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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

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Denotes a management contract or compensatory plan or arrangement.

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                                                                   Exhibit 10.53

                             CHARLES & COLVARD, LTD.
                  FISCAL YEAR 2001 EXECUTIVE COMPENSATION PLAN,
                             AS AMENDED MAY 20, 2002
                                  PLAN SUMMARY

1.   Purpose. The purpose of the 2001 Executive Compensation Plan, as amended
     May 20, 2002 (the "Plan"), is to provide selected key employees of Charles
     & Colvard, Ltd. (the "Company") with incentive awards in the form of cash
     payments and/or bonus option grants (each, an "award" and collectively,
     "awards") based upon attainment of performance goals, thereby promoting a
     closer identification of the participants' interests with the interests of
     the Company and its shareholders, and further stimulating such
     participants' efforts to enhance the efficiency, profitability, growth and
     value of the Company. The Plan was adopted in fiscal year 2001 and may
     continue in effect for future years, as modified by the Compensation
     Committee (the "Committee") of the Board of Directors (the "Board") or by
     the Board in its or their discretion. (For the purposes herein, the
     "Committee" shall be interpreted to mean the Board if in fact the Board
     takes the indicated action.)

2.   Eligibility. Key employees of the Company selected by the Committee shall
     be eligible to participate (each, a "participant"). Eligible participants
     shall be selected to participate on an annual or other periodic basis as
     determined by the Committee. For the 2002 plan year, the key employees
     eligible to participate in the Plan shall be the Chief Executive Officer,
     Chief Financial Officer, Vice President of Sales and Marketing, Vice
     President of Manufacturing, Director of Marketing, Director of Domestic
     Sales, Director of International Sales, Director of Information Technology
     and such other key employees as may be selected by the Committee to
     participate in the Plan; provided, however, that the Committee shall have
     sole discretion to determine eligibility for Plan participation and
     participation in the Plan for any single plan year shall not guarantee
     eligibility to participate in any other plan year. Nothing contained in the
     Plan or the terms of any award will be construed as conferring upon any
     participant the right to continue in the employment of the Company or as
     imposing upon the Company the obligation to continue to employ a
     participant. Awards granted under the Plan may not be assigned or
     transferred by a participant to any other person or entity. (For the
     purposes of the Plan, a "plan year" shall coincide with the particular
     fiscal year of the Company.) A participant must be employed by the Company
     at December 31 of the applicable plan year to be eligible for a bonus for
     that plan year.

3.   Administration of the Plan. The Plan will be administered by the Committee.
     The Committee is vested with the authority to determine eligibility, grant
     awards and establish and modify performance criteria. In addition, without
     limiting the foregoing, the Committee has full authority in its discretion
     to take any action with respect to the Plan including, without limitation,
     the authority (i) to determine all matters relating to awards, including
     selection of individuals to be granted awards, the types of awards, the





     number of shares of the Company's common stock (the "Common Stock"), if
     any, subject to an award, and all terms, conditions, restrictions and
     limitations of an award; and (ii) to construe and interpret the Plan and
     any instruments evidencing awards granted under the Plan, to establish and
     interpret rules and regulations for administering the Plan and to make all
     other determinations deemed necessary or advisable for administering the
     Plan. All determinations of the Committee with respect to the Plan will be
     final and binding on the Company and all persons having or claiming an
     interest in any award granted under the Plan. No member of the Committee
     shall be liable while acting as administrator for any action or
     determination made in good faith with respect to the Plan or any award.

4.   Nature of Awards. Awards granted under the Plan may consist of cash bonuses
     and/or bonuses in the form of option grants ("option bonuses"). The terms
     of option bonuses will be governed by the terms of the 1997 Omnibus Stock
     Plan of C3, Inc., as amended (the "1997 Plan"), or any other stock
     incentive plan which may apply to such option bonuses and shall be subject
     to the terms and conditions of such plan and the respective award
     agreement.

5.   Determination of Awards. The Committee will establish those performance
     goals (each, a "goal") which shall apply to the determination of awards, if
     any, to be made with respect to a participant for any plan year. A
     participant's ability to earn an award for a particular plan year will be
     based on the Company's attainment of the goals for that plan year. The
     goals and any other factors which may apply with respect to the grant of
     awards during a plan year shall be determined by the Committee and may
     differ from the goals applicable in other plan years; provided, however,
     that, unless the Committee determines otherwise, all awards which may be
     earned by Plan participants during any particular plan year will be
     determined based on the same goals.

6.   Determination of Cash Bonuses.

     (a)  General. The Company shall establish a cash bonus pool (the "cash
          bonus pool"), which will be used to fund cash awards earned under the
          Plan. The cash bonus pool will be funded in the event that the Company
          achieves its annual operating goals for the particular plan year,
          which for 2002 shall consist of the operating income goal ("income
          goal") and carat shipments goal ("shipment goal") as set out in the
          Company's annual business plan, as approved by the Board. The maximum
          cash bonus to be earned in any plan year by a participant is $500,000
          per year during the first three years of employment with the Company,
          $1,000,000 per year during the next succeeding three years of
          employment with the Company and $2,500,000 per year thereafter.

     (b)  2002 Plan Year. For the 2002 plan year, the provisions which follow
          shall apply with respect to the award of cash bonuses; provided,
          however, that the Committee shall have full discretion to modify the
          goals and any other performance or other factors applicable to the
          determination of Plan awards for any subsequent plan year and shall
          not be bound by the provisions applicable for the 2002 plan year.

