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Exhibit 10.3

Portions of this exhibit marked as “[***]” have been excluded because they are
both not material and would likely cause competitive harm to the registrant if
publicly disclosed.

SECOND AMENDMENT TO
EXCLUSIVE SUPPLY AGREEMENT

This SECOND AMENDMENT TO EXCLUSIVE SUPPLY AGREEMENT (“Second Amendment”) is
entered into as of June 30, 2020 (the “Second Amendment Effective Date”), by and
between CHARLES & COLVARD, LTD., a North Carolina corporation, with its
principal place of business at 170 Southport Drive, Morrisville, North Carolina
27560 (“C&C”), and CREE, INC., a North Carolina corporation, with its principal
place of business located at 4600 Silicon Dr., Durham, North Carolina 27703
(“Cree”).  C&C and Cree may be referred to hereinafter individually as “Party”
and collectively as “Parties.”  Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Agreement.
 
WHEREAS, Cree is in the business of developing, manufacturing and selling
silicon carbide (SiC) substrates and materials for various electronic
applications; and
 
WHEREAS, C&C develops, manufactures and markets gemstones fabricated from SiC
material and desires to purchase certain material from Cree; and
 
WHEREAS, C&C and Cree previously entered into an Exclusive Supply Agreement
dated December 12, 2014 (the “Agreement”), as amended June 22, 2018 by that
First Amendment to Exclusive Supply Agreement (the “First Amendment”); and
 
WHEREAS, C&C declared an event of Force Majeure (as that term is defined in the
Agreement) due to emergency restrictions and executive orders issued by federal,
state and local governments in response to the Coronavirus pandemic; and
 
WHEREAS, the Parties desire to enter into this Second Amendment to modify
certain terms of the Agreement as of the Second Amendment Effective Date.
 
NOW, THEREFORE, the Parties, in consideration of the foregoing premises and the
covenants and undertakings herein contained, mutually agree as follows:
 

1.
Term.

 

a.
Paragraph 2(a) of the Agreement is hereby deleted in its entirety and replaced
with the following:

 
“(a)  The term of this Agreement shall begin on the Effective Date and expire on
June 29, 2025, unless earlier terminated as provided herein or extended by
mutual written agreement of the Parties. The period from the Effective Date
until the expiration or termination of this Agreement in accordance with its
terms shall be referred to as the ‘Term.’  At least [***] months prior to the
expiration date of the Term, C&C will notify Cree in writing of C&C’s desire to
continue the business relationship after the expiration of the Term.  Promptly
following such notification, the Parties will meet in person or by telephone to
discuss a possible extension to the Term, including but not limited to
discussing production volumes, purchase commitments, pricing, and third-party
sourcing percentages for the extension period; provided, however, that neither
Party shall be obligated to continue the business relationship beyond the Term.”
 

b.
Paragraph 2(b) of the Agreement is hereby deleted in its entirety.

 
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2.
Price/Payment Terms.

The third sentence of Paragraph 6(b) is hereby deleted in its entirety and
replaced with the following:

“As of the Second Amendment Effective Date, C&C has [***]. The Parties have
agreed to a payment schedule (set forth below in Section 5 of this Second
Amendment) that is intended to [***].  For the time period of [***] through
[***] and unless otherwise agreed upon in writing, C&C shall pay Cree net [***]
days following the invoice date.  For the remainder of the Term as long as [***]
(based on these net [***] days payment terms) and unless otherwise agreed upon
in writing, C&C shall pay Cree net [***] days following the invoice date.  Cree
may adjust the payment terms in its sole discretion, [***].”

3.
Buyer’s Exclusivity Commitment.

a.
Section 7(a) is hereby modified by adding the following new language at the end
of the section:

“C&C has requested that Cree consider accepting Purchase Orders in excess of the
of the agreed-upon Minimum Purchase Commitment for a particular quarter (such
amounts, “Upside”). Cree is willing to consider such Upside requests, but only
if such requests are made by C&C with at least the amount of lead times below:

 
Requested Product Amount
 
Lead Time
 
Up to [***] kilograms
 
At least [***] weeks
         
[***] kilograms
 
At least [***] weeks

b.
Section 7(g) is hereby modified by deleting (ii) and replacing it with the
following:

“(ii) the maximum quantity of Alternative SiC Material purchased by C&C from all
third-party suppliers does not exceed [***] for Fiscal Year [***], [***] for
Fiscal Year [***], [***] for Fiscal Year [***], [***] for Fiscal Year [***],
[***] for Fiscal Year [***], [***] for Fiscal Year [***], and [***] for Fiscal
Year [***] of the Minimum Purchase Commitment applicable to that Fiscal Year;”

4.
Seller’s Exclusivity Commitment.

The following is hereby added to the end of Section 8(b):

“For the avoidance of doubt, C&C’s timely adherence to the payment schedule set
forth below for [***] shall [***].”

