Exhibit 10.2


 


CHARLES & COLVARD, LTD. 


2018 EQUITY INCENTIVE PLAN 


 


Restricted Stock Award Agreement


 


THIS RESTRICTED STOCK AWARD AGREEMENT (which,
together with Schedule A and Schedule B attached hereto, is referred to herein as the “Agreement”), made effective
as of _______________ (as defined below, the “Grant Date”), between CHARLES & COLVARD, LTD., a North Carolina
corporation (the “Company”), and ______________ (the “Participant”);


 


RECITALS: 


 


In furtherance of the purposes of the Charles &
Colvard, Ltd. 2018 Equity Incentive Plan, as it may be hereafter amended and/or restated (the “Plan”) and in consideration
of the services of the Participant and such other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Participant hereby agree as follows:


 


1.           Incorporation
of Plan. The rights and duties of the Company and the Participant under this Agreement shall, in all respects, be subject to
and governed by the provisions of the Plan, the terms of which are incorporated herein by reference. In the event of any conflict
between the provisions in this Agreement and those of the Plan, the provisions of the Plan shall govern. Unless otherwise defined
herein, capitalized terms in this Agreement shall have the same definitions as set forth within the Plan.


 


2.           Terms
of Award. The following terms used in this Agreement shall have the meanings set forth in this Section 2:


 


The “Participant” is ______________________.


 


The “Grant Date” is ______________________.


 


The “Restriction Period” is
the period beginning on the Grant Date and ending on the date or dates and satisfaction of such conditions (including both Service
Measures and Performance Measures) as described in Schedule A and Schedule B, which are attached hereto and expressly made
a part of this Agreement.


 


The number of shares of common stock of
the Company (the “Common Stock”) subject to the Restricted Stock Award granted under this Agreement shall be ______________________
(_____) shares (the “Shares”).


 


3.           Grant
of Restricted Stock Award. Subject to the terms of this Agreement and the Plan, the Company hereby grants the Participant a
Restricted Stock Award (the “Award”) for that number of Shares of Common Stock as is set forth in Section 2. The
Participant expressly acknowledges that the terms of Schedule A and Schedule B shall be incorporated herein by reference and shall
constitute part of this Agreement. 


 






     


     


    

 


4.           Vesting
and Earning of Award. Subject to the terms of the Plan, the Award shall be deemed vested and earned, and the applicable restrictions
imposed on such Shares shall lapse, upon such date or dates, and subject to such conditions (including both Service Measures and
Performance Measures), as are described in this Agreement, including but not limited to the terms of Schedule A and Schedule
B, attached hereto. The Committee has sole and absolute authority to determine whether and to what degree the Award has vested
and is payable and to interpret the terms and conditions of this Agreement and the Plan.


 


5.           Effect
of Change in Control.


 


(a)          In
the event of a Change in Control (as defined in the Plan), the Award, if outstanding and unvested as of the date of such Change
in Control, shall become fully vested, whether or not then otherwise vested, and the restrictions attached to such Shares shall
lapse except as may otherwise be provided in Section 5(b) immediately below.


 


(b)          Notwithstanding
the foregoing, in the event that a Change in Control event occurs, the Committee may, in its sole and absolute discretion, determine
that the Award shall not vest on an accelerated basis, if the Company or the surviving or acquiring Company, as the case may be,
shall have taken such action, including, but not limited to, the assumption of Awards granted under the Plan or the grant of substitute
awards (in either case, with substantially similar terms or equivalent economic benefits as Awards granted under the Plan), as
the Committee determines to be equitable or appropriate to protect the rights and interests of Participants under the Plan. For
the purposes herein, if the Committee is acting as the Committee authorized to make the determinations provided for in this Section 5(b),
the Committee shall be appointed by the Board of Directors, at least two-thirds of the members of which shall have been Directors
of the Company prior to the Change in Control event.


 


(c)          The
Committee shall have full and final authority, in its sole and absolute discretion, to determine whether a Change in Control of
the Company has occurred, the date of the occurrence of such Change in Control and any incidental matters relating thereto.


