Document:

Exhibit 10.1

 

SEPARATION OF EMPLOYMENT AGREEMENT

 

This
SEPARATION OF EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into by Suzanne Miglucci (“Employee”)
and Charles & Colvard, Ltd. (the “Company”).

 

Employee
was employed by the Company as its President and Chief Executive Officer pursuant to an employment agreement between Employee and
the Company dated December 1, 2015, as amended by the Amendment to 2015 Employment Agreement dated April 9, 2020 (the “Employment
Agreement”). The employment relationship between the Company and Employee terminated as of the Effective Resignation Date
defined herein.

 

The
Company is willing to provide Employee the severance benefits described herein in exchange for her entering into this Agreement,
and the parties desire to terminate their employment relationship on mutually agreeable terms and avoid all litigation relating
to the employment relationship and its termination.

 

Employee
represents that she has carefully read this entire Agreement, understands its consequences, and voluntarily enters into it.

 

In
consideration of the above and the mutual promises set forth below, Employee and the Company agree as follows:

 

1.       RESIGNATION.
Employee tenders, and the Company accepts, Employee’s voluntary resignation from all positions with the Company and its affiliates,
including as a member of the Board of Directors, such voluntary resignation to be effective June 1, 2020 (“Effective Resignation
Date”).

 

By signing this Agreement,
Employee represents that she has been fully paid for all time worked and received all salary and all other amounts of any kind
due to her from the Company with the sole exception of (a) her final paycheck for work during her final payroll period and for
any accrued but unused vacation/paid time off, which will be paid on the next regularly scheduled payroll date following the Effective
Resignation Date, (b) any previously submitted, but not yet paid, expense reimbursements or any expense reimbursements submitted
within 10 days of the date of this Agreement and consistent with the terms of Company policy for such reimbursements, (c) the payments
payable under this Agreement, and (d) any accrued and vested benefits payable pursuant to the Company’s employee benefit
plans.

 

As of the Effective
Resignation Date, the Employment Agreement shall terminate and neither party shall have any further obligations thereunder except
that Employee specifically acknowledges and agrees that her obligations under paragraphs 8 (Definitions), 9 (Covenant Not to Compete),
10 (Confidentiality), 11 (Proprietary Information) and 21 (Publication) of the Employment Agreement shall continue after the termination
of that Employment Agreement in accordance with their terms, and the Company specifically acknowledges and agrees that its obligations
under paragraph 13 (Indemnification) shall survive the termination of the Employment Agreement and Employee’s employment
by the Company.

 

     

     

    

 

		2.	SEVERANCE BENEFITS.

 

A.       Severance
Pay. The Company will pay Employee severance pay in an amount equal to one year of her current annual salary of Two
Hundred Seventy-Seven Thousand, Nine Hundred Thirty-Eight and 00/100 Dollars ($277,938.00) (less applicable taxes and withholdings),
payable in substantially equal installments. The installments will be paid on the same payroll schedule that was applicable to
Employee immediately prior to her separation from service, provided that no further severance shall be paid if Employee executes
but later revokes this Agreement in accordance with paragraph 5 below.

 

B.       COBRA
Premium Assistance. If Employee timely and properly elects continuation coverage under the Company’s group health plan
pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), then the Company will pay the COBRA premiums
for coverage for her and her eligible dependents during the 12-month period immediately following the Effective Resignation Date.

 

Payment
under this subparagraph 2B shall be made on a monthly basis, but in no event later than the last day of the calendar year following
the year in which the expenses were incurred. Under no circumstances will Employee be entitled to a cash payment or other benefit
in lieu of the payment of the actual COBRA premium cost. The amount of expenses eligible for payment during any calendar year shall
not be affected by the amount of expenses eligible for payment in any other calendar year.

 

Nothing
in this Agreement shall constitute a guarantee of COBRA continuation coverage or benefits. Employee shall be solely responsible
for all obligations in electing COBRA continuation coverage and taking all steps necessary to qualify for such coverage.

 

D.       Prior
Equity Grants. The vested stock options previously granted by Company to Employee under the Charles & Colvard, Ltd. 2008
Stock Incentive Plan, as amended representing 330,991 shares of Company common stock shall be exercisable as set forth in the applicable
option agreement, except that such options shall be exercisable through June 1, 2022. Employee understands that, as a result of
such extension, any options not exercised by Employee with 90 days of the Effective Resignation Date may no longer qualify as incentive
stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. Company has also agreed to waive
the forfeiture of 130,000 shares of restricted stock granted under the Charles & Colvard, Ltd. 2018 Stock Incentive Plan and
the restrictions on such restricted stock shall lapse effective as of the Effective Resignation Date.

 

The
severance and other benefits afforded under this Agreement are in lieu of any other compensation or benefits, excluding accrued
but unused vacation/paid time off (PTO) and vested retirement benefits, to which Employee otherwise might be entitled, and payment
of the severance and other benefits is conditioned upon Employee’s compliance with the terms of this Agreement and all surviving
terms of the Employment Agreement (including but not limited to paragraphs 8, 9, 10, 11 and 21).

 

     

     

    

 

		3.	RELEASE.

 

A.       In
consideration of the benefits conferred by this Agreement, EMPLOYEE (ON BEHALF OF HERSELF AND HER ASSIGNS, HEIRS AND OTHER REPRESENTATIVES)
RELEASES THE COMPANY AND ITS RELATED PARTIES (DEFINED BELOW) (“RELEASEES”) FROM ALL CLAIMS AND WAIVES ALL
RIGHTS KNOWN OR UNKNOWN, SHE MAY HAVE OR CLAIM TO HAVE AGAINST THE COMPANY, ITS PREDECESSORS, SUBSIDIARIES OR AFFILIATES relating
to her employment with the Company and separation therefrom arising before the execution of the Agreement to the fullest extent
permitted by law, including but not limited to claims:

 

(i)
for discrimination, harassment or retaliation arising under federal, state or local laws prohibiting age (including but not limited
to claims under the Age Discrimination in Employment Act of 1967 (“ADEA”), as amended), sex, national origin, race,
religion, disability, veteran status or other protected class discrimination, harassment or retaliation for protected activity;

 

(ii)
for compensation and benefits (including but not limited to claims under the Employee Retirement Income Security Act of 1974 (“ERISA”),
Fair Labor Standards Act of 1938 (“FLSA”), Family and Medical Leave Act of 1993 (“FMLA”), all as amended,
and similar federal, state, and local laws) and claims under any other Company policy, plan or program, including the Charles &
Colvard, Ltd. 2008 Stock Incentive Plan and the incentive plans and programs thereunder;

 

(iii)
under federal, state or local law of any nature whatsoever (including but not limited to constitutional, statutory, tort, express
or implied contract or other common law); and

 

(iv) for attorneys’ fees.

