Document:

AGREEMENT

  
 Exhibit 10.51 
  
 SALARY CONTINUATION AGREEMENT 
  
 THIS
SALARY CONTINUATION AGREEMENT (the “Agreement”) is made and entered into effective as of July 15, 2002 by and between Charles & Colvard, Ltd., a North Carolina company with its principal office at 3800 Gateway Boulevard, Suite 311,
Morrisville, North Carolina, 27560 (the “Company), and Barbara L. Mooty, an individual currently residing at 4814 Summit Arbor Drive #305, Raleigh, NC 27612 (“Employee”). 
  
 Statement of Purpose 
  
 Employee is
presently employed by the Company as Vice President of Brand Development and Industry Relations. Employee and the Company desire to provide for continued salary payments to Employee in the event Employee is terminated by the Company without cause,
all subject to the terms and conditions of this Agreement. 
  
 Therefore, in consideration of the mutual covenants
contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Employee agree as follows: 
  
 1.    Salary.  The annual salary of Employee is $ 150,000 (the “Initial Annual Salary”) to be paid in accordance with the
Company’s payroll practices as in existence from time to time. 
  
 2.    Salary
Continuation.  In the event Employee is terminated by the Company within eighteen months of Employee’s July 15, 2002 date of hire for any reason other than Just Cause (as defined in Section 3 below), the Company shall pay to
Employee, for a period of twelve (12) months following such termination, the Initial Annual Salary, in accordance with the Company’s normal payroll practices. 
  
 3.    Termination for Just Cause.  The Company shall have the right to terminate the Employee’s employment under this Agreement at
any time without cause, which termination shall be effective immediately, but shall be subject to Section 2 of this Agreement. In the event the Employee’s employment is terminated for Just Cause, the Employee shall have no right to receive
compensation under this Agreement for any period after such termination other than compensation or other benefits already accrued and owing to Employee. Termination for “Just Cause” shall include termination for the Employee’s
personal dishonesty, gross incompetence, willful misconduct, breach of a fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, regulation (other than traffic violations or similar
offenses), written Company policy or final cease-and-desist order, conviction of a felony or of a misdemeanor involving moral turpitude, unethical business practices in connection with the Company’s business, misappropriation of the
Company’s assets (determined on a reasonable basis), disability or material breach of any other provision of this Agreement. The determination of whether “Just Cause” exists for termination shall be made by the Board of Directors of
the Company in its sole discretion. For purposes of this section, the term 

 
 1 

 “disability” means the inability of Employee, due to the condition of her physical, mental or emotional health, to satisfactorily
perform the duties of her employment hereunder for a continuous three month period; provided further that if the Company furnishes long term disability insurance for the Employee, the term “disability” shall mean that continuous period
sufficient to allow for the long term disability payments to commence pursuant to the Company’s long term disability insurance policy. 
  
 4.    Employee’s Right to Payments.  In receiving any payments pursuant to this Agreement, Employee shall not be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Employee hereunder, and such amounts shall not be reduced or terminated whether or not the Employee obtains other employment. 
  
 5.    Entire Agreement.  This Agreement contains the entire agreement of the parties with respect to the subject matter of this
Agreement and supersedes any prior agreements between them, whether written or oral. 
  
 6.    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. 
  
 7.    Notices.  Any notice to be given under this Agreement shall be deemed sufficient if addressed in writing and delivered personally, by telefax with receipt acknowledged, or by registered or
certified U.S. mail to the address first above appearing, or to such other address as a party may designate by notice from time to time. 
  
 8.    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. 
  
 9.    Amendment.  This Agreement may be amended only by an agreement in writing signed by each of the parties hereto. 
  
 10.    Arbitration.  Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by
arbitration in Raleigh, North Carolina in accordance with the expedited procedures of the Rules of the American Arbitration Association, and judgment upon the award may be rendered by the arbitrator and may be entered in any court having
jurisdiction thereof. 
  
 11.    Governing Law.  This Agreement shall be
governed and construed in accordance with the laws of the State of North Carolina. Each of the parties hereto irrevocably submits to 

 
 2 

 the exclusive jurisdiction of the courts located in North Carolina for the purposes of any suit, action or other proceeding contemplated hereby
or any transaction contemplated hereby. 
  
 12.    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, her heirs, beneficiaries and legal representatives. It is agreed that the rights and obligations of
Employee may not be delegated or assigned except as may be specifically agreed to by the parties hereto. 
  
