Document:

Director's Deferred Compensation Plan

 EXHIBIT 10.3 
 NORTHWEST NATURAL GAS COMPANY 
 DIRECTORS DEFERRED COMPENSATION PLAN 
 EFFECTIVE JUNE 1, 1981 
 RESTATED AS OF JANUARY 1, 2007 

 Table of Contents 
  

					
	 	  	 	  	Page
	 1.
	  	Restatement	  	1
			
	 2.
	  	Election by Directors	  	1
			
	 3.
	  	Accounts	  	2
			
	 4.
	  	Interest	  	4
			
	 5.
	  	Terms of Payment	  	4
			
	 6.
	  	Death of Director	  	6
			
	 7.
	  	Administration	  	6
			
	 8.
	  	Definitions; Change in Control; Corporate Transaction	  	6
			
	 9.
	  	Amendment and Termination of the Plan	  	7
			
	 10.
	  	Miscellaneous	  	8

  

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 NORTHWEST NATURAL GAS COMPANY 
 DIRECTORS DEFERRED COMPENSATION PLAN 
 1. Restatement. The Board of
Directors (the “Board”) of Northwest Natural Gas Company (hereinafter, the “Company”) adopted a Director’s Deferred Compensation Plan (hereinafter, the “Plan”) effective June 1, 1981, which was previously
restated effective as of January 1, 1988, December 1, 1997, December 1, 2001, February 26, 2004 and December 15, 2005. The existing Plan is amended by this Restatement, effective as of January 1, 2007. 

2. Election by Directors. 
 (a) Eligibility. Any director of the Company or any corporation or other entity affiliated with or subsidiary to it (a “Director”) is eligible to elect to defer receipt of all or part of (i) the fees paid to him or her
as a Director or as a member of a committee of the Board (“Fees”), or (ii) the shares (“NEDSCP Shares”) of restricted common stock of the Company (“Common Stock”) awarded to the Director under the Company’s
Non-Employee Directors Stock Compensation Plan (“NEDSCP”). In addition, a Director may elect under the NEDSCP to receive awards under that plan as deferred cash credits (“NEDSCP Cash Credits”) rather than as NEDSCP Shares.

 (b) Deferral of Fees. Any Director may elect, prior to the beginning of any calendar year, to defer receipt of fees
for that calendar year, whether or not the fees are actually payable in that calendar year; and any newly elected Director prior to assuming office may elect to defer receipt of fees commencing after the date on which the Director assumes office.
Any election under the preceding sentence shall apply only to fees earned subsequent to the date the election is filed. Total deferrals of Fees by a Director in a calendar year must be at least $1,500. 
 (c) Deferral of NEDSCP Shares. Any Director may elect, prior to the beginning of any calendar year, to defer receipt of unvested
NEDSCP Shares that are scheduled to vest in that calendar year; and any newly elected Director prior to assuming office may elect to defer receipt of NEDSCP Shares that will vest in the remainder of the calendar year after the date on which the
Director assumes office. Total deferrals of NEDSCP Shares by a Director in a calendar year must be at least 100% of the NEDSCP Shares scheduled to vest in that year. No deferral shall be allowed of NEDSCP Shares as to which a Director has made an
election under Section 83(b) of the Internal Revenue Code. 
 (d) Continuation and Modification. An election to
defer Fees or NEDSCP Shares by a Director shall automatically continue from year to year unless the Director terminates or modifies the election by written request. Any such termination or modification shall not become applicable until the calendar
year following the year in which such written termination or modification is filed. In the event of a termination of a deferral election, any amounts already deferred by a Director shall not be paid until he or she ceases to serve as a Director, and
then only pursuant to the terms, conditions, limitations and restrictions of the Plan. 
  

