<SEC-DOCUMENT>0000895419-13-000078.txt : 20131031
<SEC-HEADER>0000895419-13-000078.hdr.sgml : 20131031
<ACCEPTANCE-DATETIME>20131031161022
ACCESSION NUMBER:		0000895419-13-000078
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20131028
ITEM INFORMATION:		Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20131031
DATE AS OF CHANGE:		20131031

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CREE INC
		CENTRAL INDEX KEY:			0000895419
		STANDARD INDUSTRIAL CLASSIFICATION:	SEMICONDUCTORS & RELATED DEVICES [3674]
		IRS NUMBER:				561572719
		STATE OF INCORPORATION:			NC
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-21154
		FILM NUMBER:		131182844

	BUSINESS ADDRESS:	
		STREET 1:		4600 SILICON DR
		CITY:			DURHAM
		STATE:			NC
		ZIP:			27703
		BUSINESS PHONE:		9194075300

	MAIL ADDRESS:	
		STREET 1:		4600 SILICON DR
		CITY:			DURHAM
		STATE:			NC
		ZIP:			27703-8475

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CREE RESEARCH INC /NC/
		DATE OF NAME CHANGE:	19940224
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form8k103113.htm
<DESCRIPTION>FORM 8-K OCT 31 2013
<TEXT>
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<a name="s21fc4ac6667d438bb478901a3f9da474"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:center;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:91.40625%;border-collapse:collapse;text-align:left;"><tr><td colspan="5"></td></tr><tr><td width="20%"></td><td width="20%"></td><td width="20%"></td><td width="20%"></td><td width="20%"></td></tr><tr><td colspan="5" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;border-top:3px double #000000;"><div style="overflow:hidden;height:20px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">UNITED STATES</font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">SECURITIES AND EXCHANGE COMMISSION</font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Washington, D.C. 20549</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:18pt;"><font style="font-family:inherit;font-size:18pt;font-weight:bold;">FORM 8-K</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">CURRENT REPORT </font></div><div style="line-height:120%;padding-top:16px;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Date of Report (Date of Earliest Event Reported): October 28, 2013</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:18pt;"><font style="font-family:inherit;font-size:18pt;font-weight:bold;">CREE, INC.</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">(Exact name of registrant as specified in its charter)</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:11pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:86.71875%;border-collapse:collapse;text-align:left;"><tr><td colspan="3"></td></tr><tr><td width="34%"></td><td width="33%"></td><td width="33%"></td></tr><tr><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">North Carolina</font></div></td><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">0-21154</font></div></td><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">56-1572719</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">(State or other jurisdiction of</font></div><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">incorporation)</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">(Commission File </font></div><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Number)</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">(I.R.S. Employer</font></div><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Identification Number)</font></div></td></tr></table></div></div><div style="line-height:120%;padding-top:16px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:11pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:85.9375%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="50%"></td><td width="50%"></td></tr><tr><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">4600 Silicon Drive</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">Durham, North Carolina</font></div></td><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;font-weight:bold;">27703</font></div></td></tr><tr><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">(Address of principal executive offices)</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">(Zip Code)</font></div><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></td></tr></table></div></div><div style="line-height:120%;padding-top:16px;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">(919) 407-5300 </font></div><div style="line-height:120%;padding-top:9px;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Registrant&#8217;s telephone number, including area code</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">N/A</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">(Former name or former address, if changed since last report)</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">[ ]&#160;&#160;&#160;&#160;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">[ ]&#160;&#160;&#160;&#160;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">[ ]&#160;&#160;&#160;&#160;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">[ ]&#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><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160;</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br><div></div><hr style="page-break-after:always"><a name="sf5ab5020337c459e80764fb60aae5a0b"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Item 5.02&#160;&#160;&#160;&#160;Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Severance Plan for Section 16 Officers</font><font style="font-family:inherit;font-size:12pt;">&#32;&#32;</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">On October 28, 2013, the Compensation Committee of the Board of Directors of Cree, Inc. (the &#8220;Company&#8221;) amended the Cree, Inc. Severance Plan for Section 16 Officers (the &#8220;Severance Plan&#8221;).  The Severance Plan is administered by the Compensation Committee and designed to supplement the Change in Control Agreements for the Company&#8217;s executive officers who are subject to the reporting requirements of Section 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.  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.  The Company&#8217;s only Officers as of the date of this report are Charles M. Swoboda, the Company&#8217;s Chairman, Chief Executive Officer and President, Michael E. McDevitt, the Company&#8217;s Executive Vice President and Chief Financial Officer, Norbert W. G. Hiller, the Company&#8217;s Executive Vice President&#8211;LEDs, and Tyrone D. Mitchell, Jr., the Company&#8217;s Executive Vice President&#8211;Lighting.  </font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-indent:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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 continued payment of the Officer&#8217;s base salary for 12 months (18 months in the Chief Executive Officer&#8217;s case) and 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.  In addition, the Chief Executive Officer will receive 1.5 times the annual payout at target under any performance unit grant in effect as of the termination date and the other Officers will receive an amount equal to the total payout at target for one year under the Company Management Incentive Compensation Plan and any performance unit grant in effect as of the termination date.</font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;text-indent:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">The foregoing description of the Severance Plan is subject to and qualified in its entirety by the Severance Plan, as amended, which is included as Exhibit 10.1 to this report and incorporated herein by reference.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">2</font></div></div><hr style="page-break-after:always"><a name="sf5ab5020337c459e80764fb60aae5a0b"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Item 9.01&#160;&#160;&#160;&#160;Financial Statements and Exhibits</font><font style="font-family:inherit;font-size:10pt;">&#32;&#32;</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">(d)</font><font style="font-family:inherit;font-size:10pt;font-weight:bold;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Exhibits</font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:96.36752136752136%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="20%"></td><td width="80%"></td></tr><tr><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">Exhibit No.