Exhibit 10.1

SERVICES AND LICENSING AGREEMENT

This SERVICES AND LICENSING AGREEMENT (this “Agreement”) is entered into
effective as of the 19th day of October, 2012 (the “Effective Date”), by and
between Charles & Colvard Direct, LLC (“CCD”), a North Carolina limited
liability company with its principal place of business at 300 Perimeter Park
Drive, Morrisville, NC 27560 and JudeFrances Jewelry, Inc. (“JF”), a California
corporation with its principal place of business at 2151 Michelson Drive, Suite
170, Irvine, CA 92612.
 
WHEREAS, CCD, a wholly-owned subsidiary of Charles & Colvard Ltd., operates the
direct-to-consumer home party jewelry sales business; and
 
WHEREAS, CCD desires to engage the services of JF and license certain
intellectual property of JF specifically for CCD’s Lulu Avenue™ line to advance
its business, for the consideration set forth herein.
 
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, and other valuable consideration, the Parties agree as follows:
 
1.  
DEFINITIONS  

 
As used in this Agreement, the following terms shall have the meanings set forth
below:
 
“Affiliates” means any corporation or business entity controlled by,
controlling, or under common control with a Party to this Agreement only for so
long as such control continues to exist.  For this purpose, “control” shall mean
direct or indirect beneficial ownership of at least fifty percent (50%) of the
voting stock or income interest in such corporation or other business entity, or
such other relationship as, in fact, constitutes actual control.
 
“Agreement Year” means each one year period during the Term, with “Year 1”
commencing on the Effective Date, “Year 2” one year thereafter, and so forth.
 
“Asset Purchase Agreement” means the Asset Purchase Agreement dated as of
October 19, 2012, between CCD and Bamboo Pink, Inc., pursuant to which Bamboo
Pink, Inc., sold and conveyed inventory and certain other assets to CCD.
 
“Bamboo Pink Molds” means the jewelry molds conveyed to CCD by Bamboo Pink, Inc.
pursuant to the Asset Purchase Agreement.
 
 “CCD Marks” means trademarks and service marks, both registered and under
common law, as well as trade dress, names, trade names, logos, insignia,
symbols, designs, combinations thereof, or other marks identifying CCD or its
Affiliates, or its or their respective products, including without limitation
the Love Knot Logo.
 
“Deliverables” means drawings, design art, support renderings, molds, models,
samples (and sample review and approval for such designs) for 2 full lines each
calendar year (Spring and Fall) with a minimum of at least [****] unique jewelry
items including products developed for interim holiday/seasonal campaigns, and
related marketing materials, provided that CCD will pay the third party
manufacturers cost (if any) for building any molds, all as further described on
Exhibit A.
 
[****] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

 
 
 

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“Intellectual Property Rights” means any trade secret, patent, copyright,
trademark, know-how, moral, and similar rights of any type under the applicable
laws of any governmental authority, domestic or foreign, including without
limitation all applications, registrations, and issuances relating to any of the
foregoing.
 
“JF Name” means “JudeFrances” and such other names, service marks, logos,
insignia or trademarks identifying JF or its Affiliates as mutually agreed by
the Parties in writing.
 
“Love Knot Logo” means the “love knot” logo comprising or incorporating the
“love knot” trademark, U.S. Registration No. 4,180,227, conveyed by Bamboo Pink,
Inc. to CCD pursuant to the Asset Purchase Agreement.
 
“Lulu Avenue Brand” means the logos, symbols, designs and combinations thereof
bearing the JF Name and the CCD Marks, as developed by one or both Parties
during the Term and approved in writing by CCD.
 
“Net Revenue” means the amounts received by CCD for sales by CCD of the
Products, less all (a) applicable refunds and returns, (b) sales credits accrued
in accordance with generally accepted accounting principles, (c) applicable
taxes, (d) reimbursement of customer expenses or pass-through costs from
customers, or (e) other similar deductions.
 
“Party” means CCD or JF; and “Parties” means CCD and JF, collectively.
 
“Products” means the fashion and moissanite jewelry manufactured by or on behalf
of Lulu Avenue, a division of CCD, which replicates the jewelry designs provided
by JF as Deliverables under this Agreement.
 
“Royalty Payments” means the 2012 Net Revenue Payment and Post-2012 Net Revenue
Payments, collectively.
 
“Services” has the meaning set forth in Section 2.
 
2.  
SERVICES

 
2.1 Services.  Subject to the terms and conditions of this Agreement, during the
Initial Term and any Renewal Terms, JF shall develop and provide to CCD those
services identified on the attached Exhibit A and otherwise in this Agreement
(“Services”) and the Deliverables. Unless otherwise distinguished in this
Agreement, “Services” and “Deliverables” shall collectively be referred to as
“Services.”  Unless otherwise set forth in this Agreement, JF shall furnish, at
its own expense, the equipment, supplies and other materials used to perform the
Services.  CCD shall not control the manner or means by which JF performs the
Services.  Any additional services that CCD may request be provided by JF
(including, for example, graphic design services) shall be subject to mutual
agreement of the Parties as to such services and JF’s compensation therefor,
which shall be set forth in an addendum executed by the Parties.
 

