EXHIBIT 10. 1
CREE, INC.
XXXXXXX XXXXXXX EMPLOYMENT AGREEMENT
This Agreement is entered into as of October 13, 2004 (the "Effective
Date") by and between Cree, Inc. (the "Company") and Xxxxxxx X. Xxxxxxx
("Executive").
1. Duties and Scope of Employment.
(a) Positions and Duties. As of the Effective Date, Executive will serve as
President and Chief Executive Officer, reporting to the Company's Board of
Directors (the "Board"). Executive will render such business and professional
services in the performance of his duties, consistent with Executive's position
within the Company, as will reasonably be assigned to him by the Board. The
period Executive is employed by the Company under this Agreement is referred to
herein as the "Employment Term".
(b) Board Membership. At each annual meeting of the Company's stockholders
during the Employment Term, the Company will nominate Executive to serve as a
member of the Board. Executive's service as a member of the Board will be
subject to any required stockholder approval. While a member of the Board,
Executive will be permitted to attend all meetings of the Board and executive
sessions thereof, on substantially the same basis as other members of the Board,
except as is prohibited by applicable law or listing standard. Notwithstanding
the preceding sentence, Executive will not have the right to attend any portion
of a meeting or executive session where the item of discussion relates to
Executive's employment, including (but not limited to) his compensation,
performance, and/or service on the Board.
(c) Obligations. During the Employment Term, Executive will devote
Executive's full business efforts and time to the Company. For the duration of
the Employment Term, Executive agrees not to actively engage in any other
employment, occupation, or consulting activity for any direct or indirect
remuneration without the prior approval of the Board (which approval will not be
unreasonably withheld); provided, however, that Executive may, without the
approval of the Board, serve in any capacity with any civic, educational, or
charitable organization, provided such services do not interfere with
Executive's obligations to Company.
2. At-Will Employment. Executive and the Company agree that Executive's
employment with the Company constitutes "at-will" employment. Executive and the
Company acknowledge that this employment relationship may be terminated at any
time, upon written notice to the other party, with or without good cause or for
any or no cause, at the option either of the Company or Executive. However, as
described in this Agreement, Executive may be entitled to severance benefits
depending upon the circumstances of Executive's termination of employment.
Executive agrees to resign from his position as a member of the Board
immediately following the termination of his employment if the Board so
requests.
3. Term of Agreement. This Agreement will have an initial term of three years
commencing on the Effective Date. On the third anniversary of the Effective
Date, and on each annual anniversary of the Effective Date thereafter, this
Agreement automatically will renew for an additional one-year term unless either
party provides the other party with written notice of non-renewal at least 120
days prior to the date of automatic renewal. Notwithstanding any contrary
provision in this Section 3, in the event of a Change of Control during the
Employment Term, this Agreement will continue for not less than 12 months after
the date of the Change of Control.
4. Compensation.
(a) Base Salary. As of the Effective Date, the Company will pay Executive
an annual salary of $500,000 as compensation for his services (such annual
salary, as is then effective, to be referred to herein as "Base Salary"). The
Base Salary will be paid periodically in accordance with the Company's normal
payroll practices and be subject to the usual, required withholdings.
Executive's salary will be subject to review by the Compensation Committee of
the Board (the "Committee") not less than annually, and adjustments will be made
in the discretion of the Compensation Committee.
(b) Annual Incentive. Executive will be eligible to receive earned annual
incentives payable for the achievement of performance goals established by the
Committee. Executive's target annual incentive will be at least 70% of Base
Salary, as determined by the Committee. The actual earned incentive, if any,
payable to Executive for any fiscal year of the Company will depend upon the
extent to which the applicable performance goal(s) specified by the Committee
are achieved and will be decreased or increased for under- or over-performance.
For each fiscal year of the Company, the Committee will endeavor to establish
the applicable performance goal(s) no later than the 90th day of the fiscal year
to which the goals relate. Executive will have the opportunity to discuss the
nature of such performance goals with the Committee prior to such performance
goals being established. Except as specifically provided herein, Executive's
annual incentive will be subject to the terms and conditions of the Company's
annual incentive plan for executive officers, including payment date and
continued employment obligations.
(c) Long-Term Incentive. Executive will be eligible to receive long-term
incentives subject to terms and conditions established by the Committee, the
underlying long-term incentive plan document, and the Committee's terms and
conditions for the applicable type of award, including vesting criteria such as
continued service or performance objectives.
