Document:

STOCK
      PURCHASE AGREEMENT

    
 

    By
      and between

     

    Tie
      LI,

    

    

    YILI
      CARBORUNDUM USA, INC.

     

     

    and

     

    PARAGON
      SEMITECH USA, INC.

     

    

    

    dated
      as of September 2, 2008

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    STOCK
      PURCHASE AGREEMENT

    

    This
      STOCK PURCHASE AGREEMENT, dated as of September 2, 2008 (the “Agreement”)
      by and
      among Tie
      LI, an
      individual residing at 22 Berkshire Way, East Brunswick, NJ 08816
      (“Li”), YILI CARBORUNDUM USA, INC., a
      Delaware corporation (“Yili
      US”)
      and
PARAGON
      SEMITECH USA, INC., a
      Delaware corporation (the “Company”).
      

    

    WHEREAS,
      Li
      currently owns 100% of the issued and outstanding capital stock of C3 Capital,
      Limited, a BVI Company incorporated under the laws of the British Virgin Islands
      (“C3”);

     

    WHEREAS,
      C3 has
      entered into an Equity Transfer Agreement with Yili Master Carborundum
      Production Co., Ltd. (“Yili
      China”),
      a
      corporation incorporated under the laws of the People’s Republic of China
(“PRC”)
      to
      acquire all of the equity interests in Yili China; C3 has also entered into
      an
      Equity Transfer Agreement with Xinjiang Ehe Mining and Metallurgy Co., Ltd.
      (“Ehe
      China”),
      a
      corporation incorporated under the laws of the PRC to acquire 90% of the equity
      interests in Ehe China; in addition, C3 has entered into a Memorandum of
      Understanding (“MOU”) with Mr. Gao Zhiqiang and Mr. Li Ping to acquire all of
      the equity interests they are going to have in Xinjiang Paragon Master Mining
      Co., Ltd. (“Quartz
      Mine China”),
      a
      corporation to be incorporated under the laws of the PRC having the quartz
      mine
      as identified in the MOU. The transactions contemplated under the Equity
      Transfer Agreements and MOU with respect to Yili China, Ehe China and Quartz
      Mine China are referred to as “PRC Entity Restructuring”. 

     

    WHEREAS,
      the
      Company owns 100% of the outstanding capital stock of Yili US; 

     

    WHEREAS,
      Li
      believes it is in his best interests to sell and transfer to Yili US all of
      the
      outstanding capital stock of C3 (the “C3
      Shares”) for
      $10,000 and each of the Company and Yili US believes it is in its best interests
      to purchase the C3 Shares, upon the terms and subject to the conditions set
      forth in this Agreement (the “Stock
      Purchase”);
      

    

    WHEREAS,
      it is
      the intention of the parties that: (i) Yili US shall acquire 100% of the C3
      for
      a cash purchase price of $10,000; and (ii) said sale and transfer to Yili US
      shall qualify as a transaction in securities exempt from registration or
      qualification under the Securities Act of 1933, as amended and in effect on
      the
      date of this Agreement (the “Securities
      Act”);
      

     

    WHEREAS,
      immediately following the consummation of the Stock Purchase, the Company
      intends to enter into a private placement financing transaction with one or
      more
      accredited investors (each an “Investor”
      and
      collectively, the“Investors”) whereby
      the Company will issue shares of newly-designated Series A Senior Convertible
      Preferred Stock, par value $.001 per share, of the Company and related warrants
      for cash (the “Financing
      Transaction”); and

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual terms, conditions and other agreements set forth
      herein, the parties hereto hereby agree as follows:

     

    ARTICLE
      I

     

    PURCHASE
      AND SALE OF C3 SHARES

     

    Section
      1.1 Purchase
      and Sale.
      On the
      Closing Date (as hereinafter defined) and upon the terms and subject to the
      conditions set forth in this Agreement, Li shall sell, assign, transfer, convey
      and deliver the C3 Shares to Yili US, and Yili US shall pay to Li in cash,
      in
      full consideration for the purchase of the C3 Shares $10,000 in cash or by
      wire
      transfer of immediately available funds.

    

    Section
      1.2 Capitalization.
      On the
      Closing Date, immediately before the transactions to be consummated pursuant
      to
      this Agreement and the Securities Purchase Agreement, dated the date hereof
      by
      and among the Company and The China Hand Fund I, LLC (the “Securities
      Purchase Agreement”;
      the
      transactions contemplated under the Securities Purchase Agreement, the
“Series
      A Financing”),
      the
      Company shall have authorized (a) a total of 100,000,000 shares of Common Stock,
      par value $.001 per share, 10,006,000 shares of which are issued and
      outstanding, (b) a total of 10,000,000 shares of Preferred Stock, par value
      $.001 per share (the “Preferred
      Stock”),
      none
      of which are issued and outstanding., but 2,000,000 shares shall have been
      designated as Series A Senior Convertible Preferred Stock (“Series
      A Stock”).
      

    

    Section
      1.3 Closing.
      The
      closing of the Stock Purchase to be made pursuant to this Agreement (the
      "Closing")
      shall
      take place at 5:00 p.m. E.D.S.T. on the day the conditions to closing set forth
      in Articles V and VI have been satisfied or waived, or at such other time and
      date as the parties hereto shall agree in writing (the "Closing
      Date"),
      at
      the offices of Guzov Ofsink, LLC, 600 Madison Avenue, 14th
      Floor,
      New York, New York 10022. At the Closing, Li shall deliver to Yili US the stock
      certificates representing 100% of the C3 Shares, duly endorsed in blank for
      transfer or accompanied by appropriate stock powers duly executed in blank.
      In
      full consideration for the purchase of the C3 Shares, Yili US shall pay to
      Li
      $10,000 in cash or by wire transfer of immediately available funds.

     

    ARTICLE
      II

    

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

    

    The
      Company hereby represents, warrants and agrees that the statements in the
      following paragraphs of this Section 2 are all true and complete as of the
      date
      hereof, and will, except as contemplated by this Agreement, be true and complete
      as of the Closing Date as if first made on such date: 

     

    
      
         

      

      
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    Section
      2.1 Corporate
      Organization

    

    a. Each
      of
      the Company and Yili US is a corporation duly organized, validly existing and
      in
      good standing under the laws of Delaware, and has all requisite corporate power
      and authority to own its properties and assets and to conduct its business
      as
      now conducted and is duly qualified to do business in good standing in each
      jurisdiction in which the nature of the business conducted by it or the
      ownership or leasing of its properties makes such qualification and being in
      good standing necessary, except where the failure to be so qualified and in
      good
      standing will not have a material adverse effect on the business, operations,
      properties, assets, condition or results of operation of the Company (a
      "Company
      Material Adverse Effect");
      

    

    b. Copies
      of
      the Certificate of Incorporation and By-laws of the Company as well as the
      Certificate of Designation of the Series A Stock, with all amendments thereto
      to
      the date hereof, have been furnished to Li, and such copies are accurate and
      complete as of the date hereof. The minute books of the Company and Yili US
      are
      current as required by law, contain the minutes of all meetings of the Board
      of
      Directors and shareholders of the Company and Yili US from their dates of
      incorporation to the date of this Agreement, and adequately reflect all material
      actions taken by the Board of Directors and shareholders of the Company and
      Yili
      US.

    

    Section
      2.2 Authorization
      and Validity of Agreements.
      Each of
      the Company and Yili US has all corporate power and authority to execute and
      deliver this Agreement, to perform its obligations hereunder and to consummate
      the transactions contemplated hereby. The execution and delivery of this
      Agreement by the Company and Yili US and the consummation by the Company and
      Yili US of the transactions contemplated hereby have been duly authorized by
      all
      necessary corporate action of the Company, and no other corporate proceedings
      on
      the part of the Company are necessary to authorize this Agreement or to
      consummate the transactions contemplated hereby.

    

    Section 2.3 No
      Conflict or Violation.
      The
      execution and delivery by each of the Company and Yili US of this Agreement
      does
      not, and the performance by the Company and Yili US of their obligations under
      this Agreement and the consummation of the transactions contemplated hereby
      will
      not, conflict with or result in a violation or breach of any of the terms,
      conditions or provisions of any other agreement to which the Company or Yili
      US
      is a party. Neither the Company, Yili US nor any subsidiary, is in violation
      of,
      in conflict with, in breach of or in default under any term or provision of,
      and
      no right of any party to accelerate, terminate, modify or cancel has come into
      existence under, (i) its articles of incorporation or by-laws (each as may
      have
      been amended, supplemented or restated), (ii) any provision of any judgment,
      writ, injunction, decree or order to which the any of them is a party; or (iii)
      any law, statute, rule or regulation applicable to any of them.

    

    Section
      2.4 Consents
      and Approvals.
      No
      consent, waiver, authorization or approval of any governmental or regulatory
      authority, domestic or foreign, or of any other person, firm or entity, is
      required in connection with the execution and delivery of this Agreement by
      the
      Company or Yili US or the performance by the Company or Yili US of its
      obligations hereunder.

     

    Section
      2.5 Survival.
      Each of
      the representations and warranties set forth in this Article II shall be deemed
      represented and made by the Company at the Closing as if made at such time
      and
      shall survive the Closing for a period terminating on the second anniversary
      of
      the date of this Agreement.

     

    
      
         

      

      
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    ARTICLE
      III

    

    REPRESENTATIONS
      AND WARRANTIES OF LI 

    

    Li
      represents, warrants and agrees, that the statements in the following paragraphs
      of this Section 3 are all true and complete as of the date hereof, and will,
      except as contemplated by this Agreement, be true and complete as of the Closing
      Date as if first made on such date: 

    

    Section
      3.1 Corporate
      Organization of C3.
      C3 is a
      company organized as a BVI Business Company under the laws of the British Virgin
      Islands, is duly organized, validly existing and in good standing under the
      laws
      of the British Virgin Islands and has the requisite power and authority to
      own,
      lease and operate its assets and properties and to carry on its business as
      it
      is now being or currently planned to be conducted. Li is in possession of all
      franchises, grants, authorizations, licenses, permits, easements, consents,
      certificates, approvals and orders (“Approvals”)
      necessary to own, lease and operate the properties it purports to own, operate
      or lease and to carry on its business as it is now being conducted, and to
      consummate the transactions contemplated under this Agreement, except where
      the
      failure to have such Approvals would not, individually or in the aggregate,
      reasonably be expected to have a material adverse effect on the business,
      operations, properties, assets, condition or results of operation of C3. Li
      has
      delivered to the Company complete and correct copies of the Memorandum of
      Association and Articles of Association or similar governing, organization
      or
      charter documents of C3 (collectively referred to herein as "Charter
      Documents").
      C3 is
      not in violation of any of the provisions of its Charter Documents. The minute
      books or the equivalent of C3 contain true, complete and accurate records of
      meetings and consents in lieu of meetings of its board of directors (and any
      committees thereof), similar governing bodies and stockholders of Li
      ("Corporate
      Records"),
      since
      the time of its organization. The ownership records of C3 Shares are true,
      complete and accurate records of the ownership of the C3 Shares as of the date
      of such records and contain all transfers of such C3 Shares since the time
      of
      original issuance of the C3 Shares.  

     

    Section
      3.2 Capitalization
      of C3; Title to the C3 Shares.
      On the
      Closing Date, immediately before the transactions to be consummated pursuant
      to
      this Agreement, C3 shall have authorized 50,000 shares of capital stock, $1
      per
      share, of which 1 C3 Share will be issued and outstanding. The C3 Shares
      constitute all the outstanding shares of capital stock of C3, and there are
      no
      outstanding options, warrants, agreements, commitments, conversion rights,
      preemptive rights or other rights to subscribe for, purchase or otherwise
      acquire any shares of capital stock or any un-issued or treasury shares of
      capital stock of C3.

     

    
      
         

      

      
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    Section
      3.3 Subsidiaries
      and Equity Investments of C3.
      (i) Set
      forth on Schedule 3.3
      is a
      true and correct list of the entities in which C3, directly or indirectly,
      owns
      capital stock or holds an equity or similar interest, together with their
      respective jurisdictions of organization and the percentage of the outstanding
      capital stock or other equity interests of such entity that is held by C3,
      subject to the completion of the PRC Entity Restructuring; (ii) other than
      with
      respect to the entities listed on Schedule 3.3,
      C3 does
      not, directly or indirectly, own any securities or beneficial ownership
      interests in any other person (including through joint ventures or partnership
      arrangements) or have any investment in any other person; (iii) C3 and its
      “Subsidiaries”
(which
      for purposes of this Agreement means any entity in which C3 or any of its
      Subsidiaries, directly or indirectly, owns any of the capital stock, equity
      or
      similar interests or voting power of such entity at the date of this Agreement,
      after giving effect to the completion of the PRC Entity Restructuring) are
      entities duly organized and
      validly existing and in good standing under the laws of the jurisdictions in
      which they are formed, and have the requisite power and authority to own their
      properties and to carry on their business as now being conducted; and (iv)
      if
      applicable, each of C3 and the Subsidiaries is duly qualified as a foreign
      entity to do business and, to the extent legally applicable, is in good standing
      in every jurisdiction in which its ownership of property or the nature of the
      business conducted by it makes such qualification necessary, except to the
      extent that the failure to be so qualified or be in good standing would not
      have
      a material adverse effect.

    

    Section
      3.4 Authorization
      and Validity of Agreements. The
      execution and delivery of this Agreement by Li and the consummation of the
      transactions contemplated hereby have been duly authorized by all necessary
      actions and no other actions on the part of Li are necessary to authorize this
      Agreement or to consummate the transactions contemplated hereby. 

