<SUBMISSION>
<ACCESSION-NUMBER>0000895419-08-000053
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>9
<PERIOD>20080818
<ITEMS>5.02
<ITEMS>9.01
<FILING-DATE>20080822
<DATE-OF-FILING-DATE-CHANGE>20080822
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CREE INC
<CIK>0000895419
<ASSIGNED-SIC>3674
<IRS-NUMBER>561572719
<STATE-OF-INCORPORATION>NC
<FISCAL-YEAR-END>0628
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>000-21154
<FILM-NUMBER>081034795
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>4600 SILICON DR
<CITY>DURHAM
<STATE>NC
<ZIP>27703
<PHONE>9193135300
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>4600 SILICON DR
<CITY>DURHAM
<STATE>NC
<ZIP>27703-8475
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CREE RESEARCH INC /NC/
<DATE-CHANGED>19940224
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form8k082208.htm
<DESCRIPTION>FORM 8-K AUGUST 22 2008
<TEXT>
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COMMISSION</font></font></div>
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20549</font></font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934</font></font></div>
        <div><br></div>
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of Report (Date of Earliest Event Reported): August 18,
200</a>8</font></font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">CREE, INC.</font></font></div>
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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:</font></div>
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]&#160;&#160;&#160;&#160;&#160;&#160;Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)</font></div>
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]&#160;&#160;&#160;&#160;&#160;&#160;Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</font></div>
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      of Certain Officers; Compensatory Arrangements of Certain
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Fiscal
2009 Management Incentive Compensation Plan</font></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August
18, 2008, the Compensation Committee of the Board of Directors of Cree, Inc.
(the &#8220;Company&#8221;) adopted the Fiscal 2009 Management Incentive Compensation Plan
(the &#8220;MICP&#8221;).&#160;&#160;The MICP is designed to motivate and reward excellent
performance, to attract and retain outstanding senior management, to create a
strong link between strategic and corporate operating plans and individual
performance, to achieve greater corporate performance by focusing on results,
and to encourage teamwork at the highest levels within the organization by
providing opportunities for cash incentives based on the attainment of specific
goals.&#160;&#160;The MICP relates to the Company&#8217;s fiscal year ending June 28,
2009 and covers executive officers (other than the Chief Executive Officer),
other senior level managers who report directly to the Chief Executive Officer
and other key managers who have been identified as participants by the Chief
Executive Officer.</font></div>
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awards under the MICP are expressed as a percentage of salary and vary based on
position.&#160;&#160;Awards are determined based on performance measures in two
categories: corporate goals and individual management by objectives (&#8220;MBO&#8221;)
goals.&#160;&#160;Corporate performance measures are determined based on the
Company meeting or exceeding revenue and earnings per share (&#8220;EPS&#8221;) targets for
the fiscal year, provided that the corporate performance measure will be 0%
unless both the revenue and EPS targets established for the minimum performance
level are achieved.&#160;&#160;Individual MBO goals are established at the
beginning of each fiscal quarter.&#160;&#160;These goals include individual
performance goals specific to such individual or his or her business unit&#8217;s
performance for the quarter and may include a component based on corporate
financial goals established by the Chief Executive Officer for the
quarter.&#160;&#160;Individual MBO goals are measured at quarter end, and any
corresponding awards are paid to eligible participants following approval of the
amount by the Chief Executive Officer.&#160;&#160;The actual awards paid to
participants, if any, may vary with the level of achievement of the
corresponding goals.</font></div>
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otherwise approved by the Compensation Committee in the case of executive
officers or by the Chief Executive Officer in any other case, and except in the
case of termination due to death or disability or in connection with a change in
control, eligible participants must be employed by the Company on the payment
date in order to receive payment for an award under the MICP. The MICP provides
that, in the event of a change in control, each participant&#8217;s performance
measurement against individual MBO goals for any award period ending after the
effective date of the change in control will be 100% and the corporate
performance measurement for the plan year will be at least 100%, regardless of
whether the participant is employed during or at the end of the award
period.</font></div>
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of the MICP is subject to and qualified in its entirety by the MICP, which is
included as Exhibit 10.1 to this report and incorporated herein by
reference.</font></font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">
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-</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Grant
of Performance Units</font></font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August
18, 2008, the Compensation Committee of the Company&#8217;s Board of Directors
approved the grant of performance units to Charles M. Swoboda, the Company&#8217;s
Chairman, Chief Executive Officer and President, under the Company&#8217;s 2004
Long-Term Incentive Compensation Plan, as amended (the &#8220;LTIP&#8221;), which was filed
as Exhibit 10.1 to the Company&#8217;s Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 7, 2007.&#160;&#160;The
performance units are designed to provide Mr. Swoboda incentive compensation if
the Company&#8217;s financial performance for fiscal 2009 achieves certain
pre-established targets.&#160;&#160;The targets under the performance units are
the same as those established for the corporate goals under the
MICP.&#160;&#160;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 (the &#8220;Code&#8221;).</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
performance units awarded to Mr. Swoboda for fiscal 2009 were granted pursuant
to the terms of a Notice of Grant and Master Performance Unit Award Agreement,
each dated August 18, 2008 (collectively, the &#8220;Award
Agreement&#8221;).&#160;&#160;Under the Award Agreement, Mr. Swoboda is eligible to
receive 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 150%) derived by comparing the Company&#8217;s fiscal 2009 financial
performance against pre-established revenue and EPS targets.&#160;&#160;In the
event of a change in control during fiscal 2009, the percentage for each measure
will be not less than 100%.&#160;&#160;The target award level is set at 85% of
Mr. Swoboda&#8217;s base salary.&#160;&#160;Any payment under the performance units
will be paid in cash.</font></div>
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provided in the Company&#8217;s Severance Plan for Section 16 Officers (described
below) and except as provided with respect to death or long-term disability or a
change in control, (i) Mr. Swoboda must be continuously employed by the Company
as its Chief Executive Officer and President through the date of payment under
the performance units to have a right to such payment, (ii) his performance
units will not be considered earned until he receives such payment, and (iii) if
he terminates his employment prior to the date of payment, with or without
cause, he will forfeit his performance units.&#160;&#160;If there is a change in
control and Mr. Swoboda&#8217;s employment terminates prior to June 28, 2009, he will
not be entitled to payment under the performance units.</font></div>
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foregoing description of the grant of performance units is subject to and
qualified in its entirety by the Notice of Grant and the Master Performance Unit
Award Agreement, which are included as Exhibits 10.2 and 10.3, respectively, to
this report and incorporated herein by reference.</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Executive
Change in Control Agreements</font></font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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Executive Officer</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
August 18, 2008, pursuant to approval of the Compensation Committee of the
Company on the same date, the Company and Mr. Swoboda entered into an Executive
Change in Control Agreement (the &#8220;CEO Agreement&#8221;), which supersedes and replaces
Mr. Swoboda&#8217;s</font></div>
            </div>
            <div>&#160;</div>
            <div>
              <div>&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
                <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                  <div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">
                        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                          <div id="FTR">
                            <div id="GLFTR" style="WIDTH: 100%" align="left">
                            </div>
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                          <div id="PN" style="PAGE-BREAK-AFTER: always">
                            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 3
-</font></div>
                            <div style="WIDTH: 100%; TEXT-ALIGN: center">
                              <hr style="COLOR: black" noshade size="2">
                            </div>
                          </div>
                          <div id="HDR">
                            <div id="GLHDR" style="WIDTH: 100%" align="right">
                            </div>
                          </div>
                        </div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amended
and Restated Employment Agreement dated August 21, 2007, except with respect to
accelerated vesting of outstanding equity awards, as described
below.</font></div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The CEO
Agreement provides that Mr. Swoboda will continue to serve as the Company&#8217;s
Chairman of the Board, President and Chief Executive Officer as an at-will
employee. In addition, the CEO Agreement requires Mr. Swoboda to be nominated
each year to serve as a member of the Company&#8217;s Board of
Directors.&#160;&#160;The current term of the CEO Agreement ends on August 18,
2009.&#160;&#160;Thereafter, the term will automatically renew for successive
one-year renewal periods on each anniversary of the effective date of the CEO
Agreement unless either party provides the other party with at least 120 days&#8217;
prior written notice of non-renewal.</font></div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The CEO
Agreement provides that Mr. Swoboda&#8217;s annual base salary is $572,000, which
amount is subject to annual review and adjustment by the Compensation Committee
of the Company&#8217;s Board of Directors.&#160;&#160;In addition, Mr. Swoboda will be
eligible to receive incentive compensation upon the achievement of certain
performance goals set by the Compensation Committee, and his annual target
incentive award level will be at least 80% of his base salary.&#160;&#160;The
CEO Agreement also provides that Mr. Swoboda is entitled to participate in
certain benefit plans of the Company as well as to be reimbursed for certain
travel, entertainment and other expenses in connection with his services for the
Company.</font></div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
Swoboda is an at-will employee, meaning that he can be terminated at any time
with or without cause upon written notice by the Company.&#160;&#160;In
connection with any termination of Mr. Swoboda&#8217;s employment, he will be entitled
to all payments and benefits that he would be entitled to as an employee of the
Company in the absence of the CEO Agreement.&#160;&#160;In addition, he may be
entitled to severance benefits if his employment is terminated in connection
with a change in control, which means, for purposes of the CEO Agreement, such
termination occurs either within (i) the period of time between 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 and the occurrence of either the resulting
change in control or the termination or expiration of the tender offer or the
written agreement without the occurrence of a change in control, or (ii) 24
months following a change in control.</font></div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If Mr.
Swoboda&#8217;s employment is terminated by the Company without cause, but not as a
result of his death or long-term disability, or by Mr. Swoboda for good reason,
and the termination is in connection with a change in control, then he also will
receive (i) continued payment of his base salary for 24 months, (ii) a lump sum
payment of an amount equal to 80% of his base salary, prorated to the date of
termination, (iii) a lump sum payment equal to the sum of Mr. Swoboda&#8217;s earned
annual incentives for the two completed fiscal years immediately preceding the
termination date, (iv) a lump sum payment equal to 24 multiplied by the COBRA
premium in effect for the type of medical, dental and vision coverage then in
effect for Mr. Swoboda, and (v) full accelerated vesting with respect to Mr.
Swoboda&#8217;s then outstanding, unvested stock options, restricted stock and other
equity awards, other than with respect to any performance units used to pay Mr.
Swoboda&#8217;s annual incentive award, and other than as provided below with respect
to equity awards outstanding as of the effective date of the CEO
Agreement.&#160;&#160;In addition, if any payment or benefit Mr. Swoboda
receives from the Company or</font></div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                          <div id="FTR">
                            <div id="GLFTR" style="WIDTH: 100%" align="left">
                            </div>
                          </div>
                          <div id="PN" style="PAGE-BREAK-AFTER: always">
                            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 4
-</font></div>
                            <div style="WIDTH: 100%; TEXT-ALIGN: center">
                              <hr style="COLOR: black" noshade size="2">
                            </div>
                          </div>
                          <div id="HDR">
                            <div id="GLHDR" style="WIDTH: 100%" align="right">
                            </div>
                          </div>
                        </div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                      </div>
                    </div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any
person whose actions result in a change in control would be considered a
parachute payment under Section 280G of the Code and the aggregate present value
of the parachute payment reduced by any excise tax imposed would be less than
three times Mr. Swoboda&#8217;s &#8220;base amount&#8221; as defined in Section 280G of the Code,
then in lieu of that portion of the payments to which Mr. Swoboda would
otherwise be entitled under (i) through (iv) above, Mr. Swoboda will receive a
total amount (if any) such that the aggregate present value of the payments is
equal to 2.99 times such base amount.&#160;&#160;This amount will be apportioned
and substituted for the amounts that otherwise would have been payable under (i)
through (iv) and paid on the same schedule as those amounts.</font></div>
                    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If Mr.
Swoboda&#8217;s employment is terminated by the Company without cause or by Mr.
Swoboda for good reason, whether or not in connection with a change in control,
Mr. Swoboda&#8217;s right to accelerated vesting of each equity award outstanding as
of the effective date of the CEO Agreement will be determined by reference to
the version of the employment agreement between Mr. Swoboda and the Company that
was in effect on the grant date of each such award instead of the CEO
Agreement.&#160;&#160;One effect of this provision is to grandfather Mr.
Swoboda&#8217;s rights under his prior employment agreement to accelerated vesting of
50% of his unvested equity awards if his employment is terminated by the Company
without cause or by Mr. Swoboda for good reason not in connection with a change
in control, provided that accelerated vesting under these circumstances would
only apply to awards that were outstanding as of the effective date of the CEO
Agreement.&#160;&#160;In addition, if Mr. Swoboda&#8217;s employment is terminated by
the Company without cause or by Mr. Swoboda for good reason under circumstances
that would entitle him to severance benefits in connection with a change in
control under the CEO Agreement but not under either version of his prior
employment agreement, then only the equity awards granted on or after the date
of the CEO Agreement would be eligible for accelerated vesting as a result of
such termination of employment.</font></div>
                    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
condition to the receipt of the severance benefits described in the prior
paragraphs, Mr. Swoboda must (i) sign and not revoke a release of claims, (ii)
refrain from disparaging the Company, its directors or officers for 24 months
after termination, and (iii) continue to comply with the terms of the standard
form of employee agreement regarding confidential information, intellectual
property and noncompetition between Mr. Swoboda and the Company (the
&#8220;Confidential Information Agreement&#8221;), as amended by the CEO
Agreement.&#160;&#160;Under the noncompetition provisions of the Confidential
Information Agreement and subject to certain limited exceptions, an employee is
restricted while employed by the Company and for a period of time following the
termination of his or her employment from (i) performing services for any
competing business,<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font>whether
as an employee, officer, director, consultant, agent, contractor or in any other
capacity, (ii) being the beneficial owner of an equity interest in any competing
business, (iii) requesting any present or future customers or suppliers of the
Company to curtail or cancel business with the Company, or (iv) inducing or
attempting to influence any employee of the Company to terminate his or her
employment with the Company.&#160;&#160;Competing business includes any entity
that is conducting research directed to, developing, manufacturing, marketing,
distributing, or selling any product, service or technology that is competitive
with any product, service or technology that the Company is developing,
manufacturing, marketing, distributing, selling or conducting research directed
to, at the time or during the period specified in the Confidential Information
Agreement.</font></div>
                    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                      <div>&#160;</div>
                      <div>&#160;</div>
                      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                        <div id="FTR">
                          <div id="GLFTR" style="WIDTH: 100%" align="left">
                          </div>
                        </div>
                        <div id="PN" style="PAGE-BREAK-AFTER: always">
                          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 5
-</font></div>
                          <div style="WIDTH: 100%; TEXT-ALIGN: center">
                            <hr style="COLOR: black" noshade size="2">
                          </div>
                        </div>
                        <div id="HDR">
                          <div id="GLHDR" style="WIDTH: 100%" align="right">
                          </div>
                        </div>
                      </div>
                      <div>&#160;</div>
                      <div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the
event of a dispute relating to the CEO Agreement arising during the term of Mr.
Swoboda&#8217;s employment or within three years following termination of the CEO
Agreement, the Company will reimburse Mr. Swoboda for the fees and expenses he
incurs in connection with the dispute on a quarterly basis.&#160;&#160;In the
event Mr. Swoboda does not prevail on at least one material issue or if an
arbitrator determines that Mr. Swoboda&#8217;s legal positions were frivolous or
without legal foundation, (i) Mr. Swoboda will repay the Company amounts
previously reimbursed, and (ii) Mr. Swoboda will reimburse the Company for its
fees and expenses.</font></div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                      </div>
                      <div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Chief
Financial Officer</font></div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
August 18, 2008, pursuant to approval of the Compensation Committee of the
Company on the same date, the Company and John T. Kurtzweil, the Company&#8217;s
Executive Vice President, Chief Financial Officer and Treasurer, entered into an
Executive Change in Control Agreement (the &#8220;CFO Agreement&#8221;), which supersedes
and replaces Mr. Kurtzweil&#8217;s Severance Agreement effective September 29, 2006
(the &#8220;Original Agreement&#8221;), except with respect to accelerated vesting of
outstanding equity awards, as described below.</font></div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The CFO
Agreement provides that Mr. Kurtzweil will continue to serve as the Company&#8217;s
Executive Vice President-Finance, Chief Financial Officer and Treasurer as an
at-will employee.&#160;&#160;The current term of the CFO Agreement ends on
August 18, 2009.&#160;&#160;Thereafter, the term will automatically renew for
successive one-year renewal periods on each anniversary of the effective date of
the CFO Agreement unless either party provides the other party with at least 120
days&#8217; prior written notice of non-renewal.</font></div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The CFO
Agreement provides that Mr. Kurtzweil&#8217;s annual base salary is $364,000, which
amount is subject to annual review and adjustment by the Compensation Committee
of the Company&#8217;s Board of Directors.&#160;&#160;In addition, Mr. Kurtzweil will
be eligible to receive incentive compensation upon the achievement of individual
performance goals set by the Chief Executive Officer and corporate performance
goals set by the Compensation Committee, and his annual target incentive award
level will be determined by the Compensation Committee.&#160;&#160;The CFO
Agreement also provides that Mr. Kurtzweil is entitled to participate in certain
benefit plans of the Company as well as to be reimbursed for certain travel,
entertainment and other expenses in connection with his services for the
Company.</font></div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
Kurtzweil is an at-will employee, meaning that he can be terminated at any time
with or without cause upon written notice by the Company.&#160;&#160;In
connection with any termination of Mr. Kurtzweil&#8217;s employment, he will be
entitled to all payments and benefits that he would be entitled to as an
employee of the Company in the absence of the CFO Agreement.&#160;&#160;In
addition, he may be entitled to severance benefits if his employment is
terminated in connection with a change in control, which means, for purposes of
the CFO Agreement, such termination occurs either within (i) the period of time
between the Company and another party entering into a written agreement that
contemplates a transaction the consummation of which would result in a change in
control and the occurrence of either the resulting change in control or the
termination or expiration of the written agreement without the occurrence of a
change in control, or (ii) 12 months following a change in
control.</font></div>
                      </div>
                      <div>&#160;</div>
                      <div>&#160;</div>
                    </div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">
                        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                          <div id="FTR">
                            <div id="GLFTR" style="WIDTH: 100%" align="left">
                            </div>
                          </div>
                          <div id="PN" style="PAGE-BREAK-AFTER: always">
                            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 6
-</font></div>
                            <div style="WIDTH: 100%; TEXT-ALIGN: center">
                              <hr style="COLOR: black" noshade size="2">
                            </div>
                          </div>
                          <div id="HDR">
                            <div id="GLHDR" style="WIDTH: 100%" align="right">
                            </div>
                          </div>
                        </div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If Mr.
Kurtzweil&#8217;s employment is terminated by the Company without cause, but not as a
result of his death or long-term disability, or by Mr. Kurtzweil for good
reason, and the termination is in connection with a change in control, then he
also will receive (i) continued payment of his base salary for 12 months, (ii) a
lump sum payment equal to 12 multiplied by the COBRA premium in effect for the
type of medical, dental and vision coverage then in effect for Mr. Kurtzweil,
and (iii) full accelerated vesting with respect to Mr. Kurtzweil&#8217;s then
outstanding, unvested stock options, time-vested restricted stock and other
equity awards that vest solely based on the passage of
time.&#160;&#160;However,<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">&#160;</font>Mr.
Kurtzweil&#8217;s right to accelerated vesting of each equity award outstanding as of
the effective date of the CFO Agreement will be determined by reference to the
Original Agreement instead of the CFO Agreement.&#160;&#160;Accordingly, if Mr.
Kurtzweil&#8217;s&#160;employment is terminated by the Company without cause or by Mr.
Kurtzweil for good reason under circumstances that would entitle him to
severance benefits in connection with a change in control under the CFO
Agreement but not under the Original Agreement, then only the equity awards
granted on or after the date of the CFO Agreement would be eligible for
accelerated vesting as a result of such termination of employment.</font></div>
                          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
condition to the receipt of the severance benefits described in the prior
paragraph, Mr. Kurtzweil must (i) sign and not revoke a release of claims, (ii)
refrain from disparaging the Company, its directors or officers for 12 months
after termination, and (iii) continue to comply with the terms of the
Confidential Information Agreement between Mr. Kurtzweil and the
Company.&#160;&#160;Under the noncompetition provisions of the Confidential
Information Agreement and subject to certain limited exceptions, an employee is
restricted while employed by the Company and for a period of time following the
termination of his or her employment from (i) performing services for any
competing business,<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font>whether
as an employee, officer, director, consultant, agent, contractor or in any other
capacity, (ii) being the beneficial owner of an equity interest in any competing
business, (iii) requesting any present or future customers or suppliers of the
Company to curtail or cancel business with the Company, or (iv) inducing or
attempting to influence any employee of the Company to terminate his or her
employment with the Company.&#160;&#160;Competing business includes any entity
that is conducting research directed to, developing, manufacturing, marketing,
distributing or selling any product, service or technology that is competitive
with any product, service or technology that the Company is developing,
manufacturing, marketing, distributing, selling or conducting research directed
to, at the time or during the period specified in the Confidential Information
Agreement.</font></div>
                          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the
event of a dispute relating to the CFO Agreement arising during the term of Mr.
Kurtzweil&#8217;s employment or within three years following termination of the CEO
Agreement, the Company will reimburse Mr. Kurtzweil for the fees and expenses he
incurs in connection with the dispute on a quarterly basis.&#160;&#160;In the
event Mr. Kurtzweil does not prevail on at least one material issue or if an
arbitrator determines that Mr. Kurtzweil&#8217;s legal positions were frivolous or
without legal foundation, (i) Mr. Kurtzweil will repay the Company amounts
previously reimbursed, and (ii) Mr. Kurtzweil will reimburse the Company for its
fees and expenses.</font></div>
                          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                        </div>
                        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                      </div>
                      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                        <div>
                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">
                            <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                              <div id="FTR">
                                <div id="GLFTR" style="WIDTH: 100%" align="left">
                                </div>
                              </div>
                              <div id="PN" style="PAGE-BREAK-AFTER: always">
                                <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 7
-</font></div>
                                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                                  <hr style="COLOR: black" noshade size="2">
                                </div>
                              </div>
                              <div id="HDR">
                                <div id="GLHDR" style="WIDTH: 100%" align="right">
                                </div>
                              </div>
                              <div>&#160;</div>
                              <div>
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Chief Operating
Officer</font></font></div>
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
August 19, 2008, pursuant to approval of the Compensation Committee of the
Company&#8217;s Board of Directors on August 18, 2008, the Company and Stephen D.
Kelley, the Company&#8217;s Executive Vice President and Chief Operating Officer,
entered into an Executive Change in Control Agreement (the &#8220;COO Agreement&#8221;) with
the same terms and conditions as the CFO Agreement described above,
except:</font></div>
                                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                                <div>
                                  <table cellpadding="0" cellspacing="0" id="list" width="100%">
                                      <tr valign="top">
                                        <td align="right" style="WIDTH: 36pt">
                                          <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;&#160;&#160;</font></div>
                                        </td>
                                        <td>
                                          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      COO Agreement provides that Mr. Kelley will serve as the Company&#8217;s
      Executive Vice President and Chief Operating Officer as an at-will
      employee.</font></div>
                                        </td>
                                      </tr>
                                  </table>
                                </div>
                                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                                <div>
                                  <table cellpadding="0" cellspacing="0" id="list" width="100%">
                                      <tr valign="top">
                                        <td align="right" style="WIDTH: 36pt">
                                          <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;&#160;&#160;</font></div>
                                        </td>
                                        <td>
                                          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      current term of the COO Agreement ends on August 19,
      2009.&#160;&#160;Thereafter, the term will automatically renew for
      successive one-year renewal periods on each anniversary of the effective
      date of the COO Agreement unless either party provides the other party
      with at least 120 days&#8217; prior written notice of
    non-renewal.</font></div>
                                        </td>
                                      </tr>
                                  </table>
                                </div>
                                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                                <div>
                                  <table cellpadding="0" cellspacing="0" id="list" width="100%">
                                      <tr valign="top">
                                        <td align="right" style="WIDTH: 36pt">
                                          <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;&#160;&#160;</font></div>
                                        </td>
                                        <td>
                                          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Kelley&#8217;s annual base salary is $350,000, which amount is subject to annual
      review and adjustment by the Compensation Committee of the Company&#8217;s Board
      of Directors.</font></div>
                                        </td>
                                      </tr>
                                  </table>
                                </div>
                                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                                <div>
                                  <table cellpadding="0" cellspacing="0" id="list" width="100%">
                                      <tr valign="top">
                                        <td align="right" style="WIDTH: 36pt">
                                          <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#183;&#160;&#160;</font></div>
                                        </td>
                                        <td>
                                          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      Mr. Kelley did not have any outstanding equity awards at the time of
      entering the COO Agreement, his right to accelerated vesting will be
      determined solely by reference to the COO
  Agreement.</font></div>
                                        </td>
                                      </tr>
                                  </table>
                                </div>
                                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
foregoing description of the Executive Change in Control Agreements is subject
to and qualified in its entirety by the CEO Agreement, CFO Agreement and COO
Agreement, which are included as Exhibits 10.4, 10.5 and 10.6, respectively, to
this report and incorporated herein by reference.</font></div>
                                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">Severance
Plan for Section 16 Officers</font></font></div>
                                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August
18, 2008, the Compensation Committee of the Company&#8217;s Board of Directors adopted
the Cree, Inc. Severance Plan for Section 16 Officers (the &#8220;Severance
Plan&#8221;).&#160;&#160;The Severance Plan is administered by the Compensation
Committee and designed to supplement the Executive Change in Control Agreements
for the Company&#8217;s executive officers who are subject to the reporting
requirements of Section&#160;16 of the Securities Exchange Act of 1934, as
amended (the &#8220;Officers&#8221;), by providing severance benefits in the event of
termination of an Officer&#8217;s employment without cause or resignation for good
reason.&#160;&#160;However, the Severance Plan will not apply to an Officer if
he or she becomes entitled to the payment of severance benefits upon termination
of employment in connection with a change in control pursuant to a separate
agreement with the Company.&#160;&#160;The Company&#8217;s only Officers as of the
date of this report are Mr. Swoboda, Mr. Kurtzweil, Mr. Kelley and John W.