5. Employee Benefits. Executive will be eligible to participate in accordance
with the terms of all Company employee benefit plans, policies, and arrangements
that are applicable to other executive officers of the Company, as such plans,
policies, and arrangements may exist from time to time. Notwithstanding the
preceding sentence, Executive's eligibility for benefits (other than annual
incentive, long term incentives or other long-term compensation (whether payable
in cash, stock, or otherwise), salary, or similar) will be at least as great as
that of any other executive officer of the Company, provided, however, that (a)
Executive will be eligible for any enhanced level of benefits that he approves
only upon subsequent Committee approval, and (b) Executive will not be eligible
for any extraordinary or unusual benefits provided to another executive officer
as part of a negotiation for such executive officer to commence or continue
employment.
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6. Expenses. The Company will reimburse Executive for reasonable travel,
entertainment, and other expenses incurred by Executive in the furtherance of
the performance of Executive's duties hereunder, in accordance with the
Company's expense reimbursement policy as in effect from time to time.
7. Termination of Employment. In the event Executive's employment with the
Company terminates for any reason, Executive will be entitled to any (a) unpaid
Base Salary accrued up to the effective date of termination, (b) unpaid, but
earned and accrued annual incentive for any completed fiscal year as of his
termination of employment, (c) pay for accrued but unused vacation that the
Company is legally obligated to pay Executive, (d) benefits or compensation as
provided under the terms of any employee benefit and compensation agreements or
plans applicable to Executive, (e) unreimbursed business expenses required to
reimbursed to Executive, and (f) rights to indemnification Executive may have
under the Company's Articles of Incorporation, Bylaws, the Employment Agreement,
or separate indemnification agreement, as applicable. In addition, if the
termination is by the Company without Cause or by Executive for Good Reason,
Executive will be entitled to the amounts and benefits specified in Section 8,
subject to the limitation of Section 8(e).
8. Severance.
(a) Termination Without Cause or Resignation for Good Reason other than in
connection with a Change of Control. If Executive's employment is terminated by
the Company without Cause or by Executive for Good Reason, and the termination
is not in Connection with a Change of Control, then, subject to Section 9,
Executive will receive: (i) continued payment of Base Salary for the Continuance
Period, (ii) a lump sum payment, paid at the time fiscal year bonuses are next
paid to other Company executive officers following Executive's termination of
employment, equal to twice the average of Executive's earned annual incentives
for the two most recently completed fiscal years immediately preceding
Executive's termination of employment, (iii) reimbursement for premiums paid to
continued medical benefits for Executive, Executive's spouse, and Executive's
eligible dependents under the Company's Benefit Plans for twelve (12) months,
payable when such premiums are due (provided Executive validly elects to
continue coverage under applicable law), and (iv) accelerated vesting with
respect to 50% of Executive's then outstanding, unvested equity awards that (y)
were granted prior to the Effective Date and have an exercise price per share
lower than the per share fair market value of the Company's common stock as of
the Effective Date, or (z) are granted on or after the Effective Date.
(b) Termination Without Cause or Resignation for Good Reason in connection
with a Change of Control. If Executive's employment is terminated by the Company
without Cause or by Executive for Good Reason, and the termination is in
Connection with a Change of Control, then, subject to Section 9, Executive will
receive: (i) continued payment of Base Salary for the Continuance Period, (ii) a
lump sum payment of an amount equal to Executive's current target annual
incentive, prorated in the proportion that the days elapsed starting on the
first day of the fiscal year during which the termination of Executive's
employment occurs through the date of Executive's termination of employment
bears to 365, paid within thirty (30) days of termination, (iii) a lump sum
payment, paid at the time fiscal year bonuses are next paid to other Company
executive officers following Executive's termination of employment, equal to
twice the average of Executive's earned annual incentives for the two most
recently completed fiscal years immediately preceding Executive's termination of
employment, (iv) reimbursement for premiums paid to continued medical benefits
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for Executive, Executive's spouse, and Executive's eligible dependents under the
Company's Benefit Plans for twenty-four (24) months, payable when such premiums
are due (provided Executive validly elects to continue coverage under applicable
law), and (v) full accelerated vesting with respect to Executive's then
outstanding, unvested equity awards.
