Exhibit 10.1

 

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Fabrinet USA, Inc.

3736 Fallon Road, #428

Dublin, CA 94568

November 5, 2015

 

Mr. Hong Q. Hou 11735 Sky Valley Way NE Albuquerque, NM 87111

Dear Hong,

We are pleased to extend an offer of employment to you, for the position of
Executive Vice President, Chief Technical Officer, for Fabrinet USA, Inc.
(“FUSA” or the “Company”). You will report to Mr. David T. Mitchell, Chief
Executive Officer (CEO) of Fabrinet; and your anticipated start date will be the
beginning of 2016.

Your duties generally will consist of those associated with managing and
developing advanced technical and engineering processes for the Company and its
affiliates. You will devote substantially all of your business time and efforts
to the performance of those duties and use your best efforts in such endeavors.
Acceptance of this offer constitutes your representation that your execution of
this agreement and performance of the requirements of this position will not be
in violation of any other agreement to which you are a party, including but not
limited to any current non-solicit, non-disclosure or confidentiality
agreements.

Your annual base salary will be $475,000.00, to be paid on a semi-monthly basis
on or about the 15th and 30th of each month in accordance with FUSA’s payroll
policy, subject to applicable U.S. tax withholdings. Your base salary will be
subject to review and adjustment by the Company from time to time, in its sole
discretion. Subject to the Board’s approval, you will be eligible to participate
in Fabrinet’s Executive Incentive Plan, with a target bonus of eighty percent
(80%) of your base salary. Any target bonus, or portion thereof, will be paid as
soon as practicable after the Compensation Committee of the Board of Directors
determines that the target bonus (or relevant portion thereof) has been earned,
but in no event shall any such target bonus be paid later than sixty (60) day
following the applicable target bonus performance period.

Additionally, you will be eligible to participate in FUSA’s Employee Benefits
Plan, which includes two hundred forty (240) hours paid time off (PTO), health
care insurance (medical, dental & vision for you and your eligible dependents),
a 401k plan, and group term life insurance. Reasonable business-related travel
and other expenses will be reimbursable via monthly expense reporting in
accordance with the Company’s policies and procedures, but in no event will any
reimbursement occur later than the fifteenth (15th) day of the third month
following the later of (i) the close of the Company’s fiscal year in which such
expenses are incurred or (ii) the calendar year in which such expenses are
incurred. You will be eligible to receive a car allowance of $1,000 per month,
provided you are an employee of FUSA on the date the car allowance is paid to
you each month. The Company may modify or terminate its benefits programs and
arrangements from time to time as necessary or appropriate. The Company has the
right to withhold from any payments or benefits under this letter all applicable
federal, state and local taxes required to be withheld and any other required
payroll deductions.

 

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Upon commencement of your employment we will recommend to the Board of Directors
of Fabrinet, the parent company of FUSA, that you be awarded a long-term
incentive equity award with a compensation value of $850,000 of Restricted Share
Units (“RSUs”) covering ordinary shares of Fabrinet, in accordance with the
terms of the Fabrinet 2010 Performance Incentive Plan (the “Plan”) and
Fabrinet’s standard form of restricted share units agreement under the Plan.
This award is subject to Board approval, including the number of RSUs granted.
RSUs granted under the Plan generally will vest over a four (4) year period as
follows: 25% of the RSUs subject to the grant shall vest on the anniversary of
the vesting commencement date for each of the next four (4) years. Vesting is
conditioned upon your continued service to FUSA on each vesting date.

This offer is not considered a contract guaranteeing employment for any specific
duration. Employment with FUSA is on an at-will basis. Thus, you are free to
terminate your employment for any reason at any time with or without prior
notice. Similarly, FUSA may terminate the employment relationship with or
without cause or notice. However, in the event your employment is terminated: 1)
by FUSA without good cause; 2) by you for good reason; you will (A) be eligible
to receive a lump sum payment payable on the sixtieth (60) day following your
termination date equal to the sum of (i) twelve (12) months of your then present
base salary, and (ii) any earned but unpaid bonus as of the date of your
termination of employment; (B) be eligible to receive a lump sum payment payable
on the sixtieth (60) day following your termination date equal to two times your
cost of COBRA coverage for twelve months under the FUSA health plans then in
effect for you and your covered dependents; and (C) become 100% vested
immediately prior to your termination date in any outstanding stock options,
restricted stock, restricted stock units, stock appreciation rights, phantom
stock or other equity based awards granted to you by FUSA, which have not
previously fully vested.

