum payment in cash to Employee in an amount equal to $20,000, less applicable tax withholding.

(ii)  Employee and his dependents shall receive continuation of medical and dental benefits substantially similar to, and at the same cost to Employee of, those provided immediately prior to the date of termination (and which may be provided through COBRA) until the earlier to occur of (i) the end of the 12-month period after the date of termination and (ii) such time as Employee is covered by comparable programs of a subsequent employer.

(iii)   The portion of the Options held by Employee which would have become vested and exercisable within the six-month period following the date of termination if Employee had continued employment shall become fully vested and exercisable. Employee will have the period set forth in the applicable option agreement (which is generally three months) following the date of termination to exercise all vested options, after which time all options shall terminate in accordance with their terms.

(iv)   All unvested Bonus Shares shall become fully vested.

(v)   The Company shall pay for outplacement counseling services for Employee for up to six months following the date of termination, but in an amount not to exceed $5,000.

(b)   The foregoing benefits shall be in lieu of any severance benefits under any plans, programs, policies or practices and shall be reduced by any amounts due, or notice period required, under the WARN Act or other applicable law.

(c)   “Cause” means the occurrence of any one or more of the following:

(i)   the failure, refusal or willful neglect of Employee to perform the services required of Employee hereunder;

(ii)   the Company forming a good faith belief that Employee has engaged in fraudulent conduct in connection with the business of the Company or that Employee has committed a felony;

(iii)   Employee’s breach of any of the covenants contained in the Confidentiality Agreement; or

(iv)   the Company forming a good faith belief that Employee has committed an act of misconduct, violated the Company’s anti-discrimination policies prohibiting discrimination or harassment on the grounds of race, sex, age or any other legally prohibited basis, or

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otherwise has caused material harm to the Company’s reputation or goodwill.

Section 3.02.   At-Will Employment Status. Nothing contained in this Agreement shall interfere with the at-will employment status of Employee or with the Company’s or Employee’s right to terminate Employee’s employment with the Company at any time, with or without Cause, subject to payment of the benefits provided under Section 3.01 if applicable.

ARTICLE 4
COVENANTS AND REPRESENTATIONS

Section 4.01.    Confidentiality and Non-Disclosure Agreement. Employee agrees to comply with the obligations under the Confidentiality Agreement during and after the Employment Term.

Section 4.02.    Material Inducement; Specific Performance. If any provision of this Agreement or the Confidentiality Agreement is determined by a court of competent jurisdiction not to be enforceable in the manner set forth herein or therein, the Company and Employee agree that it is the intention of the parties that such provision should be enforceable to the maximum extent possible under applicable law and that such court shall reform such provision to make it enforceable in accordance with the intent of the parties.

Section 4.03.   Employee Representation. Employee expressly represents and warrants to the Company that Employee is not a party to any contract or agreement and is not otherwise obligated in any way, and is not subject to any rules or regulations, whether governmentally imposed or otherwise, which will or may restrict in any way Employee’s ability to fully perform Employee’s duties and responsibilities under this Agreement.

ARTICLE 5
SUCCESSORS AND ASSIGNMENTS

Section 5.01.   Assignments. Except for an assignment in the event of a change in control or an assignment to an affiliate of the Company, this Agreement shall not be assignable by the Company without the written consent of Employee. This Agreement shall not be assignable by Employee.

Section 5.02.   Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.

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ARTICLE 6
MISCELLANEOUS

Section 6.01.   Notices. Any notice required to be delivered hereunder shall be in writing and shall be addressed:

(i)	if to the Company, to: Ultra Clean Holdings, Inc. 150 Independence Drive Menlo Park, CA 94025 Fax: (650) 326-0929 Attention: Chief Executive Officer
(ii)	if to Employee, to Employee’s last known address as reflected on the books and records of the Company;

or, in each case, to such other address as such party may hereafter specify for the purpose by written notice to the other party hereto. Any such notice shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a business day in the place of receipt. Otherwise, any such notice shall be deemed not to have been received until the next succeeding business day in the place of receipt.

Section 6.02.   Dispute Resolution. (a)  Each of Employee and the Company shall have the right and option to elect (in lieu of litigation) to have any dispute or controversy arising under or in connection with this Agreement settled by arbitration, conducted before a panel of three arbitrators sitting in Santa Clara County, California, in accordance with the rules of the American Arbitration Association then in effect. Employee’s election to arbitrate, as herein provided, and the decision of the arbitrators in that proceeding, shall be binding on the Company and Employee. Judgment may be entered on the award of the arbitrator in any court having jurisdiction.

