Exhibit 10.130

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective
as of June 23, 2009 by and between Charles & Colvard, Ltd., a North Carolina
company with its principal office at 300 Perimeter Park Drive, Suite A,
Morrisville, North Carolina, 27560 (the “Company”), and Timothy L. Krist, an
individual currently residing at 820 Magalloway Drive, Cary, North Carolina,
27519 (“Employee”).

Statement of Purpose

The Company wishes to obtain the services of Employee on the terms and
conditions and with the benefits set forth in this Agreement. Employee desires
to be employed by the Company on such terms and conditions and to receive such
additional consideration as set out herein.

As a result of his employment, Employee will be in a position of trust and
confidence and will have access to, learn of and benefit from certain
confidential and proprietary information, know-how, trade secrets and customer
relationships of the Company and the Company is entitled to be protected from
the use of this information and relationships in competition with it.
Accordingly, in consideration of the mutual covenants contained in this
Agreement, the additional consideration of $500 paid by the Company to the
Employee, the Company’s covenants set forth in Sections 7(c) and 7(d) which are
all in addition to anything to which the Employee is already entitled the
Employee agrees to the restrictive covenants contained herein.

Therefore, the Company and Employee agree as follows:

1. Employment. The Company hereby agrees to employ Employee, and Employee hereby
accepts such employment, on the terms and conditions set forth in this
Agreement.

2. Term of Employment. The term of Employee’s employment under this Agreement
shall commence as of the date of this Agreement and shall continue for one year.
Termination of employment shall be governed by Paragraph 7 of this Agreement,
and unless terminated by either party as provided in Paragraph 7, this Agreement
shall automatically, at the expiration of each then existing term, renew for
successive additional one year terms (such annual period being hereinafter
referred to as the “Term”).

3. Position and Duties. Employee shall serve as Chief Financial Officer of the
Company, which shall include positions of Principal Accounting Officer and
Principal Financial Officer for SEC purposes. Employee will, under the direction
of the Chief Executive Officer of the Company, faithfully and to the best of his
ability perform the duties as set as may be reasonably assigned by the CEO or
the Board of Directors of the Company. Employee agrees to devote his entire
working time, energy and skills to the Company while so employed.

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4. Compensation and Benefits. Employee shall receive compensation and benefits
for the services performed for the Company under this Agreement as follows:

(a) Base Salary. Employee shall receive an initial base salary of $215,000,
payable in regular and equal semi-monthly installments (“Base Salary”).

(b) Employee Benefits. Employee shall receive such benefits as are made
available to the other employees of the Company, including, but not limited to,
life, medical and disability insurance, retirement benefits, and such vacation
as is provided to the other employees of the Company (the “Employee Benefits”).
Employer reserves the right to reduce, eliminate or change such Employee
Benefits, in its sole discretion, subject to any applicable legal and regulatory
requirements.

(c) Incentive Compensation. Employee shall participate in such incentive equity,
cash and other plans as may be approved by the Board of Directors from
time-to-time for members of management, which shall include an initial award of
60,000 shares of restricted stock under the Company’s 2008 Stock Incentive Plan,
with all restrictions lapsing on June 15, 2010.

5. Reimbursement of Expenses. The Company shall reimburse Employee for all
reasonable out-of-pocket expenses incurred by Employee specifically and directly
related to the performance by Employee of the services under this Agreement.

6. Withholding. The Company may withhold from any payments or benefits under
this Agreement all federal, state or local taxes or other amounts as may be
required pursuant to applicable law, government regulation or ruling.

7. Termination of Employment.

(a) Death of Employee. If Employee shall die during the Term, this Agreement and
the employment relationship hereunder will automatically terminate on the date
of death.

(b) Termination by the Company for Just Cause. The Company shall have the right
to terminate Employee’s employment under this Agreement at any time for Just
Cause, which termination shall be effective immediately. Termination for “Just
Cause” shall include, termination for Employee’s personal dishonesty, gross
incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, regulation (other than traffic violations or similar offenses),
written Company policy or final cease-and-desist order, conviction of a felony
or of a misdemeanor involving moral turpitude, unethical business practices in
connection with the Company’s business, misappropriation of the Company’s assets
(determined on a reasonable basis), disability or material breach of any other
provision of this Agreement or any other conduct by Employee of a similar
nature. For purposes of this subsection, the term “disability” means the
inability of Employee, due to the condition of his physical, mental or emotional
health, to satisfactorily perform the duties of his employment hereunder for a
continuous three month period; provided further that if the Company furnishes
long term disability insurance for Employee, the term “disability” shall mean
that continuous period sufficient to allow for the long term disability payments
to commence pursuant to the Company’s long term disability

 

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insurance policy. In the event Employee’s employment under this Agreement is
terminated for Just Cause, Employee shall have no right to receive compensation
or other benefits under this Agreement for any period after such termination.