2.2 Project Management.  The Parties shall, during the Initial Term and any
Renewal Terms, maintain within its organization a project manager to serve as
such Party’s primary point of contact for day-to-day communications,
consultation and decision-making regarding the Services hereunder. Each such
project manager shall be responsible for providing all day-to-day consents and
approvals. The project managers shall meet no less than each calendar quarter

 
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during the Initial Term and any Renewal Terms to track performance against
contractual obligations, and address ways to improve the execution of the
obligations hereunder.  The Parties shall ensure its project manager has the
requisite organizational authority, and necessary skill, experience and
qualifications, to perform in such capacity. Each of CCD’s and JF’s initial
project managers are: For CCD, Sondra Johnson, Director of Merchandising
(sjohnson@charlesandcolvard.com) for product development; and for JF, Susan
Bush, Vice President (susan@judefrances.com). The Parties shall use commercially
reasonable efforts to maintain the same project manager in place throughout the
Initial Term and any Renewal Terms. If either CCD’s or JF’s project manager
ceases to be employed by such Party or such Party otherwise wishes to replace
its project manager, such Party shall promptly name a new project manager by
written notice to the other Party.

3.  
LICENSE GRANTS

 
3.1 License to the JF Name.  Subject to the terms and conditions of this
Agreement, JF hereby grants to CCD a worldwide, exclusive, non-transferable
license to use and display and have used and displayed during the Term the JF
Name and JF Property (to the extent incorporated into Deliverables hereunder or
as otherwise provided as part of the Services) solely as part of the Lulu Avenue
Brand (and not for use other than in association with the Lulu Avenue Brand) in
connection with the branding, design, marketing, advertisement, promotion, sales
and distribution of the Deliverables and Products, solely through a
direct-to-consumer home-based jewelry business opportunity channel (or, with
JF’s prior written consent, to be granted or withheld at JF’s discretion, other
sales channels), all in accordance with JF’s trademark guidelines furnished by
CCD to JF in writing.  For the avoidance of doubt, the foregoing license does
not apply outside of the direct-to-consumer home-based jewelry business
opportunity channel (or as otherwise approved with JF’s prior written consent),
and nothing hereunder is intended to restrict JF from using the JF Name outside
of the direct-to-consumer home-based jewelry business opportunity channel.  Any
use by CCD of the JF Name pursuant to this license right must be pre-approved in
writing (not to be unreasonably withheld or conditioned) by one of the following
JF’s representatives:  Frances Gadbois, Susan Bush or any other project manager
designated by JF in writing from time to time.  If such JF representative does
not respond to a request from CCD for such approval in writing by the
forty-ninth (49th) hour after CCD’s written request for such approval, the
written approval by JF shall be deemed given for purposes of this
Agreement.  For clarity, written requests for approval and approvals may be
provided through traditional means or the use of email correspondence.
 
3.2 License to CCD Marks.  Subject to the terms and conditions of this
Agreement, CCD hereby grants to JF a worldwide, non-exclusive, non-transferable
license to use the CCD Marks solely in connection with JF’s development of the
Lulu Avenue Brand and performance of the Services involving the branding and
sourcing of the Products in accordance with the terms of this Agreement and
CCD’s trademark guidelines furnished by CCD to JF in writing from time to time,
and for no other purpose.
 
 
3.3 Reservation of Rights.  Except as otherwise expressly provided in this
Agreement, nothing in this Agreement shall be construed as granting a Party any
rights to use, or any other rights in or to, the Intellectual Property Rights of
another Party.  All goodwill arising out of use of a Party’s Marks will inure
solely to the benefit of the owner of such Marks.
 

4.  
FEES AND EXPENSES

 

 
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4.1 Consideration. As full compensation for the Services and the rights granted
to CCD in this Agreement, CCD shall pay JF the following amounts during the
Initial Term and any Renewal Terms:
 

4.1.1 $[****] in each Agreement Year (“Agreement Year Payment”), provided that
in the event this Agreement is terminated other than at the end of an Agreement
Year, such fees will be prorated through the date of such termination.
 
4.1.2 [****]% of Net Revenue in 2012 (“2012 Net Revenue Payment”).
 
4.1.3 Beginning January 1, 2013 and continuing during the remainder of the Term
(collectively, “Post-2012 Net Revenue Payment”):
 
Net Revenue  in a Calendar Year (in USD)
Percentage of Net Revenue Payable to JF
Up to $[****]
[****]%
$[****] up to $[****]
[****]%
$[****]up to $[****]
[****]%
$[****]up to $[****]
[****]%
$[****]up to $[****]
[****]%
$[****]up to $[****]
[****]%
$[****]up to $[****]
[****]%
Over  $[****]+
[****]%

 
4.2 Payment Terms.

4.2.1 Agreement Year Payment.  Subject to the terms of this Agreement, CCD shall
make the Agreement Year Payment in monthly intervals, with the first such
installment payable upon the Effective Date, and subsequent installments at the
beginning of each calendar month thereafter during the Initial Term and any
Renewal Terms.
 
4.2.2 Royalty Payments.  Subject to the terms of this Agreement, the 2012 Net
Revenue Payment shall be calculated as of December 31, 2012, and paid on or
before January 15, 2013.  The Post-2012 Net Revenue Payments shall be calculated
as of the last day of each calendar quarter using the Net Revenue actually
received by CCD in that calendar quarter as soon as practical, but not later
than 15 days after each calendar quarter accounting close.
 