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 3. Accounts. 
 (a) Accounts. The Company shall establish on its books one, two or three separate accounts (individually, an “Account”
and collectively, the “Accounts”) for each Director who participates in the Plan: a Stock Account, a Cash Account, and/or for each person who is a Director as of January 1, 1998, a Retirement Benefit Account. The number of NEDSCP
Shares deferred by a Director shall be credited to the Stock Account. Any NEDSCP Cash Credits shall be credited to the Cash Account. Fees deferred by a Director shall be credited to the Stock Account or the Cash Account as elected by the Director at
the time the Director elects to defer Fees. Such election may be divided between the two Accounts in increments of 25 percent of the deferred Fees covered by the election. An election between the Stock Account and the Cash Account shall be
irrevocable as to the deferred Fees covered by the election and no transfers between the Stock Account and the Cash Account shall be permitted except as otherwise provided in Paragraph 3(f)(iv). The credit for deferred Fees shall be entered on the
Company’s books of account each month at the time that Fees are paid to other Directors who do not elect to defer the payment of such Fees. The credit for deferred NEDSCP Shares shall be entered on the Company’s books of account as soon as
practicable after January 1 of the year subject to the deferral. The credit for an NEDSCP Cash Credit shall be entered on the Company’s books of account effective as of the award date for such credit under the NEDSCP. No special fund shall
be established nor shall any notes or securities be issued by the Company with respect to a Director’s Accounts. 
 (b)
Stock Account. A Director’s Stock Account shall be denominated in shares of Common Stock, including fractional shares. With respect to each amount of Fees deferred to a Director’s Stock Account, the Stock Account shall be credited
with a number of shares equal to the deferred Fees divided by the purchase price for shares of Common Stock under the Company’s Dividend Reinvestment and Direct Stock Purchase Plan (the “DRSPP”) on the Investment Date (as defined in
the DRSPP) next succeeding the day the deferred Fees would have been paid if not for the deferral. As of each date for payment of dividends on the Common Stock, the Stock Accounts shall be credited with an additional number of shares (including
fractional shares) equal to the amount of dividends that would be paid on the number of shares recorded as the balance of the Stock Account as of the record date for such dividend divided by closing market price of the Common Stock reported for such
payment date or, if such day is not a trading day, the next trading day. 
 (c) Forfeiture of NEDSCP Shares or NEDSCP Cash
Credits. If any NEDSCP Shares deferred by a Director under this Plan are forfeited under the terms of the NEDSCP, the Director’s Stock Account shall be reduced by the number of shares so forfeited. If any NEDSCP Cash Credits of a Director
are forfeited under the terms of the NEDSCP, the Director’s Cash Account shall be reduced by the amount of NEDSCP Cash Credits so forfeited. 
 (d) Retirement Benefit Account. A Director’s Retirement Benefit Account shall be denominated in shares of Common Stock, including fractional shares. Effective as of January 1, 1998, Section 5 of
Article III of the Company’s Bylaws has been amended to eliminate with respect to all persons who are Directors as of January 1, 1998 a provision for a retirement benefit payable to Directors who retire from the Board at age 72 with
at least 10 years of service. Effective as of January 1, 1998, the Retirement Benefit Account of each person who 

  

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is a Director on that date shall be credited with a number a shares of Common Stock determined by the Company as a replacement for the prior retirement
benefit. As of each date for payment of dividends on the Common Stock, the Retirement Benefit Accounts shall be credited with an additional number of shares (including fractional shares) equal to the amount of dividends that would be paid on the
number of shares recorded as the balance of the Retirement Benefit Account as of the record date for such dividend divided by the purchase price for shares of Common Stock under the DRSPP for dividends reinvested on such payment date. The Retirement
Benefit Account of a Director shall be canceled, and all amounts credited to such account shall be forfeited, if the Director ceases to be a Director before reaching age 70 or before serving as a Director for 10 years; provided, however, that
each Director’s Retirement Benefit Account will be fully vested and noncancellable upon the death of the Director, the disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code) of the Director, or a Change in Control
as defined in Paragraph 8. 
 (e) Statement of Account. At the end of each calendar quarter, a report shall be issued
by the Company to each participating Director setting forth the balances of the Director’s Accounts under the Plan. The credit entries made to a Director’s Accounts constitute merely a general obligation of the Company to pay such Accounts
to the Director, or to his or her beneficiary or estate when due under the Plan. 
 (f) Effect of Corporate Transaction on
Stock Accounts and Retirement Benefit Accounts. At the time of consummation of a Corporate Transaction, if any, the amount credited to a Director’s Stock Account and Retirement Benefit Account shall be converted into a credit for cash or
common stock of the acquiring company (“Acquiror Stock”) based on the consideration received by shareholders of the Company in the Corporate Transaction, as follows: 
 (i) Stock Transaction. If holders of Common Stock receive Acquiror Stock in the Corporate Transaction, then (1) the amount
credited to each Director’s Stock Account and/or Retirement Benefit Account shall be converted into a credit for the number of shares of Acquiror Stock that the Director would have received as a result of the Corporate Transaction if the
Director had actually held the Common Stock credited to his or her Stock Account and/or Retirement Benefit Account immediately prior to the consummation of the Corporate Transaction, and (2) Stock Accounts and Retirement Benefit Accounts will
thereafter be denominated in shares of Acquiror Stock and ongoing deferrals of Fees and NEDSCP Shares, if any, shall continue to be made in accordance with outstanding deferral elections into the Stock Accounts as so denominated. 
 (ii) Cash or Other Property Transaction. If holders of Common Stock receive cash or other property in the Corporate Transaction,
then (1) the amount credited to a Director’s Stock Account and/or Retirement Benefit Account shall be transferred to the Director’s Cash Account and converted into a cash credit for the amount of cash or the value of the property that
the Director would have received as a result of the Corporate Transaction if the Director had actually held the Common Stock credited to his or her Stock Account and/or Retirement Benefit Account immediately prior to the consummation of the
Corporate Transaction, and (2) Stock Accounts shall no longer exist under the Plan and all ongoing deferrals, if any, shall thereafter be made into Cash Accounts. 
  

