exhibit10_2.htm


     

    
      

    

    
      Exhibit
10.2

       

      
        
          	
                  

                	
                   

                   

                       
      NOTICE OF GRANT

                     

                    
      

                
	
                  Company:

                  Cree,
      Inc.

                  4600
      Silicon Drive

                  Durham,
      NC  27703

                  Tax
      I.D. 56-1572719

                	
                  Participant: 

                  Award Number: 
      

                  Award Plan: 
      

                  Award Type: 
      

                  Grant Date: 
      

                  Performance Period: 
      

                	
                  Charles
      M. Swoboda

                  002

                  2004
      Long-Term Incentive Compensation Plan

                  Performance
      Units

                  August
      ­18, 2008

                  June
      30, 2008 through June 28,
2009

                


        

      

       

      
        
          


          Dear
Chuck:

           

          I am
pleased to inform you that Cree, Inc. (the “Company”) has awarded Performance
Units to you effective August 18, 2008 (the “Grant Date”).  This award
is subject to and governed by the terms of the Cree, Inc. 2004 Long-Term
Incentive Compensation Plan (the “Plan”), the terms of the Master Performance
Unit Award Agreement between you and the Company, and this Notice of
Grant.

           

          The
amount payable to you pursuant to your Performance Units (“D”) will be determined as the
result of A x B x C, where:

           

          
            	
                    ·  

                  	
                    A equals your Base
      Salary;

                  


          

           

          
            	
                    ·  

                  	
                    B equals your Target
      Award Level; and

                  


          

           

          
            	
                    ·  

                  	
                    C equals the Performance
      Measurement.

                  


          

           

          For
purposes of the foregoing, except as expressly provided otherwise in this Notice
of Grant, “Base Salary” shall refer to your annual base salary in effect on the
last day of the first fiscal quarter of fiscal year 2009 (“FY09”), as provided
in the Company’s human resources management system, unless your annual base
salary changes after the first fiscal quarter.  If your annual base
salary changes after the first fiscal quarter, “Base Salary” will mean the
weighted average annual base salary for the Performance Period determined by
multiplying each annual base salary in effect during the Performance Period by a
fraction, the numerator of which is the number of calendar days in the
Performance Period on which such annual base salary was in effect and the
denominator of which is the number of calendar days in the Performance
Period.  However, if you are on a leave of absence (other than a leave
of absence where you continue to be paid your full base salary through the
Company’s payroll system), including without limitation a short-term or
long-term disability leave, for all or part of the Performance Period, your Base
Salary will be reduced proportionately to equate to the base salary applicable
to the number of calendar days you were not on a leave of absence during the
Performance Period.

           

          For
purposes of the foregoing, your “Target Award Level” is eighty-five percent
(85%) of your Base Salary.

           

          For
purposes of the foregoing, the “Performance Measurement” is a percentage between
0% and 150% determined by the Compensation Committee of the Company’s Board of
Directors (the “Committee”) after assessing the Company’s performance against
FY09 revenue and earnings per share (“EPS”) targets.

           

          Prior to
or at the time of issuance of this Notice of Grant, you will receive one or more
schedules (collectively, the “Schedule”) showing the minimum revenue and EPS
targets for each Performance Measurement level. The Performance Measurement for
the Performance Period will be 0% unless both the minimum revenue and EPS
targets established for the minimum Performance Measurement level are
achieved.  Your Performance Measurement for the Performance Period
will be determined based on the lower of the Performance Measurement level
associated with actual revenue or the Performance Measurement level associated
with actual EPS.

           

           

          
            
               

            

            
               

              
                

              

            

            
               

            

          

           

          Except as
provided in the Company’s Severance Plan for Section 16 Officers, if such plan
is then in effect, and except as provided below with respect to your death or
LTD Disability (as defined in the Executive Change in Control Agreement between
you and the Company effective August 18, 2008 (the “Change in Control
Agreement”)) or a Change in Control (as defined in Section 7.1 of the Cree,
Inc. Equity Compensation Plan (as amended and restated August 5, 2002 and
without regard to any subsequent amendments)), (i) you must be continuously
employed by the Company as the Company’s Chief Executive Officer and President
through the date of payment under your Performance Units to have a right to
payment of your Performance Units, (ii) your Performance Units will not be
considered earned until you receive payment under your Performance Units, and
(iii) if you terminate employment with the Company prior to the date of payment
under your Performance Units, with or without cause, you will forfeit your
Performance Units.

           

          After the
end of the Performance Period, your actual Performance Measurement will be
determined as follows:

           

          
            	
                    Step
      1:

                  	
                    The
      Committee will, in good faith and in its sole discretion, determine the
      Company’s actual revenue, net income and EPS results for the Performance
      Period (the “Results,” each a “Result”) using competent and reliable
      information, including but not limited to audited financial statements, if
      available.