(b)   Each party shall pay its own expenses of such arbitration or litigation and all common expenses of such arbitration or litigation shall be borne by the Company. Each party to an arbitration or litigation hereunder shall be responsible for the payment of its own attorneys’ fees.

Section 6.03.   Unfunded Agreement. The obligations of the Company under this Agreement represent an unsecured, unfunded promise to pay benefits to Employee and/or Employee’s beneficiaries, and shall not entitle Employee or such beneficiaries to a preferential claim to any asset of the Company.

Section 6.04.   Non-exclusivity Of Benefits. Unless specifically provided herein, neither the provisions of this Agreement nor the benefits provided hereunder shall reduce any amounts otherwise payable, or in any way diminish Employee’s rights as an employee of the Company, whether existing now or

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hereafter, under any compensation and/or benefit plans (qualified or nonqualified), programs, policies, or practices provided by the Company, for which Employee may qualify; provided, however, that the Severance Benefits shall be in lieu of any severance benefits under any such plans, programs, policies or practices. Vested benefits or other amounts which Employee is otherwise entitled to receive under any plan, policy, practice, or program of the Company (i.e., including, but not limited to, vested benefits under any qualified or nonqualified retirement plan), at or subsequent to the date of termination of Employee’s employment shall be payable in accordance with such plan, policy, practice, or program except as expressly modified by this Agreement.

Section 6.05.   Entire Agreement. This Agreement (together with the Confidentiality Agreement) represents the entire agreement between Employee and the Company and its affiliates with respect to the matters referred to herein, and supersedes all prior discussions, negotiations, and agreements concerning such matters.

Section 6.06.   Tax Withholding. Notwithstanding anything in this Agreement to the contrary, the Company shall withhold from any amounts payable under this Agreement all federal, state, city, or other taxes as are legally required to be withheld.

Section 6.07.   Waiver Of Rights. The waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a continuing waiver or as a consent to or waiver of any subsequent breach hereof.

Section 6.08.   Amendment. This Agreement may not be modified, altered or changed except upon the express written consent of both parties.

Section 6.09.   Severability. In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Agreement, and this Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.

Section 6.10.   Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California without reference to principles of conflict of laws.

Section 6.11.   Counterparts. This Agreement may be signed in several counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were on the same instrument.

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IN WITNESS WHEREOF, the parties have executed this Agreement, to be effective as of the day and year first written above.

ULTRA CLEAN TECHNOLOGY

SYSTEMS AND SERVICE, INC.

By: /s/ Clarence Granger

    Name: Clarence Granger

    Title:   Chief Executive Officer

ULTRA CLEAN HOLDINGS, INC.

By: /s/ Clarence Granger

    Name: Clarence Granger

    Title:   Chief Executive Officer

EMPLOYEE:

/s/ Kevin L. Griffin
Kevin L. Griffin

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     Exhibit A Outstanding Options

Grant Date	Number of Shares	Exercise Price	Original Vesting Schedule
02/20/2003	125,000	$1.00	25% vested 1 year after grant date, 1/48th of
			the shares vest monthly thereafter.

     Exhibit B Bonus Shares

Grant Date	Number of Shares	Original Vesting Schedule
11/26/2002	45,500	25% vests on each anniversary after grant date.

EX-10.2

Exhibit 10.02

SEPARATION AGREEMENT

SEPARATION AGREEMENT (“Agreement”) dated as of March 24, 2005, by and between Ultra Clean Holdings, Inc., a Delaware corporation (together with its successors, the “Company”), and Phillip Kagel (“Executive”).

WHEREAS, the Company and Executive entered into an Employment Agreement dated as of October 21, 2004 (the “Employment Agreement”), a Confidentiality and Non-Disclosure Agreement (the “Confidentiality Agreement”) and an Indemnification Agreement (the “Indemnification Agreement”);

WHEREAS, Executive and the Company have agreed to terminate Executive’s employment with the Company as of the Separation Date (as defined below);

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties set forth in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1.  Separation. Effective as of March 24, 2005 (the “Separation Date”), Executive has resigned from his position as Senior Vice President and Chief Financial Officer of the Company, and from all other positions which Executive held with the Company, its subsidiaries or its affiliates, and the Company accepted such resignation as of the Separation Date.