 


6.           Termination
of Employment or Service; Forfeiture of Award. Except as may be otherwise provided in the Plan or this Agreement, in the event
that the employment of the Participant is terminated and/or Participant’s service to the Company ceases for any reason (whether
by the Company or the Participant and whether voluntarily or involuntarily) and all or part of the Award has not yet vested pursuant
to Sections 4 or 5 above and/or Schedule A and Schedule B attached hereto, then the Award, to the extent not vested
as of the Participant’s Termination Date, shall be forfeited immediately upon such termination, and the Participant shall
have no further rights or interests with respect to the Award or the Shares underlying that portion of the Award that has not yet
vested. The Participant expressly acknowledges and agrees that the termination of Participant’s employment shall result in
forfeiture of the Award and the Shares to the extent the Award has not vested as of Participant’s Termination Date. Notwithstanding
the above provisions of this Section 6, if the Participant terminates employment with the Company for any reason other than
death but enters into a written agreement with the Company to provide, without interruption, Continuous Service to the Company
or an Affiliate as an Independent Contractor or Consultant and/or continues or commences service as a member of the Company’s
Board of Directors without interruption, the Participant shall continue to be treated as an Employee of (or in service to) the
Company for purposes of this Award and shall not be treated as having a Termination of Service until the later of the date Participant
is no longer an Employee of the Company (or an Affiliate) or the date Participant is no longer in service as an Independent Contractor
or Board member (as determined by the Committee, in the Committee’s sole discretion).


 






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7.           Settlement
of Award. The Award (or vested portion thereof) shall be payable to the Participant in whole Shares of Common Stock as soon
as practical following the end of the Restriction Period and the Committee’s determination of Participant’s satisfactory
achievement of stated Performance Measures, if any. In no event, however, shall the Award (or applicable portion thereof) be settled
and delivered to Participant more than 21⁄2 months following the end of the Restriction Period.


 


8.           No
Right of Employment; Forfeiture of Award. None of the Plan, this Agreement, the grant of the Award, or any other action or
documentation related to the Plan or the Award shall confer upon the Participant any right to continue in the employment of, or
as a service provider to, the Company or an Affiliate or interfere with the right of the Company or an Affiliate to terminate the
Participant’s employment or service at any time. Except as otherwise provided in the Plan or this Agreement, all rights of
the Participant with respect to the Award shall terminate upon termination of the Participant’s employment or service.


 


9.           Nontransferability
of Award and Shares. The Award shall not be transferable (including by sale, assignment, pledge or hypothecation) other than
by will or the laws of intestate succession. The designation of a beneficiary in accordance with the Plan does not constitute a
transfer. The Participant shall not sell, transfer, assign, pledge or otherwise encumber the Shares subject to the Award (except
as provided in Section 13 herein) until the Restriction Period has expired and all conditions to vesting and transfer have
been met.


 


10.         Superseding
Agreement. This Agreement supersedes any statements, representations or agreements of the Company with respect to the grant
of the Award and any related awards or rights, and the Participant hereby waives any rights or claims related to any such statements,
representations or agreements. This Agreement does not supersede or amend any confidentiality agreement, nonsolicitation agreement,
noncompetition agreement, employment agreement or any other similar agreement between the Participant and the Company, including,
but not limited to, any restrictive covenants contained in such agreements.


 


11.         Governing
Law. Except as otherwise provided in the Plan or herein, this Agreement shall be construed and enforced according to the laws
of the State of North Carolina, without regard to the conflict of laws provisions of any state, and in accordance with applicable
federal laws of the United States.


 






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12.         Amendment
and Termination; Waiver. Subject to the terms of the Plan and this Section 12, this Agreement may be amended, altered,
suspended or terminated only by the written agreement of the parties hereto. Notwithstanding the foregoing, the Committee shall
have unilateral authority to amend the Plan and this Agreement (without the Participant’s consent) to the extent necessary
to comply with Applicable Laws or changes to Applicable Laws (including, but in no way limited, to Code Section 409A and federal
securities laws) as well as to accelerate vesting of the Award or eliminate or reduce any service or performance measures set forth
in Schedule A in the Participant’s favor. The waiver by the Company of a breach of any provision of this Agreement
by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.