    

    Section
      3.5 No
      Conflict or Violation.
      The
      execution, delivery and performance of this Agreement by Li does not and will
      not violate or conflict with any provision of the Charter Documents of C3,
      and
      does not and will not violate any provision of law, or any order, judgment
      or
      decree of any court or other governmental or regulatory authority, nor violate,
      result in a breach of or constitute (with due notice or lapse of time or both)
      a
      default under or give to any other entity any right of termination, amendment,
      acceleration or cancellation of any contract, lease, loan agreement, mortgage,
      security agreement, trust indenture or other agreement or instrument to which
      Li
      or C3 is a party or by which it is bound or to which any of his or its
      respective properties or assets is subject, nor result in the creation or
      imposition of any lien, charge or encumbrance of any kind whatsoever upon any
      of
      the properties or assets of Li or C3, nor result in the cancellation,
      modification, revocation or suspension of any of the licenses, franchises,
      permits to which Li or C3 is bound.

    

    Section
      3.6 Regulatory
      Permits.
      C3 and
      its Subsidiaries possess all certificates, authorizations and permits issued
      by
      the appropriate federal, state (or their equivalent), local or foreign
      regulatory authorities necessary to conduct their respective businesses, except
      where the failure to possess such permits could not, individually or in the
      aggregate, have or reasonably be expected to result in a C3 Material Adverse
      Effect (as such term is hereinafter defined). 

    

    Section
      3.7 Brokers’
      Fees. Li
      does
      not have any liability to pay any fees or commissions or other consideration
      to
      any broker, finder, or agent with respect to the transactions contemplated
      by
      this Agreement. 

    

    Section
      3.8 Material
      Agreements.
      Except
      as set forth on Schedule
      3.8
      hereof,
      C3 is not a party to or bound by any contracts, including, but not limited
      to
      any:

    

    
      	
            	a.	
              employment,
                advisory or consulting contract;

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
            	b.	
              plan
                providing for employee benefits of any
                nature;

            

    

    

    
      	
            	c.	
              lease
                with respect to any property or equipment with a value  exceeding
                $50,000;

            

    

    

    
      	 	
              d.

            	
              contract,
                agreement, understanding or commitment for any future expenditure
                in
                excess of $50,000 in the aggregate;

            

    

    

    
      	 	
              e.

            	
              contract
                or commitment pursuant to which it has assumed, guaranteed, endorsed,
                or
                otherwise become liable for any obligation of any other person, entity
                or
                organization exceeding $50,000;

            

    

    

    
      	 	
              f.

            	
              agreement
                with any person relating to the dividend, purchase or sale of securities,
                that has not been settled by the delivery or payment of securities
                when
                due, and which remains unsettled upon the date of the
                Agreement.

            

    

    

    Section
      3.9. Financial
      Statements.
      Set
      forth on Schedule 3.9 attached hereto are the unaudited financial statements
      of
      Yili China which will become an indirect Subsidiary of the Company upon the
      consummation of the transactions contemplated hereunder (collectively, the
      “Financial
      Statements”).
      The
      Financial Statements fairly present in all material respects the financial
      position of Yili China as of the dates thereof and the results of operations
      for
      the periods then ended.

    

    Section
      3.10. Material
      Changes.
      Since
      the date of the latest balance sheet included in the Financial Statements
      included on Schedule
      3.10
      attached
      hereto and, except as set forth on Schedule 3.10 attached hereto, (i) there
      has
      been no event, occurrence or development that has had or that would reasonably
      be expected to have a material adverse effect on the business, operations,
      properties, assets, condition or results of operation of C3 (a "C3
      Material Adverse Effect"),
      (ii)
      neither the C3 nor any Subsidiary has incurred any liabilities (contingent
      or
      otherwise) other than (A) trade payables, accrued expenses and other liabilities
      incurred in the ordinary course of business consistent with past practice and
      (B) liabilities not required to be reflected in the Company’s or its
      Subsidiaries’ financial statements pursuant to GAAP. 

    

    Section
      3.11. Governmental
      Consents.
      To the
      best of Li’s knowledge, no consent, approval, order or authorization of, or
      registration, qualification, designation, declaration or filing with any court,
      governmental agency, regulatory authority or political subdivision thereof,
      or
      any other entity, is required in connection with the execution, delivery and
      performance by Li of this Agreement.

    

    Section
      3.12 Litigation. There
      is
      no action, suit, proceeding, claim, arbitration or investigation pending (or,
      to
      the best knowledge of Li, currently threatened) against C3 or any of its
      Subsidiaries or, against any officer or director of C3 or any of its
      Subsidiaries in connection with such officer’s or director’s relationship with,
      or actions taken on behalf of, C3 or any of its Subsidiaries. There is no
      pending or, to the knowledge or belief of Li, currently threatened, claim or
      litigation against C3 or any of its Subsidiaries. 

     

    
      
         

      

      
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    Section
      3.13. Indebtedness;
      Compliance.
      Except
      as disclosed on Schedule
      3.13
      attached
      hereto, neither C3 nor any of its Subsidiaries is a party to any indenture,
      debt, loan or credit agreement by which it or any of its properties is bound.
      Neither C3 nor any of its Subsidiaries is (i) in default under or in violation
      of (and no event has occurred that has not been waived that, with notice or
      lapse of time or both, would result in a default under), neither C3 nor any
      of
      its Subsidiaries has received notice of a claim that it is in default under
      or
      that it is in violation of, any indenture, loan or credit agreement or any
      other
      agreement or instrument to which it is a party or by which it or
      any of
      its properties is bound (whether
      or not such default or violation has been waived), (ii) in violation of any
      court, arbitrator, governmental or administrative agency, regulatory or self
      regulatory authority (federal, state, county, local or foreign), stock market,
      stock exchange or trading facility, or (iii) or has not been in violation of
      any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws relating to taxes,
      environmental protection, occupational health and safety, product quality and
      safety and employment and labor matters, except in each case as could not,
      individually or in the aggregate, have or reasonably be expected to result
      in a
      C3 Material Adverse Effect.     

    

    Section
      3.14 Money
      Laundering Laws.
      The
      operations of C3 and each of its Subsidiaries are and have been conducted at
      all
      times in compliance with the money laundering statutes of applicable
      jurisdictions, the rules and regulations thereunder and any related or similar
      rules, regulations or guidelines, issued, administered or enforced by any
      applicable governmental agency (collectively, the “Money
      Laundering Laws”)
      and no
      action, suit or proceeding by or before any court or governmental agency,
      authority or body or any arbitrator involving the C3 and each of its
      Subsidiaries with respect to the Money Laundering Laws is pending or, to the
      best knowledge of Li, threatened. 

    

    Section
      3.15 Disclosure.
      This
      Agreement, the schedules hereto and any certificate attached hereto or delivered
      in accordance with the terms hereby by or on behalf of Li in connection with
      the
      transactions contemplated by this Agreement, when taken together, do not contain
      any untrue statement of a material fact or omit any material fact necessary
      in
      order to make the statements contained herein and/or therein not misleading.
      

    

    Section
      3.16 Survival.
      Each of
      the representations and warranties set forth in this Article III shall be deemed
      represented and made by Li at the Closing as if made at such time and shall
      survive the Closing for a period terminating on the second anniversary of the
      date of this Agreement.

     

    
      
         

      

      
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    ARTICLE
      IV

    

    COVENANTS

    

    Section
      4.1 Certain
      Changes and Conduct of Business.

    

    a. From
      and
      after the date of this Agreement and until the Closing Date, the Company shall
      conduct its business solely in the ordinary course consistent with past
      practices and, in a manner consistent with all representations, warranties
      or
      covenants of the Company, and without the prior written consent of Li, will
      not,
      except as required or permitted pursuant to the terms hereof and the Financing
      Transaction:

    

    
      	 	
              i.

            	
              make
                any material change in the conduct of its businesses and/or operations
                or
                enter into any transaction other than in the ordinary course of business
                consistent with past practices;

            

    

    

    
      	 	
              ii.

            	
              make
                any change in its Charter Documents; issue any additional shares
                of
                capital stock or equity securities or grant any option, warrant or
                right
                to acquire any capital stock or equity securities or issue any security
                convertible into or exchangeable for its capital stock or alter in
                any
                material term of any of its outstanding securities or make any change
                in
                its outstanding shares of capital stock or its capitalization, whether
                by
                reason of a reclassification, recapitalization, stock split or
                combination, exchange or readjustment of shares, stock dividend or
                otherwise;

            

    

    

    
      	 	
              iii.

            	
              A.

            	
              incur,
                assume or guarantee any indebtedness for borrowed money, issue any
                notes,
                bonds, debentures or other corporate securities or grant any option,
                warrant or right to purchase any thereof, except pursuant to transactions
                in the ordinary course of business consistent with past practices;
                or

            

      	 	 	 	 

      	 	 	B.	Issue
              any securities convertible or exchangeable for debt or equity securities
              of the Company;

    

     

    
      	 	
              iv.

            	
              make
                any sale, assignment, transfer, abandonment or other conveyance of
                any of
                its assets or any part thereof, except pursuant to transactions in
                the
                ordinary course of business consistent with past
                practice;

            

    

    

    
      	 	
              v.

            	
              subject
                any of its assets, or any part thereof, to any lien or suffer such
                to be
                imposed other than such liens as may arise in the ordinary course
                of
                business consistent with past practices by operation of law which
                will not
                have an the Company Material Adverse
                Effect;

            

    

    

    
      	 	
              vi.

            	
              acquire
                any assets, raw materials or properties, or enter into any other
                transaction, other than in the ordinary course of business consistent
                with
                past practices;

            

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	 	
              vii.

            	
              enter
                into any new (or amend any existing) employee benefit plan, program
                or
                arrangement or any new (or amend any existing) employment, severance
                or
                consulting agreement, grant any general increase in the compensation
                of
                officers or employees (including any such increase pursuant to any
                bonus,
                pension, profit-sharing or other plan or commitment) or grant any
                increase
                in the compensation payable or to become payable to any employee,
                except
                in accordance with pre-existing contractual provisions or consistent
                with
                past practices;

            

    

    

    
      	 	
              viii.

            	
              make
                or commit to make any material capital
                expenditures;

            

    

    

    
      	 	
              ix.

            	
              pay,
                loan or advance any amount to, or sell, transfer or lease any properties
                or assets to, or enter into any agreement or arrangement with, any
                of its
                affiliates;

            

    

    

    
      	 	
              x.

            	
              guarantee
                any indebtedness for borrowed money or any other obligation of any
                other
                person;

            

    

    

    
      	 	
              xi.

            	
              fail
                to keep in full force and effect insurance comparable in amount and
                scope
                to coverage maintained by it (or on behalf of it) on the date
                hereof;

            

    

    

    
      	 	
              xii.

            	
              take
                any other action that would cause any of the representations and
                warranties made by it in this Agreement not to remain true and correct
                in
                all material aspect;

            

    

    

    
      	 	
              xiii.

            	
              make
                any material loan, advance or capital contribution to or investment
                in any
                person;

            

    

    

    
      	 	
              xiv.

            	
              make
                any material change in any method of accounting or accounting principle,
                method, estimate or practice;

            

    

    

    
      	 	
              xv.

            	
              settle,
                release or forgive any claim or litigation or waive any
                right;

            

    

    

    
      	 	
              xvi.

            	
              commit
                itself to do any of the foregoing.

            

    

    

    b. From
      and
      after the date of this Agreement, Li will cause C3 each of its Subsidiaries
      to:

    

    
      	 	
              1.

            	
              continue
                to maintain, in all material respects, its properties in accordance
                with
                present practices in a condition suitable for its current
                use;

            

    

    

    
      	 	
              2.

            	
              file,
                when due or required, federal, state, foreign and other tax returns
                and
                other reports required to be filed and pay when due all taxes,
                assessments, fees and other charges lawfully levied or assessed against
                it, unless the validity thereof is contested in good faith and by
                appropriate proceedings diligently
                conducted;

            

    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	 	
              3.

            	
              continue
                to conduct its business in the ordinary course consistent with past
                practices;

            

    

    

    
      	 	
              4.

            	
              keep
                its books of account, records and files in the ordinary course and
                in
                accordance with existing practices;
                and

            

    

    

    
      	 	
              5.

            	
              continue
                to maintain existing business relationships with suppliers.
                

            

    

    

    Section
      4.2 Access
      to Properties and Records.
      Li
      shall afford the Company’s accountants, counsel and authorized representatives,
      and the Company shall afford to Li’s accountants, counsel and authorized
      representatives full access during normal business hours throughout the period
      prior to the Closing Date (or the earlier termination of this Agreement) to
      all
      of such parties’ properties, books, contracts, commitments and records and,
      during such period, shall furnish promptly to the requesting party all other
      information concerning the other party's business, properties and personnel
      as
      the requesting party may reasonably request, provided that no investigation
      or
      receipt of information pursuant to this Section 4.2 shall affect any
      representation or warranty of or the conditions to the obligations of any party.
      

    

    Section
      4.3 Negotiations.
      From
      and after the date hereof until the earlier of the Closing or the termination
      of
      this Agreement, no party to this Agreement nor its officers or directors
      (subject to such director's fiduciary duties) nor anyone acting on behalf of
      any
      party or other persons shall, directly or indirectly, encourage, solicit, engage
      in discussions or negotiations with, or provide any information to, any person,
      firm, or other entity or group concerning any merger, sale of substantial
      assets, purchase or sale of shares of capital stock or similar transaction
      involving any party except for the Financing Transaction. A party shall promptly
      communicate to any other party any inquiries or communications concerning any
      such transaction which they may receive or of which they may become aware
      of.