(i) Section 280G Gross-up. If any payment or benefit Executive
receives pursuant to Section 8, this Agreement, or otherwise, but
determined without regard to any additional payment required under
this Section 8(b)(i), (collectively, the "Payment") would (y)
constitute a "parachute payment" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), and (z) be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties payable with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then
Executive will be entitled to receive from the Company an additional
payment (the "Gross-Up Payment," and any iterative payments pursuant
to this paragraph also will be "Gross-Up Payments") in an amount that
will fund the payment by Executive of any Excise Tax on the Payment,
as well as all income and employment taxes on the Gross-Up Payment,
any Excise Tax imposed on the Gross-Up Payment and any interest or
penalties imposed with respect to income and employment taxes imposed
on the Gross-Up Payment. For this purpose, all income taxes will be
assumed to apply to Executive at the highest marginal rate. Any
Gross-Up Payment will be paid to Executive, or for his benefit, within
15 days following receipt by the Company of the report of the
accounting firm described below.
The accounting firm engaged by the Company for general audit
purposes as of the day prior to the effective date of the Change of
Control will perform the foregoing calculations. If the accounting
firm so engaged by the Company is also serving as accountant or
auditor for the individual, entity or group which will control the
Company upon the occurrence of a Change of Control, the Company will
appoint a nationally recognized accounting firm other than the
accounting firm engaged by the Company for general audit purposes to
make the determinations required hereunder. The Company will bear all
expenses with respect to the determinations by such accounting firm
required to be made hereunder.
The accounting firm engaged to make the determinations hereunder
will provide its calculations, together with detailed supporting
documentation, to the Company and Executive within thirty calendar
days after the date on which such accounting firm has been engaged to
make such determinations or such other time as requested by the
Company or Executive. If the accounting firm determines that no Excise
Tax is payable with respect to a Payment, it will furnish the Company
and Executive with an opinion reasonably acceptable to Executive that
no Excise Tax will be imposed with respect to such Payment. Any
reasonable good faith determinations of the accounting firm made
hereunder will be final, binding, and conclusive upon the Company and
Executive.
If the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of termination of
employment, the Executive shall repay to the Company, at the time the
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction. If the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of termination of employment, the Company shall make an
additional Gross-Up Payment to the Executive in respect of such excess
at the time the amount of such excess
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is finally determined. The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as practicable but
no later than ten (10) business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration
of the thirty (30) day period following the date on which he or she
gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If
the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive
shall:
(a) give the Company any information reasonably requested by
the Company relating to such claim;
(b) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order to
effectively contest such claim; and
(d) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including legal and accounting fees and additional
interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax, FICA tax, or income tax (including interest
and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation
on the foregoing provisions of this Section, the Company shall control
all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals,
proceedings, hearings, and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct the
Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction, and in one or more appellate courts,
as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on
an interest-free basis, and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be
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payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, other issues raised by the Internal
Revenue Service or any other taxing authority.
If any such claim referred to in this Section is made by the
Internal Revenue Service and the Company does not request the
Executive to contest the claim within the thirty (30) day period
following notice of the claim, the Company shall pay to the Executive
the amount on any Gross-Up Payment owed to the Executive, but not
previously paid pursuant to this Section, immediately upon the
expiration of such thirty (30) day period. If any such claim is made
by the Internal Revenue Service and the Company requests the Executive
to contest such claim, but does not advance the amount of such claim
to the Executive for purposes of such contest, the Company shall pay
to the Executive the amount of any Gross-Up Payment owed to the
Executive, but not previously paid under the provisions of this
Section, within five (5) business days of a Final Determination of the
liability of the Executive for such Excise Tax. For purposes of this
Agreement, a "Final Determination" shall be deemed to occur with
respect to a claim when (i) there is a decision, judgment, decree, or
other order by any court of competent jurisdiction, which decision,
judgment, decree, or other order has become final, i.e., all allowable
appeals pursuant to this Section have been exhausted by either party
to the action, (ii) there is a closing agreement made under Section
7121 of the Code, or (iii) the time for instituting a claim for refund
has expired, or if a claim was filed, the time for instituting suit
with respect thereto has expired.
If, after the receipt by the Executive of an amount advanced by
the Company pursuant to this Section, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of this
Section) within five (5) business days of receiving any such refund
pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If
after the receipt by the Executive of an amount advanced by the
Company pursuant to this Section, a determination is made by the
Internal Revenue Service that the Executive is not entitled to any
refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after the Company learns
of such determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required
to be paid.
