Document:

Exhibit 4.1

 Exhibit 4.1 
  

EXECUTION COPY 
  

 
 CAPITAL ONE MULTI-ASSET EXECUTION TRUST 
  
 as Issuer 
  
 and 
  
 THE BANK OF NEW YORK 
  
 as Indenture Trustee 
  
 CLASS A(2003-2) TERMS DOCUMENT 
  
 dated as of August 5, 2003 
  
 to

  
 CARD SERIES INDENTURE SUPPLEMENT 
  
 dated as of October 9, 2002 
  
 to 
  
 ASSET POOL 1 SUPPLEMENT 
  
 dated as of October 9, 2002 
  
 to 
  
 INDENTURE 
  
 dated as of October 9, 2002 
  

 TABLE OF CONTENTS 
  

	 	 	 	  	Page

	 	 	 ARTICLE I
	  	 
			
	 	 	 Definitions and Other Provisions of General Application
	  	 
			
	Section 1.01.	 	 Definitions
	  	1
			
	Section 1.02.	 	 Governing Law
	  	7
			
	Section 1.03.	 	 Counterparts
	  	7
			
	Section 1.04.	 	 Ratification of Indenture, the Asset Pool 1 Supplement and Indenture Supplement
	  	7
			
	 	 	 ARTICLE II
 The Class A(2003-2) Notes
	  	 
			
	Section 2.01.	 	 Creation and Designation
	  	8
			
	Section 2.02.	 	 Adjustments to Required Subordinated Percentages
	  	8
			
	Section 2.03.	 	 Interest Payment
	  	8
			
	Section 2.04.	 	 Calculation Agent; Determination of LIBOR
	  	9
			
	Section 2.05.	 	 Payments of Interest and Principal
	  	9
			
	Section 2.06.	 	 Form of Delivery of Class A(2003-2) Notes; Depository; Denominations
	  	10
			
	Section 2.07.	 	 Delivery and Payment for the Class A(2003-2) Notes
	  	10
			
	Section 2.08.	 	 Targeted Deposits to the Accumulation Reserve Account
	  	10
			
	Section 2.09.	 	 Capital One Derivative Agreement
	  	10
			
	Section 2.10.	 	 Tax Treatment
	  	11

  

 -i- 

 THIS CLASS A(2003-2) TERMS DOCUMENT (this “Terms Document”), by and between CAPITAL ONE
MULTI-ASSET EXECUTION TRUST, a statutory trust created under the laws of the State of Delaware (the “Issuer”), having its principal office at E. A. Delle Donne Corporate Center, Montgomery Building, 1011 Centre Road, Wilmington, DE
19805, and THE BANK OF NEW YORK, a New York banking corporation, as Indenture Trustee (the “Indenture Trustee”), is made and entered into as of August 5, 2003. 
  
 Pursuant to this Terms Document, the Issuer shall create a new tranche of Class A Notes and shall specify the principal
terms thereof. 
  
 ARTICLE I 
  
 Definitions and Other Provisions of General Application 
  
 Section 1.01. Definitions. For all purposes of this Terms Document,
except as otherwise expressly provided or unless the context otherwise requires: 
  

	 	(1)	 	the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; 

  

	 	(2)	 	all other terms used herein which are defined in the Indenture Supplement, the Asset Pool 1 Supplement or the Indenture, either directly or by reference therein, have the meanings
assigned to them therein; 

  

	 	(3)	 	all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles and, except as otherwise herein
expressly provided, the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder means such accounting principles as are generally accepted in the United States of America at the date
of such computation; 

  

	 	(4)	 	all references in this Terms Document to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions
of this Terms Document; 

  

	 	(5)	 	the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Terms Document as a whole and not to any particular
Article, Section or other subdivision; 

  

	 	(6)	 	in the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Indenture Supplement, the Asset Pool 1
Supplement, the Indenture or the Transfer and Administration Agreement, the terms and provisions of this Terms Document shall be controlling; 

  

	 	(7)	 	each capitalized term defined herein shall relate only to the Class A(2003-2) Notes and no other Tranche of Notes issued by the Issuer; and 

  

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	 	(8)	 	“including” and words of similar import will be deemed to be followed by “without limitation.” 

  
 “Accumulation Period Amount” means $41,666,666.66;
provided, however, if the Accumulation Period Length is determined to be less than twelve (12) months pursuant to Section 3.10(b)(ii) of the Indenture Supplement, the Accumulation Period Amount shall be the amount specified in
the definition of “Accumulation Period Amount” in the Indenture Supplement. 
  
 “Accumulation Reserve Funding Period” shall mean, (a) if the Accumulation Period Length is determined to be one (1) month, there shall be no Accumulation Reserve Funding Period and (b) otherwise, the
period (x) commencing on the earliest to occur of (i) the Monthly Period beginning three (3) calendar months prior to the first Distribution Date for which a budgeted deposit is targeted to be made into the Principal Funding sub-Account of the Class
A(2003-2) Notes pursuant to Section 3.10(b) of the Indenture Supplement, (ii) the Monthly Period following the first Distribution Date following and including the December 2003 Distribution Date for which the Quarterly Excess Spread
Percentage is less than 3%, but in such event the Accumulation Reserve Funding Period shall not be required to commence earlier than 6 months prior to the first Distribution Date for which a budgeted deposit is targeted to be made into the Principal
Funding sub-Account for the Class A(2003-2) Notes pursuant to Section 3.10(b) of the Indenture Supplement, and (iii) the Monthly Period following the first Distribution Date following and including the February 2004 Distribution Date for
which the Quarterly Excess Spread Percentage is less than 4%, but in such event the Accumulation Reserve Funding Period shall not be required to commence earlier than 4 months prior to the first Distribution Date for which a budgeted deposit is
targeted to be made into the Principal Funding sub-Account for the Class A(2003-2) Notes pursuant to Section 3.10(b) of the Indenture Supplement and (y) ending on the close of business on the last day of the Monthly Period preceding the
earlier to occur of (i) the Expected Principal Payment Date for the Class A(2003-2) Notes and (ii) the date on which the Class A(2003-2) Notes are paid in full. 
  

“Asset Pool 1 Supplement” means the Asset Pool 1 Supplement dated as of October 9, 2002, by and between the Issuer and the Indenture
Trustee, as amended and supplemented from time to time. 
  