 


13.         Certificates
for Shares; Rights as Shareholder. Unless the Committee determines otherwise: (i) the Participant shall have voting rights
and (except as provided in clause (ii) below) other rights as a shareholder with respect to Shares subject to the portion
of the Award that has not yet vested; and (ii) notwithstanding clause (i) herein, the Committee may determine that any
dividends (whether cash or stock) subject to the Award shall be subject to the same vesting or other restrictions that apply to
the Shares subject to the Award. Unless the Committee determines otherwise, a certificate or certificates for Shares subject to
the Award (or, in the case of uncertificated Shares, other written evidence of ownership in accordance with Applicable Laws) shall
be issued in the name of the Participant as soon as practicable after the Award has been granted. Notwithstanding the foregoing,
the Committee may require that: (a) the Participant deliver the certificate(s) (or other written instruments) for the Shares
to the Committee or its designee to be held in escrow until the Award vests (in which case the Shares will be released to the Participant)
or is forfeited (in which case the Shares shall be returned to the Company); and/or (b) the Participant deliver to the Company
a stock power (or similar instrument), endorsed in blank, relating to the Shares subject to the Award that are subject to forfeiture.


 


14.         Withholding;
Tax Matters.


 


(a)          The
Participant acknowledges that the Company shall require the Participant to pay the Company in cash the amount of any applicable
local, state, federal, foreign or other tax or other amount required by any governmental authority to be withheld and paid over
by the Company to such authority for the account of the Participant, if any, and the Participant agrees, as a condition to the
grant of the Award and delivery of the Shares or any other benefit, to satisfy such obligations as applicable. Notwithstanding
the foregoing, the Committee may establish procedures to permit the Participant to satisfy such obligations in whole or in part,
and any other local, state, federal, foreign or other income tax obligations relating to the Award, by electing (the “election”)
to have the Company withhold Shares of Common Stock from the Shares to which the Participant is entitled. The number of Shares
to be withheld shall have a Fair Market Value as of the date that the amount of tax to be withheld is determined as nearly equal
as possible to (but not exceeding) the amount of such obligations being satisfied. Each election must be made in writing to the
Committee in accordance with election procedures established by the Committee.


 






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(b)          The
Participant acknowledges that the Company has made no warranties or representations to the Participant with respect to the tax
consequences (including, but not limited to, income tax consequences) related to the transactions contemplated by this Agreement,
and the Participant is in no manner relying on the Company or its representatives for an assessment of such tax consequences. The
Participant acknowledges that there may be adverse tax consequences upon the grant of the Award and/or the acquisition or disposition
of the Shares subject to the Award and that the Participant has been advised that Participant should consult with Participant’s
own attorney, accountant, and/or tax advisor regarding the decision to enter into this Agreement and the consequences thereof.
The Participant also acknowledges that the Company has no responsibility to take or refrain from taking any actions in order to
achieve a certain tax result for the Participant, including no responsibility to advise or assist the Participant with respect
to potential Code Section 83(b) election with respect to the Award.


 


15.         Administration.
The authority to construe and interpret this Agreement and the Plan, and to administer all aspects of the Plan, shall be vested
in the Committee, and the Committee shall have all powers with respect to this Agreement as are provided in the Plan. Any interpretation
of this Agreement by the Committee and any decision made by the Committee with respect to this Agreement shall be conclusive, final,
and binding in all respects.


 


16.         Notices.
Except as may be otherwise provided by the Plan, any written notices provided for in this Agreement or the Plan shall be in writing
and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage paid first
class mail. Notices sent by mail shall be deemed received three business days after mailed but in no event later than the date
of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated by the Company’s
records (or at such other address as may be designated by the Participant in a manner acceptable to the Committee), or if to the
Company, at the Company’s principal office, attention Chief Financial Officer, Charles & Colvard, Ltd.


