Exhibit 10.124

SEVERANCE AGREEMENT

This Severance Agreement (the “Agreement”) is entered into between James R.
Braun, a resident of North Carolina (“Braun”), and Charles & Colvard, Ltd., a
North Carolina corporation (“Company”), effective as of the 30th day of
September, 2008 (the “Effective Date”).

WHEREAS, Braun has served in the position of Vice President of Finance and Chief
Financial Officer of the Company pursuant to the Employment Agreement made and
entered into effective as of June 4, 2001 by and between the Company and Braun,
as amended (the “Employment Agreement”); and

WHEREAS, Braun and the Company desire to terminate his employment with the
Company, including any subsidiaries and affiliates, as of the Effective Date;
and

WHEREAS, the parties wish for Braun’s termination from his employment and
positions with the Company to be achieved in an amicable fashion, with Braun
available to continue to perform services for the Company as set out herein, and
to provide a clear understanding of the parties rights and liabilities;

THEREFORE, the parties agree as follows:

1. Termination Date. Braun and the Company agree that as of the Effective Date,
his service as an employee and as Vice President of Finance and Chief Financial
Officer of the Company, including any subsidiaries and affiliates is terminated.

2. Continuing Services. Commencing on the Effective Date, and continuing for a
period of twelve (12) months thereafter, Braun will make himself reasonably
available to perform services, at such hours and such places as may be
reasonably requested by the Company, of an advisory or consulting nature on
behalf of Company on the terms set out herein. Specifically, Braun shall:
(i) assist the Company in finalizing the closure of the Company’s Hong Kong
operations; (ii) assist the Company in determining the tax treatment of closing
the Company’s Hong Kong operations; (iii) assist the Company with filing its
2008 tax returns; (iv) assist the Company in connection with the South Korean
patent litigation; (v) assist the Company in connection with the litigation
entitled Charles & Colvard, Ltd. v. Jewelnet Corporation d/b/a K&G Creations and
Jewelnet Acquisition Corporation d/b/a K&G Creations; and (vi) assist with
general business issues that may arise, including but not limited to any
investigation, inquiry, litigation or other proceeding in which the Company is
or may become involved, and which arises out of facts and circumstances known to
Braun (and without regard to whether Braun is a party thereto). The Company
shall provide to Braun from time to time, in writing, a single point-of-contact
for Braun at the Company and with counsel to coordinate the services to be
provided hereunder. Braun acknowledges and agrees that in

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providing these services, he shall have no authority to bind the Company to any
contract, agreement or obligation whatsoever. The acts of Braun shall in no way
constitute the acts of the Company and Braun shall not represent to any third
party that he has any express or implied authority to bind the Company to any
contract, agreement or obligation.

3. Compensation and Benefits.

(a) Compensation. Notwithstanding any provision to the contrary in the
Employment Agreement for severance or other payments, the sole compensation
payable to Braun subsequent to the Effective Date shall be as provided in this
Agreement. In consideration of Braun agreeing to make himself available to
provide services as set out in Section 2 of this Agreement during the twelve
(12) month period commencing on the Effective Date, Braun will be paid at the
rate of $19,500 per month in arrears for eleven (11) months commencing on the
Effective Date. Any accrued but unused vacation shall be paid to Braun per
Company practice. Additionally, the Company will reimburse expenses reasonably
incurred in performing such services pursuant to the Company’s standard policy.
The Company will continue to withhold from such payments customary amounts for
federal or state income taxes, social security (FICA) and unemployment tax with
respect to Braun.

(b) Payments for COBRA Continuation Coverage. Upon termination from employment,
Braun will be provided with the option to continue his current individual
dependent medical and dental insurance coverage (the “Continuation Coverage”)
under Company’s medical and dental plans pursuant to the requirements of the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”). If Braun elects the
Continuation Coverage, the Company will pay Braun’s COBRA premium for eleven
months from the Effective Date or until such time that Braun is no longer
eligible for the Continuation Coverage. With respect to the period during which
the Continuation Coverage is provided to Braun pursuant to this subsection
(b), to the extent that the Continuation Coverage benefits constitute taxable
income to Braun, Company shall report as income to Braun for federal and state
income tax purposes the value of the Continuation Coverage.

(c) Equity Awards. For the duration of this Agreement, any stock options or
restricted stock granted to Braun shall continue to vest and be exercisable in
accordance with the terms of any applicable agreements. The Company agrees that
the Company shall not exercise negative discretion to alter any post-termination
exercise and vesting terms of such agreements. 

4. Death After Effective Date. Should Braun die after the Effective Date,
Company will pay to Braun’s estate any payments provided for in
Sections 3(a)-(b) above which remain unpaid through his date of death, and
notwithstanding Section 3(c), all rights with respect to any outstanding stock
options at the time of Braun’s death shall be governed by the terms of the
applicable stock option agreements.

