exhibit10_3.htm


     

    
      
        

      

    

    Exhibit
10.3

     

    

     

     

    
      MASTER PERFORMANCE UNIT AWARD
AGREEMENT

      TERMS AND
CONDITIONS

       

       

      This
Master Performance Unit Award Agreement (this “Master Agreement” or “Agreement”)
is entered into between you (the “Participant” named below) and Cree, Inc., a
corporation formed under the laws of the State of North Carolina (the
“Company”).

      


      This
Agreement states the terms and conditions that govern any performance units
(“Performance Units”) that the Company may from time to time grant you giving
you the right to receive shares (“Shares”) of the common stock of the Company
(“Common Stock”), cash or a combination of both.  Grants of
Performance Units will be made under the Company’s 2004 Long-Term Incentive
Compensation Plan (the “Plan”).  The performance period, the
performance criteria and the portion, if any, of the award to be settled in
Shares of Common Stock applicable to each award of Performance Units will be
stated in a Notice of Grant issued by the Company, which is incorporated in this
Agreement by reference.  A Notice of Grant, together with the terms
and conditions set forth in this Agreement and the Plan, constitute the entire
agreement between you and the Company with respect to the Performance Units
described in the Notice of Grant.

      


      Unless
otherwise specified in a Notice of Grant or agreed to in writing by you and the
Company, this Master Agreement will apply to all Performance Units granted to
you on and after the effective date stated below.  This Agreement is
subject to and will be construed in accordance with the Plan.  As used
in this Agreement, “Company” includes Cree, Inc. and any entity that is part of
the “Company” as defined in the Plan.  Unless otherwise defined in
this Agreement or the Notice of Grant, capitalized terms used in this Agreement
and defined in the Plan will have the same meaning as defined in the
Plan.

      


      Please
indicate that you have read and agree to the terms and conditions of this
Agreement by signing below and returning the signed copy to the Company at its
principal offices in Durham, North Carolina. By your signature below, you agree
to be bound by the provisions of this Agreement and the Plan and Notices of
Grant applicable to the Awards to which this Agreement applies.  Upon
receipt of a signed copy of this Agreement at the Company's principal office,
this Agreement will be effective as of the first date on or after August 18,
2008 on which the Company grants you an Award.

    

     


     

     

    
      	CREE,
      INC.  	 	PARTICIPANT:
	 	  	 	 	  
	 	  	 	 	  
	/s/
      Thomas H. Werner	 	
              /s/
      Charles M. Swoboda

            
	Thomas
      H. Werner	 	Charles
      M. Swoboda
	Compensation
      Committee Chairman	 	 


    

    


     

    


     

    


    Please sign and return this
Agreement to Tamara Cappelson,

    the Stock Plan Administrator in the
Legal Department.

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        	
                1.  

              	
                Grants of
      Awards.  Subject to
      the terms and conditions contained in this Agreement, the applicable
      Notice of Grant and the Plan, the Company may, from time to time in its
      discretion, grant you Performance
Units.

              


      

       

      
        	
                2.  

              	
                Term of
      Performance Units.  Unless otherwise provided in the
      Notice of Grant, Performance Units will expire at the close of the
      Performance Period specified in the Notice of Grant, or, if earlier, upon
      your Termination of Service.

              


      

       

      
        	
                3.  

              	
                Settlement
      of Performance Units. To
      the extent Performance Units are settled in Shares, stock certificates
      evidencing the Shares shall be issued to you as soon as administratively
      practicable after the close of the Performance Period specified in the
      Notice of Grant, unless otherwise delayed pursuant to section 4
      below.  Your Shares will be registered in your name (or
      evidenced by a book entry or similar account) unless you notify the
      Committee at least thirty (30) days prior to a vesting date that you
      desire to have your Shares registered jointly in the names of you and your
      spouse.  You will receive a cash distribution for the value of
      your Performance Units not settled in
Shares.

              


      

       

      
        	
                4.  

              	
                Responsibility
      for Taxes.

