CREE INC (Form: 8-K, Received: 08/29/2014 16:02:30)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): August 25, 2014

CREE, INC.

(Exact name of registrant as specified in its charter)



North Carolina	0-21154	56-1572719
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)



4600 Silicon Drive
Durham, North Carolina	27703
(Address of principal executive offices)	(Zip Code)

(919) 407-5300

Registrant’s telephone number, including area code

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(e) Management Incentive Compensation Plan

On August 25, 2014, the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) determined that the quarterly financial targets under the Company’s Management Incentive Compensation Plan, as amended (the “MICP”) for fiscal 2015 would be stated in terms of revenue and non-GAAP operating income, unless different measures are approved by the Chief Executive Officer. For further information relating to the MICP, please see the Company’s Form 8-K filed on September 5, 2013, including the full text of the MICP filed as Exhibit 10.1 thereto.

Grants of Performance Units

On August 25, 2014, the Compensation Committee approved the grant of performance units to Charles M. Swoboda, the Company’s Chairman, Chief Executive Officer and President, Michael E. McDevitt, the Company’s Executive Vice President and Chief Financial Officer, and Norbert W. G. Hiller, the Company’s Executive Vice President-Lighting, under the Company’s 2013 Long-Term Incentive Compensation Plan (the “LTIP”), which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated October 29, 2013, as filed with the Securities and Exchange Commission on October 29, 2013. The performance units are designed to provide Messrs. Swoboda, McDevitt, and Hiller annual incentive compensation if the Company’s financial performance for fiscal 2015 achieves a pre-established non-GAAP operating income threshold. Messrs. McDevitt and Hiller were granted performance units in lieu of participation in the annual award component of the MICP; Mr. Swoboda is not eligible for awards under the MICP. Any payment under the performance units will be paid in cash. Utilizing an award under the LTIP permits the award to qualify for the performance-based compensation exemption under Section 162(m) of the Internal Revenue Code of 1986, as amended.

Each executive is eligible to receive pursuant to his performance units an annual incentive award determined by multiplying his base salary, his target award level and a performance measurement (specified as a percentage between 0% and 200%) derived by comparing the Company’s fiscal 2015 financial performance against pre-established revenue and non-GAAP operating income targets. In the event of a change in control during fiscal 2015, the percentage for each measure will be not less than 100%. The performance units awarded to Messrs. Swoboda, McDevitt and Hiller for fiscal 2015 were granted pursuant to the terms of a Notice of Grant dated August 25, 2014 and a Master Performance Unit Award Agreement dated August 25, 2014 with each such executive. Mr. Swoboda’s target award level is set at 140% of his base salary. Each of Messrs. McDevitt’s and Hiller’s target award levels is set at 48% of such executive’s base salary.

Except as provided in the Company’s Severance Plan for Section 16 Officers, as amended (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 31, 2013) and except as provided with respect to death or long-term disability or a change in control, (i) each executive must be continuously employed by the Company in the positions referenced above for such executive through the last day of the

performance period, (ii) the performance units will not be considered earned by the executive until the last day of the performance period, and (iii) if the executive terminates his employment prior to the last day of the performance period, with or without cause, he will forfeit his performance units. If there is a change in control and the executive’s employment terminates on or prior to June 28, 2015, the executive will not be entitled to payment under his performance units; however, he is entitled to payment of a similar amount under his Change in Control Agreement. Mr. Swoboda’s Change in Control Agreement is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 20, 2012. The form of Messrs. McDevitt’s and Hiller’s Change in Control Agreement is filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 20, 2012.

The foregoing description of the grant of performance units is subject to and qualified in its entirety by the Notices of Grant included as Exhibits 10.1 through 10.3 to this report and the Form of Master Performance Unit Award Agreement included as Exhibit 10.4 to this report, each of which is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits



Exhibit No.	Description of Exhibit
Exhibit 10.1	Notice of Grant to Charles M. Swoboda, dated August 25, 2014
Exhibit 10.2	Notice of Grant to Michael E. McDevitt, dated August 25, 2014
Exhibit 10.3	Notice of Grant to Norbert W. G. Hiller, dated August 25, 2014
Exhibit 10.4	Form of Master Performance Unit Award Agreement

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



	CREE, INC.


