Exhibit 10.1

 

Grace Rich Joint Venture Agreement

 

THIS JOINT VENTURE AGREEMENT made and entered into this 16th day of
(“Agreement”), by and between SAAMABA, LLC, a Michigan limited liability
corporation (“Company A”), Scio Diamond Technology Corporation, a Nevada
corporation (“Company B”) and S21 Research Holdings, an Israel corporation
(“Company C”):

 

W I T N E S S E T H:

 

WHEREAS, Company A, Company B and Company C collectively desire to establish a
joint venture company which will be engaged in the manufacture and distribution
of type lla Single-Crystal CVD Diamonds worldwide, and

 

WHEREAS, Company A, Company B and Company C desire to cooperate and assist each
other in operating such a joint venture company in accordance with the terms of
this agreement.

 

NOW, THEREFORE, for and in consideration of the premises and the covenants
hereinafter set forth, Company A, Company B and Company C (sometimes
collectively referred to as the “parties”) hereby agree as follows:

 

1.           DEFINITIONS

 

Unless otherwise defined herein, each of the terms set forth below shall have
the meaning indicated:

 

1.1          “Affiliate” shall mean any corporation, other entity, partnership
or other business enterprise (other than GRACE RICH, as defined herein):

 

1.1.1       which owns or controls, directly or indirectly, more than fifty
percent (50%) of the voting rights with respect to the election of directors of
either party hereof;

 

1.1.2       of which more than fifty percent (50%) of the voting rights with
respect to the election of directors is owned or controlled, directly or
indirectly, by either party hereto.

 

1.2          “Memorandum of Articles” shall mean the memorandum of articles of
GRACE RICH to be adopted by the directors of said entity.

 

1.3          “Effective Date” shall mean the date on which all parties have
executed this Agreement in full.

 

1.4          “GRACE RICH” shall mean GRACE RICH LIMITED, A HONG KONG entity
incorporated pursuant to the laws of HONG KONG and in accordance to the terms of
Article 2 hereof.

 

1.5          “Shares” shall mean all shares of the capital stock of GRACE RICH,
which may be issued by GRACE RICH pursuant to the provisions of Article 4hereof.

 

1.6          “Territory” shall mean worldwide unless specifically excluded from
the definition.

 

1.7          “Licensed Products” shall mean Type 1 Licensed Products and Type 2
Licensed Products.

 

1.8          “Type 1 Licensed Products” shall mean type lla single crystal CVD
manufactured diamond being 4 millimeters in depth and finished at a weight of .5
carat or less after cutting and polishing.

 

1.9          “Type 2 Licensed Products” shall mean any type IIa single crystal
CVD manufactured diamond outside the scope of Type 1 Licensed Products.

 

1.10        “WFOE” or “Subsidiary” shall mean the entity to be established
pursuant to the laws of the People’s Republic of China 100% owned by GRACE RICH.

 

1.11        “PRC” shall mean People’s Republic of China, including its SAR of
Hong Kong and Macao.

 

1.12        “Shareholders’ Agreement” shall mean the Shareholders’ Agreement, of
even date herewith, among Company A, Company B and

 

 

Proprietary and Confidential

9/16/13

 

1

--------------------------------------------------------------------------------

 

Company C.

 

1.13        “Closing of this transaction” shall mean the date on which shares of
GRACE RICH have been duly paid up by each of the subscribers and the shares have
duly issued and recorded in GRACE RICH’s stock ledger.

 

2.             BUSINESS SCOPE, PURPOSE

 

The purpose of this joint venture is to establish a manufacturing facility in
the People’s Republic of China for the manufacture of Licensed Products, as
licensed in the Licensed Agreement, for sale in the territory.  The joint
venture will be established outside of the PRC and the joint corporate vehicle
(“GRACE RICH”) will be used as the single investor for investment in the
manufacturing facility in the PRC.  “GRACE RICH” shall be the 100% owner of the
WFOE to be established in accordance with the laws of the PRC.

 

3.             FORMATION OF GRACE RICH

 

3.1          As of June 6, 2013, GRACE RICH has been duly formed and organized
under the Companies Ordinance (Chapter 32) of the Special Administrative Region
of Hong Kong, the People’s Republic of China.  The name of this China subsidiary
is GRACE RICH LIMITED.