4.3 Expenses.

4.3.1 CCD will reimburse JF for all reasonable and documented business travel
expenses incurred by JF employees to the extent such travel is for the benefit
of CCD (e.g., if a business trip pursuant to this section is made equally for
the business purposes of JF and CCD, CCD would reimburse JF for half of the
reimbursable business travel expenses).
 
4.3.2 CCD will reimburse JF for all reasonable and documented, out-of pocket
business expenses incurred by JF in connection with its performance of the
Services (including, without limitation, postage, shipping, courier, printing
and other similar charges), but excluding than JF’s overhead and employee
compensation expenses.
 
[****] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.  Omitted portions
have been filed separately with the Commission.

 
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4.3.3 It shall be considered reasonable to utilize business class for flights
that are four (4) hours or more in duration.
 
4.3.4 CCD will pay direct all jewelry samples, models and molds used for the
Deliverables.
 
4.3.5 Notwithstanding anything herein to the contrary, CCD must approve in
writing in advance all costs and expenses payable hereunder, other than travel
expenses, that are over $500.
 
4.3.6 CCD will pay direct manufacturing costs, including insurance, freight and
duties.  CCD will reimburse JF for any such reasonable and documented costs
incurred by JF (subject to advance approval as required by Section 4.3.5) and
will reimburse any documented production commissions for which the CCD and JF
have mutually agreed in writing in advance. Without limiting the generality of
the foregoing, CCD agrees that it and JMO Corp. have or will enter into, and
during the Term CCD will maintain (to the extent JMO Corp. abides by the terms
and conditions thereof), at CCD’s expense, a contractor’s agreement pursuant to
which JMO Corp. will provide production management services with respect to the
Products designed by JF pursuant to this Agreement that are manufactured for the
Lulu Avenue Brand.
 
4.3.7 JF shall submit any permitted expenses for which payment is due from CCD
according to the terms of this Agreement for reimbursement by CCD within twenty
(20) days of the end of each month during the Term.  CCD will pay all undisputed
amounts of each such invoice from JF within twenty (20) days after CCD’S receipt
thereof.  CCD may dispute invoiced amounts in good faith; provided, however,
that the Parties shall negotiate in good faith promptly to resolve any such
disputes.  Upon resolution of any such dispute, any formerly disputed amounts
that are determined to be payable by CCD pursuant to such resolution shall be
paid to JF within fifteen (15) days after such resolution.
 
4.4 Taxes.  All amounts payable under this Agreement are exclusive of all use,
sales, property, value added, withholding and other taxes.  Each Party will be
responsible for and pay all such taxes, except for taxes payable on the income
of the other Party or its Affiliates.  If a Party is exempt from paying such
taxes, it will provide the other Party with evidence of such exemption.
 
4.5 Audit Right.  CCD shall keep complete and accurate books and records showing
the description price, quantity and date of manufacture and sale of all
Products.  CCD shall make such books and records available during normal
business hours for inspection and audit by JF (or its authorized
representative), who shall be entitled to take copies of or extracts from the
same.  If such inspection or audit should reveal a discrepancy in the royalties
paid from those payable under this Agreement, CDD shall immediately make up the
shortfall and shall reimburse JF for any professional charges incurred for such
audit or inspection.  Such inspection and audit right of JF shall expire six (6)
months after expiration of the Tail Period.

5.  
TERM AND TERMINATION

 
5.1 Term of Agreement.  This Agreement commences as of the Effective Date and
shall remain in effect for three (3) years (“Initial Term”), unless terminated
earlier in accordance with the provisions hereof.  CCD shall have the option to
extend the term of this Agreement for an additional period of one (1) year (a
“Renewal Term”), provided that the option to extend in the first year may only
be exercised if (i) this Agreement has not yet terminated, (ii) CCD is in
 

 
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material compliance with its obligations under the terms of this Agreement, and
(iii) the Net Revenue for the Products exceeds [****] Dollars ($[****]) in the
Agreement Year immediately preceding the Renewal Term.  Such option may be
exercised (if exercisable) by written notice to JF given not later than sixty
(60) days prior to the end of the Initial Term.  The Initial Term and the
Renewal Term, if any, are collectively referred to herein as the “Term”.  This
Agreement may be extended for such additional period or periods as may be
mutually agreed by CCD and JF.
 
 
5.2 Termination.  A Party may terminate this Agreement at any time upon material
breach by another Party of the obligations herein, provided that it has first
provided written notice to the other Parties of the breach and the other Parties
have failed to cure such breach within thirty (30) days following such notice.
 
 
5.3 Effect of Termination.
 
 
(a)           Obligations of JF.  Upon expiration or termination of this
Agreement for any reason, or at any other time upon CCD’s written request, JF
shall within ten (10) days after such expiration or termination (i) deliver to
CCD all Deliverables (whether complete or incomplete), CCD Property (including
without limitation molds for the CCD Property) and materials provided for JF’s
use by CCD; (ii) deliver to CCD all tangible documents and materials (and any
copies) containing, reflecting, incorporating or based on the Confidential
Information of CCD; (iii) permanently erase all of the Confidential Information
of CCD from JF’s computer systems; (iv) cease using the CCD Marks; and (v)
certify in writing to CCD that JF has complied with the requirements of this
Section.
 