2.  Separation Benefits. (a) Subject to this Agreement becoming effective and Executive’s compliance with the provisions of this Agreement and of the Confidentiality Agreement, and in consideration for the release set forth in Section 3 hereof, Executive shall receive the following:

(i)The Company shall pay to Executive an amount equal to $131,250 (representing seven months of Executive’s current base salary), less applicable tax withholding, which shall be payable at the Company’s option either in periodic installments over seven months following the Separation Date in accordance with the Company’s payroll practices or in a lump sum.

(ii)The Company shall pay for Executive’s continued coverage under the Company’s health plans under COBRA at the same cost to Executive as before the Separation Date until the earlier of (x) seven months following the Separation Date or (y) the date Executive becomes eligible for group health coverage with another employer.

(b) Executive understands and agrees with the following:

(i)The Company has paid Executive all accrued compensation, including accrued vacation, through the Separation Date.

(ii)All of Executive’s options to purchase stock of the Company ceased vesting on the Separation Date in accordance with their terms.

3.Release. (a) Executive acknowledges that the following release shall extend to unknown, as well as known claims, and hereby waives the application of any provision of law, including, without limitation, Section 1542 of the California Civil Code, that purports to limit the scope of a general release. Section 1542 of the California Civil Code provides:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

(b)Executive agrees to and does fully and completely release, discharge and waive for himself and for his dependents, successors, assigns, heirs, executors and administrators (and his and their legal representatives of any kind), any and all claims, complaints, causes of action or demands of whatever kind, arising in Executive’s capacity as an employee or officer of the Company, or otherwise in any capacity whatsoever, which Executive has or may have against the Company, its subsidiaries, divisions, subsidiaries, affiliates, predecessors and successors and all their officers, directors, employees, agents, counsel and other representatives by reason of any event, matter, cause or thing which has occurred prior to the Effective Date (hereinafter “Executive Claims”). Executive understands and accepts that this Agreement specifically covers, but is not limited to, any and all Executive Claims that Executive has or may have against the Company relating in any way to his employment arrangements, or to compensation, or to his equity interests in the Company, or to any other terms, conditions or circumstances of his former employment with the Company, and to the resignation of such employment, whether for severance or based on statutory or common law claims for employment discrimination (including discrimination on the basis of sex, age, religion or disability, including specifically any claims under the Age Discrimination in Employment Act (the “ADEA”), Title VII of the Civil Rights Act of 1964, as amended or the Americans with Disabilities Act of 1990), wrongful discharge, breach of contract or any other theory, whether legal or equitable. Notwithstanding the foregoing, Executive does not waive any rights to which he may be entitled (A) to seek to enforce this Agreement, or (B) to seek indemnification with respect to liability incurred by Executive in his capacity as an officer or former employee of the Company in accordance with the bylaws of the Company and the Indemnification Agreement.

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(c)Executive further understands and acknowledges that:

(i)The release provided for in this Section, including claims under the ADEA, is in exchange for the additional consideration provided for in this Agreement to which Executive was not heretofore entitled;

(ii)Executive has been advised by the Company to consult with legal counsel prior to executing this Agreement and the release provided for in this Section, has had an opportunity to consult with and to be advised by legal counsel of his choice, fully understands the terms of this Agreement, and enters into this Agreement freely, voluntarily and intending to be bound;

(iii)Executive has been given a period of 21 days to review and consider the terms of this Agreement and the release contained herein, and Executive may use as much of the 21-day period as Executive desires; and

(iv)Executive may, within seven days after execution, revoke this Agreement (other than Section 1) by delivering a written notice of revocation to the Chief Executive Officer of the Company. For such revocation to be effective, written notice must be actually received by the Chief Executive Officer of the Company no later than the close of business on the seventh day after Executive executes the Agreement. If Executive exercises his right to revoke this Agreement, the Company shall have no obligation to satisfy the terms or provide any payments or benefits to Executive as set forth in this Agreement.

4.  Confidentiality; No Disparagement. (a) Except as otherwise required by law, Executive agrees not to cause or participate in the publication to anyone about the terms and conditions of this Agreement. This provision shall not prevent Executive from disclosing such information to his legal counsel and accountants in order to obtain professional advice or to his spouse; provided that they are advised as to and agree to observe the confidentiality of such information.

(b)Executive agrees that he shall not make negative statements or representations, or otherwise communicate negatively, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage or be damaging to the Company, its subsidiaries, affiliates, successors or their officers, directors, employees, business or reputation.

