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Exhibit 10.1
 
 
 
INDEMNIFICATION AGREEMENT
 
 
This Indemnification Agreement, dated as of _________, 20___ (the “Agreement”)
is made by and between Cree, Inc., a North Carolina corporation (the “Company”)
and [_______________] (the “Indemnitee”).
 
RECITALS
 
 
WHEREAS, the Company and Indemnitee are each aware of the ongoing and
substantial risk of litigation and other claims being asserted against directors
and officers of public companies;
 
 
WHEREAS, it is vital to the success of the Company that it be able to attract
and retain highly qualified, experienced and otherwise competent directors and
officers, such as Indemnitee;
 
 
WHEREAS, Article IX of the Bylaws provides for indemnification of directors and
officers and permits the Company to enter into an agreement with any of its
directors or officers setting forth the terms and conditions pursuant to which
the Company will provide such indemnification against liability and advancement
of expenses;
 
 
WHEREAS, Indemnitee is a director or officer of the Company and his or her
willingness to serve or to continue to serve in such capacity or to take on
additional service for or on behalf of the Company is predicated, in substantial
part, upon the Company’s willingness to enter into this Agreement; and
 
 
WHEREAS, in recognition of the need to provide Indemnitee with substantial
protection against personal liability, in order to procure Indemnitee’s service
or continued service as a director or officer of the Company and to enhance
Indemnitee’s ability to serve the Company in an effective manner, and in order
to provide such protection pursuant to express contract rights (intended to be
enforceable irrespective of, among other things, any amendment to the Charter or
Bylaws, any change in the composition of the Board or any change-in-control or
business combination transaction relating to the Company), the Company wishes to
provide in this Agreement for indemnification against Indemnifiable Losses and
the advancement of Expenses (each as defined below) to Indemnitee as set forth
in this Agreement.
 
 
AGREEMENT
 
 
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
 
 

 
1.
Definitions.  The following terms have the following meanings when used in this
Agreement with initial capital letters:

 

 
(a) 
“Agreement” means this Indemnification Agreement, dated as of _________, 20___.

 
 
 
 

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(b) 
“Board” means the Board of Directors of the Company.

 

 
(c) 
“Bylaws” means the Company’s Amended and Restated Bylaws.

 

 
(d) 
“Change in Control” means:

 

 
 
 (i)    
any Person is or becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing 20% or more of the Voting Stock without the prior
approval of at least a majority of the Incumbent Directors; provided that a
“Change in Control” will not be deemed to have occurred if a Person acquires
beneficial ownership of 20% or more of the Voting Stock as a result of a
reduction in the number of shares of the Company’s Voting Stock unless and until
such Person thereafter becomes the beneficial owner of any additional shares of
Voting Stock representing 1% or more of the then-outstanding Voting Stock, other
than in an acquisition directly from the Company that is approved by a majority
of the Incumbent Directors or other than as a result of a stock dividend, stock
split or similar transaction effected by the Company in which all holders of
Voting Stock are treated equally;

 

 
 
 (ii)   
a merger or consolidation of the Company with and into another entity is
consummated, unless immediately following such transaction (1) more than 50% of
the members of the governing body of the surviving entity were Incumbent
Directors at the time of execution of the initial agreement providing for such
transaction, (2) no Person is the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of 20% or
more of the then-outstanding Voting Stock, and (3) more than 50% of the
then-outstanding Voting Stock is beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial owners
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of the
Voting Stock immediately prior to such transaction in substantially the same
proportions as their ownership immediately prior to such transaction;

 

 
 
 (iii)  
the shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company or an agreement for the sale or disposition by the
Company (in one transaction or a series of related transactions) of all or
substantially all of the Company’s assets; or

 

 
 
 (iv)  
a majority of the Directors are not Incumbent Directors.

 

 
(e) 
“Charter” means the Company’s Amended and Restated Articles of Incorporation.

 

 
(f) 
“Claim” means, except as stated below, any threatened, pending or completed
action, demand, suit or proceeding, whether civil, criminal, administrative,
arbitrative, investigative or other and whether formal or informal, including
but not limited to any investigation, inquiry, hearing or alternative dispute
resolution process.  A “Claim” may be instituted by another party, or by or in
the right of the Company or by the Indemnitee.

 
 
 
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(g) 
“Company” means Cree, Inc., a North Carolina corporation.