 

Provided, however, the release
of claims set forth in this Agreement does NOT:

 

(v) apply to claims for workers’
compensation benefits, vested retirement benefits or unemployment benefits filed with the applicable state agencies or where otherwise
prohibited by law;

 

(vi) bar a challenge under the
Older Workers Benefit Protection Act of 1990 (OWBPA) to the enforceability of the waiver and release of ADEA claims set forth in
this Agreement; or

 

(vii)
prohibit Employee from filing a charge with or participating in an investigation by the U.S. Equal Employment Opportunity
Commission, Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA) or other
self-regulatory or governmental agency with jurisdiction concerning the terms, conditions and privileges of employment or
jurisdiction over the Company’s business or assisting with an investigation conducted internally by the Company;
provided, however, that by signing this Agreement, Employee waives the right to, and shall not seek or accept, any monetary
or other relief of any nature whatsoever in connection with any such charges, investigations or proceedings except as
follows: This Agreement does not limit Employee’s right to receive an award for information provided to the SEC, FINRA,
or any other securities regulatory agency or authority.

 

     

     

    

 

B.        Employee
will not sue the Releasees on any matters relating to her employment or separation therefrom arising before the execution of this
Agreement (with the sole exception of claims and challenges set forth in subparagraph A (v) through (vii) above), or join as a
party with others who may sue on any such claims, or opt-in to an action brought by others asserting such claims, and in the event
that Employee is made a member of any class asserting such claims without her knowledge or consent, Employee shall opt out of such
action at the first opportunity.

 

C.       The
Releasees which Employee is releasing by signing this Agreement include: the Company and its predecessors, successors, and assigns
and its and/or their past, present and future owners, parents, subsidiaries, affiliates, predecessors, successors, assigns, officers,
directors, employees, employee benefit plans (together with all plan administrators, trustees, fiduciaries and insurers) and agents.

 

		4.	COMPANY INFORMATION AND PROPERTY.

 

A.       Employee
shall not at any time after her employment terminates disclose, use or aid third parties in obtaining or using any confidential
or proprietary Company information nor access or attempt to access any Company computer systems, networks or any
resources or data that resides thereon.

 

Confidential or
proprietary information is information relating to the Company or any aspect of its business which is not generally available
to the public, the Company’s competitors, or other third parties, or ascertainable through common sense or general business
or technical knowledge; however, nothing in this paragraph or in this Agreement or in the agreements referenced in subparagraph
C below is intended, nor shall be construed, to (i) prohibit Employee from any communications to, or participation in any investigation
or proceeding conducted by, any governmental agency referenced in paragraph 3, (ii) interfere with, restrain, or prevent Employee
communications regarding wages, hours, or other terms and conditions of employment, or (iii) prevent Employee from otherwise engaging
in any legally protected activity. Moreover, notwithstanding the foregoing or any other provision in this Agreement, Employee cannot
be held criminally or civilly liable under any federal or state trade secret law if she discloses a trade secret (iv) to federal,
state, or local government officials, to her attorneys, or in a sealed court document, for the purpose of reporting or investigating
a suspected violation of the law, or (v) to her attorneys or in a sealed court document in connection with a lawsuit for retaliation
by an employer for reporting a suspected violation of the law.

 

     

     

    

 

B.       All
records, files or other materials maintained by or under the control, custody or possession of the Company or its agents in
their capacity as such shall be and remain the Company’s property and Employee shall return all such property. By signing
this Agreement, Employee represents that:

 

(i)      Employee
shall return all the Company property including but not limited to jewelry loaned on memo; credit cards; keys;  cell
phone; air card; access cards; thumb drive(s), laptop(s), personal digital devices and all other computer hardware and software;
records, files, documents, manuals, and other documents in whatever form they exist, whether electronic, hard copy or otherwise
and all copies, notes or summaries thereof;

 

(ii)
     Employee has turned over all Company passwords or access codes currently known to her
which she created received, or obtained in connection with her employment;

 

(iii)    Employee
has not deleted any emails, files or other information from any Company computer or device prior to her return of the property;

 

(iv)
    Employee shall make all good faith efforts to permanently delete any Company information
that may reside on her personal computer(s), other devices or accounts and, if requested by the Company, has submitted all personal
computers, phones and other devices which she used for Company business, and has identified all personal accounts on which Company
information has been placed and related passwords, to a third party vendor, as may be designated by the Company, for inspection
and removal of any Company-related information; and

 

(v)      Employee will make all good faith efforts to cooperate with all reasonable requests made by the Company concerning winding up her
work and transferring that work to those individuals designated. 

 

C.       Nothing
in this Agreement shall relieve Employee from any obligations under any other previously executed confidentiality, proprietary
information or secrecy agreements. All such agreements shall continue to be in full force and effect upon the execution of this
Agreement subject to the clarification set forth in subparagraph A above.

 

5.       RIGHT
TO REVIEW AND REVOKE. The Company delivered this Agreement to Employee on May 25, 2020 by email delivery and desires that
she have adequate time and opportunity to review and understand the consequences of entering into it. Accordingly, the
Company advises her to consult with her attorney prior to executing it and that she has twenty-one (21) days within which to
consider it. In the event that Employee does not return an executed copy of this Agreement to Clint Pete at Charles &
Colvard, Ltd., 170 Southport Drive, Morrisville, North Carolina 27560 by no later than the twenty-second (22nd)
calendar day after receiving it, this Agreement and the obligations of the Company herein shall become null and void.
Employee may revoke this Agreement during the seven (7) day period immediately following her execution of it. The Agreement
will not become effective or enforceable until the revocation period has expired. To revoke the Agreement, a written notice
of revocation must be delivered to Clint Pete at the above address.

 

     

     

    

 

		6.	    MUTUAL NONDISPARAGEMENT.

 

A.       Employee
represents and warrants that since receiving this Agreement, she (i) has not made, and going forward will not make,
disparaging, defaming or derogatory remarks about the Company or its products, services, business practices, directors, officers,
managers or employees to third parties; nor (ii) taken, and going forward will not take, any action that may impair the relations
between the Company and its vendors, customers, employees, or agents or that may be detrimental to or interfere with, the Company
or its business. Nothing in this section nor in this Agreement is intended, nor shall be construed, to prohibit Employee from any
communications to, or participation in any investigation or proceeding conducted by, any governmental agency referenced in paragraph
3A, or with complying with terms of a lawfully issued subpoena or sworn testimony in litigation.

 

B.       Members
of the Company’s Board of Directors and its executive officers shall not make any disparaging, defaming or derogatory remarks
about Employee to third parties. Further, the Company hereby agrees to instruct its current and future management employees to
comply with the same restrictions. Nothing in this section nor in this Agreement is intended, nor shall be construed, to prohibit
these individuals from any communications to, or participation in any investigation or proceeding conducted by, any governmental
agency referenced in paragraph 3A, or with complying with terms of a lawfully issued subpoena or sworn testimony in litigation.

 

7.
        COOPERATION. The parties agree that certain matters in which Employee has been
involved during her employment may necessitate her cooperation with the Company in the future. Accordingly, to the extent reasonably
requested by the Company, Employee shall cooperate with the Company in connection with such matters. The parties shall use all
good faith efforts to ensure that the timing and amount of services hereunder will not conflict with Employee’s other time
commitments, and the parties agree that Employee shall be permitted to perform such services remotely.

 

8.       INJUNCTIVE
RELIEF. Because of the unique nature of the confidential information, Employee understands and agrees that the Company will
suffer irreparable harm in the event that Employee fails to comply with any of Employee’s obligations under paragraph 4 of
this Agreement and that monetary damages will be inadequate to compensate the Company for such breach. Accordingly, Employee agrees
that the Company will, in addition to any other remedies available to it at law or in equity, be entitled to injunctive relief
to enforce the terms of paragraph 4 of this Agreement.