(c)The Company agrees that it shall not, and shall not authorize any officer or director of the Company to, make negative statements or representations, or otherwise communicate negatively, directly or indirectly, in writing, orally, or otherwise, concerning Executive’s performance of his duties while employed by the Company or his resignation of employment with the Company, or in connection therewith take any action which may, directly or

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indirectly, disparage or be damaging to Executive or his business or reputation. Executive understands and acknowledges that the Company’s disclosure of this Agreement and its terms pursuant to its securities law obligations shall in no way violate this Agreement.

(d)Executive acknowledges and agrees that the Company has provided notice to Executive of, and that the Company has issued or will issue, a press release in substantially the form provided to Executive, and that nothing in such press release violates any provision of this Agreement.

5.   Proprietary Information. Executive acknowledges and agrees that he will continue to be bound by the Confidentiality Agreement, including with respect to the following provisions:

(a)Executive agrees, for a period of 12 months after the Separation Date, not to solicit or attempt to solicit any employee of the Company to discontinue working for the Company or to provide service to any other company in competition with the Company without the Company’s written consent.

(b)Executive agrees, for a period of 12 months after the Separation Date, not to solicit or attempt to solicit any customer of the Company to (i) purchase goods or services from any person or entity whose goods or services could be used as substitutes for those of the Company or (ii) discontinue purchasing goods and/or services from the Company.

6.   Cooperation.  Executive agrees to provide assistance to and shall cooperate with the Company upon its reasonable request with respect to matters and specifically with respect to any claim, suit, demand, regulatory investigation or other matter relating to Executive’s employment or service as an officer of the Company. The Company agrees and acknowledges that it shall, to the maximum extent possible under then prevailing circumstances, coordinate (or cause an affiliate to coordinate) any such request with Executive’s other commitments and responsibilities to minimize the degree to which such request interferes with such commitments and responsibilities.

7.   Arbitration and Remedies. (a) Each of Executive and the Company shall have the right and option to elect (in lieu of litigation) to have any dispute or controversy arising under or in connection with this Agreement settled by arbitration, conducted before a panel of three arbitrators sitting in Santa Clara County, California, in accordance with the rules of the American Arbitration Association then in effect. The election to arbitrate, as herein provided, and the decision of the arbitrators in that proceeding, shall be binding on the Company and Executive. Judgment may be entered on the award of the arbitrator in any court having jurisdiction.

(b)Each party shall pay its own expenses of such arbitration or litigation and all common expenses of such arbitration or litigation shall be borne by the Company. Each party to an arbitration or litigation hereunder shall be responsible for the payment of its own attorneys' fees.

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(c)Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Sections 4, 5 and 6 would be inadequate and, in recognition of this fact, Executive agrees that, in the event of a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available.

(d) It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in Sections 4, 5 and 6 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction or arbitrator that any restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply to the maximum extent as such court or arbitrator determines or indicates to be enforceable. If any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.

8.   Tax Withholding. Notwithstanding anything in this Agreement to the contrary, the Company shall be entitled to withhold from any amounts payable under this Agreement, and shall pay over such amounts to the appropriate government agency, all federal, state, city, or other taxes as are legally required to be withheld.

9.   Entire Agreement; Amendment. This Agreement contains the entire understanding of the parties with respect to the termination of Executive’s employment and supercedes all other agreements between the Company and Executive related to Executive’s severance or termination rights (including but not limited to the Employment Agreement). Notwithstanding the foregoing, the Confidentiality Agreement and the Indemnification Agreement shall remain in effect. This Agreement may not be altered, modified or amended except by a written agreement signed by both parties hereto.

10.   Effectiveness. Executive has been advised, and understands, that (i) he has 21 days to consider this Agreement (which period shall be considered waived should Executive execute this letter prior to the lapse of such 21 days), (ii) Executive can revoke this Agreement (other than Section 1 hereof) during a period of 7 days following its execution and (iii) this Agreement (other than Section 1 hereof, which is effective as of the Separation Date) will become effective and enforceable upon the expiration of such 7-day revocation period (the “Effective Date”).

11.   No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

12.   Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the

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validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected thereby.

13.   Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, representatives, successors and assigns. This Agreement shall not be assignable by Executive and shall be assignable by the Company only to a direct or indirect wholly owned subsidiary of the Company or to a successor of the Company.

14.   Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

15.   Counterparts. This Agreement may be signed in several counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were on the same instrument.

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IN WITNESS WHEREOF, the Company and Executive have executed this Agreement as of the date set forth above.

ULTRA CLEAN HOLDINGS, INC.

By: /s/ Clarence Granger

Name: Clarence Granger

Title:    Chief Executive Officer

EXECUTIVE:

/s/ Phillip Kagel
Phillip Kagel

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