Palmour, Ph.D., Executive Vice President and Director of Advanced
Devices.</font></div>
                                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If an
Officer&#8217;s employment is terminated by the Company without cause or by the
Officer for good reason, except in the event of termination of the Officer&#8217;s
employment due to death or long-term disability or in the event such termination
of employment is in connection with a change in control and the Officer is
entitled to the payment of severance benefits pursuant to a separate agreement
with the Company, then the Officer will receive (i) continued payment of
the</font></div>
                              </div>
                              <div>&#160;</div>
                              <div>&#160;</div>
                            </div>
                          </div>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
              <div id="FTR">
                <div id="GLFTR" style="WIDTH: 100%" align="left">
                </div>
              </div>
              <div id="PN" style="PAGE-BREAK-AFTER: always">
                <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 8
-</font></div>
                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                  <hr style="COLOR: black" noshade size="2">
                </div>
              </div>
              <div id="HDR">
                <div id="GLHDR" style="WIDTH: 100%" align="right">
                </div>
              </div>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Officer&#8217;s base salary for
12 months (18 months in the Chief Executive Officer&#8217;s case), (ii) all incentive
compensation amounts that are not yet paid as of the termination date that the
Officer is entitled to receive (under the performance units for the Chief
Executive Officer and under the MICP for other Officers) on account of
satisfaction of the relevant performance measures for the relevant performance
period provided the Officer was employed through the end of the last day of the
relevant performance period, and (iii) a lump sum payment equal to 12 (18 in the
Chief Executive Officer&#8217;s case) multiplied by the COBRA premium applicable to
the type of medical, dental and vision coverage then in effect for the
Officer.</font>

            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
condition to the receipt of the severance benefits described in the prior
paragraph, an Officer must execute and comply with a release agreement that
includes a release of claims against the Company, its affiliates and
representatives and a non-disparagement provision.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
foregoing description of the Severance Plan is subject to and qualified in its
entirety by the Severance Plan, which is included as Exhibit 10.7 to this report
and incorporated herein by reference.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
            <table cellpadding="0" cellspacing="0" width="90%">
                <tr>
                  <td align="left" valign="top" width="6%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Item
9.01</font></font></div>
                  </td>
                  <td align="left" valign="top" width="63%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Financial Statements and
      Exhibits</font></font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: -54pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">(d)</font></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exhibits</font></font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
            <table cellpadding="0" cellspacing="0" width="78%">
                <tr>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exhibit
    No.</font></font></div>
                  </td>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Description of
      Exhibit</font></font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="13%">&#160;</td>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="25%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.1</font></div>
                  </td>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="25%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Fiscal
      2009 Management Incentive Compensation Plan</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="13%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.2</font></div>
                  </td>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="25%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Notice
      of Grant to Charles M. Swoboda,&#160;dated August 18,
  2008</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.3</font></td>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="25%" style="PADDING-BOTTOM: 2pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Master
      Performance Unit Award Agreement, dated August 18, 2008, between Cree,
      Inc. and Charles M. Swoboda</font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.4</font></td>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="25%" style="PADDING-BOTTOM: 2pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Executive
      Change in Control Agreement, effective August 18, 2008, between Cree, Inc.
      and Charles M. Swoboda</font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.5</font></td>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="25%" style="PADDING-BOTTOM: 2pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Executive
      Change in Control Agreement, effective August 18, 2008, between Cree, Inc.
      and John T. Kurtzweil</font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.6</font></td>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="25%" style="PADDING-BOTTOM: 2pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Executive
      Change in Control Agreement, effective August 19, 2008, between Cree, Inc.
      and Stephen D. Kelley</font></td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.7</font></td>
                  <td align="left" valign="top" width="5%">&#160;</td>
                  <td align="left" valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cree,
      Inc. Severance Plan for Section 16
Officers</font></td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div>&#160;</div>
          <div>
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
              <div id="FTR">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
                <div id="GLFTR" style="WIDTH: 100%" align="left">
                </div>
              </div>
              <div id="PN" style="PAGE-BREAK-AFTER: always">
                <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 9
-</font></div>
                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                  <hr style="COLOR: black" noshade size="2">
                </div>
              </div>
              <div id="HDR">
                <div id="GLHDR" style="WIDTH: 100%" align="right">
                </div>
              </div>
            </div>
          </div>
          <div>&#160;</div>
          <div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><a name="fis_signatures">SIGNATURE</a></font></font></div>
            <div><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
            <div><br></div>
            <div><br></div>
            <div align="left">
              <table cellpadding="0" cellspacing="0" width="85%">
                  <tr>
                    <td valign="top" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" colspan="3" valign="top" width="26%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">CREE,
    INC.</font></font></div>
                    </td>
                  </tr>
                  <tr>
                    <td valign="top" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="23%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="top" width="2%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:</font></div>
                    </td>
                    <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="23%" style="BORDER-BOTTOM: black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
      T. Kurtzweil</font></font></td>
                  </tr>
                  <tr>
                    <td valign="top" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
      T. Kurtzweil</font></div>
                    </td>
                  </tr>
                  <tr>
                    <td valign="top" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td valign="top" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    <td align="left" valign="top" width="23%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Executive
      Vice President - Finance,&#160;</font></div>
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
      Financial Officer and Treasurer</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div><br></div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:&#160;&#160;August
22, 2008</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><br><br>&#160;</div>
          </div>
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              <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 10
-</font></div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
                <hr style="COLOR: black" noshade size="2">
              </div>
            </div>
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              </div>
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          <div>&#160;</div>
          <div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">EXHIBIT INDEX</font></font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" width="78%">
                  <tr>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="13%" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Exhibit
    No.</font></font></div>
                    </td>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Description of
      Exhibit</font></font></div>
                    </td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="13%">&#160;</td>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="25%">&#160;</td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="13%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.1</font></div>
                    </td>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="25%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Fiscal
      2009 Management Incentive Compensation Plan</font></div>
                    </td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="13%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.2</font></div>
                    </td>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="25%">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Notice
      of Grant to Charles M. Swoboda,&#160;dated August 18,
  2008</font></div>
                    </td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.3</font></td>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="25%" style="PADDING-BOTTOM: 2pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Master
      Performance Unit Award Agreement, dated August 18, 2008, between Cree,
      Inc. and Charles M. Swoboda</font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.4</font></td>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="25%" style="PADDING-BOTTOM: 2pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Executive
      Change in Control Agreement, effective August 18, 2008, between Cree, Inc.
      and Charles M. Swoboda</font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.5</font></td>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="25%" style="PADDING-BOTTOM: 2pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Executive
      Change in Control Agreement, effective August 18, 2008, between Cree, Inc.
      and John T. Kurtzweil</font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.6</font></td>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="25%" style="PADDING-BOTTOM: 2pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Executive
      Change in Control Agreement, effective August 19, 2008, between Cree, Inc.
      and Stephen D. Kelley</font></td>
                  </tr>
                  <tr>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.7</font></td>
                    <td align="left" valign="top" width="5%">&#160;</td>
                    <td align="left" valign="top" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cree,
      Inc. Severance Plan for Section 16
Officers</font></td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          </div>
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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>exhibit10_1.htm
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
<html>
  <head>
    <title>exhibit10_1.htm</title>
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    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
    <div>&#160;</div>
    <div>
      <hr style="COLOR: black" align="left" noshade size="1" width="100%">
    </div>
    <div style="TEXT-ALIGN: right"><font style="FONT-WEIGHT: bold">Exhibit
10.1</font></div>
    <div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CREE,
INC.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FISCAL
2009</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MANAGEMENT
INCENTIVE COMPENSATION PLAN</font></div><br></div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following Management Incentive Compensation Plan (the &#8220;Plan&#8221;) is adopted by
Cree, Inc. and its consolidated subsidiaries (collectively, the &#8220;Company&#8221;) for
its fiscal year ending June 28, 2009 (the &#8220;Plan Year&#8221;):</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Purpose</font>.&#160;&#160;The
purpose of the Plan is to motivate and reward excellent performance, to attract
and retain outstanding senior management, to create a strong link between
strategic and corporate operating plans and individual performance, to achieve
greater corporate performance by focusing on results, and to encourage teamwork
at the highest levels within the organization.&#160;&#160;The Plan rewards
participants with incentives based on their contributions and the attainment of
specific corporate and individual performance goals.&#160;&#160;Incentives may
be calculated in part based on a performance measurement multiplied by the
participant&#8217;s annual target award level.&#160;&#160;Annual target award levels
vary according to the position.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Eligibility</font>.&#160;&#160;The
senior level managers of the Company who report directly to the Company&#8217;s Chief
Executive Officer (CEO) and other key managers of the Company who have been
identified by the CEO are eligible to participate in this Plan upon approval by
the Compensation Committee in the case of executive officers, or by the CEO in
all other cases, of such individual&#8217;s target award level for the Plan
Year.&#160;&#160;Participation in a predecessor incentive compensation plan does
not entitle any Company employee to be selected for participation in this
Plan.&#160;&#160;If an eligible participant&#8217;s duties and responsibilities
materially change during the Plan Year, the Compensation Committee in the case
of executive officers, or the CEO in all other cases, shall have the option to
terminate the participant&#8217;s eligibility to participate in the Plan or otherwise
modify the participant&#8217;s goals and/or incentives due to such
change.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Plan Awards</font>:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.1<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Target Award
Levels</font>.&#160;&#160;Annual target award levels are expressed as a
percentage of base salary and vary by position.&#160;&#160;The target award
level specified for each participant represents the award level for 100%
achievement of all objectives by that participant.&#160;&#160;The actual award
amount is determined by multiplying the participant&#8217;s base salary during the
award period by various percentages, as provided in Paragraph 3.2
below.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>3.2<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Determination of
Awards</font>.&#160;&#160;Except as expressly provided otherwise in this Plan,
each eligible participant&#8217;s base salary for all award periods in the Plan Year
will be determined by reference to the participant&#8217;s base salary in effect on
the last day of the first fiscal quarter of the Plan Year (as provided in the
Company&#8217;s human resources management system).&#160;&#160;If the participant&#8217;s
base salary changes after the first fiscal quarter of the Plan Year, the base
salary for the award period in which the change occurs will be the weighted
average base salary for the award period determined by multiplying each base
salary in effect during that award period by a fraction, the numerator of which
is the number of calendar days in the award period on which such base salary was
in effect and the denominator of which is the number of calendar days in the
award period, and the base salary for all full subsequent award periods will be
the new base salary (subject to any further changes).&#160;&#160;Awards are
determined based on performance against goals in two
categories:&#160;&#160;corporate goals, and individual MBO
goals.&#160;&#160;Unless otherwise approved by the Compensation Committee in the
case of executive officers or by the CEO in all other cases, 60% of a
participant&#8217;s target award level will be allocated to achievement of corporate
</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
          </div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">annual goals and 40% of a
participant&#8217;s target award level will be allocated to achievement of individual
MBO goals.&#160;&#160;Performance against individual MBO goals will be measured
quarterly on a scale of 0% to 100% and performance against corporate annual
goals will be measured annually on a scale of 0% to 150%.&#160;&#160;Actual
awards will be determined for each participant in accordance with the following
formulas:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Quarterly
Awards</font>:<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160; A x B x C x
D</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Annual Award</font>:<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>A x B x E x F</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Where</font>:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div align="center">
        <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 96px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="885"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">A
      equals the base salary for the award period</font></td>
            </tr>
            <tr valign="top">
              <td style="WIDTH: 96px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="885"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">B
      equals the target award level for the participant (expressed as a
      percentage)</font></td>
            </tr>
            <tr valign="top">
              <td style="WIDTH: 96px">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
              </td>
              <td width="885">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">C
      equals the percentage of the target award level allocated to individual
      performance goals for the fiscal quarter (e.g., &#188; of
  40%)</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 96px">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td width="885">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">D
      equals the participant&#8217;s aggregate performance measurement against
      individual goals for the fiscal quarter (expressed as a
      percentage)</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 96px">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td width="885">
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">E
      equals the percentage of the target award level allocated to corporate
      performance goals for the fiscal year (e.g.,
  60%)</font></div>
              </td>
            </tr>
        </table>
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      <div>
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                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F
      equals the performance measurement against corporate goals for the fiscal
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Goals</font>.&#160;&#160;At the beginning of each fiscal quarter, the CEO will
determine the quarterly corporate financial performance goals, if any, to be
included in each participant&#8217;s <font>individual objectives and the
weight to be applied thereto.&#160;&#160;At the beginning of each fiscal
quarter, each participant will develop performance goals specific to such
individual or to his or her business unit&#8217;s performance for that fiscal quarter
and assign a weight to each goal (expressed as a percentage) such that the
aggregate weight of all goals (including the weight of </font>any quarterly
corporate financial performance goals specified by the CEO) is equal to
100%.&#160;&#160;The participant's proposed goals and assigned weights will be
submitted to the CEO for approval.&#160;&#160;Meeting an individual goal will
yield a performance measurement of 100% for that individual goal.&#160;&#160;Not
meeting an individual goal will result in a 0% performance measurement for that
goal unless the CEO in his discretion approves a prorated percentage based on
partial achievement of the goal.&#160;&#160;Performance measurements for
individual goals will be approved by the CEO and multiplied by the weight
assigned to that goal to arrive at the participant&#8217;s aggregate performance
measurement against individual goals for the fiscal quarter.&#160;&#160;Any
corresponding awards will be paid to eligible participants following approval of
the amount by the CEO.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.4<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Corporate
Goals</font>.&#160;&#160;Performance against corporate goals is measured based
on the Company meeting or exceeding the revenue and earnings per share (EPS)
targets for the Plan Year recommended by the CEO and approved by the
Compensation Committee.&#160;&#160;The performance measurement against corporate
goals will be 0% for the Plan Year unless both the revenue and EPS targets
established for the minimum performance measurement level are achieved for such
award period.&#160;&#160;After the end of the Plan Year, the Compensation
Committee will assess the Company&#8217;s revenue and EPS results for the Plan Year
using competent and reliable information, including but not limited to audited
financial statements, if available, and will determine in good faith and in its
sole discretion the performance measurement against corporate goals (expressed
as a percentage) for the Plan Year using a pre-established interpolation
schedule.&#160;&#160;The performance payout for the award period will be
determined based on the lower of the performance measurement level associated
with revenue results or the performance measurement level associated with EPS
results.&#160;&#160;The performance measurement percentage will then be used to
determine each participant&#8217;s annual incentive compensation based on achievement
of corporate goals.&#160;&#160;Any corresponding awards will be paid to eligible
participants following approval of the </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">amount by the Compensation
Committee in the case of executive officers and by the CEO in all other
cases.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Other
Provisions</font>:</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.1<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">New Hires; Newly Eligible Employees;
Leave Periods</font>.&#160;&#160;Unless otherwise provided in the individual&#8217;s
employment offer letter, if a new hire is eligible to participate in the Plan,
he or she will commence participation in the Plan as of the date of hire and his
or her base salary for the Plan Year will be as provided in his or her offer
letter (subject to change as otherwise provided in this Plan); provided that the
base salary used for purposes of calculating the participant&#8217;s awards for the
first quarter of participation and the annual award will reduced proportionately
to equate to the base salary applicable to the number of calendar days the
participant was employed during such award periods.&#160;&#160;If an existing
employee of the Company first becomes eligible to participate in the Plan after
the start of the Plan Year, he or she will commence participation in the Plan as
of the start date approved by the Compensation Committee in the case of an
executive officer or by the CEO in all other cases.&#160;&#160;The base salary
used for purposes of calculating such participant&#8217;s awards will be determined as
otherwise provided in this Plan, except that the base salary used for purposes
of calculating the participant&#8217;s awards for the first quarter of participation
and the annual award will reduced proportionately to equate to the base salary
applicable to the number of calendar days the participant was eligible to
participate in the Plan during such award periods.&#160;&#160;If a participant
is on a leave of absence (other than a leave of absence where the participant
continues to be paid his or her full base salary through the Company&#8217;s payroll
system), including without limitation a short-term or long-term disability
leave, for all or part of an award period, to the extent permitted by applicable
law (e.g., the Family and Medical Leave Act (FMLA) or the Uniformed Services
Employment and Reemployment Rights Act (USERRA)), the base salary for such award
period will be reduced proportionately to equate to a base salary applicable to
the number of calendar days the participant was not on a leave of absence during
such award period.&#160;&#160;If a participant in the Plan remains employed by
the Company, but after the start of the Plan Year becomes ineligible to
participate in the Plan, unless otherwise approved by the Compensation Committee
in the case of an executive officer or by the CEO in all other cases, the
participant will not be eligible for an award for any award period that is
partially completed as of the date he or she becomes ineligible to participate
in the Plan.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.2<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Termination of
Employment</font>.&#160;&#160;Unless otherwise approved by the Compensation
Committee in the case of an executive officer or by the CEO in any other case,
and except in the case of termination of employment due to the participant&#8217;s
death or disability (meeting the requirements for benefits under the Company&#8217;s
long-term disability (LTD) plan or, in the case of a participant who is not
eligible to participate in the LTD plan, the determination by a qualified,
objective medical professional that the participant is disabled, as such term is
defined in the LTD plan) or termination of employment after a Change In Control
as provided in this paragraph, the participant must be continuously employed by
the Company for that part of the award period that the individual is eligible to
participate in the Plan up through and including the date of the payment in
order to have a right to payment for such award period, and any participant
whose employment with the Company terminates prior to the date of payment for
such award period, with or without cause, shall forfeit his or her rights to any
unpaid award.&#160;&#160;If the Company terminates a participant&#8217;s employment
prior to the payment date for an award period on account of the participant&#8217;s
death or disability (which shall have the same meaning as provided above), the
participant will be entitled to receive an award for any award period in which
he or she was employed by the Company as otherwise determined in accordance with
this Plan as if the participant remained employed through the payment date for
the award period.&#160;&#160;However, the base salary used for purposes of
calculating such participant&#8217;s award(s) will be reduced proportionately to
equate to the base salary applicable to the number of calendar days the
participant was employed, and not otherwise on a leave of absence as provided
above, during the award period.&#160;&#160;If there is a Change In Control, as
that term is defined in the Cree, Inc. Equity Compensation Plan&#160;&#160;(as
amended and restated August 5, 2002 and </font></div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">without regard to any
subsequent amendments) (&#8220;Change In Control&#8221;), and a participant&#8217;s employment
terminates for any reason (other than death or disability) subsequent to the
Change in Control but prior to the payment date for an award period, the
participant will be entitled to receive an award for all award periods for the
Plan Year as otherwise determined in accordance with this Plan as if the
participant remained employed through the payment date for the award
period.&#160;&#160;The base salary used for purposes of calculating such
participant&#8217;s awards will be determined as otherwise provided in this Plan,
except that the base salary used for such purposes may not be decreased after
the Change in Control without the Participant&#8217;s prior written
approval.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.3<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Exceptions</font>.&#160;&#160;In
order to ensure that the Company&#8217;s best interests are met, the amount of a
payment on an award otherwise calculated in accordance with this Plan can be
increased, decreased, or eliminated at any time prior to payment, in the sole
discretion of the CEO, except that no change with respect to any award to any
executive officer of the Company shall be made without Compensation Committee
approval and, so long as the participant is not in breach of his or her
obligations under his or her Employee Agreement Regarding Confidential
Information, Intellectual Property, and Noncompetition with the Company,
payments due as a result of a Change In Control, as otherwise provided in the
Plan, cannot be decreased or eliminated without the prior written approval of
the participant.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.4<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Amendment;
Termination</font>.&#160;&#160;The Company has no obligation to implement this
Plan for any fiscal year and has the right to amend, modify or terminate the
Plan at any time without prior notice to participants; provided that the Company
may not amend, modify or terminate the Plan in a manner that affects a payment
that has already become payable hereunder to an eligible employee.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.5<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Earned Upon
Payment</font>.&#160;&#160;Except as provided in Paragraph 4.2 above and
Paragraph 4.6 below, no award amount shall be considered earned by any
participant under the Plan until it is received by the participant from the
Company.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.6<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Change In
Control</font>.&#160;&#160;In the event a Change In Control occurs during the
Plan Year, notwithstanding any language in this Plan to the contrary, each
participant&#8217;s performance measurement against individual MBO goals for any award
period ending after the effective date of the Change In Control will be 100% and
the performance measurement against corporate goals for the Plan Year will be
the greater of 100% or such performance measurement as is determined in
accordance with this Plan, regardless of whether such participant is employed
during or at the end of the applicable award period.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.7<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Priority of Written
Agreement.</font>&#160;&#160;Notwithstanding any language in this Plan to the
contrary, the terms and conditions of any written agreement between the Company
and a participant regarding payment of one or more awards under this Plan (or
payment of an amount in lieu of payment of such awards) upon termination of
employment for any reason or in the event of a Change In Control shall supersede
and control with respect to payment of such awards to the participant under this
Plan, provided that the written agreement was approved by the Compensation
Committee if the participant was an executive officer at the time of execution
of the agreement or by the CEO in any other case.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.8<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Non-Transferability</font>.&#160;&#160;No
right or interest of any participant in this Plan is assignable or transferable,
or subject to any lien, directly, by operation of law, or otherwise, including
without limitation by execution, levy, garnishment, attachment, pledge, and
bankruptcy, except that the right to receive any form of compensation payable
hereunder may be assigned or transferred by will or the laws of descent and
distribution.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4.9<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">No Rights to Company
Assets</font>.&#160;&#160;No Plan participant nor any other person will have a
right in, nor title to, any assets, funds or property of the Company or any of
its subsidiaries through this Plan.&#160;&#160;Any earned incentives will be
payable from the Company&#8217;s general assets.&#160;&#160;Nothing contained in this
Plan constitutes a guarantee by the Company or any of its subsidiaries that the
assets of the Company and its subsidiaries will be sufficient to pay any earned
incentives.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">Administration:</font></font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.1<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;The
Compensation Committee is the Plan Administrator with respect to all decisions
under the Plan concerning, affecting or related to the compensation of executive
officers, and the CEO is the Plan Administrator with respect to all other
aspects of the Plan.&#160;&#160;The Plan Administrators, in their respective
capacities, have the authority to interpret the Plan, and the Plan
Administrators&#8217; interpretations, in their respective capacities, shall be final
and binding on all Plan participants.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.2<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;At all times,
this Plan shall be interpreted and operated so that awards payable under this
Plan 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 any Plan participant to the
payment of interest and/or any tax penalty that may be imposed under section
409A of the Code with respect to the Plan.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.3<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;When awarded,
payments under the Plan will be made as soon as practicable after the end of the
applicable award period, and in any event, payments will be made no later than
the end of the second fiscal quarter following the award period to which the
payments relate. &#160;Notwithstanding the foregoing, if a participant is
eligible for payment of:&#160;&#160;(a) all or part of an annual award as a
result of his or her death or termination of his or her employment on account of
his or her disability as provided in Paragraph 4.2 above or as a result of his
or her involuntary termination under the Severance Plan for Section 16 Officers,
if applicable, the payment will be made no later than the 15th day of the third
month after the later of the end of the Company&#8217;s tax year in which such death
or disability occurs or the end of the participant&#8217;s tax year in which such
death or disability occurs; (b) 100% of a quarterly award as provided in
Paragraph 4.6 above due to a Change In Control, payment will be made without
exception on or before the 15th day of third month following the end of the
award period; and/or (c) 100% or more of an annual award as provided in
Paragraph 4.6 above due to a Change In Control, payment will be made without
exception no later than the 15<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">th</font> day of
the third month after the later of the end of the Company&#8217;s tax year in which
the Change In Control occurs or the end of the participant&#8217;s tax year in which
the Change In Control occurs.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.4<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;This Plan
shall not be construed to give participants a right of continued employment with
the Company.</font></div>
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<DESCRIPTION>EXHIBIT 10.2
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      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibit
10.2</font></div>
      <div>&#160;</div>
      <div>
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              <tr>
                <td valign="top" width="30%" style="BORDER-TOP: black 0px solid; BORDER-LEFT: black 0px solid; BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><img src="exhibit99_11.jpg" alt=""></div>
                </td>
                <td colspan="2" valign="middle" width="70%" style="BORDER-RIGHT: black 0px solid; BORDER-TOP: black 0px solid; BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;&#160;
      NOTICE OF GRANT</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; FONT-SIZE: 6pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;</font></font></font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;&#160;
      </font></font></div>
                </td>
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              <tr>
                <td align="left" valign="top" width="30%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-TOP: medium none; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Company:</font></font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cree,
      Inc.</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4600
      Silicon Drive</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Durham,
      NC&#160;&#160;27703</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Tax
      I.D. 56-1572719</font></div>
                </td>
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                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Award Number:&#160;
      </font></font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Award Plan:&#160;
      </font></font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Award Type:&#160;
      </font></font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Grant Date:&#160;
      </font></font></div>
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Performance Period:&#160;
      </font></font></div>
                </td>
                <td align="left" valign="top" width="40%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-BOTTOM: black 0.5pt solid">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Charles
      M. Swoboda</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">002</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2004
      Long-Term Incentive Compensation Plan</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Performance
      Units</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      &#173;18, 2008</font></div>
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
      30, 2008 through June 28,
2009</font></div>
                </td>
              </tr>
          </table>
        </div>
      </div>
      <div>&#160;</div>
      <div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dear
Chuck:</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I am
pleased to inform you that Cree, Inc. (the &#8220;Company&#8221;) has awarded Performance
Units to you effective August 18, 2008 (the &#8220;Grant Date&#8221;).&#160;&#160;This award
is subject to and governed by the terms of the Cree, Inc. 2004 Long-Term
Incentive Compensation Plan (the &#8220;Plan&#8221;), the terms of the Master Performance
Unit Award Agreement between you and the Company, and this Notice of
Grant.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
amount payable to you pursuant to your Performance Units (&#8220;<font style="DISPLAY: inline; FONT-WEIGHT: bold">D</font>&#8221;) will be determined as the
result of <font style="DISPLAY: inline; FONT-WEIGHT: bold">A</font> x <font style="DISPLAY: inline; FONT-WEIGHT: bold">B</font> x <font style="DISPLAY: inline; FONT-WEIGHT: bold">C, </font>where:</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div>
            <table cellpadding="0" cellspacing="0" id="list" width="100%">
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                    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                  </td>
                  <td>
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">A</font> equals your Base
      Salary;</font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div>
            <table cellpadding="0" cellspacing="0" id="list" width="100%">
                <tr valign="top">
                  <td align="right" style="WIDTH: 36pt">
                    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                  </td>
                  <td>
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">B</font> equals your Target
      Award Level; and</font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div>
            <table cellpadding="0" cellspacing="0" id="list" width="100%">
                <tr valign="top">
                  <td align="right" style="WIDTH: 36pt">
                    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                  </td>
                  <td>
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">C</font> equals the Performance
      Measurement.</font></div>
                  </td>
                </tr>
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          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
purposes of the foregoing, except as expressly provided otherwise in this Notice
of Grant, &#8220;Base Salary&#8221; shall refer to your annual base salary in effect on the
last day of the first fiscal quarter of fiscal year 2009 (&#8220;FY09&#8221;), as provided
in the Company&#8217;s human resources management system, unless your annual base
salary changes after the first fiscal quarter.&#160;&#160;If your annual base
salary changes after the first fiscal quarter, &#8220;Base Salary&#8221; 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.&#160;&#160;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&#8217;s payroll system), including without limitation a short-term or
long-term disability leave, for all or part of the Performance Period, your Base
Salary will be reduced proportionately to equate to the base salary applicable
to the number of calendar days you were not on a leave of absence during the
Performance Period.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
purposes of the foregoing, your &#8220;Target Award Level&#8221; is eighty-five percent
(85%) of your Base Salary.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
purposes of the foregoing, the &#8220;Performance Measurement&#8221; is a percentage between
0% and 150% determined by the Compensation Committee of the Company&#8217;s Board of
Directors (the &#8220;Committee&#8221;) after assessing the Company&#8217;s performance against
FY09 revenue and earnings per share (&#8220;EPS&#8221;) targets.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to
or at the time of issuance of this Notice of Grant, you will receive one or more
schedules (collectively, the &#8220;Schedule&#8221;) showing the minimum revenue and EPS
targets for each Performance Measurement level. The Performance Measurement for
the Performance Period will be 0% unless both the minimum revenue and EPS
targets established for the minimum Performance Measurement level are
achieved.&#160;&#160;Your Performance Measurement for the Performance Period
will be determined based on the lower of the Performance Measurement level
associated with actual revenue or the Performance Measurement level associated
with actual EPS.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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            </div>
            <div id="PN" style="PAGE-BREAK-AFTER: always">
              <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
                <hr style="COLOR: black" noshade size="2">
              </div>
            </div>
            <div id="HDR">
              <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
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          <div id="HDR">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Except as
provided in the Company&#8217;s Severance Plan for Section 16 Officers, if such plan
is then in effect, and except as provided below with respect to your death or
LTD Disability (as defined in the Executive Change in Control Agreement between
you and the Company effective August 18, 2008 (the &#8220;Change in Control
Agreement&#8221;)) or a Change in Control (as defined in Section&#160;7.1 of the Cree,
Inc. Equity Compensation Plan (as amended and restated August 5, 2002 and
without regard to any subsequent amendments)), (i) you must be continuously
employed by the Company as the Company&#8217;s Chief Executive Officer and President
through the date of payment under your Performance Units to have a right to
payment of your Performance Units, (ii) your Performance Units will not be
considered earned until you receive payment under your Performance Units, and
(iii) if you terminate employment with the Company prior to the date of payment
under your Performance Units, with or without cause, you will forfeit your
Performance Units.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After the
end of the Performance Period, your actual Performance Measurement will be
determined as follows:</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div>
            <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
                <tr valign="top">
                  <td style="WIDTH: 72pt">
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Step
      1:</font></div>
                  </td>
                  <td>
                    <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Committee will, in good faith and in its sole discretion, determine the
      Company&#8217;s actual revenue, net income and EPS results for the Performance
      Period (the &#8220;Results,&#8221; each a &#8220;Result&#8221;) using competent and reliable
      information, including but not limited to audited financial statements, if
      available.</font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div>
            <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
                <tr valign="top">
                  <td style="WIDTH: 72pt">
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Step
      2:</font></div>
                  </td>
                  <td>
                    <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Committee will identify the percentage on the Schedule that corresponds to
      each Result.&#160;&#160;However, in the event a Change in Control occurs
      during the Performance Period, the percentage for each Result will be no