 


17.         Severability.
If any provision of the Agreement shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect
the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included.


 


18.         Restrictions
on Award and Shares. The Company may impose such restrictions on the Award, the Shares and/or any other benefits underlying
the Award as it may deem advisable, including, without limitation, restrictions under the federal securities laws, the requirements
of any stock exchange or similar organization and any blue sky, state or foreign securities laws applicable to such securities.
Notwithstanding any other provision in the Plan or the Agreement to the contrary, the Company shall not be obligated to issue,
deliver or transfer Shares of Common Stock, make any other distribution of benefits, or take any other action, unless such delivery,
distribution or action is in compliance with all Applicable Laws (including, but not limited to, the requirements of the Securities
Act). The Company will be under no obligation to register Shares of Common Stock or other securities with the Securities and Exchange
Commission or to effect compliance with the exemption, registration, qualification or listing requirements of any state or foreign
securities laws, stock exchange or similar organization, and the Company will have no liability for any inability or failure to
do so. The Company may cause a restrictive legend or legends (including but, in no way limited to, any legends that may be necessary
or appropriate pursuant to Section 13 herein) to be placed on any certificate for Shares issued pursuant to the Award in such
form as may be prescribed from time to time by Applicable Laws or as may be advised by legal counsel. Further, the Committee may
delay the right to receive or dispose of Shares of Common Stock (or other benefits) upon settlement of the Award at any time when
the Committee determines that allowing issuance of Common Stock (or distribution of other benefits) would violate any federal or
state securities laws, and the Committee may provide in its discretion that any time periods to receive Shares of Common Stock
(or other benefits) subject to the Award are tolled during a period of suspension.


 






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19.         Counterparts;
Further Instruments. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. The parties hereto agree to execute such further instruments
and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.


 


20.         Effect
of Changes in Duties or Status. Notwithstanding the other provisions of the Plan and the Agreement, the Committee has discretion
to determine, at the time of grant of the Award or at any time thereafter, the effect, if any, on the Award (including but not
limited to the vesting of the Award) if the Participant’s duties and/or responsibilities change or the Participant’s
status as an Employee changes, including but not limited to, a change from full-time to part-time, or vice versa, or if other similar
changes in the nature or scope of the Participant’s employment with or provisions of services to the Company occur. In addition,
unless otherwise determined by the Committee, in the Committee’s sole discretion, for purposes of the Plan, a Participant
shall be considered to have terminated employment and to have ceased to be an Employee if Participant’s employer was an Affiliate
at the time of grant and such employer or other party ceases to be an Affiliate, even if Participant continues to be employed by
or provide services to such employer or party.


 


21.         Rules
of Construction. Headings are given to the Sections of this Agreement solely as a convenience to facilitate reference. The
reference to any statute, regulation or other provision of law shall be construed to refer to any amendment to or successor of
such provision of law unless the Committee determines otherwise.


 


22.         Successors
and Assigns. The Agreement shall be binding upon the Company and its successors and assigns, and the Participant and Participant’s
executors, administrators and permitted transferees and beneficiaries.


 


23.         Right
of Offset. Notwithstanding any other provision of the Plan or this Agreement (and taking into account any Code Section 409A
considerations, if applicable), the Company may at any time reduce the amount of any distribution or benefit otherwise payable
to or on behalf of the Participant by the amount of any obligation of the Participant to the Company or an Affiliate that is or
becomes due and payable (including, but in no way limited to, any obligation that may arise under Section 304 of the Sarbanes-Oxley
Act of 2002).


 




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24.         Forfeiture
of Shares and/or Gain from Shares.