 
(b)           Obligations of CCD.  Upon expiration or termination of this
Agreement for any reason (and regardless of fault of or breach of this Agreement
by either party), CCD shall (i) pay JF on a proportional basis any fees then due
and payable for any Services completed up to and including the date of such
termination, and continue the Royalty Payments pursuant to this Agreement; and
(ii) deliver to JF all JF Property (including without limitation molds for the
JF Property).
 
 
(c)      Sell-Off Period.  Following the expiration or termination of this
Agreement, CCD may continue selling off its existing inventory of Products,
inventory that is work-in-process and may replenish orders of existing Products
for sale and distribution, and during such period CCD may continue to include
the JF Name in marketing materials (as and to the extent herein provided) for
such purposes as set forth above, all of the foregoing for a period of two (2)
years following the date of such expiration or termination (such period, the
“Tail Period”); provided, that all sales of such inventory to be governed by the
terms of this Agreement, including but not limited to the provisions relating to
payment of royalties.
 
[****] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.  Omitted portions
have been filed separately with the Commission.
 
 
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5.4 Survival.  Notwithstanding any other provision of this Agreement, the “Term”
shall be deemed to end upon the termination of this Agreement; however, the
terms and conditions of Sections 1, 4.1.2, 4.1.3 (with respect to Products
marketed and sold using the Lulu Avenue Brand), 4.2.2, 4.3 (to the extent of
expenses incurred prior to termination), 4.4, 5.3, 5.4, 6, 7, 8.2, 9-13 shall
survive the expiration or termination of this Agreement for any reason
whatsoever, and the terms and conditions of Section 3.1 shall survive the
expiration or termination of this Agreement for any reason whatsoever for
duration of the Tail Period, provided, however, that upon expiration of Section
13.4.1(b), the license in Section 3.1 shall automatically convert to a
non-exclusive license.

6.  
INTELLECTUAL PROPERTY RIGHTS

 
6.1 JF Property.  CCD acknowledges that JF possesses certain inventions,
processes, know-how, trade secrets, designs, other intellectual properties, and
other assets, which have been independently developed or obtained by JF and
which relate to its business or operations, including without limitation the JF
Name, the Bamboo Pink Molds, and all Intellectual Property Rights associated
therewith (collectively, “JF Property”).  Except as otherwise expressly set
forth under this Agreement, as between the Parties, all right, title and
interest in and to the JF Property, and all improvements and modifications
thereof created, conceived or otherwise developed by JF in connection with its
performance under this Agreement shall be and remain the exclusive property of
JF.  For clarity, any molds of designs that constitute JF Property shall
themselves constitute JF Property.
 
6.2 CCD Property.  JF acknowledges that CCD possesses certain inventions,
processes, know-how, trade secrets, designs, other intellectual properties, and
other assets, which have been independently developed or obtained by CCD and
which relate to its business or operations, including without limitation the
Love Knot Logo, and all Intellectual Property Rights associated therewith
(collectively, “CCD Property”).  Except as otherwise expressly set forth under
this Agreement, as between the Parties, all right, title and interest in and to
CCD Property, and all improvements and modifications thereof created, conceived
or otherwise developed by CCD in connection with its performance under this
Agreement shall be and remain the exclusive property of CCD.  For clarity, any
molds of designs that constitute CCD Property shall themselves constitute CCD
Property.  For the avoidance of doubt, CCD Property excludes the Bamboo Pink
Molds.
 
6.3 Intellectual Property Developed in Connection with Agreement.  All
inventions, processes, know-how, trade secrets, designs, other intellectual
properties, and other assets, developed, conceived, or prepared or created by a
Party or its agents with respect to the Services, Deliverables, or Products,
including all Intellectual Property Rights associated therewith or other
Intellectual Property Rights, shall be owned by the preparing or creating Party
as “JF Property” or “CCD Property,” as the case may be, to be set forth in an
addendum executed by the Parties that incorporates this Agreement by reference
with reasonably specific reference to such property and designating the
preparing or creating Party thereof.  For clarity, to the extent that CCD
provides specifications for a Deliverable or Product or other creation
hereunder, such specifications and all Deliverables, Products, molds, and other
materials created therefrom and all Intellectual Property Rights therein, shall
be CCD Property, except as otherwise expressly provided in such
addendum.  Notwithstanding anything herein to the contrary, all molds that
incorporate the Love Knot Logo as an integral part thereof (and not just as a
stamp or other ancillary component of the design) shall be CCD Property, except
as otherwise expressly provided in such addendum.
 

 
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Notwithstanding the foregoing, each Party agrees that advice, feedback,
criticism or comment given by it to the other Party in connection with the other
Party’s Intellectual Property Rights are given to that Party without claim of
intellectual property right, may be used by the receiving Party freely and
without restriction, and will not enable the giving Party to claim any interest
in or ownership of such other Party’s Intellectual Property Rights.  Each Party
hereby irrevocably and unconditionally assigns to the other Party and forever
waives and agrees never to assert against the other Party all right, title, and
interest, including without limitation all Intellectual Property Rights, in and
to such feedback.
 