 

3.2          Company A has applied and received approval from the proper
authorities of Hong Kong to form GRACE RICH and the parties hereto shall
collectively execute such other documents as may be necessary or required by the
applicable laws of such jurisdiction in order to complete the formation of GRACE
RICH, if any.

 

3.3          Company B and Company C shall cooperate and consult with Company A,
as needed, with respect to the procedures and particulars of the organization
and completion of registration of GRACE RICH.

 

3.4          The expenses of such organization and registration including,
without limitation, all registration taxes, notary and attorneys’ fees,
auditor’s fees, etc. shall first be borne by Company A, subject to reimbursement
by GRACE RICH to the maximum extent permitted by the applicable law.  The
portion of such expenses that GRACE RICH may not legally bear shall be borne by
Company A.

 

4.             CAPITAL

 

4.1          The authorized capital of GRACE RICH shall be HK$20,000 represented
by 10,000 shares of Series A Preferred, 5,000 shares of Series B Preferred and
5,000 shares of Series C Common stock, each with a par value of HK$1.00.

 

4.2          The shares shall be issuable to all subscribers upon receipt of
proper and legal consideration as set forth herein.

 

4.3          After execution of this Agreement, Company A shall purchase 6,000
shares of Series A Preferred stock for HK$6,000, representing a 60% share in all
issued and outstanding shares of GRACE RICH, Company B shall purchase 3,000
shares of Series B Preferred stock for HK$3,000, representing a 30% share in all
issued and outstanding shares of GRACE RICH and Company C shall purchase 1,000
shares of Series C common stock for HK$1,000, representing a 10% share in all
issued and outstanding shares of GRACE RICH.  Each party shall pay the
subscriptions for such shares on date of Closing of the joint venture following
the execution of this Agreement.

 

4.4          All shares shall contain a legend that the said shares are issued
subject to the terms, conditions and restrictions contained in this Agreement.

 

4.5          The parties hereby agree that the capital stock of GRACE RICH held
by them or their wholly owned subsidiary shall not be mortgaged, pledged, sold,
exchanged or otherwise encumbered or disposed of except as approved by the
majority of the Board of Directors consistent with applicable laws.

 

4.6          Should there be a cash call by GRACE RICH, each party or subscriber
herein is given the opportunity to contribute in proportion to its current
holdings to maintain its relative percentage share in GRACE RICH, except,
however, only Company B shall have the option, but not the obligation to
contribute cash to GRACH RICH in proportion to its current holdings and failure
to inject additional capital shall not in any way proportionately reduce Company
B’s shareholding as set forth at the outset of this joint venture.  Any failure
to meet the cash call requirements when due will subject the non-contributing
party (except Company B) to a proportionate reduction of its shareholding in
GRACE RICH.

 

2

--------------------------------------------------------------------------------

 

5.           FINANCING

 

5.1          Any funds for GRACE RICH’s operations and further investments,
including capital expenditures, working capital required in excess of the
paid-in capital and other needs shall be procured by GRACE RICH through
contributions of the parties hereto, loans from banks and other financing
organizations, or third parties whose qualifications have been approved by a
majority of the board of directors of GRACE RICH.  Any contributions in cash or
purchases of GRACE RICH shares by third parties approved by the Board of
Directors of GRACE RICH shall result in a proportionate reduction of the
holdings of each of the parties hereto (except Company B).

 

5.2          Should GRACE RICH be unable to secure loans or other financing from
investors, banks or other interested parties, such banks or organizations,
Company A shall have the option of terminating this Agreement upon notice to all
parties without further obligations, make such loans to GRACE RICH or otherwise
make guarantees of GRACE RICH bank debt.

 

6.             MANAGEMENT OF GRACE RICH

 

6.1          The management of GRACE RICH shall be vested in the Board of
Directors of the company in accordance with the Memorandum of Articles and/or
the mandatory provisions of the laws of Hong Kong, PRC.

 

6.2          GRACE RICH shall have four (4) directors, three (3) of whom shall
be nominees of Company A and one (1) of whom shall be nominees of Company B. 
Company A and Company B agree to vote their shares in GRACE RICH to elect the
respective nominees of Company A and Company B as directors of GRACE RICH.  In
case of a vacancy among the directors, the same party, which nominated the
predecessor, shall nominate the individual selected to fill such vacancy and the
other party hereby agrees to do all things required to elect such person a
director. Company C shall not be eligible to appoint any directors of GRACE
RICH.