 


(a)          Notwithstanding
any other provision of this Agreement, if, at any time during the Participant’s employment with or service to the Company
or an Affiliate or during the 12-month period following termination of employment or service for any reason (regardless of whether
such termination was by the Company or the Participant, and whether voluntary or involuntary), the Participant engages in a Prohibited
Activity (as defined herein), then: (i) the Award shall immediately be terminated and forfeited in its entirety, (ii) any
Shares, regardless of whether such Shares are vested or unvested, shall immediately be forfeited and returned to the Company (without
the payment by the Company of any consideration for such Shares), and the Participant shall cease to have any rights related thereto
and shall cease to be recognized as the legal owner of such Shares, and (iii) any Gain (as defined below) realized by the
Participant with respect to any Shares shall immediately be paid by the Participant to the Company.


 


(b)          For
purposes of this Agreement, a “Prohibited Activity” shall mean: (i) the Participant’s solicitation or assisting
any other person in so soliciting, directly or indirectly, of any customers, suppliers, vendors or other service providers to or
of the Company or any Affiliate within the United States that the Participant learned confidential information about or had contact
with through Participant’s employment or other service with the Company or an Affiliate within the United States for the
purpose of inducing that customer, supplier, vendor or other service provider to terminate or alter Participant’s or its
relationship with the Company or an Affiliate; (ii) the Participant’s inducement, directly or indirectly, of any employees
or service providers to terminate their employment with or service to the Company or an Affiliate for the purpose of performing
services for, assisting, advising or otherwise supporting any business which is competitive with the business of the Company or
an Affiliate; (iii) the Participant’s violation of any noncompetition, nonsolicitation or confidentiality restrictions
or other restrictive covenants applicable to the Participant; (iv) the Participant’s violation of any of the Company’s
policies, including, without limitation, the Company’s insider trading policies; (v) the Participant’s violation
of any material (as determined by the Committee) federal, state or other law, rule or regulation; (vi) the Participant’s
disclosure or other misuse of any confidential information or material concerning the Company or an Affiliate (except as otherwise
required by law or as agreed to by the parties herein); (vii) the Participant’s dishonesty in a manner that negatively
impacts the Company in any way; (viii) the Participant’s refusal to perform Participant’s duties for the Company
or an Affiliate; (ix) the Participant’s engaging in fraudulent conduct; or (x) the Participant’s engaging
in any conduct that is or could be materially damaging to the Company or its Affiliates without a reasonable good faith belief
that such conduct was in the best interest of the Company or any of its Affiliates. The Committee shall have sole and absolute
discretion to determine if a Prohibited Activity has occurred.


 


(c)          For
purposes of this Agreement, “Gain” shall mean, unless the Committee determines otherwise, an amount equal to (i) the
greater of: (A) the Fair Market Value per Share of the Shares (or portion thereof) at the time of grant; (B) the Fair
Market Value Per Share of the Shares (or portion thereof) at the time of vesting; or (C) the disposition price per Share of
any Shares sold or disposed at the time of disposition multiplied by (ii) the number of Shares sold or disposed of.


 






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(d)          Notwithstanding
the provisions of Section 24(a) herein, the waiver by the Company in any one or more instances of any rights afforded to the
Company pursuant to the terms of Section 24(a) herein shall not be deemed to constitute a further or continuing waiver of
any rights the Company may have pursuant to the terms of this Agreement or the Plan (including, but not limited to, the rights
afforded the Company in Section 23 herein).


 


(e)          The
Company and the Participant hereby expressly agree that, notwithstanding the other provisions of this Section 24, if the Participant
has entered into an employment agreement, consulting agreement or other agreement containing noncompetition, nonsolicitation, confidentiality
or similar covenants, then the provisions contained in such agreement(s) with respect to the scope (e.g., duration, territory,
or prohibited activity) of such restrictive covenants shall control (and thus prevail over Section 24(b)(i), Section 24(b)(ii)
and Section 24(b)(iii) herein), unless the Committee should determine otherwise. In any event, the Company shall retain the
forfeiture and recoupment rights provided in Section 24(a) in the event of a violation of such restrictive covenants unless,
and then only to the extent prohibited by, or restricted under, Applicable Laws.