(c) Voluntary Termination without Good Reason; Termination for Cause. If
Executive's employment with the Company terminates voluntarily by Executive
without Good Reason or is terminated for Cause by the Company, then, except as
provided in Section 7, (i) all further vesting of Executive's outstanding equity
awards will terminate immediately, (ii) all payments of compensation by the
Company to Executive hereunder will terminate immediately, and (iii) Executive
will be eligible for severance benefits only in accordance with the Company's
then established plans, programs, and practices.
(d) Termination due to Death or Disability. If Executive's employment
terminates by reason of death or Disability, then, except as provided in Section
7, (i) Executive's outstanding equity awards will terminate in accordance with
the terms and conditions of the applicable award agreement(s); (ii) all payments
of compensation by the Company to Executive hereunder will terminate
immediately, and (iii) Executive will be entitled to receive benefits only in
accordance with the Company's then established plans, programs, and practices.
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(e) Sole Right to Severance. This Agreement is intended to represent
Executive's sole entitlement to severance payments and benefits in connection
with the termination of his employment. If however, the Company adopts a written
program that provides for severance payments or benefits that in the aggregate
are greater than the payments and benefits provided under this Agreement, then
to the extent Executive is entitled to receive severance payments or benefits
under such Company program, severance payments and benefits due to Executive
under this Agreement will be so reduced.
9. Conditions to Receipt of Severance; No Duty to Mitigate.
(a) Separation Agreement and Release of Claims. The receipt of any
severance pursuant to Section 8 will be subject to Executive signing and not
revoking a separation agreement and release of claims in substantially the form
attached as Exhibit A, but with any appropriate modifications, reflecting
changes in applicable law, as is necessary or appropriate to provide the Company
with the protection it would have if the release were executed as of the
Effective Date. No severance will be paid or provided until the separation
agreement and release agreement becomes effective.
(b) Nondisparagement. During the Employment Term and for the longer of (i)
12 months thereafter or (ii) the Continuance Period, Executive will not
knowingly disparage, criticize, or otherwise make any derogatory statements
regarding the Company, its directors, or its officers. The foregoing
restrictions will not apply to any statements that are made truthfully in
response to a subpoena or other compulsory legal process.
(c) Other Requirements. Executive's receipt of continued severance payments
will be subject to Executive continuing to comply with the terms of the
Confidential Information Agreement as amended by this Agreement.
(d) No Duty to Mitigate. Executive will not be required to mitigate the
amount of any payment contemplated by this Agreement, nor will any earnings that
Executive may receive from any other source reduce any such payment.
10. Definitions.
(a) Benefit Plans. For purposes of this Agreement, "Benefit Plans" means
plans, policies, or arrangements that the Company sponsors (or participates in)
and that immediately prior to Executive's termination of employment provide
Executive, Executive's spouse, and/or Executive's eligible dependents with
medical, dental, or vision benefits. Benefit Plans do not include any other type
of benefit (including, but not by way of limitation, financial counseling,
disability, life insurance, or retirement benefits). A requirement that the
Company provide Executive, Executive's spouse, and Executive's eligible
dependents with coverage under the Benefit Plans will not be satisfied unless
the coverage is no less favorable than that provided to Executive, Executive's
spouse, and Executive's eligible dependents immediately prior to Executive's
termination of employment. Subject to the immediately preceding sentence, the
Company may, at its option, satisfy any requirement that the Company provide
coverage under any Benefit Plan by instead providing coverage under a separate
plan or plans providing coverage that is no less favorable or by paying
Executive a lump-sum payment which is, on an after-tax basis, sufficient to
provide Executive and Executive's eligible
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dependents with equivalent coverage under a third party plan that is reasonably
available to Executive, Executive's spouse, and Executive's eligible dependents.
