Related Party Transactions and Outside Related Director Information

Charles & Colvard, Ltd. (CTHR)

4/7/2006 Proxy Information

All agreements entered into between the Company and its officers and directors during 2005 were approved by a majority of the Board. Future transactions between the Company and any officer, director, five percent shareholder or affiliate of the Company will be approved by a majority of the Board of Directors and will be on terms no less favorable to the Company than could be obtained in substantially similar transactions with unaffiliated third parties.