    

    Section
      4.4 Consents
      and Approvals.
      The
      parties shall:

    

    
      	 	
              i.

            	
              use
                their reasonable commercial efforts to obtain all necessary consents,
                waivers, authorizations and approvals of all governmental and regulatory
                authorities, domestic and foreign, and of all other persons, firms
                or
                corporations required in connection with the execution, delivery
                and
                performance by them of this Agreement; and

            

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	 	
              ii.

            	
              diligently
                assist and cooperate with each party in preparing and filing all
                documents
                required to be submitted by a party to any governmental or regulatory
                authority, domestic or foreign, in connection with such transactions
                and
                in obtaining any governmental consents, waivers, authorizations or
                approvals which may be required to be obtained connection in with
                such
                transactions.

            

    

    

    Section
      4.5 Public
      Announcement.
      Unless
      otherwise required by applicable law, the parties hereto shall consult with
      each
      other before issuing any press release or otherwise making any public statements
      with respect to this Agreement and shall not issue any such press release or
      make any such public statement prior to such consultation.

    

    Section
      4.6 Stock
      Issuance.
      From
      and after the date of this Agreement until the Closing Date, Li shall cause
      C3
      not to issue any additional shares of its capital stock. 

    

    ARTICLE
      V

    

    CONDITIONS
      TO OBLIGATIONS OF LI 

    

    The
      obligations of Li to consummate the transactions contemplated by this Agreement
      are subject to the fulfillment, at or before the Closing Date, of the following
      conditions, any one or more of which may be waived by Li in his sole
      discretion:

    

    Section
      5.1 Representations
      and Warranties of the Company and Yili US.
      All
      representations and warranties made by the Company and Yili US in this Agreement
      shall be true and correct on and as of the Closing Date as if again made by
      the
      Company and Yili US as of such date. 

    

    Section
      5.2 Agreements
      and Covenants.
      The
      Company and Yili US shall have performed and complied in all material respects
      to all agreements and covenants required by this Agreement to be performed
      or
      complied with by it on or prior to the Closing Date. 

    

    Section
      5.3 Consents
      and Approvals.
      Consents, waivers, authorizations and approvals of any governmental or
      regulatory authority, domestic or foreign, and of any other person, firm or
      corporation, required in connection with the execution, delivery and performance
      of this Agreement shall be in full force and effect on the Closing
      Date.

    

    Section
      5.4 No
      Violation of Orders.
      No
      preliminary or permanent injunction or other order issued by any court or
      governmental or regulatory authority, domestic or foreign, nor any statute,
      rule, regulation, decree or executive order promulgated or enacted by any
      government or governmental or regulatory authority, which declares this
      Agreement invalid in any respect or prevents the consummation of the
      transactions contemplated hereby, or which materially and adversely affects
      the
      assets, properties, operations, prospects, net income or financial condition
      of
      the Company or Yili US shall be in effect; and no action or proceeding before
      any court or governmental or regulatory authority, domestic or foreign, shall
      have been instituted or threatened by any government or governmental or
      regulatory authority, domestic or foreign, or by any other person, or entity
      which seeks to prevent or delay the consummation of the transactions
      contemplated by this Agreement or which challenges the validity or
      enforceability of this Agreement.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    Section
      5.5 Other
      Closing Documents.
      Li
      shall have received such other certificates, instruments and documents in
      confirmation of the representations and warranties of the Company and Yili
      US or
      in furtherance of the transactions contemplated by this Agreement as Li or
      its
      counsel may reasonably request.

    

    Section
      5.6 Series
      A Financing. Li
      shall
      have received a copy of the Securities Purchase Agreement duly executed by
      the
      parties thereto and the Series A Financing shall have been
      consummated.

    

    ARTICLE
      VI

     

    CONDITIONS
      TO OBLIGATIONS OF THE COMPANY AND YILI US

    

    The
      obligations of the Company and Yili US to consummate the transactions
      contemplated by this Agreement are subject to the fulfillment, at or before
      the
      Closing Date, of the following conditions, any one or more of which may be
      waived by the Company in its sole discretion:

    

    Section
      6.1 Representations
      and Warranties of Li.
      All
      representations and warranties made by Li in this Agreement shall be true and
      correct on and as of the Closing Date as if again made by Li on and as of such
      date. 

    

    Section
      6.2 Agreements
      and Covenants.
      Li
      shall have performed and complied in all material respects with all agreements
      and covenants required by this Agreement to be performed or complied with by
      Li
      on or prior to the Closing Date. Yili China shall have received a Certificate
      of
      Approval issued by the related PRC governmental authority evidencing the
      governmental approval regarding the Purchase of Yili China by C3.

    

    Section
      6.3 Consents
      and Approvals.
      All
      consents, waivers, authorizations and approvals of any governmental or
      regulatory authority, domestic or foreign, and of any other person, firm or
      corporation, required in connection with the execution, delivery and performance
      of this Agreement, shall have been duly obtained and shall be in full force
      and
      effect on the Closing Date. 

    

    Section
      6.4 No
      Violation of Orders.
      No
      preliminary or permanent injunction or other order issued by any court or other
      governmental or regulatory authority, domestic or foreign, nor any statute,
      rule, regulation, decree or executive order promulgated or enacted by any
      government or governmental or regulatory authority, domestic or foreign, that
      declares this Agreement invalid or unenforceable in any respect or which
      prevents the consummation of the transactions contemplated hereby, or which
      materially and adversely affects the assets, properties, operations, prospects,
      net income or financial condition of C3 shall be in effect; and no action or
      proceeding before any court or government or regulatory authority, domestic
      or
      foreign, shall have been instituted or threatened by any government or
      governmental or regulatory authority, domestic or foreign, or by any other
      person, or entity which seeks to prevent or delay the consummation of the
      transactions contemplated by this Agreement or which challenges the validity
      or
      enforceability of this Agreement.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    Section
      6.5 Other
      Closing Documents.
      The
      Company and Yili US shall have received such other certificates, instruments
      and
      documents in confirmation of the representations and warranties of Li or in
      furtherance of the transactions contemplated by this Agreement as the Company
      or
      its counsel may reasonably request.

     

    ARTICLE
      VII

    

    TERMINATION
      AND ABANDONMENT

    

    Section
      7.1 Methods
      of Termination.
      This
      Agreement may be terminated and the transactions contemplated hereby may be
      abandoned at any time before the Closing:

    

    a. By
      the
      mutual written consent of Li and the Company;

    

    b. By
      the
      Company or Yili US, upon a material breach of any representation, warranty,
      covenant or agreement on the part of Li set forth in this Agreement, or if
      any
      representation or warranty of Li shall become untrue, in either case such that
      any of the conditions set forth in Article VI hereof would not be satisfied
      (a
      "Li
      Breach"),
      and
      such breach shall, if capable of cure, has not been cured within ten (10) days
      after receipt by the party in breach of a notice from the non-breaching party
      setting forth in detail the nature of such breach;

    

    c. By
      Li,
      upon a material breach of any representation, warranty, covenant or agreement
      on
      the part of the Company or Yili US set forth in this Agreement, or, if any
      representation or warranty of the Company or Yili US shall become untrue, in
      either case such that any of the conditions set forth in Article V hereof would
      not be satisfied (a "Company
      Breach"),
      and
      such breach shall, if capable of cure, not have been cured within ten (10)
      days
      after receipt by the party in breach of a written notice from the non-breaching
      party setting forth in detail the nature of such breach;

    

    d. By
      either
      the Company or Li, if the Closing shall not have consummated before ninety
      (90)
      days after the date hereof; provided,
      however,
      that
      this Agreement may be extended by written notice of either Li or the Company,
      if
      the Closing shall not have been consummated as a result of the Company or Li
      having failed to receive all required regulatory approvals or consents with
      respect to this transaction or as the result of the entering of an order as
      described in this Agreement; and further
      provided, however,
      that the
      right to terminate this Agreement under this Section 7.1(d) shall not be
      available to any party whose failure to fulfill any obligations under this
      Agreement has been the cause of, or resulted in, the failure of the Closing
      to
      occur on or before this date.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    e. By
      either
      Li or the Company if a court of competent jurisdiction or governmental,
      regulatory or administrative agency or commission shall have issued an order,
      decree or ruling or taken any other action (which order, decree or ruling the
      parties hereto shall use its best efforts to lift), which permanently restrains,
      enjoins or otherwise prohibits the transactions contemplated by this
      Agreement.

    

    Section
      7.2 Procedure
      Upon Termination.
      In the
      event of termination and abandonment of this Agreement by Li or the Company
      pursuant to Section 7.1, written notice thereof shall forthwith be given to
      the
      other parties and this Agreement shall terminate and the transactions
      contemplated hereby shall be abandoned, without further action. If this
      Agreement is terminated as provided herein, no party to this Agreement shall
      have any liability or further obligation to any other party to this Agreement;
      provided, however, that no termination of this Agreement pursuant to this
      Article VII shall relieve any party of liability for a breach of any provision
      of this Agreement occurring before such termination.

     

    ARTICLE
      VIII

    

    MISCELLANEOUS
      PROVISIONS

    

    Section
      8.1 Survival
      of Provisions.
      The
      respective representations, warranties, covenants and agreements of each of
      the
      parties to this Agreement (except covenants and agreements which are expressly
      required to be performed and are performed in full on or before the Closing
      Date) shall survive the Closing Date and the consummation of the transactions
      contemplated by this Agreement, subject to Sections 2.15 and 3.16. In the event
      of a breach of any of such representations, warranties or covenants, the party
      to whom such representations, warranties or covenants have been made shall
      have
      all rights and remedies for such breach available to it under the provisions
      of
      this Agreement or otherwise, whether at law or in equity, regardless of any
      disclosure to, or investigation made by or on behalf of such party on or before
      the Closing Date.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    Section
      8.2 Indemnification.
      

    

    a. Indemnification
      Obligations in favor of the Shareholders, Executive Officers, Directors and
      Employees of the Company.
      Notwithstanding the limitation set forth in Section 8.1 and subject to the
      limitations set forth in this Section 8.2, from and after the Closing Date
      until
      the expiration of statute of limitations for shareholder action under the laws
      of New York, Li shall reimburse and hold harmless the Company’s shareholders,
      executive officers, directors, employees in office immediately prior to the
      Closing (each such person and his heirs, executors, administrators, agents,
      successors and assigns is referred to herein as a “Company
      Capital Indemnified Party”)
      against and in respect of any and all damages, losses, settlement payments,
      in
      respect of deficiencies, liabilities, costs, expenses and claims suffered,
      sustained, incurred or required to be paid by any the Company Indemnified Party,
      and any and all actions, suits, claims, or legal, administrative, arbitration,
      governmental or other procedures or investigation against any the Company
      Indemnified Party, which arises or results from a third-party claim brought
      against a the Company Indemnified Party to the extent based on (i) a breach
      of
      the representations and warranties with respect to the business, operations
      or
      assets of C3 and/or any of its Subsidiaries, or (ii) any actions or omissions
      or
      any the Company Indemnified Party taken in furtherance of the transactions
      contemplated by this Agreement or the Financing Transaction. 

     

       b. Indemnification
      in favor of Li.
      Notwithstanding the limitation set forth in Section 8.1 and subject to the
      limitations set forth in this Section 8.2, from and after the Closing Date
      until
      the expiration of statute of limitations for shareholder action under the laws
      of New York, the Company will, indemnify and hold harmless Li and his agents,
      attorneys and employees, and each person, if any, who controls or may “control”
(within the meaning of the Securities Act) any of the forgoing persons or
      entities (hereinafter referred to individually as a “Li
      Indemnified Person”)
      from
      and against any and all losses, costs, damages, liabilities and expenses arising
      from claims, demands, actions, causes of action, including, without limitation,
      legal fees, (collectively, “Damages”)
      arising out of any (i) any breach of representation or warranty made by the
      Company or Yili US in this Agreement, (ii) any breach by the Company or Yili
      US
      of any covenant, obligation or other agreement made by the Company or Yili
      US in
      this Agreement, and (iii) a third-party claim based on any acts or omissions
      by
      the Company or Yili US from the inception of such corporations through and
      including the Closing Date. 

    

    Section
      8.3 Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of, and be binding upon, the parties hereto
      and their respective successors and assigns; provided, however, that no party
      shall assign or delegate any of the obligations created under this Agreement
      without the prior written consent of the other parties. 

    

    Section
      8.4 Fees
      and Expenses.
      Except
      as otherwise expressly provided in this Agreement, all legal and other fees,
      costs and expenses incurred in connection with this Agreement and the
      transactions contemplated hereby shall be paid by the party incurring such
      fees,
      costs or expenses. 

    

    Section
      8.5 Notices.
      All
      notices and other communications given or made pursuant hereto shall be in
      writing and shall be deemed to have been given or made if in writing and
      delivered personally or sent by registered or certified mail (postage prepaid,
      return receipt requested) to the parties at the following addresses:

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    If
      to Li,
      to:

    

    Mr.
      Tie
      Li

    22
      Berkshire Way, East Brunswick, NJ 08816

    Attention:

    Tel:   
       7326681629

    Fax:   
       6463493807

    Email:
       jtl2020@gmail.com
      

     

    If
      to the
      Company or Yili US, to:

    

    Paragon
      Semitech USA, Inc.

