UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 10, 2005
CREE, INC.
(Exact name of registrant as specified in its charter)
North Carolina 0-21154 56-1572719
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification Number)
4600 Silicon Drive
Durham, North Carolina 27703
(Address of principal executive offices) (Zip Code)
(919) 313-5300
Registrant's telephone number, including area code
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On August 10, 2005, Cynthia B. Merrell, Chief Financial Officer and
Treasurer, submitted her resignation as an officer of Cree, Inc. (the "Company")
and its subsidiaries, effective on the earlier of the date a successor becomes
Chief Financial Officer by appointment of the Company's Board of Directors or
February 10, 2006 (the "Resignation Effective Date"). The Company issued a press
release dated August 11, 2005 announcing Ms. Merrell's resignation; a copy is
included with this report as an exhibit. In connection with her resignation, the
Company and Ms. Merrell entered into a letter agreement dated August 10, 2005
(the "Agreement") pursuant to which Ms. Merrell will remain an at-will employee
of the Company through August 10, 2006, unless her employment is terminated
earlier by Ms. Merrell or the Company. The material terms of the Agreement are
described below.
Position, Compensation and Benefits until the Resignation Effective Date
Ms. Merrell will continue as the Company's Chief Financial Officer and
Treasurer until the Resignation Effective Date, unless her employment is
terminated earlier by Ms. Merrell or the Company. Until the Resignation
Effective Date she will be compensated at her current base salary and be
eligible to participate in all Company employee benefit plans, policies and
arrangements that are applicable to regular, full-time employees, including the
Company's Management Incentive Compensation Plan, with any incentive payment
award under the plan prorated as of the Resignation Effective Date. Ms. Merrell
will not receive any additional stock option grants or other equity awards from
the Company.
Position, Compensation and Benefits after the Resignation Effective Date
Beginning on the Resignation Effective Date and until August 10, 2006
unless her employment is terminated earlier, Ms. Merrell will serve as Senior
Financial Advisor to the Company's Chief Executive Officer on a part-time basis,
up to 80 hours per month. During that period, she will continue to be
compensated at her current base salary and will be eligible to participate in
all Company employee benefit plans, policies and arrangements that are
applicable to part-time employees, except that she will not participate in the
Company's quarterly Employee Incentive Compensation Plan. She will also not be
eligible to participate in the Company's medical, vision and dental plans,
unless she timely elects to extend coverage pursuant to COBRA. The Company will
increase her salary by an amount equal to the applicable COBRA premium during
the period she is a part-time employee under the Agreement.
Treatment of Stock Options
Ms. Merrell's stock options will continue to vest until the termination of
her employment with the Company, subject to the provisions of the Company's
Equity Compensation Plan and applicable agreements between Ms. Merrell and the
Company. The non-qualified stock option granted to Ms. Merrell on October 1,
2004 to purchase up to 30,000 shares of the Company's stock, which became fully
vested and exercisable as of April 15, 2005 subject to certain contractual
restrictions on sale or other transfer of the purchased shares, may be exercised
by Ms. Merrell free of such restrictions, subject to the expiration provisions
of the applicable option agreement and the Company's trading window policy.
Severance Payments
If the Company terminates Ms. Merrell's employment without cause (as
defined in the Agreement) prior to August 10, 2006, Ms. Merrell will be entitled
to receive a severance payment equal to the sum of (1) the remaining base salary
she would have earned through August 10, 2006, (2) the value of any accrued and
unused vacation days and holiday hours as of the last day of her employment and
(3) her cost (grossed up for taxes) to continue medical, vision and dental
coverage for herself and her dependents through the first anniversary of the
Resignation Effective Date. If Ms. Merrell remains employed by the Company
through August 10, 2006, Ms. Merrell will be entitled to receive a severance
payment equal to the sum of the amounts described in (2) and (3) above.
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If Ms. Merrell terminates her employment with the Company or the Company
terminates Ms. Merrell for cause (as defined in the Agreement) prior to August
10, 2006, the Company shall have no obligation to pay Ms. Merrell any severance
payments. Cause includes among other things Ms. Merrell's death, disability or
incapacity, acts or omission of gross negligence or willful misconduct, willful
and continued failure to perform duties and responsibilities, material breach of
her confidential information, intellectual property and non-compete agreement
with the Company or, prior to the Resignation Effective Date, her employment by
another entity.
Payment of any severance amounts is conditioned upon Ms. Merrell providing
the Company a release of customary claims.
A copy of the Agreement is filed as Exhibit 10.1 to this Form 8-K and is
incorporated by reference herein. The foregoing description is qualified in its
entirety by reference to the full text of such exhibit.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers
Item 1.01 is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits.
10.1 Letter Agreement, dated August 10, 2005, between Cynthia B. Merrell
and the Company
99.1 Press Release, dated August 11, 2005
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CREE, INC.
By: /s/ Charles M. Swoboda
------------------------------------------
Charles M. Swoboda
Chairman, Chief Executive Officer and
President
Date: August 11, 2005
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EXHIBIT INDEX
10.1 Letter Agreement, dated August 10, 2005, between Cynthia B. Merrell
and the Company
99.1 Press Release, dated August 11, 2005