Exhibit 10.8

Scio Diamond Technology Corporation
Code of Ethics and Business Conduct

1. Introduction.

1.1  The Board of Directors of Scio Diamond Technology Corporation (together
with its subsidiaries, the "Company") has adopted this Code of Ethics and
Business Conduct (the "Code") in order to:

(a) promote honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest;

(b) promote full, fair, accurate, timely and understandable disclosure in
reports and documents that the Company files with, or submits to, the Securities
and Exchange Commission (the "SEC") and in other public communications made by
the Company;

(c) promote compliance with applicable governmental laws, rules and regulations;

(d) promote the protection of Company assets, including corporate opportunities
and confidential information;

(e) promote the prompt internal reporting of violations of the Code to a person
or persons indentified in the Code;

(f) promote fair dealing practices;

(g) deter wrongdoing; and

(h) ensure accountability for adherence to the Code.

1.2 All directors, officers and employees are required to be familiar with the
Code, comply with its provisions and report any suspected violations as
described below in Section 10. Reporting and Enforcement.

2. Honest and Ethical Conduct.

2.1 The Company's policy is to promote high standards of integrity by conducting
its affairs honestly and ethically.

2.2 Each director, officer and employee must act with integrity and observe the
highest ethical standards of business conduct in his or her dealings with the
Company's customers, suppliers, partners, service providers, competitors,
employees and anyone else with whom he or she has contact in the course of
performing his or her job.
 
 
 
Exhibit 10.8 - Page - 1

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3. Conflicts of Interest.

3.1 A conflict of interest occurs when an individual's private interest (or the
interest of a member of his or her family) interferes, or even appears to
interfere, with the interests of the Company as a whole. A conflict of interest
can arise when an employee, officer or director (or a member of his or her
family) takes actions or has interests that may make it difficult to perform his
or her work for the Company objectively and effectively. Conflicts of interest
also arise when an employee, officer or director (or a member of his or her
family) receives improper personal benefits as a result of his or her position
in the Company.

3.2 Loans by the Company to, or guarantees by the Company of obligations of,
employees or their family members are of special concern and could constitute
improper personal benefits to the recipients of such loans or guarantees,
depending on the facts and circumstances. Loans by the Company to, or guarantees
by the Company of obligations of, any director or executive officer or their
family members are expressly prohibited.

3.3 Whether or not a conflict of interest exists or will exist can be unclear.
Conflicts of interest should be avoided unless specifically authorized as
described in Subsection 3.4.

3.4 Persons other than directors and executive officers who have questions about
a potential conflict of interest or who become aware of an actual or potential
conflict should discuss the matter with, and seek a determination and prior
authorization or approval from, the Chief Compliance Officer (the Company's
Chief Financial Officer, Charles G. Nichols).

Directors and executive officers must seek determinations and prior
authorizations or approvals of potential conflicts of interest exclusively from
the Board of Directors or a committee that the Board of Directors may establish
to review and potentially approve conflicts of interest matters (a
“Related-Party” Transactions Committee).

4. Compliance.

4.1 Employees, officers and directors should comply, both in letter and spirit,
with all applicable laws, rules and regulations in the cities, states and
countries in which the Company operates.

4.2 Although not all employees, officers and directors are expected to know the
details of all applicable laws, rules and regulations, it is important to know
enough to determine when to seek advice from appropriate personnel. Questions
about compliance should be addressed to the Chief Compliance Officer.

4.3 No director, officer or employee may purchase or sell any Company securities
while in possession of material non-public information regarding the Company,
nor may any director, officer or employee purchase or sell another company's
securities while in possession of material non-public information regarding that
company. It is against Company policies and illegal for any director, officer or
employee to use material non-public information regarding the Company or any
other company to:

(a) obtain profit for himself or herself; or
 
 
Exhibit 10.8 - Page - 2

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(b) directly or indirectly "tip" others who might make an investment decision on
the basis of that information.

5. Disclosure.

5.1 The Company's periodic reports and other documents filed with the SEC,
including all financial statements and other financial information, must comply
with applicable federal securities laws and SEC rules.

5.2 Each director, officer and employee who contributes in any way to the
preparation or verification of the Company's financial statements and other
financial information must ensure that the Company's books, records and accounts
are accurately maintained. Each director, officer and employee must cooperate
fully with the Company's Accounting and Internal Audit Departments, as well as
the Company's independent public accountants and counsel.

5.3 Each director, officer and employee who is involved in the Company's
disclosure process must:

(a) be familiar with and comply with the Company's disclosure controls and
procedures and its internal control over financial reporting; and

(b) take all necessary steps to ensure that all filings with the SEC and all
other public communications about the financial and business condition of the
Company provide full, fair, accurate, timely and understandable disclosure.