    197
      Route
      18 South, Suite 3000, PMB 4157

    East
      Brunswick, NJ 08816 Attention: Ms. Hong Zhao

    Tel:  
        (732)
      658-4280

    

    with
      copies to: 

    

    Guzov
      Ofsink, LLC

    600
      Madison Avenue, 14th Floor

    New
      York,
      New York 10022

    Attention:
      Darren Ofsink

    Tel.
      No.:   (212) 371-8008, ext. 127

    Fax
      No.:   (212) 688-7273

    

    or
      to
      such other persons or at such other addresses as shall be furnished by any
      party
      by like notice to the others, and such notice or communication shall be deemed
      to have been given or made as of the date so delivered or mailed. No change
      in
      any of such addresses shall be effective insofar as notices under this Section
      8.5 are concerned unless such changed address is located in the United States
      of
      America and notice of such change shall have been given to such other party
      hereto as provided in this Section 8.5.

    

    Section
      8.6 Entire
      Agreement.
      This
      Agreement, together with the exhibits hereto, represents the entire agreement
      and understanding of the parties with reference to the transactions set forth
      herein and no representations or warranties have been made in connection with
      this Agreement other than those expressly set forth herein or in the exhibits,
      certificates and other documents delivered in accordance herewith. This
      Agreement supersedes all prior negotiations, discussions, correspondence,
      communications, understandings and agreements between the parties relating
      to
      the subject matter of this Agreement and all prior drafts of this Agreement,
      all
      of which are merged into this Agreement. No prior drafts of this Agreement
      and
      no words or phrases from any such prior drafts shall be admissible into evidence
      in any action or suit involving this Agreement.

    

    Section
      8.7 Severability.
      This
      Agreement shall be deemed severable, and the invalidity or unenforceability
      of
      any term or provision hereof shall not affect the validity or enforceability
      of
      this Agreement or of any other term or provision hereof. Furthermore, in lieu
      of
      any such invalid or unenforceable term or provision, the parties hereto intend
      that there shall be added as a part of this Agreement a provision as similar
      in
      terms to such invalid or unenforceable provision as may be possible so as to
      be
      valid and enforceable.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    Section
      8.8 Titles
      and Headings.
      The
      Article and Section headings contained in this Agreement are solely for
      convenience of reference and shall not affect the meaning or interpretation
      of
      this Agreement or of any term or provision hereof.

    

    Section
      8.9 Counterparts. This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original and all of which together shall be considered one and the
      same agreement.

    

    Section
      8.10 Convenience
      of Forum; Consent to Jurisdiction.
      The
      parties to this Agreement, acting for themselves and for their respective
      successors and assigns, without regard to domicile, citizenship or residence,
      hereby expressly and irrevocably elect as the sole judicial forum for the
      adjudication of any matters arising under or in connection with this Agreement,
      and consent and subject themselves to the jurisdiction of, the courts of the
      State of New York located in County of New York, and/or the United States
      District Court for the Southern District of New York, in respect of any matter
      arising under this Agreement. Service of process, notices and demands of such
      courts may be made upon any party to this Agreement by personal service at
      any
      place where it may be found or giving notice to such party as provided in
      Section 8.5.

    

    Section
      8.11 Enforcement
      of the Agreement.
      The
      parties hereto agree that irreparable damage would occur if any of the
      provisions of this Agreement were not performed in accordance with their
      specific terms or were otherwise breached. It is accordingly agreed that the
      parties shall be entitled to an injunction or injunctions to prevent breaches
      of
      this Agreement and to enforce specifically the terms and provisions hereto,
      this
      being in addition to any other remedy to which they are entitled at law or
      in
      equity.

    

    Section
      8.12 Governing
      Law.
      This
      Agreement shall be governed by and interpreted and enforced in accordance with
      the laws of the State of New York without giving effect to the choice of law
      provisions thereof.

    

    Section
      8.13 Amendments
      and Waivers.
      No
      amendment of any provision of this Agreement shall be valid unless the same
      shall be in writing and signed by all of the parties hereto.. No waiver by
      any
      party of any default, misrepresentation, or breach of warranty or covenant
      hereunder, whether intentional or not, shall be deemed to extend to any prior
      or
      subsequent default, misrepresentation, or breach of warranty or covenant
      hereunder or affect in any way any rights arising by virtue of any prior or
      subsequent such occurrence.

     

    Section
      8.14 Publicity.
      No
      party shall cause the publication of any press release or other announcement
      with respect to this Agreement or the transactions contemplated hereby without
      the consent of the other parties, unless a press release or announcement is
      required by law. If any such announcement or other disclosure is required by
      law, the disclosing party agrees to give the non-disclosing parties prior notice
      and an opportunity to comment on the proposed disclosure.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      date
      first above written.

    

       

        
          	
                  PARAGON
                    SEMITECH USA, INC.

                	 
	 	 
	
                  By:

                	 	
                	 
	
                  Name:
                    Hong Zhao

                	 
	
                  Title:
                    Director, CFO

                	 
	 	 
	 	 
	
                  YILI
                    CARBORUNDUM USA, INC.

                	 
	 	 
	 	 
	
                  By:

                	 	
                	 
	
                  Name:
                    Hong Zhao

                	 
	
                  Title:
                    Director, Treasurer and Secretary

                	 
	 	 
	 	 
	 	 
	
                  Tie
                    Li

                	 

        

      

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    Schedule
      2.2

    

    Warrants

    

    On
      October 9, 2007, the Company issued warrants to acquire 1,000,000 shares of
      its
      common stock to Columbia China Capital Group, Inc., an affiliate of the Company,
      at an exercise price of $0.001 per share with a term of five years from October
      9, 2007 to October 9, 2012. The Warrants were issued pursuant to a consulting
      agreement by and between the Company and Columbia China Capital Group, Inc.
      (the
“Consultant”), an affiliate to the Company on October 9, 2007. Under such
      agreement, the Company agrees to pay the warrants referenced above for the
      financial advisory services rendered by the Consultant.

     

    Schedule
      3.3

     

      
        	
                Name

              	 	
                Jurisdiction

              	 	
                Equity Owners and

                Percentage of Equity

                Securities Held

              	 
	
                Yili
                  Master Carborundum Production Co., Ltd. (“Yili China”)

              	 	
                China

              	 	
                100%
                  owned by C3 Capital, Limited*

              	 
	
                Xinjiang
                  Ehe Mining and Metallurgy Co., Ltd. (“Ehe China”)

              	 	
                China

              	 	
                90%
                  owned by C3 Capital, Limited *

                The
                  rest 10% is to be owned by the local electric power
                  supplier.

              	 
	
                Xinjiang
                  Paragon Master Mining Co., Ltd. (“Quartz Mine China”)

              	 	
                China

              	 	
                100%
                  owned by C3 Capital, Limited * 

              	 

      

    

    

    * Subject
      to the completion of the PRC Entity Restructuring.

    

    Schedule
      3.8

    

    Material
      Agreements

    

    None.

    

    Schedule
      3.9

    

    Financial
      Statement

    

    See
      separately attached sheets.

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    Schedule
      3.10

    

    Material
      Changes

    

    None.

    

    Schedule
      3.13

    

    Indebtedness;
      Compliance

    

    As
      of the
      date of this Agreement, Yili China owns approximately RMB 2,666,537.23
      (Approximately US$389,847) to local electric power supplier, Yihe Hydro-electric
      Center of Development and Administration Center of Yilihe Area of
      Xinjiang.

     

    
      
         

      

      
        20SECURITIES
      PURCHASE AGREEMENT

    

    This
      Securities
      Purchase Agreement
      (this
“Agreement”)
      is
      made and entered into as of September 2, 2008 by and between Paragon
      Semitech USA, Inc.,
      a
      Delaware corporation with offices at 197 Route 18 South, Suite 3000, PMB 4157,
      East Brunswick, NJ 08816 (the “Company”)
      and
The
      China Hand Fund I, LLC with
      an
      address at
      420
      Lexington Avenue, Suite 860, New York, NY 10170 and/or its successor and assigns
      (the “Investor”
and
      together with the Company, the “Parties”).
      

    

    WHEREAS,
      the
      Company desires to issue and sell to the Investor, and the Investor desires
      to
      purchase from the Company the securities described below under Section 1.1
      of
      this Agreement pursuant to an exemption from registration under Section 4(2)
      and/or Regulation D under the Securities Act of 1933, as amended (the
“1933
      Act”)
      or
      other applicable exemptions, on the terms and conditions set forth in this
      Agreement.

    

    NOW,
      THEREFORE,
      the
      parties hereby agree as follows:

    

    1. Securities
      Sale and Purchase.
      (a) The
      Company will issue and sell to the Investor and the Investor agrees to purchase
      from the Company, pursuant to an exemption from registration provided by Section
      4(2) and/or Regulation D promulgated under the 1933 Act or other applicable
      exemption, Nine Hundred Ninety-Six Thousand One Hundred Eighty-Six (996,186)
      units of securities of the Company for an aggregate of Ten Million
      (US$10,000,000) (the “Purchase
      Price”).
      Each
      unit of the Company’s securities sold hereunder consists of (i) one (1) share of
      the Company’s Series A Convertible Preferred Stock, par value US$.001 per share
      (“Series
      A Preferred Stock”),
      with
      each share of Series A Preferred Stock being initially convertible into one
      hundred (100) shares of the Company’s common stock, par value US$.001 per share
      (“Common
      Stock”),
      which
      rate is subject to adjustment upon the occurrence of certain events, and (ii)
      attached one common stock warrant (in the aggregate, the “Warrants”)
      to
      purchase twenty-five (25) shares of Common Stock at an exercise price of
      US$0.125 per share, which exercise price and the number of shares for which
      the
      warrants are exercisable are subject to adjustment upon the occurrence of
      certain events, expiring on the third anniversary of date of issuance in the
      form annexed hereto as Exhibit
      A.
      The
      shares of Series A Preferred Stock issued and issuable hereunder and the
      Warrants are hereinafter sometimes collectively referred to as “Securities”.
      The
      terms of the Series A Preferred Stock are set forth in a Certificate of
      Designations, Preferences and Rights of Series A Convertible Preferred Stock
      filed with the Delaware Secretary of State on August 29, 2008, a copy of which
      is attached hereto as Exhibit
      B
      (the
“Certificate”).
      The
      Series A Preferred Stock and Warrants shall be issued as set forth in
Schedule
      1. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (b)
      The
      Parties acknowledge and agree that until November 30, 2008, the Investor shall
      have the right, but not the obligation, to purchase up to 697,350 additional
      shares of Series A Preferred Stock (the “Additional
      Series A Shares”)
      and
      warrants to purchase up to 17,433,751 (i.e. 1,743,375 shares on a post Reverse
      Split basis, as defined under Section 6.1 of this Agreement) additional shares
      of its Common Stock (the “Additional
      Warrants”)
      for an
      aggregate purchase price of up to Seven Million U.S. Dollars ($7,000,000) under
      the same terms and conditions as provided herein and in each other Transaction
      Document (as defined below), including, but not limited to the same per unit
      purchase price. (The issuance and sale of the Additional Series A Shares and
      Additional Warrants and the transactions related thereto is hereinafter referred
      to as the “Additional
      Series A Financing”;
      the
      closing of the Additional Series A Financing, is hereinafter referred to as
      the
“Final
      Closing”;
      the
      date on which the Final Closing shall occur is hereinafter referred to as the
      “Final
      Closing Date”;
      the
      purchasers who shall have purchased Additional Series A Shares and Additional
      Warrants in the Additional Series A Financing are each hereinafter referred
      to
      as an “Additional
      Purchaser”
and
      collectively referred to as the “Additional
      Purchasers”
and
      together with the Investor, each is hereinafter referred to as a “Series
      A Purchaser”
and
      collectively, as the “Series
      A Purchasers”).
      The
      Investor may exercise such option by written notice to the Company given at
      any
      time prior to December 15, 2008 and if such option is exercised a Final Closing
      shall be held within 15 days after such option exercise notice is given. The
      foregoing option may be completely or partially assigned by the Investor to
      any
      one or more persons, firms or entities. If an Additional Series A Financing
      is
      consummated, the Company and the Additional Series A Purchasers shall enter
      into
      a joinder agreement, substantially in the form of Exhibit
      C
      attached
      hereto pursuant to which the Company shall issue and sell to the Additional
      Purchasers the Additional Series A Shares and Additional Warrants and (A) the
      Company shall make to the Additional Purchasers as of the date of such agreement
      all of the agreements, representations, warranties and covenants made by the
      Company herein (except to the extent that any representations must be amended
      or
      modified or deleted due to the passage of time or the occurrence of events
      between the Closing Date and the Final Closing Date) and (B) the Additional
      Purchasers shall make to the Company all of the representations, warranties
      and
      covenants that the Investor is making herein, except to the extent that any
      representations, warranties and covenants must be amended or modified or deleted
      due to the passage of time or the occurrence of events between the Closing
      Date
      and the Final Closing Date). 