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          (i)   Following the 2002 plan year, if the Committee determines that
                the income goal has been met, five percent (5%) of the Company's
                operating income will be contributed to the cash bonus pool from
                which cash bonuses for the 2002 plan year may be distributed.

          (ii)  If both the income goal and the shipments goal have been met at
                the end of the 2002 plan year, an additional five percent (5%)
                of the Company's operating income will be added to the cash
                bonus pool.

          (iii) If both the income goal and the shipments goal have been met at
                the end of the 2002 plan year, fifteen percent (15%) of all
                pre-bonus, operating income in excess of the income goal will be
                added to the cash bonus pool for the 2002 plan year.

          (iv)  If the income goal is not met at the end of the 2002 plan year,
                the Committee (based on recommendations by the CEO) may in its
                discretion determine what amount, if any, will be contributed to
                the cash bonus pool and be payable to any eligible participant.

          (v)   The cash bonus pool if earned and payable will be paid 40% to
                the CEO and 20% to each of the CFO, VP of Manufacturing and VP
                of Sales and Marketing.

          (vi)  Sales and Marketing Directors who are eligible for cash
                commission payments will not participate in cash bonuses, if
                any, in 2002.

7.   Determination of Option Bonuses.

     (a)  General. The Company shall establish an option bonus pool (the "option
          pool") which will be used to fund option awards earned under the Plan.
          Options from the option pool shall be awarded in the event the Company
          achieves its income goal for the particular year. Nothing in the terms
          of the Plan shall limit the authority of the Company to grant stock
          options or other stock-based awards under the 1997 Plan or other
          applicable plan.

     (b)  2002 Plan Year. For the 2002 plan year, the provisions which follow
          shall apply with respect to the award of option bonuses; provided,
          however, that the Committee shall have full discretion to modify the
          goals and any other performance or other factors applicable to the
          determination of Plan awards for any subsequent plan year and shall
          not be bound by the provisions applicable for the 2002 plan year.

          (i)   For the 2002 plan year, the option bonus pool shall consist of
                options for 130,000 shares of the Common Stock.

                                        3



          (ii)  If the income goal has been met at the end of the 2002, the
                option pool will be distributed as follows: 40,000 options to
                the CEO, 20,000 options to each of the CFO, Vice President of
                Manufacturing and Vice President of Sales and Marketing, 9,000
                options to the Director of Information Technology and 7,000
                options to each of the Director of Marketing Director of
                Domestic Sales and Director of International Sales. Any options
                granted will have an option price equal to the closing sales
                price on the last trading day immediately prior to the Company's
                public announcement of the 2002 financial results, will vest
                immediately and will be exercisable over ten years.

          (iii) If the income goal is not met at the end of the 2002 plan year,
                the Committee (based on recommendations by the CEO) may in its
                discretion determine the option grants, if any, that will be
                awarded to any eligible participant.

8.   Timing of Awards. Unless the Committee determines otherwise, cash bonuses
     will be distributed as soon as practical following the completion of the
     annual audit for the respective preceding fiscal year by the Company's
     independent accountants. Except to the extent that the terms of the 1997
     Plan (or other applicable plan) provide otherwise, and unless the Committee
     determines otherwise, option bonuses will be granted as of the last trading
     day immediately preceding the public announcement of the Company's
     financial performance for the respective preceding fiscal year.

9.   Option Bonus Adjustments. Option bonuses will be adjusted proportionately
     in the event of any stock splits or similar adjustments occurring after the
     adoption of the Plan and prior to the end of fiscal year 2002 and may be
     subject to further adjustment in the event of any stock splits or other
     capital adjustments which occur after the end of the fiscal year, subject
     to the terms of the 1997 Plan or other applicable plan and the Committee's
     discretion thereunder.

10.  Proration of Awards. To the extent a participant is employed by the Company
     for less than the full fiscal year, the bonus to which the participant is
     otherwise entitled shall be prorated to reflect the percentage of the
     fiscal year that the participant was employed by the Company.

11.  Amendment. The Plan and any award granted under the Plan may be amended or
     terminated at any time by the Committee; provided, however, that (i)
     amendment or termination of an outstanding award may not, without the
     consent of the participant, adversely affect the rights of the participant
     with respect to such award; and (ii) approval of an amendment to the Plan
     by the shareholders of the Company shall be required in the event
     shareholder approval of such amendment is required by applicable law.

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                                                                    Exhibit 99.1

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Charles & Colvard, Ltd. (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I Robert
S. Thomas, President and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the
Sarbanes-Oxley Act of 2002, that:

         (1)  The Report fully complies with the requirements of section 13(a)
              or 15 (d) of the Securities Exchange Act of 1934; and

         (2)  The information contained in the report fairly presents, in all
              material respects, the financial condition and results of
              operations of the Company.


/s/ Robert S. Thomas
- --------------------
Robert S. Thomas
President and Chief Executive Officer
August 8, 2002

                                                                    Exhibit 99.2

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Charles & Colvard, Ltd. (the
"Company") on Form 10-Q for the period ending June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I James R.
Braun, Vice President of Finance and Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the
Sarbanes-Oxley Act of 2002, that:

         (1)  The Report fully complies with the requirements of section 13(a)
              or 15 (d) of the Securities Exchange Act of 1934; and

         (2)  The information contained in the report fairly presents, in all
              material respects, the financial condition and results of
              operations of the Company.



/s/ James R. Braun
- ------------------
James R. Braun
Vice President of Finance and Chief Financial Officer
August 8, 2002