 

9.       OTHER.
Except as expressly provided in this Agreement, (a) this Agreement supersedes all other understandings and agreements, oral
or written, between the parties and constitutes the sole agreement between the parties with respect to its subject matter,
(b) no representations, inducements, promises or agreements, oral or written, have been made by any party or by anyone acting
on behalf of any party, which are not embodied in this Agreement, and (c) no agreement, statement or promise not contained in
the Agreement shall be valid or binding on the parties. No change or modification of this Agreement shall be valid or binding
on the parties unless such change or modification is in writing and is signed by the parties. Employee’s or the
Company’s waiver of any breach of a provision of this Agreement shall not waive any subsequent breach by the other
party. If a court of competent jurisdiction holds that any provision or sub-part thereof contained in this Agreement is
invalid, illegal or unenforceable, that invalidity, illegality or unenforceability shall not affect any other provision in
this Agreement.

 

     

     

    

 

This
Agreement is intended to avoid all litigation relating to Employee’s employment with the Company and her separation therefrom;
therefore, it is not to be construed as the Company’s admission of any liability to her, liability which the Company denies.

 

This
Agreement shall apply to, be binding upon and inure to the benefit of the parties’ successors, assigns, heirs and other representatives
and be governed by North Carolina law (without regard to its conflicts of laws provisions) and the applicable provisions of federal
law, including but not limited to ADEA.

 

		10.	SECTION 409A OF THE INTERNAL REVENUE CODE.

 

(a)              
Parties’ Intent. The parties intend that the provisions of this Agreement comply with Section 409A of the Code
and the regulations thereunder (collectively, “Section 409A”) and all provisions of this Agreement shall be construed
in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. If any provision of this Agreement
(or of any award of compensation, including equity compensation or benefits) would cause Employee to incur any additional tax or
interest under Section 409A, the Company shall, upon the specific request of Employee, use its reasonable business efforts
to in good faith reform such provision to comply with Code Section 409A; provided, that to the maximum extent practicable,
the original intent and economic benefit to Employee and the Company of the applicable provision shall be maintained, and the Company
shall have no obligation to make any changes that could create any additional economic cost or loss of benefit to the Company.
The Company shall timely use its reasonable business efforts to amend any plan or program in which Employee participates to bring
it in compliance with Section 409A.

 

(b)              
Separation from Service. A termination of employment shall not be deemed to have occurred for purposes of any provision
of this Agreement relating to the payment of any amounts or benefits upon or following a termination of employment unless such
termination also constitutes a “Separation from Service” within the meaning of Section 409A and, for purposes of any
such provision of this Agreement, references to a “termination,” “termination of employment,” “separation
from service” or like terms shall mean Separation from Service.

 

(c)              
Separate Payments. Each installment payment required under this Agreement shall be considered a separate payment
for purposes of Section 409A.

 

     

     

    

 

(d)               Delayed
Distribution to Key Employees. If the Company determines in accordance with Sections 409A and 416(i) of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder, in the Company’s sole discretion, that
Employee is a Key Employee of the Company on the date Employee’s employment with the Company terminates and that a
delay in benefits provided under this Agreement is necessary to comply with Code Section 409A(A)(2)(B)(i), then any severance
payments and any continuation of benefits or reimbursement of benefit costs provided by this Agreement, and not otherwise
exempt from Section 409A, shall be delayed for a period of six (6) months following the date of termination of
Employee’s employment (the “409A Delay Period”). In such event, any severance payments and the cost of any
continuation of benefits provided under this Agreement that would otherwise be due and payable to Employee during the 409A
Delay Period shall be paid to Employee in a lump sum cash amount in the month following the end of the 409A Delay Period. For
purposes of this Agreement, “Key Employee” shall mean an employee who, on an Identification Date
(“Identification Date” shall mean each December 31) is a key employee as defined in Section 416(i) of the Code
without regard to paragraph (5) thereof. If Employee is identified as a Key Employee on an Identification Date, then Employee
shall be considered a Key Employee for purposes of this Agreement during the period beginning on the first April 1 following
the Identification Date and ending on the following March 31.

 

     

     

    

 

IN
WITNESS WHEREOF, the parties have entered into this Agreement on the day and year written below.

 

EMPLOYEE
REPRESENTS THAT SHE HAS CAREFULLY READ THE ENTIRE AGREEMENT, UNDERSTANDS ITS CONSEQUENCES, AND VOLUNTARILY ENTERS INTO IT.

 

	 	/s/ Suzanne Miglucci	 	5/28/2020
	 	Suzanne Miglucci	 	Date
	 	 	 	 
	 	 	 	 
	 	CHARLES & COLVARD, LTD.	 	 
	 	 	 	 
	 	/s/ Clint Pete	 	5/28/2020
	 	Clint Pete	 	Date
	 	Title: Chief Financial OfficerExhibit 10.2

 

 

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (the “Agreement”) is effective as of the 1ST day of June, 2020 (the “Effective
Date”) by and between Charles & Colvard, Ltd. (the “Company”) and Don O’Connell (the “Employee”).

 

WITNESSETH

 

The Executive has heretofore
been employed by the Company as its Chief Operating Officer and Senior Vice President, Supply Chain pursuant to the terms of an
Employment Agreement dated May 23, 2017, as amended April 9, 2020 (the “COO Employment Agreement”). The Company desires
to continue the employment of the Executive and promote him to the position of President and the Executive desires to continue
to be employed by the Company and accept the promotion. In recognition of the services previously rendered and to be rendered in
the future to the Company, it is deemed necessary and advisable to amend and restate the COO Employment Agreement to reflect updated
terms as set forth in this Agreement; and

 

WHEREAS, the Board
of Directors of the Company (the “Board”) has authorized the Company to enter into this Agreement.

 

NOW THEREFORE, in consideration
of the foregoing and the mutual promises and covenants contained herein and for other good and valuable consideration, the sufficiency
of which is hereby acknowledged, the parties hereto agree that:

 

1.                 
Employment. The Company hereby employs Employee, and Employee hereby accepts such employment, on the terms and conditions
set forth in this Agreement. The parties agree that this Agreement amends and replaces the COO Employment Agreement in full.

 

2.                 
Term of Employment. Unless earlier terminated as provided herein, the initial term of this Agreement shall commence
on the Effective Date and shall continue until the one-year anniversary of the Effective Date (the “Initial Term”).
After the Initial Term, this Agreement shall automatically renew for successive additional one-year terms on the same terms and
conditions set forth herein, unless: (i) earlier terminated or amended as provided herein or (ii) either party gives written notice
of non-renewal at least thirty (30) days prior to the end of the Initial Term or any renewal term of this Agreement. The Initial
Term of this Agreement and all applicable renewals thereof are collectively referred to herein as the “Term.”