 

6.3          A quorum for all meetings of the Board of Directors and for the
passage of valid resolutions and the conduct of any business by the Board of
Directors shall be that number of directors which is equal to one-half of the
total number of authorized directors (whether or not there are then vacancies in
office) plus one director; and all resolutions shall require a majority vote of
the Board of Directors. The parties hereto agree to amend the Memorandum of
Articles of GRACE RICH to conform to the intent specified herein unless the laws
of the Hong Kong SAR otherwise require a different voting majority.  All Board
resolutions shall pass by majority vote of the Board of Directors, including,
but not limited to the following:

 

(a)           The declaration and payment of dividends;

 

(b)           The acquisition of, or participation in, another business, except
the establishment of a WFOE in the PRC for the purpose of manufacturing and
distribution of Licensed Products shall NOT require a further vote of the Board
of Directors;

 

(c)           Entering into any contract (other than contracts of purchase, sale
or lease in the ordinary course of business) obligating GRACE RICH for a term
exceeding three years;

 

(d)           The sale, mortgage, encumbrance or grant of leases of any material
assets (other than in the ordinary course of business).

 

(e)           Lending funds (whether or not secured) in the aggregate amount
outstanding at any given time in excess of an amount fixed from time to time by
the Board of Directors other than loans and credit extended to customers in the
ordinary course of business.

 

(f)            Any borrowing exceeding such ceilings as the Board of Directors
shall establish from time to time and not comprehended by the annual budget
approved by the Board of Directors.

 

(g)           Any guarantee, directly or indirectly, of any obligation other
than in the ordinary course of business.

 

(h)           Initiating or defending legal proceedings in a court of law,
referring disputes to the determination of arbitrators or taking any other
measures for the purpose of obtaining a binding opinion, excepting, however,
temporary injunctions and such other legal actions as allow for no delay or are
of a purely precautionary nature and, further, excepting legal actions against
defaulting customers or suppliers or against present or former employees (other
than any Director) on an individual basis in disputes arising out of their
conditions of employment on its termination.

 

3

--------------------------------------------------------------------------------

 

6.4          The members of the Board of Directors shall serve without
compensation unless compensation is voted by the action of the majority of the
Board of Directors.  The compensation and duties of the officers of GRACE RICH
shall be determined from time to time by valid resolution of the Board of
Directors.

 

6.5          The Board of Directors shall elect a Chairman of the Board, who
shall also serve as CEO/Managing Director of GRACE RICH.

 

6.6          The parties hereby agree that the Chairman of the Board and
CEO/Managing Director shall be held by a nominee of Company A and that all other
offices such as Vice President, Chief Financial Officer, COO, Chief Legal
Officer shall be nominated and approved by the majority of the Board of
Directors.

 

6.7          The individuals elected as officers shall serve in such capacity
until their successors are elected and qualified.

 

6.8          GRACE RICH may also have one or more Vice Presidents, a Secretary
and a Treasurer, subject to the agreement of the majority of the Board of
Directors.

 

7.                             ESTABLISHMENT OF A WFOE IN THE PRC

 

7.1          GRACE RICH shall serve as the sole investor and 100% shareholder of
a WFOE to be established in the PRC for the purpose of manufacturing and
distribution of Licensed Products.

 

7.2          The WFOE shall be capitalized in accordance the laws of the PRC and
shall be established at a location to be determined by the Board of Directors of
GRACE RICH consistent with the needs of the business.

 

7.3          The WFOE shall be managed by a Legal Representative, who may also
serve as the General Manager of the WFOE, and both parties, as will be set forth
in their employment contracts, shall report to the Board of Directors and serve
at the will of the Board.

 

8.             LICENSE OF TECHNOLOGY, GUIDANCE AND SUPPORT

 

8.1          Company B agrees to provide, per the attached Exhibit A Consulting
Agreement, GRACE RICH or WFOE consultation and guidance for the build-out
(design and construction) of a facility and its associated infrastructure for
the manufacturing and distribution of Licensed Products.  This consulting
agreement shall be executed simultaneously with this Agreement and shall have a
term co-terminus with this Agreement.