 

 
(h) 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

 
(i) 
“Expense Advance” means prior to the final disposition of any Indemnifiable
claim, the Company shall advance to, pay on behalf of or reimburse Indemnitee
for any and all Expenses relating to, arising out of or resulting from such
Indemnifiable Claim paid or incurred by Indemnitee.

 

 
(j) 
“Expenses” means, to the extent actually and reasonably incurred by or on behalf
of Indemnitee, the fees and expenses of one (1) law firm and all other actual
costs and expenses in connection with investigating, defending, being a witness
in or participating in (including on appeal), or preparing to investigate,
defend, be a witness in or participate in (including on appeal), any
Indemnifiable Claim or Standard of Conduct Determination (as defined in Section
5(b)).  Expenses shall include, without limitation, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone and fax charges, postage, delivery service
charges, costs associated with procurement of surety bonds or other costs
associated with the stay of a judgment and any penalty or fine.

 

 
(k) 
“Incumbent Directors” means the individuals who, as of the date hereof, are
directors of the Company and any individual becoming a director subsequent to
the date hereof whose election, nomination for election by the Company’s
shareholders or appointment was approved by the then Incumbent Directors (either
by a specific vote or by approval of the proxy statement of the Company in which
such individual is named as a nominee for director, without objection to such
nomination); provided, however, that an individual shall not be an Incumbent
Director if such individual’s election or appointment to the Board occurs as a
result of an actual or threatened election contest (as described in Rule
14a-12(c) of the Exchange Act) with respect to the election or removal of
Directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board.

 

 
(l) 
“Indemnifiable Claim” means any Claim in which Indemnitee is or is threatened to
be involved as a party, witness or otherwise by reason of the fact that he or
she is or was a director or officer of the Company, or is or was serving at the
request of the Company as a director or officer of another foreign or domestic
corporation, partnership, limited liability company, joint venture, trust,
employee benefit plan or other enterprise, or as a trustee or administrator
under any employee benefit plan of the Company or any wholly-owned subsidiary
thereof, or by reason of any action alleged to have been taken or omitted in
such capacity.

 

 
(m) 
“Indemnifiable Losses” means any and all Losses relating to, arising out of or
resulting from any Indemnifiable Claim.

 

 
(n) 
“Indemnitee” means [_______________].

 

 
(o) 
“Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the
past five years has been, retained to represent: (i) the Company or any
subsidiary or Indemnitee in any matter material to either such party, or (ii)
any other named (or as to a threatened matter, reasonably likely to be named)
party to the Indemnifiable Claim giving rise to a claim for indemnification

 
 
 
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hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall
not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee’s rights
under this Agreement.

 

 
(p) 
“Losses” means, to the extent actually and reasonably incurred by or on behalf
of Indemnitee and except as provided below, any and all Expenses, damages,
losses, liabilities, judgments and amounts paid in settlement.

 

 
(q) 
“NCBCA” means the North Carolina Business Corporation Act.

 

 
(r) 
“Objecting Group” shall have the meaning as set forth in Section 14(c) below.

 

 
(s) 
“Person” means any person (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act), other than the Company or any employee benefit plan sponsored
by the Company.

 

 
(t) 
“Standard of Conduct Determination” shall have the meaning as set forth in
Section 5(b) below.

 

 
(u) 
“Voting Stock” means securities of the Company entitled to vote generally in the
election of directors (or similar governing bodies).

 

 
2.
Indemnification Obligation.  Subject to Section 5, the Company shall indemnify
Indemnitee against all Indemnifiable Losses to the fullest extent permitted or
required by the laws of the State of North Carolina in effect on the date hereof
or as such laws may from time to time hereafter be amended to increase the scope
of such permitted indemnification; provided, that any indemnification permitted
hereunder in connection with an Indemnifiable Claim by or in the right of the
Company that is concluded without a final adjudication on the issue of liability
shall be limited to Expenses actually and reasonably incurred by Indemnitee in
connection with such Indemnifiable Claim.

 

 
Notwithstanding the foregoing, no indemnification shall be required of the
Company hereunder:

 

 
(a) 
with respect to any Claim or any part thereof arising out of acts or omissions
for which applicable law prohibits elimination of liability;

 

 
(b) 
with respect to any Claim or part thereof or Losses where a determination has
been made pursuant to Section 5(b) that the Indemnitee’s activities in question
were at the time taken known or believed by him or her to be clearly in conflict
with the best interests of the Company or Indemnitee otherwise failed to satisfy
any applicable standard of conduct under North Carolina law;

 

 
(c) 
with respect to any Claim or part thereof or Losses arising under Section 16(b)
of the Exchange Act pursuant to which Indemnitee shall be obligated to pay any
penalty, fine, settlement or judgment;

 
 
 
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(d) 
with respect to any Claim initiated by Indemnitee without the prior written
consent or authorization of the Board, provided that this exclusion shall not
apply with respect to any Claim brought by Indemnitee to enforce his or her
rights under this Agreement; or

 

 
(e) 
prior to the exhaustion of any applicable D&O Insurance, except as provided in
Section 3.