(b) Cause. For purposes of this Agreement, "Cause" means (i) Executive's
willful and continued failure to perform the duties and responsibilities of his
position that is not corrected within a thirty (30) day correction period that
begins upon delivery to Executive of a written demand for performance from the
Board that describes the basis for the Board's belief that Executive has not
substantially performed his duties; (ii) any act of personal dishonesty taken by
Executive in connection with his responsibilities as an employee of the Company
with the intention or reasonable expectation that such may result in substantial
personal enrichment of Executive; (iii) Executive's conviction of, or plea of
nolo contendre to, a felony that the Board reasonably believes has had or will
have a material detrimental effect on the Company's reputation or business, or
(iv) Executive materially breaching Executive's Confidential Information
Agreement as modified by this Agreement, which breach is (if capable of cure)
not cured within thirty (30) days after the Company delivers written notice to
Executive of the breach.
(c) Change of Control. For purposes of this Agreement, "Change of Control"
will have the same meaning as in Section 7.1 of the Company's Equity
Compensation Plan (as amended and restated August 5, 2002 and without regard to
any subsequent amendments).
(d) Continuance Period. For purposes of this Agreement, "Continuance
Period" means the period of time beginning on the date of the termination of
Executive's employment and ending on the later of (i) the date twenty-four (24)
months following the termination of Executive's employment or (ii) the date that
the term of this Agreement otherwise expires. Notwithstanding the preceding
sentence, in the event of a termination of Executive's employment where
Executive is not entitled to severance under Section 8(a) or Section 8(b), the
Continuance Period shall be of no duration.
(e) Disability. For purposes of this Agreement, Disability will have the
same defined meaning as in the Company's long-term disability plan.
(f) Good Reason. For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following, without Executive's consent: (i) a
significant reduction of Executive's duties or responsibilities, a change in
Executive's position as Chief Executive Officer or President, or the removal of
Executive from any of such duties, positions, or responsibilities; (ii) a
reduction in Executive's Base Salary or target annual incentive compensation
other than a one-time reduction that also is applied to substantially all other
executive officers of the Company on Executive's recommendation or approval if
Executive's reduction is substantially proportionate to, or no greater than, the
reduction applied to substantially all other executive officers; (iii) the
Company requiring Executive to report to anyone other than the Board of
Directors; (iv) the Company eliminating from reporting to Executive any position
that previously directly reported to Executive; or (v) the Company requiring
Executive to relocate his principal place of business or the Company relocating
its headquarters, in either case to a facility or location outside of a
thirty-five (35) mile radius from Executive's current principal place of
employment; provided, however, that Executive only will have Good Reason if the
event or circumstances constituting Good Reason specified in any of the
preceding clauses is not cured within thirty (30) days after Executive gives
written notice to the Board. Executive's actions approving any change,
reduction, requirement, or occurrence in his role as Chief Executive Officer or
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a director (that otherwise may be considered Good Reason) will be considered
consent for the purposes of this Good Reason definition.
In addition, "Good Reason" also means the occurrence of any of the
following, without Executive's express written consent, in Connection with a
Change of Control: (i) a substantial reduction by the Company of the facilities
and perquisites (including office space and location) available to Executive
provided such reduction is not applied to all executive officers of the Company;
(ii) a material reduction in the kind or level of employee benefits to which
Executive is entitled with the result that Executive's overall benefits package
is significantly reduced; provided such reduction is not applied to
substantially all executive officers of the Company; or (iii) the failure of the
Company to obtain the assumption of the Employment Agreement by the successor
(as defined in Section 13).
(g) In Connection with a Change of Control. For purposes of this Agreement,
a termination of Executive's employment with the Company is "in Connection with
a Change of Control" if Executive's employment is terminated within twelve (12)
months following a Change of Control.
11. Indemnification. Subject to applicable law, Executive will be provided
indemnification to the maximum extent permitted by the Company's bylaws and
Certificate of Incorporation, with such indemnification to be on terms
determined by the Board or any of its committees, but on terms no less favorable
than provided to any other Company executive officer or director and subject to
the terms of any separate written indemnification agreement.
12. Confidential Information. Executive will execute the Company's standard form
of Employee Agreement Regarding Confidential Information, Intellectual Property,
and Noncompetition appended hereto as Exhibit B (the "Confidential Information
Agreement"); provided, however, that Executive agrees he will be subject to the
noncompetition/nonsolicitation provision of such agreement (paragraph 11(a))
during the Employment Term and, except as provided in Section 20 hereof, until
the later of (a) the date twelve (12) months following the termination of
Executive's employment, or (b) the expiration of the Continuance Period.