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 (iii) Combination Transaction. If holders of Common Stock receive Acquiror Stock
and cash or other property in the Corporate Transaction, then (1) the amount credited to each Director’s Stock Account and/or Retirement Benefit Account shall be converted in part into a credit for Acquiror Stock under Paragraph 3(f)(i)
and in part into a credit for cash under Paragraph 3(f)(ii) in the same proportion as such consideration is received by shareholders, and (2) ongoing deferrals of Fees and NEDSCP Shares, if any, shall continue to be made in accordance with
outstanding deferral elections into Stock Accounts in accordance with Paragraph 3(f)(i). 
 (iv) Election Following Stock
Transaction. For a period of 12 months following the consummation of any Corporate Transaction which results in Directors having Stock Accounts and/or Retirement Benefit Accounts denominated in Acquiror Stock, each Director shall have a
one-time right to elect to transfer the entire amount in the Director’s Stock Account and Retirement Benefit Account into the Director’s Cash Account. Such election shall be made by written notice to the Company and shall be effective on
the date received by the Company. If such an election is made, the amount of cash to be credited to the Director’s Cash Account shall be determined by multiplying the number of shares of Acquiror Stock in the Director’s Stock Account and
Retirement Benefit Account by the closing market price of the Acquiror Stock reported for the last trading day preceding the effective date of the election. 
 4. Interest. Interest shall be credited to the Cash Account balance (including both principal and interest) of each participating Director based on the balance at the end of each calendar quarter. The rate of
interest to be applied at the end of each calendar quarter shall be the quarterly equivalent of an annual yield that is equal to the annual yield on Moody’s Average Corporate Bond Yield for the preceding quarter, as published by the
Moody’s Investors Service, Inc. (or any successor thereto), or if such index is no longer published, a substantially similar index selected by the Board. The interest credit shall continue to be applied to the Cash Account of a Director, even
if ceasing to serve as a Director, until all amounts credited to his or her Cash Account have been paid. Said interest shall be calculated quarterly, based upon the average daily balance of the Director’s Cash Account since the preceding
calendar quarter, after giving effect to any reduction in the Cash Account as a result of any payments. The remaining annual payments will be recomputed to reflect the additional interest credits. 
 5. Terms of Payment. 
 (a) Plan Benefits. The amounts contained in a Director’s Accounts are subject to the terms of payment as set forth in this paragraph. When a Director ceases to serve as a Director of the Company, either by retirement or
otherwise, the individual shall be entitled to payment of the amounts in his or her Accounts. 
 (b) Timing of Benefit
Payment. At the time the Director elects to defer Fees or NEDSCP Shares or to receive NEDSCP Cash Credits in lieu of NEDSCP Shares, and with respect to Retirement Benefit Accounts before January 1, 1998, the Director may designate the
number of annual installments, not to exceed ten, in which the applicable Account balance shall be paid, or the Director may elect to receive such Account balance in a lump sum payment, or in a combination of a partial lump sum and the remainder in
installment payments. A Director may elect to modify such election by filing a change of payment designation which shall supersede 

  