 

8.2          Company B grants an exclusive royalty-free license to GRACE RICH,
with the right to sublicense same to GRACE RICH’S Affiliate, of Company B’s
technology, process knowledge, trade secrets and related intellectual property
rights to enable GRACE RICH and/or its Affiliate to produce annualized output of
gemstones consistent with the business plan of GRACE RICH.  This license may not
be revoked or terminated for any reason, except for failure of Grace Rich to
cure a material breach of this license within two (2) years from the date of
notice; after which, termination can be effected by thirty (30) days’ advance
written notice from Company B to GRACE RICH..  All intellectual property
conceived or created by GRACE RICH and/or its Affiliates shall be owned by GRACE
RICH subject to its agreement with the inventor(s).  This license agreement (the
“License Agreement”) shall be executed simultaneously with this Agreement.

 

8.3          Company B agrees to provide, per the attached Exhibit A Consulting
Agreement to GRACE RICH or WFOE consultation and guidance, including, general
consulting, guidance, training and technical assistance related to the business
scope of GRACE RICH and/or the WFOE to enable the WFOE to execute its business
plan. This consulting agreement shall be executed simultaneously with this
Agreement and shall have a term co-terminus with this Agreement.

 

8.4          Company C agrees to facilitate free of charge to GRACE RICH or WFOE
(except for reimbursement of reasonable expenses incurred in connection with the
service) the transfer of technology, trade secret and knowhow which will enable
GRACE RICH and/or WFOE to achieve its business goal of a certain amount of
gemstones output.  This consulting agreement shall be executed simultaneously
with this Agreement and shall have a term co-terminus with this Agreement.

 

9.           REPORTING AND INSPECTION

 

9.1          GRACE RICH shall keep true and accurate books of account and
records in the English language in accordance with sound accounting practices,
employing standards, procedures and form in conformity with Hong Kong generally
accepted accounting principles.

 

4

--------------------------------------------------------------------------------

 

9.2          GRACE RICH shall render such periodic reports as are reasonably
necessary to keep the parties hereto advised of the operations and financial
position of GRACE RICH.  If specially requested by Company A or Company B, GRACE
RICH shall render special monthly, quarterly and annual reports with such
information and in such form as are prescribed by Company A or Company B
respectively, provided the cost of such special reports are borne by the party
requesting for such information.

 

9.3          Only Company A or Company B may allow their respective accountants,
auditors or other individuals with corresponding responsibilities in the employ
of each of them shall have full access at all reasonable times to all financial
and operational areas in the possession or under the control of GRACE RICH and
to all books of account and other records and documents of GRACE RICH.  The
examinations by such internal accountants, auditors or other individuals as
aforesaid will be at the expense of each party who makes such examinations and
shall be solely for the purpose of assuring such party that all operations of
GRACE RICH are being conducted in accordance with this Agreement and to detect
any inefficiencies or lack of control which may exist to the detriment of the
profitability of GRACE RICH.

 

9.4          At the end of each fiscal period of GRACE RICH, the books of
account and records of GRACE RICH shall be audited, at the expense of GRACE
RICH, by a firm of independent public accountants appointed by the Board of
Directors and authorized to practice in in Hong Kong SAR and competent to audit
the books and records of GRACE RICH.  Examination by such firm of independent
public accountants shall be made in accordance with generally accepted auditing
standards, practices, procedures and forms in the United States or Hong Kong
SAR.

 

10.        ADDITIONAL COVENANTS

 

10.1        Each party hereto shall keep, and shall use its best efforts to
ensure that its directors, officers, employees, agents, customers and suppliers
keep confidential all CONFIDENTIAL INFORMATION of GRACE RICH, the WFOE and the
parties hereto., GRACE RICH shall not disclose CONFIDENTIAL INFORMATION to third
parties without the express written consent of the party that the information
relates to, unless such information has already been published or has been in
its possession other than through the original sender, GRACE RICH or a person
deriving such information, directly or indirectly, from the original sender.

 

10.1.1     The parties hereto shall each obtain and shall cause GRACE RICH to
obtain from their directors, officers and employees, such non-disclosure
agreements in writing as are necessary and proper to implement the provisions of
this Sub-Paragraph.

 

10.1.2     In the event that this Agreement is terminated or that the party who
has received CONFIDENTIAL PROPRIETARY INFORMATION ceases its status as a
shareholder of GRACE RICH, all Confidential Proprietary Information shall be
returned immediately by the respective parties unless other arrangements are
made relative to the continued use of such CONFIDENTIAL INFORMATION.