	By:		/s/ Michael E. McDevitt
			Michael E. McDevitt
			Executive Vice President and Chief Financial Officer

Date: August 29, 2014

EXHIBIT INDEX



Exhibit No.	Description of Exhibit
Exhibit 10.1	Notice of Grant to Charles M. Swoboda, dated August 25, 2014
Exhibit 10.2	Notice of Grant to Michael E. McDevitt, dated August 25, 2014
Exhibit 10.3	Notice of Grant to Norbert W. G. Hiller, dated August 25, 2014
Exhibit 10.4	Form of Master Performance Unit Award Agreement

Exhibit 10.1



		NOTICE OF GRANT
	Participant:	Charles M. Swoboda
Company:	Award Number:	15
Cree, Inc.	Award Plan:	2013 Long-Term Incentive Compensation Plan
4600 Silicon Drive	Award Type:	Performance Units
Durham, NC 27703	Grant Date:	August 25, 2014
Tax I.D. 56-1572719	Performance Period:	June 30, 2014 through June 28, 2015

Dear Chuck:

I am pleased to inform you that Cree, Inc. (the “Company”) has awarded Performance Units to you effective August 25, 2014 (the “Grant Date”). This award is subject to and governed by the terms of the Cree, Inc. 2013 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 2015 (“FY15”), as provided in the Company’s human resources management system, unless your annual base salary changes after the first fiscal quarter. If your annual base salary changes after the first fiscal quarter, “Base Salary” will mean the weighted average annual base salary for the Performance Period determined by multiplying each annual base salary in effect during the Performance Period by a fraction, the numerator of which is the number of calendar days in the Performance Period on which such annual base salary was in effect and the denominator of which is the number of calendar days in the Performance Period. However, if you are on a leave of absence (other than a leave of absence where you continue to be paid your full base salary through the Company’s payroll system, except payments received under the Company’s short-term disability income protection plan), for all or part of the Performance Period, your Base Salary will be reduced proportionately to equate to the base salary applicable to the number of calendar days you were not on a leave of absence during the Performance Period.

For purposes of the foregoing, your “Target Award Level” is one hundred forty percent (140%) of your Base Salary.

For purposes of the foregoing, the “Performance Measurement” is a percentage between 0% and 200% determined by the Compensation Committee of the Company’s Board of Directors (the “Committee”) after assessing the Company’s performance against FY15 revenue and non-GAAP operating income 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 Performance Measurement levels for revenue and non-GAAP operating income targets for the Performance Period. The Performance Measurement for the Performance Period will be 0% unless the minimum non-GAAP operating income target is achieved. Provided that the minimum non-GAAP operating income target is achieved, the Performance Measurement for the Performance Period will be determined by averaging the Performance Measurement levels associated with actual revenue and non-GAAP operating income results for the Performance Period, rounded to the nearest whole percentage.

Except as provided in the Company's Severance Plan for Section 16 Officers, if such plan is then in effect, and except as provided below with respect to your death or LTD Disability (as defined in the Change in Control Agreement between you and the Company effective December 17, 2012 (the "Change in Control Agreement")) or a Change in Control (as defined in Section 10(d) of the Change in Control Agreement), (i) you must be continuously employed by the Company as the Company's Chief Executive Officer and President through the last day of the Performance Period to have a right to payment of your Performance Units, (ii) your Performance Units will not be considered earned until the last day of the Performance Period, and (iii) if you terminate employment with the Company prior to the last day of the Performance Period, 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 and non-GAAP operating income 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 determine the Performance Measurement for the Performance Period by averaging the Performance Measurement levels on the Schedule that corresponds to each Result, rounded to the nearest whole percentage. However, in the event a Change in Control occurs during the Performance Period, the percentage for each Result will be no less than 100%.

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

In connection with the Committee’s determination of the annual revenue and non-GAAP operating income results for the Performance Period, the Committee shall (without limiting its authority to apply negative discretion as provided above) make adjustments that eliminate the effect of any changes or events (each a “Change”) that occur during such Performance Period and that were not fully anticipated and/or accurately incorporated into the financial calculations when the performance targets were determined, where (a) making the adjustment will improve performance results, and (b) the Change has a material effect on results under a performance target (determined consistently with past practice), and (c) the Change comes within one or more of the following categories (determined consistently with past practice, to the extent applicable): (1) changes in corporate or capital structure, including but not limited to debt or equity offerings, mergers, acquisitions or divestitures; or (2) other unusual or nonrecurring events.

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

If there is a Change in Control and you remain continuously employed by the Company through the end of the Performance Period, but your employment terminates In Connection with a Change in Control upon or after the end of the Performance Period but prior to the payment date under your Performance Units, you will be entitled to payment under your Performance Units as otherwise determined in accordance with this Notice of Grant. However, if there is a Change in Control and your employment terminates prior to the end of the Performance Period, you will not be entitled hereunder to a payment under your Performance Units. “In Connection with a Change of Control” will have the same meaning as in Section 10(i) of the Change in Control Agreement.

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

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

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

Date: August 25, 2014



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

Exhibit 10.2



		NOTICE OF GRANT
	Participant:	Michael E. McDevitt
Company:	Award Number:	16
Cree, Inc.	Award Plan:	2013 Long-Term Incentive Compensation Plan
4600 Silicon Drive	Award Type:	Performance Units
Durham, NC 27703	Grant Date:	August 25, 2014
Tax I.D. 56-1572719	Performance Period:	June 30, 2014 through June 28, 2015

Dear Mike:

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 Performance Unit Target Award Level; and


•	C equals the Performance Measurement.