      less than 100%.</font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div>
            <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
                <tr valign="top">
                  <td style="WIDTH: 72pt">
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Step
      3:</font></div>
                  </td>
                  <td>
                    <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Committee will identify the greater of the net income percentage from Step
      2 or the EPS percentage from Step
2.</font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div>
            <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
                <tr valign="top">
                  <td style="WIDTH: 72pt">
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Step
      4:</font></div>
                  </td>
                  <td>
                    <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Your
      Performance Measurement will be the lesser of the revenue percentage from
      Step 2 or the percentage identified in Step 3
  above.</font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Notwithstanding
the foregoing, in order to ensure that the Company&#8217;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)),&#160; the Committee may
not decrease or eliminate the amount payable as otherwise determined in
accordance with&#160;this Notice of Grant without your prior written consent,
except that, this restriction shall cease to apply if the tender offer or
the&#160;&#160;written agreement is terminated or expires without the occurrence
of a Change in Control.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If there
is a Change in Control and you remain continuously employed by the Company
through the end of the Performance Period, but your employment terminates In
Connection with a Change in Control upon or after the end of the Performance
Period but prior to the payment date under your Performance Units, you will be
entitled to payment under your Performance Units as otherwise determined in
accordance with this Notice of Grant as if you had remained employed through the
payment date under your Performance Units.&#160;&#160;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 </font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
              <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
            </div>
            <div id="PN" style="PAGE-BREAK-AFTER: always">
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-</font></div>
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                <hr style="COLOR: black" noshade size="2">
              </div>
            </div>
            <div id="HDR">
              <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
            </div>
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to a payment under your Performance Units.&#160;&#160;&#8220;In Connection with a
Change of Control&#8221; will have the same meaning as in Section&#160;10(h) of the
Change in Control Agreement.</font></div>
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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,&#160;(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&#160;ends or the end of your tax year in which the Performance Period
ends.&#160;&#160;However, if payment becomes due under your Performance Units on
account of your death or termination of your employment on account of your LTD
Disability, payment will be made no later than the 15th day of the third month
after the later of the end of the Company&#8217;s tax year in which your death or LTD
Disability, as applicable, occurs or the end of your tax year in which your
death or LTD Disability, as applicable, occurs.&#160;&#160;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<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">th</font> day of
the third month after the later of the end of the Company&#8217;s tax year in which
the Change of Control occurs or the end of your tax year in which the Change of
Control occurs.</font></div>
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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.&#160;&#160;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.&#160;&#160;By signing below, you
expressly acknowledge that you are not a participant in or entitled to a payment
under the Fiscal 2008 Management Incentive Compensation Plan.</font></div>
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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.</font></div>
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18, 2008</font></div>
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<DOCUMENT>
<TYPE>EX-10.3
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<DESCRIPTION>EXHIBIT 10.3
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10.3</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">MASTER PERFORMANCE UNIT AWARD
AGREEMENT</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">TERMS AND
CONDITIONS</font></font></div>
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      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
Master Performance Unit Award Agreement (this &#8220;Master Agreement&#8221; or &#8220;Agreement&#8221;)
is entered into between you (the &#8220;Participant&#8221; named below) and Cree, Inc., a
corporation formed under the laws of the State of North Carolina (the
&#8220;Company&#8221;).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
Agreement states the terms and conditions that govern any performance units
(&#8220;Performance Units&#8221;) that the Company may from time to time grant you giving
you the right to receive shares (&#8220;Shares&#8221;) of the common stock of the Company
(&#8220;Common Stock&#8221;), cash or a combination of both.&#160;&#160;Grants of
Performance Units will be made under the Company&#8217;s 2004 Long-Term Incentive
Compensation Plan (the &#8220;Plan&#8221;).&#160;&#160;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.&#160;&#160;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.</font></div>
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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.&#160;&#160;This Agreement is
subject to and will be construed in accordance with the Plan.&#160;&#160;As used
in this Agreement, &#8220;Company&#8221; includes Cree, Inc. and any entity that is part of
the &#8220;Company&#8221; as defined in the Plan.&#160;&#160;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.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;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 18,
2008 on which the Company grants you an Award.</font></div>
    </div>
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    <div>&#160;</div>
    <div>&#160;</div>
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          </tr>
          <tr>
            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="42%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="top" width="42%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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    <div>&#160;</div>
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Agreement to Tamara Cappelson,</font></font></div>
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    <div>&#160;</div>
    <div>&#160;</div>
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Units.</font></div>
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            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">3.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Settlement
      of Performance Units</font>.<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">&#160;</font>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.&#160;&#160;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.&#160;&#160;You will receive a cash distribution for the value of
      your Performance Units not settled in
Shares.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">4.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Responsibility
      for Taxes.</font></font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Regardless
      of any action the Company<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>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)&#160;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)&#160;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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;If permissible under local law and at your election,
      the Company will satisfy this condition pursuant to the withholding of
      Shares consistent with the &#8220;Share Withholding&#8221; provisions under section
      13.2 of the Plan.&#160;&#160;The Company, in its discretion, may authorize
      alternative arrangements, including, if permissible under local law, the
      Company&#8217;s selling or arranging to sell Shares that you acquire under the
      Plan.&#160;&#160;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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">5.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Transfer of
      Performance Units.&#160;&#160;</font>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.&#160;&#160;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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">6.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Rights
      Prior to Issuance of Shares</font>.&#160;&#160;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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 2
-</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">7.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Definitions</font>.&#160;&#160;The
      following definitions apply under this
  Agreement:</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Tax-Related
      Items&#8221; 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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Termination
      of Service&#8221; 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.&#160;&#160;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.&#160;&#160;The Committee, in its
      discretion, will determine whether you have incurred a Termination of
      Service.&#160;&#160;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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">8.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Provisions
      of the Plan</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.&#160;&#160;</font>The
      provisions of the Plan are incorporated by reference in this Agreement as
      if set out in full in this Agreement.&#160;&#160;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.&#160;&#160;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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">9.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Section
      409A.</font>&#160;&#160;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.&#160;&#160;In all cases, the provisions of this paragraph shall
      apply notwithstanding any contrary provision in this Agreement or any
      Notice of Grant.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">10.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Data
      Privacy.</font>&#160;&#160;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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 27px">
                <div>&#160;</div>
              </td>
              <td width="959">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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 (&#8220;Data&#8221;).&#160;&#160;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&#8217;s country may have different data privacy laws and protections
      than your country.&#160;&#160;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.&#160;&#160;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.&#160;&#160;You understand that Data
      will be held only as long as is necessary to implement, administer and
      manage your participation in the Plan.&#160;&#160;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.&#160;&#160;You understand, however, that refusing or
      withdrawing your consent may affect your ability to participate in
      the</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 3
-</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 27px">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">&#160;</font></div>
              </td>
              <td width="954">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Plan.&#160;&#160;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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">11.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Electronic
      Delivery.</font>&#160;&#160;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.&#160;&#160;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.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 20pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">12.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">General.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
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                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;&#160;</font></div>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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&#8217;s right to
      terminate the service relationship.</font></div>
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                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;&#160;</font></div>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
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            </tr>
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      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&#8217;s
      records.</font></div>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
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            </tr>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;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.</font></div>
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      <div>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;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.</font></div>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
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      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.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      acknowledge, represent and warrant to the Company, and agree with the
      Company, that, except for information provided in the Company&#8217;s filings
      with the Securities and Exchange Commission and in the Company&#8217;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;
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
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      you will seek from your own professional advisors such investment, tax and
      other advice as you believe
necessary.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
      acknowledge that you may incur a substantial tax liability as a result of
      Performance Units.&#160;&#160;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.&#160;&#160;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&#8217;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.</font></div>
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                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">13.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Severability</font>.&#160;&#160;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.</font></div>
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<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>exhibit10_4.htm
<DESCRIPTION>EXHIBIT 10.4
<TEXT>
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    <title>exhibit10_4.htm</title>
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    <div>
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    <div style="TEXT-ALIGN: right"><font style="FONT-WEIGHT: bold">Exhibit
10.4</font></div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CREE,
INC.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXECUTIVE
CHANGE IN CONTROL AGREEMENT</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cree,
Inc. (the &#8220;Company&#8221;) and Charles M. Swoboda (&#8220;Executive&#8221;) entered into an
Employment Agreement effective as of October 13, 2004 (the &#8220;Original
Agreement&#8221;), which was subsequently amended and restated effective as of August
21, 2007 (the &#8220;Existing Agreement&#8221;).&#160;&#160;This Executive Change in Control
Agreement (the &#8220;Agreement&#8221;) between Company and Executive is intended to
supersede and replace the Existing Agreement as of the effective date of this
Agreement, which shall be August 18, 2008 (the &#8220;Effective
Date&#8221;).&#160;&#160;Upon full execution and delivery of this Agreement and the
exchange of good and valuable consideration, the receipt and sufficiency of
which is acknowledged, the parties hereby agree to terminate the Existing
Agreement as of the Effective Date, except to the extent provided in Section 19
of this Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Duties and Scope of
Employment</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Positions and
Duties</font>.&#160;&#160;Executive will continue to serve as Chairman of the
Board, President and Chief Executive Officer, reporting to the Company&#8217;s Board
of Directors (the &#8220;Board&#8221;).&#160;&#160;Executive will render such business and
professional services in the performance of his duties, consistent with
Executive&#8217;s positions within the Company, as will reasonably be assigned to him
by the Board.&#160;&#160;The period Executive is employed by the Company under
this Agreement is referred to herein as the &#8220;Employment Term&#8221;.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Board
Membership</font>.&#160;&#160;At each annual meeting of the Company&#8217;s
stockholders during the Employment Term, the Company will nominate Executive to
serve as a member of the Board.&#160;&#160;Executive&#8217;s service as a member of
the Board will be subject to any required stockholder approval.&#160;&#160;While
a member of the Board, Executive will be permitted to attend all meetings of the
Board and executive sessions thereof, on substantially the same basis as other
members of the Board, except as is prohibited by applicable law or listing
standard.&#160;&#160;Notwithstanding the preceding sentence, Executive will not
have the right to attend any portion of a meeting or executive session where the
item of discussion relates to Executive&#8217;s employment, including (but not limited
to) his compensation, performance and/or service on the Board.</font></div>
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          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Obligations</font>.&#160;&#160;During
the Employment Term, Executive will devote Executive&#8217;s full business efforts and
time to the Company.&#160;&#160;For the duration of the Employment Term,
Executive agrees not to actively engage in any other employment, occupation, or
consulting activity for any direct or indirect remuneration without the prior
approval of the Board (which approval will not be unreasonably withheld);
provided, however, that Executive may, without the approval of the Board, serve
in any capacity with any civic, educational, or charitable organization,
provided such services do not interfere with Executive&#8217;s obligations to
Company.</font></div>
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          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">At-Will
Employment</font>.&#160;&#160;Executive and the Company agree that Executive&#8217;s
employment with the Company constitutes &#8220;at-will&#8221;
employment.&#160;&#160;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.&#160;&#160;However, as described in
this Agreement, Executive may be entitled to severance benefits depending upon
the circumstances of termination of his
employment.&#160;&#160;Executive</font></div>
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to resign from all positions held with the Company and its affiliates
immediately following the termination of his employment if the Board so
requests.</font></div>
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Agreement</font>.&#160;&#160;This Agreement will have an initial term of one
year commencing on the Effective Date.&#160;&#160;On each anniversary of the
Effective Date thereafter, this Agreement will automatically 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.&#160;&#160;Notwithstanding any contrary provision in this
Section&#160;3, (i) in the event of the commencement of a tender offer or the
Company and another party enter 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, this
Agreement will continue until the occurrence of either the resulting Change in
Control or the termination or expiration of the tender offer or the written
agreement without the occurrence of a Change in Control, whichever comes first,
and (ii) in the event a Change in Control (including without limitation a
resulting Change in Control described in the preceding clause (i))occurs during
the Employment Term, this Agreement will continue for not less than twenty-four
(24) months after the date of the Change in Control.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Compensation</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Base
Salary</font>.&#160;&#160;As of the Effective Date, the Company will pay
Executive an annual salary of $572,000.00 as compensation for his services (such
annual salary, as is then effective, to be referred to herein as &#8220;Base
Salary&#8221;).&#160;&#160;The Base Salary will be paid periodically in accordance
with the Company&#8217;s normal payroll schedule and practices and be subject to the
usual, required withholdings.&#160;&#160;Executive&#8217;s salary will be subject to
review by the Compensation Committee of the Board (the &#8220;Committee&#8221;) not less
than annually, and adjustments will be made in the discretion of the
Committee.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Incentive
Compensation</font>.&#160;&#160;Executive will be eligible to receive incentive
compensation payable for the achievement of performance goals established by the
Committee.&#160;&#160;Executive&#8217;s annual target incentive award level will be at
least 80% of Base Salary, as determined by the Committee.&#160;&#160;The actual
earned incentive, if any, payable to Executive for any fiscal year of the
Company will depend upon the extent to which the applicable performance goal(s)
specified by the Committee are achieved and will be decreased or increased for
under- or over-performance.&#160;&#160;For each fiscal year of the Company, the
Committee will endeavor to establish the applicable performance goal(s) no later
than the 90th day of the fiscal year to which the goals
relate.&#160;&#160;Executive will have the opportunity to discuss the nature of
such performance goals with the Committee prior to such performance goals being
established.&#160;&#160;Executive&#8217;s incentive compensation will be subject to
the terms and conditions of the Company&#8217;s incentive plan or arrangement
designated by the Committee for this purpose, including but not limited to
continued employment requirements and payment date terms that are designed to
cause the incentive compensation to be exempt from or in compliance with Section
409A of the Internal Revenue Code of 1986, as amended (the &#8220;Code&#8221;) and the
guidance thereunder (collectively &#8220;Section 409A&#8221;).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Long-Term
Incentive</font>.&#160;&#160;Executive will be eligible to receive long-term
incentives subject to terms and conditions established by the Committee, the
underlying Cree, Inc. 2004 Long-Term Incentive Compensation Plan or any
successor plan thereto, and the Committee&#8217;s</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">terms
and conditions for the applicable type of award, including vesting criteria such
as continued service or performance objectives.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Employee
Benefits</font>.&#160;&#160;Executive will be eligible to participate in all
Company employee benefit plans, policies, and arrangements that are applicable
to other executive officers of the Company in accordance with the terms of such
plans, policies, and arrangements as may exist from time to
time.&#160;&#160;Notwithstanding the preceding sentence, Executive&#8217;s eligibility
for benefits (other than annual incentive, long-term incentives or other
long-term compensation (whether payable in cash, stock, or otherwise), salary,
or similar items) will be at least as great as that of any other executive
officer of the Company, provided, however, that (a)&#160;Executive will be
eligible for any enhanced level of benefits that he approves only upon
subsequent Committee approval, and (b)&#160;Executive will not be eligible for
any extraordinary or unusual benefits provided to another executive officer as
part of a negotiation for such executive officer to commence or continue
employment.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">6.</font><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Expenses</font>.&#160;&#160;The
Company will reimburse Executive for reasonable travel, entertainment, and other
expenses incurred by Executive in the furtherance of the performance of
Executive&#8217;s duties hereunder, in accordance with the Company&#8217;s expense
reimbursement policy as in effect from time to time.&#160;&#160;To the extent
that any such reimbursement does not qualify for exclusion from Federal income
taxation, the Company will make the reimbursement only if the corresponding
expense is incurred during the term of this Agreement and the reimbursement is
made on or before the last day of the calendar year following the calendar year
in which the expense is incurred, the amount of expenses eligible for such
reimbursement during a calendar year will not affect the amount of expenses
eligible for such reimbursement in another calendar year, and the right to such
reimbursement is not subject to liquidation or exchange for another benefit from
the Company.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Termination of
Employment</font>.&#160;&#160;In the event of Executive&#8217;s Termination of
Employment with the Company, Executive will be entitled to any (a)&#160;unpaid
Base Salary accrued up to the date of such Termination of Employment (the
&#8220;Termination Date&#8221;) paid in accordance with the schedule specified in Section
4(a) above, (b)&#160;any incentive compensation that is earned as of Executive&#8217;s
Termination Date in accordance with the terms and conditions of the applicable
incentive plan or arrangement but has not yet been paid, which amount, if any,
will be paid in accordance with the terms and conditions of the applicable
incentive arrangement, (c)&#160;pay for accrued but unused vacation that the
Company is legally obligated to pay Executive, which amount will be paid in the
first regular payroll cycle occurring after the Termination Date or, if
Executive is a Specified Employee of the Company on the Termination Date, such
amount will be paid on the Six-Month Delay Payment Date to the extent required
to satisfy Subsection 409A(a)(2)(B)(i), (d)&#160;benefits or compensation as
provided under the terms of any employee benefit and compensation agreements or
plans applicable to Executive, (e)&#160;unreimbursed business expenses required
to be reimbursed to Executive, which amount, if any, will be paid in accordance
with Section 6 above, and (f)&#160;rights to indemnification Executive may have
under the Company&#8217;s Articles of Incorporation, Bylaws, this Agreement, or a
separate indemnification agreement, as applicable.&#160;&#160;In addition, if
the Termination of Employment is initiated by the Company without Cause or by
Executive for Good Reason, and the Termination of Employment is In Connection
with a Change in Control, Executive will be entitled to the amounts and benefits
specified in Section&#160;8(a) below.</font></div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severance</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Change in Control
Benefits</font>.&#160;&#160;If Executive&#8217;s Termination of Employment is
initiated by the Company without Cause or by Executive for Good Reason, and the
Termination of Employment is In Connection with a Change in Control (but not by
the Company in connection with the death or LTD Disability of Executive), then,
subject to Section&#160;9, Executive will receive: (i)&#160;continued payment of
Base Salary for twenty-four (24) months, paid in accordance with the schedule
specified in Section 4(a) above, but commencing within thirty (30) days
following Termination of Employment with payments retroactive to that date,
except as provided in Section 8(b) below, (ii)&#160;a lump sum payment of an
amount equal to eighty percent (80%) of Executive&#8217;s Base Salary, multiplied by a
fraction, the numerator of which is the number of days elapsed starting on the
first day of the fiscal year during which the Termination Date occurs and ending
on the Termination Date and the denominator of which is 365, paid within sixty
(60) days following the Termination Date except as provided in Section 8(b)
below, (iii)&#160;a lump sum payment equal to the sum of Executive&#8217;s earned
annual incentives for the two most recently completed fiscal years immediately
preceding the Termination Date, paid within ninety (90) days following the
Termination Date except as provided in Section 8(b) below, (iv)&#160;a lump sum
payment equal to twenty-four (24) multiplied by the COBRA premium in effect for
the type of medical, dental and vision coverage in effect for Executive (e.g.,
family coverage vs. employee-only coverage) at the time of his Termination of
Employment, paid within ninety (90) days following the Termination Date except
as provided in Section 8(b) below, and (v)&#160;full accelerated vesting with
respect to Executive&#8217;s then outstanding, unvested stock options, restricted
stock awards, and other equity awards other than performance units used to pay
Executive&#8217;s annual incentive award.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Payment Delay in Event
Executive is a Specified Employee</font>.&#160;&#160;If Executive is a Specified
Employee on the Termination Date, the payments specified in subsections 8(a)(i),
(ii), (iii) and (iv) above will be delayed until the Six-Month Delay Payment
Date to the extent required to satisfy Subsection 409A(a)(2)(B)(i); on that
date, the Company will pay Executive a lump sum consisting of all payments that
would have been paid to Executive prior to the Six-Month Delay Payment Date had
Executive not been a Specified Employee, increased for interest at the
short-term Federal rate in effect on the Termination Date for the period
beginning on the date each component of such lump sum would have been paid had
Executive not been a Specified Employee and ending on the Six-Month Delay
Payment Date.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Parachute Payment
Limitation</font>.&#160;&#160;Notwithstanding the provisions of&#160;Section
8(a) above, if</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;
(i)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;any
payments or benefits received or to be received by&#160;Executive, whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company or any person whose actions result in a Change in
Control, constitute "parachute payments" (such payments or benefits being
hereinafter referred to as the "Parachute Payments") within the meaning
of&#160;Section 280G(b)(2) of the Code, and</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;
(ii)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>the
aggregate present value of the Parachute Payments reduced by any excise tax
imposed under&#160;Section 4999 of the Code (or any similar tax that may
hereafter be </font></div>
          </div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">imposed)
(the "Excise Tax") would be less than 3 times&#160;Executive's&#160;"base
amount" as defined in&#160;Section 280G(b)(3) of the Code,</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">then, in
lieu of that portion of the Parachute Payments to which&#160;Executive would
otherwise be entitled under&#160;subsections (i), (ii), (iii) and (iv) of
Section&#160;8(a)&#160;above, the Company shall pay&#160;Executive an amount (if
any) such that the aggregate present value of the Parachute Payments is equal to
2.99 times&#160;such base amount (the&#160;resulting amount that is payable
under subsections (i), (ii), (iii) and (iv) of Section 8(a) is the "Capped
Amount").&#160; The Capped Amount shall be apportioned and substituted for the
amounts that would otherwise have been payable under&#160;subsections (i),
(ii),&#160;(iii) and (iv)&#160;of Section 8(a) above but for this Section
8(c)&#160;on a prorata basis, and each such amount shall be paid at the time
specified in the&#160;corresponding&#160;subsection of&#160;Section&#160;8(a)
above except as provided in Section 8(b) above.&#160; For this purpose,
proration shall be accomplished by multiplying each amount that would otherwise
have been payable under&#160;subsections (i), (ii),&#160;(iii) and (iv)&#160;of
Section 8(a) above but for this Section 8(c) by a fraction, the numerator of
which is the Capped Amount and the denominator of which is the aggregate amount
that would otherwise have been payable under subsections (i), (ii), (iii) and
(iv) of Section 8(a) but for this Section 8(c).&#160; For purposes of this
Section 8(c),&#160;the base amount, the present value of the Parachute Payments,
the amount of the Excise Tax and all other appropriate matters shall be
determined by the Company&#8217;s independent auditors in accordance with the
principles of&#160;Section 280G of the Code and based upon the advice of tax
counsel selected by such auditors</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Voluntary Termination
without Good Reason; Termination for Cause</font>.&#160;&#160;If Executive&#8217;s
employment with the Company terminates voluntarily by Executive without Good
Reason or is terminated for Cause by the Company, then, except as provided in
Section 7, (i)&#160;all further vesting of Executive&#8217;s outstanding equity awards
will terminate immediately, and Executive&#8217;s outstanding equity awards will
terminate in accordance with the terms and conditions of the applicable award
agreement(s), (ii)&#160;all payments of compensation by the Company to Executive
hereunder will terminate immediately, and (iii)&#160;Executive will be entitled
to receive benefits, including severance benefits, only in accordance with the
Company&#8217;s then established plans, programs, and practices other than this
Agreement.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Termination due to Death or
LTD Disability</font>.&#160;&#160;If Executive&#8217;s employment is terminated by
reason of his death or LTD Disability, then, except as provided in Section 7,
(i)&#160;Executive&#8217;s outstanding equity awards will vest and terminate in
accordance with the terms and conditions of the applicable award agreement(s);
(ii)&#160;all payments of compensation by the Company to Executive hereunder
will terminate immediately, and (iii)&#160;Executive will be entitled to receive
benefits, including severance benefits, only in accordance with the Company&#8217;s
then established plans, programs, and practices other than this
Agreement.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Sole Right to
Severance</font>.&#160;&#160;This Agreement is intended to represent Executive&#8217;s
sole entitlement to severance payments and benefits in connection with a
termination of his employment In Connection with a Change in Control, except for
such payments and benefits to which Executive would be entitled as an employee
of the Company in the absence of this Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Conditions to Receipt of
Severance; No Duty to Mitigate</font>.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(a)</font><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Separation Agreement and
Release of Claims</font>.&#160;&#160;The receipt of any severance pursuant to
Section&#160;8 will be subject to Executive signing and not revoking a release
of claims in substantially the form attached as <font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit A</font>, but with
any appropriate modifications, reflecting changes in applicable law, as are
necessary or appropriate to provide the Company with the protection it would
have if the release were executed as of the Effective Date.&#160;&#160;No
severance will be paid or provided unless and until the release of claims is
timely executed and returned by Executive to the Company, becomes effective and
has not been timely revoked in accordance with the terms thereof.&#160;&#160;The
Company will complete and provide to Executive the release of claims in
sufficient time so that if Executive timely executes and returns it, the
revocation period will expire before severance payments are required to commence
under Section 8.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Nondisparagement</font>.&#160;&#160;As
a condition to receipt of severance, during the Employment Term and for the
longer of (i)&#160;12 months thereafter or (ii)&#160;the Continuance Period,
Executive will not knowingly disparage, criticize, or otherwise make any
derogatory statements regarding the Company, its directors, or its
officers.&#160;&#160;The foregoing restrictions will not apply to any statements
that are made truthfully in response to a subpoena or other compulsory legal
process.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Other
Requirements</font>.&#160;&#160;Executive&#8217;s receipt of continued severance
payments will be subject to Executive continuing to comply with the terms of the
Confidential Information Agreement as amended by this Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No Duty to
Mitigate</font>.&#160;&#160;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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Generally Disabled; LTD
Disability</font>.&#160;&#160;The provisions of this Section 9(e) will control
in the event of conflict between this Section 9(e) and any other language in
this Agreement.&#160;&#160;If Executive becomes Generally Disabled, the Company
will not be in breach of this Agreement and Executive will not be entitled to
severance pursuant to Section 8(a) on account of the Company, in its sole
discretion, taking any action that would otherwise be considered Good Reason
under items (i), (iii), or (iv) of the first paragraph of Section 10(g) below or
under item (i) of the second paragraph of Section 10(g) below provided that such
action remains in effect only for so long as Executive remains Generally
Disabled.&#160;&#160;If Executive is Generally Disabled for more than ninety-one
(91) days (whether or not consecutive) in a rolling twelve (12) month period,
the Company will not be in breach of this Agreement and Executive will not be
entitled to severance per Section 8(a) on account of the Company permanently
taking any action that would otherwise be considered Good Reason under items
(i), (iii), or (iv) of the first paragraph of Section 10(g) below or under item
(i) of the second paragraph of Section 10(g) below so long as the Company does
not terminate Executive&#8217;s employment prior to the date that Executive is
determined to have an LTD Disability.&#160;&#160;If Executive is Generally
Disabled and the Company terminates his employment without Cause In Connection
with a Change in Control prior to the date that he is determined to have an LTD
Disability, such termination will be considered Termination of Employment by the
Company without Cause for purposes of Section 8(a) of this Agreement, provided
that, in such circumstances, Executive will only be eligible for the severance
benefits set forth in items (i) and (iv) of Section 8(a) of this Agreement and
Section 13 of this Agreement will not apply.&#160;&#160;If Executive ceases to
be Generally Disabled before his employment is terminated by reason of LTD
Disability, subject to the notice and cure provisions in Section 10(g), for
purposes of Section 8(a) </font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
this Agreement Executive will have the right to terminate his employment for
Good Reason (if the Termination of Employment is In Connection with a Change in
Control) on account of any event or circumstances that occurred while Executive
was Generally Disabled that would otherwise have constituted Good Reason except
for the provisions of this Section 9(e) unless such event or circumstances has
already been cured by the Company or consented to by Executive; provided that,
in such circumstances, Executive will only be eligible for the severance
benefits set forth in items (i) and (iv) of Section 8(a) of this Agreement and
Section 13 of this Agreement will not apply.&#160;&#160;Notwithstanding any
language herein to the contrary, nothing in this paragraph creates a right to
severance benefits other than if Executive&#8217;s Termination of Employment is In
Connection with a Change in Control.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Definitions</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Benefit
Plans</font>.&#160;&#160;For purposes of this Agreement, &#8220;Benefit Plans&#8221; means
plans, policies, or arrangements that the Company sponsors (or participates in)
and that immediately prior to the Termination Date provide Executive,
Executive&#8217;s spouse, and/or Executive&#8217;s eligible dependents with medical, dental,
or vision benefits.&#160;&#160;The term &#8220;Benefit Plans&#8221; does not include plans,
policies, or arrangements providing for any other type of benefit (including,
but not by way of limitation, financial counseling, disability, life insurance,
or retirement benefits).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Cause</font>.&#160;&#160;For
purposes of this Agreement, &#8220;Cause&#8221; means (i)&#160;Executive&#8217;s willful and
continued failure to perform the duties and responsibilities of his position
that is not corrected within a thirty (30) day correction period that begins
upon delivery to Executive of a written demand for performance from the Board
that describes the basis for the Board&#8217;s belief that Executive has not
substantially performed his duties; (ii)&#160;any act of personal dishonesty
taken by Executive in connection with his responsibilities as an employee of the
Company with the intention or reasonable expectation that such may result in
substantial personal enrichment of Executive; (iii)&#160;Executive&#8217;s conviction
of, or plea of <font style="DISPLAY: inline; FONT-STYLE: italic">nolo
contendere</font> to, a felony that the Board reasonably believes has had or
will have a material detrimental effect on the Company&#8217;s reputation or business;
or (iv)&#160;Executive materially breaching Executive&#8217;s Confidential Information
Agreement as modified by this 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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Change in
Control</font>.&#160;&#160;For purposes of this Agreement, &#8220;Change in Control&#8221;
will have the same meaning as in Section&#160;7.1 of the Cree, Inc. Equity
Compensation Plan (as amended and restated August 5, 2002 and without regard to
any subsequent amendments).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Confidential Information
Agreement</font>.&#160;&#160;For purposes of this Agreement, &#8220;Confidential
Information Agreement&#8221; shall refer to the version of Employee Agreement
Regarding Confidential Information, Intellectual Property, and Noncompetition in
effect for Executive as of the relevant date; provided that, with respect to
Executive&#8217;s post-termination obligations, it shall refer to the version of such
agreement in effect as of Executive&#8217;s Termination Date.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Continuance
Period</font>.&#160;&#160;For purposes of this Agreement, &#8220;Continuance Period&#8221;
means the period of time beginning on the Termination Date and ending on the
date twenty-four (24) months following the Termination
Date.&#160;&#160;Notwithstanding the preceding sentence, in the event
</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
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              </div>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of a
termination of Executive&#8217;s employment where Executive is not entitled to
severance under Section 8(a), the Continuance Period shall be of no
duration.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Generally
Disabled</font>.&#160;&#160;For purposes of this Agreement, &#8220;Generally Disabled&#8221;
means that Executive is unable, with reasonable accommodation, to perform the
material and substantial duties of his position due to illness or injury or
physical or mental incapacity as determined by the Committee consistent with its
obligations to the Company&#8217;s shareholders.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(g)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Good
Reason</font>.&#160;&#160;For purposes of this Agreement, except as provided in
Section 9(e) above, &#8220;Good Reason&#8221; means the occurrence of any of the following,
without Executive&#8217;s consent: (i)&#160;a significant reduction of Executive&#8217;s
duties or responsibilities or a change in Executive&#8217;s position as Chief
Executive Officer or President, or the removal of Executive from any of such
duties, positions, or responsibilities; (ii)&#160;a reduction in Executive&#8217;s
Base Salary or target annual incentive award level below 80% of Base Salary
other than a one-time reduction that also is applied to substantially all other
executive officers of the Company on Executive&#8217;s recommendation or approval if
Executive&#8217;s reduction is substantially proportionate to, or no greater than, the
reduction applied to substantially all other executive officers; (iii)&#160;the
Company requiring Executive to report to anyone other than the Board of
Directors; (iv)&#160;the Company eliminating from reporting to Executive any
position that previously directly reported to Executive; or (v)&#160;the Company
requiring Executive to relocate his principal place of business or the Company
relocating its headquarters, in either case to a facility or location outside of
a thirty-five (35) mile radius from Executive&#8217;s current principal place of
employment; provided, however, that Executive only will have Good Reason if
<font style="DISPLAY: inline">he provides notice to the Company of the existence
of</font><font style="DISPLAY: inline">&#160;</font>the event or circumstances
constituting Good Reason specified in any of the preceding clauses <font style="DISPLAY: inline">within ninety (90) days of the initial occurrence of
such event or circumstances and, in the case of a tender offer as contemplated
in Section 3(i) of this Agreement, such event or circumstances must have
initially occurred after the commencement of the tender offer, and if such event
or circumstances</font> is not cured within thirty (30) days after Executive
gives written notice to the Company.&#160;&#160;If Executive initiates
Termination of Employment for Good Reason, the actual Termination of Employment
must occur within thirty (30) days after expiration of the cure period.