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the prior form of payment designation for any one (1) or more deferral periods. If the Director’s most recent change of payment designation has not
been filed one (1) full calendar year prior to the year in which the Director ceases to serve as a Director of the Company, the prior election shall be used to determine the form of payment. For example, a Director leaving the Board in 2003
must file a written request with the Committee by December 31, 2001 to change his form of payment designation. 
 (c)
Form of Benefit Payment. Benefits payable to a Director from a Stock Account or a Retirement Benefit Account shall only be paid to such Director as a distribution of Common Stock plus cash for fractional shares. Benefits payable to a Director
from a Cash Account shall only be paid to such Director in cash. 
 (d) Commencement of Payment. Any lump sum payment
or the first annual installment payment owed to a Director shall not be due earlier than the first business day of January in the year following the year in which he or she ceases to serve as a Director of the Company. In the event a Director
terminates the election to defer Fees or NEDSCP Shares, any Fees or NEDSCP Shares already deferred shall not be payable to the Director until such time as he or she ceases to serve as a Director, and then only subject to the terms and conditions
contained herein. The provisions of this paragraph are subject to the terms of Paragraph 6 covering the death of a Director and to the terms of Paragraph 8 covering a Change in Control. 
 (e) Payment to Guardian. If a benefit under the Plan is payable to a minor or a person declared incompetent or to a person
incapable of handling the disposition of his property, the Committee may direct payment of such Plan benefit to the guardian, legal representative or person responsible for the care and custody of such minor, incompetent or person. The Committee may
require proof of incompetence, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the Plan benefit. Such distribution shall completely discharge the Committee and the Company from all liability with respect to
such benefit. 
 (f) Withholding; Payroll Taxes. The Company shall withhold from payments made hereunder any taxes
required to be withheld from such payments under federal, state or local law. 
 (g) Accelerated Distribution.
Notwithstanding any other provision of the Plan, a Director shall be entitled to receive, upon written request to the Committee, a lump sum distribution equal to ninety percent (90%) of the vested Account balance as of the last day of the
calendar quarter immediately preceding the day on which the Committee receives the written request. The remaining balance shall be forfeited by the Director. A Director who receives a distribution under this section shall be suspended from
participation in the Plan for 12 months, but such suspension shall not apply to crediting of NEDSCP Cash Credits. The amount payable under this section shall be paid in a lump sum within 65 days following the receipt of the notice by the
Committee from the Director. 
  

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 6. Death of Director. 
 (a) Plan Death Benefit. Upon the death of a Director or a former Director prior to the receipt of the full amount credited to his
or her Accounts, the balance of the Director’s Accounts shall be paid to the designated beneficiary or beneficiaries in the manner elected in writing by the Director at the time of the deferral election, or if no such election is made, by lump
sum payment. 
 (b) Beneficiary. At the time a Director elects to defer payment of Fees or NEDSCP Shares or to receive
NEDSCP Cash Credits in lieu of NEDSCP Shares, and with respect to Retirement Benefit Accounts before January 1, 1998, the Director may designate a beneficiary or beneficiaries. If greater than 50% of the benefit is designated to a beneficiary
other than the Director’s spouse, such beneficiary designation shall be consented to by the Director’s spouse. Such designation may be changed by the Director at any time without the consent of a beneficiary, subject to the spousal consent
requirement above. If no designated beneficiary survives the Director or former Director, the balance of the Director’s Accounts shall be paid to the Director’s estate. 
 7. Administration. 
 (a) Committee Duties. This Plan shall be administered by the Organization and Executive Compensation Committee of the Board (the “Committee”). The Committee shall have responsibility for the general administration of the
Plan and for carrying out its intent and provisions. The Committee shall interpret the Plan and have such powers and duties as may be necessary to discharge its responsibilities. The Committee may, from time to time, employ other agents and delegate
to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company. 
 (b) Binding Effect of Decisions. The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan. 
 (c)
Indemnity of Committee. To the extent permitted by applicable law, the Company shall indemnify, hold harmless and defend the members of the Committee against any and all claims, loss, damage, expense or liability arising from any action or
failure to act with respect to this Plan, provided that the members of the Committee were acting in accordance with the applicable standard of care. 
 8. Definitions; Change in Control; Corporate Transaction. 
 (a) For purposes of this
Plan, a “Change in Control” of the Company shall mean the occurrence of any of the following events: 
 (i) The
consummation of: 
 (A) any consolidation, merger or plan of share exchange involving the Company (a “Merger”) as a
result of which the holders of outstanding securities of 

  

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the Company ordinarily having the right to vote for the election of directors (“Voting Securities”) immediately prior to the Merger do not continue
to hold at least 50% of the combined voting power of the outstanding Voting Securities of the surviving corporation or a parent corporation of the surviving corporation immediately after the Merger, disregarding any Voting Securities issued to or
retained by such holders in respect of securities of any other party to the Merger; or 
 (B) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company; 
 (ii) At any time during a period of two consecutive years, individuals who at the beginning of such period constituted the board of directors of the Company (“Incumbent Directors”) shall cease for any reason to constitute at least
a majority thereof; provided, however, that the term “Incumbent Director” shall also include each new director elected during such two-year period whose nomination or election was approved by two-thirds of the Incumbent Directors then in
office; or 
 (iii) Any person (as such term is used in Section 14(d) of the Securities Exchange Act of 1934, other than
the Company or any employee benefit plan sponsored by the Company) shall, as a result of a tender or exchange offer, open market purchases or privately negotiated purchases from anyone other than the Company, have become the beneficial owner (within
the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Voting Securities representing twenty percent (20%) or more of the combined voting power of the then outstanding Voting Securities.