    

    2.
       Closings
      and Payment. 

    

    2.1 The
      Closings.
      The
      Company will issue and sell the Securities to the Investor and, subject to
      the
      terms and conditions hereof, and in reliance upon the written representations
      and warranties of the Company, the Investor will purchase the Securities from
      the Company. The closing shall be held on August 29, 2008, or such other date
      as
      the parties may agree upon (the “Closing”
and
      the
“Closing
      Date”)
      at the
      offices of Guzov Ofsink, LLC, 600 Madison Avenue, 14th
      Floor,
      New York, New York 10022, U.S.A., at 10:00 a.m., or at such other location
      or by
      such other means upon which the parties may agree. The Final Closing shall
      occur
      at such time and place as the Company and the Additional Purchasers shall agree.
      In any event, the Final Closing Date shall be no later than November 30,
      2008.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    2.2 Closing
      Deliveries.
      At
      the
      Closing, the Purchase Price shall be paid by wire transfer of immediately
      available funds to the account designated by the Company in writing and the
      Company will deliver to the Investor original certificates and warrants in
      its
      name and in such denominations as the Investor may specify prior to the Closing.
      Further, at the Closing, the Company shall deliver or cause to be delivered
      to
      the Investor (i) the legal opinion of United States counsel to the Company,
      in
      agreed form, addressed to the Investor; (ii) the legal opinion of special PRC
      (as such term is hereinafter defined) counsel to the Company, in agreed form,
      addressed to the Investor; (iii) a copy of the Share Purchase Agreement by
      and
      between Yili Carborundum USA, Inc. a wholly owned subsidiary of the Company
      incorporated in Delaware (“Yili
      USA”),
      and
      James Li, the sole shareholder of C3 Capital Limited, a British Virgin Islands
      company (“C3
      Capital”),
      a copy
      of which is attached hereto as Exhibit
      D
      (the
“Share
      Exchange Agreement”;
      the
      transactions contemplated thereunder, the “Share
      Exchange Transaction”),
      duly
      executed by the parties thereto; (iv) a copy of the Equity Transfer Agreement
      by
      and between C3 Capital Limited, Yili Master Carborundum Production Co., Ltd.
      (“Yili
      China”),
      a
      corporation incorporated under the laws of the People’s Republic of China (the
“PRC”),
      and
      Changchun Master Industry Co., Ltd, the sole shareholder of Yili China prior
      to
      the equity transfer (“Former
      Yili China Shareholder”),
      a copy
      of which is attached hereto as Exhibit
      E (the
      “Yili
      Equity Transfer Agreement”,
      the
      transactions contemplated thereunder, the“Purchase
      of Yili China”);
      (v) a
      copy of Equity Interest Transfer Agreement by and between C3 Capital, Mr. Gao
      Zhigang, the sole shareholder of Xinjiang Ehe Mining and Metallurgy Co., Ltd.
      (“Ehe
      China”)
      prior
      to the equity transfer (“Former
      Ehe Shareholder”),
      a copy
      of which is attached hereto as Exhibit
      F
      (the
“Ehe
      Equity Transfer Agreement”),
      the
      transactions contemplated thereunder, the “Purchase
      of Ehe China”);
      (vi) a
      copy of the Memorandum of Understanding by and among C3 Capital, Mr. Gao Zhigang
      and Mr. Li Ping, the proposed shareholders of Xinjiang Paragon Master Mining
      Co., Ltd. (“Quartz
      Mine China”),
      a
      corporation to be incorporated under the laws of PRC (the “Former
      Quartz
      Mine China Shareholder”),
      a
      corporation to be incorporated under the law of the PRC for purposes of
      exploration and development of certain quartz mine as identified therein, a
      copy
      of which is attached hereto as Exhibit G (the “Quartz
      Mine MOU”,
      the
      transactions contemplated thereunder, the “Purchase
      of Quartz Mine”,
      Yili
      Equity Transfer Agreement, Ehe Equity Transfer Agreement and Quartz Mine MOU
      are
      collectively referred hereinafter as the“PRC
      Restructuring Agreements”,
      and
      Purchase of Yili China, Purchase of Ehe China and Purchase of Quartz Mine are
      collectively referred to hereinafter as the“PRC
      Entity Restructuring”
      ); and
      (vii) each of the other Transaction Documents (as such term is hereinafter
      defined) to which the Company and/or its Subsidiaries (as such term is
      hereinafter defined) is a party, duly executed by the Company and/or such
      Subsidiaries; and (vi) such other documents, instruments and certificates as
      shall be reasonably requested by the Investor. 

     

    
      
        3.
          REPRESENTATIONS
          WARRANTIES AND COVENANTS OF THE COMPANY.
          

      

    

    

    The
      Company hereby represents, warrants, as of the date hereof and the Closing
      Date,
      except as set forth on the schedule of exceptions attached hereto (the
“Schedule
      of Exceptions”)
      with
      each numbered item in the Schedule of Exceptions corresponding to the section
      number herein, and covenants to the Investor as follows: 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    3.1 Organization
      and Qualification.  Except
      as
      set forth under Schedule 3.1, the
      Company and each Subsidiary is a corporation duly incorporated, validly existing
      and in good standing under the laws of its jurisdiction, and has full corporate
      power and authority to conduct its business as presently conducted, and to
      own,
      use or lease assets and properties as presently owned, used or leased. The
      Company and each Subsidiary are duly qualified to conduct its respective
      businesses and is in good standing as a foreign corporation or other entity
      in
      each jurisdiction in which the nature of the business conducted or property
      owned by it makes such qualification necessary, except where the failure to
      be
      so qualified or in good standing, as the case may be, could not, individually
      or
      in the aggregate, have or reasonably be expected to result in (A) a material
      and
      adverse effect on the results of operations, assets, properties, prospects,
      business or condition (financial or otherwise) of the Company and its
      Subsidiaries taken as a whole and/or (B) any condition, circumstance, or
      situation that would prohibit or otherwise materially interfere with the ability
      of the Company or any Subsidiary to perform any of its material obligations
      under the Transaction Documents (as such term is hereinafter defined)
      (collectively, “Material
      Adverse Effect”).
      For
      purposes of this Agreement, the term “Subsidiary”
or
      “Subsidiaries”
      means
      any corporation(s) or other entity(ies) of which at least a majority of the
      securities or other ownership interest having ordinary voting power (absolutely
      or contingently) for the election of directors or other persons performing
      similar functions are at the time owned directly or indirectly by the Company
      and/or any of its other subsidiaries, including such corporation or other
      entities after giving effect to the PRC Entity Restructuring, including Yili
      China, Ehe China and Quartz Mine China. 

    

    3.2 Authority;
      Due Authorization.
      The
      Company has full corporate power and authority to execute and deliver this
      Agreement, the Share Exchange Agreement, the PRC Restructuring Agreements,
      the
      Certificate, the Warrants, and the certificates, documents and instruments
      related to or contemplated by each of the foregoing agreements (each a
“Transaction
      Document”
and
      collectively, the “Transaction
      Documents”)
      to
      which it is or will be a party and to perform its obligations hereunder and
      thereunder, and to consummate the transactions contemplated hereby and thereby.
      The execution and delivery by the Company of each of the Transaction Documents
      and the performance by the Company of its obligations thereunder, have been
      duly
      and validly authorized by the Board of Directors, no other corporate action
      on
      the part of the Company or its stockholders being necessary. Each of the
      Transaction Documents has been or will be duly and validly executed and
      delivered by the Company, and constitutes, or will constitute a legal, valid
      and
      binding obligation of the Company enforceable against the Company in accordance
      with their respective terms except as enforceability may be limited by
      bankruptcy, insolvency and other laws of general application affecting the
      enforcement of creditors’ rights and except that any granting of equitable
      relief is in the discretion of the court. Each Subsidiary has full corporate
      power and authority to execute and deliver the PRC Restructuring Agreements
      to
      which they are parties and to perform its obligations thereunder and to
      consummate the transactions contemplated thereby. The execution and delivery
      by
      each Subsidiary of the Equity Transfer Agreement and/or Share Exchange Agreement
      to which they are parties and the performance by such Subsidiary of its
      obligations thereunder, have been duly and validly authorized by all appropriate
      corporate action on the part of such Subsidiary. Each of the Equity Transfer
      Agreement and/or Share Exchange Agreement has been duly and validly executed
      and
      delivered by each Subsidiary who is a party thereto and constitutes, or will
      constitute a legal, valid and binding obligation of such Subsidiary enforceable
      against such Subsidiary in accordance with their respective terms except as
      enforceability may be limited by bankruptcy, insolvency and other laws of
      general application affecting the enforcement of creditors’ rights and except
      that any granting of equitable relief is in the discretion of the court.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    3.3 Capitalization.
      The
      authorized and outstanding capital stock of the Company as of the date of this
      Agreement and as adjusted to reflect the issuance and sale of the Securities
      pursuant to this Agreement and as adjusted to give effect to the transactions
      contemplated by the Share Exchange Agreement and the PRC Entity Restructuring
      is
      set forth in Schedule
      3.3.
      There
      are no outstanding options, warrants, rights to subscribe for, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into or exchangeable for, shares of any class of capital stock
      of
      the Company or any of its subsidiaries, or agreements, understandings or
      arrangements to which the Company or any of its subsidiaries is a party, or
      by
      which the Company or any of its subsidiaries is or may be bound, to issue
      additional shares of its capital stock or options, warrants, scrip or rights
      to
      subscribe for, calls or commitment of any character whatsoever relating to,
      or
      securities or rights convertible into or exchangeable for, any shares of any
      class of its capital stock, except as set forth in Schedule 3.3 and the PRC
      Restructuring Agreements.

    

    3.4 No
      Conflicts.
      The
      execution and delivery by the Company and the Subsidiaries of the Transaction
      Documents do not and will not, and the performance by the Company and the
      Subsidiaries of their obligations under the Transaction Documents and the
      consummation of the transactions contemplated thereby will not (i) conflict
      with
      or result in a violation or breach of any of the terms, conditions or provisions
      of the Company’s and its Subsidiaries’ certificates of incorporation or by-laws;
      (ii) conflict with or result in a violation or breach of any term or provision
      of any law or order applicable to the Company, its Subsidiaries, or any of
      their
      assets and properties; or (iii)(a) conflict with or result in a violation or
      breach of, (b) constitute (with or without notice or lapse of time or both)
      a
      default under, (c) require the Company, its Subsidiaries, or any other person
      or
      entity to obtain any consent, approval or action of, make any filing (other
      than
      such filings which will be made prior to or within the time frame following
      the
      Closing as set forth under Section 7.6 Completion of the PRC Entity
      Restructuring) with or give any notice to any person or entity as a result
      or
      under the terms of, or (d) result in the creation or imposition of any charge,
      encumbrance, security interest, pre-emptive right, right of first refusal,
      right
      of participation or any other restrictions of any kind (“Liens”)
      upon
      the Company, any of its Subsidiaries, or any of its assets or properties under,
      any contract or license to which the Company or its Subsidiaries, is a party
      or
      by which any of its assets and properties is bound (other than with respect
      to
      clauses (i), (ii) and (iii) above, where such violations, conflicts, breaches,
      defaults, or failure to obtain the consent, approval of or make any filing
      with,
      or the creations of Liens, would not, in the aggregate, have or reasonably
      be
      expected to result in a Material Adverse Effect. 

    

    3.5 Valid
      Issuance of Series A Preferred Stock and Warrant Shares.
      The
      Series A Preferred Stock, when issued and paid for as provided in this
      Agreement, will be duly authorized, validly issued, fully paid and
      non-assessable. The shares of Common Stock issuable on conversion of the Series
      A Preferred Stock (“Conversion
      Shares”),
      when
      issued in accordance with their terms, will be duly authorized, validly issued,
      fully paid and non-assessable. The shares of Common Stock issuable on exercise
      of the Warrants (“Warrant
      Shares”),
      when
      issued and paid for in accordance with their terms, will be duly authorized,
      validly issued, fully paid and non-assessable. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    3.6 Financial
      Statements.
      Set
      forth
      on Exhibit
      H
      attached
      hereto are the unaudited financial statements of Yili
      China
      which
      will become an indirect Subsidiary of the Company upon the consummation of
      the
      Share Exchange Transaction and the Purchase of Yili China (collectively, the
      “Financial
      Statements”).
      The
      Financial Statements fairly present in all material respects the financial
      position of Yili China, as applicable, as of the dates thereof and the results
      of operations for the periods then ended. 

    

    3.7 Material
      Changes.
      Since
      the
      date of the latest balance sheet included in the Financial Statements included
      on Exhibit
      H
      attached
      hereto and, except as set forth on Schedule
      3.7
      attached
      hereto, (i) there has been no event, occurrence or development that has had
      or
      that would reasonably be expected to result in a Material Adverse Effect, (ii)
      neither the Company nor any Subsidiary (except for Ehe China and Quartz Mine
      China, in which case are not applicable here) has incurred any liabilities
      (contingent or otherwise) other than (A) trade payables, accrued expenses and
      other liabilities incurred in the ordinary course of business consistent with
      past practice and (B) liabilities not required to be reflected in the Company’s
      or its Subsidiaries’ financial statements pursuant to GAAP. 

    

    3.8 Governmental
      Consents.
      To the
      best of the Company’s knowledge, no consent, approval, order or authorization
      of, or registration, qualification, designation, declaration or filing with
      any
      court, governmental agency, regulatory authority or political subdivision
      thereof, or any other entity, is required in connection with the execution,
      delivery and performance by the Company and/or its Subsidiaries of this
      Agreement or any of the Transaction Documents, other than a notice filing with
      an applicable state government or the documents, approvals or certificates,
      as
      the case may be, as set forth in Schedule 3.1, Schedule 3.2 and Section 7.6
      of
      this Agreement.

    

    3.9 Litigation. There
      is
      no action, suit, proceeding, claim, arbitration or investigation pending (or,
      to
      the best knowledge of the Company, currently threatened) against the Company
      or
      any of its Subsidiaries, their respective activities, properties or assets
      or,
      to the best of the Company’s knowledge, against any officer or director of the
      Company or any of its Subsidiaries in connection with such officer’s or
      director’s relationship with, or actions taken on behalf of, the Company or any
      of its Subsidiaries. There is no pending or, to the knowledge or belief of
      the
      Company, currently threatened, claim or litigation against the Company or any
      of
      its Subsidiaries, contesting their right to produce, manufacture, sold, used
      or
      offered by the Company or any of its Subsidiaries. 