 “Base Rate” means, with respect to any Monthly Period, the sum of (a) the Card Series Servicing Fee Percentage and (b) the weighted average (based on the Outstanding Dollar Principal Amount of the related Card Series Notes)
of the following: 
  
 (i) in the case of a
Tranche of Card Series Dollar Interest-bearing Notes with no Derivative Agreement for interest, the rate of interest applicable to such Tranche for the period from and including the Monthly Interest Accrual Date for such Tranche of Card Series
Dollar Interest-bearing Notes in such Monthly Period to but excluding the Monthly Interest Accrual Date for such Tranche of Card Series Dollar Interest-bearing Notes in the following Monthly Period; 
  
 (ii) in the case of a Tranche of Card Series Discount Notes,
the rate of accretion (converted to an accrual rate) of such Tranche for the period from and including the Monthly Interest Accrual Date for such Tranche of Card Series Discount Notes in such Monthly Period to but excluding the Monthly Interest

  

 2 

 Accrual Date for such Tranche of Card Series Discount Notes in the following Monthly Period; 

 
 (iii) in the case of a Tranche of Card Series Notes with
a Performing Derivative Agreement for interest, the rate at which payments by the Issuer to the applicable Derivative Counterparty accrue (prior to the netting of such payments, if applicable) for the period from and including the Monthly Interest
Accrual Date for such Tranche of Card Series Notes in such Monthly Period to but excluding the Monthly Interest Accrual Date for such Tranche of Card Series Notes in the following Monthly Period; provided, however, that in the case of a Tranche of
Card Series Notes with a Performing Derivative Agreement for interest in which the rating on such Tranche of Card Series Notes is not dependant upon the rating of the applicable Derivative Counterparty, the amount determined pursuant to this clause
(iii) will be the higher of (1) the rate determined pursuant to this clause (iii) above and (2) the rate of interest applicable to such Tranche for the period from and including the Monthly Interest Accrual Date for such Tranche of Card Series Notes
in such Monthly Period to but excluding the Monthly Interest Accrual Date for such Tranche of Card Series Notes in the following Monthly Period; and 
  
 (iv) in the case of a tranche of Card Series Notes with a non-Performing Derivative Agreement for interest, the rate specified for that
date in the related Terms Document. 
  
 “Calculation
Agent” is defined in Section 2.04(a). 
  
 “Class A(2003-2) Adverse Event” means the occurrence of any of the following: (a) an Early Redemption Event with respect to the Class A(2003-2) Notes or (b) an Event of Default and acceleration of the Class A(2003-2) Notes.

  
 “Class A(2003-2) Note” means any Note,
substantially in the form set forth in Exhibit A-1 to the Indenture Supplement, designated therein as a Class A(2003-2) Note and duly executed and authenticated in accordance with the Indenture. 
  
 “Class A(2003-2) Noteholder” means a Person in whose name a
Class A(2003-2) Note is registered in the Note Register. 
  
 “Class A(2003-2) Termination Date” means the earliest to occur of (a) the Principal Payment Date on which the Outstanding Dollar Principal Amount of the Class A(2003-2) Notes is paid in full, (b) the Legal Maturity Date and
(c) the date on which the Indenture is discharged and satisfied pursuant to Article VI thereof. 
  
 “Excess Spread Percentage” shall mean, with respect to any Distribution Date, the amount, if any, by which the Portfolio Yield for the
preceding Monthly Period exceeds the Base Rate for such Monthly Period. 
  
 “Expected Principal Payment Date” means July 15, 2005. 
  
 “Initial Dollar Principal Amount” means $500,000,000. 
  

 3 

 “Indenture” means the Indenture dated as of October 9, 2002, by and between the Issuer
and the Indenture Trustee, as amended and supplemented from time to time. 
  
 “Indenture Supplement” means the Card Series Indenture Supplement dated as of October 9, 2002, by and between the Issuer and the Indenture Trustee, as amended and supplemented from time to time.

  
 “Interest Payment Date” means the fifteenth
day of each month commencing in September 2003, or if such fifteenth day is not a Business Day, the next succeeding Business Day. 
  
 “Interest Period” means, with respect to any Interest Payment Date, the period from and including the previous Interest Payment Date (or
in the case of the initial Interest Payment Date, from and including the Issuance Date) through the day preceding such Interest Payment Date. 
  
 “Issuance Date” means August 5, 2003. 
  
 “Legal Maturity Date” means May 15, 2008. 
  
 “LIBOR” means, for any Interest Period, the London interbank offered rate for one-month United States dollar deposits determined by the
Indenture Trustee on the LIBOR Determination Date for each Interest Period in accordance with the provisions of Section 2.04. 
  
 “LIBOR Determination Date” means August 1, 2003 for the period from and including the Issuance Date to but excluding September 15, 2003
and the second London Business Day prior to the commencement of the second and each subsequent Interest Period. 
  
 “London Business Day” means any Business Day on which dealings in deposits in United States Dollars are transacted in the London
interbank market. 
  
 “Maximum Subordination Amount of
Class B Notes” means, for the Class A(2003-2) Notes for any date of determination, an amount equal to the product of (a) Adjusted Outstanding Dollar Principal Amount of the Class A(2003-2) Notes on such date of determination and (b) the
percentage equivalent of a fraction, the numerator of which is 10 and the denominator of which is 81.25. 
  
 “Note Interest Rate” means a rate per annum equal to 0.11% in excess of LIBOR as determined by the Calculation Agent on the related LIBOR
Determination Date with respect to each Interest Period. 
  
 “Paying Agent” means The Bank of New York. 
  
 “Portfolio Yield” means, with respect to any Monthly Period, the annualized percentage equivalent of a fraction: 
  
 (a) the numerator of which is equal to the sum of: 
  

 4 

 (i) the aggregate amount of Finance Charge Amounts allocated to the Card Series with
respect to such Monthly Period; plus 
  
 (ii) the aggregate amount of Interest Funding sub-Account Earnings on all Tranches of Card Series Notes for such Monthly Period; plus 
  
 (iii) any amounts to be treated as Card Series Finance Charge Amounts pursuant to Sections 3.20(d) and 3.27(a) of the
Indenture Supplement; minus 
  
 (iv) the
excess, if any, of (1) the sum of the PFA Prefunding Earnings Shortfall plus the PFA Accumulation Earnings Shortfall over (2) the sum of the aggregate amount to be treated as Card Series Finance Charge Amounts for such Monthly Period pursuant
to Sections 3.04(a)(ii) and 3.25(a) of the Indenture Supplement plus any other amounts applied to cover earnings shortfalls on amounts in the Principal Funding sub-Account for any tranche of Card Series Notes for such Monthly
Period; minus 
  
 (v) the Card Series
Default Amount for such Monthly Period; and 
  
 (b) the
denominator of which is the numerator used in the calculation of the Card Series Floating Allocation Percentage for such Monthly Period. 
  