</font></div></td><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">Description of Exhibit</font></div></td></tr><tr><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Exhibit 10.1</font></div></td><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Cree, Inc. Severance Plan for Section 16 Officers, as amended</font></div></td></tr></table></div></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">3</font></div></div><hr style="page-break-after:always"><a name="sf5ab5020337c459e80764fb60aae5a0b"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">SIGNATURE</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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 style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="4"></td></tr><tr><td width="47%"></td><td width="6%"></td><td width="2%"></td><td width="45%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="3" style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">CREE, INC.</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:18px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">By:</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:top;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">/s/ Michael E. McDevitt</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Michael E. McDevitt</font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">Executive Vice President and Chief Financial Officer</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Date:  October 31, 2013</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">4</font></div></div><hr style="page-break-after:always"><a name="sf5ab5020337c459e80764fb60aae5a0b"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">EXHIBIT INDEX</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:96.36752136752136%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="20%"></td><td width="80%"></td></tr><tr><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">Exhibit No.</font></div></td><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">Description of Exhibit</font></div></td></tr><tr><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Exhibit 10.1</font></div></td><td style="vertical-align:top;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Cree, Inc. Severance Plan for Section 16 Officers, as amended</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">5</font></div></div>	</body>
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<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>exhibit10_1103113.htm
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
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<a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Cree, Inc.</font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Severance Plan for Section 16 Officers</font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;">Plan Document and Summary Plan Description</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Effective August 18, 2008</font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Amended Effective October 28, 2013</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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;).  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><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">I.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">EFFECTIVE DATE</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">The Section 16 Plan is effective as of August 18, 2008, with amendments effective October 28, 2013. </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">II.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">ELIGIBILITY TO PARTICIPATE</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Participation 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><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">III.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">ELIGIBILITY TO RECEIVE BENEFITS</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">An 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.  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.  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><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Exhibit A</font><font style="font-family:inherit;font-size:12pt;">, 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.</font><font style="font-family:inherit;font-size:12pt;color:#ff0000;">&#32;&#32;</font><font style="font-family:inherit;font-size:12pt;">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.  The Company will complete and provide to </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">1</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">the Officer the release of claims in sufficient time so that if the Officer timely executes and returns it, the revocation period will expire before severance payments are required to commence under Article IV. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:justify;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">The provisions of this paragraph will control in the event of conflict between this paragraph and any other language in this Section 16 Plan.  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.  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.  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.  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.</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">IV.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">BENEFITS</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">A.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Severance Amounts</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">1.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">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.  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.  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 </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">2</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;padding-left:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">that date, and shall continue for the Salary Continuation Period provided that the Officer continues to comply with all terms and conditions of the Release Agreement during such period. </font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">2.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">As to the Chief Executive Officer, 1.5 times the annual payout at target under any performance unit grant in effect as of the Termination Date, subject to all applicable taxes and withholdings</font><font style="font-family:inherit;font-size:12pt;color:#333333;">.  </font><font style="font-family:inherit;font-size:12pt;">In the case of all other Officers who are eligible under this Section 16 Plan, an amount equal to the total payout at target for one year under the Cree, Inc. Management Incentive Compensation Plan (&#8220;MICP&#8221;)  and any performance unit grant in effect as of the Termination Date, subject to all applicable taxes and withholdings.  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.</font><font style="font-family:inherit;font-size:12pt;color:#333333;">&#32;&#32;</font></div><div style="line-height:120%;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">B.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Medical, Dental &amp; Vision Benefits</font><font style="font-family:inherit;font-size:12pt;">.  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.  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.  Such lump sum amounts will be paid within ninety (90) days following the Severance Start Date, except as provided in Article VII below.  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;).  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.  COBRA and the terms and conditions of the applicable Health Care Plan documents shall govern any continuation of coverage. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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.  All equity compensation grants are subject to the terms and conditions of the applicable plan document(s).  Payments under the Section 16 Plan will not be subject to 401(k) Plan or Employee Stock Purchase Plan deductions.   </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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 </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">3</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">disabled after a Termination of Employment initiated by Cree without Cause or initiated by the Officer for Good Reason. </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160;&#160; </font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">V.