 
6.4 Jointly Created Property.  If the Parties intend the joint creation of any
Property in the course of performance under this Agreement, they agree to set
forth such Property in an addendum hereto in which they will each acknowledge
that fact in writing with reasonably specific reference to the Property to be
created and a written project plan therefor.  All jointly created Property
(including without limitation molds and designs) will be owned by CCD, except as
otherwise expressly provided in an addendun.  Advice, feedback, criticism or
comment by one Party regarding the other Party’s development of Property will
not constitute joint production, except as otherwise expressly set forth
hereunder.
 
 
6.5 Third Party Materials.  JF shall not knowingly include in the Deliverables,
and operation of the Deliverables in accordance with the specifications and
documentation shall, to JF’s knowledge, not require the use of, any materials
owned or licensed by any third party (including Affiliates of JF) (“Third-Party
Materials”), other than Third-Party Materials expressly approved by CCD and
described in the applicable exhibit and licensed to CCD in accordance with this
Section (“Approved Third-Party Materials”).  Not later than the date specified
on the applicable exhibit, JF shall secure for the benefit of CCD, at JF’s sole
cost and expense, all necessary, rights, licenses, consents and approvals
necessary for CCD to use the Approved Third-Party Materials in connection with
its business operations or any portion thereof or successor thereto, perpetually
and worldwide, and to freely sublicense and assign such rights in connection
with sublicensing or assigning, as the case may be, the Deliverables or any
portion thereof or successor thereto.  Promptly upon execution of such license
agreements, JF shall provide CCD with copies thereof. All royalties, license
fees or other consideration payable in respect of such licenses for Approved
Third-Party Materials are included in the fees hereunder unless specifically
stated otherwise in the exhibit, and any additional amounts shall be the sole
responsibility of JF.
 
7.  
CONFIDENTIALITY

 
7.1 Confidential Information. “Confidential Information” of a Party, (the
“Disclosing Party”), means any information or proprietary materials (in every
form and media) of such Party, designated in writing as “Confidential,”
“Proprietary,” or the like, or that a Party has a reasonable basis to believe is
confidential or proprietary, made available to, disclosed to or otherwise
obtained by another Party (the “Receiving Party”) in connection with the
Agreement, including, but not limited to, information relating to the Disclosing
Party’s products, services and/or service plans, trade secrets, inventions,
data, designs, reports, analyses, costs, prices or discount structure, names,
customer lists, finances, marketing plans, business plans, strategic plans or
business opportunities.
 
7.2 Use of Confidential Information.  The Disclosing Party retains all right,
title and interest in, to and under its Confidential Information and grants only
the rights expressly described in the Agreement.  The Receiving Party agrees not
to use any Confidential Information of the Disclosing Party for any purpose
except for performing the Receiving Party’s obligations pursuant to the
Agreement.  The Receiving Party shall promptly notify the Disclosing Party in
the event of any unauthorized use or disclosure of the Disclosing Party’s
Confidential Information.
 

 
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The Receiving Party: (i) may copy the Disclosing Party’s Confidential
Information only as required to perform its obligations hereunder and shall
reproduce the Disclosing Party’s proprietary rights notices on any such copies,
in the same manner in which such notices were set forth in or on the original;
(ii) must return or destroy the Disclosing Party’s Confidential Information when
no longer needed, upon request, or at termination or expiration of the
Agreement; (iii) must use the same care it uses to protect, and avoid
unauthorized disclosure, release, or use of its own Confidential Information of
like importance, but not less than reasonable care; (iv) may disclose the
Disclosing Party’s Confidential Information only to those employees, affiliates
and independent contractors who have a need to know and use the Confidential
Information for purposes permitted or required by this Agreement, provided that
the employees, affiliates and independent contractors have agreed in writing,
prior to any disclosure of Confidential Information to any such employee,
affiliate or independent contractor, to maintain the confidentiality of the
information under terms no less stringent than those specified herein and are
not competitors of the Disclosing Party; and (v) may use Confidential
Information to perform its obligations under this Agreement, and its employees,
affiliates and independent contractors with a need to know are authorized to do
the same.
 
7.3 Exclusions from Confidential Information.  Notwithstanding the provisions of
Section 7.2, the following will not be considered Confidential Information under
this Agreement: (a) information that is independently developed by the Receiving
Party without use of, reference to or reliance on the Disclosing Party’s
Confidential Information; (b) information that is or has become publicly known
through no fault or act of the Receiving Party; (c) information that is lawfully
known by the Receiving Party at the time of disclosure and is not subject to
restriction; and (d) information that is lawfully obtained, without a duty of
confidentiality, from a third party that rightfully makes such disclosure
without breach of a duty of confidentiality or other wrongful act by the
Receiving Party.  The Receiving Party may disclose Confidential Information of
the Disclosing Party if required to do so by law; provided that the Receiving
Party promptly furnishes the Disclosing Party with written notice of such
legally required disclosure and cooperates with the Disclosing Party’s
reasonable efforts, at Disclosing Party’s cost and expense, to obtain a
protective order or other appropriate protection of the Disclosing Party’s
Confidential Information.
 