              


      

       

      
        	
                (a)  

              	
                Regardless
      of any action the Company takes with respect
      to Tax-Related Items, you acknowledge that the ultimate liability for all
      Tax-Related Items legally due by you is and remains your responsibility
      and that the Company (1) make no representations or undertakings
      regarding the treatment of any Tax-Related Items in connection with any
      aspect of Award grants, including the grant or settlement of any Awards,
      the subsequent sale of Shares acquired pursuant to Performance Units
      settled in Shares and the receipt of any dividends; and (2) does not
      commit to structure the terms of the grant or any aspect of an Award to
      reduce or eliminate your liability for Tax-Related
  Items.

              


      

       

      
        	
                (b)  

              	
                Prior
      to the settlement in Shares of Performance Units awarded under this
      Agreement, you agree to pay or make adequate arrangements satisfactory to
      the Company to satisfy all withholding and payment obligations of the
      Company related to the settlement of the Performance Units in
      Shares.  If permissible under local law and at your election,
      the Company will satisfy this condition pursuant to the withholding of
      Shares consistent with the “Share Withholding” provisions under section
      13.2 of the Plan.  The Company, in its discretion, may authorize
      alternative arrangements, including, if permissible under local law, the
      Company’s selling or arranging to sell Shares that you acquire under the
      Plan.  In any event, to the extent this condition is not
      otherwise satisfied, you authorize the Employer to withhold all applicable
      Tax-Related Items legally payable by you from your wages or other cash
      compensation paid to you by the
Employer.

              


      

       

      
        	
                (c)  

              	
                You
      agree to pay to the Company any amount of Tax-Related Items that the
      Company may be required to withhold as a result of your participation in
      the Plan that cannot be satisfied by the means previously
      described.

              


      

       

      
        	
                (d)  

              	
                The
      Company may refuse to deliver Shares to you pursuant to the settlement of
      Performance Units under any Awards if you fail to comply with your
      obligations in connection with the Tax-Related Items as described in this
      section.

              


      

       

      
        	
                5.  

              	
                Transfer of
      Performance Units.  A Performance Unit and any rights
      under any Performance Unit may not be assigned, pledged as collateral or
      otherwise transferred, except as permitted by the Plan, nor may they be
      subject to attachment, execution or other judicial process.  In
      the event of any attempt to assign, pledge or otherwise dispose of a
      Performance Unit or any rights under a Performance Unit, except as
      permitted by the Plan, or in the event of the levy of any attachment,
      execution or similar judicial process upon the rights or interests
      conferred by a Performance Unit, the Committee may in its discretion
      terminate a Performance Unit by notice to
you.

              


      

       

      
        	
                6.  

              	
                Rights
      Prior to Issuance of Shares.  You will have no rights as
      a shareholder with respect to any Shares, including, but not limited to,
      voting rights or rights to dividends or dividend equivalents, until such
      Shares have been duly issued by the Company or its transfer agent pursuant
      to the settlement of a Performance
Unit.

              


      

       

       

      
        
           

        

        
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                7.  

              	
                Definitions.  The
      following definitions apply under this
  Agreement:

              


      

       

      
        	
                (a)  

              	
                “Tax-Related
      Items” means any or all income tax, social insurance, payroll tax, payment
      on account or other tax-related withholding that may be applicable to
      Awards under this Agreement by law or regulation of any governmental
      authority, whether federal, state or local, domestic or
      foreign.

              


      

       

      
        	
                (b)  

              	
                “Termination
      of Service” means the discontinuance of your relationship with an Employer
      as an employee of the Employer or as a non-employee member of the board of
      directors of any entity constituting the Employer.  Except as
      determined otherwise by the Committee, you will not be deemed to have
      incurred a Termination of Service if the capacity in which you provide
      services to the Employer changes (for example, you change from being a
      non-employee director to being an employee) or if you transfer among the
      various entities constituting the Employer, so long as there is no
      interruption in your provision of services to the Employer as an employee
      or non-employee member of the Board.  The Committee, in its
      discretion, will determine whether you have incurred a Termination of
      Service.  Except as may be provided in an agreement between you
      and the Company, you will not be deemed to have incurred a Termination of
      Service during a period for which you are on military leave, sick leave,
      or other leave of absence approved by the
  Employer.