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    3.10 Indebtedness;
      Compliance.
      Except
      as disclosed on Schedule
      3.10
      attached
      hereto, neither the Company nor any Subsidiary is a party to any indenture,
      debt, loan or credit agreement by which it or any of its properties is bound.
      Neither the Company nor any Subsidiary is (i) in default under or in violation
      of (and no event has occurred that has not been waived that, with notice or
      lapse of time or both, would result in a default under), nor has the Company
      nor
      any Subsidiary has received notice of a claim that it is in default under or
      that it is in violation of, any indenture, loan or credit agreement or any
      other
      agreement or instrument to which it is a party or by which it or
      any of
      its properties is bound (whether
      or not such default or violation has been waived), (ii) in violation of any
      court, arbitrator, governmental or administrative agency, regulatory or self
      regulatory authority (federal, state, county, local or foreign), stock market,
      stock exchange or trading facility, or (iii) or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws relating to taxes,
      environmental protection, occupational health and safety, product quality and
      safety and employment and labor matters, except in each case as could not,
      individually or in the aggregate, have or reasonably be expected to result
      in a
      Material Adverse Effect. 

    

    3.11 Regulatory
      Permits.
      The
      Company and its Subsidiaries possessed all certificates, authorizations and
      permits issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their businesses, except where the failure to
      possess such permits could not, individually or in the aggregate, have or
      reasonably be expected to result in a Material Adverse Effect, except as set
      forth in Schedule 3.1, Schedule 3.2 and Section 7.6 of this Agreement.

    

    3.12
       Title
      to Assets.
      The
      Company and each of its Subsidiaries have valid land use rights for all real
      property that is material to their respective businesses and good and marketable
      title in all personal property owned by them that is material to their
      respective businesses, in each case, free and clear of all Liens, except for
      Liens as do not materially affect the value of such property and do not
      materially interfere with the use made and proposed to be made of such property
      by the Company and each Subsidiary. Any real property and facilities held under
      lease by the Company and any of it Subsidiaries are held by them under valid,
      subsisting and enforceable leases, except as could not, individually or in
      the
      aggregate, have or reasonably be expected to result in a Material Adverse
      Effect.

    

    3.13
       Patents
      and Trademarks.
      The
      Company and its Subsidiaries do not own or have the rights to use any particular
      patents, patent applications, trademarks, trademark applications, service marks,
      trade names, copyrights, licenses and other similar rights (collectively, the
      “Intellectual
      Property Rights”).
      Neither the Company nor any Subsidiary has received written notice that the
      Intellectual Property Rights used by any of them violates or infringes upon
      the
      rights of any other person. To the knowledge of the Company there is no existing
      infringement by another person of any of the Intellectual Property Rights.
      

    

    3.14 Foreign
      Corrupt Practices Act.
      Neither
      the Company or its Subsidiaries, nor to the knowledge of the Company and its
      Subsidiaries, any agent or other person acting on behalf of any of them, has,
      directly or indirectly, (i) used any funds, or will use any proceeds from the
      sale of the Securities, for unlawful contributions, gifts, entertainment or
      other unlawful expenses related to foreign or domestic political activity,
      (ii)
      made any unlawful payment to foreign or domestic government officials or
      employees or to any foreign or domestic political parties or campaigns from
      corporate funds, (iii) failed to disclose fully any contribution made by the
      Company or any subsidiary (or made by any person acting on their behalf of
      which
      the Company is aware) which is in violation of law, or (iv) has violated in
      any
      material respect any provision of the Foreign Corrupt Practices Act of 1977,
      as
      amended, and the rules and regulations thereunder (the “FCPA”).
      

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    3.15 OFAC.
      Neither
      the Company nor any of its subsidiaries nor, to the knowledge of the Company,
      any director, officer, agent, employee, affiliate or person acting on behalf
      of
      the Company or any subsidiary, is currently subject to any U.S. sanctions
      administered by the Office of Foreign Assets Control of the U.S. Treasury
      Department (“OFAC”);
      and
      the Company will not directly or indirectly use the proceeds of the sale of
      the
      Securities, or lend, contribute or otherwise make available such proceeds to
      any
      subsidiary, joint venture partner or other person or entity, towards any sales
      or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
      sanctioned by OFAC or for the purpose of financing the activities of any person
      currently subject to any U.S. sanctions administered by OFAC. 

    

    3.16 Money
      Laundering Laws.
      The
      operations of the Company and each of its Subsidiaries are and have been
      conducted at all times in compliance with the money laundering statutes of
      applicable jurisdictions, the rules and regulations thereunder and any related
      or similar rules, regulations or guidelines, issued, administered or enforced
      by
      any applicable governmental agency (collectively, the “Money
      Laundering Laws”)
      and no
      action, suit or proceeding by or before any court or governmental agency,
      authority or body or any arbitrator involving the Company and each of its
      Subsidiaries with respect to the Money Laundering Laws is pending or, to the
      best knowledge of the Company, threatened. 

    

    3.17 Subsidiaries. Schedule
      3.15
      hereto
      sets forth each Subsidiary of the Company (after giving effect to the
      consummation of the Share Exchange Transaction and the PRC Entity
      Restructuring), the jurisdiction of its incorporation or organization and the
      name of each holder of equity securities of the Subsidiary and the percentage
      of
      the equity owned by such person. Subject to the consummation of the Share
      Exchange Transaction and the PRC Entity Restructuring, the Company represents
      that (i) all of the outstanding shares of capital stock of each Subsidiary
      have
      been duly authorized and validly issued, and are fully paid and nonassessable,
      (ii) other than as contemplated by the Transaction Documents, there are no
      outstanding preemptive, conversion or other rights, options, warrants or
      agreements granted or issued by or binding upon any subsidiary for the purchase
      or acquisition of any shares of capital stock of any Subsidiary or any other
      securities convertible into, exchangeable for or evidencing the rights to
      subscribe for any shares of such capital stock, (iii) other than as contemplated
      by the Transaction Documents, neither the Company nor any Subsidiary is subject
      to any obligation (contingent or otherwise) to repurchase or otherwise acquire
      or retire any shares of the capital stock of any subsidiary or any convertible
      securities, rights, warrants or options of the type described in the preceding
      sentence, and (iv) other than as contemplated by the Transaction Documents,
      none
      of the Subsidiaries of the Company is party to, nor has any knowledge of, any
      agreement restricting the voting or transfer of any shares of the capital stock
      of any Subsidiary.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    3.18 Other
      Representations and Warranties Relating to Yili China

    

    (a)Yili
      China, the Company’s operating subsidiary, has completed the necessary
      registrations and transactions, and has submitted the necessary application
      documents for the approvals in the PRC to convert Yili China into a wholly
      foreign owned enterprise wholly owned by the Company through its ownership
      of
      Yili USA and C3 Capital Limited. 

    

    (b)The
      constitutional documents and certificates and related material contracts of
      Yili
      China are valid and have been duly approved or registered (as applicable) by
      competent PRC governmental authorities. 

    

    (c)Yili
      China is not in receipt of any letter or notice from any relevant PRC
      governmental authority notifying it of revocation of any licenses or
      qualifications issued to it or any subsidy, if any, granted to it by any PRC
      governmental authority for non-compliance with the terms thereof or with
      applicable PRC laws, or the need for compliance or remedial actions in respect
      of the activities carried out by it, except such revocation does not, and
could
      not, individually or in the aggregate, have or result in a Material Adverse
      Effect.
      

    

    (d)Yili
      China has conducted its business activities within the permitted scope of
      business or has otherwise operated its business in compliance with all relevant
      legal requirements and with all requisite licenses and approvals granted by
      competent PRC governmental authorities except where the failure to so comply
      does not or could
      not, individually or in the aggregate, have or result in a Material Adverse
      Effect.
      

    

    3.19
       Other
      Representations and Warranties Relating to Ehe China and Quartz
      China.  The
      Ehe
      Equity Transfer Agreement and the Quartz Mine MOU have been formed to reflect
      the true intention of the parties. The Ehe Equity Transfer Agreement is valid
      and enforceable as to the contractual obligations of each party thereto upon
      its
      execution. Once the transaction contemplated by the Ehe Equity Transfer
      Agreement is approved by the related government in PRC, the Purchase of Ehe
      China shall be valid and enforceable under the PRC laws.

    

    4. REPRESENTATIONS,
      WARRANTIES AND CERTAIN AGREEMENTS OF INVESTOR.  

    

    The
      Investor hereby represents and warrants to, and agrees with, the Company
      that:

    

    4.1 Authorization.
      This
      Agreement and each of the other Transaction Documents to which the Investor
      is a
      party constitute valid and legally binding obligations of the Investor,
      enforceable against the Investor in accordance with their terms. The Investor
      represents that the Investor has full power and authority to enter into and
      perform its obligations under this Agreement.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    4.2 Purchase
      for Own Account. The
      Securities to be purchased by the Investor hereunder will be acquired for
      investment for Investor’s own account, not as a nominee or agent. The Investor
      has not purchased the Securities with a view to the public resale or
      distribution thereof, and Investor has no present intention of selling, granting
      any participation in, or otherwise distributing the same.

    

    4.3 Disclosure
      of Information. The
      Investor is entering into this Agreement in reliance solely on the
      representations and warranties set forth in this Agreement and no reliance
      is
      being placed on oral or other representations, if any, that may have been made
      prior to the execution and delivery of this Agreement by the Company or any
      officer, director, employee or agent of the Company. The Investor acknowledges
      that all documents, records, and books pertaining to this investment that the
      Investor believes necessary for consideration and evaluation of the investment
      have been made available for inspection by the Investor, and the Investor’s
      attorney(ies), accountant(s), or advisor(s). The Investor is not relying on
      the
      Company with respect to the tax and other economic considerations of its
      investment.

    

    4.4 Investment
      Experience.
      The
      Investor understands that the purchase of the Securities involves substantial
      risk. The Investor (a) has experience as an investor in securities of companies
      in the development stage which seek to make investments in the PRC and
      acknowledges that the Investor can bear the economic risk of the Investor’s
      investment in the Securities and (b) has such knowledge and experience in
      financial or business matters that Investor is capable of evaluating the merits
      and risks of this investment in the Securities and protecting Investor’s
      interests in connection with this investment.

    

    4.5 Accredited
      Investor Status. The
      Investor is an “accredited investor” within the meaning of Rule 502 of
      Regulation D promulgated under the 1933 Act. 

    

    4.6 Restricted
      Securities.
      The
      Investor understands that upon issuance and sale to the Investor the Securities
      will be characterized as “restricted securities” under the 1933 Act inasmuch as
      they are being acquired from the Company in a transaction not involving a public
      offering and that under the 1933 Act, and applicable regulations thereunder,
      such Securities may be resold without registration under the 1933 Act only
      in
      certain limited circumstances. In this connection, the Investor represents
      that
      it is familiar with Rule 144, Regulation D and Regulation S under the 1933
      Act,
      as presently in effect, and understands the resale limitations imposed thereby
      and by other provisions of the 1933 Act. 

    

    4.7 Limitations
      on Dispositions. 
      The
      Investor acknowledges that if any transfer of the Securities is proposed to
      be
      made in reliance upon an exemption under the 1933 Act, the Company may require
      an opinion of counsel satisfactory to the Company that such transfer may be
      made
      pursuant to an applicable exemption under the 1933 Act. The Investor
      acknowledges that, so long as required by law, a legend similar to the following
      may appear on the certificates representing the Series A Preferred Stock, the
      Warrants, the Common Stock issued upon exercise of the Warrants (“Warrant
      Shares”)
      and
      the Conversion Shares:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED,
      ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION STATEMENT UNDER
      THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO
      THESE SECURITIES, (ii) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS
      OF
      REGULATIONS UNDER THE SECURITIES ACT, OR (iii) PURSUANT TO A SPECIFIC EXEMPTION
      FROM REGISTRATION UNDER THE SECURITIES ACT BUT ONLY UPON A HOLDER HEREOF FIRST
      HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE
      COMPANY THAT THE PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE
      PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR
      SECURITIES LAW.

    

    4.8 Further
      Limitations on Disposition.
      Without
      in any way limiting the representations set forth above, the Investor further
      agrees not to make any disposition of all or any portion of the Securities,
      except pursuant to a registration statement under the 1933 Act covering such
      disposition or pursuant to an exemption from registration under the 1933 Act,
      including, without limitation, Rule 144, Rule 144A or Regulation S
      thereunder.

    

    4.9 No
      General Solicitation. Investor
      has not received any general solicitation or advertising regarding the offering
      of the Securities or this Agreement.

    

    5. CONDITIONS
      TO INVESTOR’S OBLIGATIONS AT CLOSING.
      The
      obligations of the Investor to purchase the Securities under this Agreement
      are
      subject to the fulfillment or waiver, on or before the Closing, of each of
      the
      following conditions:

    

    5.1 Representations
      and Warranties True.
      Each of
      the representations and warranties of the Company and each Subsidiary contained
      in Section 3 shall be true and correct in all material respects as of the date
      when made and as of the Closing as though made on and as of such
      date.

    

    5.2 Performance.
      The
      Company and each Subsidiary shall have performed and complied in all material
      respects with all agreements, obligations and conditions contained in the
      Transaction Documents that are required to be performed or complied with by
      it
      on or before the Closing and shall have obtained (or will obtain within the
      time
      frame set forth in Section 7.6 of this Agreement) all approvals, consents and
      qualifications necessary to complete the purchase and sale described
      herein.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    5.3 Securities
      Exemptions.
      The
      offer and sale of the Securities to the Investor pursuant to this Agreement
      shall be exempt from the registration requirements of the 1933 Act.