8.  
WARRANTIES

 
8.1 Mutual Representations and Warranties.  Each Party represents and warrants
to the other Parties that: (a) it is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it is organized; (b)
the execution, delivery and performance of this Agreement has been duly and
validly authorized by all necessary corporation action on the part of such
Party; (c) it has all of the rights and licenses necessary to perform its
obligations under this Agreement and to grant the other Parties the rights and
licenses that are granted herein; and (d) this Agreement constitutes a valid and
binding obligation of such Party, enforceable in accordance with its terms.
 
8.2 JF Representations and Warranties.  JF represents and warrants to CCD that:
 
8.2.1 the Services shall function and perform in all material respects in
accordance with the applicable Documentation, all express specifications,
drawings, plans, instructions, samples and other descriptions, as well as any
other criteria referred to in the applicable exhibit or mutually agreed by the
Parties in writing;
 
8.2.2 JF shall perform all activities in a good, timely, efficient, professional
and workmanlike manner using diligence, due care and skill and at a level at
least equivalent to
 

 
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industry standards and practices; provided, however, that where this Agreement
specifies a particular standard or criteria for performance, this warranty is
not intended to and does not diminish that standard or criteria for performance;
 
8.2.3 the provision of the Services hereunder will not violate any applicable
laws, rules or regulations, and will not conflict with or result in any breach
or default under any contracts or agreements to which JF is bound;
 
8.2.4 except as otherwise expressly provided hereunder, CCD will receive good
and valid title to all Deliverables, free and clear of all encumbrances and
liens of any kind;
 
8.2.5 to the best knowledge of JF, the Services (which, for clarity, include
Deliverables) do not and will not violate or infringe upon the intellectual
property right or any other right whatsoever of any person, firm, corporation or
other entity; and
 
8.2.6 JF is the sole and exclusive owner of the JF Name and JF Property; (b)
Love Knot Logo is valid, in existence and registered with the U.S. Patent and
Trademark Office; (c) there are no claims and/or actions by any third party
relating to the JF Name or and JF Property; and (d) JF has the right to grant
CCD the license to use the JF Name and JF Property as described herein.
 
9. 
INSURANCE

 
During the Term, JF shall maintain in force adequate workman’s compensation,
commercial general liability, and other forms of insurance, in each case with
insurers reasonably acceptable to CCD, with policy limits sufficient to protect
and indemnify CCD and its Affiliates, and each of their officers, directors,
agents, employees, subsidiaries, partners, members and controlling persons, from
any losses resulting from JF’s or JF’s agents, servants or employees conduct,
acts, or omissions. CCD shall be listed as additional insured under such policy,
and JF shall forward a certificate of insurance verifying such insurance upon
CCD’s written request, which certificate will indicate that such insurance
policies may not be cancelled before the expiration of a thirty (30) day
notification period and that CCD will be immediately notified in writing of any
such notice of termination.
 
10.  
INDEMNITY

 
10.1 Each Party shall indemnify, defend and hold harmless the other Party, its
directors, officers and employees (each Party obligated to indemnify hereunder,
an “Indemnitor” and each Party entitled to indemnification hereunder, an
“Indemnitee”) from and against any claims, demands, suits, actions, causes of
action, costs, losses and expenses (including, without limitation, reasonable
attorneys’ fees and costs) brought by a third party (collectively, “Claims”)
suffered, assessed against or otherwise incurred by the Indemnitee as a result
of Indemnitor’s (a) breach of any covenant or agreement under the terms of this
Agreement or (b) negligent act, omission or willful misconduct.  Further, JF
shall indemnify, defend and hold harmless CCD, its directors, officers and
employees from and against any Claims suffered, assessed against or otherwise
incurred by CCD arising out of or relating to any claim or allegation that the
Deliverables infringe, misappropriate or otherwise violate any Intellectual
Property Rights of any third party.

10.2 Without limiting JF’s indemnification obligations pursuant to Section 10.1
or obligations elsewhere in this Agreement, if JF, based on advice of counsel
obtained at JF’s expense, believes that any of the Deliverables may violate a
third party’s Intellectual Property Rights, CCD will immediately cease its use
of the Deliverables as reasonably requested in writing

 
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by JF and will cooperate with JF in modifying the Deliverables to be
non-infringing or, to obtain a license to allow for continued use, provided that
JF shall not be responsible for the payment of any royalties or other amounts
under any such license.

11.  
LIMITATION OF LIABILITY

 
IN NO EVENT A PARTY BE LIABLE TO ANOTHER PARTY FOR ANY SPECIAL, INCIDENTAL,
INDIRECT, PUNITIVE OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS AND LOST
BUSINESS), WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE),
PRODUCT LIABILITY, OR OTHERWISE ARISING OUT OR RELATED TO THIS AGREEMENT, AND
WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGE.  Notwithstanding anything to the contrary contained herein, the
limitations of liability contained in this Section shall not apply to the
Parties’ indemnification obligations under this Agreement, or any termination of
this Agreement other than as expressly provided hereunder.
 