 IN
WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the day and year first above written. 
  
 
	 CHARLES & COLVARD, LTD.
 
	 
	 By:
 	 	 /s/    Robert S. Thomas        
 

	  	 	 Robert S. Thomas, President
 

 
  
 
	 EMPLOYEE
 
	 
	 /s/    Barbara L. Mooty        
 

	 Barbara L. Mooty
 

 

 
 3<PAGE>

                                                               EXHIBIT 10.144

LEASE SCHEDULE NO. 1000114783                                    FINANCING LEASE
                                                    (Contract Rate Interim Rent)
Master Lease Agreement dated June 10, 2002

Lessor:  Banc One Leasing Corporation

Lessee: COLONIAL FULL SERVICE CAR WASH, INC.

1. GENERAL. This Lease Schedule is signed and delivered under the Master Lease
Agreement identified above, as amended from time to time ("Master Lease"),
between Lessee and Lessor. Capitalized terms defined in the Master Lease will
have the same meanings when used in this Schedule. To the extent that the Master
Lease contains provisions inconsistent with this Schedule, the terms and
provisions of this Schedule shall control.

2. FINANCING. Lessor finances for Lessee, and Lessee finances with Lessor, all
of the property ("Equipment") described in Schedule A-1 attached hereto (and
Lessee represents that all Equipment is new unless specifically identified as
used).

3.  AMOUNT FINANCED.          Equipment Cost:         $39,059.38
                              Set-up/Filing Fee:      $   375.00
                              Miscellaneous:
                              Sales Tax:

                              Total:                  $39,434.38

4. FINANCING TERM. The Base Term of this Schedule shall be 60 months and the
Base Term shall commence on Acceptance Date ("Commencement Date"). The total
Lease Term consists of the Interim Term plus the Base Term. The Interim Term
begins on the date that Lessor accepts this Schedule as stated below Lessor's
signature ("Acceptance Date") and continues up to the Commencement Date.

5. INSTALLMENT PAYMENTS/FEES. As financing for the Equipment, Lessee shall pay
to Lessor all amounts stated below on the due dates stated below. There shall be
added to each installment payment all applicable Taxes as in effect from time to
time.

(a) During the Lease Term, the above Amount Financed shall bear interest at the
rate of 7.75% per annum ("Contract Rate").

(b) For the Interim Term, Lessee shall pay to Lessor on the Commencement Date an
amount equal to the Per Diem Payment multiplied by the number of days in the
Interim Term. "Per Diem Payment" means an amount equal to the product of the
Amount Financed of the Equipment and the Daily Rate. "Daily Rate" means the
Contract Rate divided by 360.

(c) During the Base Term, Lessee shall pay to Lessor installment payments in the
amounts and according to the timing set forth below, provided however, that
notwithstanding the following, the final installment payment due hereunder shall
be equal to the remaining principal balance hereunder together with all accrued
interest and fees.

         (1) Amount of each installment payment during the Base Term (including
principal and interest):

                           60 months                 $794.88

         (2)  Frequency of installment payments during Base Term:      monthly

                                   Page 1 of 4

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         (3)  Timing of installment payments during the Base Term:    in arrears

(d)  Lessee shall pay Lessor a Set-Up/Filing Fee as follows:

         (1)  $0.00        shall be paid on the Acceptance Date, or
              -----
         (2)  $375.00      has been included in the above Amount Financed of
              -------      the Equipment.

(e) Security Deposit: $0.00. On the Acceptance Date, Lessee shall pay Lessor
said Security Deposit which shall be held in accordance with paragraph 6 below.

6. SECURITY INTEREST. This Schedule is intended to be a secured debt financing
transaction, not a true lease. See Paragraph 7 below regarding Lessee's
ownership of the Equipment. As collateral security for payment and performance
of all Secured Obligations (defined in Paragraph 8 below) and to induce Lessor
to extend credit from time to time to Lessee (under the Lease or otherwise),
Lessee hereby grants to Lessor a first priority security interest in all of
Lessee's right, title and interest in the Equipment, whether now existing or
hereafter acquired, any sums specified in this Schedule as a "Security Deposit",
and in all Proceeds (defined in Paragraph 8 below). At its option, Lessor may
apply all or any part of any Security Deposit to cure any default of Lessee
under the Lease. If upon final termination of this Schedule, Lessee has
fulfilled all of the terms and conditions hereof, then Lessor shall pay to
Lessee upon Lessee's written request any remaining balance of the Security
Deposit for this Schedule, without interest.