13. Assignment. This Agreement will be binding upon and inure to the benefit of
(a) the heirs, executors, and legal representatives of Executive upon
Executive's death, and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation, or other business entity which at any time, whether by
purchase, merger, or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance, or other
disposition of Executive's right to compensation or other benefits will be null
and void.
14. Notices. All notices, requests, demands, and other communications called for
hereunder will be in writing and will be deemed given (a) on the date of
delivery if delivered personally, (b) one day after being sent overnight by a
well established commercial overnight service, or (c) four days after being
mailed by registered or certified mail, return receipt requested, prepaid and
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addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:
If to the Company:
Attn: Chairman of the Compensation Committee
c/o Corporate Secretary
Cree, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
If to Executive:
at the last residential address known by the Company.
15. Severability. If any provision hereof becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable, or void, this Agreement
will continue in full force and effect without said provision.
16. Arbitration. The Parties agree that any and all disputes arising out of the
terms of this Agreement, Executive's employment by the Company, Executive's
service as an officer or director of the Company, or Executive's compensation
and benefits, their interpretation, and any of the matters herein released, will
be subject to binding arbitration in Durham, North Carolina before the American
Arbitration Association under its National Rules for the Resolution of
Employment Disputes, supplemented by the North Carolina Rules of Civil
Procedure. The Parties agree that the prevailing party in any arbitration will
be entitled to injunctive relief in any court of competent jurisdiction to
enforce the arbitration award. The Parties hereby agree to waive their right to
have any dispute between them resolved in a court of law by a judge or jury.
This paragraph will not prevent either party from seeking injunctive relief (or
any other provisional remedy) from any court having jurisdiction over the
Parties and the subject matter of their dispute relating to Executive's
obligations under this Agreement and the Confidential Information Agreement.
17. Legal and Tax Expenses. The Company will reimburse Executive up to $15,000
for reasonable legal and tax advice expenses incurred by him in connection with
the negotiation, preparation, and execution of this Agreement. In addition, in
the event of a dispute relating to any provision of this Agreement following the
Effective Date, the Company will reimburse Executive's fees and expenses as
incurred quarterly, including reasonable attorneys' fees, in connection with
such dispute, provided Executive prevails on at least one material issue in such
dispute, or provided an arbitrator does not determine that Executive's legal
positions were frivolous or without legal foundation. In the event Executive
does not so prevail or in the event of such determination, Executive will repay
to the Company any amounts previously reimbursed by it, and Executive will
reimburse the Company for its fees and expenses, including reasonable attorneys'
fees, incurred in connection with the dispute.
18. Integration. This Agreement, together with the Confidential Information
Agreement and the standard forms of equity award grant that describe Executive's
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outstanding equity awards, represents the entire agreement and understanding
between the parties as to the subject matter herein and supersedes all prior or
contemporaneous agreements whether written or oral. No waiver, alteration, or
modification of any of the provisions of this Agreement will be binding unless
in a writing and is signed by duly authorized representatives of the parties
hereto.
19. Waiver of Breach. The waiver of a breach of any term or provision of this
Agreement, which must be in writing, will not operate as or be construed to be a
waiver of any other previous or subsequent breach of this Agreement.
20. Survival. The Confidential Information Agreement, the Company's and
Executive's responsibilities under Sections 7, 8 and 9, and Sections 11, 12, 16,
and 17 will survive the termination of this Agreement. Notwithstanding the
preceding sentence, in the event this Agreement expires because the Company
delivers notice of non-renewal of the term of this Agreement pursuant to Section
3, the amendment of the Confidential Information Agreement provided by Section
12 will expire as of the expiration of the term of this Agreement.
21. Headings. All captions and Section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.
22. Tax Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.
23. Governing Law. This Agreement will be governed by the laws of the State of
North Carolina (with the exception of its conflict of laws provisions).
24. Acknowledgment. Executive acknowledges that he has had the opportunity to
discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.
25. Counterparts. This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement on the part of each of the
undersigned.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by a duly authorized officer, as of the day and year written
below.
COMPANY:
CREE, INC.
/s/ Xxxxx X. Xxxxx Date: October 13, 2004
------------------------------------------
Xxxxx X. Xxxxx
Compensation Committee Chairman
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxx Date: October 13, 2004
-------------------------------------------
Xxxxxxx X. Xxxxxxx
[SIGNATURE PAGE TO X. XXXXXXX EMPLOYMENT AGREEMENT]
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