<PAGE>
Filed Pursuant to
Rule 424(b)(3)
and Rule 424(c)
Registration No. 33-98728
CREE RESEARCH, INC.
PROSPECTUS SUPPLEMENT DATED MAY 24, 1996
(SUPPLEMENTING PROSPECTUS DATED DECEMBER 18, 1995)
This Prospectus Supplement shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
This Prospectus Supplement updates and supplements the Prospectus dated
December 18, 1995, which was filed in conjunction with Registration Statement on
Form S-3, Registration No. 33-98728 (the "Prospectus"), to reflect changes
resulting from (i) the allocation and issuance to the Selling Shareholders of
Extra Shares as described on page 13 of the Prospectus, and (ii) transfers known
to the Company of Common Shares and Warrants in non-market transactions among
the Selling Shareholders which occurred subsequent to the date of the
Prospectus. This Prospectus Supplement does not reflect changes resulting from
market transactions involving the Common Shares or Extra Shares.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED
ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE
"RISK FACTORS" BEGINNING ON PAGE 3 OF PROSPECTUS DATED DECEMBER 18,
1995.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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SELLING SHAREHOLDERS
This Prospectus Supplement relates to 1,514,400 shares of Common Stock
of the Company, of which (i) 800,000 shares of Common Stock (the "Common
Shares") were issued pursuant to Subscription Agreements by and between the
Company and the Selling Shareholders, (ii) 200,000 shares of Common Stock (the
"Warrant Shares") are issuable pursuant to warrants issued by the Company to the
Selling Shareholders, (iii) 279,467 of a total of 414,400 shares of Common Stock
(the "Extra Shares") allocated for such purpose were issued to the Selling
Shareholders pursuant to certain price protection provisions of the Subscription
Agreements, and (iv) 100,000 shares of Common Stock (the "Placement Agent
Warrant Shares") are issuable pursuant to warrants issued by the Company to the
Placement Agents as compensation for their assistance in locating sources of
capital for the Company.
Set forth below is a list and description of each Selling Shareholder,
together with the number of Shares beneficially owned, the number of Shares
being offered, and the number of Shares (and the percent of the class) to be
owned after completion of the offering.
<TABLE>
<CAPTION>
=============================================================================================================================
Material Percent
Relationship Securities Securities Common
Had With the Beneficially Beneficially Stock Owned
Name of Company Within Owned As of Securities Owned After After
Selling Past Three October 15, Offered Completion of Completion
Shareholder Years (1) 1995 (2) Hereby (3) Offering (4) of Offering
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Trustees of
General shareholder 1,262,500 79,967 1,200,000 11.5%
Electric
Pension Trust
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Rahn & Rodmer shareholder 37,500 47,980 0 *
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Mid Lakes
Distr. Profit shareholder 5,000 12,794 0 *
Sharing Plan (5)
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Hollub Heating 0
Profit Sharing shareholder 5,000 (5) 0 *
Plan
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WNC shareholder 139,000 31,987 114,000 *
Corporation
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HDC Group shareholder 18,750 3,750 0 *
L.L.C. (5)
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Rosewood shareholder 2,500 3,199 0 *
Partners, L.P.
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K.A.M. Group, shareholder 6,250 7,997 0 *
Inc.
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M.D. Funding, shareholder 2,500 3,199 0 *
Inc.
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Barry shareholder 67,500 63,973 17,500 *
Nathanson
Assoc.
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Robert Kantor shareholder 142,000 153,536 22,000 *
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Tudor BVI shareholder 101,026 129,258 0 *
Futures, LTD
2
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Material Percent
Relationship Securities Securities Common
Had With the Beneficially Beneficially Stock Owned
Name of Company Within Owned As of Securities Owned After After
Selling Past Three October 15, Offered Completion of Completion
Shareholder Years (1) 1995 (2) Hereby (3) Offering (4) of Offering
- -----------------------------------------------------------------------------------------------------------------------------
Raptor Global shareholder 41,535 53,143 0 *
Fund, LTD
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Raptor Global shareholder 30,815 39,427 0 *
Fund, LP
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Tudor shareholder 14,125 18,072 0 *
Arbitrage
Partners, L.P.
- -----------------------------------------------------------------------------------------------------------------------------
Par Investment shareholder 70,000 75,563 0 *
Partners, L.P. (5)
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Worthington shareholder 37,500 40,480 0 *
Growth, L.P. (5)
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Professional shareholder 50,000 63,973 0 *
Edge Fund,
L.P.
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Dreshertowne shareholder 25,000 31,987 0 *
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Generation
Capital shareholder 45,200 57,576 200 *
Associates
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Everest shareholder 221,800 119,713 110,900 *
Capital Fund, (5)
L.P.
- -----------------------------------------------------------------------------------------------------------------------------
Everest shareholder 278,200 150,154 139,100 1.2%
Capital (5)
International
Ltd.
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Morgan Stanley shareholder 1,500(6) 87,250 1,500 *
& Co. (7)
Incorporated
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David Levin shareholder 12,750 6,746 6,500 *
(7)
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Ronit Sucoff shareholder 16,938 6,746 6,000 *
(7)
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Helen Kohn shareholder 33,937 6,746 23,000 *
(7)
=============================================================================================================================
</TABLE>
* Less than 1%.
(1) The term "shareholder" refers to either shareholders or warrant holders
of the Company.