 “Quarterly Excess Spread Percentage” means, with respect to the December 2003 Distribution Date and each Distribution Date thereafter,
the percentage equivalent of a fraction the numerator of which is the sum of the Excess Spread Percentages with respect to the immediately preceding three Monthly Periods and the denominator of which is three. 
  
 “Record Date” means, for any Distribution Date, the last
Business Day of the preceding Monthly Period. 
  
 “Reference Banks” means four major banks in the London interbank market selected by the Beneficiary. 
  
 “Required Accumulation Reserve sub-Account Amount” means, with respect to any Monthly Period during the Accumulation Reserve Funding
Period, an amount equal to (i) 0.5% of the Outstanding Dollar Principal Amount of the Class A(2003-2) Notes as of the close of business on the last day of the preceding Monthly Period or (ii) any other amount designated by the Issuer;
provided, however, that if such designation is of a lesser amount, the Note Rating Agencies shall have provided prior written confirmation that a Ratings Effect will not occur with respect to such change. 
  
 “Required Subordinated Amount of Class B Notes” means, for
the Class A(2003-2) Notes for any date of determination, an amount equal to the product of (a) the Required Subordinated Percentage of Class B Notes for such Class A(2003-2) Notes on such date of determination and (b) the Adjusted Outstanding Dollar
Principal Amount of such Class A(2003-2) Notes on such date of determination; provided, however, that such an amount shall not exceed the Maximum Subordination Amount of Class B Notes for the Class A(2003-2) Notes; provided
further, however, that for any date of determination on or after the occurrence and during the 
  

 5 

 continuation of a Class A(2003-2) Adverse Event, the Required Subordinated Amount of Class B Notes for the Class
A(2003-2) Notes will be the greater of (x) the amount determined above for such date of determination and (y) the amount determined above for the date immediately prior to the date on which such Class A(2003-2) Adverse Event shall have occurred.

  
 “Required Subordinated Amount of Class C
Notes” means, for the Class A(2003-2) Notes for any date of determination, an amount equal to the product of (a) the Required Subordinated Percentage of Class C Notes for such Class A(2003-2) Notes on such date of determination and (b) the
Adjusted Outstanding Dollar Principal Amount of such Class A(2003-2) Notes on such date of determination; provided, however, that for any date of determination, unless (i) the Prefunding Target Amount for any Tranche of Card Series
Notes on such date of determination is greater than zero or (ii) any prefunded amounts are on deposit in a Principal Funding sub-Account on such date of determination for any Tranche of Card Series Notes, the Required Subordinated Amount of Class C
Notes for the Class A(2003-2) Notes will not be less than an amount equal to (i) 3.0% of the Initial Dollar Principal Amount of the Class A(2003-2) Notes, minus (ii) the Required Subordinated Amount of Class D Notes for the Class A(2003-2)
Notes; provided further, however, that for any date of determination on or after the occurrence and during the continuation of a Class A(2003-2) Adverse Event, the Required Subordinated Amount of Class C Notes for the Class
A(2003-2) Notes will be the greater of (x) the amount determined above for such date of determination, (y) the amount determined above for the date immediately prior to the date on which such Class A(2003-2) Adverse Event shall have occurred
and (z) unless (i) the Prefunding Target Amount for any Tranche of Card Series Notes on such date of determination is greater than zero or (ii) any prefunded amounts are on deposit in a Principal Funding sub-Account on such date of determination for
any Tranche of Card Series Notes, the amount determined pursuant to the preceding proviso. 
  
 “Required Subordinated Amount of Class D Notes” means, for the Class A(2003-2) Notes for any date of determination, an amount equal to the product of (a) the Required Subordinated Percentage of Class
D Notes for such Class A(2003-2) Notes on such date of determination and (b) the Adjusted Outstanding Dollar Principal Amount of such Class A(2003-2) Notes on such date of determination; provided, however, that for any date of
determination, unless (i) the Prefunding Target Amount for any Tranche of Card Series Notes on such date of determination is greater than zero or (ii) any prefunded amounts are on deposit in a Principal Funding sub-Account on such date of
determination for any Tranche of Card Series Notes, the Required Subordinated Amount of Class D Notes for the Class A(2003-2) Notes will not be less than an amount equal to 1.8462% of the Initial Dollar Principal Amount of the Class A(2003-2) Notes,
provided further, however, that for any date of determination on or after the occurrence and during the continuation of a Class A(2003-2) Adverse Event, the Required Subordinated Amount of Class D Notes for the Class A(2003-2)
Notes will be the greatest of (x) the amount determined above for such date of determination, (y) the amount determined above for the date immediately prior to the date on which such Class A(2003-2) Adverse Event shall have occurred and (z) unless
(i) the Prefunding Target Amount for any Tranche of Card Series Notes on such date of determination is greater than zero or (ii) any prefunded amounts are on deposit in a Principal Funding sub-Account on such date of determination for any Tranche of
Card Series Notes, the amount determined pursuant to the preceding proviso. 
  
 “Required Subordinated Percentage of Class B Notes” means, for the Class A(2003-2) Notes, 12.3077%, subject to adjustment in accordance with Section 2.02. 
  

 6 

 “Required Subordinated Percentage of Class C Notes” means, for the Class A(2003-2)
Notes, 8.9231%, subject to adjustment in accordance with Section 2.02. 
  
 “Required Subordinated Percentage of Class D Notes” means, for the Class A(2003-2) Notes, 1.8462%, subject to adjustment in accordance with Section 2.02. 
  
 “Stated Principal Amount” means $500,000,000. 
  
 “Telerate Page 3750” means the display page currently so
designated on the Moneyline Telerate Service (or such other page as may replace that page on that service for the purpose of displaying comparable rates or prices). 
  
 Section 1.02. Governing Law. THIS TERMS DOCUMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATION LAW, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

  
 Section 1.03. Counterparts. This Terms Document may be
executed in any number of counterparts, each of which so executed will be deemed to be an original, but all such counterparts will together constitute but one and the same instrument. 
  
 Section 1.04. Ratification of Indenture, the Asset Pool 1 Supplement and Indenture Supplement. As supplemented by
this Terms Document, each of the Indenture, the Asset Pool 1 Supplement and the Indenture Supplement is in all respects ratified and confirmed and the Indenture as so supplemented by the Asset Pool 1 Supplement as so supplemented by the Indenture
Supplement as so supplemented and this Terms Document shall be read, taken and construed as one and the same instrument. 
  