In the event your employment is terminated by you on account of your retirement,
you will be eligible to receive (1) a lump sum payment payable on the sixtieth
(60) day following your termination date equal to the product of one month’s
base salary multiplied by the total number of full and fractional years of your
employment with FUSA as of your retirement date, and (2) all of the payments and
benefits described in subsection (B) of the preceding paragraph.

Any payments or benefits due to you under the preceding two paragraphs shall be
conditioned upon your execution of a general release of claims in such form as
provided by FUSA that becomes irrevocable within 60 days of your termination
date. If the foregoing release is executed and delivered and no longer subject
to revocation as provided in the preceding sentence, then such payments or
benefits shall be made or commence upon the sixtieth (60) day following your
termination date. The first such cash payment shall include payment of all
amounts that otherwise would have been due prior thereto under the terms of your
offer letter had such payments commenced immediately upon your termination date,
and any payments made thereafter shall continue as provided herein. The delayed
payments or benefits shall in any event expire at the time such benefits would
have expired had such benefits commenced immediately following your termination
date.

Anything in this offer letter to the contrary notwithstanding, all payments
required to be made by FUSA hereunder to you or your estate or beneficiaries
shall be subject to the withholding of such amounts relating to taxes as FUSA
may reasonably determine it should withhold pursuant to any applicable law or
regulation. In lieu of withholding such amounts, in whole or in part, FUSA may,
in its sole discretion, accept other provisions for payment of taxes and
withholding as required by law, provided it is satisfied that all requirements
of law affecting its responsibilities to withhold have been satisfied.

 

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For purposes of this offer letter, “good cause” means (i) an act of dishonesty
made by you in connection with your responsibilities as an employee; (ii) your
conviction of or plea of nolo contendere to a felony, or any crime involving
fraud, embezzlement or any other act of moral turpitude; (iii) your gross
misconduct; (iv) your unauthorized use or disclosure of any proprietary
information or trade secrets of the Company or any other party to whom you owe
an obligation of nondisclosure as a result of your relationship with the
Company; (v) your willful breach of any obligations under any written agreement
or covenant with the Company; or (vi) your continued failure to perform your
employment duties after you have received a written demand of performance from
the Company which specifically sets forth the factual basis for the Company’s
belief that you have not substantially performed your duties and have failed to
cure such nonperformance to the Company’s satisfaction within thirty (30) days
after receipt of such notice.

For purposes of this offer letter, “good reason” means the occurrence of any of
the following events, without your consent: (i) a material diminution in your
base compensation; (ii) a material diminution in your authority, duties, or
responsibilities; (iii) a material change in the geographic location at which
you must perform the services for the Company; or (iv) any other action or
inaction that constitutes a material breach by the Company of any written
agreement or covenant with the Company. Good reason shall not be deemed to exist
unless your termination of employment for good reason occurs within two years
following the initial existence of one of the conditions specified in clauses
(i) through (iv) above, you provide the Company with written notice of the
existence of such condition within 90 days after the initial existence of the
condition, and the Company fails to remedy the condition within 30 days after
its receipt of such notice.

For purposes of this offer letter, “retirement” means your voluntary termination
of employment (a) on or after attainment of age 65, and (b) a successor to your
position assumes your position that is satisfactory to the Company’s board of
directors.

Notwithstanding anything to the contrary in this offer letter, no Deferred
Compensation Separation Benefits (as defined below) will be considered due or
payable until you have incurred a “separation from service” within the meaning
of Section 409A of the Internal Revenue Code of 1986, as amended, and the final
regulations and any guidance promulgated there under (together, “Section 409A”).