 

     

     

    

 

 

 

3.                  Position
and Duties. Employee shall serve as the President and Chief Executive Officer of the Company and upon his appointment to
these officer positions, the Board of Directors of the Company shall appoint him as a member of the Board of Directors.
Employee shall faithfully and to the best of his ability perform all duties of the Company related to his position with the
Company, including, but not limited to, all duties set forth in this Agreement and/or in the Bylaws of the Company related to
the position that he holds, as well as all duties that are reasonably assigned to him by the Board or its designees. Employee
agrees to devote his entire working time, attention, energy, and skills to the Company in furtherance of the Company’s
best interests, while so employed; provided that Employee may, to the extent not
otherwise prohibited by this Agreement, (A) engage in such activities as permitted in writing by the Company and (B) devote
such amount of time as does not interfere or compete with the performance of the Employee’s duties under this Agreement
to any one or more of the following activities: (i) investing the Employee’s personal assets in such manner as will not
require services to be rendered by the Employee in the operation of the affairs of the companies in which investments are
made; or (ii) engaging in charitable and professional organization activities, including serving on the Boards of Directors
of charitable and professional organizations. Employee shall comply with all reasonable Company policies, standards, rules,
and regulations (the “Company Policies”) and all applicable government laws, rules, and regulations that are now
or hereafter in effect. Employee acknowledges receipt of copies of all written Company Policies that are in effect as of the
date of this Agreement. 

 

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

 

(a)              
Base Salary. Employee shall receive a base salary of Three Hundred Thirty-Five Thousand and 00/100 Dollars ($335,000),
payable in regular and equal installments in accordance with the Company’s regular payroll schedule and practices (“Base
Salary”).

 

(b)              
Employee Benefits. Employee shall be entitled to receive those benefits that are made available to the other similarly-situated
executive employees of the Company, including, but not limited to, life, medical, and disability insurance, as well as retirement
benefits (collectively, the “Employee Benefits”), in accordance with the terms and conditions of the applicable plan
documents, provided that Employee meets the eligibility requirements thereof. The Company reserves the right to reduce, eliminate,
or change such Employee Benefits, in its sole discretion, subject to any applicable legal and regulatory requirements.

 

     

     

    

 

 

 

(c)               Equity
Compensation Award. The Company confirms that the incentive stock option (“ISO”) for the right to purchase up
to 100,000 shares of the Company’s common stock under the Charles & Colvard, Ltd. 2008 Stock Incentive Plan, as
amended, at an option exercise price of $0.88 granted to Employee in accordance with the terms of the COO Employment
Agreement on May 23, 2017 are fully vested as of the date hereof. The Compensation Committee of the Board has approved an
additional ISO granting Employee the right to purchase up to 350,000 shares of the Company’s common stock under the the
Charles & Colvard, Ltd. 2018 Stock Incentive Plan (the “2018 Plan”), at an option exercise price equal to the
closing price of the common stock on the Effective Date contingent upon Employee’s execution of this Agreement;
provided that such option shall be granted as a nonqualified stock option (“NSO”) to the extent it does not
qualify for ISO treatment on the Effective Date (the ISO award, together with any required NSO, the “Equity
Grant”). This Equity Grant shall vest in accordance with the following vesting schedule:  50% of the Equity Grant
(175,000 option shares) shall vest on the Effective Date and an additional 25% of the ISO award (87,500 option shares each)
shall vest on each of the following two anniversaries of the Effective Date provided Employee remains continuously employed
with the Company (or other affiliated company) through each such vesting date.  The Equity Grant shall be contingent
upon Employee’s execution of a standard Employee Incentive Stock Option Agreement in substantially the form attached as Exhibit
A to this Agreement and, if needed, a standard Employee Nonqualified Stock Option Agreement substantially in the form
attached as Exhibit B to this Agreement and the Equity Grant shall in all respects be subject to and governed by the
provisions of the 2018 Plan and the Employee Incentive Option Agreement and, if needed, the Employee Nonqualified Option
Agreement. 

 

(d)              
Reimbursement of Expenses. The Company shall reimburse Employee for all reasonable out-of-pocket expenses incurred
by Employee that specifically and directly relate to the performance by Employee of the services under this Agreement, provided
that Employee complies with the Company Policies for reimbursement that are now or hereafter in effect. Each such expense shall
be submitted for reimbursement after they are incurred.

 

(e)              
Paid Time Off. On a calendar year basis, Employee will: (i) earn paid time off (“PTO”) in accordance
with the Company’s PTO policy, and (ii) receive six (6) days of paid personal leave on January 1. In accordance with the
Company Policies, all PTO that is earned by Employee shall be used or carried over to the extent permitted and all paid personal
leave that is received by Employee shall be used or forfeited. Upon the termination of the Employee’s employment by the Company,
all earned and unused PTO shall be paid and all unused paid personal leave shall be forfeited in accordance with the terms of the
Company Policies.

 

(f)               
Annual Bonus. Employee shall be eligible to receive an annual bonus (the “Annual Bonus”) under a bonus
plan as approved by the Compensation Committee of the Company’s Board of Directors.  All Annual Bonus payments will
be subject to the terms, conditions, and eligibility requirements of the applicable bonus plan as it may exist from time to time,
which may provide that the Annual Bonus is payable in the sole and absolute discretion of the Company.  The Annual Bonus shall
be provided in a manner such that entitlement to and payment of the Annual Bonus is exempt from or compliant with Internal Revenue
Code Section 409A.

     

     

    

 

 

 

(g)               Housing
and Travel. Company shall provide Employee a monthly housing allowance of up to $1700 per month as long as
Employee’s primary residence remains outside of North Carolina. In addition, for so long Employee’s primary
residence remains outside of North Carolina, the Company shall reimburse Employee for the costs of travel to such primary
residence up to an annual aggregate amount of $15,000 per year. Employee agrees and acknowledges that to the extent that
Company’s tax advisors determines that these housing and travel are taxable compensation benefits that they shall be
subject to applicable tax withholding requirements by Company.

 

5.           Withholding. The Company may withhold from any payments or benefits under this Agreement, including, but not limited
to, any payments under Paragraphs 4(a), (c), (d), (e), (f) and (g) of this Agreement, all federal, state, or local taxes or other
amounts, as may be required pursuant to applicable law, government regulation, or ruling.

 

6.           Termination. This Agreement and Employee’s employment by the Company shall or may be terminated as follows:

 

(a)           Expiration of the Term. This Agreement and Employee’s employment by the Company shall terminate upon the expiration
of the Term.

 

(b)           Death of Employee. This Agreement and Employee’s employment by the Company shall terminate upon the death of
Employee (“Death”).

 

(c)           Discontinuance. The Company, immediately and without notice, may terminate this Agreement and Employee’s employment
by the Company upon the liquidation, dissolution, or discontinuance of business by the Company in any manner or the filing of any
petition by or against the Company under any federal or state bankruptcy or insolvency laws, provided that such petition is not
dismissed within sixty (60) days after filing (“Discontinuance”).