 (b) For purposes of this Plan, a “Corporate Transaction” shall mean any of the following: 
 (i) any consolidation, merger or plan of share exchange involving the Company pursuant to which shares of Common Stock would be converted
into cash, securities or other property; or 
 (ii) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, the assets of the Company. 
 9. Amendment and Termination of the Plan.

 (a) Amendment. The Board may at any time amend the Plan in whole or in part; provided, however, that upon a Change
in Control, no amendment shall be effective to change the payout schedule in Paragraph 9(b)(ii), and further provided that no amendment shall decrease or restrict the amount credited to any Account maintained under the Plan as of the date of
amendment. An amendment affecting the interest rate credited under Paragraph 4 shall not become effective before the first day of the calendar year which follows the adoption of the amendment and at least 30 days written notice of the amendment
to the Director. An amendment affecting the interest rate credited under Paragraph 4 that is adopted after a Change in Control shall apply only to those amounts credited to Directors’ Accounts after the Change in Control. 
  

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 (b) Termination. The Board may at any time partially or completely terminate the
Plan if, in its judgment, the tax, accounting, or other effects of the continuance of the Plan, or potential payments thereunder, would not be in the best interests of the Company. 
 (i) Partial Termination. The Board may partially terminate the Plan by instructing the Committee not to accept any additional
deferrals. In the event of such a partial termination, the Plan shall continue to operate and be effective with regard to deferrals entered into prior to the effective date of such partial termination. 
 (ii) Complete Termination. The Board may completely terminate the Plan by instructing the Committee not to accept any additional
deferrals, and terminate all ongoing deferrals. The Plan shall cease to operate and the Committee shall pay out to each Director the balance in each of his or her Accounts in a lump sum or in equal annual installments amortized over the period
listed in the payout schedule below based on the balance in the particular Account at the time of such complete termination: 
 Payout
Schedule 
  

			
	 Appropriate Account Balance
	  	 Payout Period

	Less than $10,000	  	Lump sum
		
	$10,000 but less than $50,000	  	Lesser of 5 years or period elected in Participation Agreement
		
	More than $50,000	  	Period elected in Participation Agreement

 Interest earned on the unpaid balance in the Director’s Cash Account shall be the applicable
interest rate at the end of the calendar quarter immediately preceding the effective date of such complete termination. 
 10.
Miscellaneous. 
 (a) Unsecured General Creditor. The Accounts shall be established solely for the purpose of
measuring the amounts owed to a Director or beneficiary under the Plan. Directors and their beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of the Company, nor shall
they be beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Company. Except as may be provided in Paragraph 10(b), such policies,
annuity contracts or other assets of the Company shall not be held under any trust for the benefit of the Directors, their beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfilling of the obligations
of the Company under this Plan. Any and all of the Company’s assets and policies shall be, and remain, the general, unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be that of an unfunded and
unsecured promise to pay money in the future. 
  

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 (b) Trust Fund. The Company shall be responsible for the payment of all benefits
provided under the Plan. At its discretion, the Company may establish one or more trusts, with such trustees as the Board may approve, for the purpose of providing for the payment of such benefits. Such trust or trusts may be irrevocable, but the
assets thereof shall be subject to the claims of the Company’s creditors. To the extent any benefits provided under the Plan are actually paid from any such trust, the Company shall have no further obligation with respect thereto, but to the
extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Company. 
 (c)
Nonassignability. No assignment or alienation may be made of any deferred fees or interest thereon, except in accordance with Paragraph 6. 
 (d) Governing Law. The provisions of this Plan shall be construed and interpreted according to the laws of the State of Oregon. 
 (e) Successors. The provisions of this Plan shall bind and inure to the benefit of the Company and its successors and assigns. The
term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Company, and successors of
any such corporation or other business entity. 
 (f) The foregoing restatement of the Plan was approved by the Board of
Directors of Northwest Natural Gas Company effective as of January 1, 2007. 
  