In addition, if FUSA, or its affiliates is a public company with its securities
listed on a stock exchange at the time of an involuntary termination of your
employment, and at the time of such termination it is determined you are a
“specified employee” within the meaning of Section 409A, the amounts payable to
you, pursuant to this letter, when considered together with any other severance
payments or separation benefits that are considered deferred compensation under
Section 409A (together, the “Deferred Compensation Separation Benefits”) that
are payable within the first six (6) months following your termination of
employment, will become payable on the first payroll date that occurs on or
after the date six (6) months and one (1) day following the date of your
termination of employment. Any amount paid under this letter that satisfies the
requirements of the “short-term deferral” rule set forth in
Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred
Compensation Separation Benefits for purposes of this paragraph. In addition,
any amount paid under this letter that qualifies as a payment made as a result
of an involuntary separation from

 

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service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that
does not exceed the specified limit in Section 1.409A-1(b)(9)(iii)(A) of the
Treasury Regulations will not constitute Deferred Compensation Separation
Benefits for purposes of this paragraph.

Each payment and benefit payable under this letter is intended to constitute a
separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations. The foregoing provisions are intended to comply with the
requirements of Section 409A such that none of the payments and benefits to be
provided hereunder will be subject to the additional tax imposed under
Section 409A, and any ambiguities herein will be interpreted to so comply. In no
event will the Company reimburse you for any taxes that may be imposed on you
under Section 409A or any other provision of the Code with respect to any
payments or benefits you may receive from the Company under the terms of this
letter or under any other agreement or arrangement. The parties to this letter
agree to work together in good faith to consider amendments to this letter, if
required, and to take such reasonable actions, which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to you under Section 409A.

During the term of your employment and for a one-year period immediately
following the termination of your employment, you shall not, without FUSA’s
prior written consent:

(i) solicit or encourage to leave the employment or other service of FUSA,
Fabrinet (Cayman) or the affiliates of either, any employee or independent
contractor thereof or hire (on behalf of yourself or any other person or entity)
any employee or independent contractor who has left the employment or other
service of FUSA, Fabrinet (Cayman) or the affiliates of either within the
one-year period which follows the termination of such employee’s or independent
contractor’s employment or other service with FUSA, Fabrinet (Cayman) and the
affiliates of either; or

(ii) whether for your own account or for the account of any other person, firm,
corporation or other business organization, intentionally interfere with FUSA’s,
Fabrinet (Cayman)’s or any of their affiliates’ relationship with, or endeavor
to entice away from FUSA, Fabrinet (Cayman) or the affiliates of either, any
person who during the term of your employment or the one-year period following
the expiration of the term of your employment is or was a customer or client of
FUSA, Fabrinet (Cayman) or the affiliates of either.

Prior to your start date we will provide additional information about general
employment conditions including Company policies, benefits programs, and
completion of employment forms. To fulfill federal identification requirements,
you will need to provide documentation to support your identity and eligibility
to work in the United States. The types of acceptable documentation are listed
on Form I-9 of the U.S. Citizenship and Immigration Services. Also, please be
advised that it is the policy of FUSA to maintain a workplace that is free of
drugs and alcohol.

Should you have questions or require additional information about any benefits,
terms or conditions of your employment, please do not hesitate to contact Ms. Na
Yang, Fabrinet’s Global HR Director by phone at (408) 813-1479 or email at
nay@fabrinet.com.

If you are in agreement with the provisions of this letter detailing the initial
terms of your employment with FUSA, please indicate your acceptance by signing
below and identifying your intended start date.

 

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We look forward to you joining our organization.

Sincerely,

 

        /s/ Toh-Seng Ng

Toh-Seng Ng Chief Financial Officer Fabrinet USA, Inc.

***     ***     ***

I accept the offer of employment with FUSA under the terms described in this
letter. I acknowledge that this letter is the complete agreement concerning my
employment and supersedes all prior or concurrent agreements and representations
and may not be modified in any way except in a writing executed by an authorized
agent of FUSA.

 

        /s/ Hong Hou

Hong Hou

 

        November 6, 2015

Date

 

        January 4, 2016

Start Date

 

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