 

 
3.
Advancement of Expenses.  Prior to the final disposition of any Indemnifiable
Claim, the Company shall advance to, pay on behalf of or reimburse Indemnitee
for any and all Expenses relating to, arising out of or resulting from such
Indemnifiable Claim paid or incurred by Indemnitee.

 

 
(a) 
An Expense Advance shall be made without awaiting the results of the Claim
giving rise to the Expenses or the outcome of any further Claim to determine the
Indemnitee’s right to indemnification hereunder, and without making any
preliminary determination as to the Indemnitee’s state of mind at the time of
the activities in question. Any Expense Advance shall be subject, however, to
the condition subsequent that if, when and to the extent that any Standard of
Conduct Determination (as hereinafter defined) is made that indemnification is
not proper, the Company shall be entitled to be reimbursed by the Indemnitee
within thirty (30) days for all such amounts theretofore advanced.  The
Indemnitee hereby undertakes so to reimburse the Company, the receipt of which
unsecured and interest free undertaking is hereby accepted by the Company, as
the sole condition of advancing the Indemnitee’s Expenses pursuant to this
Section 3.  If a final determination is made that Indemnitee is entitled only to
partial indemnification, then Indemnitee shall only repay advanced Expenses
related to the portion of the Claim for which such person was not deemed
entitled to indemnification.  For the avoidance of doubt, the Indemnitee’s
execution of this Agreement constitutes the delivery of an undertaking by the
Indemnitee to repay any Expense Advance unless it is ultimately determined that
he or she is entitled to be indemnified by the Company against such Expenses in
accordance with Section 55-8-53 of the NCBCA.

 

 
(b) 
In the event that a determination is made that indemnification is not proper
with respect to a Claim, or any portion thereof, for which the Indemnitee
received an Expense Advance and Indemnitee was represented by counsel who also
represented other current and former officers and/or directors of the Company
with respect to such Claim, then the Indemnitee shall be responsible to
reimburse the Company for his or her proportionate share of Expenses advanced by
the Company with respect to such Claim.

 

 
(c) 
Indemnitee shall promptly repay, without interest, any amounts actually advanced
to Indemnitee pursuant to this Section 3 and Section 4 that, at the final
disposition of the Indemnifiable Claim to which the advance related, were in
excess of amounts paid or payable by Indemnitee in respect of Expenses relating
to, arising out of or resulting from such Indemnifiable Claim.

 

 
4.
Procedure for Indemnification and Advancement.

 

 
(a) 
Notice.  Promptly upon being served with any summons, citation, subpoena,
complaint, indictment, information, or other document relating to a Claim or
otherwise after

 
 
 
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receipt by Indemnitee of notice of the commencement of any Claim, Indemnitee
will, if a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company in writing of such service or other commencement
of the Claim; but the omission so to notify the Company will not relieve it from
any liability that it may have to Indemnitee, unless and only to the extent that
the Company did not otherwise learn of the Indemnifiable Claim or Indemnifiable
Loss and such failure results in forfeiture by the Company of substantial
defenses, rights or insurance coverage.  In addition, Indemnitee shall give the
Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee’s power.

 

 
(b) 
Written Demand.  To obtain indemnification or advancement under this Agreement,
Indemnitee shall submit to the Company a written demand therefor, including a
brief description (based upon information then available to Indemnitee) of such
Indemnifiable Claim or Indemnifiable Loss.  Indemnitee shall be entitled to
indemnification of Indemnifiable Losses or advancement of Expenses, and shall
receive payment thereof, from the Company in accordance with this Agreement
within thirty (30) calendar days after the Indemnitee has made such written
demand to the Company for indemnification or advancement, unless, in the case of
a demand for indemnification, a determination pursuant to Section 5 has been
made that Indemnitee is not entitled to indemnification under applicable
law.  The Company shall notify Indemnitee of such determination no later than
two (2) business days after it has received notice of such determination. 

