DEVELOPMENT AGREEMENT DATED AS OF JUNE 6, 1997



 EXHIBIT 10.25 
  
 July 14, 1997 
  
 C3, Inc. 
 One Dominion Drive, Suite 106 
 Morrisville. NC 25670 
  

	 	Re:	 	Development Agreement Dated as of June 6, 1997 (the “Development Agreement”), and Amended and Restated Supply Agreement Dated as of June 6, 1997 (the “Supply
Agreement”), between C3, Inc. and Cree Research, Inc. 

  
 Gentlemen: 
  
 This letter confirms the following
representations made by, and understandings reached between, C3, Inc. (“C3”) and Cree Research, Inc. (“Cree”) in connection with the execution of the Development Agreement and Supply Agreement referenced above: 
  
 1. Notwithstanding any other provision of the Supply Agreement, the price to
C3 for [***] diameter production silicon carbide (SIC) boules purchased under the Supply Agreement on an “as is” basis prior to July 1, 1998 shall not exceed [***] per boule, including the cost of removal of the seed. 
  
 2. C3 acknowledges that it has not given Cree any notice under Section 1.2 of
the Supply Agreement prior to the date of this letter. 
  
 3. C3
acknowledges and agrees that, except as provided otherwise in the letter agreements between C3 and Cree dated January 31, 1996, and February 12, 1996, the Assignment Agreement dated June 28, 1995 (as amended September 15, 1995), and Section 5.8 of
the Supply Agreement, nothing in any agreement, purchase order or other arrangement between Cree and C3 gives C3 ownership rights in or any license with respect to any invention made or conceived by Cree personnel prior to the date hereof, whether
alone by Cree personnel or jointly with Cree and C3 personnel. 
  
 4. Cree shall have [***] as the lead scientist (100% of his effort) for the work to be performed for C3 pursuant to the Development Agreement through June 30, 1998, provided that [***] remains an employee of Cree and C3 does not reduce its
funding obligations under Section 2.3 of the Development Agreement. 
  
 5. C3 acknowledges that the license granted pursuant to the letter agreement between C3 and Cree dated January 31, 1996 does not include a license to any invention other than that claimed in U.S. Patent Application Serial No. 08/596,526,
entitled “Growth of Colorless Silicon Carbide Crystals,” and, in particular, does not include a license to practice the methods claimed in U.S. Patent No. Re34,861, entitled “Sublimation of Silicon Carbide to Produce Large, Device
Quality Single Crystals of Silicon Carbide.” 
  
 [***] Confidential treatment
requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 







 July 14, 1997 
 Page 2 
  
 6. The contents of this letter shall be considered “Confidential Information” of each party subject to the provisions of Section 5 of the Supply
Agreement. 
  
 If you agree that the foregoing accurately states
our understanding regarding the subject matter addressed above, please indicate your agreement on behalf of C3 by signing below. 
  

	 Very truly yours,

	
	 CREE RESEARCH, INC.

		
	 By:
	 	 /s/    CHARLES M. SWOBODA


	 	 	 Charles M. Swoboda,
 Vice President and Chief Operating Officer



  

	Agreed:
	
	C3, INC.
		
	 By:
	 	 /s/    JEFF N. HUNTER


	 	 	 Jeff N. Hunter,
 President