exhibit101.htm


    Exhibit
10.1

    
{Charles & Colvard, Ltd.
Letterhead}

     

    VIA EMAIL & FEDERAL
EXPRESS PRIORITY OVERNIGHT

    


    Confidential

     

    October
16, 2009

     

    Mr. Linus
Cortez, CFO

       
Stuller, Inc.

    302 Rue
Louis XIV

    Lafayette,
LA 70508

     

    Dear Mr.
Cortez:

     

    This
letter when signed by the last party hereto will serve as our agreement going
forward and will replace all previous agreements between us.

    


    A. For
the Term, Charles & Colvard, Ltd. (C&C) hereby:

    
      	
              1.  

            	
              Appoints
      Stuller Inc. (Stuller) the rights to sell “Charles & Colvard Created
      Moissanite®”
      (either as a loose jewel or in manufactured jewelry) in the territory
      comprised of the North American Continent from the present date until
      December 31, 2010 (The "Appointment
Term").

            


    

    


    
      	
              2.  

            	
              Warrants
      that Stuller will receive the lowest price schedule offered to
      manufacturers and distributors.  The current price schedule is
      attached. Further, if at any time the pricing of moissanite is decreased,
      C&C shall provide Stuller with a credit toward additional purchases of
      moissanite equal to the amount of any such price decrease on the lesser of
      (a) Stuller's net purchases of moissanite during the prior 90 days or (b)
      Stuller's actual purchase cost of inventory of jewels at such time.
      Stuller will be informed at least 90 days prior to any price
      increase.

            


    

    


    
      	
              3.  

            	
              C&C
      will fund all pre-approved, eligible advertising/promotional activity
      expenses for moissanite marketing up to [***]% of net purchases made by
      Stuller. To receive the co-op credit Stuller must submit to C&C in
      advance, on a quarterly basis, a marketing proposal listing all co-op
      activities to be undertaken by Stuller for the quarter. Submittal of
      funding requests under this proposal must be supported by actual receipts
      for all expenditures and other appropriate backup evidencing that
      advertising has occurred. C&C will issue a credit memo to Stuller for
      the co-op portion of such actual marketing
  expenditures.

            


    

    


    
      	
              4.  

            	
              Agrees
      to provide stock re-balancing semi-annually on a dollar value per dollar
      value basis, [***]. This stock rebalancing will occur no later than the
      15th
      of May (based on purchases made the 1st
      quarter and the 4th
      quarter of the previous year) and the 15th
      of November (based on the purchases made the 2nd
      and 3rd
      quarter) of each year.

            


    

    


    
      	
              5.  

            	
              Agrees
      to provide the Stuller staff with any reasonably required training
      concerning the product, the marketing strategy, and the product
      positioning being implemented by
C&C.

            


    

     

     

    
      	
              6.  

            	
              Agrees
      to provide Stuller with [***] for moissanite jewels
  [***].

            


    

     

    

      [***]
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.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

    


    Page
2

    Linus
Cortez, CFO

    Stuller,
Inc.

    October
16, 2009



     

    
      	
              7.  

            	
              In
      order to encourage a growing partnership, beginning January 1, 2010,
      C&C will issue in the first quarter of the following year a credit
      towards future purchases based on a tiered, percentage rebate for annual,
      incremental net purchases in excess of a benchmark of [***], according to
      the following graduated schedule:

            


    

     

    


    
      	
              Rebate
      (%)

            	
              [***]

            	
              [***]

            	
              [***]

            	
              [***]

            	
              [***]

            
	
              Incremental
      purchases over [***]

            	
              [***]

            	
              [***]

            	
              [***]

            	
              [***]

            	
              [***]

            


    

    


    B.
Stuller agrees to comply with the following:

    
      	
              1.  

            	
              Submission
      of support documentation relevant to all co-op and any other authorized
      marketing and sales expenses.

            


    

     
 

    
      	
              2.  

            	
              Stuller
      will share a 12 month rolling forecast monthly of planned requirements
      with C&C in order to provide a smooth flow of jewels to Stuller's
      inventory.

            


    

    


    
      	
              3.  

            	
              On
      a quarterly basis Stuller agrees to provide C&C with any available
      statistics on the number of jewelry stores purchasing moissanite specific
      to independent jewelers in total and large retailers
      individually.

            


    

    


    Stuller
hereby recognizes, and agrees to cooperate fully with C&C in the protection
of all C&C trademarks, logos, copyrights and intellectual property. Further,
Stuller agrees to include “Charles & Colvard Created Moissanite®” in
its catalog and trade show presentations for the term of the agreement and to
make commercially reasonable efforts to market moissanite to its customers
consistent with the Brand Identity Guidelines (BIG) supplied by C&C. Stuller
specifically agrees to make commercially reasonable efforts to sell “Charles
& Colvard Created Moissanite®” as
loose stones and set in jewelry to Stuller qualified jewelry resellers or
manufacturers only.

    


    If the
foregoing meets with your understanding of our agreement, please sign and return
one copy of this letter for our files.

    


    Agreed
and accepted:

       
Charles & Colvard,
Ltd.                                                                                     Stuller,
Inc.

    


    /s/
George
Cattermole                                                                                            /s/
Linus Cortez

    


      
George
Cattermole                                                                                                 
Linus Cortez

    Interim
CEO & Board
Chair                                                                                  
CFO

    


    Date: 11/04/09                                        Date:  10/29/09

    


    


    [***]
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.