12.  
NOTICES

 
Except as specifically provided herein, all notices required hereunder shall be
in writing and shall be given by personal delivery, international courier
service of recognized reputation (e.g., DHL), or by airmail, certified or
registered, postage prepaid, return receipt requested, to the Parties at their
respective addresses as set forth below, or to any Party at such other addresses
as shall be specified in writing by such Party to the other Party in accordance
with the terms and conditions of this Section 12.  Advance copy may be provided
to the e-mail address below, followed by original document being provided as
previously stated.   All notices shall be deemed effective upon personal
delivery, or one business day following receipt or seven days following deposit
in the mail in accordance with this Section 12, or three business days following
deposit with any international courier service of recognized reputation (e.g.,
DHL) in accordance with this Section 12.
 
CCD:

Charles & Colvard Direct, LLC
Attn: Randall N. McCullough
Manager
300 Perimeter Park Drive, Suite A
Morrisville, NC 27560

JF:
JudeFrances Jewelry, Inc.
Attn: Frances Gadbois
President
2151 Michelson Drive, suite 170
Irvine, CA 92612

With a copy to:

 
Bryan Friedman, Esq.

Friedman, Stroffe and Gerard PC
 
19800 MacArthur Boulevard, Suite 1100

Irvine, California 92612

 
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13.  
MISCELLANEOUS

 
13.1 Entire Agreement.  This Agreement (including Exhibit A, incorporated herein
by reference) constitutes the entire agreement among the Parties, and supersedes
all prior oral and written understandings, among the Parties regarding the
subject matter hereof. There are no agreements, understandings or
promises, whether express or implied, that a Party has relied upon in signing
this Agreement or that will be legally binding or enforceable against a Party
other than this Agreement. Any modifications to this Agreement must be in
writing and signed by authorized representatives of CCD and JF.
 
13.2 Press Release. CCD and JF agree to the mutual development and issuance
within thirty (30) days of the Effective Date of a press release by CCD
announcing the relationship contemplated by this Agreement.
 
13.3 Independent Parties.  Nothing contained herein shall be deemed to create or
be construed as creating a joint venture or partnership among the
Parties.  Neither Party is, by virtue of this Agreement or otherwise, authorized
as an agent or legal representative of the other Party.  Neither Party is
granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
Party or to bind such other Party in any manner.  Further, it is not the
intention of this Agreement or of the Parties hereto to confer a third party
beneficiary right of action upon any third party or entity whatsoever, and
nothing hereinbefore or hereinafter set forth shall be construed so as to confer
upon any third party or entity other than the Parties hereto a right of action
under this Agreement or in any manner whatsoever.
 
13.4 Non-Solicitation and Non-Compete.
 
13.4.1 JF agrees that during the Term and (a) for a period of twelve (12) months
thereafter, JF shall not make any solicitation to employ CCD’s personnel without
written consent of CCD, to be given or withheld in CCD’s sole discretion;
provided, however, that such restriction shall not apply with respect to any
individual who prior to the date hereof was an employee or independent
contractor of JF or Bamboo Pink, Inc.; and (b) for a period of twelve (12)
months thereafter, or if a court finds twelve (12) months excessive, then six
(6) months thereafter, JF agrees that it shall not, directly or indirectly
through one (1) or more Affiliates or intermediaries, engage in the business of
marketing, distribution or sale of jewelry in the direct-to-consumer home-based
jewelry business opportunity channel.  In addition, JF will not make any further
use of the Love Knot Logo, other than in connection with its Services under this
Agreement and the design of the Deliverables hereunder.
 
13.4.2 CCD agrees that during the Term and for a period of twelve (12) months
thereafter, CCD shall not make any solicitation to employ JF’s personnel without
written consent of JF, to be given or withheld in JF’s sole discretion.
 
13.5 Waiver.  No waiver of any provision of this Agreement or any rights or
obligations of a Party hereunder shall be effective, except pursuant to a
written instrument signed by the Party or Parties waiving compliance, and any
such waiver shall be effective only in the specific instance and for the
specific purpose stated in such writing.
 
13.6 Amendments.  All amendments or modifications of this Agreement shall be
binding upon the Parties despite any lack of consideration so long as the same
shall be in writing and executed by authorized representatives of both Parties
in accordance with the other terms of this Agreement regarding modifications.
 

 
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13.7 Severability of Provisions.  In the event that any provision hereof is
found invalid or unenforceable pursuant to judicial decree or decision, the
remainder of this Agreement shall remain valid and enforceable according to its
terms.
 
13.8 Assignment.  Neither JF nor CCD shall assign any rights, or delegate or
subcontract any obligations, under this Agreement without the other Party’s
prior written consent. Any assignment in violation of the foregoing shall be
deemed null and void.  For purposes of this Agreement, a change in ownership of
less than fifty-one percent (51%) of the membership interests of CCD or shares
of JF shall not be deemed an assignment or delegation of this Agreement, unless
within six (6) months of such change in control two (2) or more named executive
officers of the relevant company are changed.  Subject to the limits on
assignment stated above, this Agreement will inure to the benefit of, be binding
upon, and be enforceable against, each of the Parties hereto and their
respective successors and assigns.
 
13.9 Forum and Jurisdiction.  This Agreement and its validity, construction,
interpretation and legal effect shall be governed by the laws and judicial
decisions of the State of North Carolina without regard to conflict of laws
principles.  The exclusive venue for any dispute relating to this Agreement
shall be in the courts of New York, New York.
 
