Exhibit 10.17

 
FIRST LEASE AMENDMENT

THIS FIRST LEASE AMENDMENT (this “Amendment”) is executed this 22nd day of
September, 2004 by and between DUKE REALTY LIMITED PARTNERSHIP, an Indiana
limited partnership doing business in North Carolina as Duke Realty of Indiana
Limited Partnership (“Landlord”), and CHARLES & COLVARD, LTD., a North Carolina
corporation (“Tenant”).

W I T N E S S E T H:

WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated
March 24, 2004, (the “Lease”), whereby Tenant leased from Landlord certain
premises consisting of approximately 16,517 rentable square feet (the “Leased
Premises”) of the building (the “Building”) located at 300 Perimeter Park Drive,
Suite A, Morrisville, North Carolina 27560, within Perimeter Park (the “Park”),
as more particularly described in the Lease; and

WHEREAS, the costs of construction of the Tenant Improvements were increased by
$31,226.00 due to Change Orders requested by Tenant. Landlord and Tenant desire
to amortize the additional costs of the Tenant Improvements due to such Change
Orders over the term of the Lease.

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants
herein contained and each act performed hereunder by the parties, Landlord and
Tenant hereby enter into this Amendment.

1.           Incorporation of Recitals. The above recitals are hereby
incorporated into this Amendment as if fully set forth herein.

2.           The Lease is hereby amended to provide that Landlord shall amortize
the amount of Thirty-One Thousand Two Hundred Twenty-Six and 00/100 Dollars
($31,226.00) over the initial Lease Term on a straight-line basis at an annual
rate of zero percent (0%), which amortization payments in the amount of Three
Hundred Seventy One and 74/100 Dollars ($371.74) shall be paid by Tenant
commencing on the Commencement Date and monthly thereafter for the Lease Term as
Additional Rent in the same manner as Monthly Rental Installments.
Notwithstanding the foregoing, Tenant shall not be obligated to make such
payments during the months in which Tenant receives free rent.

3.           All other terms and conditions as set forth in the Lease shall
remain in effect during the Extension Term.

4.           Tenant’s Representations and Warranties. The undersigned represents
and warrants to Landlord that (i) Tenant is duly organized, validly existing and
in good standing in accordance with the laws of the state under which it was
organized and if such state is not the state in which the Leased Premises is
located, that it is authorized to do business in such state; (ii) all action
necessary to authorize the execution of this Amendment has been taken by Tenant;
and (iii) the individual executing and delivering this Amendment on behalf of
Tenant has been authorized to do so, and such execution and delivery shall bind
Tenant. Tenant, at Landlord’s request, shall provide Landlord with evidence of
such authority.
 
 
5.           Examination of Amendment. Submission of this instrument for
examination or signature to Tenant does not constitute a reservation or option,
and it is not effective until execution by and delivery to both Landlord and
Tenant.

6.           Definitions. Except as otherwise provided herein, the capitalized
terms used in this Amendment shall have the definitions set forth in the Lease.

7.           Incorporation. This Amendment shall be incorporated into and made a
part of the Lease, and all provisions of the Lease not expressly modified or
amended hereby shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed on the
day and year first written above.

LANDLORD:

DUKE REALTY LIMITED PARTNERSHIP,
an Indiana limited partnership doing business in North Carolina
as Duke Realty of Indiana Limited Partnership

By:           Duke Realty Corporation,
its General Partner

By: /s/ illegible                                                      
Name: /s/ illegible                                                      
Title: SVP                                                      
 
 
TENANT:

CHARLES & COLVARD, LTD., a
North Carolina corporation

By:  /s/ James R. Braun                                                

Printed:  James R. Braun                                                

Title:  VP – Finance & C.F.O.                                                

END OF EXECUTION SIGNATURES