Document:

Charles & Colvard letter agreement

 EXHIBIT 10.1 
  
 December 14, 2003 
  

			
		
	 Robert S. Thomas
 President & CEO
 Charles & Colvard, Ltd.
 3800 Gateway Blvd. Suite 310
 Morrisville, NC 27560
	  	 Charles M. Swoboda
 President & CEO
 Cree, Inc.
 4600 Silicon Drive
 Durham, NC 27703

  
 This letter, when signed on behalf of
Charles & Colvard, Ltd. (formerly C3 Inc.) and Cree, Inc., will serve as an agreement between Charles & Colvard and Cree amending the parties’ August 5th , 2002 letter agreement to provide the following terms, effective on and after December 29, 2003. 
  
 1. Cree will supply SiC production crystals to Charles & Colvard, and
Charles & Colvard will purchase SiC production crystals from Cree, according to the terms stated in this agreement. 
  
 2. Charles & Colvard will purchase [***] kg each quarter of calendar 2004 of “usable material” (where “usable material” will be
determined in the manner described in Paragraph 3) at a price of $[***] /gram. Provided that Cree uses its best commercially reasonable efforts to deliver the quantities of usable material required by this agreement, Cree will not be held in breach
for delays in delivery. As used in this agreement, “quarter” refers to fiscal quarters of Cree ending during the indicated period. 
  
 3. The quantity of “usable material” of crystals delivered to Charles & Colvard pursuant to this agreement will be determined according to
the following: 
  

	 	A.	Material will be graded according to the specifications in Attachment A. 

  

	 	B.	Grams of usable material will be calculated on a crystal by crystal basis according to the following equation: (usable mm) as a percent of total length of the crystal in mm
multiplied by the actual weight of the crystal in grams. “Usable mm” means millimeters of usable material as defined in Attachment A. 

  

	 	C.	Crystals shipped to Charles & Colvard must contain at least [***] grams of usable material for the 2” crystals or [***] grams for 3” crystals. This usable area must be
contiguous. Crystal diameter to be shipped will be 2” or 3” as determined by Cree. 

  

	 	4.	The obligations of the parties under Paragraph 4 of the August 5th, 2002 agreement are terminated. 

  

	 	5.	Except as provided above, the supply and purchase of SiC material will be governed by the terms and conditions of the parties’ Amended and Restated Exclusive Supply Agreement
dated June 6, 1997 (the “Supply Agreement”, as amended). 

  

	 	6.	The contents of this letter shall be considered “Confidential Information” of each party subject to the provisions of Section 5 of the Supply Agreement.

  

									
	 CHARLES & COLVARD, LTD.
	 	 	 	 CREE, INC.
  

					
	By:	 	/s/    Robert S. Thomas	 	 	 	By:	 	/s/    Charles M. Swoboda
	 	 	
	 	 	 	 	 	

	 	 	 Robert S. Thomas
 President & CEO
 Charles & Colvard Ltd.
	 	 	 	 	 	 Charles M. Swoboda
 President & CEO
 Cree, Inc.

  
  

					
	1 of 2	 	Cree, Inc. and Charles and Colvard, Ltd. Proprietary	 	12/14/03

  
  
 [***] Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been
filed separately with the Commission. 

 ATTACHMENT A 
  
 Specification of usable material as referenced in paragraph 2 above. 
  
 COLOR: Usable material is calculated as “light gray” or “very light gray”. Specifically tone/color number
20 and 10 1 as used in the Charles & Colvard boule-grading screen will be considered acceptable tone and color
material. (Note: Grade 10 is preferred. Grade 20 material will be valued at $[***] per-gram.) 
  
 DEFECTS: 
  
 Material volume of
acceptable color will be reduced by the percentage of the defects listed in the table below. Charles & Colvard shall set the acceptable standards for the quality of both the color and defects of all material purchased pursuant to this letter
agreement. Unless otherwise mutually agreed by the parties in writing, however, the grading of the material by both Cree and Charles & Colvard will adhere to those standards and methods identified in Notes 1-3 below, applied on a consistent
basis in the same manner as applied during September, October and November of calendar 2003. Should Charles & Colvard deem such standards and methods or new defects unacceptable, it can request changes to its volume commitment or the methods,
standards or list of price reducing defects, with such changes to be effective 60 days after giving Cree notice of the changes. Cree may request changes to its pricing and/or volume commitment. If the parties do not agree in writing on the changes
to be made, before the effective date of the requested changes, either party can terminate this agreement upon notice and, in that event, the Supply Agreement will govern the parties’ obligations thereafter. 
  

							
	ID

	  	 D-Type

	  	 	  	 
	1	  	[***]	  	Reduce	  	 
	2	  	[***]	  	Reduce	  	 
	3	  	[***]	  	Reduce	  	 
	4	  	[***]	  	No reduction	  	 
	5	  	[***]	  	Reduce	  	 
	6	  	[***] 2	  	Reduce	  	 
	7	  	[***]	  	No reduction	  	 
	8	  	[***]	  	Reduce	  	 
	9	  	[***] 3	  	Reduce	  	 

  
 Notes 
  

	1	CH0257R 17.4mm tone/color 20 (lightest 20), new gray boules that are lighter than this will grade as 10, CE0269R 9.5mm tone/color 30 (lightest 30), new gray boules that are
lighter than this will grade as 20 

  

	2	[***] grading will be performed according to the Cree document identified as the [***]. The area determined according to this procedure multiplied by [***] defines the area of
non-usable material for [***]. 