    

    5.4 Completion
      of Due Diligence.
      Investor shall have completed its legal and financial due diligence, the results
      of which shall be reasonably satisfactory to the Investor, and the Company
      shall
      have reasonably cooperated with Investor in connection therewith. 

    

    5.5 No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction that prohibits the consummation of any
      of
      the transactions contemplated by the Transaction Documents.

    

    5.6. Adverse
      Changes.
      Since
      the date of execution of this Agreement, no event or series of events shall
      have
      occurred that reasonably could have or result in a Material Adverse Effect
      with
      respect to the Subsidiaries. 

    

     5.7 U.S.
      and PRC Counsel Opinions.
      The
      Company shall have delivered to the Investor, and the Investor shall be able
      to
      rely upon, the legal opinions that the Company shall have received from its
      legal counsel in the United States and the PRC with such legal opinions being
      in
      a form acceptable to the Investor in its sole discretion. 

    

    5.8 Share
      Exchange Agreement and Acquisition of Yili China by C3 Capital
      Limited.
      Prior to
      or concurrently with or prior to the Closing, (a) the Share Exchange Agreement
      shall have been executed and a copy thereof shall be delivered to the Investor
      and the Share Exchange Transaction shall be consummated and (b) the PRC
      Restructuring Agreements shall have been executed and a copy thereof shall
      be
      delivered to the Investor.

     

    5.9 Closing
      Officer’s Certificate.
      At the
      Closing, the Company shall have delivered to each Investor an officer’s
      certificate to the effect that each of the conditions specified in this Section
      5 have been satisfied in all material respects. 

    

    5.10 Company
      Deliverables.
      The
      Company shall have delivered all of the documents required to be delivered
      by
      the Company pursuant to Section 2.2. 

    

    5.11 Filing
      of Certificate of Designations of Series A Preferred
      Stock.
      The
      Company shall have filed with the Secretary of State of the State of Delaware
      a
      Certificate of Designations, Preferences and Rights of Series A Convertible
      Preferred Stock of the Company in the form of Exhibit
      B
      attached
      hereto.

    

    5.13 Appointment
      of New Directors.
      The
      existing directors of the Company shall have appointed four new directors
      designated by the Investor.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

    6. REVERSE
      SPLIT OF COMMON STOCK.

    

    6.1 Reverse
      Split of Common Stock.
      On
      or
      before 90 days after the Closing Date, the Company shall effectuate a one for
      ten reverse split of its Common Stock (the “Reverse Split”).

    

    7. COVENANTS
      OF THE COMPANY

    

    7.1
      Reservation
      of Shares.
      As of
      the date hereof, the Company has reserved and the Company shall continue to
      reserve and keep available at all times the maximum number of shares for the
      purpose of enabling the Company to issue the shares issuable on conversion
      of
      the Series A Preferred Stock and on exercise of the Warrants.

    

    7.2 Right
      of First Refusal.
      If,
      at
      any time and from time to time, within eighteen months
      after the Closing, the
      Company seeks to raise additional financing through a
      private
      placement of its equity securities (a “Proposed
      Financing”)
      (other
      than certain exempt issuances described below as to which this section does
      not
      apply), the Company shall first offer such equity securities to the Investor.
      The Investor shall have the right to participate in any Proposed Financing
      by
      the Company.
      This
      right is personal to the Investor and is not transferable, whether in connection
      with the sale of stock or otherwise, except for the immediate transferee of
      the
      Investor. The terms on which the Investor shall purchase securities pursuant
      to
      the Proposed Financing shall be the same as such securities are offered for
      purchase by the Company to other potential investors (the "Proposed
      Subscribers").
      The
      Company shall give the Investor the opportunity to participate in the Proposed
      Financing by giving the Investor not less than ten (10) days notice setting
      forth the terms of the Proposed Financing. In the event that the terms of the
      Proposed Financing are changed in a manner which is more favorable to the
      Proposed Subscribers, the Company shall provide the Investor, at the same time
      as the notice is provided to the Proposed Subscribers, with a new ten (10)
      day
      notice setting forth the revised terms that are provided to the Proposed
      Subscribers. In the event that the Investor does not exercise its right to
      participate in the Proposed Financing within the time limits set forth in this
      Section 7.2, the Company may sell the securities in the Proposed Financing
      at a
      price and on terms which are no more favorable to the Proposed Subscribers
      than
      the terms provided to the Investor. If the Company subsequently changes the
      price or terms so that the price is more favorable to the Proposed Subscribers
      or so the terms are more favorable to the Proposed Subscribers, the Company
      shall provide the Investor with the opportunity to purchase the securities
      on
      the revised terms in the manner set forth in Section 7.2 of this Agreement.
      The
      right
      of first refusal shall not apply to:

     

    (a) any
      shares (or options, warrants or rights therefor) granted or issued hereafter
      to
      employees, officers, directors, contractors, consultants or advisors to, the
      Company, or any Subsidiary, pursuant to incentive agreements, share purchase
      or
      share option plans, share bonuses or awards, warrants, contracts or other
      arrangements that are approved by the Board of Directors;

     

    (b) any
      shares (and/or options or warrants therefor) issued or issuable to parties
      providing the Company with equipment leases, real property leases, loans, credit
      lines, guaranties of indebtedness, or similar financing, under arrangements
      approved by the Board of Directors; 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (c) any
      shares (and/or options or warrants therefor) issued in connection with the
      Company entering into a partnership with a strategic partner or any shares
      issued pursuant to the acquisition of another corporation or entity by the
      Company by consolidation, merger, purchase of all or substantially all of the
      assets, or other reorganization in which the Company acquires, in a single
      transaction or series of related transactions, all or substantially all of
      the
      assets of such other corporation or entity or fifty percent (50%) or more of
      the
      voting power of such other corporation or entity or fifty percent (50%) or
      more
      of the equity ownership of such other entity; 

     

    (d) any
      shares issued upon exercise of the Warrants;

     

    (e) any
      shares issued in connection with any share split or share dividend;
      and

     

    (f) any
      securities offered by the Company to the public pursuant to a Registration
      Statement filed under the 1933 Act.

    

    7.3 
      [Reserved]

    

    7.4  Use
      of Proceeds.
      The
      Company will use the net proceeds from the sale of the Securities, after payment
      of legal fees and other costs, to complete the purchase of Yili China as set
      forth under Section 9.2 of this Agreement, to begin the Constructions and to
      fund working capital expenses of the Company and its Subsidiaries, 

    

    7.5
        Conduct
      of Business.
      For
      so
      long as at least 25% of the shares of the Series A Preferred Stock issued to
      the
      Investor pursuant to this Agreement remain outstanding: 

     

    (a)
      the
      Company shall and shall cause each of its Subsidiaries (i) to carry on its
      businesses in the regular and ordinary course in substantially the same manner
      as currently conducted and/or as currently plan to be conducted, (ii) to comply
      in all material respects with all applicable laws (except where the failure
      to
      so comply would not have a Material Adverse Effect), (iii) to use all reasonable
      efforts to preserve its and its Subsidiaries businesses intact;

     

    (b)
      the
      Company shall not permit or effect the dissolution or winding up of the Company
      or any of its Subsidiaries; 

     

    (c)
      the
      Company shall, at all times, maintain directly or indirectly more than a 50.1%
      controlling interest in Yili China; and

     

    (d)
      the
      Company shall provide the Investor and its representatives with copies of all
      Board minutes, quarterly business reports, quarterly management account and
      annual accounts of the Company and its Subsidiaries and shall allow reasonable
      access during normal business hours to inspect the facilities, books and records
      of the Company and its Subsidiaries. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    7.6 Completion
      of the PRC Entity Restructuring

     

    (a)
      Completion
      of the Purchase of Yili China.
      By the
      20th
      day
      following the Closing, the Company shall complete the Purchase of Yili China
      evidenced by an approval from the related PRC governmental authority approving
      the change of status from a PRC domestic company to a wholly foreign owned
      company and a new business license. In order to complete the Purchase of Yili
      China, the Company, Yili USA and C3 Capital agree to use part of the proceeds
      from the sale of the Securities under this Agreement and transmit the dollar
      amount equivalent to RMB3.8 million using the exchange rate on the date of
      the
      transmission (approximately US$555,560, for reference only, using the exchange
      rate $0.1462 on August 27, 2008, subject to the exchange rate of the date of
      the
      transmission) (the “Purchase Price”) to the accounts of Former Yili China
      Shareholder and complete additional filings and registrations, including
      obtaining a new business license reflecting the payment of the Purchase Price
      and certificate or its equivalent from the PRC State Administration of Foreign
      Exchange reflecting the completion of the payment of the Purchase Price. The
      Company represents and warrants that the Former Yili China Shareholder has
      agreed that it will not retain the Purchase Price and has issued an instruction
      that the local branch of PRC State Administration of Foreign Exchange, transmit
      the Purchase Price, when received, to Yili China. 

     

    (b)
      Completion
      of the Purchase of Ehe China.
      By 90
      days following the Closing, the Company shall complete the Purchase of Ehe
      China
      evidenced by an approval from the related PRC governmental authority approving
      the change of status from a PRC domestic company to a sino-foreign joint venture
      company and a new business license. In order to complete the Purchase of Ehe
      China, the Company, Yili USA and C3 Capital agree to use part of the proceeds
      from the sale of the Securities under this Agreement and/or the Joinder
      Agreement and transmit the dollar amount equivalent to RMB900,000 using the
      exchange rate on the date of the transmission (approximatelyUS$131,580 for
      reference only, using the exchange rate RMB1= $0.1462 on August 27, 2008,
      subject to the exchange rate on the date of the transmission) (the “Purchase
      Price for Ehe China”) to the accounts of Former Ehe China Shareholder and
      complete additional filings and registrations, including obtaining a new
      business license reflecting the payment of the Purchase Price for Ehe China
      and
      certificate or its equivalent from the PRC State Administration of Foreign
      Exchange reflecting the completion of the payment of the Purchase Price for
      Ehe
      China. The Company represents and warrants that the Former Ehe China Shareholder
      has agreed that it will not retain the Purchase Price for Ehe China and will
      transmit the Purchase Price, when received, to Ehe China.

     

    (c)
      Completion
      of the Purchase of Quartz Mine China.
      By
      December 31, 2008, the Company shall complete the Purchase of Quartz Mine China
      evidenced by an approval from the related PRC governmental authority approving
      the change of status from a PRC domestic company to a wholly foreign owned
      company and a new business license. In order to complete the Purchase of Quartz
      Mine China, the Company, Yili USA and C3 Capital agree to use part of the
      proceeds from the sale of the Securities under this Agreement and/or the Joinder
      Agreement and transmit US$50,000 (the “Purchase Price for Quartz Mine China”) to
      the accounts of Former Quartz Mine China Shareholder and complete additional
      filings and registrations, including obtaining a new business license reflecting
      the payment of the Purchase Price for Quartz Mine China and certificate or
      its
      equivalent from the PRC State Administration of Foreign Exchange reflecting
      the
      completion of the payment of the Purchase Price for Quartz Mine China. The
      Company represents and warrants that the Former Quartz Mine China Shareholder
      has agreed that he will not retain the Purchase Price for Quartz Mine China
      and
      will transmit the Purchase Price for Quartz Mine China, when received, to Quartz
      Mine China.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    7.7 The
      Company’s Bank Account.
      On or
      before September 17, 2008, the balance of approximately $44,000 shall be
      transferred from the Company’s old bank account to the new bank account
      designated by the Investor. Within 30 days from the Closing Date, the Company
      shall close its old bank account. 

    

    8. CONDITIONS
      TO THE COMPANY’S OBLIGATIONS AT CLOSING. 

    

    The
      obligations of the Company to the Investor under this Agreement are subject
      to
      the fulfillment or waiver on or before the Closing of each of the following
      conditions by the Investor:

    

    8.1 Representations
      and Warranties. The
      representations and warranties of the Investor contained in Section 4 shall
      be
      true and complete in all material respects on the date of the Closing with
      the
      same effect as though such representations and warranties had been made on
      and
      as of the Closing.

    

    8.2 Payment
      of Purchase Price. 
      The
      Investor shall have delivered to the Company the Purchase Price in accordance
      with the provisions of Section 2.

    

    8.3 Securities
      Exemptions.
      The
      offer
      and sale of the Securities to the Investor pursuant to this Agreement shall
      be
      exempt from the registration requirements of the 1933 Act.