 

 
(c) 
Suit to Enforce Rights.  If (i) no determination of entitlement to
indemnification shall have been made within thirty (30) calendar days after
Indemnitee has made a demand in accordance with Section 4(b), (ii) payment of
indemnification pursuant to Section 4(b) is not made within thirty (30) calendar
days after a determination has been made that Indemnitee is entitled to
indemnification, (iii) the Standard of Conduct Determination (as hereinafter
defined) indicates that Indemnitee is not entitled to indemnification under this
Agreement, or (iv) Indemnitee has not received an Expense Advance within thirty
(30) calendar days after making a demand in accordance with Section 4(a), then
Indemnitee shall have the right to enforce its rights under this Agreement by
commencing litigation in accordance with Section 16(b) seeking an initial
determination by the court or challenging any Standard of Conduct Determination
or any aspect thereof. The Company hereby consents to service of process and to
appear in any such proceeding. Any Standard of Conduct Determination not
challenged by the Indemnitee on or before the first anniversary of the date of
such Standard of Conduct Determination shall be binding on the Company and
Indemnitee. The remedy provided for in this Section 4 shall be in addition to
any other remedies available to Indemnitee in law or equity.

 

 
5.
Determination That Indemnification Is Proper.

 

 
(a) 
Successful Defense.  To the extent that Indemnitee has been wholly successful,
on the merits or otherwise, in the defense of any Indemnifiable Claim or in
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against all Indemnifiable Losses relating to, arising out of or resulting from
such Indemnifiable Claim or claim, issue or matter therein in accordance with
Section 2 and no Standard of Conduct Determination (as defined in Section 5(b))
shall be required.

 
 
 
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(b) 
Standard of Conduct Determination.  To the extent that the provisions of Section
5(a) are inapplicable to an Indemnifiable Claim that shall have been finally
disposed of, or if any Indemnifiable Claim is concluded without a final
adjudication on the issue of liability, the Company shall nevertheless indemnify
Indemnitee for Indemnifiable Losses unless a determination is made that
indemnification of Indemnitee is not proper in the circumstances because his or
her actions in question were, at the time taken, known or believed by him or her
to be clearly in conflict with the best interests of the Company or otherwise
failed to satisfy any applicable standard of conduct under North Carolina law (a
“Standard of Conduct Determination”). Any such Standard of Conduct Determination
shall be made in accordance with this paragraph.  If a Change in Control shall
not have occurred, or if a Change in Control shall have occurred but Indemnitee
shall have requested that the Standard of Conduct Determination be made pursuant
to this sentence, the Standard of Conduct Determination shall be made either (i)
by the Board by majority vote of a quorum consisting of directors not at the
time parties to the Indemnifiable Claim; (ii) if a quorum cannot be obtained
under subdivision (i), by a majority vote of a committee designated by the Board
(in which designation directors who are parties may participate), consisting
solely of two or more directors not at the time parties to the Indemnifiable
Claim; (iii) by Independent Counsel selected by the Board or its committee in
the manner prescribed by subdivision (i) or (ii); or (iv) if a quorum cannot be
obtained under subdivision (i) or a committee designated under subdivision (ii),
by a majority vote of the full Board (in which directors who are parties may
participate).  If a Change in Control shall have occurred and Indemnitee shall
not have requested that the Standard of Conduct Determination be made pursuant
to the prior sentence, the Standard of Conduct Determination shall be made by
Independent Counsel selected by Indemnitee. Any Standard of Conduct
Determination made by Independent Counsel shall be delivered in a written
opinion addressed to the Board, a copy of which shall be provided to Indemnitee.

 

 
(c) 
Independent Counsel.  If a Standard of Conduct Determination is to be made by
Independent Counsel pursuant to Section 5(b), the party who selected such
Independent Counsel shall give notice to the other party advising such party of
the identity of the Independent Counsel selected.  In either case, the Company
or the Indemnitee, as applicable, may, within five (5) business days after
receiving written notice of selection from the other, deliver to the other a
written objection to such selection; provided, however, that such objection may
be asserted only on the ground that the Independent Counsel so selected does not
satisfy the criteria set forth in the definition of “Independent Counsel” in
Section 1, and the objection shall set forth with particularity the factual
basis of such assertion.  Absent a proper and timely objection, the person or
firm so selected shall act as Independent Counsel.  If such written objection is
timely made and substantiated, (i) the Independent Counsel so selected may not
serve as Independent Counsel unless and until such objection is withdrawn or a
court has determined that such objection is without merit and (ii) the
non-objecting party may, at its option, select an alternative Independent
Counsel and give written notice to the other party advising such party of the
selection, in which case the provisions of the two immediately preceding
sentences and clause (i) of this sentence shall apply to such subsequent
selection and notice.  If applicable, the provisions of clause (ii) of the
immediately preceding sentence shall apply to successive alternative
selections.  If no Independent Counsel shall have been selected within thirty
(30) calendar days after the party who makes the selection sends the initial
notice of selection, the party who did not make the selection may petition the
courts of the State of North Carolina in accordance with Section 16(b) for
resolution of any objection which shall have been made by such party to the
other party’s

