Exhibit 10.124
SEVERANCE
AGREEMENT
This Severance Agreement (the
“Agreement”) is entered into between James R. Braun, a
resident of North Carolina (“Braun”), and
Charles & Colvard, Ltd., a North Carolina corporation
(“Company”), effective as of the 30th day of September,
2008 (the “Effective Date”).
WHEREAS, Braun has served in the
position of Vice President of Finance and Chief Financial Officer
of the Company pursuant to the Employment Agreement made and
entered into effective as of June 4, 2001 by and between the
Company and Braun, as amended (the “Employment
Agreement”); and
WHEREAS, Braun and the Company
desire to terminate his employment with the Company, including any
subsidiaries and affiliates, as of the Effective Date;
and
WHEREAS, the parties wish for
Braun’s termination from his employment and positions with
the Company to be achieved in an amicable fashion, with Braun
available to continue to perform services for the Company as set
out herein, and to provide a clear understanding of the parties
rights and liabilities;
THEREFORE, the parties agree as
follows:
1. Termination Date . Braun
and the Company agree that as of the Effective Date, his service as
an employee and as Vice President of Finance and Chief Financial
Officer of the Company, including any subsidiaries and affiliates
is terminated.
2. Continuing Services .
Commencing on the Effective Date, and continuing for a period of
twelve (12) months thereafter, Braun will make himself
reasonably available to perform services, at such hours and such
places as may be reasonably requested by the Company, of an
advisory or consulting nature on behalf of Company on the terms set
out herein. Specifically, Braun shall: (i) assist the Company
in finalizing the closure of the Company’s Hong Kong
operations; (ii) assist the Company in determining the tax
treatment of closing the Company’s Hong Kong operations;
(iii) assist the Company with filing its 2008 tax returns;
(iv) assist the Company in connection with the South Korean
patent litigation; (v) assist the Company in connection with
the litigation entitled Charles & Colvard, Ltd. v.
Jewelnet Corporation d/b/a K&G Creations and Jewelnet
Acquisition Corporation d/b/a K&G Creations ; and
(vi) assist with general business issues that may arise,
including but not limited to any investigation, inquiry, litigation
or other proceeding in which the Company is or may become involved,
and which arises out of facts and circumstances known to Braun (and
without regard to whether Braun is a party thereto). The Company
shall provide to Braun from time to time, in writing, a single
point-of-contact for Braun at the Company and with counsel to
coordinate the services to be provided hereunder. Braun
acknowledges and agrees that in
providing these services, he shall have no
authority to bind the Company to any contract, agreement or
obligation whatsoever. The acts of Braun shall in no way constitute
the acts of the Company and Braun shall not represent to any third
party that he has any express or implied authority to bind the
Company to any contract, agreement or obligation.
3. Compensation and Benefits
.
(a) Compensation .
Notwithstanding any provision to the contrary in the Employment
Agreement for severance or other payments, the sole compensation
payable to Braun subsequent to the Effective Date shall be as
provided in this Agreement. In consideration of Braun agreeing to
make himself available to provide services as set out in
Section 2 of this Agreement during the twelve (12) month
period commencing on the Effective Date, Braun will be paid at the
rate of $19,500 per month in arrears for eleven (11) months
commencing on the Effective Date. Any accrued but unused vacation
shall be paid to Braun per Company practice. Additionally, the
Company will reimburse expenses reasonably incurred in performing
such services pursuant to the Company’s standard policy. The
Company will continue to withhold from such payments customary
amounts for federal or state income taxes, social security (FICA)
and unemployment tax with respect to Braun.
(b) Payments for COBRA
Continuation Coverage . Upon termination from employment, Braun
will be provided with the option to continue his current individual
dependent medical and dental insurance coverage (the
“Continuation Coverage”) under Company’s medical
and dental plans pursuant to the requirements of the Consolidated
Omnibus Budget Reconciliation Act (“COBRA”). If Braun
elects the Continuation Coverage, the Company will pay
Braun’s COBRA premium for eleven months from the Effective
Date or until such time that Braun is no longer eligible for the
Continuation Coverage. With respect to the period during which the
Continuation Coverage is provided to Braun pursuant to this
subsection (b), to the extent that the Continuation Coverage
benefits constitute taxable income to Braun, Company shall report
as income to Braun for federal and state income tax purposes the
value of the Continuation Coverage.
(c) Equity Awards . For the
duration of this Agreement, any stock options or restricted stock
granted to Braun shall continue to vest and be exercisable in
accordance with the terms of any applicable agreements. The Company
agrees that the Company shall not exercise negative discretion to
alter any post-termination exercise and vesting terms of such
agreements.
4. Death After Effective Date
. Should Braun die after the Effective Date, Company will pay to
Braun’s estate any payments provided for in
Sections 3(a)-(b) above which remain unpaid through his
date of death, and notwithstanding Section 3(c), all rights
with respect to any outstanding stock options at the time of
Braun’s death shall be governed by the terms of the
applicable stock option agreements.
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5. Return and Use of Company
Property; Preservation of Records . Unless otherwise mutually
agreed by the parties as necessary or appropriate for the
performance of the services provided for herein, following the
Effective Date, Braun will promptly return to Company all Company
property, including, but not limited to, credit cards, and Company
Confidential Information (both written and electronic copies) as
required under Section 6(a). Braun may retain his
blackberry/cell phone and pertinent numbers and his computer with
such access as is needed for performing services pursuant to this
Agreement. Braun shall remove all of his personal belongings from
his current office, but shall be provided office space by the
Company as needed to perform the services pursuant to this
Agreement. During the term of this Agreement, the Company shall
preserve and maintain records pertaining to Braun’s
employment and shall make such records reasonably available to
Braun during normal working hours.
6. Restrictive Covenants .
Braun acknowledges that Company is engaged in a highly competitive
business and that Company has made substantial investments of time
and capital in the development of its business a