 

(d)           Termination
by the Company for Just Cause. The Company, immediately and without notice, may terminate this Agreement and
Employee’s employment by the Company at any time for Just Cause. Termination for “Just Cause” shall include
termination for Employee’s: dishonesty; gross incompetence; willful misconduct; breach of fiduciary duty owed to the
Company, including any failure to disclose a material conflict of interest; failure to perform his duties as required by this
Agreement or to achieve the reasonable objectives mutually agreed upon by Employee and the Board or its designees; material
violation of any law (other than traffic violations or similar offenses); material failure to comply with Company Policies,
including policies prohibiting harassment, discrimination, and retaliation, or any other reasonable directives of the Board
or its designees; conviction of a felony of any nature or of a misdemeanor involving moral turpitude; use of illegal drugs or
other illegal substance, or use of alcohol in a manner that materially interferes with the performance of Employee’s
duties under this Agreement; adverse action or omission, without the consent or approval of the Company or not in accordance
with performing Employee’s duties hereunder, that would be required to be disclosed pursuant to public securities laws,
even though such laws may not then apply to the Company, that would limit the ability of the Company or any affiliated entity
to sell securities under any federal or state law, or that would disqualify the Company or any affiliated entity from any
exemption otherwise available to it; disability; or material breach of any provision of this Agreement, including provisions
concerning confidentiality, proprietary information, and restrictive covenants. For purposes of this subsection, the term
 “disability” means the inability of Employee, because of the condition of his physical, mental, or emotional
health, to satisfactorily perform the duties of his employment hereunder, with or without a reasonable accommodation, for a
continuous three-month period.

 

     

     

    

 

 

 

(e)           Termination by the Company Without Cause. The Company may terminate this Agreement and Employee’s employment
by the Company other than for “Just Cause,” as described in Paragraph 6(d) above, and other than upon “Discontinuance,”
as described in Paragraph 6(c) above, at any time for any reason by providing written notice to Employee, which termination shall
be effective immediately (“Without Cause”). For the avoidance of doubt, a notice by the Company that the Term of this
Agreement shall not be automatically renewed as provided in Paragraph 2 of this Agreement shall constitute a termination by the
Company Without Cause.

 

(f)            Termination by Employee for Good Reason. Employee may terminate this Agreement and his employment by the Company
for “Good Reason” (as defined herein), provided that: (i) Employee provides the Company with written notice of the
Good Reason within ninety (90) days of the initial actions or inactions of the Company giving rise to Good Reason; (ii) the Company
does not cure such conditions within sixty (60) days of such notice (the “Cure Period”); (iii) Employee terminates
his employment under this Agreement within thirty (30) days of the expiration of the Cure Period; and (iv) the Company has not,
prior to Employee giving notice of Good Reason, provided Employee with notice of termination or of non-renewal under this Agreement.

 

“Good Reason”
shall mean the occurrence of any of the following events within six (6) months following a Change of Control (as defined herein)
and without Employee’s consent: (i) a material diminishment in Employee’s responsibilities from those he had immediately
prior to the Change of Control; (ii) a material reduction in Employee’s base salary; (iii) Employee’s place of employment
is relocated more than fifty (50) miles from the location where Employee worked immediately prior to the Change of Control; or
(iv) a material breach of this Agreement by the Company.

 

     

     

    

 

 

 

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 the Company,
becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) of securities or ownership interests of the Company, representing 51% or more of the
combined voting power of the Company’s then outstanding securities or ownership interests; 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 or ownership
interests of the 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 Board, plus new directors whose election by the 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; 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 which entity continues to be the sole or majority owner of
the Company; 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.

 

(g)           Termination by Employee Without Good Reason. Employee may terminate this Agreement and his employment by the Company
for reasons other than Good Reason thirty (30) days after written notice of Employee’s resignation is received by the Company
(“Resignation”).

 

(h)           Obligations of the Company Upon Termination.

 

i.            Upon
the termination of this Agreement: (A) pursuant to the expiration of the Term, under Paragraph 6(a) of this Agreement, following
Employee’s notice of non-renewal pursuant to Paragraph 2 of this Agreement; (B) pursuant to Paragraph 6(b) of this Agreement
(“Death”); (C) by the Company pursuant to Paragraph 6(c) of this Agreement (“Discontinuance”) or Paragraph
6(d) of this Agreement (“Just Cause”); (D) by Employee pursuant to Paragraph 6(g) of this Agreement (“Resignation”);
or (E) for any reason other than those set forth in Paragraph 6(h)(ii); the Company shall have no further obligation hereunder
other than the payment of all compensation and other benefits payable to Employee through the date of such termination.

 

ii.           Upon
the termination of this Agreement (and subject to Employee’s execution of a release under Paragraph 7 of this Agreement
and compliance with his obligations under Paragraphs 8, 9, 10, and 11 of this Agreement): (A) by Employee pursuant to
Paragraph 6(f) of this Agreement (“Good Reason”); (B) by the Company pursuant to Paragraph 6(e) of this Agreement
(“Without Cause”); or (C) pursuant to the expiration of the Term, under Paragraph 6(a) of this Agreement,
following the Company’s notice of non-renewal pursuant to Paragraph 2 of this Agreement; the Company shall pay Employee
an amount equal to twelve (12) months of his then current base salary (less all applicable deductions), payable over twelve
consecutive months in equal installment payments paid in accordance with the Company’s regular payroll schedule,
beginning on the first regular payroll date occurring on or after the date on which the release of claims required by
Paragraph 7 of this Agreement becomes effective and non-revocable.

 

     

     

    

 

 

 

iii.          Notwithstanding the terms of the Company’s equity compensation plans and applicable award agreements, upon the occurrence
of a Change of Control or a termination of this Agreement by the Company pursuant to Paragraph 6(e) of this Agreement that occurs
within six months immediately prior to a Change of Control (and subject to Employee’s execution of a release under Paragraph
7 of this Agreement and compliance with his obligations under Paragraphs 8, 9, 10, and 11 of this Agreement): (A) all of Employee’s
outstanding unvested time-based equity awards shall become fully vested and any restrictions thereon shall lapse and (B) all of
Employee’s outstanding unvested performance-based equity awards shall be deemed achieved at target levels with respect to
performance goals or other vesting criteria.

 

iv.          Notwithstanding any provision in this Agreement to the contrary, any payment conditioned upon the release required by Paragraph
7 shall be made, or commence, as applicable, within ninety (90) days of the termination of Employee’s employment. To the
extent that any payment due under this Paragraph 6 is not exempt from Section 409A, such amount shall be paid in a lump sum no
later than seventy-four (74) days following the Employee’s termination of employment.

 

7.           Release of Claims. Notwithstanding any provision of this Agreement to the contrary, the Company’s obligation
to provide any severance payment under Paragraph 6(h)(ii) of this Agreement is conditioned upon Employee’s execution of an
enforceable release of any and all claims arising before the date that he signs the release, in a form which is reasonable and
which is satisfactory to the Company (satisfaction of the Company is not to be unreasonably withheld), and his compliance with
the provisions of Paragraphs 8, 9, 10, and 11 of this Agreement. If Employee fails to execute such a release or fails to comply
with such terms of this Agreement, then the Company’s obligation to make any payments to him ceases on the effective termination
date. The release of claims shall be provided to Employee within seven (7) days of the termination of his employment, and Employee
must execute it within the time period specified in the release (which shall not be longer than forty-five (45) days from the date
upon which he receives it). Such release shall not be effective until any applicable revocation period has expired.