13.10 Further Assurances.  The Parties shall execute and deliver such additional
instruments and other documents reasonably requested by such other Party in
connection with the transactions contemplated by this Agreement and consistent
with the terms hereof to memorialize, perfect or otherwise give effect to the
transactions contemplated hereby.
 
13.11 Counterparts.  This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
 
 

 
[signature page follows]
 

 
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[Signature Page to Services and Licensing Agreement]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.

CHARLES & COLVARD DIRECT, LLC
JUDEFRANCIS JEWELRY, INC.

By:  /s/ Randall N. McCullough                                         By:  /s/
Frances Gadbois 

Name:           Randall N.
McCullough                                                                Name:    
  Frances Gadbois

Title:           President and
CEO                                                           
              Title:         President

 

 
 

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EXHIBIT A

SERVICES

 
Description of Deliverables:
 

 
Product and Design Development
·  
Design of all fashion and moissanite jewelry from scratch and exclusive to CCD’s
Lulu Avenue™ line* and related production of design art, support renderings,
samples and sample review and approval for such designs.

·  
The Parties will collaborate to design and develop in a timely manner the Lulu
Avenue Brand for use in connection with the products and designs created
hereunder.

·  
Provide all design (including related production of drawings, design art,
support renderings, molds, models, samples and sample review and approval for
such designs) for 2 full lines each calendar year (Spring and Fall) with a
minimum of at least [****] unique jewelry items including products developed for
interim holiday/seasonal campaigns, and related marketing materials.

·  
The first of such line for the Spring 2013 Lulu Avenue catalog will be designed,
with all materials in place including samples for photography, product
descriptions, estimated landed cost, and manufacturing lead times as soon as
practical, with delivery to CCD no later than [****] for jewelry designed to
incorporate Charles & Colvard Created Moissanite® and [****] for fashion
jewelry, unless otherwise mutually agreed by the Parties in writing. Future line
dates will be negotiated with JF with estimated due dates to be mutually agreed
by the Parties in writing.

·  
At least [****]% of each line shall be designed to incorporate Charles & Colvard
Created Moissanite® products.

·  
A minimum of [****]% of each full line shall be new, non-core product.

·  
A minimum of [****]% of each interim holiday/seasonal campaign offering shall be
new, non-core product.

·  
For clarity, the definition of “Deliverables” hereunder does not include the JF
Name.

*All references to CCD’s Lulu Avenue™ line or similar references includes any
such successor or re-branded lines.

[****] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.  Omitted portions
have been filed separately with the Commission.
 
 
 

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Description of Services:

 
Complete Re-Branding of CCD’s Lulu Avenue™ jewelry line
·  
Consultive support with respect to the branding and re-branding for the CCD Lulu
Avenue™ jewelry line collection, website, promotional materials and packaging,
display elements including without limitation review of all colors, art
elements, and all collateral materials and JF review and approval on the Lulu
Avenue™ Style Guide.  All graphic design work is to be paid for directly by CCD.

Pre-Production Marketing & Branding Support
·  
All pre-production planning and implementation including but not limited to:

o  
Design and branding support for the collection, display and packaging for all
Lulu Avenue™ jewelry items.

o  
Review of all colors, art elements, etc. for the Lulu Avenue™ Style Guide.

o  
Design art, supporting renderings, sampling, sample review and approval for the
Lulu Avenue™ line.

o  
All demand planning is at the sole discretion of CCD, and CCD shall approve in
writing in advance all pricing and order execution, including without
limitation,  all designs and related branding, quality and specification
requirements, and purchase orders and pricing prior to the submission of any
manufacturing orders for the Products by JF.

o  
JF shall provide all consultative support in connection with pre-production
sourcing and manufacturing activities, including without limitation, liaising
with mutually approved manufacturers and suppliers to submit and process Product
orders approved in writing by CCD, and on any quality, delivery, acceptance and
related matters.

Production Management
·  
Oversee production of all Lulu Avenue™ jewelry items designed by JF to ensure
CCD-approved quality and specification requirements are met.

·  
All quantity demand planning is at the sole discretion of CCD, and CCD shall
approve in writing in advance all pricing and order execution, including without
limitation, all designs and related branding, quality and specification
requirements, and purchase orders and pricing prior to the submission of any
manufacturing orders for the Products by JF.

·  
JF shall provide all consultative support in connection with pre-production
sourcing and manufacturing activities, including without limitation, liaising
with mutually approved manufacturers and suppliers to submit and process Product
orders approved in writing by CCD, and on any quality, delivery, acceptance and
related matters.

·  
All shipment and delivery of the Products shall be direct from the manufacturer
or supplier to CCD or its designee to receive such orders, as provided to JF in
writing by CCD.  JF agrees that it will not take receipt of Products unless
agreed by the Parties in writing in advance.

Field Sales Support

·  
At least [****] in-person appearances annually to promote field growth and brand
of the Lulu Avenue™ jewelry line.

·  
Monthly short video appearances and blogs (social media to be managed, written
and updated by CCD, JF to provide content topics) to promote the branding, style
and use tips, etc. regarding the Lulu Avenue™ jewelry line to excite interest.

[****] Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.  Omitted portions
have been filed separately with the Commission.

 
 

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