 
 
 
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selection and/or for the appointment as Independent Counsel of a person or firm
selected by the Court or by such other person as the Court shall designate.  In
all events, the Company shall pay all of the reasonable fees and expenses of the
Independent Counsel incurred in connection with making a Standard of Conduct
Determination pursuant to this Agreement.

 

 
(d) 
Cooperation.  Indemnitee shall cooperate with the person or persons making a
Standard of Conduct Determination pursuant to Section 5(b), including providing
to such person or persons, upon reasonable advance request, any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and which the person or persons
making such determination reasonably request; provided that the person or
persons making such Standard of Conduct Determination determine that Indemnitee
is entitled to indemnification hereunder, the Company shall further indemnify
Indemnitee against any and all Expenses actually and reasonably incurred by
Indemnitee in so cooperating with the person or persons making such Standard of
Conduct Determination.

 

 
(e) 
Public Policy.  Both the Company and Indemnitee acknowledge that in certain
instances, federal law or applicable public policy may prohibit the Company from
indemnifying its directors or officers under this Agreement or
otherwise.  Indemnitee understands and acknowledges that the Company has
undertaken and may be required in the future to undertake with the Securities
and Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company’s right under public
policy to indemnify Indemnitee.

 

 
6.
Contribution.  To the fullest extent permissible under applicable law, if the
indemnification provided for in this Agreement is unavailable to Indemnitee for
any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall
contribute the amount of Indemnifiable Losses incurred by Indemnitee or on his
or her behalf, in such proportion as is deemed fair and reasonable in light of
all the circumstances of the Indemnifiable Claim, in order to reflect (i) the
relative benefits received by the Company and Indemnitee as a result of the
event(s) and/or transaction(s) giving rise to such Indemnifiable Claim; and/or
(ii) the relative fault of the Company (and its directors, officers, employees
and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).  The determination of the proportion to be contributed by the
Company to Indemnitee shall be made in the same manner as a Standard of Conduct
Determination pursuant to Section 5 hereof.

 

 
7.
Non-Exclusivity.  The rights of the Indemnitee hereunder shall be in addition to
any other rights the Indemnitee may have under the Charter, the NCBCA, the
Bylaws, any other agreement, a vote of shareholders or a resolution of the Board
or otherwise.

 

 
8.
Presumptions and Burdens of Proof.  Indemnitee shall be entitled to a
presumption that he or she is entitled to indemnification, advancement of
Expenses or both under this Agreement if he or she has provided a written
request for indemnification pursuant to Section 4.  The Company shall bear the
burden of proving, by a preponderance of the evidence, that Indemnitee is not
entitled to indemnification or advancement.  For purposes of this Agreement, the
termination of any Indemnifiable Claim by judgment, order, settlement,
conviction or upon a plea of no contest or its equivalent, is not, of itself,
determinative that Indemnitee did not (a) conduct himself or herself in good
faith, (b) reasonably believe (i) in the

 
 
 
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case of conduct in his or her official capacity with the Company, that his or
her conduct was in the Company’s best interests and (ii) in all other cases,
that his or her conduct was at least not opposed to its best interests, and (c)
in the case of any Indemnifiable Claim that is a criminal Claim, had no
reasonable cause to believe that his or her conduct was unlawful.

 

 
9.
Procedure for Indemnification and Advancement.

 

 
(a) 
To the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors or officers of the Company, or for
directors or officers of another foreign or domestic corporation, partnership,
limited liability company, joint venture, trust, employee benefit plan or other
enterprise who serve in such capacity at the request of the Company, Indemnitee
shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of coverage available for any director or officer
under such policy or policies.  If, at the time of the receipt of a notice of a
claim pursuant to the terms hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies.

 

 
(b) 
Upon request by Indemnitee, the Company shall provide Indemnitee copies of any
applicable director and officer insurance maintained by the Company.  The
Company shall promptly notify Indemnitee of any material change in such D&O
Insurance coverage.