 [END OF ARTICLE I] 
  
  

 7 

 ARTICLE II 
  
 The Class A(2003-2) Notes 
  
 Section 2.01. Creation and Designation. There is hereby created a tranche of Card Series Class A Notes to be issued pursuant to the Indenture, the
Asset Pool 1 Supplement and the Indenture Supplement to be known as the “Card Series Class A(2003-2) Notes.” 
  
 Section 2.02. Adjustments to Required Subordinated Percentages. 
  
 (a) On any date, the Issuer may change the Required Subordinated Percentage of Class B Notes or the Required Subordinated
Percentage of Class C Notes, in each case for the Class A(2003-2) Notes, without the consent of any Noteholders or any Note Rating Agencies, provided that, after giving effect to such change, (x) the sum of the Required Subordination Percentage of
Class B Notes and the Required Subordinated Percentage of Class C Notes, in each case, for the Class A(2003-2) Notes after giving effect to such change is equal to or greater than the sum of the Required Subordination Percentage of Class B Notes and
the Required Subordinated Percentage of Class C Notes, in each case, for the Class A(2003-2) Notes immediately prior to giving effect to such change and (y) the Required Subordinated Amount of Class B Notes for the Class A(2003-2) Notes does not
exceed the Maximum Subordinated Amount of Class B Notes. 
  
 (b)
On any date, the Issuer may change the Required Subordinated Percentage of Class B Notes, the Required Subordinated Percentage of Class C Notes or the Required Subordinated Percentage of Class D Notes, in each case for the Class A(2003-2) Notes,
such that after giving effect to all changes to such percentages on such date the sum of the Required Subordination Percentage of Class B Notes, the Required Subordinated Percentage of Class C Notes and the Required Subordinated Amount of Class D
Notes, in each case, for the Class A(2003-2) Notes after giving effect to such change is less than the sum of the Required Subordination Percentage of Class B Notes, the Required Subordinated Percentage of Class C Notes and the Required Subordinated
Amount of Class D Notes, in each case, for the Class A(2003-2) Notes immediately prior to giving effect to such change, without the consent of any Noteholders, provided that the Issuer has (i) received written confirmation from each Note Rating
Agency that has rated any Outstanding Notes of the Card Series that the change in such percentage will not result in a Ratings Effect with respect to any Outstanding Class A(2003-2) Notes and (ii) delivered to the Indenture Trustee and the Note
Rating Agencies a Master Trust Tax Opinion for each Master Trust and an Issuer Tax Opinion. 
  
 Section 2.03. Interest Payment. 
  
 (a) For each Interest Payment Date, the amount of interest due with respect to the Class A(2003-2) Notes shall be an amount equal to the product of (i)(A) a fraction, the numerator of which is the actual number of days in the related
Interest Period and the denominator of which is 360, times (B) the Note Interest Rate in effect with respect to the related Interest Period, times (ii) the Outstanding Dollar Principal Amount of the Class A(2003-2) Notes determined as
of the Record Date preceding the related Distribution Date. Any interest on the Class A(2003-2) Notes will be calculated on the basis of the actual number of days in the related Interest Period and a 360-day year. 
  

 8 

 (b) Pursuant to Section 3.03 of the Indenture Supplement, on each Distribution Date, the Indenture
Trustee shall deposit into the Class A(2003-2) Interest Funding sub-Account the portion of Card Series Available Finance Charge Amounts allocable to the Class A(2003-2) Notes. 
  
 Section 2.04. Calculation Agent; Determination of LIBOR. 
  
 (a) The Issuer hereby agrees that for so long as any Class A(2003-2) Notes
are Outstanding, there shall at all times be an agent appointed to calculate LIBOR for each Interest Period (the “Calculation Agent”). The Issuer hereby initially appoints the Indenture Trustee as the Calculation Agent for purposes
of determining LIBOR for each Interest Period. The Calculation Agent may be removed by the Issuer at any time. If the Calculation Agent is unable or unwilling to act as such or is removed by the Issuer, or if the Calculation Agent fails to determine
LIBOR for an Interest Period, the Issuer shall promptly appoint a replacement Calculation Agent that does not control or is not controlled by or under common control with the Issuer or its Affiliates. The Calculation Agent may not resign its duties,
and the Issuer may not remove the Calculation Agent, without a successor having been duly appointed. 
  
 (b) On each LIBOR Determination Date, the Calculation Agent shall determine LIBOR on the basis of the rate for deposits in United States dollars for a
one-month period which appears on Telerate Page 3750 as of 11:00 a.m., London time, on such date. If such rate does not appear on Telerate Page 3750, the rate for that LIBOR Determination Date shall be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at approximately 11:00 a.m., London time, on that day to prime banks in the London interbank market for a one-month period. The Calculation Agent shall request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate for that LIBOR Determination Date shall be the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that LIBOR Determination Date will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Beneficiary, at approximately 11:00 a.m., New York City time, on that day for loans in
United States dollars to leading European banks for a one-month period. 
  
 (c) The Note Interest Rate applicable to the then current and the immediately preceding Interest Periods may be obtained by telephoning the Indenture Trustee at its corporate trust office at (212) 815-3247 or such other telephone number as
shall be designated by the Indenture Trustee for such purpose by prior written notice by the Indenture Trustee to each Noteholder from time to time. 
  
 (d) On each LIBOR Determination Date, the Calculation Agent shall send to the Indenture Trustee, the Issuer and the Beneficiary, by facsimile
transmission, notification of LIBOR for the following Interest Period. 
  
 Section 2.05. Payments of Interest and Principal. 
  
 (a) Any installment of interest or principal, if any, payable on any Class A(2003-2) Note which is punctually paid or duly provided for by the Issuer and the Indenture Trustee on the applicable Interest Payment Date or Principal Payment
Date shall be paid by the Paying Agent to the Person in whose name such Class A(2003-2) Note (or one or more Predecessor Notes) is registered on the Record Date, by wire transfer of immediately available funds to such 
  
  

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 Person’s account as has been designated by written instructions received by the Paying Agent from such Person not
later than the close of business on the third Business Day preceding the date of payment or, if no such account has been so designated, by check mailed first-class, postage prepaid to such Person’s address as it appears on the Note Register on
such Record Date, except that with respect to Notes registered on the Record Date in the name of the nominee of Cede & Co., payment shall be made by wire transfer in immediately available funds to the account designated by such nominee.