			
	NORTHWEST NATURAL GAS COMPANY
		
	 By:   
	 	  

  

			
		
	Attest:	 	  

  

 -9-Severance Agreement

 Exhibit 10.3 
 CREE, INC. 
 SEVERANCE AGREEMENT 
 This Severance Agreement (the “Agreement”) is entered into as of September 29, 2006 (the “Effective Date”) by and between Cree,
Inc. (the “Company”) and John T. Kurtzweil (“Executive”). 
 1. Background. As of the Effective Date, Executive
has been employed by the Company as its Executive Vice President-Finance, Chief Financial Officer and Treasurer. The period during which Executive is employed by the Company is referred to in this Agreement as the “Employment Term.” The
Company and Executive are entering into this Agreement to provide Executive severance benefits, as set forth herein, in connection with termination of Executive’s employment following any Change in Control that may occur during the Employment
Term and in certain other circumstances. 
 2. At-Will Employment. Executive and the Company agree that Executive’s employment
with the Company constitutes “at-will” employment. Executive and the Company acknowledge that this employment relationship may be terminated at any time, upon written notice to the other party, with or without good cause or for any or no
cause, at the option either of the Company or Executive. However, as described in this Agreement, Executive may be entitled to severance benefits depending upon the circumstances of Executive’s termination of employment. Executive agrees to
resign from all positions held with the Company and its affiliates immediately following the termination of his employment if the Company’s Board of Directors (the “Board”) so requests. 
 3. Term of Agreement. This Agreement will have an initial term of one year commencing on the Effective Date. On the first anniversary of the
Effective Date and on each anniversary of the Effective Date thereafter, this Agreement automatically will renew for an additional one-year term unless either party provides the other party with written notice of non-renewal at least 120 days prior
to the date of automatic renewal or unless Executive’s employment terminates for any reason prior to the anniversary date. Notwithstanding any contrary provision in this Section 3, in the event of a Change in Control during the Employment
Term, this Agreement will continue for twelve months after the effective date of the Change in Control. 
 4. Severance. 

(a) Termination Without Cause or Resignation for Good Reason not in connection with a Change in Control. If Executive’s employment is
terminated by the Company without Cause or by Executive for Good Reason, and the termination is not in Connection with a Change in Control, then, subject to Section 4(d)(i) and Section 5 below, Executive will receive: (i) continued
payment of base salary for twelve (12) months following the termination of Executive’s employment in accordance with the Company’s regular payroll cycle, and (ii) reimbursement of premiums through the Company’s payroll
system as explained below for continuation of medical benefits for Executive, Executive’s spouse, and Executive’s eligible dependents under the Company’s Benefit Plans under the Consolidated Omnibus Budget Reconciliation Act of 1986,
as amended (“COBRA”) for twelve (12) months following 

 
Executive’s termination of employment; provided Executive validly elects to continue coverage under COBRA, continues coverage in accordance with
applicable law, and pays the applicable premiums to the Company’s COBRA administrator when due. When applicable, COBRA premiums will be reimbursed as follows: the monthly COBRA premium in effect at the time of termination will be multiplied by
twelve and the product will be divided by the number of pay periods remaining in the twelve (12) months following the termination of Executive’s employment, and an amount equal to the result (i.e., the quotient rounded to the nearest whole
cent) will be included in Executive’s compensation each of the remaining pay periods, so long as Executive remains eligible for reimbursement of COBRA premiums under the terms of this Agreement. 
 (b) Termination Without Cause or Resignation for Good Reason in connection with a Change in Control. If Executive’s employment is terminated
by the Company without Cause or by Executive for Good Reason, and the termination is in Connection with a Change in Control, then, subject to Section 4(d)(i) and Section 5 below, Executive will receive: (i) continued payment of base
salary for twelve (12) months following the termination of Executive’s employment in accordance with the Company’s regular payroll cycle, (ii) reimbursement of premiums through the Company’s payroll system as explained above
for continuation of medical benefits for Executive, Executive’s spouse, and Executive’s eligible dependents under the Company’s Benefit Plans under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended
(“COBRA”) for twelve (12) months following Executive’s termination of employment; provided Executive validly elects to continue coverage under COBRA, continues coverage in accordance with applicable law, and pays the applicable
premiums to the Company’s COBRA administrator when due, and (iii) accelerated vesting of all of Executive’s then outstanding, unvested equity awards. 
 (c) Sole Right to Severance. Any severance payment will be paid pursuant to and in accordance with the Company’s Severance Program. This Agreement is intended to represent Executive’s sole entitlement
to severance payments and benefits in connection with the termination of his employment, except for such payments and benefits to which Executive would be entitled as an employee of the Company in the absence of this Agreement. 
 (d) Section 409A. 
 (i)
Notwithstanding anything to the contrary in this Agreement, if the Company determines, in its good faith judgment, that the Executive is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the “Code”), the Company will restructure payment of the severance benefits so that the severance benefits will accrue during the first six (6) months after the Executive’s termination, and the
accrued amount will be paid in a lump sum payment on the first regular payroll payment date after expiration of the 6-month period, with all subsequent payments, if any, made in accordance with the Company’s regular payroll cycle as otherwise
provided in this Agreement. 
  