Executive&#8217;s failure to timely give notice of the occurrence of a specific event
that would otherwise constitute Good Reason will not constitute a waiver of
Executive&#8217;s right to give notice of any new event that would constitute Good
Reason that occurs after such prior event (regardless of whether the new
subsequent event is of the same or different nature as the preceding
event).&#160;&#160;Executive&#8217;s actions approving in writing (or by such other
means as is reliable and verifiable) any change, reduction, requirement or
occurrence (that otherwise may be considered Good Reason) in his role as Chief
Executive Officer or as a director will be considered consent for the purposes
of this Good Reason definition.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, except as provided in Section 9(e) above, &#8220;Good Reason&#8221; also means the
occurrence of any of the following, without Executive&#8217;s express written consent,
In Connection with a Change in Control:&#160;&#160;(i)&#160;a substantial
reduction by the Company of the facilities and perquisites (including office
space and location) available to Executive provided such reduction is not
applied to all executive officers of the Company; (ii)&#160;a material reduction
in the kind or level of employee benefits to which Executive is entitled (other
than a reduction due to application of the rules for eligibility or coverage
under any benefit plan or policy) with the result that Executive&#8217;s overall
benefits package is significantly reduced provided such reduction is not applied
to substantially all executive officers of the Company; or (iii)&#160;the
failure of the Company to obtain the</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">assumption of this
Agreement by the Successor (as defined in Section 14); <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provided,
however, that Executive only will have Good Reason if the notice and cure
conditions specified in the immediately preceding paragraph are
satisfied</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(h)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">In Connection with a Change
in Control</font>.&#160;&#160;For purposes of this Agreement, a Termination of
Employment with the Company is &#8220;In Connection with a Change in Control&#8221; if
Executive incurs a Termination of Employment either within (i) the period of
time between 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 and the occurrence of either
the resulting Change in Control or the termination or expiration of the tender
offer or the written agreement without the occurrence of a Change in Control, or
(ii) twenty-four (24) months following a Change in Control (including without
limitation a resulting Change in Control described in the preceding
clause(i)).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">LTD
Disability</font>.&#160;&#160;For purposes of this Agreement, &#8220;LTD Disability&#8221;
will mean that Executive is &#8220;Partially Disabled&#8221; or &#8220;Total Disabled&#8221; within the
meaning of the Company&#8217;s current long-term disability plan (or such similar term
or terms in any long-term disability plan of the Company that replaces its
current long-term disability plan) and has satisfied the elimination period for
benefits eligibility under such plan.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(j)</font><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Six-Month Delay Payment
Date</font>.&#160;&#160;The payment date associated with the first regular
payroll cycle after passage of six months following the Termination
Date.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(k)</font><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Specified
Employe</font>e.&#160;&#160;For purposes of this Agreement, &#8220;Specified Employee&#8221;
will have the meaning prescribed by Subsection 409A(a)(2)(B)(i) of the Code, as
such meaning may be amended from time to time.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(l)</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Termination of
Employmen</font>t.&#160;&#160;For purposes of this Agreement, &#8220;Termination of
Employment&#8221; will have the meaning as prescribed by Treasury Regulation &#167;
1.409A-1(h)(1)(ii), as such meaning may be amended from time to
time.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font size="+0"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Tax Treatment; Section 409A
Compliance</font>.&#160;&#160;Executive&#160;acknowledges and agrees that the
Company has made no representations as to the tax treatment of the compensation
and benefits provided pursuant to&#160;this Agreement.<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-FAMILY: Times New Roman">&#160;</font>This
Agreement is intended to comply with the requirements of Section
409A.&#160;&#160;Nothing in this Agreement shall require payment in 2008 of any
payment that was required to be paid after 2008 under this Agreement or the
Existing Agreement; in addition, except as may be required to observe the
six-month delay applicable to Specified Employees under Subsection
409A(a)(2)(B)(i), nothing in this Agreement shall postpone beyond 2008 any
payment that was required to be paid in 2008 pursuant to this Agreement or the
Existing Agreement.&#160;&#160;The parties agree to work together to effectuate
the intent of this provision, including but not limited to revising the timing
and/or form of any payment hereunder as may be permitted by and necessary to
ensure the terms and conditions applicable to such payments comply with Section
409A.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Indemnification</font>.&#160;&#160;Subject
to applicable law, Executive will be provided indemnification to the maximum
extent permitted by the Company&#8217;s bylaws and Articles of Incorporation, with
such indemnification to be on terms determined by the Board or any of its
</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Confidential
Information</font>.&#160;&#160;Executive agrees he will be subject to the
noncompetition/nonsolicitation provision (paragraph 11(a)) of his Confidential
Information Agreement during the Employment Term and, except as provided in
Sections 9(e) and 21 hereof, until the later of (a)&#160;the date twelve (12)
months following the Termination Date, or (b)&#160;the expiration of the
Continuance Period.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Assignment</font>.&#160;&#160;This
Agreement will be binding upon and inure to the benefit of (a)&#160;the heirs,
executors, and legal representatives of Executive upon Executive&#8217;s death, and
(b)&#160;any Successor of the Company.&#160;&#160;Any such Successor of the
Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes.&#160;&#160;For this purpose, &#8220;Successor&#8221; 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.&#160;&#160;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.&#160;&#160;Any other attempted assignment, transfer,
conveyance, or other disposition of Executive&#8217;s right to compensation or other
benefits will be null and void.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Notices</font>.&#160;&#160;All
notices, requests, demands, and other communications called for hereunder will
be in writing and will be deemed given (a)&#160;on the date of delivery if
delivered personally, (b)&#160;one business day after being sent overnight by a
well-established commercial overnight service, or (c)&#160;four days after being
mailed by registered or certified mail, return receipt 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:</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If to the
Company:</font></div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Attn</font>: Chairman of the
Compensation Committee</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>c/o Corporate Secretary</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Cree, Inc.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4600 Silicon Drive</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Durham, NC 27703</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If to
Executive:</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>at the last residential address known
by the Company.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severability</font>.&#160;&#160;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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Arbitration</font>.&#160;&#160;The
Parties agree that any and all disputes arising out of the terms of this
Agreement, Executive&#8217;s employment by the Company, Executive&#8217;s service as an
officer or director of the Company, or Executive&#8217;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</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Disputes, supplemented by
the North Carolina Rules of Civil Procedure.&#160;&#160;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.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.&#160;&#160;</font>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&#8217;s obligations under this
Agreement and the Confidential Information Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Legal and Tax
Expenses</font>.&#160;&#160;The Company will reimburse Executive up to
$9,000.00, grossed-up for income and withholding taxes based on the tax rates
applicable to supplemental wage payments to Executive at the time of
payment,<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>for
reasonable legal and tax advice expenses incurred in 2008 by him in connection
with the negotiation, preparation, and execution of this Agreement and related
documents; the Company will make such reimbursement as soon as administratively
practicable after the date on which Executive substantiates to the Company in
writing the amount of such expenses but in no event later than the last day of
2009; Executive must provide such written substantiation in time for the Company
to make such reimbursement by the last day of 2009.&#160;&#160;In addition, in
the event of a dispute relating to this Agreement arising during the term of
Executive&#8217;s employment with the Company or within three (3) years following the
termination of this Agreement, the Company will reimburse Executive&#8217;s fees and
expenses as incurred quarterly, including reasonable attorneys&#8217; fees, in
connection with such dispute, provided that (i) Executive provides the Company
with written documentation substantiating the amount of such fees and expenses,
and (ii) Executive prevails on at least one material issue in such dispute or an
arbitrator does not determine that Executive&#8217;s legal positions were frivolous or
without legal foundation.&#160;&#160;The Company will make such reimbursement
payments quarterly based on the written substantiation documentation submitted
by Executive to the Company during the prior quarter; in no event will any
reimbursement be made later than the end of the calendar year next following the
calendar year in which the expense was incurred by Executive; Executive must
provide such written substantiation in time for the Company to make such
reimbursement by such deadline.&#160;&#160;In the event Executive does not so
prevail or in the event of a determination by the arbitrator that his legal
positions were frivolous or without legal foundation (in either case, a
&#8220;Resolution&#8221;), 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&#8217; fees, incurred in connection with the
dispute, both within a reasonable period of time not to exceed sixty (60) days
following the date of the Resolution.&#160;&#160;The amount of expenses eligible
for reimbursement under this Section 18 during a calendar year will not affect
the amount of expenses eligible for reimbursement under this Section 18 in
another calendar year, and the right to such reimbursement is not subject to
liquidation or exchange for another benefit from the Company.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">19.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Integration</font>.&#160;&#160;This
Agreement, together with the Confidential Information Agreement and the standard
forms of equity award agreements and grant notices that describe Executive&#8217;s
outstanding equity awards, represents 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.&#160;&#160;No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless in a writing that is signed by duly authorized representatives of
the parties hereto.&#160;&#160;Notwithstanding the foregoing, the parties
acknowledge that, with respect to Executive&#8217;s outstanding equity awards as of
the Effective Date, if Executive&#8217;s Termination of Employment is initiated by the
Company without Cause or by Executive for Good Reason, Executive&#8217;s right
to</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">accelerated vesting of
each such award will be determined by reference to Sections 8(a) or 8(b), as
applicable (including any relevant defined terms) in the Original Agreement or
in the Existing Agreement, as applicable based on the version in effect at the
time of the grant of such award (the terms and conditions of which are
incorporated herein for this limited purpose), and not by reference to Section
8(a) (including any relevant defined terms) of this Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Waiver of
Breach</font>.&#160;&#160;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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">21.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Survival</font>.&#160;&#160;The
Confidential Information Agreement, the Company&#8217;s and Executive&#8217;s
responsibilities under Sections&#160;7, 8 and 9, and Sections&#160;12, 13, 17,
and 18 will survive the termination of this
Agreement.&#160;&#160;Notwithstanding the preceding sentence, in the event this
Agreement expires because the Company delivers notice of non-renewal of the term
of this Agreement pursuant to Section 3, the amendment of the Confidential
Information Agreement provided by Section 13 will expire as of the expiration of
the term of this Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">22.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Headings</font>.&#160;&#160;All
captions and Section headings used in this Agreement are for convenient
reference only and do not form a part of this Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Tax
Withholding</font>.&#160;&#160;All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">24.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Governing
Law</font>.&#160;&#160;This Agreement will be governed by the laws of the State
of North Carolina (with the exception of its conflict of laws
provisions).</font></div>
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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.</font></div>
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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.</font></div>
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</font></div>
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-</font></div>
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</font></div>
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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.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
          <table border="0" cellpadding="0" cellspacing="0" width="85%">
              <tr>
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                </td>
              </tr>
              <tr>
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                <td align="left" valign="top" width="10%">&#160;</td>
                <td align="left" valign="top" width="2%">&#160;</td>
                <td align="left" valign="top" width="55%">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="top" width="33%">&#160;<font size="2">CREE,
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                <td align="left" valign="top" width="10%">&#160;</td>
                <td align="left" valign="top" width="2%">&#160;</td>
                <td align="left" valign="top" width="55%">&#160;</td>
              </tr>
              <tr>
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                <td align="left" valign="top" width="10%">&#160;</td>
                <td align="left" valign="top" width="2%">&#160;</td>
                <td align="left" valign="top" width="55%">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
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                <td align="left" valign="top" width="2%">&#160;</td>
                <td align="left" valign="top" width="55%">&#160;</td>
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              <tr>
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                <td align="left" valign="top" width="2%">&#160;</td>
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                  <div>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date: August 19,
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              </tr>
              <tr>
                <td align="left" valign="bottom" width="33%"><font size="2">&#160;Thomas H.
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                <td align="left" valign="top" width="10%">&#160;</td>
                <td align="left" valign="top" width="2%">&#160;</td>
                <td align="left" valign="top" width="55%">&#160;</td>
              </tr>
              <tr>
                <td align="left" valign="bottom" width="33%"><font size="2">&#160;Compensation
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                <td align="left" valign="top" width="2%">&#160;</td>
                <td align="left" valign="top" width="55%">&#160;</td>
              </tr>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;

          <div align="justify">
            <table border="0" cellpadding="0" cellspacing="0" width="85%">
                <tr>
                  <td align="left" valign="top" width="33%">&#160;<font size="2">EXECUTIVE:</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
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                <tr>
                  <td align="left" valign="bottom" width="33%" style="BORDER-BOTTOM: black 1px solid"><font size="2">&#160;/s/ Charles M. Swoboda</font></td>
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                  <td align="left" valign="top" width="55%">
                    <div>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date: August 19,
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                  </td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%"><font size="2">&#160;Charles M.
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                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
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          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 13
-</font></div>
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              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
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    <div>&#160;</div>
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<font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RELEA</font>SE</font></font></div>
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          <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">RE<font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CITA</font>LS</font></font></div>
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General Release (this &#8220;Release&#8221;) is made by and between Charles M. Swoboda
(&#8220;Employee&#8221;) and Cree, Inc. (the &#8220;Company&#8221;) (jointly referred to as the
&#8220;Parties&#8221;):</font></div>
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the Company and Employee entered into an Executive Change in Control Agreement
dated August 18, 2008 (the &#8220;Change in Control Agreement&#8221;)</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Company and Employee entered into an Employee Agreement Regarding
Confidential Information, Intellectual Property, and Noncompetition (as amended
by the Change in Control Agreement, the &#8220;Confidentiality
Agreement&#8221;);</font></div>
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the Company and Employee entered into [DESCRIBE EQUITY AWARD AGREEMENTS: a Stock
Option Agreement dated [____] granting Employee the option to purchase shares of
the Company&#8217;s common stock subject to the terms and conditions of the Company&#8217;s
[Stock Option Plan] and the Stock Option Agreement (collectively, the &#8220;Stock
Agreements&#8221;)];</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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Employee&#8217;s employment with the Company terminated on [<font style="DISPLAY: inline; FONT-WEIGHT: bold">DATE</font>] (the &#8220;Termination
Date&#8221;);</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions and demands that the Employee may have
against the Company as defined herein, including, but not limited to, any and
all claims arising out of, or related to, Employee&#8217;s employment with, or
separation from, the Company;</font></div>
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THEREFORE, in consideration of the promises made herein, the Parties hereby
agree as follows:</font></div>
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        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Consideration</font>.</font></div>
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to the Section 9(a) of the Change in Control Agreement, Employee&#8217;s receipt of
severance pursuant to Section 8(a) of the Change in Control Agreement is subject
to Employee executing and not revoking this Release.&#160;&#160;In consideration
of Employee executing and not revoking this Release, and subject to Section 9 of
the Change in Control Agreement, the Company agrees to pay (or provide, as
applicable) Employee the amounts and benefits specified in Section 8(a) of the
Change in Control Agreement.&#160;&#160;Such severance benefits will be paid or
provided at the times and in the manner set forth in the Change in Control
Agreement.&#160;&#160;Employee acknowledges that he will not be entitled to any
other compensation or benefits, except as provided in Section 7 of the Change in
Control Agreement.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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acknowledges that as of the Termination Date, he will have vested in [______]
options and no more.&#160;&#160;The exercise of any stock options shall continue
to be </font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left">
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">subject to the terms and
conditions of the Stock Agreements and Sections 8 and 19 of the Change in
Control Agreement.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Benefits</font>.&#160;&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">Employee&#8217;s</font> group
health benefits will cease on <font style="DISPLAY: inline; FONT-WEIGHT: bold">[DATE]</font>, subject to Employee&#8217;s
right to continue his group health benefits under COBRA.&#160;&#160;Employee&#8217;s
participation in all other benefits and incidents of employment (including, but
not limited to, the accrual of vacation and paid time off, and the vesting of
stock options) ceased on the Termination Date.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Payment of
Salary</font>.&#160;&#160;Subject to Section 7 of the Change in Control
Agreement and Section 1 above, Employee acknowledges and represents that
Employee is not entitled to any additional salary, wages, bonuses, accrued
vacation, housing allowances, relocation costs, interest, severance, stock,
stock options, outplacement costs, fees, commissions or any other benefits and
compensation.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Confidential
Information</font>.&#160;&#160;Employee shall continue to comply with the terms
and conditions of the Confidentiality Agreement, as such agreement may be
amended by the Change in Control Agreement, and maintain the confidentiality of
all of the Company&#8217;s confidential and proprietary
information.&#160;&#160;Employee also shall return to the Company all of the
Company&#8217;s property, including all confidential and proprietary information, and
all documents and information that Employee obtained in connection with his
employment with the Company, on or before the Effective Date of this
Release.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Release of
Claims</font>.&#160;&#160;Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company.&#160;&#160;To the fullest extent permitted by applicable law,
Employee, on his own behalf and on behalf of his respective heirs, family
members, executors, agents, and assigns, hereby fully and forever releases the
Company and its current and former: officers, directors, employees, agents,
investors, attorneys, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corpora&#173;tions and assigns (the
&#8220;Releasees&#8221;) from, and agrees not to sue concerning, any claim, duty, obligation
or cause of action relating to any matters of any kind arising out of or
relating to his employment by the Company (except as provided in Section 7 of
the Change in Control Agreement), or his service as an officer of the Company
and/or a director of the Company, whether presently known or unknown, suspected
or unsuspected, that Employee may possess arising from any omissions, acts or
facts that have occurred up until and including the Effective Date of this
Release including, without limitation:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims relating to or arising from Employee&#8217;s employment with the Company,
or the termination of that employment;</font></div>
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        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims relating to, or arising from, Employee&#8217;s right to purchase, or actual
purchase of, shares of Company stock, including, but not limited to, any claims
for fraud, misrepresentation, breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud under any state or federal
law;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims under the law of any jurisdiction, including, but not limited to,
wrongful discharge of employment; constructive discharge from employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a </font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">covenant of good faith and
fair dealing, both express and implied; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; and conversion;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act of 1967; the Americans
with Disabilities Act of 1990; the Fair Labor Standards Act; the Employee
Retirement Income Security Act of 1974; the Worker Adjustment and Retraining
Notification Act; the Older Workers Benefit Protection Act; the Family and
Medical Leave Act; the Fair Credit Reporting Act; the North Carolina Equal
Employment Practices Act; and North Carolina law;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for violation of the federal, or any state,
constitution;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims arising out of any other laws and regulations relating to employment
or employment discrimination;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(g)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any claim
for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by
Employee as a result of this Release; and</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(h)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for attorney fees and costs.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Acknowledgement of Waiver of
Claims Under ADEA</font>.&#160;&#160;Employee acknowledges that he is waiving
and releasing any rights he may have under the Age Discrimination in Employment
Act of 1967 (&#8220;ADEA&#8221;) and that this waiver and release is knowing and
voluntary.&#160;&#160;Employee and the Company agree that this waiver and
release does not apply to any rights or claims that may arise under the ADEA
after the Effective Date of this Release.&#160;&#160;Employee acknowledges that
the consideration given for this waiver and release is in addition to anything
of value to which Employee was already entitled.&#160;&#160;Employee further
acknowledges that he has been advised by this writing that:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he should
consult with an attorney prior to executing this Release;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he has up
to twenty-one (21) days within which to consider this Release;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he has
seven (7) days following his execution of this Release to revoke this
Release;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">this ADEA
waiver shall not be effective until the revocation period has expired;
and,</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">nothing
in this Release prevents or precludes Employee from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs for doing so, unless
specifically authorized by federal law.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Unknown
Claims</font>.&#160;&#160;The Parties represent that they are not aware of any
claim by either of them other than the claims that are released by this
Release.&#160;&#160;Employee acknowledges that he has been advised by legal
counsel and is familiar with the principle that a general release does not
extend to claims which the releasor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him would have
materially affected his settlement with the releasee.&#160;&#160;Employee, being
aware of said principle, agrees to expressly waive any rights Employee may have
to that effect, as well as under any other statute or common law principles of
similar effect, to the fullest extent permitted by applicable law.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Application for
Employment</font>.&#160;&#160;Employee understands and agrees that, as a
condition of this Release, he shall not be entitled to any employment with the
Company, its subsidiaries, or any successor, and he hereby waives any alleged
right of employment or re-employment with the Company, its subsidiaries or
related companies, or any successor.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No
Cooperation</font>.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employee
agrees that he will not knowingly counsel or assist any attorneys or their
clients in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints by any third party against any of the
Releasees that relate to any of the matters for which he has provided a release
hereunder, unless under a subpoena or other court order to do
so.&#160;&#160;Employee agrees both to immediately notify the Company upon
receipt of any such subpoena or court order, and to furnish, within three (3)
business days of its receipt, a copy of such subpoena or court order to the
Company.&#160;&#160;If approached by anyone for counsel or assistance in the
presentation or prosecution of any such disputes, differences, grievances,
claims, charges, or complaints against any of the Releasees, Employee shall
state no more than that he cannot provide counsel or assistance.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;Notwithstanding any
language herein to the contrary, Employee understand that nothing in this
Release prohibits him from filing or pursuing a charge of discrimination with
the Equal Employment Opportunity Commission (EEOC) or a claim with the National
Labor Relations Board (NLRB); provided that, by signing this Release Employee
agree to waive and relinquish any personal monetary gain that otherwise would
result from such EEOC or NLRB Claim.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Costs</font>.&#160;&#160;The
Parties shall each bear their own costs, expert fees, attorney fees and other
fees incurred in connection with the preparation of this Release.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Arbitration</font>.&#160;&#160;The
Parties agree that any and all disputes arising out of, or relating to, the
terms of this Release, their interpretation, and any of the matters herein
released, shall be subject to binding arbitration as described in Section 17 of
the Change in Control Agreement (but as adjusted to cover disputes under this
Release).</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No
Representations</font>.&#160;&#160;Each Party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Release.&#160;&#160;Neither Party
has relied upon any representations or statements made by the other Party hereto
which are not specifically set forth in this Release.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No Oral
Modification</font>.&#160;&#160;Any modification or amendment of this Release,
or additional obligation assumed by either Party in connection with this
Release, shall be effective only if placed in writing and signed by both Parties
or their authorized representatives.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
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            </div>
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            <div style="WIDTH: 100%; TEXT-ALIGN: center">
            </div>
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            </div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Entire
Agreement</font>.&#160;&#160;This Release, the Change in Control Agreement, the
Confidentiality Agreement and the Stock Agreements represent the entire
agreement and understanding between the Company and Employee concerning the
subject matter of this Release and Employee&#8217;s relationship with the Company, and
supersede and replace any and all prior agreements and understandings between
the Parties concerning the subject matter of this Release and Employee&#8217;s
relationship with the Company.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Governing
Law</font>.&#160;&#160;This Release shall be governed by the laws of the State
of North Carolina, without regard for choice of law provisions.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severability</font>.&#160;&#160;If
any provision of this Release is found to be unenforceable, it shall not affect
the enforceability of the remaining provisions, and the court shall enforce all
remaining provisions to the fullest extent permitted by law.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Effective
Date</font>.&#160;&#160;This Release will not become effective until the eighth
(8th) day after it has been signed by both Parties and then only if Executive
does not revoke it as permitted in Section 5(c) above (the &#8220;Effective
Date&#8221;).&#160;&#160;In order to revoke this Release, the Executive must deliver a
letter expressly stating that he is revoking this Release to the Company&#8217;s Vice
President, Administration, at 4600 Silicon Drive, Durham, North Carolina 27703
within seven (7) days after he signs this Release.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="TEXT-DECORATION: underline">Voluntary Execution of
Release</font>.&#160;&#160;This Release is executed voluntarily and with the
full intent of releasing all claims, and without any duress or undue influence
by any of the Parties.&#160;&#160;The Parties acknowledge that:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">They have
read this Release;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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been represented in the preparation, negotiation, and execution of this Release
by legal counsel of their own choice or that they have voluntarily declined to
seek such counsel;</font></div>
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understand the terms and consequences of this Release and of the releases it
contains; and</font></div>
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WITNESS WHEREOF, each of the parties has executed this Release, in the case of
the Company by a duly authorized officer, as of the day and year written
below.</font></div>
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                      <div align="left">&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date:
    </font></div>
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                    <td align="left" valign="top" width="6%" style="PADDING-BOTTOM: 2px">&#160;</td>
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                    <td align="left" valign="top" width="41%"><font size="2">&#160;CHARLES M.
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<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>exhibit10_5.htm
<DESCRIPTION>EXHIBIT 10.5
<TEXT>
<html>
  <head>
    <title>exhibit10_5.htm</title>
<!-- Licensed to: Cree, Inc.-->
<!-- Document Created using EDGARizer 4.0.6.1 -->
<!-- Copyright 1995 - 2008 EDGARfilings, Ltd., an IEC company. All rights reserved -->
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      <div style="TEXT-ALIGN: right"><font style="FONT-WEIGHT: bold">Exhibit
10.5</font></div>
      <div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CREE,
INC.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXECUTIVE
CHANGE IN CONTROL AGREEMENT</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cree,
Inc. (the &#8220;Company&#8221;) and John T. Kurtzweil (&#8220;Executive&#8221;) entered into a
Severance Agreement effective as of September 29, 2006 (the &#8220;Existing
Agreement&#8221;).&#160;&#160;This Executive Change in Control Agreement (the
&#8220;Agreement&#8221;) between Company and Executive is intended to supersede and replace
the Existing Agreement as of the effective date of this Agreement, which shall
be August 18, 2008 (the &#8220;Effective Date&#8221;).&#160;&#160;Upon full execution and
delivery of this Agreement and&#160;the exchange of&#160;good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the parties
hereby agree to terminate the Existing Agreement as of the Effective Date,
except to the extent provided in Section 18 of this Agreement.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Duties and Scope of
Employment</font>.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Positions and
Duties</font>.&#160;&#160;Executive will continue to serve as Executive Vice
President-Finance, Chief Financial Officer and Treasurer, reporting to the
Company&#8217;s Chief Executive Officer and President (&#8220;CEO&#8221;).&#160;&#160;Executive
will render such business and professional services in the performance of his
duties, consistent with Executive&#8217;s positions within the Company, as will
reasonably be assigned to him by the CEO.&#160;&#160;The period Executive is
employed by the Company under this Agreement is referred to herein as the
&#8220;Employment Term&#8221;.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Obligations</font>.&#160;&#160;During
the Employment Term, Executive will devote Executive&#8217;s full business efforts and
time to the Company.&#160;&#160;For the duration of the Employment Term,
Executive agrees not to actively engage in any other employment, occupation, or
consulting activity for any direct or indirect remuneration without the prior
approval of the CEO (which approval will not be unreasonably withheld);
provided, however, that Executive may, without the approval of the CEO, serve in
any capacity with any civic, educational, or charitable organization, provided
such services do not interfere with Executive&#8217;s obligations to
Company.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">At-Will
Employment</font>.&#160;&#160;Executive and the Company agree that Executive&#8217;s
employment with the Company constitutes &#8220;at-will&#8221;
employment.&#160;&#160;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.&#160;&#160;However, as described in
this Agreement, Executive may be entitled to severance benefits depending upon
the circumstances of termination of his employment.&#160;&#160;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") or the CEO so requests.</font></div>
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Agreement</font>.&#160;&#160;This Agreement will have an initial term of one
year commencing on the Effective Date.&#160;&#160;On each anniversary of the
Effective Date thereafter, this Agreement will automatically 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.&#160;&#160;Notwithstanding any contrary provision in this
Section&#160;3, (i) in the event the Company</font></div>
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another party enter into a written agreement that contemplates a transaction the
consummation of which would result in a Change in Control as defined in
Subsection (a), (b), or (d) of such definition, this Agreement will continue
until the occurrence of either the resulting Change in Control or the
termination or expiration of the written agreement without the occurrence of a
Change in Control, whichever comes first, and (ii) in the event a Change in
Control (including without limitation a resulting Change in Control as described
in the preceding clause (i)) occurs during the Employment Term, this Agreement
will continue for not less than twelve (12) months after the date of the Change
in Control.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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Salary</font>.&#160;&#160;As of the Effective Date, the Company will pay
Executive an annual salary of $ 364,000.00 as compensation for his services
(such annual salary, as is then effective, to be referred to herein as &#8220;Base
Salary&#8221;).&#160;&#160;The Base Salary will be paid periodically in accordance
with the Company&#8217;s normal payroll schedule and practices and be subject to the
usual, required withholdings.&#160;&#160;Executive&#8217;s salary will be subject to
review by the Compensation Committee of the Board (the &#8220;Committee&#8221;) not less
than annually, and adjustments will be made in the discretion of the
Compensation Committee.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Incentive
Compensation</font>.&#160;&#160;Executive will be eligible to receive incentive
compensation payable for the achievement of individual performance goals
established by the CEO and corporate performance goals established by the
Committee.&#160;&#160;The Committee will determine executive&#8217;s annual target
incentive award level.&#160;&#160;The actual earned incentive, if any, payable
to Executive for any fiscal period of the Company will depend upon the extent to
which the performance goal(s) specified by the CEO or Committee, as applicable,
are achieved.&#160;&#160;For each fiscal quarter of the Company, the CEO will
endeavor to establish the applicable individual performance goal(s) no later
than the 30th day of the fiscal quarter to which the goals
relate.&#160;&#160;For each fiscal year of the Company, the Committee will
endeavor to establish the applicable corporate performance goal(s) no later than
the 90th day of the fiscal year to which the goals
relate.&#160;&#160;Executive&#8217;s incentive compensation will be subject to the
terms and conditions of the Company&#8217;s incentive plan or arrangement designated
by the Committee for this purpose, including but not limited to continued
employment requirements and payment date terms that are designed to cause the
incentive compensation to be exempt from or in compliance with Section 409A of
the Internal Revenue Code of 1986, as amended (the &#8220;Code&#8221;) and the guidance
thereunder (collectively &#8220;Section 409A&#8221;).</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Long-Term
Incentive</font>.&#160;&#160;Executive will be eligible to receive long-term
incentives subject to terms and conditions established by the Committee, the
underlying Cree, Inc. 2004 Long-Term Incentive Compensation Plan or any
successor plan thereto, and the Committee&#8217;s terms and conditions for the
applicable type of award, including vesting criteria such as continued service
or performance objectives.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Employee
Benefits</font>.&#160;&#160;Executive will be eligible to participate in all
Company employee benefit plans, policies, and arrangements that are applicable
to other executive officers of the Company in accordance with the terms of such
plans, policies, and arrangements as may exist from time to time.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">6.</font><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Expenses</font>.&#160;&#160;The
Company will reimburse Executive for reasonable travel, entertainment, and other
expenses incurred by Executive in the furtherance of the performance of
Executive&#8217;s duties hereunder, in accordance with the Company&#8217;s expense
reimbursement policy as in effect from time to time.&#160;&#160;To the extent
that any such reimbursement does not qualify for exclusion from Federal income
taxation, the Company will make the reimbursement only if the corresponding
expense is incurred during the term of this Agreement and the reimbursement is
made on or before the last day of the calendar year following the calendar year
in which the expense is incurred, the amount of expenses eligible for such
reimbursement during a calendar year will not affect the amount of expenses
eligible for such reimbursement in another calendar year, and the right to such
reimbursement is not subject to liquidation or exchange for another benefit from
the Company.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Termination of
Employment</font>.&#160;&#160;In the event of Executive&#8217;s Termination of
Employment with the Company, Executive will be entitled to any (a)&#160;unpaid
Base Salary accrued up to the date of such Termination of Employment (the
&#8220;Termination Date&#8221;) paid in accordance with the schedule specified in Section
4(a) above, (b)&#160;any incentive compensation that is earned as of Executive&#8217;s
Termination Date in accordance with the terms and conditions of the applicable
incentive plan or arrangement but has not yet been paid, which amount, if any,
will be paid in accordance with the terms and conditions of the applicable
incentive arrangement, (c)&#160;pay for accrued but unused vacation that the
Company is legally obligated to pay Executive, which amount will be paid in the
first regular payroll cycle occurring after the Termination Date, except as
provided in Section 8(b) below, (d)&#160;benefits or compensation as provided
under the terms of any employee benefit and compensation agreements or plans
applicable to Executive, (e)&#160;unreimbursed business expenses required to be
reimbursed to Executive, which amount, if any, will be paid in accordance with
Section 6 above, and (f)&#160;rights to indemnification Executive may have under
the Company&#8217;s Articles of Incorporation, Bylaws, this Agreement, or a separate
indemnification agreement, as applicable.&#160;&#160;In addition, if the
Termination of Employment is initiated by the Company without Cause or by
Executive for Good Reason, and the Termination of Employment is In Connection
with a Change in Control, Executive will be entitled to the amounts and benefits
specified in Section&#160;8(a) below.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severance</font>.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Change in Control
Benefits</font>.&#160;&#160;If Executive&#8217;s Termination of Employment is
initiated by the Company without Cause or by Executive for Good Reason, and the
Termination of Employment is In Connection with a Change in Control (but not by
the Company in connection with the death or LTD Disability of Executive), then,
subject to Section&#160;9, Executive will receive: (i)&#160;continued payment of
Base Salary for twelve (12) months, paid in accordance with the schedule
specified in Section 4(a) above, but commencing within thirty (30) days
following Termination of Employment with payments retroactive to that date,
except as provided in Section 8(b) below, (ii)&#160; a lump sum payment equal to
twelve (12) multiplied by the COBRA premium in effect for the type of medical,
dental and vision coverage in effect for Executive (e.g., family coverage vs.