              


      

       

      
        	
                8.  

              	
                Provisions
      of the Plan.  The
      provisions of the Plan are incorporated by reference in this Agreement as
      if set out in full in this Agreement.  To the extent that any
      conflict may exist between any other provision of this Agreement and a
      provision of the Plan, the Plan provision will control.  All
      decisions of the Committee with respect to the interpretation,
      construction and application of the Plan or this Agreement shall be final,
      conclusive and binding upon you and the
Company.

              


      

       

      
        	
                9.  

              	
                Section
      409A.  At all times, this Agreement and any related
      Notice(s) of Grant shall be interpreted and operated so that each
      Performance Unit shall either be exempt from or comply with the provisions
      of section 409A of the Internal Revenue Code of 1986, as amended (the
      "Code") and the treasury regulations relating thereto so as not to subject
      you to the payment of interest and/or any tax penalty that may be imposed
      under section 409A of the Code with respect to the Performance
      Unit.  In all cases, the provisions of this paragraph shall
      apply notwithstanding any contrary provision in this Agreement or any
      Notice of Grant.

              


      

       

      
        	
                10.  

              	
                Data
      Privacy.  By signing this Agreement, you explicitly and
      unambiguously consent to the collection, use and transfer, in electronic
      or other form, of your personal data as described in this Agreement by and
      among, as applicable, the Employer, and the Company and its subsidiaries
      and affiliates for the exclusive purpose of implementing, administering
      and managing your participation in the
Plan.

              


      

       

      
        	
                 

              	
                You
      understand that the Employer holds certain personal information about you,
      including, but not limited to, your name, home address and telephone
      number, date of birth, social insurance number or other identification
      number, salary, nationality, job title, any shares of stock or
      directorships held in the Company, details of all Awards or any other
      entitlement to Shares of stock awarded, canceled, exercised, vested,
      unvested or outstanding in your favor, for the purpose of implementing,
      administering and managing the Plan (“Data”).  You understand
      that Data may be transferred to any third parties assisting in the
      implementation, administration and management of the Plan, that these
      recipients may be located in you country or elsewhere, and that the
      recipient’s country may have different data privacy laws and protections
      than your country.  You understand that you may request a list
      with the names and addresses of any potential recipients of the Data by
      contacting your local human resources representative.  You
      authorize the recipients to receive, possess, use, retain and transfer the
      Data, in electronic or other form, for the purposes of implementing,
      administering and managing your participation in the Plan, including any
      requisite transfer of such Data as may be required to a broker or other
      third party with whom you may elect to deposit any Shares of stock
      acquired pursuant to this Agreement.  You understand that Data
      will be held only as long as is necessary to implement, administer and
      manage your participation in the Plan.  You understand that you
      may, at any time, view Data, request additional information about the
      storage and processing of Data, require any necessary amendments to Data
      or refuse or withdraw the consents above, in any case without cost, by
      contacting in writing your local human resources
      representative.  You understand, however, that refusing or
      withdrawing your consent may affect your ability to participate in
      the

              


      

       

       

      
        
           

        

        
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                Plan.  For
      more information on the consequences of your refusal to consent or
      withdrawal of consent, you understand that you may contact your local
      human resources representative.

              


      

       

      
        	
                11.  

              	
                Electronic
      Delivery.  The Company may, in its sole discretion,
      decide to deliver any documents related to the Performance Units granted
      under this Agreement by electronic means or to request your consent to
      participate in the Plan by electronic means.  By signing this
      Agreement, you consent to receive such documents by electronic delivery
      and, if requested, to agree to participate in the Plan through an on-line
      or electronic system established and maintained by the Company or another
      third party designated by Company.

              


      

       

      
        	
                12.  

              	
                General.

              


      

       

      
        	
                (a)  

              	
                Nothing
      in this Agreement will be construed as constituting a commitment,
      agreement or understanding of any kind that the Employer will continue
      your service relationship nor to limit or restrict either party’s right to
      terminate the service relationship.