 

10.1.3     The obligations imposed by this Paragraph shall survive the
termination and/or assignment of this Agreement or the transfer to any third
party of all or any Shares of GRACE RICH.

 

10.2        Unless otherwise provided for in this Agreement, the parties hereto
shall provide for their own expenses in connection with the transactions
contemplated hereby, including all fees and disbursements of counsel and all
other expenses incurred by or on behalf of such party in the performance of its
obligations hereunder, provided that if either of the parties hereto should
thereby bear a disproportionate amount of expenses which accrues primarily to
the benefit of GRACE RICH as opposed to such party’s separate account, such
party shall notify the other parties and supply them with a reasonably detailed
description of its expenses, and the parties hereto shall endeavor forthwith to
reach agreement upon an equitable basis of apportionment.

 

10.3        The parties hereby covenant and agree that GRACE RICH and all its
subsidiaries (WFOE) shall constitute the sole vehicle through which they (and
all of their Affiliates) will engage in the business of selling Licensed
Products in the Territory.  Accordingly, any party (including any of their
Affiliates) shall neither engage nor knowingly cause a third party to engage
(other than through GRACE RICH) in the above business in the Territory.

 

10.4        Each party shall indemnify the other for its portion of expenses or
damages incurred or paid, or to be paid, by GRACE RICH (including reasonable
attorney fees) in defending any dispute or controversy with third parties
arising solely out of independent activities of the indemnifying party.

 

10.5        In the event the license, guidance and support referenced in
Paragraph 8 above and the agreements to which they reference are no longer in
effect for any or no reason at all, parties hereto agree that GRACH RICH may
redeem the shares held by Company B and Company C, and each of them, at the par
value of HK$1.00 per share upon written notice to each of them, and Company B
and Company C, and each of them, hereby agree that it or they are hereby
consenting to such redemption in advance and agree take such additional action
and execute

 

5

--------------------------------------------------------------------------------

 

such additional amendments or documents so as to fully effectuate the intent of
the parties expressed herein, including but not limited to revision of the
Memorandum of Articles of GRACH RICH and related Shareholders’ Agreement.

 

10.6        As further inducement to Company A for entering into this Agreement
and the subsequent undertakings to fund the joint venture in Hong Kong SAR and
the PRC as anticipated herein, Company B agrees that until May 31, 2014, Company
A shall have the right, but not the obligation, to loan a sum to Company B, and
Company B hereby agrees to accept such sum for the sole purpose of paying-off
its existing loan with Platinum One, resulting in the removal of any and all
liens or encumbrances on the Licensed Patents and Licensed Technology that maybe
held by Platinum One.  Such loan shall be on terms and conditions mutually
acceptable to Company A and Company B, but shall include, among other things,
the reversion of all right, interest and title in the Licensed Patents and
Technology to Company A in the event of a default by Company B.   The loan
agreement to be executed between Company A and Company B shall be the subject of
a separate agreement. A sample of the loan agreement is attached hereto as
Exhibit C for reference.

 

10.7        Company B agrees, as an express condition of Company A’s willingness
to enter into this Agreement and undertaking to seek funding for the business as
contemplated herein, for a period of two years (2 years) following the Closing
of the transaction as contemplated herein,  Company B will not sell or offer for
sale any machinery, equipment or technology to any third party that utilizes or
contains the intellectual property referenced herein for manufacturing Type 1
Licensed Products (as defined in the License Agreement), except where the
equipment or technology is controlled or operated by Company B,  nor will
Company B consult or provide consulting services, directly or indirectly,
through any of its Affiliates, to any third party for a period of two years (2
years) following the Closing of the transaction contemplated herein on matters
that pertain to the Business or the intellectual property referenced herein for
Type 1 Licensed Products, without the prior written approval of Company A, which
approval shall not be unreasonably withheld.

 

10.8        At closing, the parties shall procure that the following agreements
are executed in the agreed form:

 

(a)        The Consulting Agreement;

 

(b)        The Shareholders’ Agreement;

 

(c)        The License Agreement;

 

(d)        The Side Agreement; and

 

(e)        Initials signifying agreement on the format of The Sublicense
Agreement.