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">DEFINITIONS</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">A.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Cause </font><font style="font-family:inherit;font-size:12pt;">&#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><font style="font-family:inherit;font-size:12pt;font-style:italic;">nolo contendere</font><font style="font-family:inherit;font-size:12pt;">&#32;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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#32;&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">B.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Disability</font><font style="font-family:inherit;font-size:12pt;">&#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.  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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">C.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Good Reason</font><font style="font-family:inherit;font-size:12pt;">&#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="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;padding-left:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">(i) </font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">a material reduction of the Officer's authority, duties or responsibilities;&#160;</font><font style="font-family:Arial;font-size:10pt;color:#0000ff;">&#160;</font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;padding-left:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">(ii)</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">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><font style="font-family:Arial;font-size:10pt;color:#0000ff;">&#160;</font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;padding-left:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">(iii) </font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">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</font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">4</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;padding-left:48px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;"><br></font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;padding-left:48px;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">(iv)&#160; </font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;padding-top:16px;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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.  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.  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).  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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">D.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">LTD Disability</font><font style="font-family:inherit;font-size:12pt;">&#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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">E.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Salary Continuation Period</font><font style="font-family:inherit;font-size:12pt;">&#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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">F.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Section 16 Plan Administrator</font><font style="font-family:inherit;font-size:12pt;">&#8221; means the Compensation Committee of the Cree Board of Directors (&#8220;Compensation Committee&#8221;).  </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">G.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Severance Start Date</font><font style="font-family:inherit;font-size:12pt;">&#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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">H.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Six-Month Delay Payment Date&#8221; </font><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">I.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Specified Employee&#8221;</font><font style="font-family:inherit;font-size:12pt;">&#32;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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">5</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">J.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Specified Employee Identification Date</font><font style="font-family:inherit;font-size:12pt;">&#8221; will have the meaning prescribed by Treasury Regulation &#167;1.409A-1(i).</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">K.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;">&#8220;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">Termination Date </font><font style="font-family:inherit;font-size:12pt;">&#8221; shall mean the Officer&#8217;s last date of employment with Cree, Inc. or one of its affiliates.  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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">L.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">&#8220;Termination of Employment&#8221; </font><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">VI.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">IMPACT OF SEPARATE CHANGE IN CONTROL AGREEMENT</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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.  In other words, the Company will pay severance benefits to an Officer only once:  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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">VII.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">INTERNAL REVENUE CODE SECTION 409A</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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;  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 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 </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">6</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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><font style="font-family:Arial;font-size:12pt;">&#32;&#32;</font><font style="font-family:inherit;font-size:12pt;">This Section 16 Plan is designed with the intent that all payments hereunder shall either be exempt from or in compliance with Section 409A.  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.  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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160;&#160;</font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">VIII.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">FUNDING</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160;</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Benefits provided pursuant to the Section 16 Plan shall be paid solely out of the Company&#8217;s general assets.  Cree shall not be required to fund or otherwise provide for the payment of benefits provided hereunder in any other manner.  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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">IX.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">CLAIMS AND REVIEW PROCEDURES</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#32;&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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 </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">7</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">writing to the Section 16 Plan Administrator.  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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Initial Claim</font><font style="font-family:inherit;font-size:12pt;">. 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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Appeals</font><font style="font-family:inherit;font-size:12pt;">.  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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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 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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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 </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">8</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Exhaustion of Claims Procedures</font><font style="font-family:inherit;font-size:12pt;">. 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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">D.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Limitation on Actions</font><font style="font-family:inherit;font-size:12pt;">.  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.  Any claim or action brought after this timeframe will be void.                                                                                              </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">X.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">ADMINISTRATION</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160;</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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.  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.  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.  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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160;</font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">XI.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">AMENDMENT AND TERMINATION</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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 </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">9</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">or benefits under this Section 16 Plan.  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.  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.  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.   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  (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.  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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">XII.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">ENTIRE PLAN; AMENDMENTS</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">&#160; &#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">This Plan Document and Summary Plan Description contains all the terms, conditions and benefits relating to the Section 16 Plan.  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.  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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">XIII.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">NO CONTRACT OF EMPLOYMENT</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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 in any way the right of the Company to terminate an Officer at any time and for any reason. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160; </font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">XIV.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">ASSIGNMENT OF RIGHTS AND OBLIGATIONS</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:11pt;"><font style="font-family:inherit;font-size:11pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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.  Notwithstanding the </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">10</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">XV.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">APPLICABLE LAW; VENUE</font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:center;font-size:12pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"></td></tr><tr><td width="8%"></td><td width="92%"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">XVI.</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;font-weight:bold;text-decoration:underline;">ERISA RIGHTS </font></div></td></tr></table></div></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Information Required By ERISA: </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Plan Name </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Cree, Inc. Severance Plan for Section 16 Officers </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Plan Sponsor </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Cree, Inc.</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">4600 Silicon Drive</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Durham, NC 27703 </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">(919) 313-5300</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Plan Administrator </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">The Compensation Committee of the Company&#8217;s Board of Directors is the Section 16 Plan Administrator.  Communications with the Section 16 Plan Administrator must be in writing and addressed to: </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Vice President, Administration </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Cree, Inc.</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">4600 Silicon Drive</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Durham, NC 27703  </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Type of Plan </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">The Section 16 Plan is a welfare plan providing for severance benefits. </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Employer Identification Number </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Cree&#8217;s Employer Identification Number is 56-1572719.  When writing about the Section 16 Plan, an Officer should include this number. </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">11</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Plan Number </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Plan Year</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">The Section 16 Plan records are kept on a calendar year basis.</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Service of Legal Process </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">Service of legal process may be made on the Section 16 Plan Administrator at the address above. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Statement of ERISA Rights</font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">A.  </font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Receive Information About Your Plan and Benefits</font><font style="font-family:inherit;font-size:12pt;">.</font><font style="font-family:inherit;font-size:12pt;font-style:italic;">&#32;</font><font style="font-family:inherit;font-size:12pt;">ERISA provides that you are entitled to: </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;padding-left:48px;text-align:left;"><font style="text-align:left;font-family:inherit;font-size:12pt;padding-right:48px;">1.</font><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;padding-left:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;padding-left:48px;text-align:left;"><font style="text-align:left;font-family:inherit;font-size:12pt;padding-right:48px;">2.</font><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;padding-left:48px;text-align:left;"><font style="text-align:left;font-family:inherit;font-size:12pt;padding-right:48px;">3.</font><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160;&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">B.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Prudent Actions By Fiduciaries</font><font style="font-family:inherit;font-size:12pt;">. 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 you and other Section 16 Plan participants and beneficiaries.   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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">12</font></div></div><hr style="page-break-after:always"><a name="s437a3801c20044b9b53e6c88f6ef1d59"></a><div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div></div><br><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">C.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Enforce Your Rights</font><font style="font-family:inherit;font-size:12pt;">.  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 </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">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.  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.  The court will decide who should pay court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  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="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">&#160; </font></div><div style="line-height:120%;text-align:left;font-size:12pt;"><font style="font-family:inherit;font-size:12pt;">D.</font><font style="font-family:inherit;font-size:10pt;">&#160;&#160;&#160;&#160;</font><font style="font-family:inherit;font-size:12pt;text-decoration:underline;">Assistance With Your Questions</font><font style="font-family:inherit;font-size:12pt;">.  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.  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.  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="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br></font></div><br><div><div style="line-height:120%;text-align:center;font-size:10pt;"><font style="font-family:inherit;">13</font></div></div>	</body>
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