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 (ii) The Executive agrees to work in good faith with the Company to consider amendments to this
Agreement which are necessary or appropriate to avoid imposition of any additional tax or income recognition under Section 409A of the Code prior to the actual payment to the Executive of payments or benefits under this Agreement. 

5. Conditions to Receipt of Severance; No Duty to Mitigate. 
 (a) Separation Agreement and Release of Claims. The receipt of any severance pursuant to Section 4 will be subject to Executive signing and not revoking a release of claims in substantially the form
attached as Exhibit A, but with any appropriate modifications, reflecting changes in applicable law, as is necessary or appropriate to provide the Company with the protection it would have if the release were executed as of the Effective
Date. No severance will be paid or provided until the separation agreement and release of claims become effective. 
 (b)
Nondisparagement. During the Employment Term and for twelve (12) months thereafter, Executive will not knowingly disparage, criticize, or otherwise make any derogatory statements regarding the Company, its directors, or its officers. The
foregoing restrictions will not apply to any statements that are made truthfully in response to a subpoena or other compulsory legal process. 
 (c) Other Requirements. Executive’s receipt of continued severance payments will be subject to Executive continuing to comply with the terms of the Confidential Information Agreement. 
 (d) No Duty to Mitigate. Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any
earnings that Executive may receive from any other source reduce any such payment. 
 6. Definitions. 
 (a) Benefit Plans. For purposes of this Agreement, “Benefit Plans” means plans, policies, or arrangements that the Company sponsors (or
participates in) and that immediately prior to Executive’s termination of employment provide Executive, Executive’s spouse, and/or Executive’s eligible dependents with medical, dental, or vision benefits. Benefit Plans do not include
any other type of benefit (including, but not by way of limitation, financial counseling, disability, life insurance, or retirement benefits). 
 (b) Cause. For purposes of this Agreement only, “Cause” means Executive’s: (i) gross negligence or willful misconduct in the performance of his duties to the Company after one written warning detailing the
concerns and offering the Executive the opportunity to cure; (ii) material and willful violation of any federal or state law; (iii) commission of any act of fraud with respect to the Company; (iv) conviction of, plea of nolo contendre
to, or grant of prayer of judgment continued with respect to, a felony or any crime that the Chief Executive Officer or the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business;
(v) material breach of his Confidential Information Agreement, which breach is (if capable of cure) not cured within thirty (30) days after the Company delivers written notice to Executive of the breach; (vi) death; or (vii) the
Executive has been disabled within the meaning of the Company’s long-term disability insurance program for a period of six months and is unable to return to work after such six-month period, with or without reasonable accommodation. 

 

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 (c) Change in Control. For purposes of this Agreement, “Change in Control” will have the
same meaning as in Section 7.1 of the Company’s Equity Compensation Plan (as amended and restated August 5, 2002 and without regard to any subsequent amendments). 
 (d) Confidential Information Agreement. For purposes of this Agreement, “Confidential Information Agreement” means the Company’s
standard form of Employee Agreement Regarding Confidential Information, Intellectual Property, and Non-Competition executed by Executive in favor of the Company concurrently with the execution of this Agreement, as such Confidential Information
Agreement may be amended from time to time by mutual written agreement of the parties. 
 (e) Good Reason. For purposes of this
Agreement, “Good Reason” means any act of the Company, without Executive’s consent, that materially and adversely diminishes the Executive’s duties or responsibilities; provided that, in the event of the happening of such act,
the Executive must notify the Board in writing of the act and the basis for his belief that it constitutes Good Reason. The Company will have thirty (30) days from its receipt of such notice to remedy any act giving rise to a claim of Good
Reason before Executive may take further action hereunder on the basis of such act. Executive’s actions approving any change, reduction, requirement, or occurrence in his role as Executive Vice President-Finance, Chief Financial Officer or
Treasurer (that otherwise may be considered Good Reason) will be considered consent for the purposes of this Good Reason definition. 
 (f)
In Connection with a Change in Control. For purposes of this Agreement, a termination of Executive’s employment with the Company is “in Connection with a Change in Control” if Executive’s employment is terminated within
twelve (12) months following a Change in Control. 
 7. Indemnification. Subject to applicable law, Executive will be provided
indemnification to the maximum extent permitted by the Company’s bylaws and Articles of Incorporation, with such indemnification to be on terms determined by the Board or any of its committees, but on terms no less favorable than provided to
any other Company executive officer or director and subject to the terms of any separate written indemnification agreement. 
 8.
Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors, and legal representatives of Executive upon Executive’s death, and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation, or other business entity which at any time, whether by purchase,
merger, or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or
transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance, or other disposition of Executive’s right to compensation or other benefits will be null and void. 
 9. Notices. All notices, requests, demands, and other communications called for hereunder will be in writing and will be deemed given (a) on
the date of delivery if delivered personally, (b) one day after being sent overnight by a well established commercial overnight service, or (c) four days after being mailed by registered or certified mail, return receipt 