 

 
10.
Additional Capacities.  To the extent that Indemnitee is or was serving or has
agreed to serve at the request of the Company as a director or officer of
another foreign or domestic corporation, partnership, limited liability company,
joint venture, trust, employee benefit plan or other enterprise, or as a trustee
or administrator under any employee benefit plan of the Company or any
wholly-owned subsidiary thereof, the indemnification provided hereunder will be
secondary to any liability insurance and/or indemnification obligations provided
by such enterprise, and those obligations will be primary to the Company’s
obligations hereunder.

 

 
11.
Subrogation.  In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the related rights of
recovery of Indemnitee against any other persons or entities. Indemnitee, as a
condition of receiving indemnification from the Company, shall execute all
documents and do all things that the Company may deem necessary or desirable to
perfect such right of recovery, including the execution of such documents
necessary to enable the Company effectively to enforce any such recovery.

 

 
12.
No Duplication of Payments.  The Company shall not be liable under this
Agreement to make any payment in connection with any Indemnifiable Claim to the
extent that Indemnitee has otherwise received payment, whether under any
insurance policy, contract, agreement or otherwise, of the amounts otherwise
payable as indemnity hereunder.

 

 
13.
Cooperation in Defense and Settlement.  Indemnitee shall not make any admission
or effect any settlement with respect to any Indemnifiable Claim without the
Company’s written consent unless Indemnitee shall have determined to undertake
his or her own defense in such matter and has waived any rights to
indemnification by or advancement from the

 
 
 
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Company (arising under this Agreement or otherwise, except to the extent that
indemnification may be required by law). The Company shall have the authority to
settle any Indemnifiable Claim to which Indemnitee is a party so long as it
either (i) obtains Indemnitee’s consent to such settlement or (ii) such
settlement would not impose any Expense on Indemnitee and includes a complete
and unconditional release of Indemnitee from all liability on any claims that
are the subject matter of such Indemnifiable Claim. Neither Indemnitee nor the
Company will unreasonably withhold consent to the proposed
settlement.  Indemnitee acknowledges and agrees that his or her unreasonable
failure to so consent shall constitute a waiver of all of his or her rights to
indemnification and advancement hereunder. Indemnitee and the Company shall
cooperate to the extent reasonably possible with each other and with the
Company’s insurers in attempts to defend and/or settle such proceeding.

 

 
14.
Assumption of Defense.

 

 
(a) 
Except as otherwise provided in Section 14(b) below, the Company, jointly with
any other indemnifying party similarly notified, may assume Indemnitee’s defense
in any Indemnifiable Claim. After notice from the Company to Indemnitee of the
Company’s election to assume such defense, the Company will not be liable to
Indemnitee under this Agreement or otherwise for Losses subsequently incurred by
Indemnitee in connection with the defense thereof, other than reasonable costs
of investigation or as otherwise provided below. Indemnitee shall have the right
to employ counsel in such Indemnifiable Claim, but the fees and expenses of such
counsel incurred after notice from the Company of its assumption of the defense
thereof shall be at Indemnitee’s own expense unless:

 

 
 
 (i)    
The employment of counsel by Indemnitee has been authorized by the Company;

 

 
 
 (ii)   
Indemnitee shall have reasonably concluded, after consultation with counsel
selected by the Indemnitee, that there may be a conflict of interest between
Indemnitee and the Company (or another party being represented jointly with the
Company) in the conduct of the defense of such Indemnifiable Claim;

 

 
 
 (iii)  
the Company has assumed the defense of more than one (1) current and/or former
directors and/or officers, and a majority of such directors and/or officers
reasonably object to the counsel selected by the Company pursuant to Section
14(c); or

 

 
 
 (iv)  
the Company shall not have employed counsel within sixty (60) calendar days to
assume the defense of such Indemnifiable Claim.

 

 
(b) 
The Company shall not be entitled to assume the defense of Indemnitee with
respect to any Indemnifiable Claim as to which Indemnitee shall have made the
conclusions provided for in Section 14(a)(ii).