 


(f)          By
accepting this Agreement, and without limiting the effect of Section 23 herein, the Participant consents to a deduction (to
the extent permitted by Applicable Law) from any amounts the Company or an Affiliate may owe the Participant from time to time
(including amounts owed to the Participant as wages or other compensation, fringe benefits, or vacation pay, as well as any other
amounts owed to the Participant by the Company or an Affiliate), to the extent of the amounts the Participant owes the Company
pursuant to this Agreement, including but not limited to this Section 24. Whether or not the Company elects to make any set-off
in whole or in part, if the Company does not recover by means of set-off the full amount owed by the Participant pursuant to this
Agreement, the Participant agrees to immediately pay the unpaid balance to the Company. Further, by executing and returning this
Agreement to the Company, the Participant acknowledges and agrees that: (i) Participant has read the Plan and this Agreement
in its entirety; (ii) Participant has had the opportunity to consult with legal counsel prior to execution of this Agreement;
(iii) this Agreement is valid and binding upon, and enforceable against, the Participant in accordance with its terms, including,
but not limited to, the restrictions contained in this Section 24; and (iv) the consideration for this Agreement is valuable
and sufficient consideration.


 


[Signatures of the Company and the Participant
follow on Separate Page.]


 




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IN WITNESS WHEREOF, this Agreement has been
executed on behalf of the Company and by the Participant on the day and year first above written.


 


	 	CHARLES & COLVARD, LTD.
	 	 	 
	 	By:	 
	 	 	 
	 	Title:	 


 


	Attest:	 
	 	 	 
	By:	 	 
	 	 	 
	Title:	 	 
	 	 	 
	[Corporate Seal]	 


 


	 	PARTICIPANT	 
	 	 	 
	 	 	  (SEAL)
	 	 	 
	 	Printed Name:	 	 


 




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CHARLES & COLVARD, LTD.


2018 EQUITY INCENTIVE PLAN


 


Restricted Stock Award Agreement


 


SCHEDULE A


 


SERVICE MEASURES


 


Grant Date: ___________________, 20_____.


 


Number of Shares Subject to Award: _______________________ Shares.


 


Restriction Period: The Shares subject to the Award shall vest
and be earned, as provided below, subject to the terms and conditions as may be imposed by the Plan and the Agreement1:


 


	Date of Vesting	Shares to be Vested


 


[Insert Schedule]


 





 






1 Vesting of the Award is subject to Participant’s
continuous employment with, or service to, the Company from the Grant Date through the Date of Vesting and the other terms and
conditions imposed under the Plan and/or this Agreement, including achievement of the performance goals set forth in the Performance
Measures described in Schedule B


 




     


     


    

 


CHARLES & COLVARD, LTD. 


2018 EQUITY INCENTIVE PLAN 


 


Restricted Stock Award Agreement


 


SCHEDULE B 


 


PERFORMANCE GOALS


 


1.          Purpose.
The purpose of this Schedule B is to set forth the Performance Measures that will be applied to determine the amount
of the Award to be made under the terms of the attached Restricted Stock Award Agreement (the “Agreement”). This Schedule
B is incorporated into and forms a part of the Agreement.


 


2.          Revision
of Performance Goals. The Performance Goals set forth in this Schedule B may be modified by the Committee during,
and after the end of, the Restriction Period to reflect significant events that occur during the Restriction Period.


 


3.          Performance
Goals. The Performance Goals shall be as follows2:


 


a.     Financial
Goals.


 


b.     Personal
Goals.


 


[Insert Schedule]


 


4.          Amount
of Award. The amount distributable to the Participant under the Agreement shall be determined in the discretion of the
Committee based upon the Committee's assessment of the degree to which the Participant successfully achieved the Performance Goals
set forth above.


 





 






2 Vesting of the Award is subject to Participant’s
continuous employment with, or service to, the Company through the Date of Vesting set forth in the Service Measures described
in Schedule A and the other terms and conditions imposed under the Plan and/or this Agreement.