employee-only coverage) at the time of his Termination of Employment, paid
within ninety (90) days following the Termination Date, except as provided in
Section 8(b) below, and (iii)&#160;full accelerated vesting with respect to
Executive&#8217;s then outstanding, unvested stock options, time-vested restricted
stock awards and other equity awards that vest solely based on the passage of
time.</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Section 409A Payment
Provisions; Possible Payment Delay in Event Executive is a Specified
Employee</font>.&#160;&#160;For purposes of Section 409A, each installment
payment of severance specified in Sections 7(c) and 8(a)(i) and (ii) above is a
separate payment; all payments specified in Sections 7(c) and 8(a)(i) and (ii)
above made through the date that is 2-&#189; months following the later of the last
day of the calendar year containing the Termination Date and the last day of the
Company&#8217;s fiscal year containing the Termination Date&#160;&#160;(the
&#8220;Short-Term Deferral Deadline&#8221;) are intended to be exempt from Section 409A
under the short-term deferral rule;&#160;&#160;all such payments made after the
Short Term Deferral Deadline are intended to be exempt from Section 409A under
the severance pay exemption specified in Treasury Regulation &#167;1.409A-
1(b)(9)(iii) (the &#8220;Severance Pay Exemption&#8221;); in the event that Executive is a
Specified Employee on the Termination Date, all such payments made after the
Short Term Deferral Deadline, that exceed the limits of the Severance Pay
Exemption, and that would be paid earlier than the Six-Month Delay Payment Date
will be delayed until the Six-Month Delay Payment Date to the extent required to
satisfy Subsection 409A(a)(2)(B)(i) of the Code; on that date, the Company will
pay Executive a lump sum consisting of all payments that would have been paid to
Executive prior to the Six-Month Delay Payment Date had Executive not been a
Specified Employee, increased for interest at the short-term Federal rate in
effect on the Termination Date for the period beginning on the date each
component of such lump sum would have been paid had Executive not been a
Specified Employee and ending on the Six-Month Delay Payment Date; however, if
Executive dies after the Termination Date but before such lump sum payment is
made, it will be paid to Executive&#8217;s estate without regard to any six-month
delay that otherwise applies to Specified Employees.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Voluntary Termination
without Good Reason; Termination for Cause</font>.&#160;&#160;If Executive&#8217;s
employment with the Company terminates voluntarily by Executive without Good
Reason or is terminated for Cause by the Company, then, except as provided in
Section 7, (i)&#160;all further vesting of Executive&#8217;s outstanding equity awards
will terminate immediately, and Executive&#8217;s outstanding equity awards will
terminate in accordance with the terms and conditions of the applicable award
agreement(s), (ii)&#160;all payments of compensation by the Company to Executive
hereunder will terminate immediately, and (iii)&#160;Executive will be entitled
to receive benefits, including severance benefits, only in accordance with the
Company&#8217;s then established plans, programs, and practices other than this
Agreement.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Termination due to Death or
LTD Disability</font>.&#160;&#160;If Executive&#8217;s employment is terminated by
reason of his death or LTD Disability, then, except as provided in Section 7,
(i)&#160;Executive&#8217;s outstanding equity awards will vest and terminate in
accordance with the terms and conditions of the applicable award agreement(s);
(ii)&#160;all payments of compensation by the Company to Executive hereunder
will terminate immediately, and (iii)&#160;Executive will be entitled to receive
benefits, including severance benefits, only in accordance with the Company&#8217;s
then established plans, programs, and practices other than this
Agreement.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Sole Right to
Severance</font>.&#160;&#160;This Agreement is intended to represent Executive&#8217;s
sole entitlement to severance payments and benefits in connection with a
termination of his employment In Connection with a Change in Control, except for
such payments and benefits to which Executive would be entitled as an employee
of the Company in the absence of this Agreement.</font></div>
      </div>
      <div>&#160;</div>
      <div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Conditions to Receipt of
Severance; No Duty to Mitigate</font>.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font size="+0"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Separation Agreement and
Release of Claims</font>.&#160;&#160;The receipt of any severance pursuant to
Section&#160;8 will be subject to Executive signing and not revoking a release
of claims in substantially the form attached as <font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit A</font>, but with
any appropriate modifications, reflecting changes in applicable law, as are
necessary or appropriate to provide the Company with the protection it would
have if the release were executed as of the Effective Date.&#160;&#160;No
severance will be paid or provided unless and until the release of claims is
timely executed and returned by Executive to the Company, becomes effective and
has not been timely revoked in accordance with the terms thereof.&#160;&#160;The
Company will complete and provide to Executive the release of claims in
sufficient time so that if Executive timely executes and returns it, the
revocation period will expire before severance payments are required to commence
under Section 8.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Nondisparagement</font>.&#160;&#160;As
a condition to receipt of severance, 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.&#160;&#160;The foregoing restrictions will not apply to any
statements that are made truthfully in response to a subpoena or other
compulsory legal process.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Other
Requirements</font>.&#160;&#160;Executive&#8217;s receipt of continued severance
payments will be subject to Executive continuing to comply with the terms of the
Confidential Information Agreement.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No Duty to
Mitigate</font>.&#160;&#160;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.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Generally Disabled; LTD
Disability</font>.&#160;The provisions of this Section 9(e) will control in the
event of conflict between this Section 9(e) and any other language in this
Agreement.&#160;If Executive becomes Generally Disabled, the Company will not be
in breach of this Agreement and Executive will not be entitled to severance
pursuant to Section 8(a) on account of the Company, in its sole discretion,
taking any action that would otherwise be considered Good Reason under Section
10(f) below provided that such action remains in effect only for so long as
Executive remains Generally Disabled.&#160;&#160;If Executive is Generally
Disabled for more than ninety-one (91) days (whether or not consecutive) in a
rolling twelve (12) month period, the Company will not be in breach of this
Agreement and Executive will not be entitled to severance per Section 8(a) on
account of the Company permanently taking any action that would otherwise be
considered Good Reason under Section 10(f) below so long as the Company does not
terminate Executive&#8217;s employment prior to the date that Executive is determined
to have an LTD Disability.&#160;&#160;If Executive is Generally Disabled and the
Company terminates his employment without Cause In Connection with a Change in
Control prior to the date that he is determined to have an LTD Disability, such
termination will be considered Termination of Employment by the Company without
Cause for purposes of Section 8(a) of this Agreement; provided that, in such
circumstances, Executive will only be eligible for the severance benefits set
forth in items (i) and (ii) of Section 8(a) of this </font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Agreement. <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font>If
Executive ceases to be Generally Disabled before his employment is terminated by
reason of LTD Disability, subject to the notice and cure provisions in Section
10(f), for purposes of Section 8(a) of this Agreement Executive will have the
right to terminate his employment for Good Reason (if the Termination of
Employment is In Connection with a Change in Control) on account of any event or
circumstances that occurred while Executive was Generally Disabled that would
otherwise have constituted Good Reason except for the provisions of this Section
9(e) unless such event or circumstances has already been cured by the Company or
consented to by Executive; provided that, in such circumstances, Executive will
only be eligible for the severance benefits set forth in items (i) and (ii) of
Section 8(a) of this Agreement.&#160;&#160;Notwithstanding any language herein
to the contrary, nothing in this paragraph creates a right to severance benefits
other than if Executive&#8217;s Termination of Employment is In Connection with a
Change in Control.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Definitions</font>.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Benefit
Plans</font>.&#160;&#160;For purposes of this Agreement, &#8220;Benefit Plans&#8221; means
plans, policies, or arrangements that the Company sponsors (or participates in)
and that immediately prior to the Termination Date provide Executive,
Executive&#8217;s spouse, and/or Executive&#8217;s eligible dependents with medical, dental,
or vision benefits.&#160;&#160;The term &#8220;Benefit Plans&#8221; does not include plans,
policies, or arrangements providing for any other type of benefit (including,
but not by way of limitation, financial counseling, disability, life insurance,
or retirement benefits).</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Cause</font>.&#160;&#160;For
purposes of this Agreement, &#8220;Cause&#8221; means (i)&#160;Executive&#8217;s willful and
continued failure to perform the duties and responsibilities of his position
that is not corrected after one written warning detailing the concerns and
offering Executive a reasonable period of time to cure; (ii)&#160;any material
and willful violation of any federal or state law by Executive in connection
with his responsibilities as an employee of the Company; (iii) any act of
personal dishonesty taken by Executive in connection with his responsibilities
as an employee of the Company with the intention or reasonable expectation that
such may result in personal enrichment of Executive; (iv)&#160;Executive&#8217;s
conviction of, or plea of <font style="DISPLAY: inline; FONT-STYLE: italic">nolo
contendere</font> to, or grant of prayer of judgment continued with respect to,
a felony that the Board reasonably believes has had or will have a material
detrimental effect on the Company&#8217;s reputation or business; or
(v)&#160;Executive materially breaching Executive&#8217;s 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.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Change in
Control</font>.&#160;&#160;For purposes of this Agreement, &#8220;Change in Control&#8221;
will have the same meaning as in Section&#160;7.1 of the Cree, Inc. Equity
Compensation Plan (as amended and restated August 5, 2002 and without regard to
any subsequent amendments).</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Confidential Information
Agreement</font>.&#160;&#160;For purposes of this Agreement, &#8220;Confidential
Information Agreement&#8221; shall refer to the version of Employee Agreement
Regarding Confidential Information, Intellectual Property, and Noncompetition in
effect for Executive as of the relevant date; provided that, with respect to
Executive&#8217;s post-termination obligations, it shall refer to the version of such
agreement in effect as of Executive&#8217;s Termination Date.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Generally
Disabled</font>.&#160;&#160;For purposes of this Agreement, &#8220;Generally Disabled&#8221;
means that Executive is unable, with reasonable accommodation, to perform the
material and </font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">substantial duties of his
position due to illness or injury or physical or mental incapacity as determined
by the Committee consistent with its obligations to the Company&#8217;s
shareholders.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Good
Reason</font>.&#160;&#160;For purposes of this Agreement, except as provided in
Section 9(e) above, &#8220;Good Reason&#8221; means the occurrence of any of the following,
without Executive&#8217;s consent and not due to Cause, within the timeframes
specified in the definition of &#8220;In Connection with a Change in Control&#8221;: (i) a
material reduction of Executive's authority, duties or
responsibilities;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font>(ii)
a material reduction in Executive's base salary other than a one-time reduction
that also is applied to substantially all other executive officers of the
Company, provided that Executive's reduction is substantially proportionate to
the reduction applied to substantially all other executive officers;&#160;(iii)
the Company requiring Executive to report to anyone other than the CEO, the
Board, or a Committee of the Board; or&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font>(iv)&#160;
the Company requiring Executive to relocate his principal place of business or
the Company relocating its headquarters, in either case to a facility or
location outside of a thirty-five (35) mile radius from Executive&#8217;s current
principal place of employment; provided, however, that Executive will only have
Good Reason if he provides notice to the Company of the existence of the event
or circumstances constituting Good Reason specified in any of the preceding
clauses within ninety (90) days of the initial occurrence of such event or
circumstances and if such event or circumstances is not cured within thirty (30)
days after Executive gives such written notice.&#160;&#160;If Executive
initiates Termination of Employment for Good Reason, the actual Termination of
Employment must occur within thirty (30) days after expiration of the cure
period.&#160;&#160;Executive&#8217;s failure to timely give notice of the occurrence
of a specific event that would otherwise constitute Good Reason will not
constitute a waiver of Executive&#8217;s right to give notice of any new subsequent
event that would constitute Good Reason that occurs after such prior event
(regardless of whether the new subsequent event is of the same or different
nature as the preceding event).&#160;&#160;Executive&#8217;s actions approving in
writing (or by such other means as is reliable and verifiable) any change,
reduction, requirement or occurrence (that otherwise may be considered Good
Reason) in his role as an officer of the Company will be considered consent for
the purposes of this Good Reason definition.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(g)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">In Connection with a Change
in Control</font>.&#160;&#160;For purposes of this Agreement, a Termination of
Employment with the Company is &#8220;In Connection with a Change in Control&#8221; if
Executive incurs a Termination of Employment either within (i) the period of
time between the Company and another party entering into a written agreement
that contemplates a transaction the consummation of which would result in a
Change in Control as defined in Subsection (a), (b), or (d) of such definition
and the occurrence of either the resulting Change in Control or the termination
or expiration of the written agreement without the occurrence of a Change in
Control, or (ii) twelve (12) months following a Change in Control (including
without limitation a resulting Change in Control as described in the preceding
clause (i)).</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(h)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">LTD
Disability</font>.&#160;&#160;For purposes of this Agreement, &#8220;LTD Disability&#8221;
will mean that Executive is &#8220;Partially Disabled&#8221; or &#8220;Total Disabled&#8221; within the
meaning of the Company&#8217;s current long-term disability plan (or such similar term
or terms in any long-term disability plan of the Company that replaces its
current long-term disability plan) and has satisfied the elimination period for
benefits eligibility under such plan.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(i)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Six-Month Delay Payment
Date</font>.&#160;&#160;The payment date associated with the first regular
payroll cycle after passage of six months following the Termination
Date.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(j)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Specified
Employe</font>e.&#160;&#160;For purposes of this Agreement, &#8220;Specified Employee&#8221;
will have the meaning prescribed by Subsection 409A(a)(2)(B)(i) of the Code, as
such meaning may be amended from time to time.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(k)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">Termination of
Employmen</font>t.&#160;&#160;For purposes of this Agreement, &#8220;Termination of
Employment&#8221; will have the meaning as prescribed by Treasury Regulation &#167;
1.409A-1(h)(1)(ii), as such meaning may be amended from time to
time.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Tax Treatment; Section 409A
Compliance</font>.&#160;&#160;Executive&#160;acknowledges and agrees that the
Company has made no representations as to the tax treatment of the compensation
and benefits provided pursuant to&#160;this Agreement.<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-FAMILY: Times New Roman">&#160;</font>This
Agreement is intended to comply with the requirements of Section
409A.&#160;&#160;<font style="DISPLAY: inline">Nothing in this Agreement shall
require payment in 2008 of any payment that was required to be paid after 2008
under this Agreement or the Existing Agreement; in addition, except as may be
required to observe the six-month delay applicable to Specified Employees under
Subsection 409A(a)(2)(B)(i), nothing in this Agreement shall postpone beyond
2008 any payment that was required to be paid in 2008 pursuant to this Agreement
or the Existing Agreement.&#160;&#160;</font>The parties agree to work together
to effectuate the intent of this provision, including but not limited to
revising the timing and/or form of any payment hereunder as may be permitted by
and necessary to ensure the terms and conditions applicable to such payments
comply with Section 409A.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Indemnification</font>.&#160;&#160;Subject
to applicable law, Executive will be provided indemnification to the maximum
extent permitted by the Company&#8217;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.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Assignment</font>.&#160;&#160;This
Agreement will be binding upon and inure to the benefit of (a)&#160;the heirs,
executors, and legal representatives of Executive upon Executive&#8217;s death, and
(b)&#160;any Successor of the Company.&#160;&#160;Any such Successor of the
Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes.&#160;&#160;For this purpose, &#8220;Successor&#8221; 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.&#160;&#160;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.&#160;&#160;Any other attempted assignment, transfer,
conveyance, or other disposition of Executive&#8217;s right to compensation or other
benefits will be null and void.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Notices</font>.&#160;&#160;All
notices, requests, demands, and other communications called for hereunder will
be in writing and will be deemed given (a)&#160;on the date of delivery if
delivered personally, (b)&#160;one business day after being sent overnight by a
well-established commercial overnight service, or (c)&#160;four days after being
mailed by registered or certified mail, return receipt 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:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If to the
Company:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Attn</font>: Vice President,
Administration</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Cree, Inc.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4600 Silicon Drive</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Durham, NC 27703</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If to
Executive:</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>at the last residential address known
by the Company.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severability</font>.&#160;&#160;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.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Arbitration</font>.&#160;&#160;The
Parties agree that any and all disputes arising out of the terms of this
Agreement, Executive&#8217;s employment by the Company, Executive&#8217;s service as an
officer or director of the Company, or Executive&#8217;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.&#160;&#160;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.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">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.&#160;&#160;</font>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&#8217;s obligations under this Agreement and the Confidential
Information Agreement.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Expenses of
Enforcement</font>.&#160;&#160;In the event of a dispute relating to this
Agreement arising during the term of Executive&#8217;s employment with the Company or
within three (3) years following the termination of this Agreement, the Company
will reimburse Executive&#8217;s fees and expenses as incurred quarterly, including
reasonable attorneys&#8217; fees, in connection with such dispute, provided that (i)
Executive provides the Company with written documentation substantiating the
amount of such fees and expenses, and (ii) Executive prevails on at least one
material issue in such dispute or an arbitrator does not determine that
Executive&#8217;s legal positions were frivolous or without legal
foundation.&#160;&#160;The Company will make such reimbursement payments
quarterly based on the written substantiation documentation submitted by
Executive to the Company during the prior quarter; in no event will any
reimbursement be made later than the end of the calendar year next following the
calendar year in which the expense was incurred by Executive; Executive must
provide such written substantiation in time for the Company to make such
reimbursement by such deadline.&#160;&#160;In the event Executive does not so
prevail or in the event of a determination by the arbitrator that his legal
positions were frivolous or without legal foundation (in either case, a
&#8220;Resolution&#8221;), 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&#8217; fees, incurred in connection with the
dispute, both within a reasonable period of time not to exceed sixty (60) days
following the date of the Resolution.&#160;&#160;The amount of expenses eligible
for reimbursement under this Section 17 during a calendar year will not affect
the amount </font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 9
-</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right">
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
expenses eligible for reimbursement under this Section 17 in another calendar
year, and the right to such reimbursement is not subject to liquidation or
exchange for another benefit from the Company.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Integration</font>.&#160;&#160;This
Agreement, together with the Confidential Information Agreement and the standard
forms of equity award agreements and grant notices that describe Executive&#8217;s
outstanding equity awards, represents 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.&#160;&#160;No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless in a writing that is signed by duly authorized representatives of
the parties hereto.&#160;&#160;Notwithstanding the foregoing, the parties
acknowledge that, with respect to Executive&#8217;s outstanding equity awards as of
the Effective Date, if Executive&#8217;s Termination of Employment is initiated by the
Company without Cause or by Executive for Good Reason In Connection with a
Change in Control, Executive&#8217;s right to accelerated vesting of each such award
will be determined by reference to Section 4(b) (including any relevant defined
terms) of the Existing Agreement (the terms and conditions of which are
incorporated herein for this limited purpose) and not by reference to Section
8(a) (including any relevant defined terms) of this Agreement.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">19.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Waiver of
Breach</font>.&#160;&#160;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.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Survival</font>.&#160;&#160;The
Confidential Information Agreement, the Company&#8217;s and Executive&#8217;s
responsibilities under Sections&#160;7, 8 and 9, and Sections&#160;12, 16, and
17 will survive the termination of this Agreement.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">21.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Headings</font>.&#160;&#160;All
captions and Section headings used in this Agreement are for convenient
reference only and do not form a part of this Agreement.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">22.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Tax
Withholding</font>.&#160;&#160;All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Governing
Law</font>.&#160;&#160;This Agreement will be governed by the laws of the State
of North Carolina (with the exception of its conflict of laws
provisions).</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">24.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Acknowledgment</font>.&#160;&#160;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.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">25.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Counterparts</font>.&#160;&#160;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.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 10
-</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
            <table border="0" cellpadding="0" cellspacing="0" width="85%">
                <tr>
                  <td align="left" valign="top" width="33%">&#160;<font size="2">COMPANY:</font></td>
                  <td align="left" colspan="3" valign="top" width="67%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%">&#160;</td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%">&#160;<font size="2">CREE,
    INC.</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%" style="BORDER-BOTTOM: black 1px solid"><font size="2">&#160;/s/ Charles M. Swoboda</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">
                    <div>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date: August 20,
      2008</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%"><font size="2">&#160;Charles M.
      Swoboda</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%"><font size="2">&#160;Chief
      Executive Officer and President</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
            <table border="0" cellpadding="0" cellspacing="0" width="85%">
                <tr>
                  <td align="left" valign="top" width="33%">&#160;<font size="2">EXECUTIVE:</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%" style="BORDER-BOTTOM: black 1px solid"><font size="2">&#160;/s/ John T. Kurtzweil</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">
                    <div>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date: August 20,
      2008</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%"><font size="2">&#160;John T.
      Kurtzweil</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br><br></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
              <div id="FTR">
                <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
              </div>
              <div id="PN" style="PAGE-BREAK-AFTER: always">
                <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 11
-</font></div>
                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                  <hr style="COLOR: black" noshade size="2">
                </div>
              </div>
              <div id="HDR">
                <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
              </div>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="justify"><font style="FONT-WEIGHT: bold; TEXT-DECORATION: underline">EXHIBIT A</font><br></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 2.5; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">GENERAL
<font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RELEA</font>SE</font></font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="justify">
              <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">RE<font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CITA</font>LS</font></font></div>
            </div><br></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
General Release (this &#8220;Release&#8221;) is made by and between John T. Kurtzweil
(&#8220;Employee&#8221;) and Cree, Inc. (the &#8220;Company&#8221;) (jointly referred to as the
&#8220;Parties&#8221;):</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Company and Employee entered into an Executive Change in Control Agreement
dated [_______] (the &#8220;Change in Control Agreement&#8221;)</font></div>
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the Company and Employee entered into an Employee Agreement Regarding
Confidential Information, Intellectual Property, and Noncompetition (as amended
by the Change in Control Agreement, the &#8220;Confidentiality
Agreement&#8221;);</font></div>
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the Company and Employee entered into [DESCRIBE EQUITY AWARD AGREEMENTS: a Stock
Option Agreement dated [____] granting Employee the option to purchase shares of
the Company&#8217;s common stock subject to the terms and conditions of the Company&#8217;s
[Stock Option Plan] and the Stock Option Agreement (collectively, the &#8220;Stock
Agreements&#8221;)];</font></div>
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Employee&#8217;s employment with the Company terminated on [<font style="DISPLAY: inline; FONT-WEIGHT: bold">DATE</font>] (the &#8220;Termination
Date&#8221;);</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions and demands that the Employee may have
against the Company as defined herein, including, but not limited to, any and
all claims arising out of, or related to, Employee&#8217;s employment with, or
separation from, the Company;</font></div>
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THEREFORE, in consideration of the promises made herein, the Parties hereby
agree as follows:</font></div>
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to the Section 9(a) of the Change in Control Agreement, Employee&#8217;s receipt of
severance pursuant to Section 8(a) of the Change in Control Agreement is subject
to Employee executing and not revoking this Release.&#160;&#160;In consideration
of Employee executing and not revoking this Release, and subject to Section 9 of
the Change in Control Agreement, the Company agrees to pay (or provide, as
applicable) Employee the amounts and benefits specified in Section 8(a) of the
Change in Control Agreement.&#160;&#160;Such severance benefits will be paid or
provided at the times and in the manner set forth in the Change in Control
Agreement.&#160;&#160;Employee acknowledges that he will not be entitled to any
other compensation or benefits, except as provided in Section 7 of the Change in
Control Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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acknowledges that as of the Termination Date, he will have vested in [______]
options and no more.&#160;&#160;The exercise of any stock options shall continue
to be </font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">subject to the terms and
conditions of the Stock Agreements and Sections 8 and 18 of the Change in
Control Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Benefits</font>.&#160;&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">Employee&#8217;s</font> group
health benefits will cease on <font style="DISPLAY: inline; FONT-WEIGHT: bold">[DATE]</font>, subject to Employee&#8217;s
right to continue his group health benefits under COBRA.&#160;&#160;Employee&#8217;s
participation in all other benefits and incidents of employment (including, but
not limited to, the accrual of vacation and paid time off, and the vesting of
stock options) ceased on the Termination Date.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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Salary</font>.&#160;&#160;Subject to Section 7 of the Change in Control
Agreement and Section 1 above, Employee acknowledges and represents that
Employee is not entitled to any additional salary, wages, bonuses, accrued
vacation, housing allowances, relocation costs, interest, severance, stock,
stock options, outplacement costs, fees, commissions or any other benefits and
compensation.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Confidential
Information</font>.&#160;&#160;Employee shall continue to comply with the terms
and conditions of the Confidentiality Agreement, as such agreement may be
amended by the Change in Control Agreement, and maintain the confidentiality of
all of the Company&#8217;s confidential and proprietary
information.&#160;&#160;Employee also shall return to the Company all of the
Company&#8217;s property, including all confidential and proprietary information, and
all documents and information that Employee obtained in connection with his
employment with the Company, on or before the Effective Date of this
Release.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Release of
Claims</font>.&#160;&#160;Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company.&#160;&#160;To the fullest extent permitted by applicable law,
Employee, on his own behalf and on behalf of his respective heirs, family
members, executors, agents, and assigns, hereby fully and forever releases the
Company and its current and former: officers, directors, employees, agents,
investors, attorneys, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corpora&#173;tions and assigns (the
&#8220;Releasees&#8221;) from, and agrees not to sue concerning, any claim, duty, obligation
or cause of action relating to any matters of any kind arising out of or
relating to his employment by the Company (except as provided in Section 7 of
the Change in Control Agreement), or his service as an officer of the Company
and/or a director of the Company, whether presently known or unknown, suspected
or unsuspected, that Employee may possess arising from any omissions, acts or
facts that have occurred up until and including the Effective Date of this
Release including, without limitation:</font></div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims relating to or arising from Employee&#8217;s employment with the Company,
or the termination of that employment;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims relating to, or arising from, Employee&#8217;s right to purchase, or actual
purchase of, shares of Company stock, including, but not limited to, any claims
for fraud, misrepresentation, breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud under any state or federal
law;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims under the law of any jurisdiction, including, but not limited to,
wrongful discharge of employment; constructive discharge from employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a </font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">covenant of good faith and
fair dealing, both express and implied; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; and conversion;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act of 1967; the Americans
with Disabilities Act of 1990; the Fair Labor Standards Act; the Employee
Retirement Income Security Act of 1974; the Worker Adjustment and Retraining
Notification Act; the Older Workers Benefit Protection Act; the Family and
Medical Leave Act; the Fair Credit Reporting Act; the North Carolina Equal
Employment Practices Act; and North Carolina law;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for violation of the federal, or any state,
constitution;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims arising out of any other laws and regulations relating to employment
or employment discrimination;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(g)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any claim
for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by
Employee as a result of this Release; and</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(h)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for attorney fees and costs.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Acknowledgement of Waiver of
Claims Under ADEA</font>.&#160;&#160;Employee acknowledges that he is waiving
and releasing any rights he may have under the Age Discrimination in Employment
Act of 1967 (&#8220;ADEA&#8221;) and that this waiver and release is knowing and
voluntary.&#160;&#160;Employee and the Company agree that this waiver and
release does not apply to any rights or claims that may arise under the ADEA
after the Effective Date of this Release.&#160;&#160;Employee acknowledges that
the consideration given for this waiver and release is in addition to anything
of value to which Employee was already entitled.&#160;&#160;Employee further
acknowledges that he has been advised by this writing that:</font></div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he should
consult with an attorney prior to executing this Release;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he has up
to twenty-one (21) days within which to consider this Release;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he has
seven (7) days following his execution of this Release to revoke this
Release;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">this ADEA
waiver shall not be effective until the revocation period has expired;
and,</font></div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">nothing
in this Release prevents or precludes Employee from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs for doing so, unless
specifically authorized by federal law.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Unknown
Claims</font>.&#160;&#160;The Parties represent that they are not aware of any
claim by either of them other than the claims that are released by this
Release.&#160;&#160;Employee acknowledges that he has been advised by legal
counsel and is familiar with the principle that a general release does not
extend to claims which the releasor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him would have
materially affected his settlement with the releasee.&#160;&#160;Employee, being
aware of said principle, agrees to expressly waive any rights Employee may have
to that effect, as well as under any other statute or common law principles of
similar effect, to the fullest extent permitted by applicable law.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Application for
Employment</font>.&#160;&#160;Employee understands and agrees that, as a
condition of this Release, he shall not be entitled to any employment with the
Company, its subsidiaries, or any successor, and he hereby waives any alleged
right of employment or re-employment with the Company, its subsidiaries or
related companies, or any successor.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No
Cooperation</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employee
agrees that he will not knowingly counsel or assist any attorneys or their
clients in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints by any third party against any of the
Releasees that relate to any of the matters for which he has provided a release
hereunder, unless under a subpoena or other court order to do
so.&#160;&#160;Employee agrees both to immediately notify the Company upon
receipt of any such subpoena or court order, and to furnish, within three (3)
business days of its receipt, a copy of such subpoena or court order to the
Company.&#160;&#160;If approached by anyone for counsel or assistance in the
presentation or prosecution of any such disputes, differences, grievances,
claims, charges, or complaints against any of the Releasees, Employee shall
state no more than that he cannot provide counsel or assistance.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;Notwithstanding any
language herein to the contrary, Employee understand that nothing in this
Release prohibits him from filing or pursuing a charge of discrimination with
the Equal Employment Opportunity Commission (EEOC) or a claim with the National
Labor Relations Board (NLRB); provided that, by signing this Release Employee
agree to waive and relinquish any personal monetary gain that otherwise would
result from such EEOC or NLRB Claim.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Costs</font>.&#160;&#160;The
Parties shall each bear their own costs, expert fees, attorney fees and other
fees incurred in connection with the preparation of this Release.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Arbitration</font>.&#160;&#160;The
Parties agree that any and all disputes arising out of, or relating to, the
terms of this Release, their interpretation, and any of the matters herein
released, shall be subject to binding arbitration as described in Section 16 of
the Change in Control Agreement (but as adjusted to cover disputes under this
Release).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No
Representations</font>.&#160;&#160;Each Party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Release.&#160;&#160;Neither Party
has relied upon any representations or statements made by the other Party hereto
which are not specifically set forth in this Release.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No Oral
Modification</font>.&#160;&#160;Any modification or amendment of this Release,
or additional obligation assumed by either Party in connection with this
Release, shall be effective only if placed in writing and signed by both Parties
or their authorized representatives.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Entire
Agreement</font>.&#160;&#160;This Release, the Change in Control Agreement, the
Confidentiality Agreement and the Stock Agreements represent the entire
agreement and understanding between the Company and Employee concerning the
subject matter of this Release and Employee&#8217;s relationship with the Company, and
supersede and replace any and all prior agreements and understandings between
the Parties concerning the subject matter of this Release and Employee&#8217;s
relationship with the Company.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Governing
Law</font>.&#160;&#160;This Release shall be governed by the laws of the State
of North Carolina, without regard for choice of law provisions.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severability</font>.&#160;&#160;If
any provision of this Release is found to be unenforceable, it shall not affect
the enforceability of the remaining provisions, and the court shall enforce all
remaining provisions to the fullest extent permitted by law.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Effective
Date</font>.&#160;&#160;This Release will not become effective until the eighth
(8th) day after it has been signed by both Parties and then only if Executive
does not revoke it as permitted in Section 5(c) above (the &#8220;Effective
Date&#8221;).&#160;&#160;In order to revoke this Release, the Executive must deliver a
letter expressly stating that he is revoking this Release to the Company&#8217;s Vice
President, Administration, at 4600 Silicon Drive, Durham, North Carolina 27703
within seven (7) days after he signs this Release.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="TEXT-DECORATION: underline">Voluntary Execution of
Release</font>.&#160;&#160;This Release is executed voluntarily and with the
full intent of releasing all claims, and without any duress or undue influence
by any of the Parties.&#160;&#160;The Parties acknowledge that:</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">They have
read this Release;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">They have
been represented in the preparation, negotiation, and execution of this Release
by legal counsel of their own choice or that they have voluntarily declined to
seek such counsel;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">They
understand the terms and consequences of this Release and of the releases it
contains; and</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">They are
fully aware of the legal and binding effect of this Release.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
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                <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
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</font></div>
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                </div>
              </div>
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</font></div>
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            </div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IN
WITNESS WHEREOF, each of the parties has executed this Release, in the case of
the Company by a duly authorized officer, as of the day and year written
below.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
                <table border="0" cellpadding="0" cellspacing="0" width="68%">
                    <tr>
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                      <td align="left" colspan="3" valign="top" width="21%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                      </td>
                      <td align="left" valign="top" width="38%">&#160;</td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="7%">&#160;</td>
                      <td align="left" valign="top" width="34%">&#160;</td>
                      <td align="left" valign="top" width="12%">&#160;</td>
                      <td align="left" valign="top" width="3%">&#160;</td>
                      <td align="left" valign="top" width="6%">&#160;</td>
                      <td align="left" valign="top" width="38%">&#160;</td>
                    </tr>
                    <tr>
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      INC.</font></td>
                      <td align="left" valign="top" width="12%">&#160;</td>
                      <td align="left" valign="top" width="3%">&#160;</td>
                      <td align="left" valign="top" width="6%">&#160;</td>
                      <td align="left" valign="top" width="38%">&#160;</td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="7%"><font size="2">&#160;</font></td>
                      <td align="left" valign="top" width="34%"><font size="2">&#160;</font></td>
                      <td align="left" valign="top" width="12%">&#160;</td>
                      <td align="left" valign="top" width="3%">&#160;</td>
                      <td align="left" valign="top" width="6%">&#160;</td>
                      <td align="left" valign="top" width="38%">&#160;</td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="7%"><font size="2">&#160;</font></td>
                      <td align="left" valign="top" width="34%"><font size="2">&#160;</font></td>
                      <td align="left" valign="top" width="12%">&#160;</td>
                      <td align="left" valign="top" width="3%">&#160;</td>
                      <td align="left" valign="top" width="6%">&#160;</td>
                      <td align="left" valign="top" width="38%">&#160;</td>
                    </tr>
                    <tr>
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                      <td align="left" valign="top" width="34%" style="BORDER-BOTTOM: black 1px solid"><font size="2">&#160;</font></td>
                      <td align="left" valign="top" width="12%" style="PADDING-BOTTOM: 1px">&#160;</td>
                      <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 1px">&#160;</td>
                      <td align="left" valign="bottom" width="6%" style="PADDING-BOTTOM: 1px; BORDER-BOTTOM: 4px">
                        <div align="left">&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date:
    </font></div>
                      </td>
                      <td align="left" valign="top" width="38%" style="PADDING-BOTTOM: 1px; BORDER-BOTTOM: black 1px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="bottom" width="7%" style="PADDING-BOTTOM: 2px"><font size="2">&#160;Title:</font></td>
                      <td align="left" valign="top" width="34%" style="BORDER-BOTTOM: black 1px solid"><font size="2">&#160;</font></td>
                      <td align="left" valign="top" width="12%" style="PADDING-BOTTOM: 2px">&#160;</td>
                      <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px">&#160;</td>
                      <td align="left" valign="top" width="6%" style="PADDING-BOTTOM: 2px">&#160;</td>
                      <td align="left" valign="top" width="38%" style="PADDING-BOTTOM: 2px">&#160;</td>
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                    <tr>
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                        <div>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date:
    </font></div>
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                      <td align="left" valign="top" width="41%"><font size="2">&#160;JOHN T.