 

11.        FORCE MAJEURE

 

11.1        Anything to the contrary in this Agreement notwithstanding, no party
hereto shall be liable to the other party hereto for any loss, injury, delay,
damages or other casualty suffered or incurred by such other party hereto due to
strikes, riots, storms, fires, explosions, acts of God, war, governmental
action, or any other cause similar thereto, and any failure or delay by either
of the parties hereto in performance of any of its obligations under this
Agreement due to one or more of the foregoing causes shall not be considered as
a breach of this Agreement.

 

11.2        In the event that performance of any of the material obligations
under this Agreement should be suspended due to one or more of the foregoing
causes for one hundred and twenty (120) days consecutively and such suspension
should have a major adverse effect on either party or both or on the operations
or financial conditions or prospects of GRACE RICH, then either party, which
ever suffered thereby, may give notice to the other parties requesting mutual
consultation relative to such suspension.

 

11.3        No later than thirty (30) days after such notice, the parties hereto
shall commence discussion in good faith of the possibilities of a mutually
satisfactory resolution of the problem arising from such suspension; provided,
however, in the event that the parties hereto fail to resolve such problems by a
mutually satisfactory agreement in writing within ninety (90) days after the
aforesaid notice and it is not foreseen that such suspension will be lifted
soon, either party, whichever has given the said notice, shall have the right to
terminate this Agreement effective immediately upon giving notice to that effect
to the other party at any time before such suspension is lifted. Any party who
disagrees with such termination may submit the matter to arbitration as set
forth herein for injunctive relief.  The non- prevailing party shall pay
attorney fees, arbitrator fees and other costs.

 

11.4        It is expressly understood and agreed by the parties hereto that in
the event of such termination, neither party, whichever elects to terminate this
Agreement, will incur any liability to the other party hereto for any default in
the performance of this Agreement arising from exercise of such right to
terminate.  In the event there is a dispute on the right to terminate, this
clause shall prevail if an arbitration award sides with the prevailing party.

 

6

--------------------------------------------------------------------------------

 

12.        NOTICES

 

12.1        Except as otherwise provided in this Agreement, all notices required
or permitted to be given pursuant or in reference to this Agreement shall be in
writing and shall be valid and sufficient if dispatched by certified mail,
postage prepaid, and addressed as follows:

 

If to Company A:       354 Indusco Court

Troy, MI 48083

Attention: Roger Parsons

 

With a copy to:

 

Peter Pang, Esq.

Dickinson Wright PLLC

1875 I Street NW, suite 1200

Washington DC 20006

 

If to Company B:       411 University Ridge — Suite D

Greenville, SC 29601

Attention:  Michael W. McMahon

 

If to Company C:       To be Provided

 

Attention:

 

12.2        Notices of change of address may be made at any time in the manner
set forth above.  Notices given as herein provided shall be considered to have
been given when sent electronically (email) with proof of delivery or five
(5) days after the dispatch thereof using a reputable courier service

 

13.        INTERPRETATION

 

13.1        The validity, construction and performance of this Agreement shall
be governed by and interpreted in accordance with the laws of Michigan.

 

13.2        The headings to Articles and Sections of this Agreement are to
facilitate reference only, do not form a part of this Agreement and shall not in
any way affect or be considered in the interpretation hereof.

 

13.3        This Agreement and the Exhibits attached hereto constitutes the
entire understanding between the parties hereto regarding the subject matter
hereof and supersedes all prior understandings and agreements between the
parties.

 

13.4        No amendment or change hereof or addition hereto shall be effective
or binding on either of the parties hereto unless set forth in writing and
executed by the respective duly authorized representatives of each of the
parties hereto.

 

13.5        No omission or delay on the part of either party hereto in requiring
due and punctual fulfillment by the other party of the obligations of such other
party hereto as set forth in this Agreement shall be deemed to constitute a
waiver by the omitting or delaying party hereto of any of its rights to require
such due and punctual fulfillment of any other such obligations hereunder,
whether similar or otherwise, or a waiver of any remedy it might have hereunder.

 

13.6        The invalidity or unenforceability of any particular provision or
provisions of this Agreement shall not in any manner or way affect any other
provision hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision or provisions, if any, were omitted.

 

14.        MISCELLANEOUS

 

14.1        This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their successors and assigns, but neither this Agreement, nor
any rights, and obligations hereunder, shall be assigned by any of the parties
hereto to any other person, firm or corporation, without the express prior
written consent thereto by the other party, unless otherwise specifically
provided for in this Agreement.