7. TITLE TO EQUIPMENT; FIRST PRIORITY LIEN. Lessee represents, warrants and
agrees: that Lessee currently is the lawful owner of the Equipment; that good
and marketable title to the Equipment shall remain with Lessee at all times;
that Lessee has granted to Lessor a first priority security interest in the
Equipment and all Proceeds; and that the Equipment and all Proceeds are, and at
all times shall be, free and clear of any Liens other than Lessor's security
interest therein. Lessee at its sole expense will protect and defend Lessor's
first priority security interest in the Equipment against all claims and demands
whatsoever.

8. CERTAIN DEFINITIONS. "Secured Obligations" means (a) all payments and other
obligations of Lessee under or in connection with this Schedule, and (b) all
payments and other obligations of Lessee (whether now existing or hereafter
incurred) under or in connection with the Master Lease and all present and
future Lease Schedules thereto, and (c) all other leases, indebtedness,
liabilities and/or obligations of any kind (whether now existing or hereafter
incurred, absolute or contingent, direct or indirect) of Lessee to Lessor or to
any affiliate of either Lessor or Bank One Corporation. "Proceeds" means all
cash and non-cash proceeds of the Equipment including, without limitation,
proceeds of insurance, indemnities and/or warranties.

9. AMENDMENTS TO MASTER LEASE. For purposes of this Schedule only, Lessee and
Lessor agree to amend the Master Lease as follows: (a) public liability or
property insurance as described in the second sentence of Section 8 will not be
required; (b) the definition of "Stipulated Loss Value" in clause (b) of Section
9 is deleted and replaced by Paragraph 10 below; (c) the text of Section 10 is
deleted in its entirety; (d) Subsections 23(a) and 23(c) are deleted; (e)
subsection 23(b) and the last sentence of section 4 will apply only if an event
of default occurs; and (f) all references in the Lease as it relates to this
Schedule to "Lessee" and "Lessor" shall be changed to "Borrower" and "Lender"
respectively.

10. STIPULATED LOSS VALUE. For purposes of this Schedule only, the "Stipulated
Loss Value" of any item of Equipment during its Lease Term equals the aggregate
of the following as of the date specified by Lessor: (a) all accrued and unpaid
interest, late charges and other amounts due under this Schedule and the Master
Lease to the extent it relates to this Schedule as of such specified date, plus
(b) the remaining principal balance due and payable by Lessee under this
Schedule as of such specified date, plus (c) interest on the amount described in
the foregoing clauses (a) and (b) at the Overdue Rate commencing with the
specified date; provided, that the foregoing calculation shall not exceed the
maximum amount which may be collected by Lessor from Lessee under applicable law
in connection with enforcement of Lessor's rights under this Schedule and the
Master Lease to the extent it relates to this Schedule.

                                  Page 2 of 4

<PAGE>

11. LESSEE TO PAY ALL TAXES. For purposes of this Schedule and its Equipment
only: Lessee shall pay any and all Taxes relating to this Schedule and its
Equipment directly to the applicable taxing authority; Lessee shall prepare and
file all reports or returns concerning any such Taxes as may be required by
applicable law or regulation (provided, that Lessor shall not be identified as
the owner of the Equipment in such reports or returns); and Lessee shall, upon
Lessor's request, send Lessor evidence of payment of such
Taxes and copies of any such reports or returns.

12. LESSEE'S ASSURANCES. Lessee irrevocably and unconditionally: (a) reaffirms
all of the terms and conditions of the Master Lease and agrees that the Master
Lease remains in full force and effect; (b) agrees that the Equipment is and
will be used at all times solely for commercial purposes, and not for personal,
family or household purposes; and (c) incorporates all of the terms and
conditions of the Master Lease as if fully set forth in this Schedule.

13. REPRESENTATIONS AND WARRANTIES: Lessee represents and warrants that: (a)
Lessee is a corporation, partnership or proprietorship duly organized, validly
existing and in good standing under the laws of the state of its organization
and is qualified to do business and is in good standing under the laws of each
other state in which the Equipment is or will be located; (b) Lessee has full
power, authority and legal right to sign, deliver and perform the Master Lease,
this Schedule and all related documents and such actions have been duly
authorized by all necessary corporate/partnership/ proprietorship action; and
(c) the Master Lease, this Schedule and each related document has been duly
signed and delivered by Lessee and each such document constitutes a legal, valid
and binding obligation of Lessee enforceable in accordance with its terms.