 

     

     

    

 

 

 

8.           Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

 

(a)         “Confidential Information” shall mean: (i) any and all non-public or otherwise confidential proprietary knowledge,
material, or information of the Company, including any and all knowledge, material, or information that is designated as Confidential
Information by the Company and any and all confidential knowledge, material, or information that becomes generally known to the
public as a result of a disclosure by Employee, or any other person or entity who is obligated to treat such knowledge, material,
or information confidentially, and (ii) any and all non-public or otherwise confidential proprietary knowledge, material, or information
of others who disclose that knowledge, material, or information to the Company, including any and all knowledge, material, or information
designated as Confidential Information by the Company, or those others and any and all confidential knowledge, material, or information
that becomes generally known to the public as a result of a disclosure by Employee, or any other person or entity who is obligation
to treat such knowledge, material, or information confidentially. Confidential Information includes, but is not limited to, the
following types of knowledge, material, or information (whether or not reduced to writing): trade secrets; concepts; designs; discoveries;
ideas; know-how; processes; techniques; Inventions (as defined herein); drawings; specifications; models; data; software in various
stages of development; source and object code; documentation; diagrams; flow charts; research; procedures; marketing

 

(b)         not limited, devices, processes, computer programs and related source code and object code, mask works, and methods, together
with any improvements thereon or thereto, and development techniques, materials, plans, and information; business methods, procedures,
and policies; current and prospective customers names and lists and other information related to current and prospective customers;
prices, including price lists, policies, and formulas; profit margins, data, and formulas; financial information; training

 

(c)         a mask work and whether or not reduced to practice, including, but derivative works made therefrom, and know-how, descriptions,
sketches, drawings, or other knowledge, manuals and methodologies; and employee files and information.

 

(d)         “Inventions” shall mean ideas, concepts, techniques, inventions, discoveries, and works of authorship, whether
or not patentable or protectable by copyright or as information, or material related thereto.

 

(e)         “Intellectual Property Rights” shall mean all patent, trademark, and copyright rights, moral rights, rights
of attribution or integrity, trade secret rights, or other proprietary or intellectual property rights.

 

(f)          “Competing Business” shall mean any corporation, partnership, person, or other entity that is primarily engaged
in researching, developing, manufacturing, marketing, distributing, or selling any product, service, or technology that is competitive
with any part of the Company’s Business. For the avoidance of doubt, a retail business which researches, develops, manufactures,
markets, distributes and/or sells a wide variety of products, and revenue from its fashion jewelry is less than 20% of its total
revenue is not a Competing Business.

 

     

     

    

 

 

 

(g)         “Company’s Business” shall mean the development, manufacture, marketing, distribution, or sale of, including
research directed to, any product, service, or technology involving Moissanite or other lab-created gemstones (together “Lab-Created
Gemstones”) in the jewelry or gemstone industry. As of the date of this Agreement, Company’s Business includes, but
is not limited to: (i) marketing and distributing Lab-Created Gemstone jewelry and Lab-Created Gemstones, and (ii) fabricating
(including wafering, pre-forming, and faceting), marketing, and distributing Lab-Created Gemstones to the gem and jewelry industry.
Employee understands that during Employee’s employment with the Company, the Company’s Business may expand or change,
and Employee agrees that any such expansions or changes shall expand or contract the definition of the Company’s Business
and Employee’s obligations under this Agreement accordingly.

 

(h)         “Territory” shall mean the following severable geographic areas: (i) throughout the world, (ii) within any country
in which the Company, or a Competing Business is engaged in business; (iii) within any country in which the Company is engaged
in business, (iv) within the United States, (v) within any state, including the District of Columbia, in which the Company or a
Competing Business is engaged in business, (vi) within any state, including the District of Columbia, in which the Company is engaged
in business, (vii) within a 100 mile radius of Employee’s principal place of employment or work for the Company, (viii) the
state of North Carolina, and (ix) within a 100 mile radius of the Company’s corporate headquarters.

 

9.           Covenant Not to Compete. As a result of Employee’s employment by the Company: (i) Employee will have access
to trade secrets and Confidential Information of the Company, including, but not limited to, valuable information about its intellectual
property, business operations and methods, and the persons with which it does business in various locations throughout the world,
that is not generally known to or readily ascertainable by a Competing Business, (ii) Employee will develop relationships with
the Company’s customers and others with which the Company does business, and these relationships are among the Company’s
most important assets, (iii) Employee will receive specialized knowledge of and specialized training in the Company’s Business,
and (iv) Employee will gain such knowledge of the Company’s Business that, during the course of Employee’s employment
with the Company and for a period of one year following the termination thereof, Employee could not perform services for a Competing
Business without inevitably disclosing the Company’s trade secrets and Confidential Information to that Competing Business.
Accordingly, Employee agrees to the following:

 

(a)         While
employed by the Company, Employee will not, without the express written consent of an authorized representative of the
Company: (i) perform services (as an employee, independent contractor, officer, director, or otherwise) within the Territory
for any Competing Business, (ii) engage in any activities (or assist others to engage in any activities) within the Territory
that compete with the Company’s Business, (iii) own or beneficially own an equity interest in a Competing Business,
(iv) request, induce, or solicit (or assist others to request, induce, or solicit) any customers, prospective customers, or
suppliers of the Company to curtail or cancel their business with the Company, or to do business within the scope of the
Company’s Business with a Competing Business, (v) request, induce, or solicit (or assist others to request, induce, or
solicit) for the benefit of any Competing Business any employee or independent contractor of the Company to terminate his or
her employment or independent contractor relationship with the Company, or (vi) employ (or assist others to employ) for the
benefit of any Competing Business any person who has been employed by the Company within the last year of Employee’s
employment with the Company.

 

     

     

    

 

 

 

(b)        For a period of one year following the termination of Employee’s employment with the Company, Employee will not, without
the express written consent of an authorized representative of the Company: (i) perform services (as an employee, independent contractor,
officer, director, or otherwise), within the Territory for any Competing Business, that are the same or similar to any services
that Employee performed for the Company or that otherwise utilize skills, knowledge, and/or business contacts and relationships
that Employee utilized while providing services to the Company, (ii) engage in any activities (or assist others to engage in any
activities) within the Territory that compete with the Company’s Business, (iii) own or beneficially own an equity interest
in a Competing Business, (iv) request, induce, or solicit (or assist others to request, induce, or solicit) any customers, prospective
customers, or suppliers of the Company, which were customers, prospective customers, or suppliers of the Company during the last
year of Employee’s employment with the Company, to curtail or cancel their business with the Company, or to do business within
the scope of the Company’s Business with a Competing Business, (v) request, induce, or solicit (or assist others to request,
induce, or solicit) any customers, prospective customers, or suppliers of the Company with which Employee worked or had business
contact during the last year of Employee’s employment with the Company to curtail or cancel their business with the Company,
or to do business within the scope of the Company’s Business with a Competing Business, (vi) request, induce, or solicit
(or assist others to request, induce, or solicit) any employee or independent contractor of the Company to terminate his or her
employment or independent relationship with the Company, (vii) request, induce, or solicit (or assist others to request, induce,
or solicit) any person who has been employed by the Company within the last year of Employee’s employment by the Company
or thereafter to be employed with a Competing Business, or (viii) employ or engage as a contractor (or assist others to employ
or engage as a contractor) any person who has been employed by the Company within the last year of Employee’s employment
by the Company or thereafter. These obligations will continue for the specified period regardless of whether the termination of
Employee’s employment was voluntary or involuntary or with or without cause, and the specified period shall be tolled and
shall not run during any time in which Employee fails to abide by these obligations.