(2) Includes Common Stock as to which the holder has sole or shared voting
or investment power and Common Stock issuable pursuant to options
and/or warrants exercisable within the next 60 days.
3
<PAGE>
(3) Includes, for each Selling Shareholder (excluding Morgan Stanley & Co.
Incorporated) Extra Shares issued to such Selling Shareholder pursuant
to the terms of the Subscription Agreements, as described on page 5
hereof.
(4) Is based on securities beneficially owned as of October 15, 1995 and
assumes all Shares being registered in this offering will be sold.
However, to the best of the Company's knowledge, the holders of such
securities have no commitment to anyone to sell all or part of the
securities being registered.
(5) Some or all of the securities offered on behalf of this Selling
Shareholder were transferred to certain of the other Selling
Shareholders prior to the date of this Prospectus Supplement.
(6) Reflects shares owned by Morgan Stanley Co. Incorporated ("Morgan
Stanely") with a settlement date of October 18, 1995. Does not reflect
shares as to which Morgan Stanley held a short position as of such
date.
(7) Includes Common Shares and Warrants transferred to this Selling
Shareholder by certain of the Selling Shareholders.
Set forth below is a list and description of each Placement Agent,
together with the number of Shares beneficially owned, the number of Shares
being offered, and the number of Shares (and the percent of the class) to be
owned after completion of the offering.
<TABLE>
<CAPTION>
==================================================================================================================================
Material Percent
Relationship Securities Securities Common
Had With the Beneficially Beneficially Stock Owned
Name of Company Within Owned As of Securities Owned After After
Placement Past Three October 15, Offered Completion of Completion
Agent Years (1) 1995 (2) Hereby Offering (3) of Offering
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harvey Kohn shareholder 4,687(4) 4,687 0 *
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Cary Sucoff shareholder 4,688(4) 4,688 0 *
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Rene Matthews shareholder 7,375 3,375 4,000 *
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Burt S. Davis, consultant/ 19,425 19,425 0 *
III shareholder
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Marion Bass shareholder 8,325 8,325 0 *
Securities
Group
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Herbert A. shareholder 102,750 6,250 96,500 *
Hardt
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Alan Davidson shareholder 61,250 6,250 55,000 *
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Donald shareholder 60,250 6,250 54,000 *
Erenberg
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Jeffrey A. shareholder 15,750 0 0 *
Leerink (5)
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Harlan P. shareholder 17,728 17,728 0 *
Kleiman
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Robert K.
Schacter shareholder 5,522 5,522 0 *
4
<PAGE>
- ----------------------------------------------------------------------------------------------------------------------------------
Financial West
Group shareholder 1,750 1,750 0 *
===================================================================================================================================
</TABLE>
* Less than 1%.
(1) The term "shareholder" refers to either shareholders or warrant holders
of the Company.
(2) Includes Common Stock as to which the holder has sole or shared voting
or investment power and Common Stock issuable pursuant to options
and/or warrants exercisable within the next 60 days.
(3) Is based on securities beneficially owned as of October 15, 1995 and
assumes all Shares being registered in this offering will be sold.
However, to the best of the Company's knowledge, the holders of such
securities have no commitment to anyone to sell all or part of the
securities being registered.
(4) Does not include 18,750 Shares beneficially owned by HDC Group, L.L.C.
or its principals.
(5) Some or all of the securities offered on behalf of this Selling
Shareholder were transferred to certain Selling Shareholders prior to
the date of this Prospectus Supplement.
The Shares registered hereby were issued by the Company to the Selling
Shareholders in an offering qualifying for exemption from registration under the
Securities Act (the "Offering"). The Selling Shareholders acquired an aggregate
of 200,000 units in the Offering, each of which consisted of four (4) shares of
Common Stock and one (1) warrant to purchase one (1) share of Common Stock (the
"Units").
The Subscription Agreements executed by the Company and the Selling
Shareholders provided that the 800,000 shares of Common Stock issued to the
Selling Shareholders in the Offering would be increased if the market price of
the Company's Common Stock decreased below $22.77 per share during the five
trading days following the release by the Company of its financial results for
the quarter ending December 31, 1995, with market price deemed to be the average
of the mean between the high and low trading prices on the five trading days
commencing on the release date of second quarter financial information. The
number of Extra Shares issued as a result of this provision was 279,467 shares,
the number of shares at the market price required to compensate the Selling
Shareholder for the amount by which $22.77 exceeded the market price, but not
more than $7.77 per share of losses. Only shares still held by a Selling
Shareholder at the end of the five trading days after the release date qualified
such Selling Shareholder for Extra Shares. The Company agreed to register an
additional 414,400 shares of Common Stock to accommodate any Extra Shares it may
be required to issue pursuant to the terms of the Subscription Agreements.
5
<PAGE>
PROSPECTUS SUPPLEMENT DATED MAY 24, 1996
(SUPPLEMENTING PROSPECTUS DATED DECEMBER 18, 1995)
CREE RESEARCH, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Selling Shareholders..............................................................................................2
</TABLE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus Supplement in
connection with this offering, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus Supplement does not constitute an offer to sell or
solicitation of an offer to buy, any securities other than the registered
securities to which it relates, or an offer to or solicitation of any person in
any jurisdiction in which such offer or solicitation would be unlawful. The
delivery of this Prospectus Supplement at any time does not imply that
information herein is correct as of any time subsequent to its date.
6