      KURTZWEIL</font></td>
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<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>7
<FILENAME>exhibit10_6.htm
<DESCRIPTION>EXHIBIT 10.6
<TEXT>
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      <div>&#160;</div>
      <div>
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      <div style="TEXT-ALIGN: right"><font style="FONT-WEIGHT: bold">Exhibit
10.6</font></div>
      <div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CREE,
INC.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXECUTIVE
CHANGE IN CONTROL AGREEMENT</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
Executive Change in Control Agreement (the &#8220;Agreement&#8221;) is entered into as of
August 19, 2008 (the &#8220;Effective Date&#8221;) by and between Cree, Inc. (the &#8220;Company&#8221;)
and Stephen D. Kelley (&#8220;Executive&#8221;).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Duties and Scope of
Employment</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Positions and
Duties</font>.&#160;&#160;Executive will serve as Executive Vice President and
Chief Operating Officer, reporting to the Company&#8217;s Chief Executive Officer and
President (&#8220;CEO&#8221;).&#160;&#160;Executive will render such business and
professional services in the performance of his duties, consistent with
Executive&#8217;s positions within the Company, as will reasonably be assigned to him
by the CEO.&#160;&#160;The period Executive is employed by the Company under
this Agreement is referred to herein as the &#8220;Employment Term&#8221;.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Obligations</font>.&#160;&#160;During
the Employment Term, Executive will devote Executive&#8217;s full business efforts and
time to the Company.&#160;&#160;For the duration of the Employment Term,
Executive agrees not to actively engage in any other employment, occupation, or
consulting activity for any direct or indirect remuneration without the prior
approval of the CEO (which approval will not be unreasonably withheld);
provided, however, that Executive may, without the approval of the CEO, serve in
any capacity with any civic, educational, or charitable organization, provided
such services do not interfere with Executive&#8217;s obligations to
Company.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">At-Will
Employment</font>.&#160;&#160;Executive and the Company agree that Executive&#8217;s
employment with the Company constitutes &#8220;at-will&#8221;
employment.&#160;&#160;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.&#160;&#160;However, as described in
this Agreement, Executive may be entitled to severance benefits depending upon
the circumstances of termination of his employment.&#160;&#160;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") or the CEO so requests.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Term of
Agreement</font>.&#160;&#160;This Agreement will have an initial term of one
year commencing on the Effective Date.&#160;&#160;On each anniversary of the
Effective Date thereafter, this Agreement will automatically 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.&#160;&#160;Notwithstanding any contrary provision in this
Section&#160;3, (i) in the event the Company and another party enter into a
written agreement that contemplates a transaction the consummation of which
would result in a Change in Control as defined in Subsection (a), (b), or (d) of
such definition, this Agreement will continue until the occurrence of either the
resulting Change in Control or the termination or expiration of the written
agreement without the occurrence of a Change in Control, whichever comes first,
and (ii) in the event a Change in Control (including without limitation a
resulting Change in Control as described in the preceding clause (i)) occurs
</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">during
the Employment Term, this Agreement will continue for not less than twelve (12)
months after the date of the Change in Control.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Compensation</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Base
Salary</font>.&#160;&#160;As of the Effective Date, the Company will pay
Executive an annual salary of $ 350,000.00 as compensation for his services
(such annual salary, as is then effective, to be referred to herein as &#8220;Base
Salary&#8221;).&#160;&#160;The Base Salary will be paid periodically in accordance
with the Company&#8217;s normal payroll schedule and practices and be subject to the
usual, required withholdings.&#160;&#160;Executive&#8217;s salary will be subject to
review by the Compensation Committee of the Board (the &#8220;Committee&#8221;) not less
than annually, and adjustments will be made in the discretion of the
Compensation Committee.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Incentive
Compensation</font>.&#160;&#160;Executive will be eligible to receive incentive
compensation payable for the achievement of individual performance goals
established by the CEO and corporate performance goals established by the
Committee.&#160;&#160;The Committee will determine executive&#8217;s annual target
incentive award level.&#160;&#160;The actual earned incentive, if any, payable
to Executive for any fiscal period of the Company will depend upon the extent to
which the performance goal(s) specified by the CEO or Committee, as applicable,
are achieved.&#160;&#160;For each fiscal quarter of the Company, the CEO will
endeavor to establish the applicable individual performance goal(s) no later
than the 30th day of the fiscal quarter to which the goals
relate.&#160;&#160;For each fiscal year of the Company, the Committee will
endeavor to establish the applicable corporate performance goal(s) no later than
the 90th day of the fiscal year to which the goals
relate.&#160;&#160;Executive&#8217;s incentive compensation will be subject to the
terms and conditions of the Company&#8217;s incentive plan or arrangement designated
by the Committee for this purpose, including but not limited to continued
employment requirements and payment date terms that are designed to cause the
incentive compensation to be exempt from or in compliance with Section 409A of
the Internal Revenue Code of 1986, as amended (the &#8220;Code&#8221;) and the guidance
thereunder (collectively &#8220;Section 409A&#8221;).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Long-Term
Incentive</font>.&#160;&#160;Executive will be eligible to receive long-term
incentives subject to terms and conditions established by the Committee, the
underlying Cree, Inc. 2004 Long-Term Incentive Compensation Plan or any
successor plan thereto, and the Committee&#8217;s terms and conditions for the
applicable type of award, including vesting criteria such as continued service
or performance objectives.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Employee
Benefits</font>.&#160;&#160;Executive will be eligible to participate in all
Company employee benefit plans, policies, and arrangements that are applicable
to other executive officers of the Company in accordance with the terms of such
plans, policies, and arrangements as may exist from time to time.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">6.</font><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Expenses</font>.&#160;&#160;The
Company will reimburse Executive for reasonable travel, entertainment, and other
expenses incurred by Executive in the furtherance of the performance of
Executive&#8217;s duties hereunder, in accordance with the Company&#8217;s expense
reimbursement policy as in effect from time to time.&#160;&#160;To the extent
that any such reimbursement does not qualify for </font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
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              <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 2
-</font></div>
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              </div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">exclusion from Federal
income taxation, the Company will make the reimbursement only if the
corresponding expense is incurred during the term of this Agreement and the
reimbursement is made on or before the last day of the calendar year following
the calendar year in which the expense is incurred, the amount of expenses
eligible for such reimbursement during a calendar year will not affect the
amount of expenses eligible for such reimbursement in another calendar year, and
the right to such reimbursement is not subject to liquidation or exchange for
another benefit from the Company.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">7.</font><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Termination of
Employment</font>.&#160;&#160;In the event of Executive&#8217;s Termination of
Employment with the Company, Executive will be entitled to any (a)&#160;unpaid
Base Salary accrued up to the date of such Termination of Employment (the
&#8220;Termination Date&#8221;) paid in accordance with the schedule specified in Section
4(a) above, (b)&#160;any incentive compensation that is earned as of Executive&#8217;s
Termination Date in accordance with the terms and conditions of the applicable
incentive plan or arrangement but has not yet been paid, which amount, if any,
will be paid in accordance with the terms and conditions of the applicable
incentive arrangement, (c)&#160;pay for accrued but unused vacation that the
Company is legally obligated to pay Executive, which amount will be paid in the
first regular payroll cycle occurring after the Termination Date, except as
provided in Section 8(b) below, (d)&#160;benefits or compensation as provided
under the terms of any employee benefit and compensation agreements or plans
applicable to Executive, (e)&#160;unreimbursed business expenses required to be
reimbursed to Executive, which amount, if any, will be paid in accordance with
Section 6 above, and (f)&#160;rights to indemnification Executive may have under
the Company&#8217;s Articles of Incorporation, Bylaws, this Agreement, or a separate
indemnification agreement, as applicable.&#160;&#160;In addition, if the
Termination of Employment is initiated by the Company without Cause or by
Executive for Good Reason, and the Termination of Employment is In Connection
with a Change in Control, Executive will be entitled to the amounts and benefits
specified in Section&#160;8(a) below.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severance</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Change in Control
Benefits</font>.&#160;&#160;If Executive&#8217;s Termination of Employment is
initiated by the Company without Cause or by Executive for Good Reason, and the
Termination of Employment is In Connection with a Change in Control (but not by
the Company in connection with the death or LTD Disability of Executive), then,
subject to Section&#160;9, Executive will receive: (i)&#160;continued payment of
Base Salary for twelve (12) months, paid in accordance with the schedule
specified in Section 4(a) above, but commencing within thirty (30) days
following Termination of Employment with payments retroactive to that date,
except as provided in Section 8(b) below, (ii)&#160; a lump sum payment equal to
twelve (12) multiplied by the COBRA premium in effect for the type of medical,
dental and vision coverage in effect for Executive (e.g., family coverage vs.
employee-only coverage) at the time of his Termination of Employment, paid
within ninety (90) days following the Termination Date, except as provided in
Section 8(b) below, and (iii)&#160;full accelerated vesting with respect to
Executive&#8217;s then outstanding, unvested stock options, time-vested restricted
stock awards and other equity awards that vest solely based on the passage of
time.</font></div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Section 409A Payment
Provisions; Possible Payment Delay in Event Executive is a Specified
Employee</font>.&#160;&#160;For purposes of Section 409A, each installment
payment of</font></div>
          </div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">severance specified in
Sections 7(c) and 8(a)(i) and (ii) above is a separate payment; all payments
specified in Sections 7(c) and 8(a)(i) and (ii) above made through the date that
is 2-&#189; months following the later of the last day of the calendar year
containing the Termination Date and the last day of the Company&#8217;s fiscal year
containing the Termination Date&#160;&#160;(the &#8220;Short-Term Deferral Deadline&#8221;)
are intended to be exempt from Section 409A under the short-term deferral
rule;&#160;&#160;all such payments made after the Short Term Deferral Deadline
are intended to be exempt from Section 409A under the severance pay exemption
specified in Treasury Regulation &#167;1.409A- 1(b)(9)(iii) (the &#8220;Severance Pay
Exemption&#8221;); in the event that Executive is a Specified Employee on the
Termination Date, all such payments made after the Short Term Deferral Deadline,
that exceed the limits of the Severance Pay Exemption, and that would be paid
earlier than the Six-Month Delay Payment Date will be delayed until the
Six-Month Delay Payment Date to the extent required to satisfy Subsection
409A(a)(2)(B)(i) of the Code; on that date, the Company will pay Executive a
lump sum consisting of all payments that would have been paid to Executive prior
to the Six-Month Delay Payment Date had Executive not been a Specified Employee,
increased for interest at the short-term Federal rate in effect on the
Termination Date for the period beginning on the date each component of such
lump sum would have been paid had Executive not been a Specified Employee and
ending on the Six-Month Delay Payment Date; however, if Executive dies after the
Termination Date but before such lump sum payment is made, it will be paid to
Executive&#8217;s estate without regard to any six-month delay that otherwise applies
to Specified Employees. </font>

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              </div>
            </div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Voluntary Termination
without Good Reason; Termination for Cause</font>.&#160;&#160;If Executive&#8217;s
employment with the Company terminates voluntarily by Executive without Good
Reason or is terminated for Cause by the Company, then, except as provided in
Section 7, (i)&#160;all further vesting of Executive&#8217;s outstanding equity awards
will terminate immediately, and Executive&#8217;s outstanding equity awards will
terminate in accordance with the terms and conditions of the applicable award
agreement(s), (ii)&#160;all payments of compensation by the Company to Executive
hereunder will terminate immediately, and (iii)&#160;Executive will be entitled
to receive benefits, including severance benefits, only in accordance with the
Company&#8217;s then established plans, programs, and practices other than this
Agreement.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Termination due to Death or
LTD Disability</font>.&#160;&#160;If Executive&#8217;s employment is terminated by
reason of his death or LTD Disability, then, except as provided in Section 7,
(i)&#160;Executive&#8217;s outstanding equity awards will vest and terminate in
accordance with the terms and conditions of the applicable award agreement(s);
(ii)&#160;all payments of compensation by the Company to Executive hereunder
will terminate immediately, and (iii)&#160;Executive will be entitled to receive
benefits, including severance benefits, only in accordance with the Company&#8217;s
then established plans, programs, and practices other than this
Agreement.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">Sole Right to
Severance</font>.&#160;&#160;This Agreement is intended to represent Executive&#8217;s
sole entitlement to severance payments and benefits in connection with a
termination of his employment In Connection with a Change in Control, except for
such payments and benefits to which Executive would be entitled as an employee
of the Company in the absence of this Agreement.</font></div><br>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Conditions to Receipt of
Severance; No Duty to Mitigate</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(a)</font><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Separation Agreement and
Release of Claims</font>.&#160;&#160;The receipt of any severance pursuant to
Section&#160;8 will be subject to Executive signing and not revoking a release
of claims in substantially the form attached as <font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit A</font>, but with
any appropriate modifications, reflecting changes in applicable law, as are
necessary or appropriate to provide the Company with the protection it would
have if the release were executed as of the Effective Date.&#160;&#160;No
severance will be paid or provided unless and until the release of claims is
timely executed and returned by Executive to the Company, becomes effective and
has not been timely revoked in accordance with the terms thereof.&#160;&#160;The
Company will complete and provide to Executive the release of claims in
sufficient time so that if Executive timely executes and returns it, the
revocation period will expire before severance payments are required to commence
under Section 8.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Nondisparagement</font>.&#160;&#160;As
a condition to receipt of severance, 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.&#160;&#160;The foregoing restrictions will not apply to any
statements that are made truthfully in response to a subpoena or other
compulsory legal process.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Other
Requirements</font>.&#160;&#160;Executive&#8217;s receipt of continued severance
payments will be subject to Executive continuing to comply with the terms of the
Confidential Information Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No Duty to
Mitigate</font>.&#160;&#160;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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">Generally Disabled; LTD
Disability</font>.&#160;The provisions of this Section 9(e) will control in the
event of conflict between this Section 9(e) and any other language in this
Agreement.&#160;If Executive becomes Generally Disabled, the Company will not be
in breach of this Agreement and Executive will not be entitled to severance
pursuant to Section 8(a) on account of the Company, in its sole discretion,
taking any action that would otherwise be considered Good Reason under Section
10(f) below provided that such action remains in effect only for so long as
Executive remains Generally Disabled.&#160;&#160;If Executive is Generally
Disabled for more than ninety-one (91) days (whether or not consecutive) in a
rolling twelve (12) month period, the Company will not be in breach of this
Agreement and Executive will not be entitled to severance per Section 8(a) on
account of the Company permanently taking any action that would otherwise be
considered Good Reason under Section 10(f) below so long as the Company does not
terminate Executive&#8217;s employment prior to the date that Executive is determined
to have an LTD Disability.&#160;&#160;If Executive is Generally Disabled and the
Company terminates his employment without Cause In Connection with a Change in
Control prior to the date that he is determined to have an LTD Disability, such
termination will be considered Termination of Employment by the Company without
Cause for purposes of Section 8(a) of this Agreement; provided that, in such
circumstances, Executive will only be eligible for the severance benefits set
forth in items (i) and (ii) of Section 8(a) of this</font></div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Agreement. <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font>If
Executive ceases to be Generally Disabled before his employment is terminated by
reason of LTD Disability, subject to the notice and cure provisions in Section
10(f), for purposes of Section 8(a) of this Agreement Executive will have the
right to terminate his employment for Good Reason (if the Termination of
Employment is In Connection with a Change in Control) on account of any event or
circumstances that occurred while Executive was Generally Disabled that would
otherwise have constituted Good Reason except for the provisions of this Section
9(e) unless such event or circumstances has already been cured by the Company or
consented to by Executive; provided that, in such circumstances, Executive will
only be eligible for the severance benefits set forth in items (i) and (ii) of
Section 8(a) of this Agreement.&#160;&#160;Notwithstanding any language herein
to the contrary, nothing in this paragraph creates a right to severance benefits
other than if Executive&#8217;s Termination of Employment is In Connection with a
Change in Control.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Definitions</font>.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Benefit
Plans</font>.&#160;&#160;For purposes of this Agreement, &#8220;Benefit Plans&#8221; means
plans, policies, or arrangements that the Company sponsors (or participates in)
and that immediately prior to the Termination Date provide Executive,
Executive&#8217;s spouse, and/or Executive&#8217;s eligible dependents with medical, dental,
or vision benefits.&#160;&#160;The term &#8220;Benefit Plans&#8221; does not include plans,
policies, or arrangements providing for any other type of benefit (including,
but not by way of limitation, financial counseling, disability, life insurance,
or retirement benefits).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Cause</font>.&#160;&#160;For
purposes of this Agreement, &#8220;Cause&#8221; means (i)&#160;Executive&#8217;s willful and
continued failure to perform the duties and responsibilities of his position
that is not corrected after one written warning detailing the concerns and
offering Executive a reasonable period of time to cure; (ii)&#160;any material
and willful violation of any federal or state law by Executive in connection
with his responsibilities as an employee of the Company; (iii) any act of
personal dishonesty taken by Executive in connection with his responsibilities
as an employee of the Company with the intention or reasonable expectation that
such may result in personal enrichment of Executive; (iv)&#160;Executive&#8217;s
conviction of, or plea of <font style="DISPLAY: inline; FONT-STYLE: italic">nolo
contendere</font> to, or grant of prayer of judgment continued with respect to,
a felony that the Board reasonably believes has had or will have a material
detrimental effect on the Company&#8217;s reputation or business; or
(v)&#160;Executive materially breaching Executive&#8217;s 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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Change in
Control</font>.&#160;&#160;For purposes of this Agreement, &#8220;Change in Control&#8221;
will have the same meaning as in Section&#160;7.1 of the Cree, Inc. Equity
Compensation Plan (as amended and restated August 5, 2002 and without regard to
any subsequent amendments).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Confidential Information
Agreement</font>.&#160;&#160;For purposes of this Agreement, &#8220;Confidential
Information Agreement&#8221; shall refer to the version of Employee Agreement
Regarding Confidential Information, Intellectual Property, and Noncompetition in
effect for Executive as of the relevant date; provided that, with respect to
Executive&#8217;s post-termination obligations, it shall refer to the version of such
agreement in effect as of Executive&#8217;s Termination Date.</font></div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Generally
Disabled</font>.&#160;&#160;For purposes of this Agreement, &#8220;Generally Disabled&#8221;
means that Executive is unable, with reasonable accommodation, to perform the
material and substantial duties of his position due to illness or injury or
physical or mental incapacity as determined by the Committee consistent with its
obligations to the Company&#8217;s shareholders.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Good
Reason</font>.&#160;&#160;For purposes of this Agreement, except as provided in
Section 9(e) above, &#8220;Good Reason&#8221; means the occurrence of any of the following,
without Executive&#8217;s consent and not due to Cause, within the timeframes
specified in the definition of &#8220;In Connection with a Change in Control&#8221;: (i) a
material reduction of Executive's authority, duties or
responsibilities;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font>(ii)
a material reduction in Executive's base salary other than a one-time reduction
that also is applied to substantially all other executive officers of the
Company, provided that Executive's reduction is substantially proportionate to
the reduction applied to substantially all other executive officers;&#160;(iii)
the Company requiring Executive to report to anyone other than the CEO, the
Board, or a Committee of the Board; or&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font>(iv)&#160;
the Company requiring Executive to relocate his principal place of business or
the Company relocating its headquarters, in either case to a facility or
location outside of a thirty-five (35) mile radius from Executive&#8217;s current
principal place of employment; provided, however, that Executive will only have
Good Reason if he provides notice to the Company of the existence of the event
or circumstances constituting Good Reason specified in any of the preceding
clauses within ninety (90) days of the initial occurrence of such event or
circumstances and if such event or circumstances is not cured within thirty (30)
days after Executive gives such written notice.&#160;&#160;If Executive
initiates Termination of Employment for Good Reason, the actual Termination of
Employment must occur within thirty (30) days after expiration of the cure
period.&#160;&#160;Executive&#8217;s failure to timely give notice of the occurrence
of a specific event that would otherwise constitute Good Reason will not
constitute a waiver of Executive&#8217;s right to give notice of any new subsequent
event that would constitute Good Reason that occurs after such prior event
(regardless of whether the new subsequent event is of the same or different
nature as the preceding event).&#160;&#160;Executive&#8217;s actions approving in
writing (or by such other means as is reliable and verifiable) any change,
reduction, requirement or occurrence (that otherwise may be considered Good
Reason) in his role as an officer of the Company will be considered consent for
the purposes of this Good Reason definition.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(g)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">In Connection with a Change
in Control</font>.&#160;&#160;For purposes of this Agreement, a Termination of
Employment with the Company is &#8220;In Connection with a Change in Control&#8221; if
Executive incurs a Termination of Employment either within (i) the period of
time between the Company and another party entering into a written agreement
that contemplates a transaction the consummation of which would result in a
Change in Control as defined in Subsection (a), (b), or (d) of such definition
and the occurrence of either the resulting Change in Control or the termination
or expiration of the written agreement without the occurrence of a Change in
Control, or (ii) twelve (12) months following a Change in Control (including
without limitation a resulting Change in Control as described in the preceding
clause (i)).</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(h)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">LTD
Disability</font>.&#160;&#160;For purposes of this Agreement, &#8220;LTD Disability&#8221;
will mean that Executive is &#8220;Partially Disabled&#8221; or &#8220;Total Disabled&#8221; within the
meaning of the Company&#8217;s current long-term disability plan (or such similar term
or terms in any long-term</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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-</font></div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
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            </div>
            <div id="HDR">
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              </div>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">disability plan of the
Company that replaces its current long-term disability plan) and has satisfied
the elimination period for benefits eligibility under such plan.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(i)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Six-Month Delay Payment
Date</font>.&#160;&#160;The payment date associated with the first regular
payroll cycle after passage of six months following the Termination
Date.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(j)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Specified
Employe</font>e.&#160;&#160;For purposes of this Agreement, &#8220;Specified Employee&#8221;
will have the meaning prescribed by Subsection 409A(a)(2)(B)(i) of the Code, as
such meaning may be amended from time to time.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 68pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">(k)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Termination of
Employmen</font>t.&#160;&#160;For purposes of this Agreement, &#8220;Termination of
Employment&#8221; will have the meaning as prescribed by Treasury Regulation &#167;
1.409A-1(h)(1)(ii), as such meaning may be amended from time to
time.</font></div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal">11.</font><font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Tax Treatment; Section 409A
Compliance</font>.&#160;&#160;Executive&#160;acknowledges and agrees that the
Company has made no representations as to the tax treatment of the compensation
and benefits provided pursuant to&#160;this Agreement.<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-FAMILY: Times New Roman">&#160;</font>This
Agreement is intended to comply with the requirements of Section
409A.&#160;&#160;Nothing in this Agreement shall require payment in 2008 of any
payment that was required to be paid after 2008 under this Agreement; in
addition, except as may be required to observe the six-month delay applicable to
Specified Employees under Subsection 409A(a)(2)(B)(i), nothing in this Agreement
shall postpone beyond 2008 any payment that was required to be paid in 2008
pursuant to this Agreement.&#160;&#160;The parties agree to work together to
effectuate the intent of this provision, including but not limited to revising
the timing and/or form of any payment hereunder as may be permitted by and
necessary to ensure the terms and conditions applicable to such payments comply
with Section 409A.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Indemnification</font>.&#160;&#160;Subject
to applicable law, Executive will be provided indemnification to the maximum
extent permitted by the Company&#8217;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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Assignment</font>.&#160;&#160;This
Agreement will be binding upon and inure to the benefit of (a)&#160;the heirs,
executors, and legal representatives of Executive upon Executive&#8217;s death, and
(b)&#160;any Successor of the Company.&#160;&#160;Any such Successor of the
Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes.&#160;&#160;For this purpose, &#8220;Successor&#8221; 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.&#160;&#160;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.&#160;&#160;Any other attempted assignment, transfer,
conveyance, or other disposition of Executive&#8217;s right to compensation or other
benefits will be null and void.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Notices</font>.&#160;&#160;All
notices, requests, demands, and other communications called for hereunder will
be in writing and will be deemed given (a)&#160;on the date of delivery if
delivered</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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-</font></div>
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          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">personally, (b)&#160;one
business day after being sent overnight by a well-established commercial
overnight service, or (c)&#160;four days after being mailed by registered or
certified mail, return receipt 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:</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If to the
Company:</font></div>
          <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Attn</font>: Vice President,
Administration</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Cree, Inc.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>4600 Silicon Drive</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Durham, NC 27703</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If to
Executive:</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>at the last residential address known
by the Company.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severability</font>.&#160;&#160;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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Arbitration</font>.&#160;&#160;The
Parties agree that any and all disputes arising out of the terms of this
Agreement, Executive&#8217;s employment by the Company, Executive&#8217;s service as an
officer or director of the Company, or Executive&#8217;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.&#160;&#160;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.&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">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.&#160;&#160;</font>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&#8217;s obligations under this Agreement and the Confidential
Information Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Expenses of
Enforcement</font>.&#160;&#160;In the event of a dispute relating to this
Agreement arising during the term of Executive&#8217;s employment with the Company or
within three (3) years following the termination of this Agreement, the Company
will reimburse Executive&#8217;s fees and expenses as incurred quarterly, including
reasonable attorneys&#8217; fees, in connection with such dispute, provided that (i)
Executive provides the Company with written documentation substantiating the
amount of such fees and expenses, and (ii) Executive prevails on at least one
material issue in such dispute or an arbitrator does not determine that
Executive&#8217;s legal positions were frivolous or without legal
foundation.&#160;&#160;The Company will make such reimbursement payments
quarterly based on the written substantiation documentation submitted by
Executive to the Company during the prior quarter; in no event will any
reimbursement be made later than the end of the calendar year next following the
calendar year in which the expense was incurred by Executive; Executive must
provide such written substantiation in time for the Company to make
</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
              <div id="GLFTR" style="WIDTH: 100%" align="left">
              </div>
            </div>
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-</font></div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
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            </div>
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              </div>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">such
reimbursement by such deadline.&#160;&#160;In the event Executive does not so
prevail or in the event of a determination by the arbitrator that his legal
positions were frivolous or without legal foundation (in either case, a
&#8220;Resolution&#8221;), 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&#8217; fees, incurred in connection with the
dispute, both within a reasonable period of time not to exceed sixty (60) days
following the date of the Resolution.&#160;&#160;The amount of expenses eligible
for reimbursement under this Section 17 during a calendar year will not affect
the amount of expenses eligible for reimbursement under this Section 17 in
another calendar year, and the right to such reimbursement is not subject to
liquidation or exchange for another benefit from the Company.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">18.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Integration</font>.&#160;&#160;This
Agreement, together with the Confidential Information Agreement and the standard
forms of equity award agreements and grant notices that describe Executive&#8217;s
outstanding equity awards, represents 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.&#160;&#160;No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless in a writing that is signed by duly authorized representatives of
the parties hereto.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">19.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Waiver of
Breach</font>.&#160;&#160;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.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Survival</font>.&#160;&#160;The
Confidential Information Agreement, the Company&#8217;s and Executive&#8217;s
responsibilities under Sections&#160;7, 8 and 9, and Sections&#160;12, 16, and
17 will survive the termination of this Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">21.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Headings</font>.&#160;&#160;All
captions and Section headings used in this Agreement are for convenient
reference only and do not form a part of this Agreement.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">22.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Tax
Withholding</font>.&#160;&#160;All payments made pursuant to this Agreement will
be subject to withholding of applicable taxes.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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Law</font>.&#160;&#160;This Agreement will be governed by the laws of the State
of North Carolina (with the exception of its conflict of laws
provisions).</font></div>
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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.</font></div>
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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.</font></div>
          <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt">&#160;</div>
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</font></div>
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          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 10
-</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
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          <div id="HDR">
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</font></div>
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        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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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.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
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            <table border="0" cellpadding="0" cellspacing="0" width="85%">
                <tr>
                  <td align="left" valign="top" width="33%">&#160;<font size="2">COMPANY:</font></td>
                  <td align="left" colspan="3" valign="top" width="67%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%">&#160;</td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%">&#160;<font size="2">CREE,
    INC.</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%" style="BORDER-BOTTOM: black 1px solid"><font size="2">&#160;/s/ Charles M. Swoboda</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">
                    <div>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date: August 20,
      2008</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%"><font size="2">&#160;Charles M.