  
 (b) The right of the Class A(2003-2) Noteholders to receive
payments from the Issuer will terminate on the first Business Day following the Class A(2003-2) Termination Date. 
  
 Section 2.06. Form of Delivery of Class A(2003-2) Notes; Depository; Denominations. 
  
 (a) The Class A(2003-2) Notes shall be delivered in the form of a global Registered Note as provided in Sections 202
and 301(i) of the Indenture, respectively. 
  
 (b) The
Depository for the Class A(2003-2) Notes shall be The Depository Trust Company, and the Class A(2003-2) Notes shall initially be registered in the name of Cede & Co., its nominee. 
  
 (c) The Class A(2003-2) Notes will be issued in minimum denominations of $1,000 and integral multiples of that amount.

  
 Section 2.07. Delivery and Payment for the Class A(2003-2)
Notes. The Issuer shall execute and deliver the Class A(2003-2) Notes to the Indenture Trustee for authentication, and the Indenture Trustee shall deliver the Class A(2003-2) Notes when authenticated, each in accordance with Section 303 of the
Indenture. 
  
 Section 2.08. Targeted Deposits to the
Accumulation Reserve Account. 
  
 The deposit targeted to be
made to the Accumulation Reserve Account for any Monthly Period during the Accumulation Reserve Funding Period will be an amount equal to the Required Accumulation Reserve sub-Account Amount. 
  
 Section 2.09. Capital One Derivative Agreement. 
  
 (a) On any Distribution Date, any amount owed by the Issuer pursuant to the
ISDA Master Agreement, dated as of October 9, 2002, as supplemented by the Schedule thereto, dated as of October 9, 2002, and the Confirmation thereto relating to the Class A(2003-2) Notes, dated as of August 5, 2003 (collectively, the
“Capital One Derivative Agreement”), each between Capital One Bank and the Issuer, shall be paid to Capital One Bank from Card Series Finance Charge Amounts (available after giving effect to Sections 3.01(a) through (l) of
the Indenture Supplement) for such Distribution Date in an amount not to exceed the lesser of (i) the product of (x) the amount of Card Series Finance Charge Amounts available for application pursuant to Section 3.01(m) of the Indenture
Supplement times (y) a fraction, the numerator of which is the Nominal Liquidation Amount of the Class A(2003-2) Notes as of the close of business on the last day of the preceding Monthly Period and the denominator of which is the Nominal
Liquidation Amount of all tranches of Card Series Notes as of the close of business on the last day of the preceding Monthly 
  

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 Period and (ii) the amount of such payment owed by the Issuer to Capital One Bank on such Distribution Date. 

 
 (b) On any Distribution Date, any amount owed to the Issuer pursuant to
the Capital One Derivative Agreement shall be, when received by the Issuer, treated as Card Series Finance Charge Amounts for the purposes of Section 3.01(n) of the Indenture Supplement. 
  
 (c) The Capital One Derivative Agreement shall not be considered a
“Derivative Agreement” (as such term is defined in the Indenture) for the purposes of Indenture, the Asset Pool Supplement or the Indenture Supplement. 
  
 Section 2.10. Tax Treatment. Notwithstanding any other express or implied agreement to the contrary, each of the
Issuer and the Class A(2003-2) Noteholders are hereby deemed to agree that they and any recipient of the Prospectus Supplement dated July 29, 2003 and the Prospectus dated July 28, 2003, each relating to the Class A(2003-2) Notes (or their
employees, representatives, or other agents), may disclose to any and all persons, without limitation of any kind, the Tax Treatment and Tax Structure of any transaction relating to the Issuer or the Class A(2003-2) Notes and all materials of any
kind (including opinions or other tax analyses) that are provided to any of them relating to such Tax Treatment and Tax Structure. For purposes of this Section 2.10, “Tax Treatment” refers to the purported or claimed
treatment of the Issuer and the Class A(2003-2) Notes under the Internal Revenue Code, and “Tax Structure” refers to any fact that may be relevant to understanding such Tax Treatment. It is hereby confirmed that each of the
foregoing have been deemed to so agree since the commencement of discussions regarding the Class A(2003-2) Notes. 
  
 [END OF ARTICLE II] 
  
  

 11 

 IN WITNESS WHEREOF, the parties hereto have caused this Terms Document to be duly executed, all as of the
day and year first above written. 
  

	 CAPITAL ONE MULTI-ASSET EXECUTION
TRUST,
 by DEUTSCHE BANK TRUST COMPANY DELAWARE,
 not in its individual capacity, but solely as Owner Trustee on behalf of the Trust

		
	 By:
	 	 /s/    PETER BECKER

	 Name:
	 	Peter Becker
	 Title:
	 	Attorney-in-Fact

  

	 THE BANK OF NEW
YORK, as Indenture Trustee
 and not in its individual capacity

		
	 By:
	 	 /s/    ALLISON CLAN

	 Name:
	 	Allison Clan
	 Title:
	 	Assistant Treasurer

  
 [Signature Page
to the Class A(2003-2) Terms Document]Amendment to Severance and Consulting Agreement

 Exhibit 10.58 
  
 AMENDMENT TO SEVERANCE AND CONSULTING AGREEMENT 
  
 This AMENDMENT TO SEVERANCE AND CONSULTING AGREEMENT (the “Amendment”) is made effective as of the 31st day of
May, 2003 by and between Charles & Colvard, Ltd. (the “Company”) and Jeff N. Hunter (the “Consultant”). 
  
 RECITALS: 
  
 The Company and the Consultant entered into a Severance and Consulting Agreement effective as of the 15th day of May, 2000 (the “Agreement”) which shall terminate pursuant to its terms as of the close of business on May 31, 2003. The Company desires to
continue retain the services of the Consultant and the Consultant desires to continue to provide services pursuant to the terms of such Agreement to the Company. 
  
 In consideration for the mutual agreements set forth herein and other valuable consideration, the receipt of which the
parties hereto acknowledge, the parties agrees as follows: 
  
 1.
Extension of Term. The Term of the Agreement shall be extended from the close of business May 31, 2003 through and including the close of business on December 31, 2004 (which for all purposes shall be referenced as the “Term”).
Prior to the termination of the Term, the parties agree to negotiate for an additional extension of the Agreement. In all other respects the Company and the Consultant reaffirm the existence and validity of the Agreement, subject to this Amendment.