6. Protection and Proper Use of Company Assets.

6.1 All directors, officers and employees should protect the Company's assets
and ensure their efficient use. Theft, carelessness and waste have a direct
impact on the Company's profitability and are prohibited.

6.2 All Company assets should be used only for legitimate business purposes,
though reasonable incidental personal use is or may be permitted. Any suspected
incident of fraud or theft should be reported for investigation immediately.

6.3 The obligation to protect Company assets includes the Company's proprietary
information. Proprietary information includes intellectual property such as
trade secrets, patents, trademarks, and copyrights, as well as business and
marketing plans, engineering and manufacturing ideas, designs, databases,
records and any non-public financial data or reports. Unauthorized use or
distribution of this information is prohibited and could also be illegal and
result in civil or criminal penalties.

7. Corporate Opportunities. All directors, officers and employees owe a duty to
the Company to advance its interests when the opportunity arises. Directors,
officers and employees are prohibited from taking for themselves personally (or
for the benefit of friends or family members) opportunities that are discovered
through the use of Company assets, property, information or
position.  Directors, officers and employees may not use Company assets,
property, information or position for personal gain (including gain of friends
or family members). In addition, no director, officer or employee may compete
with the Company.

 
 
Exhibit 10.8 - Page - 3

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8. Confidentiality. Directors, officers and employees should maintain the
confidentiality of information entrusted to them by the Company or by its
customers, suppliers or partners, except when disclosure is expressly authorized
or legally required. Confidential information includes all non-public
information (regardless of its source) that might be of use to the Company's
competitors or harmful to the Company or its customers, suppliers or partners if
disclosed.

9. Fair Dealing. Each director, officer and employee must deal fairly with the
Company's customers, suppliers, partners, service providers, competitors,
employees and anyone else with whom he or she has contact in the course of
performing his or her job. No director, officer or employee may take unfair
advantage of anyone through manipulation, concealment, abuse or privileged
information, misrepresentation of facts or any other unfair dealing practice.

10. Reporting and Enforcement.

10.1 Reporting and Investigation of Violations.

(a) Actions prohibited by this code involving directors or executive officers
must be reported to the Board of Directors or, if applicable, to the
Related-Party Transactions Committee.

(b) Actions prohibited by this code involving any other person must be reported
to the Chief Financial Officer.

(c) After receiving a report of an alleged prohibited action, the Chief
Financial Officer must promptly take all appropriate actions necessary to
investigate.

(d) All directors, officers and employees are expected to cooperate in any
internal investigation of misconduct.

10.2 Enforcement.

(a) The Company must ensure prompt and consistent action against violations of
this Code.

(b) If, after investigating a report of an alleged prohibited action by a
director or executive officer, the Related-Party Transactions Committee
determines that a violation of this Code has occurred, the Related-Party
Transactions Committee will report such determination to the Board of Directors.

(c) If, after investigating a report of an alleged prohibited action by any
other person, the Chief Financial Officer determines that a violation of this
Code has occurred, the Chief Financial Officer will report such determination to
the Chief Executive Officer.
 
 
 
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(d) Upon receipt of a determination that there has been a violation of this
Code, the Board of Directors or the Chief Executive Officer will take such
preventative or disciplinary action as it deems appropriate, including, but not
limited to, reassignment, demotion, dismissal and, in the event of criminal
conduct or other serious violations of the law, notification of appropriate
governmental authorities.

10.3 Waivers.

(a) Each of the Board of Directors, the Related-Party Transactions Committee (in
the case of a violation by a director or executive officer), and the Chief
Executive Officer (in the case of a violation by any other person) may, in its
discretion, waive any violation of this Code.

(b) Any waiver for a director or an executive officer shall be disclosed as
required by SEC and any applicable stock market rules.

10.4 Prohibition on Retaliation.

The Company does not tolerate acts of retaliation against any director, officer
or employee who makes a good faith report of known or suspected acts of
misconduct or other violations of this Code.

 

 
Exhibit 10.8 - Page - 5

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ACKNOWLEDGMENT OF RECEIPT AND REVIEW
To be signed and returned to the Chief Compliance Officer (the Company's Chief
Financial Officer).

I, _______________________, acknowledge that I have received and read a copy of
the Scio Diamond Technology Corporation Code of Ethics and Business Conduct. I
understand the contents of the Code and I agree to comply with the policies and
procedures set out in the Code.

I understand that I should approach the Chief Compliance Officer if I have any
questions about the Code generally or any questions about reporting a suspected
conflict of interest or other violation of the Code.

 
________________________
[NAME]   
 
________________________
[PRINTED NAME]
 
________________________
[DATE]

 

 

 
Exhibit 10.8 - Page - 6

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