                  


          

           

          
            	
                    Step
      2:

                  	
                    The
      Committee will identify the percentage on the Schedule that corresponds to
      each Result.  However, in the event a Change in Control occurs
      during the Performance Period, the percentage for each Result will be no
      less than 100%.

                  


          

           

          
            	
                    Step
      3:

                  	
                    The
      Committee will identify the greater of the net income percentage from Step
      2 or the EPS percentage from Step
2.

                  


          

           

          
            	
                    Step
      4:

                  	
                    Your
      Performance Measurement will be the lesser of the revenue percentage from
      Step 2 or the percentage identified in Step 3
  above.

                  


          

           

          Notwithstanding
the foregoing, in order to ensure that the Company’s best interests are met,
except as specifically provided in the Change in Control Agreement, the
Committee in its discretion may decrease or eliminate the amount payable
pursuant to your Performance Units at any time prior to payment if it determines
in good faith that payment of the full amount otherwise payable pursuant to the
Performance Units is not warranted or appropriate; provided, however, so long as
you are not in breach of your Confidential Information Agreement (as defined in
the Change in Control Agreement), following (i) the commencement of a tender
offer or the Company and another party entering into a written agreement that
contemplates a transaction, the consummation of either of which would result in
a Change in Control as defined in Subsection (a), (b), or (d) of such
definition, or (ii) a Change in Control (including without limitation a
resulting Change in Control described in clause (i)),  the Committee may
not decrease or eliminate the amount payable as otherwise determined in
accordance with this Notice of Grant without your prior written consent,
except that, this restriction shall cease to apply if the tender offer or
the  written agreement is terminated or expires without the occurrence
of a Change in Control.

           

          If prior
to settlement of your Performance Units, the Company terminates your employment
on account of your LTD Disability or you die, you or your beneficiary will
receive payment under your Performance Units as otherwise determined in
accordance with this Notice of Grant as if you had remained employed through the
payment date for your Performance Units.  However, in such event your
Base Salary will be proportionally reduced based on the number of calendar days
you were employed by the Company and not otherwise on leave of absence as
provided above during the Performance Period.

           

          If there
is a Change in Control and you remain continuously employed by the Company
through the end of the Performance Period, but your employment terminates In
Connection with a Change in Control upon or after the end of the Performance
Period but prior to the payment date under your Performance Units, you will be
entitled to payment under your Performance Units as otherwise determined in
accordance with this Notice of Grant as if you had remained employed through the
payment date under your Performance Units.  However, if there is a
Change in Control and your employment terminates prior to the end of the
Performance Period, you will not be entitled 

           

           

          
            
               

            

            
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          hereunder
to a payment under your Performance Units.  “In Connection with a
Change of Control” will have the same meaning as in Section 10(h) of the
Change in Control Agreement.

           

          In
general, payment under your Performance Units will be made as soon as
practicable after the end of the Performance Period and, in any event, will be
made no later than (i) the end of the second fiscal quarter following the end of
the Performance Period or, if earlier, (ii) the 15th day of the third month
after the later of the end of the Company's tax year in which the Performance
Period ends or the end of your tax year in which the Performance Period
ends.  However, if payment becomes due under your Performance Units on
account of your death or termination of your employment on account of your LTD
Disability, payment will be made no later than the 15th day of the third month
after the later of the end of the Company’s tax year in which your death or LTD
Disability, as applicable, occurs or the end of your tax year in which your
death or LTD Disability, as applicable, occurs.  Alternatively, in the
event a Change in Control occurs prior to the payment date of your Performance
Units, any payment that becomes due under your Performance Units will be made no
later than the 15th day of
the third month after the later of the end of the Company’s tax year in which
the Change of Control occurs or the end of your tax year in which the Change of
Control occurs.

           

          This
award is intended to fulfill any and all agreements, obligations or promises,
whether legally binding or not, previously made by the Company or any Employer
under the Plan to grant you Performance Units or to provide you annual incentive
compensation for the Performance period.  By signing below, you accept
such award, along with all prior awards received by you, in full satisfaction of
any such agreement, obligation or promise.  By signing below, you
expressly acknowledge that you are not a participant in or entitled to a payment
under the Fiscal 2008 Management Incentive Compensation Plan.

           

          Nothing
in this Notice of Grant or the Master Performance Unit Award Agreement is
intended to modify or amend the Change in Control Agreement, including but not
limited to your right to receive the payment specified in Section 8(a) thereof
in accordance with the terms and conditions of the Change in Control
Agreement.

        

         

         

        Date:  August
18, 2008

         

        
          
            	For
      Cree, Inc.  	 	Accepted
      and agreed to:
	 	  	 	 	  
	 	  	 	 	  
	By:	/s/
      Thomas H. Werner	 	
                    By:

                  	/s/
      Charles M. Swoboda
	 	Thomas
      H. Werner	 	 	Charles
      M. Swoboda
	 	Compensation
      Committee Chairman	 	 	 


          

        

         

         

        
          
             

          

          
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