(c) Termination by the Company Without Cause. The Company may terminate
Employee’s employment other than for “Just Cause,” as described in Subsection
(b) above, at any time upon written notice to Employee, which termination shall
be effective immediately. For the avoidance of doubt, a notice by the Company
that the Agreement is not automatically renewing as provided in Section 2 hereof
shall constitute a termination by the Company without cause under this
Subsection (c). In the event the Company terminates Employee pursuant to this
Subsection (c), Employee will continue to receive his Base Salary at time of
termination for a one (1) year period from such termination (the “Termination
Compensation”), so long as Employee complies with Section 8, 9 and 10 of the
Agreement. Such amounts shall be payable at the times such amounts would have
been paid in accordance with Section 4. In addition, the Company shall pay
Employee’s insurance plan premiums under the Consolidated Omnibus Budget
Reconciliation Act to continue his and his family’s health insurance coverage
for all periods that Employee receives Termination Compensation. Notwithstanding
anything in this Agreement to the contrary, if Employee breaches Sections 8, 9
or 10 of this Agreement, Employee will not be entitled to receive any further
compensation or benefits pursuant to this Section 7(c).

(d) Change of Control Situations. In the event of a Change of Control of the
Company at any time after the date hereof, Employee may voluntarily terminate
employment with Company up until one (1) year after the Change of Control for
“Good Reason” (as defined below) and, subject to Section 7(f), (y) be entitled
to receive in a lump sum (i) any compensation due but not yet paid through the
date of termination and (ii) in lieu of any further salary payments from the
date of termination to the end of the then existing term, an amount equal to the
Termination Compensation within two (2) months of the consummation of the Change
of Control, and (z) the Company shall pay Employee’s insurance plan premiums
under the Consolidated Omnibus Budget Reconciliation Act to continue his and his
family’s health insurance coverage for a period of one year following
termination of employment by Employee, on the same terms as were in effect
either (A) at the date of such termination, or (B) if such plans and programs in
effect prior to the Change of Control of Company are, considered together as a
whole, materially more generous to the officers of Company, then at the date of
the Change of Control. Any equity based incentive compensation (including but
not limited to stock options, restricted stock, SARs, etc.) shall fully vest and
be immediately exercisable in full upon a Change of Control, not withstanding
any provision in any applicable plan. Any such benefits shall be paid by the
Company to the same extent as they were so paid prior to the termination or the
Change of Control of Company.

 

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“Good Reason” shall mean the occurrence of any of the following events without
Employee’s express written consent:

(i) the assignment to Employee of duties materially inconsistent with the
position and status of Employee with the Company immediately prior to the Change
of Control;

(ii) a material reduction by the Company in Employee’s pay grade or base salary
as then in effect, or the exclusion of Employee from participation in Company’s
benefit plans in which he previously participated as in effect at the date
hereof or as the same may be increased from time to time during the Term;

(iii) an involuntary relocation of Employee more than 50 miles from the location
where Employee worked immediately prior to the Change of Control or the breach
by the Company of any material provision of this Agreement; or

(iv) any purported termination of the employment of Employee by Company which is
not effected in accordance with this Agreement.