14. CONDITIONS. No lease of Equipment under this Schedule shall be binding on
Lessor, and Lessor shall have no obligation to purchase the Equipment covered
hereby, unless: (a) Lessor has received evidence of all required insurance; (b)
in Lessor's sole judgment, there has been no material adverse change in the
financial condition or business of Lessee or any guarantor; (c) Lessee has
signed and delivered to Lessor this Schedule, which must be satisfactory to
Lessor, and Lessor has signed and accepted this Schedule; (d) no change in the
Code or any regulation thereunder, which in Lessor's sole judgment would
adversely affect the economics to Lessor of the lease transaction, shall have
occurred or shall appear to be imminent; (e) Lessor has received, in form and
substance satisfactory to Lessor, such other documents and information as Lessor
shall reasonably request; and (f) Lessee has satisfied all other reasonable
conditions established by Lessor.

15. OTHER DOCUMENTS: EXPENSES: Lessee agrees to sign and deliver to Lessor any
additional documents deemed desirable by Lessor to effect the terms of the
Master Lease or this Schedule including, without limitation, Uniform Commercial
Code financing statements which Lessor is authorized to file with the
appropriate filing officers. Lessee hereby irrevocably appoints Lessor and any
designee of Lessor as Lessee's attorney-in-fact with full power and authority in
the place of Lessee and in the name of Lessee to prepare, sign, amend, file or
record any Uniform Commercial Code financing statements or other documents
deemed desirable by Lessor to perfect, establish or give notice of Lessor's
interests in the Equipment or in any collateral as to which Lessee has granted
Lessor a security interest. Lessee shall pay upon Lessor's written request any
reasonable actual out-of-pocket costs and expenses paid or incurred by Lessor in
connection with the above terms of this section or the funding and closing of
this Schedule.

16. Solely for the purposes of this Schedule, Lessee and Lessor agree to the
following changes in the Master Lease.

        (a) The last sentence of Section 4 of the Master Lease is hereby
deleted in its entirety.

        (b) Subsection 15(b) is amended and restated in its entirety as follows:

               (b) Lessor or its agent may repossess any or all Equipment
               wherever found, may enter the premises during regular business
               hours where the Equipment is located and disconnect, render
               unusable and remove it.

                    [This space is intentionally left blank.]

                                  Page 3 of 4

<PAGE>

17. PURCHASE ORDERS AND ACCEPTANCE OF EQUIPMENT. Lessee agrees that (i) Lessor
has not selected, manufactured, sold or supplied any of the Equipment, (ii)
Lessee has selected all of the Equipment and its suppliers, and (iii) Lessee has
received a copy of, and approved, the purchase orders or purchase contracts for
the Equipment. AS BETWEEN LESSEE AND LESSOR, LESSEE AGREES THAT: (a) LESSEE HAS
RECEIVED, INSPECTED AND APPROVED ALL OF THE EQUIPMENT; (b) ALL EQUIPMENT IS IN
GOOD WORKING ORDER AND COMPLIES WITH ALL PURCHASE ORDERS OR CONTRACTS AND ALL
APPLICABLE SPECIFICATIONS; (c) LESSEE IRREVOCABLY ACCEPTS ALL EQUIPMENT FOR
PURPOSES OF THE LEASE "AS-IS, WHERE-IS" WITH ALL FAULTS; AND (d) LESSEE
UNCONDITIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO REVOKE ITS ACCEPTANCE OF
THE EQUIPMENT.

LESSEE HAS READ AND UNDERSTOOD ALL OF THE TERMS OF THIS SCHEDULE. LESSEE AGREES
THAT THERE ARE NO ORAL OR UNWRITTEN AGREEMENTS WITH LESSOR REGARDING THE
EQUIPMENT OR THIS SCHEDULE.

BANC ONE LEASING CORPORATION                COLONIAL FULL SERVICE CAR WASH, INC.
(Lessor)                                    (Lessee)

By:  /s/  Mary Heubach                      By:  /s/ Robert M. Kramer
     -----------------                           --------------------

Title: Funding Authority                    Title: Vice President

Acceptance Date: 8/29/02                    Witness: /s/ Mark Warren

                                   Page 4 of 4

<PAGE>

                              MASTER LEASE ADDENDUM

                            Dated as of June 10, 2002

Master Lease Agreement Dated as of June 10, 2002

Lessee: COLONIAL FULL SERVICE CAR WASH, INC.