  
 2. Cancellation of Certain Options: The Consultant
hereby surrenders, cancels and terminates the option to purchase 70,000 shares at $15.00 per share which was granted pursuant to the Option Agreement between the Company and the Consultant dated November 19, 1997, and all rights related to such
grant. The Consultant represents and warrants that he has full power and authority to surrender for cancellation said grant of options and that said options are free and clear of all security interests, liens, restrictions, charges, encumbrances,
conditional sales agreements or other obligations relating to the sale or transfer thereof. 
  
 3. Continuation of Non-Disclosure and Non-Competition Agreement. The Company and the Consultant reaffirm the existence and validity of the Non-Disclosure and Non-Competition Agreement dated as of June 22, 2000
entered into pursuant to the Agreement and the continuing agreement of the parties to be bound thereto pursuant to its terms. 
  
 IN WITNESS WHEREOF, the parties hereto acknowledge their agreement to be bound by the terms of this Amendment as of the date and year first above written.

  

	 COMPANY:

	
	 CHARLES & COLVARD, LTD.

		
	 By:
	 	 /s/ Robert S. Thomas

	 	 	 Robert S. Thomas, President

	
	 CONSULTANT:

	
	 /s/ Jeff N. Hunter

	 Jeff N. Hunter

 SEVERANCE AND CONSULTING AGREEMENT 
  
 THIS SEVERANCE AND CONSULTING AGREEMENT (the “Agreement”), made effective as of the 15th day of May, 2000, by and
between Charles & Colvard, Ltd. (the “Company”), and Jeff N. Hunter (the “Consultant”). 
  
 RECITALS: 
  
 The Company is engaged in the business of designing, developing, manufacturing and selling lab-created moissanite jewels (the “Business”). The Consultant served as Chairman and Chief Executive Officer for the Company pursuant to
an Employment Agreement dated June 1, 1997, as amended (the “Employment Agreement”). Consultant has resigned from such position effective May 15, 2000. The Company and the Consultant desire to settle certain outstanding issues between the
parties related to the resignation of his employment. Additionally, the Company wishes the Consultant to assist the Company by providing consulting services for the Business related to the Consultant’s extensive knowledge of the history and
development of moissanite and the development of Charles & Colvard created moissanite jewels and to manufacturing, marketing and sales for moissanite jewels, and the Consultant desires to provide such services to the Company on the terms and for
the compensation set forth herein. 
  
 NOW, THEREFORE, the parties
hereto agree as follows: 
  

	 	1.	 	SEVERANCE. The Company will provide Consultant with the following severance compensation and benefits: 

  

	 	a.	 	Salary. The Company agrees to pay Consultant’s current salary through May 31, 2001. Payments will be made on the Company’s regular payday and will be subject to
normal withholding for taxes. 

  

	 	b.	 	Health Benefits. The Company will continue to provide health insurance coverage to Consultant and his family until May 31, 2001 on the same terms as were in effect prior to
Consultant’s resignation from employment with the Company or the same terms as may come into effect for other employees of Company in the event that Company changes or modifies its plan. Consultant’s COBRA rights to continuation of health
insurance coverage shall commence effective June 1, 2001. 

  

	 	c.	 	Immediate Vesting of Existing Options. The Consultant has been previously granted options to purchase an aggregate of 259,240 shares of the Company’s Common Stock
pursuant to the 1996 Stock Option Plan of C3, Inc. and the 1997 Omnibus Stock Plan of C3, Inc. Of such options, the Company acknowledges that 229,240 have fully vested prior to the date of this Agreement and the remaining 30,000 have future vesting
dates and shall continue to be governed by the terms of the applicable stock option agreement and plan. 

  

	 	d.	 	Computer Equipment. Consultant will be entitled to ownership of the computer equipment assigned to him by the Company as of May 14, 2000. 

	 	e.	 	Administrative Support. The Company agrees to provide Consultant with reasonable administrative support services for 90 days following the execution of this Agreement.

  

	 	2.	 	NONDISPARAGEMENT. The Company and Consultant agree not to disparage or comment negatively about each other and further agree not to make any statements that would reflect
unfavorably or negatively on each other. 

  

	 	3.	 	CONSULTING ENGAGEMENT. The Company hereby engages the Consultant as a nonexclusive consultant to perform the Services (as defined below) subject to the terms and conditions of this
Agreement, and the Consultant hereby accepts such engagement for and in consideration of the compensation hereinafter provided in paragraph 9 and agrees to use his best efforts performing the Services. The Consultant shall perform his obligations
hereunder in compliance with the terms of this Agreement and any and all applicable laws and regulations. The Consultant acknowledges that this is a nonexclusive engagement by the Company and that the Company retains the right to appoint additional
consultants as the Company, as in its sole and unrestricted judgment it may from time to time determine to be in the best interests of the Company, without liability or obligation to the Consultant. 

  

	 	4.	 	SERVICES. 

  

	 	a.	 	The Consultant agrees that, at the request of the Company, the Consultant shall (i) provide consulting services related to the development of manufacturing processes, marketing and
sales related to the Consultant’s extensive knowledge of the history and development of moissanite and the development of Charles & Colvard created moissanite jewels and moissanite gemstones for the Company and (ii) perform other duties
related thereto as the Company may determine from time to time (the “Services”). The Consultant warrants to the Company that the Services will be performed in a professional, timely and workmanlike manner. 

  

	 	b.	 	The Consultant shall execute a Nondisclosure and Noncompetition Agreement in substantially the form attached hereto as Exhibit A concurrent with the execution of this Agreement (the
“Nondisclosure and Noncompetition Agreement”). 

  

	 	5.	 	LICENSES; TOOLS AND MATERIALS. The Consultant shall be responsible for obtaining, at the Consultant’s own expense, all licenses, permits and bonds as may be required by any
federal, state or local law or regulation for the performance of the Consultant’s duties hereunder. The Company shall be responsible for supplying at its cost all necessary tools and materials to be used by the Consultant.

  

	 	6.	 	LIMITATIONS. Nothing in this Agreement shall be construed to give the Consultant authority to represent the Company before any court or governmental or regulatory agency without the
express prior written authorization of the Company. In addition, all files, books, accounts, records and other information of any nature, however recorded or stored, and related to the Company (the 

	 	 
“Records”) shall at all times belong to the Company and to the extent possessed by the Consultant hereunder, such possession shall be for the
benefit of and as agent for the Company. The Consultant’s possession of the Records is at the will of the Company and is solely for the purpose of enabling the Consultant to perform his obligations hereunder. The Records shall be readily
separable from the records of the Consultant. 