A “Change of Control” shall be deemed to have occurred if (i) any person or
group of persons (as defined in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934) together with its affiliates, excluding employee benefit
plans of Company, becomes, directly or indirectly, the “beneficial owner” (as
defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of
securities of Company representing 51% or more of the combined voting power of
Company’s then outstanding securities; or (ii) during the then existing term of
the Agreement, as a result of a tender offer or exchange offer for the purchase
of securities of Company (other than such an offer by the Company for its own
securities), or as a result of a proxy contest, merger, consolidation or sale of
assets, or as a result of any combination of the foregoing, individuals who at
the beginning of any year period during such term constitute the Company’s Board
of Directors, plus new directors whose election by Company’s shareholders is
approved by a vote of at least two-thirds of the outstanding voting shares of
the Company, cease for any reason during such year period to constitute at least
two-thirds of the members of such Board of Directors; or (iii) the shareholders
of the Company approve a merger or consolidation of the Company with any other
corporation or entity regardless of which entity is the survivor, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or being converted into voting securities of the surviving
entity) at least 60% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation; or (iv) any event which the Company’s Board of Directors
determines should constitute a Change of Control. Notwithstanding anything in
this Agreement to the contrary, in no event shall any of the following
occurrences constitute a “Change of Control”: (i) the Company’s making any
assignment for the benefit of its creditors or consenting to the appointment of
a receiver or commencing any proceeding in bankruptcy or for dissolution,
liquidation, winding-up, composition or other relief under state or federal
bankruptcy laws or (ii) any proceeding in bankruptcy or for dissolution,
liquidation, winding-up, composition or other relief under state or federal
bankruptcy laws being commenced against the Company, or a receiver or trustee
being appointed for the Company or a substantial part of its property.

 

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(e) Employee’s Right to Payments. In receiving any payments pursuant to this
Section 7, Employee shall not be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to Employee hereunder,
and such amounts shall not be reduced or terminated whether or not Employee
obtains other employment.

(f) Reduction in Agreement Payments. Notwithstanding anything in this Agreement
to the contrary, if any of the payments provided for under this Agreement (the
“Agreement Payments”), together with any other payments that Employee has the
right to receive (such other payments together with the Agreement Payments are
referred to as the “Total Payments”), would constitute a “parachute payment” as
defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended
(the “Code”) (a “Parachute Payment”), the Agreement Payments shall be reduced by
the smallest amount necessary so that no portion of such Total Payments would be
Parachute Payments. In the event the Company shall make an Agreement Payment to
Employee that would constitute a Parachute Payment, Employee shall return such
payment to the Company (together with interest at the rate set forth in
Section 1274(b)(2)(B) of the Code). For purposes of determining whether and the
extent to which the Total Payments constitute Parachute Payments, no portion of
the Total Payments the receipt of which Employee has effectively waived in
writing shall be taken into account.

8. Covenant Not to Compete. Employee agrees that during his employment with the
Company and for a period of one (1) year following the termination of his
employment with the Company, for whatever reason:

(a) Employee shall not, directly or indirectly, own any interest in, manage,
operate, control, be employed by, render advisory services to, or participate in
the management or control of any business that operates in the Business. For
purposes of this Agreement, the Employee and the Company specifically agree that
the “Business” shall mean the business of: (i) marketing or distributing
jewelry, diamonds or gemstones or (ii) fabricating (wafering, preforming and
faceting), marketing and distributing moissanite gemstones or other diamond
simulants to the gem and jewelry industry, unless Employee’s duties,
responsibilities and activities for and on behalf of such business are not
related in any way to products which are in competition with the Company’s
products. For purposes of this section, “competition with the Company” shall
mean competition for customers in the United States and in any country in which
the Company is selling the Company’s products at the time of termination.
Employee’s ownership of less than one percent of the issued and outstanding
stock of a corporation engaged in the Business shall not by itself be deemed to
be a violation of this Agreement. Employee recognizes that the possible
restriction on his activities which may occur as a result of his performance of
his obligations under Paragraph 8(a) are substantial, but that such restriction
is required for the reasonable protection of the Company.

(b) Employee shall not, directly or indirectly, influence or attempt to
influence any customer of the Company to discontinue its purchase of any product
of the Company which is manufactured or sold by the Company at the time of
termination of Employee’s employment or to divert such purchases to any other
person, firm or employer.

 

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(c) Employee shall not, directly or indirectly, interfere with, disrupt or
attempt to disrupt the relationship, contractual or otherwise, between the
Company and any of its suppliers.

(d) Employee shall not, directly or indirectly, solicit any employee of the
Company to work for any other person, firm or employer.