Payment Schedule:

Time Period
Payment Amount
[***]
$[***]
[***]
$[***]
[***]
$[***]
[***]
$[***]
[***]
$[***]

5.
Buyer’s Purchase Commitments.

Paragraph 9(a) is hereby deleted in its entirety and replaced with the
following:

“(a)
Each Fiscal Quarter, C&C agrees to purchase Products from Cree in quantities at
or above the Minimum Purchase Commitment amount for such Fiscal Quarter. 
Failure to do so will, except as contemplated below, be considered a breach of
the Agreement.  The ‘Minimum Purchase Commitment’ for each Fiscal Quarter will
be [***] (i) at least [***]% of C&C's requirements for SiC materials for the
production of gemstones in colors available from Cree, excluding from such
calculation any SiC materials purchased from third parties as expressly
permitted in Paragraph 7(a) (but including any SiC materials purchased from
third parties as expressly permitted in Paragraph 7(b), 7(c), 7(d) or 7(g)), or
(ii) (A) [***] kilograms in the [***] Quarter of [***]; (B) [***] kilograms in
the [***] Quarter of [***]; (C) [***] kilograms in [***] Quarter of [***]; (D)
[***] kilograms in [***] Quarter of [***]; (E) [***] kilograms in [***] Quarter
of [***]; (F) [***] kilograms in [***] Quarter of [***]; (G) [***] kilograms in
[***]  Quarters of [***]; (H) [***] kilograms in the [***] Quarter of [***]; (I)
[***] kilograms in the [***] Quarter of [***]; (J) [***] kilograms in the [***]
Quarter of [***]; (K) [***]  kilograms in the [***] Quarter of [***]; (L) [***]
kilograms in the [***] Quarter of [***]; (M) [***] kilograms in [***] Quarters
of [***]; (N) [***] kilograms in the [***] Quarter of [***]; (O) [***] 
kilograms in the [***] Quarter of [***]; (P) [***] kilograms in [***] Quarters
of [***]; (Q) [***] kilograms in the [***] Quarter of [***]; (R) [***] kilograms
in [***] Quarter of [***]; (S) [***] kilograms in [***] Quarters of [***]; and
(T) [***] kilograms in [***]  Quarters of [***].

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6.
Exhibit A.

a.
The “Pricing for [***] SiC [***] crystals (all prices are per gram) Meeting
Forever OneTM Specifications” section in Exhibit A is hereby deleted in its
entirety and replaced with the following:

“Pricing for [***] SiC [***] crystals (all prices are per gram) Meeting Forever
OneTM Specifications:

Fiscal
Year
Volume
(kg)
Volume
(grams)
Revenue
Price per gram
of Product
meeting Forever
OneTM
Specifications
2019
[***]
[***]
$[***]
$[***]
2020
[***]
[***]
$[***]
$[***]
2021
[***]
[***]
$[***]
$[***]
2022
[***]
[***]
$[***]
$[***]
2023
[***]
[***]
$[***]
$[***]
2024
[***]
[***]
$[***]
$[***]
2025
[***]
[***]
$[***]
$[***]
Total
[***]
[***]
$52,945,000
$[***]

The prices will be determined based on the Fiscal Year in which the Product is
originally scheduled for delivery.  The Parties agree that the foregoing pricing
shall be subject to change from time to time, as mutually agreed upon in writing
by the Parties, based upon any improvements made by Cree to the Specifications
of the SiC Materials.

7.
Miscellaneous.

All modifications and changes in this Second Amendment shall be effective as of
the Second Amendment Effective Date, notwithstanding a later or earlier
execution date.  The Agreement, as amended herein, shall continue in effect in
accordance with its terms.  In the event of conflict between the terms and
conditions in this Second Amendment and in the Agreement as amended previously,
the terms and conditions in this Second Amendment will control. The Agreement
and Exhibits, as modified by this Second Amendment, and the NDA contain the
entire agreement between C&C and Cree with respect to the subject matter of the
Agreement and supersede all other prior written or oral agreements relating to
the purchase and sale of Products.  This Second Amendment may be executed in one
or more counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.  Any signed copy of
this Second Amendment copied or reproduced and transmitted via photocopy,
facsimile or other process that accurately transmits the original document shall
be considered an original document.

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IN WITNESS WHEREOF, each of the Parties has duly executed this Second Amendment
as of the dates indicated below to be effective as of the Second Amendment
Effective Date, notwithstanding an earlier or later execution date.

CREE, INC.
 
CHARLES & COLVARD, LTD.
             
By:
/s/ Cengiz Balkas

 
By:
/s/ Don O’Connell
         
Cengiz Balkas
 
Don O’Connell
         
Title:
Senior Vice President, Wolfspeed
 
Title:
President and CEO
             
Date:
August 26, 2020
 
Date:
August 25, 2020
 

Address for Notices
Cree, Inc.
4600 Silicon Drive
Durham, North Carolina 27703
Attn:  Cengiz Balkas
Email:  [***]
Fax No.:  919-[***]
Address for Notices
Charles & Colvard, Ltd.
170 Southport Drive
Morrisville, North Carolina 27560
Attn: Maria Flanagan
Email: [***]
Fax No.: 919-[***]
   
With copy of any notices of a legal nature to:
Cree, Inc.
Attn: General Counsel
4600 Silicon Dr.
Durham, North Carolina 27703
Email:  [***]
Fax No.:  919-[***]
With copy of any notices of a legal nature to:
Wyrick Robbins Yates & Ponton LLP
Attn: Jason Wood
4101 Lake Boone Trail
Raleigh, NC 27607
Email:  [***]
Fax No.:  919-[***]

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