  

	3	Crystals CC0213R, CH0165R and CH0215R represent [***] grading. 

  
  

					
	2 of 2	 	Cree, Inc. and Charles and Colvard, Ltd. Proprietary	 	12/14/03

  
  
 [***] Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been
filed separately with the Commission.Amendment No 4 dated as of 11-24-03 to the Marvin Schlanger Employment Agreement

 Exhibit 10.62 
  
 AMENDMENT NO. 4, dated November 24, 2003 (this “Amendment”), to the Employment Agreement dated November 14, 2000,
as amended by Amendment No. 1 thereto dated March 15, 2002, Amendment No. 2 dated January 1, 2003 and Amendment No. 3 dated February 17, 2003 (the “Employment Agreement”), by and between RESOLUTION PERFORMANCE PRODUCTS LLC, a
Delaware limited liability company (the “Company”) and MARVIN O. SCHLANGER (“Executive”). 
  
 WHEREAS, Executive and the Company desire to amend Executive’s Employment Agreement with respect to the term of employment and
Executive’s compensation as specifically set forth in this Amendment. 
  
 NOW, THEREFORE, it is therefore hereby agreed by and between the parties as follows: 
  

	1.	Term of Employment 

  
 Section 2 of Executive’s Employment Agreement is hereby amended by deleting the word “third” in the sixth line and inserting the word
“fifth” therein. 
  

	2.	Compensation and Benefits. 

  
 A.    Section 3(a) of Executive’s Employment Agreement is hereby amended in its entirety to read as follows: 
  
 “(a) Base Salary. The Company shall pay
Executive a base salary (the “Base Salary”) at the annual rate of $150,000, provided that if the LTM Adjusted EBITDA (as defined below) for the twelve month period ending on the last day of any fiscal quarter during 2003 or 2004
(such day, the “Salary Reimbursement Date”) equals $116 million or more, the Base Salary shall be payable at the annual rate of $300,000 from and after the Salary Reimbursement Date, and the Company shall pay to Executive 125% of
the amount paid to Executive as Base Salary from January 1, 2003 to the Salary Reimbursement Date or December 31, 2003, whichever is later. In the event of Executive’s death, long-term disability, retirement, or a Realization Event (as defined
in the 2000 Stock Option Plan of Resolution Performance Products Inc.) prior to the earlier of (i) the Salary Reimbursement Date and (ii) January 1, 2004 (any such event, a “Special Event”), the Company shall pay to Executive a lump
sum amount (to be considered pensionable wages) equal to 100% of the amount paid to Executive as Base Salary from January 1, 2003 to the date of the Special Event. Notwithstanding the foregoing, on January 1, 2004, Executive’s Base Salary shall
be payable at the annual rate of $400,000. The Base Salary (and other amounts payable in accordance with this paragraph (a)) shall be payable in accordance with the ordinary payroll practices of the Company and shall be subject to increase as
determined by the compensation committee of the Board of 
  

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 Managers of the Company (the “Compensation Committee”). For purposes of this Agreement,
“LTM Adjusted EBITDA” shall be determined in accordance with the Company’s historical practices. 
  
 B.    Section 3 (e) is hereby added as follows: 
  
 “(e) Extension Bonus. In addition to the Base Salary and Bonus, Executive shall receive a total
of $500,000, payable in eight consecutive quarterly installments of $62,500 each on or before the fifteenth (15) day of each quarter, commencing with the quarter beginning on January 1, 2004 (the “Extension Bonus”); provided
that Executive is employed by the Company on the first day of such quarter. In the event of Executive’s death, long-term disability, or a Realization Event (as defined in the 2000 Stock Option Plan of Resolution Performance Products Inc.) prior
to the Extension Bonus being paid in full, the Company shall pay to Executive a lump sum amount (to be considered pensionable wages) equal to the remaining unpaid balance of the Extension Bonus.” 
  

	3.	Effectiveness. 

  
 This Amendment shall become effective as of the date hereof. 
  

	4.	No Other Amendments. 

  
 Except as expressly set forth herein, Executive’s Employment Agreement remains in full force and effect in accordance with its terms and nothing
contained herein shall be deemed to be a waiver, amendment, modification or other change of any term, condition or provision of Executive’s Employment Agreement. 
  

	5.	References to the Employment Agreement. 

  
 From and after the date hereof, all references in the Employment Agreement and any other documents to the Employment Agreement shall be deemed to be
references to the Employment Agreement after giving effect to this Amendment. 
  

	6.	Headings. 

  
 The headings used herein are for convenience of reference only and shall not affect the construction of, nor shall they be taken into consideration in
interpreting, this Amendment. 
  

	7.	Counterparts. 

  
 This Amendment may be executed in any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute
one and the same instrument. Facsimile counterpart signatures to this Amendment shall be acceptable and binding. 
  

	8.	Applicable Law. 

  
 THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW). 
  
 [SIGNATURE PAGES FOLLOW]

  
  

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 IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the date first above
written. 
  

			
	RESOLUTION PERFORMANCE PRODUCTS LLC
	 
	 
	 By:
	 	    /S/    MARK ANTONVICH
	 	 	

	 	 	Name: Mark Antonvich
	 	 	Title:   Vice President
	 	 	 
	 	 	 
	 	 	 
	 	 	    /S/    MARVIN O. SCHLANGER
	 	 	

	 	 	Name: Marvin O. Schlanger

  

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