 

(c)        As
an exception to the above restrictions, Employee may own passive investments in Competing Businesses, (including, but not
limited to, indirect investments through mutual funds), provided that the securities of the Competing Business are publicly
traded and Employee does not own or control more than two percent of the outstanding voting rights or equity of the Competing
Business.

 

     

     

    

 

 

 

10.         Confidentiality.

 

(a)        All documents or other records, paper or electronic, that, in any way, constitute, contain, incorporate, or reflect any
Confidential Information and all proprietary rights therein, including Intellectual Property Rights, shall belong exclusively to
the Company, and Employee agrees to promptly deliver to the Company, upon request or upon termination of Employee’s employment
with the Company, all copies of such materials and Confidential Information in Employee’s possession, custody, or control,
as well as all other property of the Company in Employee’s possession, custody, or control. Likewise, Employee agrees to
promptly deliver to the Company, upon request or upon termination of Employee’s employment with the Company, all copies of
all documents or other records that, in any way, constitute, contain, incorporate, or reflect any Confidential Information of others
that was disclosed or provided to Employee during the Term that is in Employee’s possession, custody, or control.

 

(b)        Employee agrees, during the Term and thereafter: (i) to hold in confidence and treat with strict confidentiality all Confidential
Information, (ii) not to directly or indirectly reveal, report, publish, disclose, or transfer any Confidential Information to
any person or entity, and (iii) not to utilize any Confidential Information for any purpose, other than in the course and scope
of Employees work for the Company. If Employee is required to disclose Confidential Information pursuant to a court order or subpoena
or such disclosure is necessary to comply with applicable law, the undersigned shall: (i) promptly notify the Company before any
such disclosure is made and provide the Company with reasonable and ample time within which to object to or oppose any such disclosure,
(ii) at the Company’s request and expense take all reasonably necessary steps to defend against such disclosure, including
defending against the enforcement of the court order, subpoena, or other applicable law, and (iii) permit the Company to participate
with counsel of its choice in any related proceedings.

 

11.         Proprietary Information.

 

(a)        Employee
agrees that any Inventions created, conceived, developed, or reduced to practice, in whole or in part, by Employee, either
solely or in conjunction with others, during or after the Term that arise in any way from the use of or reliance on any
Confidential Information or any of the Company’s equipment, facilities, supplies, trade secret information, or time,
that relate to the Company’s Business or the Company’s demonstrably anticipated business, research, or
development, or that result from any work performed by Employee for, on behalf of, or at the direction of the Company, shall
belong exclusively to the Company and shall be deemed part of the Confidential Information for purposes of this Agreement,
whether or not fixed in a tangible medium of expression. Employee agrees that all rights, title, and interest in and to all
such Inventions, including, but not limited to, Intellectual Property Rights shall vest and reside in, and shall be the
exclusive property of, the Company. Without limiting the foregoing, Employee agrees that any and all such Inventions shall be
deemed to be “works made for hire” and that the Company shall be deemed the sole and exclusive owner thereof. In
the event and to the extent that any such Inventions are determined not to constitute “works made for hire” or
that, by operation of law or otherwise, any right, title, or interest in or to the Inventions, including, but not limited to,
any Intellectual Property Rights, vests not in the Company, but, rather, in Employee, Employee hereby: (i) irrevocably and
unconditionally assigns and transfers to the Company all rights, title, and interest in and to any such Inventions,
including, but not limited to, all Intellectual Property Rights and (ii) forever waives and agrees never to assert all such
rights, title, and interest.

 

     

     

    

 

 

 

(b)        Employee agrees to promptly and fully disclose in writing to the Board of Directors of the Company: (i) any Invention created,
conceived, developed or reduced to practice by Employee, either solely or in conjunction with others, during the Term and (ii)
any such Invention created, conceived, developed, or reduced to practice after the Term that belongs exclusively to the Company
pursuant to the provisions of Paragraph 11(a) of this Agreement. For the avoidance of doubt, in no event shall any provision of
this Agreement, including without limitation Paragraph 11(b), provide or be construed to provide Employee or any other party with
any license or other right or authority to create, conceive, develop, or reduce to practice, after the Term, any Invention in which
the Company has an ownership interest, without the prior written consent of the Company.

 

(c)        Employee agrees to assist the Company, at the Company’s expense, either during or subsequent to the Term, to obtain
and enforce for the Company’s own benefit, in any country, Intellectual Property Rights in connection with any and all Inventions
created, conceived, developed, or reduced to practice by Employee (in whole or in part) that belong or have been assigned to the
Company pursuant to the provisions of Paragraph 11(a) of this Agreement. Upon request, either during or subsequent to the Term,
Employee will execute all applications, assignments, instruments, and papers and perform all acts that the Company or its counsel
may reasonably deem necessary or desirable to obtain, maintain, or enforce any Intellectual Property Rights in connection with
any such Inventions or to otherwise protect the interests of the Company in those Inventions.

 

12.         Acknowledgements, Representations, and Warranties.

 

(a)        Employee acknowledges that the Company has a strict policy against using proprietary information belonging to any other
person or entity without the express permission of the owner of that information.

 

(b)        Employee
represents and warrants to the Company that Employee’s performance under this Agreement and as an employee of the
Company does not and will not breach any non-competition, non-solicitation, or confidentiality agreement to which Employee is
a party. Employee represents and warrants to the Company that Employee has not entered into, and agrees not to enter into,
any agreement that conflicts with or violates this Agreement.

 

     

     

    

 

 

 

(c)        Employee represents and warrants to the Company that Employee has not brought and shall not bring to the Company, or use
in the performance of Employee’s responsibilities for the Company, any materials or documents of a former employer that are
not generally available to the public or that did not belong to Employee prior to Employee’s employment with the Company,
unless Employee has obtained written authorization from the former employer or other owner for their possession and use and provided
the Company with a copy thereof.

 

13.        Indemnification. The Employee will be eligible for indemnification to the fullest extent authorized under the Company’s
Articles of Incorporation and By-Laws (as applicable) and will be eligible for coverage under the Company’s Director’s
 & Officer’s liability insurance policy as approved by the Board, subject to the terms and conditions contained therein.

 

14.        Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the matters set
forth herein and supersedes any prior agreements or understandings between them, whether written or oral, related to compensation,
including without limitation the COO Employment Agreement.

 

15.        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.

 

16.         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 following:

 

For the Company:

Chairman
of the Board of Directors

Charles &
Colvard, Ltd.

170 Southport
Drive

Morrisville,
North Carolina 27560

Fax: (919)
468-0486

 

For Employee:

Don O’Connell

c/o Charles
 & Colvard, Ltd.

170 Southport
Drive

Morrisville,
North Carolina 27560

 

     

     

    

 

 

 

17.         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. In the event that a court determines that the length of time, the geographic
area, or the activities prohibited under this Agreement are too restrictive to be enforceable, the court may reduce the scope of
the restriction to the extent necessary to make the restriction enforceable.