 

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5. Return and Use of Company Property; Preservation of Records. Unless otherwise
mutually agreed by the parties as necessary or appropriate for the performance
of the services provided for herein, following the Effective Date, Braun will
promptly return to Company all Company property, including, but not limited to,
credit cards, and Company Confidential Information (both written and electronic
copies) as required under Section 6(a). Braun may retain his blackberry/cell
phone and pertinent numbers and his computer with such access as is needed for
performing services pursuant to this Agreement. Braun shall remove all of his
personal belongings from his current office, but shall be provided office space
by the Company as needed to perform the services pursuant to this Agreement.
During the term of this Agreement, the Company shall preserve and maintain
records pertaining to Braun’s employment and shall make such records reasonably
available to Braun during normal working hours.

6. Restrictive Covenants. Braun acknowledges that Company is engaged in a highly
competitive business and that Company has made substantial investments of time
and capital in the development of its business and the goodwill associated with
its business and will continue to make such substantial investments. In order to
protect Company against possible injury or damage, Braun agrees as follows:

(a) Nondisclosure. Braun acknowledges that as a result of his employment by
Company, he has used, acquired and added to Confidential Information relating to
Company which is proprietary to Company. Braun agrees that he shall not at any
time, directly or indirectly, divulge or disclose to any person, for any
purpose, any Confidential Information unless legally required to do so.
“Confidential Information,” as that term is used in this Agreement, shall mean
all information concerning Company, including, but not limited to, business
plans and models, specifications, technical data, designs, formulas, computer
software programs, manuals, methods of operation, accounting and financial
information, customer lists, pricing structure and other product information,
which has ever been or will be revealed to or discovered by Braun, unless such
information was generally available to the public prior to disclosure by Braun
or subsequently became publicly available through no act of Braun that was not
authorized by Company. Such information shall be considered “Confidential
Information” whether it was disclosed to Braun by plans, drawings, reports or
other written materials, by conversation with employees or agents of Company, by
observation or inspection of physical objects or by any other method. Promptly
following the Effective Date, Braun shall, on a best efforts basis immediately
deliver, or cause to be delivered, to Company any and all documents, statements
or other information (both written and electronic copies) in his possession or
control obtained from Company containing Confidential Information (including,
but not limited to, photocopies as taken by Braun or any other person in or
outside Company, and Braun’s handwritten or typed notes containing such
Confidential Information), other than such Confidential Information as is
mutually agreed to by the Company and Braun as necessary for Braun to retain to
perform his consulting duties hereunder. The return of documents provided for
herein shall in no way obviate the obligation of Braun to maintain the
confidentiality of the Confidential Information as provided for herein.
Notwithstanding the provisions of this Section, Braun may disclose

 

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Confidential Information to his attorneys and accountants provided they are made
aware of and agree to maintain such Confidential Information in accordance with
the terms of this Agreement.

(b) Non-Competition. Braun acknowledges that the Covenant Not to Compete in his
Employment Agreement effective as of June 4, 2001, as amended, is a valid and
binding agreement and in consideration of the compensation paid to him under
this Agreement, Braun will abide by the restrictive covenants contained therein
for a period of one (1) year following the termination of this Agreement.

(c) Nondisparagement. Braun agrees that he will not make disparaging comments
regarding Company or any of its officers or directors to any third party.
Company agrees that neither it nor any of its officers or directors in their
capacities as officers or directors will make disparaging comments regarding
Braun to any third party.

(d) Breach. In addition to any other remedies (including injunctive relief),
Braun agrees that if he breaches the restrictive covenants or any other material
provision of this Agreement, Company’s obligation to make any remaining payments
pursuant to Section 3 of this Agreement is terminated and Braun will be liable
to Company for, and will immediately repay to Company, the gross amount paid
pursuant to Section 3(a) and (b) of this Agreement.

7. Mutual Release.

(a) Release by Braun. Braun (and any of his respective heirs, agents or assigns)
does hereby remise, release and forever discharge the Company and its officers,
directors, shareholders, predecessors, successors, agents, counsel, trusts and
assigns from any and all rights, actions, suits, debts, sums of money, accounts,
causes of action, claims (however and whenever arising and whether in law or
equity, and whether arising under statutory or common law of the United States
or any state thereof), demands or damages of any kind (whether actual, punitive,
compensatory, double, treble or nominal and whether known or unknown) arising
prior to the date of this Agreement and related in any way to Braun’s previous
relationship with the Company, which include claims under the Age Discrimination
in Employment Act, 29 U.S.C. 621 et. seq all to the end that any and all matters
and things which are or might have been claimed now or in the future by Braun
against the Company pursuant to any previous events that may have occurred or
may occur in connection with the subject matter of their previous relationship
or any prior contracts or agreements of any kind whatsoever between Braun and
the Company are forever barred and put to rest. In addition and not in
limitation of the foregoing, Braun does hereby release and extinguish any and
all claims he may have against the Company of any kind whatsoever prior to the
execution of this Agreement.