  

	 	7.	 	TERM. The term of this Agreement shall commence on May 31, 2000 and shall continue thereafter through and including the close of business on May 31, 2003 (the “Term”).
Notwithstanding the foregoing, the Company may terminate this Agreement for “cause,” as defined herein, by giving written notice at least 30 days in advance of its desire to terminate this Agreement for cause. The Company shall be deemed
to have cause for terminating the Consultant’s engagement in the event the Consultant (i) demonstrates any dishonesty or engages in any act of moral turpitude, (ii) improperly performs or fails to perform the Services described herein, (iii)
causes intentional damage to substantial property of the Company, or (iv) is unable to perform the Services because of death or a disability which renders him unable to perform the Services for 30 consecutive calendar days. 

 

	 	8.	 	MUTUAL RELEASE. 

  

	 	a.	 	Release by Consultant. The Consultant (and any of his respective heirs, agents or assigns) does hereby remise, release and forever discharge the Company and its officers,
directors, shareholders, predecessors, successors, agents, counsel, trusts and assigns from any and all rights, actions, suits, debts, sums of money, accounts, causes of action, claims (however and whenever arising and whether in law or equity, and
whether arising under statutory or common law of the United States or any state thereof), demands or damages of any kind (whether actual, punitive, compensatory, double, treble or nominal and whether known or unknown) arising prior to the date of
this Agreement and related in any way to Consultant’s previous relationship with the Company, all to the end that any and all matters and things which are or might have been claimed now or in the future by the Consultant against the Company
pursuant to any previous events that may have occurred or may occur in connection with the subject matter of their previous relationship or any prior contracts or agreements of any kind whatsoever between the Consultant and the Company are forever
barred and put to rest. In addition and not in limitation of the foregoing, the Consultant does hereby release and extinguish any and all claims the parties hereto may have against the Company of any kind whatsoever prior to the execution of this
Agreement. 

  

	 	    	 	The Consultant acknowledges that he has carefully read and reviewed this Agreement (including this paragraph 8 entitled “Mutual Release”) and has hereby been advised in
writing to seek, and he has sought and received, the advice of his attorney, Larry Robbins, or other counsel, and he has had a period of 21 days within which to consult with and receive counsel from 

	 	 
his attorney concerning the terms of this Agreement. The Consultant and the Company understand and are satisfied with the terms and contents of this
Agreement and each has signed his or its name to the same as a free act and deed, and each agrees that it shall be binding upon them and their agents, attorneys, personal representatives, heirs and assigns. The Consultant has seven (7) days
following the date that he executes this Agreement (the “Revocation Period”) to revoke it by notifying the Company in writing of his decision to revoke. Payments will begin to be made to Consultant pursuant to this Agreement within five
(5) business days after the expiration of the Revocation Period. 

  

	 	b.	 	Release by Company. The Company does hereby remise, release and forever discharge the Consultant from any and all rights, actions, suits, debts, sums of money,
accounts, causes of action, claims (however and whenever arising and whether in law or in equity, and whether arising under statutory or common law of the United States or any state thereof), demands or damages or any kind (whether actual, punitive,
compensatory, double, treble or nominal, and whether known or unknown) arising prior to the date of this Agreement and related in any way to Consultant’s previous relationship with the Company, all to the end that any and all matters and things
which are or might have been claimed now or in the future by the Company against the Consultant pursuant to any previous events that may have occurred or may occur in connection with the subject matter of their previous relationship or any prior
contracts or agreements of any kind whatsoever between the Consultant and the Company are forever barred and put to rest. In addition and not in limitation of the foregoing, the Company does hereby release and extinguish any and all claims the
parties hereto may have against the Consultant of any kind whatsoever prior to the execution of this Agreement. 

  

	 	9.	 	FEES. As compensation for the performance of the Services, concurrently with the execution of this Agreement, the Company and the Consultant shall execute the Nonqualified Stock
Option Agreement dated May 15, 2000, attached hereto as Exhibit B, which grants to Consultant the option to purchase 40,000 shares of common stock upon the terms and conditions set forth therein and in the Company’s 1997 Omnibus Stock Plan. No
amounts (including, without limitation, social security, federal and state withholding taxes) shall be withheld or otherwise subtracted from the compensation paid to the Consultant pursuant to this Section 9 unless required by law. In addition, the
Consultant shall be reimbursed for all expenses incurred by the Consultant on behalf (and with the prior written authorization) of the Company within 15 days from the date the Consultant delivers an itemized report of such expenses, together with
receipts or other evidence of payment reasonably satisfactory to the Company and its accountant. 

  

	 	10.	 	INDEMNIFICATION. The Consultant shall defend, release, indemnify and hold the Company and its directors, officers, shareholders, employees and agents and the personal
representatives and assigns of each, harmless from and against any and all claims, suits, liability, costs and expenses, including, without limitation, 

	 	 
attorneys’ fees and expenses, in connection with any act or omission of the Consultant, his employees and/or agents which arise from the provision of
the Services. 

  

	 	11.	 	INSURANCE REPRESENTATIONS; WORKPLACE SAFETY. Consultant shall be solely responsible for workplace safety, shall maintain the workplace in accordance with industry standards and
shall comply with all governmental (including federal, state and local) regulations. If Consultant hires employees, then Consultant agrees to maintain worker’s compensation insurance in such amount and with such carrier as the Company may
reasonably request. 

  

	 	12.	 	NOTICES. All notices, demands, requests or other communications which may be or are required to be given, served or sent by one party to the other party pursuant to this Agreement
shall be in writing and shall be hand delivered or mailed by certified mail return receipt requested, postage prepaid, or sent by telefax, addressed as follows: 

  
 If to the Company: 
  

P.O. Box 13533 
 Research Triangle Park, NC 27709 
 Attention: Mark W. Hahn, Chief Financial Officer 
 Telecopy: (919) 468-5052 
  
 With a copy to: 
  
 Cyrus M. Johnson, Esq. 
 3300 One First Union Center 
 301 South College Street 
 Charlotte, NC 28202-6025 
 Telecopy: (704) 338-7809 
  
 If to the Consultant: 
  
 Jeff N. Hunter 
 1923 Myron Drive 
 Raleigh, NC 27607 
 Telecopy: (919) 510-5095 
  
 With a copy
to: 
  
 Larry Robbins, Esq. 
 Wyrick Robbins Yates & Ponton LLP 
 4101 Lake Boone Trail, Suite 300 
 Raleigh, NC 27607 
 Telecopy: (919) 781-4865 
  
 Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be delivered, given or
sent. Documents delivered by hand shall be deemed to have been received upon delivery; documents sent by telefax shall be deemed to have been received when the answer back is received; and documents sent by mail shall be deemed to have 

 been received upon their receipt or at such time as delivery is refused by the addressee upon
presentation. 
  