For purposes of the foregoing, your “Performance Unit Target Award Level” is forty-eight percent (48%) of your Base Salary.

Except as provided in the Company's Severance Plan for Section 16 Officers, if such plan is then in effect, and except as provided below with respect to your death or LTD Disability (as defined in the Executive Change in Control Agreement between you and the Company effective December 17, 2012 (the "Change in Control Agreement")) or a Change in Control (as defined in Section 10(d) of the Change in Control Agreement), (i) you must be continuously employed as an Executive Officer of the Company through the last day of the Performance Period to have a right to payment of your Performance Units, (ii) your Performance Units will not be considered earned until the last day of the Performance Period, and (iii) if you terminate employment with the Company prior to the last day of the Performance Period, 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 and non-GAAP operating income 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 determine the Performance Measurement for the Performance Period by averaging the Performance Measurement levels on the Schedule that corresponds to each Result, rounded to the nearest whole percentage. However, in the event a Change in Control occurs during the Performance Period, the percentage for each Result will be no less than 100%.

end of the Performance Period but prior to the payment date under your Performance Units, you will be entitled to payment under your Performance Units as otherwise determined in accordance with this Notice of Grant. However, if there is a Change in Control and your employment terminates prior to the end of the Performance Period, you will not be entitled hereunder to a payment under your Performance Units. “In Connection with a Change of Control” will have the same meaning as in Section 10(i) of the Change in Control Agreement.

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 entitled to a payment for achievement of annual corporate performance goals under the Management Incentive Compensation Plan.

Date: August 25, 2014



For Cree, Inc.		Accepted and agreed to:


By:	/s/ Charles M. Swoboda	By:	/s/ Michael E. McDevitt
	Charles M. Swoboda, Chairman, President		Michael E. McDevitt
	and Chief Executive Officer

Exhibit 10.3



		NOTICE OF GRANT
	Participant:	Norbert Hiller
Company:	Award Number:	17
Cree, Inc.	Award Plan:	2013 Long-Term Incentive Compensation Plan
4600 Silicon Drive	Award Type:	Performance Units
Durham, NC 27703	Grant Date:	August 25, 2014
Tax I.D. 56-1572719	Performance Period:	June 30, 2014 through June 28, 2015

Dear Norbert:

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 Performance Unit Target Award Level; and


•	C equals the Performance Measurement.

For purposes of the foregoing, your “Performance Unit Target Award Level” is forty-eight percent (48%) of your Base Salary.

Except as provided in the Company's Severance Plan for Section 16 Officers, if such plan is then in effect, and except as provided below with respect to your death or LTD Disability (as defined in the Executive Change in Control Agreement between you and the Company effective December 17, 2012 (the "Change in Control Agreement")) or a Change in Control (as defined in Section 10(d) of the Change in Control Agreement), (i) you must be continuously employed as an Executive Officer of the Company through the last day of the Performance Period to have a right to payment of your Performance Units, (ii) your Performance Units will not be considered earned until the last day of the Performance Period, and (iii) if you terminate employment with the Company prior to the last day of the Performance Period, 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 and non-GAAP operating income 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 determine the Performance Measurement for the Performance Period by averaging the Performance Measurement levels on the Schedule that corresponds to each Result, rounded to the nearest whole percentage. However, in the event a Change in Control occurs during the Performance Period, the percentage for each Result will be no less than 100%.

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 entitled to a payment for achievement of annual corporate performance goals under the Management Incentive Compensation Plan.

Date: August 25, 2014



For Cree, Inc.		Accepted and agreed to:


By:	/s/ Charles M. Swoboda	By:	/s/ Norbert Hiller
	Charles M. Swoboda, Chairman, President		Norbert Hiller
	and Chief Executive Officer

Exhibit 10.4

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 2013 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 25, 2014 on which the Company grants you an Award.



CREE, INC.		PARTICIPANT



Charles M. Swoboda, Chairman, President		[Executive Officer Name]
and Chief Executive Officer

Please sign and return this Agreement to Sharon Boggs,

the Stock Plan Administrator in the Legal Department.

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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.

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


4.	Responsibility for Taxes.

(a)

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

(b)

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


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


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

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


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

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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.

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.

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


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

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

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Cree, Inc. Master Performance Unit Award

Agreement Terms and Conditions

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

11.

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


12.	General.


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


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


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


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

(e)

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

(f)

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

(g)

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


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

(i)

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

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Cree, Inc. Master Performance Unit Award

Agreement Terms and Conditions

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

(j)

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


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

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