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                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%"><font size="2">&#160;Chief
      Executive Officer and President</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
            <table border="0" cellpadding="0" cellspacing="0" width="85%">
                <tr>
                  <td align="left" valign="top" width="33%">&#160;<font size="2">EXECUTIVE:</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%" style="BORDER-BOTTOM: black 1px solid"><font size="2">&#160;/s/ Stephen D. Kelley</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">
                    <div>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date: August 20,
      2008</font></div>
                  </td>
                </tr>
                <tr>
                  <td align="left" valign="bottom" width="33%"><font size="2">&#160;Stephen D.
      Kelley</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
                <tr>
                  <td align="left" valign="top" width="33%"><font size="2">&#160;</font></td>
                  <td align="left" valign="top" width="10%">&#160;</td>
                  <td align="left" valign="top" width="2%">&#160;</td>
                  <td align="left" valign="top" width="55%">&#160;</td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br><br></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
              <div id="FTR">
                <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
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              <div id="PN" style="PAGE-BREAK-AFTER: always">
                <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 11
-</font></div>
                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                  <hr style="COLOR: black" noshade size="2">
                </div>
              </div>
              <div id="HDR">
                <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
              </div>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="justify"><font style="FONT-WEIGHT: bold; TEXT-DECORATION: underline">EXHIBIT A</font><br></div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 2.5; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">GENERAL
<font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RELEA</font>SE</font></font></div>
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              <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">RE<font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CITA</font>LS</font></font></div>
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          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
            <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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General Release (this &#8220;Release&#8221;) is made by and between Stephen D. Kelley
(&#8220;Employee&#8221;) and Cree, Inc. (the &#8220;Company&#8221;) (jointly referred to as the
&#8220;Parties&#8221;):</font></div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Company and Employee entered into an Executive Change in Control Agreement
dated August 19, 2008 (the &#8220;Change in Control Agreement&#8221;)</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Company and Employee entered into an Employee Agreement Regarding
Confidential Information, Intellectual Property, and Noncompetition (as amended
by the Change in Control Agreement, the &#8220;Confidentiality
Agreement&#8221;);</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Company and Employee entered into [DESCRIBE EQUITY AWARD AGREEMENTS: a Stock
Option Agreement dated [____] granting Employee the option to purchase shares of
the Company&#8217;s common stock subject to the terms and conditions of the Company&#8217;s
[Stock Option Plan] and the Stock Option Agreement (collectively, the &#8220;Stock
Agreements&#8221;)];</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
Employee&#8217;s employment with the Company terminated on [<font style="DISPLAY: inline; FONT-WEIGHT: bold">DATE</font>] (the &#8220;Termination
Date&#8221;);</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions and demands that the Employee may have
against the Company as defined herein, including, but not limited to, any and
all claims arising out of, or related to, Employee&#8217;s employment with, or
separation from, the Company;</font></div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOW
THEREFORE, in consideration of the promises made herein, the Parties hereby
agree as follows:</font></div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">COVENANTS</font></font></div>
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            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Consideration</font>.</font></div>
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to the Section 9(a) of the Change in Control Agreement, Employee&#8217;s receipt of
severance pursuant to Section 8(a) of the Change in Control Agreement is subject
to Employee executing and not revoking this Release.&#160;&#160;In consideration
of Employee executing and not revoking this Release, and subject to Section 9 of
the Change in Control Agreement, the Company agrees to pay (or provide, as
applicable) Employee the amounts and benefits specified in Section 8(a) of the
Change in Control Agreement.&#160;&#160;Such severance benefits will be paid or
provided at the times and in the manner set forth in the Change in Control
Agreement.&#160;&#160;Employee acknowledges that he will not be entitled to any
other compensation or benefits, except as provided in Section 7 of the Change in
Control Agreement.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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acknowledges that as of the Termination Date, he will have vested in [______]
options and no more.&#160;&#160;The exercise of any stock options shall continue
to be</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
              <div id="FTR">
                <div id="GLFTR" style="WIDTH: 100%" align="left">
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                </div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">subject to the terms and
conditions of the Stock Agreements and Sections 8 of the Change in Control
Agreement.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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health benefits will cease on <font style="DISPLAY: inline; FONT-WEIGHT: bold">[DATE]</font>, subject to Employee&#8217;s
right to continue his group health benefits under COBRA.&#160;&#160;Employee&#8217;s
participation in all other benefits and incidents of employment (including, but
not limited to, the accrual of vacation and paid time off, and the vesting of
stock options) ceased on the Termination Date.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Payment of
Salary</font>.&#160;&#160;Subject to Section 7 of the Change in Control
Agreement and Section 1 above, Employee acknowledges and represents that
Employee is not entitled to any additional salary, wages, bonuses, accrued
vacation, housing allowances, relocation costs, interest, severance, stock,
stock options, outplacement costs, fees, commissions or any other benefits and
compensation.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Confidential
Information</font>.&#160;&#160;Employee shall continue to comply with the terms
and conditions of the Confidentiality Agreement, as such agreement may be
amended by the Change in Control Agreement, and maintain the confidentiality of
all of the Company&#8217;s confidential and proprietary
information.&#160;&#160;Employee also shall return to the Company all of the
Company&#8217;s property, including all confidential and proprietary information, and
all documents and information that Employee obtained in connection with his
employment with the Company, on or before the Effective Date of this
Release.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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Claims</font>.&#160;&#160;Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company.&#160;&#160;To the fullest extent permitted by applicable law,
Employee, on his own behalf and on behalf of his respective heirs, family
members, executors, agents, and assigns, hereby fully and forever releases the
Company and its current and former: officers, directors, employees, agents,
investors, attorneys, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corpora&#173;tions and assigns (the
&#8220;Releasees&#8221;) from, and agrees not to sue concerning, any claim, duty, obligation
or cause of action relating to any matters of any kind arising out of or
relating to his employment by the Company (except as provided in Section 7 of
the Change in Control Agreement), or his service as an officer of the Company
and/or a director of the Company, whether presently known or unknown, suspected
or unsuspected, that Employee may possess arising from any omissions, acts or
facts that have occurred up until and including the Effective Date of this
Release including, without limitation:</font></div>
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            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims relating to or arising from Employee&#8217;s employment with the Company,
or the termination of that employment;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims relating to, or arising from, Employee&#8217;s right to purchase, or actual
purchase of, shares of Company stock, including, but not limited to, any claims
for fraud, misrepresentation, breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud under any state or federal
law;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims under the law of any jurisdiction, including, but not limited to,
wrongful discharge of employment; constructive discharge from employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a </font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">covenant of good faith and
fair dealing, both express and implied; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; and conversion;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act of 1967; the Americans
with Disabilities Act of 1990; the Fair Labor Standards Act; the Employee
Retirement Income Security Act of 1974; the Worker Adjustment and Retraining
Notification Act; the Older Workers Benefit Protection Act; the Family and
Medical Leave Act; the Fair Credit Reporting Act; the North Carolina Equal
Employment Practices Act; and North Carolina law;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for violation of the federal, or any state,
constitution;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims arising out of any other laws and regulations relating to employment
or employment discrimination;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(g)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any claim
for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by
Employee as a result of this Release; and</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(h)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for attorney fees and costs.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Acknowledgement of Waiver of
Claims Under ADEA</font>.&#160;&#160;Employee acknowledges that he is waiving
and releasing any rights he may have under the Age Discrimination in Employment
Act of 1967 (&#8220;ADEA&#8221;) and that this waiver and release is knowing and
voluntary.&#160;&#160;Employee and the Company agree that this waiver and
release does not apply to any rights or claims that may arise under the ADEA
after the Effective Date of this Release.&#160;&#160;Employee acknowledges that
the consideration given for this waiver and release is in addition to anything
of value to which Employee was already entitled.&#160;&#160;Employee further
acknowledges that he has been advised by this writing that:</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he should
consult with an attorney prior to executing this Release;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he has up
to twenty-one (21) days within which to consider this Release;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he has
seven (7) days following his execution of this Release to revoke this
Release;</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">this ADEA
waiver shall not be effective until the revocation period has expired;
and,</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">nothing
in this Release prevents or precludes Employee from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs for doing so, unless
specifically authorized by federal law.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Unknown
Claims</font>.&#160;&#160;The Parties represent that they are not aware of any
claim by either of them other than the claims that are released by this
Release.&#160;&#160;Employee acknowledges that he has been advised by legal
counsel and is familiar with the principle that a general release does not
extend to claims which the releasor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him would have
materially affected his settlement with the releasee.&#160;&#160;Employee, being
aware of said principle, agrees to expressly waive any rights Employee may have
to that effect, as well as under any other statute or common law principles of
similar effect, to the fullest extent permitted by applicable law.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Application for
Employment</font>.&#160;&#160;Employee understands and agrees that, as a
condition of this Release, he shall not be entitled to any employment with the
Company, its subsidiaries, or any successor, and he hereby waives any alleged
right of employment or re-employment with the Company, its subsidiaries or
related companies, or any successor.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No
Cooperation</font>.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employee
agrees that he will not knowingly counsel or assist any attorneys or their
clients in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints by any third party against any of the
Releasees that relate to any of the matters for which he has provided a release
hereunder, unless under a subpoena or other court order to do
so.&#160;&#160;Employee agrees both to immediately notify the Company upon
receipt of any such subpoena or court order, and to furnish, within three (3)
business days of its receipt, a copy of such subpoena or court order to the
Company.&#160;&#160;If approached by anyone for counsel or assistance in the
presentation or prosecution of any such disputes, differences, grievances,
claims, charges, or complaints against any of the Releasees, Employee shall
state no more than that he cannot provide counsel or assistance.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;Notwithstanding any
language herein to the contrary, Employee understand that nothing in this
Release prohibits him from filing or pursuing a charge of discrimination with
the Equal Employment Opportunity Commission (EEOC) or a claim with the National
Labor Relations Board (NLRB); provided that, by signing this Release Employee
agree to waive and relinquish any personal monetary gain that otherwise would
result from such EEOC or NLRB Claim.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Costs</font>.&#160;&#160;The
Parties shall each bear their own costs, expert fees, attorney fees and other
fees incurred in connection with the preparation of this Release.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Arbitration</font>.&#160;&#160;The
Parties agree that any and all disputes arising out of, or relating to, the
terms of this Release, their interpretation, and any of the matters herein
released, shall be subject to binding arbitration as described in Section 16 of
the Change in Control Agreement (but as adjusted to cover disputes under this
Release).</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No
Representations</font>.&#160;&#160;Each Party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Release.&#160;&#160;Neither Party
has relied upon any representations or statements made by the other Party hereto
which are not specifically set forth in this Release.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
              <div id="FTR">
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                </div>
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                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                </div>
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                </div>
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              <div id="HDR">
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                </div>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No Oral
Modification</font>.&#160;&#160;Any modification or amendment of this Release,
or additional obligation assumed by either Party in connection with this
Release, shall be effective only if placed in writing and signed by both Parties
or their authorized representatives.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Entire
Agreement</font>.&#160;&#160;This Release, the Change in Control Agreement, the
Confidentiality Agreement and the Stock Agreements represent the entire
agreement and understanding between the Company and Employee concerning the
subject matter of this Release and Employee&#8217;s relationship with the Company, and
supersede and replace any and all prior agreements and understandings between
the Parties concerning the subject matter of this Release and Employee&#8217;s
relationship with the Company.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Governing
Law</font>.&#160;&#160;This Release shall be governed by the laws of the State
of North Carolina, without regard for choice of law provisions.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severability</font>.&#160;&#160;If
any provision of this Release is found to be unenforceable, it shall not affect
the enforceability of the remaining provisions, and the court shall enforce all
remaining provisions to the fullest extent permitted by law.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Effective
Date</font>.&#160;&#160;This Release will not become effective until the eighth
(8th) day after it has been signed by both Parties and then only if Executive
does not revoke it as permitted in Section 5(c) above (the &#8220;Effective
Date&#8221;).&#160;&#160;In order to revoke this Release, the Executive must deliver a
letter expressly stating that he is revoking this Release to the Company&#8217;s Vice
President, Administration, at 4600 Silicon Drive, Durham, North Carolina 27703
within seven (7) days after he signs this Release.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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Release</font>.&#160;&#160;This Release is executed voluntarily and with the
full intent of releasing all claims, and without any duress or undue influence
by any of the Parties.&#160;&#160;The Parties acknowledge that:</font></div>
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been represented in the preparation, negotiation, and execution of this Release
by legal counsel of their own choice or that they have voluntarily declined to
seek such counsel;</font></div>
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contains; and</font></div>
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the Company by a duly authorized officer, as of the day and year written
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<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>8
<FILENAME>exhibit10_7.htm
<DESCRIPTION>EXHIBIT 10.7
<TEXT>
<html>
  <head>
    <title>exhibit10_7.htm</title>
<!-- Licensed to: Cree, Inc.-->
<!-- Document Created using EDGARizer 4.0.6.1 -->
<!-- Copyright 1995 - 2008 EDGARfilings, Ltd., an IEC company. All rights reserved -->
</head>
    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
    <div>&#160;</div>
    <div>
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    <div style="TEXT-ALIGN: right"><font style="FONT-WEIGHT: bold">Exhibit
10.7</font><br>&#160;</div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cree,
Inc.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Severance
Plan for Section 16 Officers</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Plan
Document and Summary Plan Description</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
August 18, 2008</font></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This Plan
Document and Summary Plan Description (&#8220;Summary Plan Description&#8221;) is for all
employees of Cree, Inc. (&#8220;Cree&#8221; or the &#8220;Company&#8221;) who are eligible under the
terms of the Cree, Inc. Severance Plan for Section 16 Officers (the &#8220;Section 16
Plan&#8221;).&#160;&#160;All rights to participate in and receive benefits under the
Section 16 Plan are governed solely by the terms and conditions of this Summary
Plan Description.&#160;</font></div>
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    <div align="left">
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          <tr>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">I.</font></font></div>
            </td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">EFFECTIVE
      DATE</font></font></div>
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          </tr>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Section 16 Plan is effective as of August 18, 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
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          <tr>
            <td align="left" valign="top" width="2%">
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      PARTICIPATE</font></font></div>
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          </tr>
      </table>
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in the Section 16 Plan is restricted to active Cree employees who have been
designated by the Company, at its discretion and consistent with applicable law,
as being subject to the reporting requirements of Section&#160;16 of the
Securities Exchange Act of 1934, as amended (&#8220;Officers&#8221;).</font></div>
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Officer of the Company is eligible to receive benefits under this Section 16
Plan upon his/her Termination of Employment initiated by the Company without
Cause or initiated by the Officer for Good Reason, except in the event of
termination of his/her employment due to death or LTD Disability and except as
provided in Article VI below.&#160;&#160;Termination of employment initiated by
the Officer other than for Good Reason, or termination of employment due to
death or LTD Disability, will not entitle the Officer to any benefits under this
Section 16 Plan.&#160;&#160;The receipt of benefits under the Section 16 Plan
will be conditioned upon the Officer&#8217;s execution of and compliance with an
agreement substantially in the form attached as <font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit A</font>, but with
any appropriate modifications, reflecting changes in applicable law, as are
necessary or appropriate to provide the Company with the protection it would
have if the release were executed as of the effective date specified in Article
I (the &#8220;Release Agreement&#8221;) that includes, without limitation, (i) a release of
claims against the Company, its affiliates and representatives; and (ii) a
non-disparagement provision.&#160;No severance benefits will paid or provided
under the Section 16 Plan unless and until the Release Agreement is timely
executed and returned by the Officer to the Company, becomes effective and has
not been timely revoked in accordance with the terms hereof.&#160;&#160;The
Company will complete and provide to the Officer the release of claims in
sufficient time so that if the Officer timely executes </font></div>
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-</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and returns it, the
revocation period will expire before severance payments are required to commence
under Article IV.</font></div>
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provisions of this paragraph will control in the event of conflict between this
paragraph and any other language in this Section 16 Plan.&#160;&#160;If the
Officer becomes Generally Disabled, the Officer will not be entitled to
severance pursuant to this Section 16 Plan on account of the Company, in its
sole discretion, taking any action that would otherwise be considered Good
Reason hereunder provided that such action remains in effect only for so long as
the Officer remains Generally Disabled.&#160;&#160;If the Officer is Generally
Disabled for more than ninety-one (91) days (whether or not consecutive) in a
rolling twelve (12) month period, the Company will not be in breach of this
Agreement and the Officer will not be entitled to severance on account of the
Company permanently taking any action that would otherwise be considered Good
Reason hereunder so long as the Committee does not terminate the Officer&#8217;s
employment prior to the date that the Officer is determined to have an LTD
Disability.&#160;&#160;If the Officer is Generally Disabled and the Company
terminates his employment without Cause prior to the date that he is determined
to have an LTD Disability, such termination will be considered a Termination of
Employment by the Company without Cause for purposes of this Section 16
Plan.&#160;&#160;If the Officer ceases to be Generally Disabled before his
employment is terminated by reason of LTD Disability, subject to the notice and
cure provisions in Article V, paragraph C of this Section 16 Plan, the Officer
will have the right to terminate his employment for Good Reason on account of
any event or circumstances that occurred while the Officer was Generally
Disabled that would otherwise have constituted Good Reason except for the
provisions of this paragraph and such termination will be considered Termination
of Employment by the Officer for Good Reason for purposes of this Section 16
Plan, unless such event or circumstances has already been cured by the Company
or consented to by the Officer.&#160;&#160;</font></div>
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    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">IV.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">BENEFITS</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Officers
who are otherwise eligible to receive benefits under the Section 16 Plan will be
entitled to receive the following upon their execution and non-revocation (if
applicable) of the Release Agreement:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Severance
Amounts</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;In the case
of the Chief Executive Officer of the Company, eighteen (18) months of the
Officer&#8217;s annualized base salary as of the Termination Date, subject to all
applicable taxes and withholdings.&#160;&#160;In the case of all other Officers
who are eligible under this Section 16 Plan, twelve (12) months of the Officer&#8217;s
annualized base salary as of the Termination Date, subject to all applicable
taxes and withholdings.&#160;&#160;Except as provided in Article VII below, the
base salary provided above shall be paid in accordance with the Company&#8217;s
regular payroll schedule and practices for base salary, but commencing within
thirty (30) days following the Officer&#8217;s Termination of Employment with payments
retroactive to that date, and shall continue for the Salary Continuation Period
provided that the</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Officer
continues to comply with all terms and conditions of the Release Agreement
during such period.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;As to the
Chief Executive Officer, all incentive compensation amounts under the
performance units as to which the Chief Executive Officer was employed through
the end of the last day of the relevant performance period but that are not yet
paid as of the Termination Date, subject to all applicable taxes and
withholdings.&#160;&#160;In the case of all other Officers who are eligible
under this Section 16 Plan, all incentive compensation amounts under the Cree,
Inc. Management Incentive Compensation Plan (&#8220;MICP&#8221;) as to which the Officer was
employed through the end of the last day of the relevant performance period but
that are not yet paid as of the Termination Date, subject to all applicable
taxes and withholdings.&#160;&#160;The sole purpose of this Article IV,
paragraph A.2. is to negate the requirements under the MICP and performance
units that an Officer be employed on the date of payment in order to be eligible
for such payment.&#160;&#160;Only amounts to which the Officer is entitled on
account of satisfaction of the relevant performance measures for the relevant
performance period, determined in accordance with the terms of the MICP or
Notice of Grant of Performance Units, as applicable, will be paid hereunder. Any
incentive compensation amounts will be paid in accordance with the schedule set
forth in the MICP or Notice of Grant of Performance Units, as
applicable.&#160;&#160;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Medical, Dental &amp; Vision
Benefits</font>.&#160;&#160;In the case of the Chief Executive Officer of the
Company, a lump sum payment equal to eighteen (18) multiplied by the COBRA
premium applicable to the type of medical, dental and vision coverage in effect
for the Officer (e.g., family coverage vs. employee-only coverage) as of the
Termination Date, subject to all applicable taxes and
withholdings.&#160;&#160;In the case of all other Officers who are eligible
under this Section 16 Plan, a lump sum payment equal to twelve (12) multiplied
by the COBRA premium applicable to the type of medical, dental and vision
coverage in effect for the Officer (e.g., family coverage vs. employee-only
coverage) as of the Termination Date, subject to all applicable taxes and
withholdings.&#160;&#160;Such lump sum amounts will be paid within ninety (90)
days following the Severance Start Date, except as provided in Article VII
below.&#160;&#160;Receipt of this payment does not result in continuation of
coverage under the Company&#8217;s medical, dental, and vision plans (collectively
&#8220;Health Care Plans&#8221;) pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and the regulations thereunder (collectively
&#8220;COBRA&#8221;).&#160;&#160;The Officer must timely and properly elect to continue
coverage under the Health Care Plans in accordance with COBRA and timely remit
the required premiums to the Company or its designee whether or not the payment
provided for in this paragraph has been received.&#160;&#160;COBRA and the terms
and conditions of the applicable Health Care Plan documents shall govern any
continuation of coverage.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All other
compensation (including, without limitation, bonuses and commissions) and
employee benefits (including, without limitation, short-term and long-term
disability insurance, Paid Time Off accrual, and vesting of equity compensation)
will cease on the Officer&#8217;s Termination Date unless provided otherwise by the
Company in writing.&#160;&#160;All </font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">equity compensation grants
are subject to the terms and conditions of the applicable plan
document(s).&#160;&#160;Payments under the Section 16 Plan will not be subject
to 401(k) Plan or Employee Stock Purchase Plan deductions.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
an Officer will not be eligible for severance benefits hereunder in the event of
his/her Termination of Employment due to death or Disability, if an Officer is
otherwise eligible for benefits hereunder, such benefits will not cease if the
Officer dies or becomes disabled after a Termination of Employment initiated by
Cree without Cause or initiated by the Officer for Good Reason.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">V.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">DEFINITIONS</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Cause </font>&#8221; shall mean
(i)&#160;the Officer&#8217;s willful and continued failure to perform the duties and
responsibilities of his position that is not corrected after one written warning
detailing the concerns and offering the Officer a reasonable period of time to
cure; (ii)&#160;any material and willful violation of any federal or state law
by the Officer in connection with his responsibilities as an employee of the
Company; (iii) any act of personal dishonesty taken by the Officer in connection
with his responsibilities as an employee of the Company with the intention or
reasonable expectation that such may result in personal enrichment of the
Officer; (iv)&#160;the Officer&#8217;s conviction of, or plea of <font style="DISPLAY: inline; FONT-STYLE: italic">nolo contendere</font> to, or grant
of prayer of judgment continued with respect to, a felony that the Board
reasonably believes has had or will have a material detrimental effect on the
Company&#8217;s reputation or business; or (v)&#160;the Officer materially breaching
his/her Employee Agreement Regarding Confidential Information, Intellectual
Property and Noncompetition with the Company, which breach is (if capable of
cure) not cured within thirty (30) days after the Company delivers written
notice to the Officer of the breach.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Disability</font>&#8221; means that the
Officer is generally disabled for more than ninety-one (91) days (whether or not
consecutive) in a rolling twelve (12) month period.&#160;&#160;As used in this
paragraph, &#8220;generally disabled&#8221; means that the Officer is unable, with
reasonable accommodation, to perform the material and substantial duties of his
position due to illness or injury or physical or mental incapacity as determined
by the Committee consistent with its obligations to the Company&#8217;s
shareholders.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">C.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Good Reason</font>&#8221; means a
Termination of Employment initiated by the Officer within the time periods set
forth below following the initial existence of one or more of the following
conditions arising without consent of the Officer:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;a material
reduction of the Officer's authority, duties or responsibilities;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>a material
reduction in the Officer's base salary other than a one-time reduction that also
is applied to substantially all other Officers of the Company, provided that the
Officer's reduction is substantially proportionate to the reduction applied to
substantially all other Officers;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iii)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>the Company
requiring an Officer (other than the Chief Executive Officer) to report to
anyone other than the Chief Executive Officer (or an acting Chief Executive
Officer in the event of the Chief Executive Officer's absence), the Company's
Board of Directors, or a Committee of the Board, or, in the case of the Chief
Executive Officer, the Company requiring the Chief Executive Officer to report
to anyone other than the Company's Board of Directors; or&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iv)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>the Company
requiring the Officer to relocate his principal place of business or the Company
relocating its headquarters, in either case to a facility or location outside of
a thirty-five (35) mile radius from the Officer&#8217;s current principal place of
employment;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provided,
however, that the Officer will only have Good Reason if he provides notice to
the Chief Executive Officer (in the case of any Officer other than the Chief
Executive Officer) or the Board (in the case of the Chief Executive Officer) of
the existence of the event or circumstances constituting Good Reason specified
in any of the preceding clauses within ninety (90) days of the initial
occurrence of such event or circumstances and if such event or circumstances is
not cured within thirty (30) days after Executive gives such written
notice.&#160;&#160;If the Officer initiates Termination of Employment for Good
Reason, the actual Termination of Employment must occur within thirty (30) days
after expiration of the cure period.&#160;&#160;The Officer&#8217;s failure to timely
give notice of the occurrence of a specific event that would otherwise
constitute Good Reason will not constitute a waiver of the Executive&#8217;s right to
give notice of any new subsequent event that would constitute Good Reason that
occurs after such prior event (regardless of whether the new subsequent event is
of the same or different nature as the preceding event).&#160;&#160;The
Officer&#8217;s actions in writing (or by such other means as is reliable and
verifiable) approving any change, reduction, requirement or occurrence (that
otherwise may be considered Good Reason) in his role as an Officer will be
considered consent for the purposes of this Good Reason definition.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">D.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">LTD Disability</font>&#8221; means that
the Officer is &#8220;Partially Disabled&#8221; or &#8220;Total Disabled&#8221; within the meaning of
the Company&#8217;s current long-term disability plan (or such similar term or terms
in any long-term disability plan of the Company that replaces its current
long-term disability plan) and has satisfied the elimination period for benefits
eligibility under such plan.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">E.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Salary Continuation Period</font>&#8221;
means the period of time beginning on the date following the Officer&#8217;s Severance
Start Date and continuing for the number of months specified in Article IV,
paragraph A (1) of this Section 16 Plan.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Section 16 Plan
Administrator</font>&#8221; means the Compensation Committee of the Cree Board of
Directors (&#8220;Compensation Committee&#8221;).</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">G.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Severance Start Date</font>&#8221; means
the date on which the relevant Officer incurs a &#8220;separation from service&#8221; under
Section 409A(a)(2)(A)(i) of the Code.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
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    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">H.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Six-Month Delay Payment Date&#8221;
</font>means the payment date associated with the first regular payroll cycle
after passage of six months following the Severance Start Date.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160; &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Specified Employee&#8221;</font> will have
the meaning prescribed by Subsection 409A(a)(2)(B)(i) of the Internal Revenue
Code, as amended, as such meaning may be amended from time to time.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">J.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160; &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Specified Employee Identification
Date</font>&#8221; will have the meaning prescribed by Treasury Regulation
&#167;1.409A-1(i).</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">K.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;&#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Termination Date </font>&#8221; shall mean
the Officer&#8217;s last date of employment with Cree, Inc. or one of its
affiliates.&#160;&#160;As used in this paragraph, &#8220;affiliate&#8221; means an entity
which controls, is controlled by, or is under common control with Cree, where
&#8220;control&#8221; means ownership of a majority of the outstanding capital stock or
other voting equity interests of the controlled entity.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">L.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-STYLE: italic">&#8220;Termination of Employment&#8221;
</font>will have the meaning as prescribed by Treasury Regulation &#167;
1.409A-1(h)(1)(ii), as such meaning may be amended from time to
time.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">VI.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">IMPACT OF SEPARATE
      CHANGE IN CONTROL AGREEMENT</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
Section 16 Plan shall not apply to an Officer if he or she becomes entitled to
the payment of severance benefits upon his or her employment termination in
connection with a change in control of the Company pursuant to a separate
agreement with the Company.&#160;&#160;In other words, the Company will pay
severance benefits to an Officer only once:&#160;&#160;either under this Section
16 Plan or, if applicable, under a separate agreement with the Company providing
for severance benefits in a change in control context.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">VII.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">INTERNAL REVENUE CODE
      SECTION 409A</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
purposes of Section 409A with respect to all Officers other than the Chief
Executive Officer, each installment payment of severance specified in Article
IV, paragraphs A.1. and B. above is a separate payment; all payments specified
in Article IV, paragraphs A.1. and B. above made through the date that is 2-&#189;
months following the later of the last day of the calendar year containing the
Severance Start Date and the last day of the Company&#8217;s fiscal year containing
the Severance Start Date (the &#8220;Short-Term Deferral Deadline&#8221;) are intended to be
exempt from Section 409A under the short-term deferral rule;&#160;&#160;all such
payments made after the Short Term Deferral Deadline are intended to be exempt
from Section 409A under the severance pay exemption specified in Treasury
Regulation &#167;1.409A- 1(b)(9)(iii) (the &#8220;Severance Pay Exemption&#8221;); all payments
made after the Short Term Deferral Deadline, that exceed the limits of the
Severance Pay Exemption, that would be paid earlier than the Six-Month Delay
Payment Date and that are paid to an Officer who is a Specified Employee on his
or her Severance Start Date will be delayed until the Six-Month Delay Payment
Date to the extent required to satisfy Subsection 409A(a)(2)(B)(i) of the Code;
on that date, the Company will pay the Officer</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 6
-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a lump sum consisting of
all payments that would have been paid to the Officer prior to the Six-Month
Delay Payment Date had the Officer not been a Specified Employee, increased for
interest at the short-term Federal rate in effect on the Termination Date for
the period beginning on the date each component of such lump sum would have been
paid had the Officer not been a Specified Employee and ending on the Six-Month
Delay Payment Date; however, if the Officer dies after his or her Severance
Start Date but before such lump sum payment is made, it will be paid to the
Officer&#8217;s estate without regard to any six-month delay that otherwise applies to
Specified Employees.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
purposes of Section 409A with respect to the Chief Executive Officer, if the
Chief Executive Office is a Specified Employee on his Severance Start Date, the
payments specified in Article IV, paragraphs A.1. and B. above will be delayed
until the Six-Month Delay Payment Date to the extent required to satisfy
Subsection 409A(a)(2)(B)(i) of the Code; on that date, the Company will pay the
Chief Executive Officer a lump sum consisting of all payments that would have
been paid to him prior to the Six-Month Delay Payment Date had he not been a
Specified Employee, increased for interest at the short-term Federal rate in
effect on the Termination Date for the period beginning on the date each
component of such lump sum would have been paid had he not been a Specified
Employee and ending on the Six-Month Delay Payment Date; however, if the Chief
Executive Officer dies after his Severance Start Date but before such lump sum
payment is made, it will be paid to the Chief Executive Officer&#8217;s estate without
regard to any six-month delay that otherwise applies to Specified
Employees.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
Officer&#160;acknowledges and agrees that the Company has made no
representations as to the tax treatment of the compensation and benefits that
may be received by such Officer pursuant to&#160;this Section 16 Plan.<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-FAMILY: Times New Roman">&#160;</font>This
Section 16 Plan is designed with the intent that all payments hereunder shall
either be exempt from or in compliance with Section 409A.&#160;&#160;Nothing in
this Section 16 Plan shall require payment in 2008 of any payment that was
required to be paid after 2008 under the any agreement or arrangement with an
Officer that is deemed to be amended by this Section 16 Plan; in addition,
except as may be required to observe the six-month delay applicable to Specified
Employees under Subsection 409A(a)(2)(B)(i), nothing in this Section 16 Plan
shall postpone beyond 2008 any payment that was required to be paid in 2008
pursuant to any agreement or arrangement with an Officer that is deemed to be
amended by this Section 16 Plan.&#160;&#160;The parties agree to work together
to effectuate the intent of this provision, including but not limited to
revising the timing and/or form of any payment hereunder as may be permitted by
and necessary to ensure the terms and conditions applicable to such payments
comply with Section 409A.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">VIII.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">FUNDING</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Benefits
provided pursuant to the Section 16 Plan shall be paid solely out of the
Company&#8217;s general assets.&#160;&#160;Cree shall not be required to fund or
otherwise provide for the payment of benefits provided hereunder in any other
manner.&#160;&#160;An Officer entitled to benefits under the Section 16 Plan has
no rights other than as an unsecured general creditor of the
Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
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-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">IX.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">CLAIMS AND REVIEW
      PROCEDURES</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If an
Officer believes that he/she is entitled to a benefit under the Section 16 Plan,
or to a benefit in an amount greater than he/she has received, the Officer may
file a claim by writing to the Section 16 Plan Administrator.&#160;&#160;The
Section 16 Plan Administrator is the named fiduciary that has the discretionary
power and authority to act with respect to any appeal from a denial of a claim
for benefits under the Section 16 Plan by performing a full and fair review of
the denial, and such actions shall be final and binding on all persons. Benefits
under the Section 16 Plan shall be payable only if the Section 16 Plan
Administrator determines, in its sole discretion, that an eligible Officer is
entitled to them. Any claim must be filed no later than forty-five (45) days
after the Officer&#8217;s Termination Date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Initial Claim</font>. The
Section 16 Plan Administrator will notify the Officer in writing within ninety
(90) days (or 180 days if special circumstances require an extension of time for
processing the claim) of receipt of the claim as to whether the claim is granted
or denied. Note that if an extension is necessary, the Section 16 Plan
Administrator will provide the Officer with written notice of the extension
(including the circumstances requiring extension and date by which a decision is
expected to be rendered) before the initial ninety (90) day period expires. If
the claim is denied, the Officer will be given (1) specific reasons for the
denial, (2) specific reference to the Section 16 Plan provision(s) on which the
denial is based, (3) a description of any information or material necessary to
support the claim and an explanation of why such information or material is
necessary, (4)&#160;an explanation of the Section 16 Plan&#8217;s claim appeal
procedure (including a statement of the Officer&#8217;s right to bring a civil action
under the Employee Retirement Income Security Act of 1974 (&#8220;ERISA&#8221;) following a
denial of the claim upon appeal), and (5)&#160;a statement that the Officer is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of all documents, records or other information relevant (as defined by
Department of Labor regulation section 2560.503-1(m)) to the claim.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Appeals</font>.&#160;&#160;If
the claim is denied, the Officer has sixty (60) days after receipt of notice of
the denial to file a written appeal with the Section 16 Plan Administrator.