	 	13.	 	SECURITY. The Consultant agrees that he will at all times comply with all security regulations in effect from time to time at the Company’s premises or applicable outside such
premises to materials belonging to the Company. The Consultant agrees not to use or disclose to any party any information, systems, equipment, ideas, processor or methods of operation observed in connection with the performance of his obligations
hereunder, except as may be required by law. 

  

	 	14.	 	INDEPENDENT CONTRACTOR. 

  

	 	a.	 	Acknowledgment by the Consultant. The Consultant acknowledges and agrees that the Consultant will be treated, vis-a-vis the Company, as an independent contractor and not as
an employee, agent or authorized representative of the Company. The Consultant shall have no authority to bind the Company to any contract, agreement or obligation whatsoever. The acts of the Consultant shall in no way constitute the acts of the
Company, and the Consultant shall not represent to any third party that the Consultant has any express or implied authority to bind the Company to any such contract, agreement or obligation. 

  

	 	b.	 	Tax Matters. Because the Consultant is an independent contractor, the Company will not withhold from any compensation paid to the Consultant any amounts for federal or state
income taxes, or social security (FICA) for the Consultant, nor will the Company pay any social security or unemployment tax with respect to the Consultant. Such taxes are the responsibility of the Consultant. The Consultant agrees to indemnify and
hold the Company (including its employees, officers, directors, agents, subsidiaries or affiliates) harmless, and hereby indemnifies and hold the Company harmless, from and against any damage, claim, assessment, interest charge or penalty incurred
by or charged to the Company as a result of any claim, cause of action or assessment by any federal or state government or agency for any nonpayment or late payment by the Consultant of any tax or contribution based upon compensation paid hereunder
or because the Company did not withhold any taxes from compensation paid hereunder. 

  

	 	c.	 	No insurance. Consistent with the Consultant’s status as an independent contractor, the Company will not provide the Consultant with any company, individual or group
insurance policy or any other kind of insurance coverage whatsoever in exchange for the Services. 

  

	 	15.	 	ASSIGNMENT AND SUCCESSORS. Neither this Agreement or any interest herein or any rights hereunder shall be sold or assigned by the Consultant, nor shall any of the duties of the
Consultant hereunder be delegated to any person, firm or corporation, without prior notice to and consent of the Company. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of
the successors and permitted assigns of the parties. 

	 	16.	 	INTELLECTUAL PROPERTY. Consultant acknowledges the importance to the Company of its intellectual property. Consultant agrees to cooperate with the Company in any adversary
proceeding challenging the scope or validity of the Company’s intellectual property position. Consultant also acknowledges that copyrightable works prepared by him within the scope of this Agreement are “works for hire” under the
Copyright Act and that the Company will be considered the author of these works. Consultant agrees that all work product that (a) are developed within the scope of this Agreement using equipment, supplies, facilities or trade secrets of the Company,
(b) result from work performed by the Consultant for the Company within the scope of this Agreement, or (c) are developed within the scope of this Agreement and relate to the Company’s business or current or anticipated research and
development, will be the sole and exclusive property of the Company and are assigned by Consultant to the Company by this Agreement. 

  
 The Company agrees that, in connection with any retail sales of Charles & Colvard created moissanite jewels that Consultant may sell directly to
consumers after the execution of this Agreement and pursuant to the exclusion of the noncompetition provisions of the Nondisclosure and Noncompetition Agreement, Consultant may develop proprietary information including but not limited to trademarks,
trade secrets, and copyrighted materials, and that such proprietary information shall be owned exclusively by Consultant; provided, however, that for such proprietary information developed during the Term of this Agreement, Company shall be granted
a perpetual nonexclusive license to use and sublicense any such proprietary information in consideration of the compensation paid to Consultant pursuant to this Agreement. 
  

	 	17.	 	STANDARD OF CARE. The Consultant warrants that he will exercise due diligence to performance Services in a professional manner in compliance with all applicable laws and regulations
and the highest ethical standards. In addition, the Consultant represents and warrants that any information which he may supply the Company during the term of this Agreement (i) will have been obtained by the Consultant lawfully and from publicly
available sources and (ii) will not be confidential or proprietary to any third person. Nothing in this Agreement shall be construed as authorizing or encouraging the Consultant to obtain information for the Company in violation of any third
party’s rights to copyright or trade secret protection. 

  

	 	18.	 	MISCELLANEOUS. 

  

	 	a.	 	The provisions of this Agreement may be waived, altered, amended or repealed, in whole or in part, only on the written consent of the Company and the Consultant.

  

	 	b.	 	Section headings and numbers used in this Agreement are included for convenience of reference only, and, if there is any conflict between any such numbers and headings and the text
of this Agreement, the text shall control. Each of the statements set forth in the premises of this Agreement is incorporated into the Agreement as a valid and binding representation of the party or parties to whom it relates.

	 	c.	 	This Agreement shall be governed by and construed in accordance with the laws of the State of North Carolina without reference to the choice of law principles thereof. If any
dispute arises hereunder, the parties hereto agree that any suit brought by either party shall be heard in the courts of North Carolina or any federal court sitting in North Carolina, and the parties hereto consent to the jurisdiction of such
courts. 

  

	 	d.	 	This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

  

	 	e.	 	This Agreement, together with the Stock Option Agreement and the Nondisclosure and Noncompetition Agreement herein referenced represent the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety any and all prior written or oral agreements with respect thereto including but not limited to the Employment Agreement and the Summary of Material Terms dated May 15, 2000.

  

	 	f.	 	Neither party shall have the right under this Agreement to use the name, trademark or trade names of the other, unless prior written approval has been obtained. Any such approval or
authorization shall cease upon termination of this Agreement. 

  
 IN WITNESS WHEREOF, the duly authorized representations of the parties have executed this Severance and Consulting Agreement as of the date and year first above written. 
  

	 COMPANY

	
	 Charles & Colvard, Ltd.

		
	 By:
	 	 /s/ Mark W. Hahn

	 	 	 Mark W. Hahn, Chief Financial Officer

	
	 CONSULTANT

	
	 /s/ Jeff N. Hunter

	 Jeff N. Hunter

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