 

 
(c) 
If the Company has selected counsel to represent Indemnitee and other current
and former directors and/or officers of the Company in the defense of a Claim,
and a majority of such persons, including the Indemnitee, reasonably object to
such counsel selected by the Company pursuant to this Section 14(a) (the
“Objecting Group”), then the Objecting Group shall

 
 
 
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deliver to the Company a written notice, executed by each member of the
Objecting Group, indicating that it has made the conclusion in Section
14(a)(iii) hereof.  The Company, within ten (10) calendar days, shall provide to
the Objecting Group a list of law firms, if any, approved by the Company or
notify the Objecting Group that no such list exists.  The Objecting Group shall
be permitted to employ one (1) law firm from the approved list provided by the
Company to represent the Objecting Group or, if no list is provided within ten
(10) calendar days or the Company notifies the Objecting Group that no such list
exists, one (1) law firm of their choice, and the Expenses of such counsel shall
be at the expense of the Company.  For the avoidance of doubt, the Company shall
not be required to bear the expenses of more than one (1) law firm for all
members of the Objecting Group.

 

 
(d) 
In the event that Indemnitee notifies the Company that he or she has made the
conclusion set forth in Section 14(a)(ii), the Company shall be required to
indemnify Indemnitee against and advance or reimburse to Indemnitee all Expenses
incurred (whether incurred by Indemnitee before or after the delivery of such
notice) with respect to such Indemnifiable Claim while any of the conditions set
forth in Section 14(a)(ii) are present to the fullest extent provided hereunder
(including Expenses incurred by Indemnitee with respect to the preparation and
delivery of such notice).

 

 
(e) 
If the Company disagrees with Indemnitee’s conclusion under Section 14(a)(ii),
the Company shall, within thirty (30) calendar days after the receipt of notice
from Indemnitee, appoint Independent Counsel consistent with the procedures
specified in Section 5(b) to resolve the dispute.  Provided that such
Independent Counsel determines that Indemnitee’s conclusion under Section
14(a)(ii) was reasonable, the Company shall further indemnify Indemnitee against
any and all Expenses actually and reasonably incurred by Indemnitee in so
cooperating with such Independent Counsel.

 

 
(f) 
For the avoidance of doubt, regardless of whether the Company has assumed or is
entitled to assume Indemnitee’s defense, the Company shall be entitled to
participate in any Indemnifiable Claim at the Company’s own expense.  In the
event separate counsel is retained by an Indemnitee pursuant to this Section 14,
the Company shall cooperate with Indemnitee with respect to the defense of the
Claim.

 

 
15.
Successors and Binding Agreement.

 

 
(a) 
The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance reasonably satisfactory to Indemnitee, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent the
Company would be required to perform if no such succession had taken place. This
Agreement shall be binding upon and inure to the benefit of the Company and any
successor to the Company, including without limitation any person acquiring
directly or indirectly all or substantially all of the business or assets of the
Company, whether by purchase, merger, consolidation, reorganization or otherwise
(and such successor will thereafter be deemed the “Company” for purposes of this
Agreement).

 
 
 
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(b)
The indemnification and advancement of Expenses provided by this Agreement shall
continue as to a person who has ceased to be a director or officer or who is
deceased and shall inure to the benefit of and be enforceable by the personal or
legal representatives, executors, administrators, heirs, distributees, legatees
and other successors of such person.

 

 
(c) 
This Agreement is personal in nature and neither of the parties hereto may,
without the written consent of the other, assign or delegate this Agreement or
any rights or obligations hereunder except as expressly provided in Sections
15(a) and 15(b). Without limiting the generality or effect of the foregoing,
Indemnitee’s right to receive payments hereunder shall not be assignable,
whether by pledge, creation of a security interest or otherwise, other than by a
transfer by Indemnitee’s will or by the laws of descent and distribution, and,
in the event of any attempted assignment or transfer contrary to this Section
15(c), the Company shall have no liability to pay any amount so attempted to be
assigned or transferred.

 

 
16.
Miscellaneous.

 

 
(a) 
Notice of Claim; Notices.  All notices, requests, demands and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally against written receipt or by facsimile
transmission or mailed by prepaid first class mail, return receipt requested, or
sent by overnight courier prepaid to the parties at the following addresses or
facsimile numbers:

 

 
 
  
If to the Company, to:

 

 
 
 
Cree, Inc.
4600 Silicon Drive
Durham, North Carolina 27703
Facsimile:  (919) 407-5456
Attention:  General Counsel

 

 
 
 
with a copy to:

 

 
 
 
If to the Indemnitee, to:

 

 
 
 
Indemnitee

 

 
 
 
[Address]

 

