Document:

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:  

                Portion
                  of Award Subject  

                to
                  Settlement In Shares:  

              	
                 

                Charles
                  M. Swoboda

                001

                2004
                  Long-Term Incentive Compensation Plan

                Performance
                  Units

                August
                  ­21, 2007

                June
                  25, 2007 through June 29, 2008

                ­

                up
                  to 30%

              

      

    

     

    
      Dear
        Chuck:

       

      I
        am
        pleased to inform you that Cree, Inc. (the “Company”) has awarded Performance
        Units to you effective August 21, 2007 (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 2008 (“FY08”), 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 (whether or not
        such leave is a paid leave of absence), 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 such purposes, excused
        time off, paid time off (PTO), and holidays taken in accordance with the
        Company’s human resources policies will not be considered leaves of
        absence.

       

      For
        purposes of the foregoing, your “Target Award Level” is eighty percent (80%) 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
        FY08 revenue, net income, 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, net income
        and EPS targets for each Performance Measurement level. The Performance
        Measurement for the Performance Period will be 0% unless the revenue target
        established for the minimum Performance Measurement level is achieved and
        either
        the net income or the EPS target for the minimum Performance Measurement
        level
        is achieved.

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Except
        as
        provided in the Employment Agreement between you and the Company as amended
        and
        restated effective August 21, 2007 (the “Employment Agreement”) and except as
        provided below with respect to your death or LTD Disability (as defined in
        the
        Employment 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 Employment 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
        Employment Agreement), following a Change in Control 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.

       

      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 set forth under 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 your employment terminates 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 set forth
        under
        this Notice of Grant as if you had remained employed through the payment
        date
        under your Performance Units.  If there is a Change in Control and
        your employment terminates prior to the end of the Performance Period, you
        will
        not be entitled hereunder to a payment under your Performance
        Units.

       

      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 the end of the second fiscal quarter following the end
        of the
        Performance Period.  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.

       

       

       

      
        
          
          

        

        
          -
            2
            -

          
            

          

        

        
          
          

        

      

       

      In
        the
        event your Performance Measurement is greater than 0%, thereby entitling
        you to
        payment under your Performance Units, except for payments made in connection
        with a Termination of Service, a portion of your Performance Units will be
        paid
        in shares (“Shares”) of the Company’s common stock (“Common Stock”) determined
        by multiplying D by E and dividing the sum by
F, where:

       

      
        	
                ·
                     

              	
                D
                  equals the amount payable to you under your Performance Units,
                  calculated
                  as specified above;

              

      

       

      
        	
                · 
                    

              	
                E
                  equals the percentage determined by reference to Schedule A
                  attached hereto and incorporated
                  herein;

              

      

       

      
        	
                · 
                    

              	
                F
                  equals the last sale price reported for a Share of Common Stock
                  on the
                  securities exchange or system upon which the Common Stock is traded
                  on the
                  last trading day immediately prior to the payment date;
                  and

              

      

       

      
        	
                · 
                    

              	
                Provided
                  that, if the product of D x E exceeds
                  the product of .30(A x B), the product
                  of D x E will be capped at the product
                  of .30(A x
B).

              

      

       

      Notwithstanding
        the foregoing, the maximum number of Shares that will be issued as payment
        for a
        portion of your Performance Units for the Performance Period is 10,000 Shares.
        Payment will be made only in a whole number of Shares.  If the
        calculation above results in a partial Share number amount, the number of
        Shares
        paid will be reduced to the next highest number of whole Shares.  The
        Company will pay you cash equal to the difference between the total value
        of
        your Performance Units, as calculated above, and the aggregate fair market
        value
        on the payment date of the Shares distributed to you.

       

      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.

       

       

       

      Date:  August
        21, 2007

       

      
        
          	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	 	 	 

        

      

       

      
 

      
        
          
          

        

        
          -
            3
            -

          
            

          

        

        
          
          

        

      

      

      SCHEDULE
        A

      

      The
        following schedule shall be used to determine the portion, if any, of your
        Performance Units that will be paid in Shares of the Company’s common
        stock:

       

      If
        D is less than $200,000, E will be
        0%.

      If
        D is equal to or greater than $200,000 but less than $300,000,
        E will be 10%.

      If
        D is equal to or greater than $300,000 but less than $400,000,
        E will be 20%.

      If
        D is equal to or greater than $400,000, E will
        be 30%.

       

      
 

       

       

      
        CGS-B752-10

      

      
        
          
          

        

        
          -
            4
            -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
        21,
        2007 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.

       

       

       

      
        
          US2000
            9493714.3

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            Cree,
              Inc. Master Performance Unit Award

            Agreement Terms and Conditions

          

        

      

       

      
        	
                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 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.  If permissible under
                  local law, the Company shall 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.

              

      

       

       

       

      
        
          US2000
            9493714.3

          
          

        

        
          -
            2
            -

          
            

          

        

        
          
          

          
            Cree,
              Inc. Master Performance Unit Award

            
              Agreement Terms and Conditions

            

          

        

      

       

      
        	
                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
                  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.

              

      

       

       

       

      
        
          US2000
            9493714.3

          
          

        

        
          -
            3
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            Cree,
              Inc. Master Performance Unit Award

            
              Agreement Terms and Conditions

            

          

        

      

       

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

              

      

       

       

       

      
        
          US2000
            9493714.3

          
          

        

        
          -
            4
            -

          
            

          

        

        
          
          

          
            Cree,
              Inc. Master Performance Unit Award

            
              Agreement Terms and Conditions

            

          

        

      

       

      
        	
                (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.

              

      

       

      

    

    
      
        US2000
          9493714.3

        
        

      

      
        -
          5
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