9. Confidentiality. In the course of his employment with the Company, Employee
will have access to confidential information, records, data, customer lists,
lists of product sources, specifications, trade secrets and other information
which is not generally available to the public and which the Company and
Employee hereby agree is proprietary information of the Company (“Confidential
Information”). During and after his employment by the Company, Employee shall
not, directly or indirectly, disclose the Confidential Information to any person
or use any Confidential Information, except as is required in the course of his
employment under this Agreement. All Confidential Information as well as
records, files, memoranda, reports, plans, drawings, documents, models,
equipment and the like, including copies thereof, relating to the Company’s
business, which Employee shall prepare or use or come into contact with during
the course of his employment, shall be and remain the Company’s sole property,
and upon termination of Employee’s employment with the Company, Employee shall
return all such materials to the Company.

10. Proprietary Information. Employee shall assign to the Company, its
successors or assigns, all of Employee’s rights to copyrightable works and
inventions which, during the period of Employee’s employment by the Company or
its successors in business, Employee makes or conceives, either solely or
jointly with others, relating to any subject matter with which Employee’s work
for the Company is or may be concerned (“Proprietary Information”). Employee
shall promptly disclose in writing to the Company such copyrightable works and
inventions and, without charge to the Company, to execute, acknowledge and
deliver all such further papers, including applications for copyrights and
patents for such copyrightable works and inventions, if any, in all countries
and to vest title thereto in the Company, its successors, assigns or nominees.
Upon termination of Employee’s employment hereunder, Employee shall return to
the Company or its successors or assigns, as the case may be, any Proprietary
Information. The obligation of Employee to assign the rights to such
copyrightable works and inventions shall survive the discontinuance or
termination of this Agreement for any reason.

11. Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to Employee’s employment by the Company and supersedes any
prior agreements between them, whether written or oral.

12. Waiver. The failure of either party to insist in any one or more instance,
upon performance of the terms and conditions of this Agreement, shall not be
construed as a waiver or a relinquishment of any right granted hereunder or of
the future performance of any such term or condition.

13. Notices. Any notice to be given under this Agreement shall be deemed
sufficient if addressed in writing and delivered personally, by telefax with
receipt acknowledged, or by registered or certified U.S. mail to the address
first above appearing, or to such other address as a party may designate by
notice from time to time.

 

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14. Severability. In the event that any provision of any paragraph of this
Agreement shall be deemed to be invalid or unenforceable for any reason
whatsoever, it is agreed such invalidity or unenforceability shall not affect
any other provision of such paragraph or of this Agreement, and the remaining
terms, covenants, restrictions or provisions in such paragraph and in this
Agreement shall remain in full force and effect and any court of competent
jurisdiction may so modify the objectionable provision as to make it valid,
reasonable and enforceable.

15. Amendment. This Agreement may be amended only by an agreement in writing
signed by each of the parties hereto.

16. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled by arbitration in Raleigh, North
Carolina in accordance with the expedited procedures of the Rules of the
American Arbitration Association, and judgment upon the award may be rendered by
the arbitrator and may be entered in any court having jurisdiction thereof.

17. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of North Carolina. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the courts located in North
Carolina for the purposes of any suit, action or other proceeding contemplated
hereby or any transaction contemplated hereby.

18. Benefit. This Agreement shall be binding upon and inure to the benefit of
and shall be enforceable by and against the Company, its successors and assigns,
and Employee, his heirs, beneficiaries and legal representatives. It is agreed
that the rights and obligations of Employee may not be delegated or assigned
except as may be specifically agreed to by the parties hereto.

19. Compliance with Section 409A. The parties hereto intend that this Agreement
comply with Section 409A of the Internal Revenue Code of 1986, as amended
(including any applicable regulations, proposed regulations, guidance or other
interpretive authority thereunder (for purposes of this section, collectively,
“Section 409A”)), to the extent applicable. The parties hereby agree that this
Agreement shall be construed in a manner to comply with Section 409A and that
should any provision be found not in compliance with Section 409A, the parties
are hereby contractually obligated to execute any and all amendments to this
Agreement deemed necessary and recommended by legal counsel for the Company to
achieve compliance with Section 409A. By execution and delivery of this
Agreement, the Company and Employee each irrevocably waive any objections it or
he may have to the amendments required or necessitated, in the reasonable
opinion of the Company, by Section 409A.

<signature page follows>

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

CHARLES & COLVARD, LTD. By:  

/s/    Richard A. Bird

  Richard A. Bird, Chief Executive Officer EMPLOYEE

/s/    Timothy L. Krist

Timothy L. Krist