        Reference is made to the above Master Lease Agreement as amended
("Master Lease") by and between Banc One Leasing Corporation ("Lessor") and the
above lessee ("Lessee"). This Addendum modifies the terms and conditions of the
Master Lease. Unless otherwise defined herein, capitalized terms defined in the
Master Lease shall have the same meaning when used herein. As part of the
valuable consideration to induce the execution of the Master Lease, Lessor and
Lessee hereby agree as follows.

        1.  Section 17 of the Master Lease is hereby amended and restated in its
entirety as follows.

                 17. FINANCIAL REPORTS: Lessee shall to furnish to Lessor: (a)
                 annual financial statements setting forth the financial
                 condition and results of operation of Lessee (financial
                 statements shall include balance sheet and income statement)
                 within 120 days of the end of each fiscal year of Lessee; (b)
                 upon Lessor's request, quarterly financial statements setting
                 forth the financial condition and results of operation of
                 Lessee within 60 days of the end of each of the first three
                 fiscal quarters of Lessee; and (c) such other financial
                 information as Lessor may from time to time reasonably request
                 including, without limitation, financial reports filed by
                 Lessee with federal or state regulatory agencies. All such
                 financial information shall be prepared in accordance with
                 generally accepted accounting principles. If Lessee fails to
                 furnish the annual financial statements to Lessor within 30
                 days of Lessor's written request, then Lessor may, at its
                 option, charge Lessee a non-performance fee equal to all the
                 rentals due under the Lease for the then current month (unless
                 otherwise prohibited by law) and such fees shall be deemed to
                 be additional rent, payable by Lessee on demand.
                 Notwithstanding the foregoing, Lessee shall not be required to
                 furnish the statements or information described in (a), (b),
                 and (c) above so long as Lessee is required to furnish annual
                 financial statements and other financial information to Bank
                 One NA (successor by merger to Bank One, Texas NA).

        2.  The first sentence in Section 21 of the Master Lease is amended and
restated as follows.

                 Lessor and any assignee of Lessor, upon written notice to
                 Lessee, may sell, assign, transfer or grant a security
                 interest in all or any part of Lessor's rights, obligations,
                 title or interest in the Equipment, the Lease, any Schedule or
                 the amounts payable under the Lease or any Schedule to any
                 entity ("transferee"). The transferee shall succeed to all of
                 Lessor's rights in respect to the Lease (including, without
                 limitation, all rights to insurance and indemnity protection
                 described in the Lease).

        3.  Except as expressly amended by this Addendum and other written
instruments signed by the party to be bound, the Master Lease remains unchanged
and in full force and effect. The modifications made pursuant to this Addendum
shall apply to all existing and future Schedules under the Master Lease, and
shall apply to all Schedules owned by Lessor or an assignee of Lessor for which
Lessor executes this Addendum as such assignee's agent.

        IN WITNESS, the parties hereto have executed this Addendum as of the
date referenced above.

COLONIAL FULL SERVICE CAR WASH, INC.                BANC ONE LEASING CORPORATION
(Lessee)                                            (Lessor)

By: /s/ Gregory M. Krzemien                         By: /s/ Mary Heubach
    -----------------------                         --------------------

Title: CFO and Treasurer                            Title: Funding Authority
       -----------------                                   -----------------

                                   Page 1 of 1

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[LOGO]
                          Banc One Leasing Corporation

                    SCHEDULE A-1 EQUIPMENT LEASED HEREUNDER

QUANTITY                  DESCRIPTION                                PAGE      1

            EQUIPMENT LOCATION:            3022 South Cooper
                                           Arlington, TX  76015

            COUNTY:                        Tarrant
            EQUIPMENT COST:                $39,059.38

1    EIS-5000 - EMISSION ANALYZER

     TOGETHER WITH ALL ATTACHMENTS, ADDITIONS, ACCESSIONS, PARTS, REPAIRS,
     IMPROVEMENTS, REPLACEMENTS AND SUBSTITUTIONS THERETO.

This Schedule A-1 is attached to and made a part of Lease Number 1000114783 and
constitutes a true and accurate description of the equipment.

Lessee:COLONIAL FULL SERVICE CAR WASH, INC

By: /s/ Robert M. Kramer
    ---------------------

Date: 8/28/02

scheda-1,057

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