During the review process, the Officer has the right to submit written comments,
documents, records, and other information relating to the claim for benefits,
which will be considered without regard to whether such items were considered in
the initial benefit determination. Also, the Officer may, upon request and free
of charge, have reasonable access to, and copies of, all documents, records and
other information relevant (as defined by Department of Labor regulation section
2560.503-1(m)) to the claim for benefits.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Section 16 Plan Administrator will notify the Officer in writing within sixty
(60) days (or 120 days if special circumstances require an extension of time for
processing the appeal) of receipt of the appeal as to its decision on review. If
the Section 16 Plan Administrator determines that an extension is necessary, the
Section 16 Plan Administrator will provide the Officer with written notice
(including the circumstances</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
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-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">requiring
the extension and date by which a decision is expected to be rendered) before
the initial sixty (60) day period expires.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If the
Section 16 Plan Administrator denies the appeal, it will provide a written
denial of the claim upon appeal. The written denial shall include the specific
reason or reasons for the denial, specific references to the Section 16 Plan
provisions on which the denial is based, a statement that the Officer is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of all documents, records or other information relevant (as defined in
Department of Labor regulation section 2560.503-1(m)) to the claim, and a
statement of the Officer&#8217;s right to bring an action under Section 502(a) of
ERISA.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
determinations, interpretations, rules, and decisions of the Section 16 Plan
Administrator or its delegate shall be conclusive and binding upon all persons
having or claiming to have any interest or right under the Section 16 Plan and
shall be given deference in any judicial or other proceeding.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">C.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhaustion of Claims
Procedures</font>. In no event shall an Officer or any other person be entitled
to challenge a decision of the Section 16 Plan Administrator in court or in any
other administrative proceeding unless and until the claim and appeal procedures
described above have been fully complied with and exhausted.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">D.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Limitation on
Actions</font>.&#160;&#160;Any claim or action that is filed in court or any
other tribunal against or with respect to the Section 16 Plan, the Section 16
Plan Administrator and/or the Committee with respect to this Section 16 Plan
must be brought within 180 days following the relevant Officer&#8217;s Termination
Date.&#160;&#160;Any claim or action brought after this timeframe will be
void.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">X.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">ADMINISTRATION</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Section 16 Plan Administrator is the &#8220;administrator&#8221; of the Section 16 Plan
within the meaning of Section 3(16)(A) of ERISA and the &#8220;named fiduciary&#8221; of the
Section 16 Plan under Section 402 of ERISA.&#160;&#160;The Section 16 Plan
Administrator is exclusively authorized to interpret the provisions of this Plan
Document and Summary Plan Description. The Section 16 Plan Administrator&#8217;s
interpretation and/or application of any term or provision of the Section 16
Plan shall be final and binding. The Section 16 Plan Administrator shall have
full and unfettered authority and responsibility for administration of the
Section 16 Plan, including the discretionary authority to determine eligibility
for benefits and amounts of benefit entitlements and to interpret the terms of
the Section 16 Plan.&#160;&#160;The discretionary authority referred to above is
intended to be absolute, and in any case where the extent of this discretion is
in question, the Section 16 Plan Administrator is to be accorded the maximum
discretion possible.&#160;&#160;Any exercise of this discretionary authority
shall be reviewed by a court or other tribunal under the arbitrary and
capricious standard (i.e., the abuse of discretion standard).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 9
-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">XI.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">AMENDMENT AND
      TERMINATION</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subject
to this paragraph and Article XV below, the Company reserves the right at its
discretion to amend or terminate this Section 16 Plan at any time, with or
without notice; provided that, the Company will notify the Officers within ten
(10) days if this Section 16 Plan is terminated or an amendment is approved that
adversely affects an Officer&#8217;s rights or benefits under this Section 16
Plan.&#160;&#160;Any amendment must be in writing and made by a resolution
adopted by the Board of Directors of the Company or the Compensation Committee
of the Board of Directors of the Company or by any other applicable document
executed by a person or persons duly authorized by the Board of Directors of the
Company or the Compensation Committee of the Board of Directors of the Company
to take such actions.&#160;&#160;Any amendment or termination of the Section 16
Plan will be limited so that a violation of Section 409A does not occur on
account of the amendment or termination.&#160;&#160;Notwithstanding the
foregoing, if an Officer experiences a Termination of Employment initiated by
the Company without Cause or initiated by the Officer for Good Reason while this
Section 16 Plan is in effect, no subsequent amendment or termination of this
Section 16 Plan may alter his/her right to receive the severance benefits
provided under the Section 16 Plan in effect as of his/her Termination
Date.&#160;&#160;&#160;In any event, if an Officer experiences a Termination of
Employment initiated by the Company without Cause or initiated by the Officer
for Good Reason within ninety (90) days after (i) termination of this Section 16
Plan, or&#160;&#160;(ii) an amendment that adversely affects Officer&#8217;s rights or
benefits under this Section 16 Plan, the determination of the Officer&#8217;s
eligibility for and amount of benefits on account of such Termination of
Employment will be determined by reference to the form of this Section 16 Plan
in effect immediately prior to such termination or amendment.&#160;&#160;If a
material change to the Section 16 Plan is adopted by a party other than the
Compensation Committee of the Board of Directors of the Company, the
Compensation Committee of the Board of Directors of the Company must approve
such change before it shall become effective.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
&#160;</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">XII.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">ENTIRE PLAN;
      AMENDMENTS</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This Plan
Document and Summary Plan Description contains all the terms, conditions and
benefits relating to the Section 16 Plan.&#160;&#160;No employee, officer, or
director of the Company has the authority to alter, vary or modify the terms of
the Section 16 Plan, other than by means of an authorized written amendment to
the Section 16 Plan approved by the Section 16 Plan Administrator.&#160;&#160;No
oral or written representations contrary to the terms of the Section 16 Plan and
its written amendments shall be binding upon the Section 16 Plan, the Section 16
Plan Administrator or the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">XIII.</font></font></div>
            </td>
            <td align="left" valign="top" width="2%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">NO CONTRACT OF
      EMPLOYMENT</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nothing
herein is intended to or shall be considered a contract of employment or for any
period of employment or a guarantee of future employment with the Company or to
limit </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 10
-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">in any
way the right of the Company to terminate an Officer at any time and for any
reason.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">XIV.</font></font></div>
            </td>
            <td align="left" valign="top" width="2%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">ASSIGNMENT OF RIGHTS
      AND OBLIGATIONS</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
eligible Officer shall have the right to assign, delegate or otherwise transfer,
either in full or in part, any of his/her rights or obligations under the
Section 16 Plan, and any such assignment, delegation or other such transfer
shall be void.&#160;&#160;Notwithstanding the foregoing, if an Officer dies
after experiencing an Termination of Employment initiated by the Company without
Cause or initiated by the Officer for Good Reason but prior to receipt of the
final severance benefit provided for herein, any remaining payments will be made
to the Officer&#8217;s estate, subject to applicable withholdings.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">XV.</font></font></div>
            </td>
            <td align="left" valign="top" width="3%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">APPLICABLE LAW;
      VENUE</font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Except
where preempted by ERISA, the Section 16 Plan shall be construed in accordance
with, and all disputes hereunder shall be governed by, the laws of the State of
North Carolina without regard to its conflict of laws rules. All legal actions
arising under or relating to the Section 16 Plan shall be subject to the
jurisdiction and venue of the United States District Court for the Middle
District of North Carolina sitting in Greensboro, North Carolina.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">XVI.</font></font></div>
            </td>
            <td align="left" valign="top" width="2%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="95%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0"><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">ERISA
      RIGHTS</font></font></font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Information
Required By ERISA:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Plan
Name</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cree,
Inc. Severance Plan for Section 16 Officers</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Plan
Sponsor</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cree,
Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4600
Silicon Drive</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Durham,
NC 27703</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(919)
313-5300</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Plan
Administrator</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Compensation Committee of the Company&#8217;s Board of Directors is the Section 16
Plan Administrator.&#160;&#160;Communications with the Section 16 Plan
Administrator must be in writing and addressed to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Vice
President, Administration</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cree,
Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4600
Silicon Drive</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Durham,
NC 27703</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">- 11
-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Type of
Plan</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Section 16 Plan is a welfare plan providing for severance benefits.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Employer Identification
Number</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cree&#8217;s
Employer Identification Number is 56-1572719.&#160;&#160;When writing about the
Section 16 Plan, an Officer should include this number.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Plan
Number</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the
purpose of identification, Cree has assigned the Section 16 Plan the number 511.
All communications concerning the Section 16 Plan should include this reference
number.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Plan
Year</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Section 16 Plan records are kept on a calendar year basis.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Service of Legal
Process</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Service
of legal process may be made on the Section 16 Plan Administrator at the address
above.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Statement of ERISA
Rights</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If you
are an eligible Officer who is a participant in the Section 16 Plan, you are
entitled to certain rights and protections under ERISA.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Receive Information About
Your Plan and Benefits</font>.<font style="DISPLAY: inline; FONT-STYLE: italic">&#160;</font>ERISA provides that you
are entitled to:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Examine,
without charge, at the office of the Section 16 Plan Administrator or its
delegate all Section 16 Plan documents and a copy of the latest annual report
(Form 5500 series) available at the Public Disclosure Room of the Employee
Benefits Security Administration, if such report is required to be filed by the
Section 16 Plan with the U.S. Department of Labor.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Obtain
copies of all documents governing the operation of the Section 16 Plan,
including copies of the latest annual report (Form 5500 series), if any, and
updated summary plan description, upon written request to the Section 16 Plan
Administrator. The Section 16 Plan Administrator may impose a reasonable charge
for the copies.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Receive a
summary of the Section 16 Plan&#8217;s financial report, if any. The Section 16 Plan
Administrator may be required by law to furnish each participant with a copy of
the summary annual report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Prudent Actions By
Fiduciaries</font>. In addition to creating rights for the Section 16 Plan
participants, ERISA imposes duties upon the people who are responsible for the
operation of the Section 16 Plan. The people who operate the Section 16 Plan,
called &#8220;fiduciaries&#8221; of the Section 16 Plan, have a duty to do so prudently and
in the interest of </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
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-</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">you and
other Section 16 Plan participants and beneficiaries.&#160;&#160;&#160;No one,
including your employer or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a welfare
benefit or exercising your rights under ERISA.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">C.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Enforce Your
Rights</font>.&#160;&#160;If your claim for a welfare benefit is denied or
ignored, in whole or in part, you have a right to know why this was done, to
obtain copies of documents relating to the decision without charge, and to
appeal any denial, all within certain time schedules.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
ERISA, there are steps you can take to enforce the above rights. For instance,
if you request a copy of plan documents or the latest annual report (if any)
from the Section 16 Plan and do not receive them within thirty (30) days, you
may file suit in a federal court. In such case, the court may require the
Section 16 Plan Administrator to provide the materials and pay you up to $110 a
day until you receive the materials, unless the materials were not sent because
of reasons beyond the control of the Section 16 Plan Administrator.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If you
have a claim for a benefit that is denied or ignored, in whole or in part, you
may file suit in a state or federal court.&#160;&#160;If it should happen that
Section 16 Plan fiduciaries misuse the Section 16 Plan&#8217;s money, or if you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor or you may file suit in a federal
court.&#160;&#160;The court will decide who should pay court costs and legal
fees.&#160;&#160;If you are successful, the court may order the person you have
sued to pay these costs and fees.&#160;&#160;If you lose, the court may order
you to pay these costs and fees, for example, if it finds your claim is
frivolous.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">D.<font id="TAB2" style="LETTER-SPACING: 8pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Assistance With Your
Questions</font>.&#160;&#160;If you have questions about the Section 16 Plan,
you should contact the Section 16 Plan Administrator in care of the Vice
President, Administration, of the Company.&#160;&#160;If you have questions
about the statements made in this summary or your rights under ERISA, or if you
need assistance in obtaining documents from the Section 16 Plan Administrator,
you should contact the nearest office of the Employee Benefits Security
Administration, U.S. Department of Labor, listed in your telephone directory, or
the Division of Technical Assistance and Inquiries, Employee Benefits Security
Administration, U.S. Department of Labor, 200 Constitution Avenue, Washington,
D.C. 20210.&#160;&#160;You may also obtain certain publications about your
rights and responsibilities under ERISA by calling the publications hotline of
the Employee Benefits Security Administration.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div><br></div>
    <div>
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</font></div>
        </div>
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</font></div>
        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="justify"><font style="FONT-WEIGHT: bold; TEXT-DECORATION: underline">EXHIBIT A</font><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 2.5; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">GENERAL
<font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RELEA</font>SE</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="justify">
          <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; TEXT-DECORATION: underline">RE<font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CITA</font>LS</font></font></div>
        </div>
      </div>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
General Release (this &#8220;Release&#8221;) is made by and between ______________
(&#8220;Employee&#8221;) and Cree, Inc. (the &#8220;Company&#8221;) (jointly referred to as the
&#8220;Parties&#8221;):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Company and Employee entered into an Executive Change in Control Agreement
dated [_______] (the &#8220;Change in Control Agreement&#8221;);</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Employee is a participant in the Company&#8217;s Severance Plan for Section 16
Officers adopted on August 18, 2008 (the &#8220;Severance Plan&#8221;);</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Company and Employee entered into an Employee Agreement Regarding
Confidential Information, Intellectual Property, and Noncompetition (the
&#8220;Confidentiality Agreement&#8221;);</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Company and Employee entered into [DESCRIBE EQUITY AWARD AGREEMENTS: a Stock
Option Agreement dated [____] granting Employee the option to purchase shares of
the Company&#8217;s common stock subject to the terms and conditions of the Company&#8217;s
[Stock Option Plan] and the Stock Option Agreement (collectively, the &#8220;Stock
Agreements&#8221;)];</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
Employee&#8217;s employment with the Company terminated on [<font style="DISPLAY: inline; FONT-WEIGHT: bold">DATE</font>] (the &#8220;Termination
Date&#8221;); and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WHEREAS,
the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions and demands that the Employee may have
against the Company as defined herein, including, but not limited to, any and
all claims arising out of, or related to, Employee&#8217;s employment with, or
separation from, the Company;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOW
THEREFORE, in consideration of the promises made herein, the Parties hereby
agree as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">COVENANTS</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Consideration</font>.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to Article III of the Severance Plan , Employee&#8217;s receipt of severance pursuant
to Article IV of the Severance Plan is subject to Employee executing and not
revoking this Release.&#160;&#160;In consideration of Employee executing and not
revoking this Release, and subject to the terms and conditions of the Severance
Plan, the Company agrees to pay (or provide, as applicable) Employee the amounts
and benefits specified in Article IV of the Severance Plan.&#160;&#160;Such
severance benefits will be paid or provided at the times and in the manner set
forth in the Severance Plan.&#160;&#160;Employee acknowledges that he will not
be entitled to any other compensation or benefits, except as provided in Section
7 of the Change in Control Agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Stock</font>.&#160;&#160;Employee
acknowledges that as of the Termination Date, he will have vested in [______]
options and no more.&#160;&#160;The exercise of any stock options shall continue
to be subject to the terms and conditions of the Stock Agreements and Section 19
of the Change in Control Agreement. [Delete Section 19 cross-reference if not
applicable]</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Benefits</font>.&#160;&#160;<font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">Employee&#8217;s</font> group
health benefits will cease on <font style="DISPLAY: inline; FONT-WEIGHT: bold">[DATE]</font>, subject to Employee&#8217;s
right to continue his group health benefits under COBRA.&#160;&#160;Employee&#8217;s
participation in all other benefits and incidents of employment (including, but
not limited to, the accrual of vacation and paid time off, and the vesting of
stock options) ceased on the Termination Date.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Payment of
Salary</font>.&#160;&#160;Subject to Section 7 of the Change in Control
Agreement and Section 1 above, Employee acknowledges and represents that
Employee is not entitled to any additional salary, wages, bonuses, accrued
vacation, housing allowances, relocation costs, interest, severance, stock,
stock options, outplacement costs, fees, commissions or any other benefits and
compensation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Confidential
Information</font>.&#160;&#160;Employee shall continue to comply with the terms
and conditions of the Confidentiality Agreement and maintain the confidentiality
of all of the Company&#8217;s confidential and proprietary
information.&#160;&#160;Employee also shall return to the Company all of the
Company&#8217;s property, including all confidential and proprietary information, and
all documents and information that Employee obtained in connection with his
employment with the Company, on or before the Effective Date of this
Release.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Release of
Claims</font>.&#160;&#160;Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Employee by
the Company.&#160;&#160;To the fullest extent permitted by applicable law,
Employee, on his own behalf and on behalf of his respective heirs, family
members, executors, agents, and assigns, hereby fully and forever releases the
Company and its current and former: officers, directors, employees, agents,
investors, attorneys, shareholders, administrators, affiliates, divisions,
subsidiaries, predecessor and successor corpora&#173;tions and assigns (the
&#8220;Releasees&#8221;) from, and agrees not to sue concerning, any claim, duty, obligation
or cause of action relating to any matters of any kind arising out of or
relating to his employment by the Company (except as provided in Section 7 of
the Change in Control Agreement), or his service as an officer of the Company
and/or a director of the Company, whether presently known or unknown, suspected
or unsuspected, that Employee may possess arising from any omissions, acts or
facts that have occurred up until and including the Effective Date of this
Release including, without limitation:</font></div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims relating to or arising from Employee&#8217;s employment with the Company,
or the termination of that employment;</font></div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims relating to, or arising from, Employee&#8217;s right to purchase, or actual
purchase of, shares of Company stock, including, but not limited to, any claims
for fraud, misrepresentation, breach of fiduciary duty, breach of duty under
applicable state corporate law, and securities fraud under any state or federal
law;</font></div>
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    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims under the law of any jurisdiction, including, but not limited to,
wrongful discharge of employment; constructive discharge from employment;
termination in </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">violation of public
policy; discrimination; breach of contract, both express and implied; breach of
a covenant of good faith and fair dealing, both express and implied; promissory
estoppel; negligent or intentional infliction of emotional distress; negligent
or intentional misrepresentation; negligent or intentional interference with
contract or prospective economic advantage; unfair business practices;
defamation; libel; slander; negligence; personal injury; assault; battery;
invasion of privacy; false imprisonment; and conversion;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for violation of any federal, state or municipal statute, including,
but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act of 1967; the Americans
with Disabilities Act of 1990; the Fair Labor Standards Act; the Employee
Retirement Income Security Act of 1974; the Worker Adjustment and Retraining
Notification Act; the Older Workers Benefit Protection Act; the Family and
Medical Leave Act; the Fair Credit Reporting Act; the North Carolina Equal
Employment Practices Act; and North Carolina law;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for violation of the federal, or any state,
constitution;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims arising out of any other laws and regulations relating to employment
or employment discrimination;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(g)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any claim
for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by
Employee as a result of this Release; and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(h)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">any and
all claims for attorney fees and costs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">[Include if Officer is 40 or
more years old] Acknowledgement of Waiver of Claims Under
ADEA</font>.&#160;&#160;Employee acknowledges that he is waiving and releasing
any rights he may have under the Age Discrimination in Employment Act of 1967
(&#8220;ADEA&#8221;) and that this waiver and release is knowing and
voluntary.&#160;&#160;Employee and the Company agree that this waiver and
release does not apply to any rights or claims that may arise under the ADEA
after the Effective Date of this Release.&#160;&#160;Employee acknowledges that
the consideration given for this waiver and release is in addition to anything
of value to which Employee was already entitled.&#160;&#160;Employee further
acknowledges that he has been advised by this writing that:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he should
consult with an attorney prior to executing this Release;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he has up
to twenty-one (21) days within which to consider this Release;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he has
seven (7) days following his execution of this Release to revoke this
Release;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">this ADEA
waiver shall not be effective until the revocation period has expired;
and,</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">nothing
in this Release prevents or precludes Employee from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">impose
any condition precedent, penalties or costs for doing so, unless specifically
authorized by federal law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Unknown
Claims</font>.&#160;&#160;The Parties represent that they are not aware of any
claim by either of them other than the claims that are released by this
Release.&#160;&#160;Employee acknowledges that he has been advised by legal
counsel and is familiar with the principle that a general release does not
extend to claims which the releasor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him would have
materially affected his settlement with the releasee.&#160;&#160;Employee, being
aware of said principle, agrees to expressly waive any rights Employee may have
to that effect, as well as under any other statute or common law principles of
similar effect, to the fullest extent permitted by applicable law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Application for
Employment</font>.&#160;&#160;Employee understands and agrees that, as a
condition of this Release, he shall not be entitled to any employment with the
Company, its subsidiaries, or any successor, and he hereby waives any alleged
right of employment or re-employment with the Company, its subsidiaries or
related companies, or any successor.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No
Cooperation</font>.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employee
agrees that he will not knowingly counsel or assist any attorneys or their
clients in the presentation or prosecution of any disputes, differences,
grievances, claims, charges, or complaints by any third party against any of the
Releasees that relate to any of the matters for which he has provided a release
hereunder, unless under a subpoena or other court order to do
so.&#160;&#160;Employee agrees both to immediately notify the Company upon
receipt of any such subpoena or court order, and to furnish, within three (3)
business days of its receipt, a copy of such subpoena or court order to the
Company.&#160;&#160;If approached by anyone for counsel or assistance in the
presentation or prosecution of any such disputes, differences, grievances,
claims, charges, or complaints against any of the Releasees, Employee shall
state no more than that he cannot provide counsel or assistance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;Notwithstanding any
language herein to the contrary, Employee understand that nothing in this
Release prohibits him from filing or pursuing a charge of discrimination with
the Equal Employment Opportunity Commission (EEOC) or a claim with the National
Labor Relations Board (NLRB); provided that, by signing this Release Employee
agree to waive and relinquish any personal monetary gain that otherwise would
result from such EEOC or NLRB Claim.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Costs</font>.&#160;&#160;The
Parties shall each bear their own costs, expert fees, attorney fees and other
fees incurred in connection with the preparation of this Release.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Arbitration</font>.&#160;&#160;The
Parties agree that any and all disputes arising out of, or relating to, the
terms of this Release, their interpretation, and any of the matters herein
released, shall be subject to binding arbitration as described in Section 17
[change to Section 16 as applicable] of the Change in Control Agreement (but as
adjusted to cover disputes under this Release).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No
Representations</font>.&#160;&#160;Each Party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Release.&#160;&#160;Neither
Party has relied upon any representations or statements made by the other Party
hereto which are not specifically set forth in this Release.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">No Oral
Modification</font>.&#160;&#160;Any modification or amendment of this Release,
or additional obligation assumed by either Party in connection with this
Release, shall be effective only if placed in writing and signed by both Parties
or their authorized representatives.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Entire
Agreement</font>.&#160;&#160;This Release, the Change in Control Agreement, the
Confidentiality Agreement and the Stock Agreements represent the entire
agreement and understanding between the Company and Employee concerning the
subject matter of this Release and Employee&#8217;s relationship with the Company, and
supersede and replace any and all prior agreements and understandings between
the Parties concerning the subject matter of this Release and Employee&#8217;s
relationship with the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Governing
Law</font>.&#160;&#160;This Release shall be governed by the laws of the State
of North Carolina, without regard for choice of law provisions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Severability</font>.&#160;&#160;If
any provision of this Release is found to be unenforceable, it shall not affect
the enforceability of the remaining provisions, and the court shall enforce all
remaining provisions to the fullest extent permitted by law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16.<font id="TAB2" style="LETTER-SPACING: 4pt">&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Effective
Date</font>.&#160;&#160;This Release will not become effective until the eighth
(8th) day after it has been signed by both Parties and then only if Executive
does not revoke it as permitted in Section 5(c) above (the &#8220;Effective
Date&#8221;).&#160;&#160;In order to revoke this Release, the Executive must deliver a
letter expressly stating that he is revoking this Release to the Company&#8217;s Vice
President, Administration, at 4600 Silicon Drive, Durham, North Carolina 27703
within seven (7) days after he signs this Release.</font></div>
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end
</TEXT>
</DOCUMENT>
</SUBMISSION>