 

7

--------------------------------------------------------------------------------

 

14.2        This Agreement shall not constitute either of the parties hereto the
legal representative or agent of the other party hereto for any purpose
whatsoever and the parties to this Agreement are not in partnership with each
other, nor shall either party hereto have any right or authority to assume,
create or incur in any manner any obligation or other liability of any kind or
nature, express or implied, against, or in the name or on behalf of, the other
party hereto.

 

14.3        This Agreement may be executed in two (2) or more counterpart
originals, and each such counterpart original shall be deemed an original but
shall nevertheless together constitute but one and the same instrument.

 

15.        TERM AND TERMINATION

 

15.1        This Agreement is effective on Effective Date and shall continue in
force and effect until the expiration of GRACE RICH’S or WFOE’S license to
operate under its jurisdiction, whichever is earlier, or until GRACE RICH or
WFOE shall be dissolved or otherwise cease to exist as a separate entity, unless
this Agreement is sooner terminated by mutual written agreement of the parties,
or pursuant to the following provisions of this Article or otherwise by lawful
exercise by a party of its rights under the applicable laws.

 

15.2        Either party shall have the right at its option to terminate this
Agreement effective immediately upon given written notice to the other party in
the event of:

 

15.2.1     appointment of a trustee, receiver or other custodian for all or
substantially all of the property of such other party, or for any lesser portion
of such property if the result is materially and adversely affects the ability
of such other party to fulfill its affirmative or negative obligations
hereunder;

 

15.2.2     a judicial finding that such other party is insolvent or bankrupt;
the filing of a petition in bankruptcy for itself by such other party or the
filing of any such petition against such other party, if not dismissed or
withdrawn within sixty (60) days thereafter;

 

15.2.3     an assignment by such other party for the benefit of creditors;

 

15.2.4     government expropriation or condemnation of all or substantially all
of the assets or the capital stock of such other party or of any lesser portion
of such assets or capital stock if the result materially and adversely affects
the ability of such other party to fulfill its affirmative or negative
obligations hereunder;

 

15.2.5     the dissolution or liquidation of such other party, other than in
consequence of a merger, amalgamation or other corporate reorganization to which
it is a party; or

 

15.2.6     the occurrence of any of the events set forth in above in respect of
any Affiliate of such other party which owns Shares of GRACE RICH, if the result
is materially and adversely to affect the ability of such other party or such
Affiliate to fulfill its affirmative or negative obligations hereunder.

 

15.2.7     the complete termination of any party’s interest as a shareholder in
GRACE RICH.

 

15.2.8     the failure to procure sufficient funding for the establishment of a
WFOE in the PRC within the first anniversary of Effective Date as determined by
Company A;

 

15.2.9     the failure to have established a WFOE within 18 months after
Effective Date

 

16.          Dispute Resolution - Arbitration

 

All claims and disputes arising under or relating to this Agreement are to be
settled by binding arbitration in the state of Michigan or another location
mutually agreeable to the parties. The arbitration shall be conducted on a
confidential basis pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. Any decision or award as a result of any such
arbitration proceeding shall be in writing and shall provide an explanation for
all conclusions of law and fact and shall include the assessment of costs,
expenses, and reasonable attorneys’ fees. Any such arbitration shall be
conducted by an arbitrator experienced in business disputes and shall include a
written record of the arbitration hearing. The parties reserve the right to
object to any individual who shall be employed by or affiliated with a competing
organization or entity. An award of arbitration may be confirmed in a court of
competent jurisdiction.

 

8

--------------------------------------------------------------------------------

 

17.          Compliance with Law

 

All parties to this joint venture agree that they each shall comply and shall
cause GRACE RICH and the WFOE to comply with all applicable laws, rules and
regulations of their personal domicile, or in the case of GRACE RICH and WFOE,
the jurisdiction in which each such entity is registered or operates, including
but not limited to Anti-Bribery Laws, Foreign Corrupt Practices Act, Sarbanes
Oxley Act, SEC rules and regulations, laws on anti-discrimination, applicable
Antitrust laws and laws protecting against child labor.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
on their behalf by their respective representatives duly hereunto authorized,
intending to be legally bound hereby, as of the day and year first above
written.

 

 

COMPANY A

 

 

 

By:

 

 

 

 

COMPANY B

 

 

 

By:

 

 

 

 

COMPANY C

 

 

 

By:

 

 

9

--------------------------------------------------------------------------------