 
(b) 
Governing Law.  The validity, interpretation, construction and performance of
this Agreement shall be governed by and construed in accordance with the
substantive laws of the State of North Carolina, without giving effect to its
principles of conflict of laws. The Company and Indemnitee each hereby
irrevocably consent that both parties are subject to the jurisdiction of the
state courts of the State of North Carolina for all purposes in connection with
any action or proceeding that arises out of or relates to this Agreement, and
further agree that the sole and exclusive venue for any such dispute shall be
the General Court of Justice, Superior Court Division, in Durham County, North
Carolina.  The parties stipulate and agree that any such

 
 
 
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dispute shall be designated by agreement of the parties as a “mandatory complex
business case” pursuant to N.C.G.S. § 7A-45.4 (as such statute may be amended
from time to time) or, in the alternative, as a discretionary “complex business”
case under Rule 2.1 of the North Carolina General Rules of Practice for the
Superior and District Courts (as such rule may be amended from time to time),
and both parties hereby irrevocably waive any objection to such dispute being so
designated.  In the event the parties are unable to secure designation of the
dispute as a complex business case, or if such designation is revoked at any
time, the parties agree that they shall request that the dispute be designated
as an “exceptional” case pursuant to Rule 2.1 of the North Carolina General
Rules of Practice for the Superior and District Courts (as such rule may be
amended from time to time) and agree to cooperate in good faith to secure such
designation.

 

 
(c) 
Validity.  If any provision of this Agreement or the application of any
provision hereof to any person or circumstance is held invalid, unenforceable or
otherwise illegal, the remainder of this Agreement and the application of such
provision to any other person or circumstance shall not be affected, and the
provision so held to be invalid, unenforceable or otherwise illegal shall be
reformed to the extent, and only to the extent, necessary to make it
enforceable, valid or legal. In the event that any court or other adjudicative
body shall decline to reform any provision of this Agreement held to be invalid,
unenforceable or otherwise illegal as contemplated by the immediately preceding
sentence, the parties hereto shall take all such action as may be necessary or
appropriate to replace the provision so held to be invalid, unenforceable or
otherwise illegal with one or more alternative provisions that effectuate the
purpose and intent of the original provisions of this Agreement as fully as
possible without being invalid, unenforceable or otherwise illegal.

 

 
(d) 
Amendment.  This Agreement may not be modified or amended except by a written
instrument executed by or on behalf of each of Indemnitee and the Company.

 

 
(e) 
Waiver.  The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by a writing signed by the party against which such waiver is to be
asserted, and no waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.

 

 
(f) 
Entire Agreement.  No agreements or representations, oral or otherwise,
expressed or implied, with respect to the subject matter hereof have been made
by either party that are not set forth expressly in this Agreement.

 

 
(g) 
Headings.  The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.

 

 
(h) 
Certain Interpretive Matters.  Unless the context of this Agreement otherwise
requires, (i) “it” or “its” or words of any gender include each other gender;
(ii) words using the singular or plural number also include the plural or
singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and
derivative or similar words refer to this entire Agreement; (iv) the term
“Section” refers to the specified Section of this Agreement; (v) the terms
“include,” “includes” and “including” shall be deemed to be followed by the
words “without limitation” (whether or not so expressed); and (vi) the word “or”
is disjunctive but not exclusive. No

 
 
 
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provision of this Agreement will be interpreted in favor of, or against, either
of the parties hereto by reason of the extent to which any such party or its
counsel participated in the drafting thereof or by reason of the extent to which
any such provision is inconsistent with any prior draft hereof or thereof.

 

 
(i) 
Counterparts. This Agreement may be executed in one or more counterparts, and
delivered by facsimile or other means of electronic transmission, each of which
shall be deemed to be an original but all of which together shall constitute one
and the same agreement.

 

 
17.
Prospective Effect. Notwithstanding anything to the contrary contained anywhere
in this Agreement, in no event will this Agreement be deemed to apply to any
Claim existing against Indemnitee prior to the date of this Agreement, any
Losses incurred by Indemnitee prior to the date of this Agreement or any Losses
relating to any Claim existing against Indemnitee prior to the date of this
Agreement.

 

 
IN WITNESS WHEREOF, Indemnitee has executed and the Company has caused its duly
authorized representative to execute this Agreement as of the date first above
written.

 
 
 

 
 
 
CREE, INC.

 
 

 
 
 
By: ___________________________________

 
 
 
      [Name]

 
 
 
      [Title]

 
 
 

 
 
 
INDEMNITEE:

 
 

 
 
 
______________________________________

 
 
 
[Name]

 
 
 
 

 
 
 
Address:

 
 
 
______________________________________

 
 
 
______________________________________

 
 
 
______________________________________

 
 
 
______________________________________

 
 
 
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