 

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

 

19.         Restrictive Covenants Are Reasonable. The market for the Company’s services and the Company’s Business
is highly specialized and highly competitive such that other companies and business entities compete with the Company in various
locations throughout the world. The provisions set forth in this Agreement: (i) are reasonably necessary to protect the Company’s
legitimate business interests, (ii) are reasonable as to the time, territory, and scope of activities that are restricted, (iii)
do not interfere with Employee’s ability to earn a comparable living or secure employment in the field of Employee’s
choice, (iv) do not interfere and are not inconsistent with public policy or the public interest, and (v) are described with sufficient
accuracy and definiteness to enable Employee to understand the scope of the restrictions on Employee.

 

20.         Injunctive Relief. Because of the unique nature of the Confidential Information, Employee understands and agrees
that the Company will suffer irreparable harm in the event that Employee fails to comply with any of Employee’s obligations
under Paragraphs 8, 9, 10, or 11 of this Agreement and that monetary damages will be inadequate to compensate the Company for such
breach. Accordingly, Employee agrees that the Company will, in addition to any other remedies available to it at law or in equity,
be entitled to injunctive relief to enforce the terms of Paragraphs 8, 9, 10, or 11 of this Agreement.

 

21.         Publication. Employee hereby authorizes the Company to provide a copy of this Agreement to any and all of Employee’s
future employers and to notify any and all such future employers that the Company intends to exercise its legal rights arising
out of or in connection with this Agreement and/or any breach or any inducement of a breach hereof.

 

22.         Survival. Employee agrees that: (i) Employee’s employment with the Company is contingent upon Employee’s
execution of this Agreement, which is a material inducement to the Company to offer employment and the compensation and benefits
hereunder to Employee and to provide Confidential Information to Employee, and (ii) Paragraphs 8, 9, 10, and 11 of this Agreement
shall survive any termination for any reason whatsoever of Employee’s employment with the Company.

 

     

     

    

 

 

 

23.         Governing Law. This Agreement shall be construed, interpreted, and governed in accordance with the laws of the state
of North Carolina, without regard to the conflicts of laws principles thereof. The state and federal courts in North Carolina shall
be the exclusive venues for the adjudication of all disputes arising out of this Agreement, and the parties consent to the exercise
of personal jurisdiction over them in any such adjudication and hereby waive any and all objections and defenses to the exercise
of such personal jurisdiction.

 

24.         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. The Company may assign
this Agreement or any rights hereunder, or delegate any obligations hereunder, without the consent of Employee. Employee shall
not assign this Agreement or delegate Employee’s obligations hereunder. Employee’s right to receive payments under
this Agreement shall not be subject to alienation, anticipation, commutation, sale, assignment, encumbrance, setoff, charge, pledge,
offset or hypothecation or to execution, levy, attachment, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to effect any such action shall be null, void and of no effect.

 

25.         Attorneys’ Fees. The Company shall reimburse Employee up to Five Thousand Dollars ($5,000.00) of legal fees
and expenses he incurs for legal review and negotiation of this Agreement on his behalf with such reimbursement to be made within
ten (10) days of Employee’s submission to the Company of such documentation of his payment of such fees and expenses as the
Company may require and in no event later than June 30, 2017.

 

26.         Compliance with Section 409A.

 

(a)       Parties’
Intent. The parties intend that the payments and benefits to which Employee may become entitled in connection with
Employee’s employment under this Agreement will be exempt from or comply with Section 409A of the Code and the
regulations and other guidance promulgated thereunder (collectively, “Section 409A”) and all provisions of this
Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A.
All severance payments hereunder are intended to qualify as short-term deferrals meeting the requirements of Treasury
Regulation Section 1.409A-1(b)(4) or as involuntary severance payments satisfying the requirements of Treasury Regulation
Section 1.409A-1(b)(9)(iii) and this Agreement shall be construed in accordance with such intent. If any provision of this
Agreement (or of any award of compensation, including equity compensation or benefits) would cause Employee to incur any
additional tax or interest under Section 409A, the Company shall, upon the specific request of Employee, use its
reasonable business efforts to in good faith reform such provision to comply with Code Section 409A; provided,
that to the maximum extent practicable, the original intent and economic benefit to Employee and the Company of the
applicable provision shall be maintained, and the Company shall have no obligation to make any changes that could create any
additional economic cost or loss of benefit to the Company. The Company shall timely use its reasonable business efforts to
amend any plan or program in which Employee participates to bring it in compliance with Section 409A.

 

     

     

    

 

 

 

(b)       Separation from Service. A termination of employment shall not be deemed to have occurred for purposes of any provision
of this Agreement relating to the payment of any amounts or benefits upon or following a termination of employment unless such
termination also constitutes a “Separation from Service” within the meaning of Section 409A and, for purposes of any
such provision of this Agreement, references to a “termination,” “termination of employment,” “separation
from service” or like terms shall mean Separation from Service.

 

(c)       Separate Payments. Each installment payment required under this Agreement shall be considered a separate payment
for purposes of Section 409A.

 

(d)       Delayed Distribution to Key Employees. If the Company determines in accordance with Sections 409A and 416(i) of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, in the Company’s sole discretion,
that Employee is a Key Employee of the Company on the date Employee’s employment with the Company terminates and that a delay
in benefits provided under this Agreement is necessary to comply with Code Section 409A(A)(2)(B)(i), then any severance payments
and any continuation of benefits or reimbursement of benefit costs provided by this Agreement, and not otherwise exempt from Section
409A, shall be delayed for a period of six (6) months following the date of termination of Employee’s employment (the “409A
Delay Period”). In such event, any severance payments and the cost of any continuation of benefits provided under this Agreement
that would otherwise be due and payable to Employee during the 409A Delay Period shall be paid to Employee in a lump sum cash amount
in the month following the end of the 409A Delay Period. For purposes of this Agreement, “Key Employee” shall mean
an employee who, on an Identification Date (“Identification Date” shall mean each December 31) is a key employee as
defined in Section 416(i) of the Code without regard to paragraph (5) thereof. If Employee is identified as a Key Employee on an
Identification Date, then Employee shall be considered a Key Employee for purposes of this Agreement during the period beginning
on the first April 1 following the Identification Date and ending on the following March 31.

 

a.         Reimbursement. To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under
this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A), (i) any such expense reimbursement
shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was
incurred by the Employee, (ii) the right to reimbursement on in-kind benefits shall not be subject to liquidation or exchange for
another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year
shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year.

 

[signature page follows]

 

     

     

    

 

 

 

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

 

	 	CHARLES & COLVARD, LTD.
	 	 
	 	 
	 	By:	/s/ Neal Goldman
	 	 	Neal Goldman
	 	 	Chairman of the Board of Directors
	 	 
	 	EMPLOYEE
	 	 
	 	 
	 	 	/s/ Don O’Connell
	 	 	Don O’Connell

 

     

     

    

 

 

 

Exhibit
A

 

Form
of Employee Incentive Stock Option Agreement 

 

     

     

    

 

 

 

Exhibit
B

 

Form
of Employee Nonqualified Stock Option Agreement

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