  

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requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate
in writing: 
 If to the Company: 
 Attn: Vice President, Administration 
 Cree, Inc. 
 4600 Silicon Drive 
 Durham, NC 27703

 If to Executive: 
 at the last
residential address known by the Company. 
 10. Severability. If any provision hereof becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full force and effect without said provision. 
 11.
Arbitration. The Parties agree that any and all disputes arising out of the terms of this Agreement, Executive’s employment by the Company, Executive’s service as an officer or director of the Company, or Executive’s
compensation and benefits, their interpretation, and any of the matters herein released, will be subject to binding arbitration in Durham, North Carolina before the American Arbitration Association under its National Rules for the Resolution of
Employment Disputes, supplemented by the North Carolina Rules of Civil Procedure. The Parties agree that the prevailing party in any arbitration will be entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration
award. The Parties hereby agree to waive their right to have any dispute between them resolved in a court of law by a judge or jury. This paragraph will not prevent either party from seeking injunctive relief (or any other provisional remedy)
from any court having jurisdiction over the Parties and the subject matter of their dispute relating to Executive’s obligations under this Agreement and the Confidential Information Agreement. 
 12. Expenses of Enforcement. In the event of a dispute relating to any provision of this Agreement, the Company will reimburse Executive’s
fees and expenses as incurred quarterly, including reasonable attorneys’ fees, in connection with such dispute, provided Executive prevails on at least one material issue in such dispute, or provided an arbitrator does not determine that
Executive’s legal positions were frivolous or without legal foundation. In the event Executive does not so prevail or in the event of such determination, Executive will repay to the Company any amounts previously reimbursed by it, and Executive
will reimburse the Company for its fees and expenses, including reasonable attorneys’ fees, incurred in connection with the dispute. 
  

 5 

 13. Integration. This Agreement, together with the letter agreement between the parties dated
September 1, 2006, the Confidential Information Agreement, and the standard equity plan documents governing Executive’s outstanding equity awards, represent the entire agreement and understanding between the parties as to the subject
matter herein and supersedes all prior or contemporaneous agreements whether written or oral. No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless in a writing and is signed by duly authorized
representatives of the parties hereto. 
 14. Waiver of Breach. The waiver of a breach of any term or provision of this Agreement,
which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement. 
 15. Survival. The Confidential Information Agreement, the Company’s and Executive’s responsibilities under Sections 4 and 5, Sections 7, 8, 11 and 12, and all other provisions that expressly or by their nature
survive, will survive the termination or expiration of this Agreement. 
 16. Headings. All captions and Section headings used in this
Agreement are for convenient reference only and do not form a part of this Agreement. 
 17. Tax Withholding. All payments made
pursuant to this Agreement will be subject to withholding of applicable taxes. 
 18. Governing Law. This Agreement will be governed
by the laws of the State of North Carolina as if executed and to be performed wholly within such State. 
 19. Acknowledgment.
Executive acknowledges that he has had the opportunity to discuss this matter with and obtain advice from his private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is
knowingly and voluntarily entering into this Agreement. 
 20. Counterparts. This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned. 
 [Next Page is Signature Page] 
  

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 IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by a duly
authorized officer, as of the day and year written below. 
 COMPANY: 
 CREE, INC. 
  

							
	 By:
	 	 /s/ Brenda F. Castonguay
	 		 	Date: October 16, 2006
		 	Brenda F. Castonguay	 		 	
		 	Vice President, Administration	 		 	
				
		 	EXECUTIVE:	 		 	
				
		 	 /s/ John T. Kurtzweil
 John T.
Kurtzweil
	 		 	Date: October 16, 2006

  

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