              


      

       

      
        	
                (b)  

              	
                This
      Agreement shall be binding upon and inure to the benefit of you and the
      Company and upon our respective heirs, executors, administrators,
      representatives, successors and permitted
  assigns.

              


      

       

      
        	
                (c)  

              	
                Notices
      under this Agreement must be in writing and delivered either by hand or by
      certified or registered mail (return receipt requested and first-class
      postage prepaid), in the case of the Company, addressed to its principal
      executive offices to the attention of the Stock Plan Administrator, and,
      in your case, to your address as shown on the Employer’s
      records.

              


      

       

      
        	
                (d)  

              	
                This
      Agreement is governed by and construed in accordance with the laws of the
      State of North Carolina, without reference under conflicts of laws
      principles.

              


      

       

      
        	
                (e)  

              	
                No
      amendment or modification of this Agreement shall be valid unless the same
      is in writing and signed by you and by an authorized executive officer of
      Cree, Inc.  If any provision of this Agreement is held to be
      invalid or unenforceable, such determination shall not affect the other
      provisions of the Agreement and the Agreement shall be construed as if the
      invalid or unenforceable provision were omitted and a valid and
      enforceable provision, as nearly comparable as possible, substituted in
      its place.

              


      

       

      
        	
                (f)  

              	
                This
      Agreement, the applicable Notice(s) of Grant and the Plan set forth all of
      the promises, agreements and understandings between you and Company
      relating to each Award evidenced by this Agreement.  This
      Agreement supersedes any and all prior agreements or understandings,
      whether oral or written, with respect to each Award evidenced by this
      Agreement unless otherwise specified in the Notice of
    Grant.

              


      

       

      
        	
                (g)  

              	
                Shares
      issued upon settlement of Performance Units may be subject to such
      stop-transfer orders and other restrictions as the Committee may deem
      advisable under the rules, regulations and other requirements of the
      Securities and Exchange Commission, any stock exchange or trading system
      upon which the Common Stock is listed or traded, and any applicable
      federal or state laws, and the Committee may cause a legend or legends to
      be placed on any such certificates to make appropriate reference to such
      restrictions.

              


      

       

      
        	
                (h)  

              	
                You
      agree that each Performance Unit evidenced by this Agreement serves as
      additional, valuable consideration for your obligations, if any,
      undertaken in any existing agreement between you and the Employer
      regarding confidential information, noncompetition, nonsolicitation or
      similar covenants.

              


      

       

      
        	
                (i)  

              	
                You
      acknowledge, represent and warrant to the Company, and agree with the
      Company, that, except for information provided in the Company’s filings
      with the Securities and Exchange Commission and in the Company’s current
      prospectus relating to the Plan: (i) you have not relied and will not rely
      upon the Committee, the Company, an Employer or any employee or agent of
      the Company or an Employer in determining whether to accept Performance
      Units, or in connection with any disposition of Shares obtained pursuant
      to settlement of Performance Units, or with respect to any tax
      consequences related to the grant of Performance Units or the disposition
      of Shares obtained pursuant to settlement of Performance Units;
      and

              


      

       

       

      
        
           

        

        
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                (ii)
      you will seek from your own professional advisors such investment, tax and
      other advice as you believe
necessary.

              


      

       

      
        	
                (j)  

              	
                You
      acknowledge that you may incur a substantial tax liability as a result of
      Performance Units.  You assume full responsibility for all such
      consequences and the filing of all tax returns and related elections you
      may be required or find desirable to file.  If you are required
      to make any valuation of Performance Units or Shares obtained pursuant to
      settlement of Performance Units under any federal, state or other
      applicable tax law, and if the valuation affects any tax return or
      election of the Company or the Employer or affects the Company’s financial
      statement reporting, you agree that the Company may determine the value
      and that you will observe any determination so made by the Company in all
      tax returns and elections filed by
you.

              


      

       

      
        	
                13.  

              	
                Severability.  The
      provisions of this Agreement are severable and if any one of more
      provisions are determined to be illegal or otherwise unenforceable, in
      whole or in part, the remaining provisions shall nevertheless be binding
      and enforceable.

              


      

       

       

      
        
           

        

        
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