(b) Release by Company. The Company does hereby remise, release and forever
discharge Braun from any and all rights, actions, suits, debts, sums of money,
accounts, causes of action, claims (however and whenever arising and

 

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whether in law or in equity, and whether arising under statutory or common law
of the United States or any state thereof), demands or damages or any kind
(whether actual, punitive, compensatory, double, treble or nominal, and whether
known or unknown) arising prior to the date of this Agreement and related in any
way to Braun’s previous relationship with the Company, all to the end that any
and all matters and things which are or might have been claimed now or in the
future by the Company against Braun pursuant to any previous events that may
have occurred or may occur in connection with the subject matter of their
previous relationship or any prior contracts or agreements of any kind
whatsoever between Braun and the Company are forever barred and put to rest. In
addition and not in limitation of the foregoing, the Company does hereby release
and extinguish any and all claims it may have against Braun of any kind
whatsoever prior to the execution of this Agreement.

8. Consideration and Revocation Period. Employee acknowledges that he has hereby
been advised in writing to consult with an attorney of his choice prior to
signing this Agreement, and that he had at least 21 days to consider this
Agreement before signing it. Employee acknowledges that if this agreement is
signed before 21 days have elapsed from the date of delivery, which he has
expressly waived the 21-day consideration period. Employee acknowledges that he
may revoke this Agreement within seven (7) days following its execution, and the
Agreement shall not become effective until the revocation period has expired.

9. Opportunity to Seek Counsel. Braun acknowledges by signing this Agreement
that he has read and understands this document, that he has conferred with or
had the opportunity to confer with an attorney of his choice regarding the terms
and meaning of this Agreement, that he has had sufficient time to consider the
terms provided for in this Agreement, that no representations or inducements
have been made to him as set forth herein, and that he has signed the same
KNOWINGLY AND VOLUNTARILY.

10. Arbitration. Except as provided below, any dispute or controversy arising
between the parties to this Agreement involving the interpretation or
application of any provision of this Agreement, or arising out of this
Agreement, shall be submitted to arbitration at Raleigh, North Carolina,
pursuant to the Commercial Rules (the “Rules”) of the American Arbitration
Association (“AAA”) by an arbitrator mutually agreed upon by the parties. Such
arbitrator shall be selected by the parties hereto in accordance with and within
the period specified by the Rules (“Arbitrator Designation Period”). In the
event Company and Braun are unable to agree on an arbitrator within the
Arbitrator Designation Period, AAA shall appoint a neutral arbitrator in
accordance with the Rules no later than ten (10) days following the expiration
of the Arbitrator Designation Period. The designated arbitrator shall not be an
agent, Braun, shareholder, relative or affiliate of Company or Braun. The
arbitrator may, in his or her discretion, award to the prevailing party its
costs of the proceeding, including attorneys’ fees and expenses. The decision of
the arbitrator shall be final and binding on the parties, and judgment upon the
decision may be entered in the state courts or federal courts having
jurisdiction over Wake County, North Carolina. Notwithstanding the foregoing,
either party shall have the right to institute an action against the other party
in the federal or state courts of Wake County,

 

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North Carolina seeking injunctive relief to enjoin any continuing or threatened
breach by the other party of any term of this Agreement.

11. Governing Law. The provisions of this Agreement shall be construed in
accordance with the internal laws of the state of North Carolina. In the event
that any paragraph, subparagraph or provision of this Agreement shall be
determined to be partially contrary to governing law or otherwise partially
unenforceable, the paragraph, subparagraph, or provision and this Agreement
shall be enforced to the maximum extent permitted by law, and if any paragraph,
subparagraph, or provision of Agreement shall be determined to be totally
contrary to governing law or otherwise totally unenforceable, the paragraph,
subparagraph, or provision shall be severed and disregarded and the remainder of
this Agreement shall be enforced to the maximum extent permitted by law.

12. Entire Agreement. This Agreement expresses the entire agreement between the
parties with reference to the terms of the termination of Braun and supersedes
and replaces any prior understanding or arrangement as to such termination,
(other than any benefit plans governing such terms), whether written or oral,
between Braun and the Company.

13. Modification of Agreement. No waiver or modification of this Agreement shall
be valid unless in writing and signed by the party to be charged therewith.

 

Charles & Colvard, Ltd.

 

    By:   /s/ Dennis M. Reed    

/s/ James. R. Braun

  Dennis M. Reed, President     James R. Braun Date:   9/30/08     Date: 9/30/08

 

 

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