    

    9. POST-CLOSING
      COVENANTS OF INVESTOR.

    

    9.1 Confidentiality.
      Each
      party acknowledges that the other could be irreparably damaged if confidential
      information concerning the business and affairs of the other was disclosed
      to or
      utilized on behalf of any person. Each party covenants and agrees with the
      other
      that, except as otherwise provided in this Agreement or the other Transaction
      Documents, such party will not, at any time, directly or indirectly, without
      the
      prior written consent of the other, divulge, or permit any of its partners,
      employees, agents or affiliates to divulge to any person any non–public
      information concerning the business or financial or other affairs, or any of
      the
      methods of doing business used by the other, nor release any information
      provided pursuant to or concerning this Agreement or the other Transaction
      Documents or the transaction contemplated hereby or thereby if such release
      is
      intended for, or may result in, its public dissemination. The foregoing
      requirements of confidentiality shall not apply to information: (i) that is
      now
      or in the future becomes freely available to the public through no fault of
      or
      action by the using or disclosing party; (ii) that is in the possession of,
      or
      was used by, the disclosing party prior to the time such information was
      obtained from the Company or that is independently acquired by the using or
      disclosing party without the aid, application or use of such other information;
      (iii) that is obtained or used by the disclosing party in good faith without
      knowledge of any breach of a secrecy arrangement from a third party; (iv) that
      is required to be disclosed by applicable law or order of government agency
      or
      self-regulatory body; or (v) that is disclosed in connection with any bona-fide
      offer to purchase any shares in the Company; provided that the proposed
      transferor obtains an undertaking from the proposed transferee to keep such
      information confidential in accordance with the provision of this Section 9.1
      prior to such disclosure. The Investor and the Company agree to consult with
      each other (and to take into consideration any comments reasonably raised by
      any
      such party) prior to the dissemination of any press release or public
      communication concerning this Agreement and the other Transaction Documents
      or
      the transaction contemplated hereby or thereby. Any such press release or public
      communication shall be subject to the approval of both the Company and Investor.
      This Section 9.1 will survive termination of this Agreement.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    9.2   Performance
      Incentive. In the event one of the following occurs, the Company’s Chinese
      management (namely, Mr. Gao Zhigang along with other Chinese management) will
      be
      entitled to a stock option package that will provide them with up to 5%
      incremental equity ownership of the Company on a fully diluted basis at the
      time
      of the option grant. Such option can be exercisable at a 10% premium to the
      Company’s share price at the time of Closing:

    

    
      	
              9.2.1

            	
              The
                Company completes the construction of two 8500-ton furnaces and full
                production of such facilities by July 2, 2009, if the Company raises
                an
                aggregate of $10 million financing by September 2, 2008.
                

            

    

    

    
      	
              9.2.2

            	
              The
                Company completes the construction of three 8500-ton furnaces and
                full
                production of such facilities by July 31, 2009, if the Company raises
                an
                aggregate of $17 million financing by November 30, 2008. (The construction
                under Section 9.2.1 and Section 9.2.2 are collectively referred to
                as the
                “Constructions”)

            

    

    

    
      	
              9.2.3

            	
              If
                the financings which the Constructions rely on are not consummated
                as
                scheduled above or in the amount stated above, the completion date
                of the
                Constructions for purposes of this Section 9.2 can be adjusted
                accordingly. 

            

    

    

    10. GENERAL
      PROVISIONS.

    

    10.1 Survival
      of Warranties; Investigation.
      The
      representations, warranties and covenants of the Company and Investor contained
      in or made pursuant to this Agreement shall survive the execution and delivery
      of this Agreement and the Closing. It shall be no defense to an action for
      breach of this Agreement that Investor or its agents have (or have not) made
      investigations into the affairs of the Company or that the Company could not
      have known of the misrepresentation or breach of warranty. Damages for breach
      of
      a representation or warranty or other provision of this Agreement shall not
      be
      diminished by alleged tax savings resulting to the complaining party as a result
      of the loss complained of.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    10.2 Successors
      and Assigns. The
      terms
      and conditions of this Agreement shall inure to the benefit of and be binding
      upon the respective successors and assigns of the parties. The Company
      acknowledges and agrees that the Investor may assign all and any of its rights
      and obligations under the Agreement without its consent.

    

    10.3 Governing
      Law; Jurisdiction. Any
      dispute, disagreement, conflict of interpretation or claim arising out of or
      relating to this Agreement, or its enforcement, shall be governed by the laws
      of
      the State of New York. The Company and Investor hereby irrevocably and
      unconditionally submit, for themselves and their property, to the nonexclusive
      jurisdiction of the Supreme Court of the State of New York sitting in New York
      County and of the United States District Court of the Southern District of
      New
      York, and any appellate court from any thereof, in any action or proceeding
      arising out of or relating to this Agreement, or for recognition or enforcement
      of any judgment, and each of the parties hereto hereby irrevocably and
      unconditionally agrees that all claims in respect of any such action or
      proceeding may be heard and determined in such New York State or, to the extent
      permitted by law, in such Federal court. Each of the parties hereto agrees
      that
      a final judgment in any such action or proceeding shall be conclusive and may
      be
      enforced in other jurisdictions by suit on the judgment or in any other manner
      provided by law. Each party hereby irrevocably and unconditionally waives,
      to
      the fullest extent it may legally and effectively do so, any objection which
      it
      may now or hereafter have to the laying of venue of any suit, action or
      proceeding arising out of or relating to this Agreement in any court referred
      to
      above. Each party to this Agreement irrevocably consents to service of process
      in the manner provided for notices below. Nothing in this Agreement will affect
      the right of any party to this Agreement to serve process in any other manner
      permitted by law. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
      PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
      LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
      AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
      TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
      REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
      OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
      SEEK
      TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
      PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
      THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

    

    10.4 Counterparts. This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed as original, but all of which together shall constitute one and the
      same
      agreement. A
      telefaxed copy of this Agreement shall be deemed an original.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    10.5 Headings. The
      headings and captions used in this Agreement are used for convenience only
      and
      are not to be considered in construing or interpreting this Agreement. All
      references in this Agreement to sections, paragraphs, exhibits and schedules
      shall, unless otherwise provided, refer to sections and paragraphs hereof and
      exhibits and schedules attached hereto, all of which exhibits and schedules
      are
      incorporated herein by this reference.

    

    10.6 Notices. All
      notices and other communications provided for herein shall be in writing and
      shall be delivered by hand or overnight courier service, mailed by certified
      or
      registered mail or sent by facsimile, to the addresses set forth
      below:

    

    If
      to the
      Company:

    

    Paragon
      Semitech USA, Inc.

    197
      Route
      18 South, Suite 3000, PMB 4157

    East
      Brunswick, NJ 08816

    Facsimile:
      

    

    and
      to:

    

    Guzov
      Ofsink, LLC

    600
      Madison Avenue, 14th
      Floor

    New
      York,
      NY 10022

    

    Attention:
      Darren L. Ofsink, Esq.

    Facsimile
      No: 212-688-7273

    

    If
      to
      Investor:

    The
      China
      Hand Fund I, LLC

    420
      Lexington Avenue, Suite 860, New York, NY 10170

    Facsimile:
      (646) 649-9454

    

    Except
      as
      otherwise provided in this Agreement, all such communications shall be deemed
      to
      have been duly given when transmitted by telecopier or personally delivered
      or,
      in the case of a mailed notice, upon receipt, in each case given or addressed
      as
      aforesaid. Any party hereto may change its address or facsimile number for
      notices and other communications hereunder by notice to the other parties
      hereto. 

    

    10.7 Costs,
      Expenses. Each
      party hereto shall bear their own costs in connection with the preparation,
      execution and delivery of this Agreement.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    10.8 Amendments
      and Waivers. Any
      term
      of this Agreement may be amended and the observance of any term of this
      Agreement may be waived (either generally or in a particular instance and either
      retroactively or prospectively), only with the written consent of the Company
      and the holders of at least a majority of Series A Preferred Stock then
      outstanding. No delay or omission to exercise any right, power, or remedy
      accruing to the Investor, upon any breach, default or noncompliance of the
      Company under this Agreement shall impair any such right, power, or remedy,
      nor
      shall it be construed to be a waiver of any such breach, default or
      noncompliance, or any acquiescence therein, or of any similar breach, default
      or
      noncompliance thereafter occurring. All remedies, either under this Agreement,
      by law, or otherwise afforded to the Investor, shall be cumulative and not
      alternative.

     

    10.9 Severability. If
      one or
      more provisions of this Agreement are held to be unenforceable under applicable
      law, such provision(s) shall be excluded from this Agreement and the balance
      of
      the Agreement shall be interpreted as if such provision(s) were so excluded
      and
      shall be enforceable in accordance with its terms.

    

    10.10 Entire
      Agreement. This
      Agreement, together with all exhibits and schedules hereto, each of the other
      Transaction Documents, and the other documents delivered pursuant hereto and
      thereto constitute the entire agreement and understanding of the parties with
      respect to the subject matter hereof and supersedes any and all prior
      negotiations, correspondence, agreements, understandings duties or obligations
      between the parties with respect to the subject matter hereof.

    

    10.11 Further
      Assurances. From
      and
      after the date of this Agreement, upon the request of the Investor or the
      Company, the Company and the Investor shall execute and deliver such
      instruments, documents or other writings as may be reasonably necessary or
      desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this Agreement.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    

    In
      Witness Whereof,
      the
      parties hereto have executed this Agreement as of the date first written
      above.

    

    THE
      COMPANY:       
      INVESTOR:

    

    PARAGON
      SEMITECH USA,
      INC.                                                      THE
      CHINA HAND FUND I, LLC

     

    By:_______________________________                                                
      By:_______________________________

     

    Print
      Name:________________________                                                 Print
      Name:________________________

     

    Title:______________________________                                                Title:______________________________

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    Schedule
      1 

    Issuances
      to Investor

    

    996,186
      Units: consisting of 

    

    Series
      A Preferred Stock

    

    996,186
      Shares of Series A Preferred Stock (each share of Preferred Stock initially
      convertible into 100 shares of Common Stock)

    

    and

    

    Warrants

    

    996,186
      Warrants (each warrant representing the right to purchase 25 shares of Common
      Stock)

    

    Schedule
      3.1

    

    Organization
      and Qualification

    

    As
      of the
      date of this Agreement, Ehe China has not obtained the following
      approval/certificates for the purposes of operation of its contemplated
      business:

    
      	 	
              1)

            	
              The
                approval document issued by the statuary administration in charge
                of
                project or “Backup Certificate of Enterprise Investment Project of
                Xinjiang Uygur Autonomous Region”;

            

    

    
      	 	
              2)

            	
              Approval
                from the
                Environmental Protection Bureau of Aletai area in Xinjiang Province
                of the
                Environmental Impact Report;

            

    

    
      	 	
              3)

            	
              Preliminary
                Approval regarding the Use of Land for Construction Purposes from
                the
                related National Land Resources Administrative Bureau in Xinjiang
                Province, related zoning approval and go through the Land Grant
                procedure;

            

    

    

    As
      of the
      date of this Agreement, Quartz Mine China has not been incorporated. The only
      document it has is company name reservation.

    

    Schedule
      3.3

    

    Capitalization
      of the Company

    

    Authorized
      Capital 

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    Common
      Stock:
      100,000,000
      shares,
      par value US$.001 per share.

    Preferred
      Stock:
      10,000,000
      shares,
      par value US$.001 per share

    Series
      A Preferred Stock:
      2,000,000 shares of Preferred Stock have been designated as Series A Convertible
      Preferred Stock. 

    

    Issued
      Capital 

    

    (a)
      Common Stock

    

    A
      total
      of 10,006,000 shares of Common Stock have been issued and outstanding.

    

    (b)
      Series A Preferred Stock 996,186 shares of Series A Preferred Stock have been
      issued to the Investor pursuant to this Agreement.

    

    Each
      share of Series A Preferred Stock is convertible into 100 shares of Common
      Stock. 

    

    (c)
      Warrants.

    

    On
      October 9, 2007, the Company issued warrants to acquire 1,000,000 shares of
      its
      common stock to Columbia China Capital Group, Inc., an affiliate of the Company,
      at an exercise price of $0.001 per share with a term of five years from October
      9, 2007 to October 9, 2012. The Warrants were issued pursuant to a consulting
      agreement by and between the Company and Columbia China Capital Group, Inc.
      (the
“Consultant”), an affiliate to the Company on October 9, 2007. Under such
      agreement, the Company agrees to pay the warrants referenced above for the
      financial advisory services rendered by the Consultant.

    

    996,186
      warrants to purchase a total of 24,904,645 shares of Common Stock also have
      been
      issued to the Investor pursuant to this Agreement. 

     

    Outstanding
      Issued Share Capital Immediately After Purchase of 996,186 Units by the
      Investor

    

    
      	
              Investors and OUTSTANDING 

            	 	
              Private Placement 

            	 	
              Series A Preferred 

            	 	
              Common Shares 

            	 	
              Shares Fully Diluted 

            	 	
              Warrants Post Conv

            	 
	
              Shell
                Shareholders

            	 	 	 	 	 	 	 	 	
              10,006,000

            	 	 	
              11,006,000

            	 	 	
              -

            	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
              China
                Hand Fund I, LLC and/or Its Assigns 

            	 	
              $

            	
              10,000,000

            	 	 	
              996,186

            	 	 	
              99,618,580

            	 	 	
              124,523,225

            	 	 	
              24,904,645

            	 
	
              Chinese
                Management

            	 	 	 	 	 	 	 	 	
              9,250,000

            	 	 	
              9,250,000

            	 	 	 	 
	
              TOTALS

            	 	
              $

            	
              10,000,000

            	 	 	
              996,186

            	 	 	
              118,874,580
                

            	 	 	
              144,779,225
                

            	 	 	
              24,904,645
                

            	 

    

    

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    

    Schedule
      3.7

    Material
      Changes

    

    None.

    

    Schedule
      3.10

    

    Indebtedness

    

    As
      of the
      date of this Agreement, Yili China owns RMB 2,666,537.23 (Approximately
      US$389,847) to local electric power supplier, Yihe Hydro-electric Center of
      Development and Administration Center of Yilihe Area of Xinjiang. 

    

    Schedule
      3.12

    

    Yili
      China has entered the lease for the lease of an aggregate of 100 Mu
      (approximately 717,594 square foot) land for the use of the new project (the
      construction of 35,000 ton carborundum production lines) and such land has
      not
      secured land use right; nevertheless, in the lease between Yili China and the
      local government in Yili County at Xinjiang Province, the local government
      agreed to cooperate with the application of the land use right by the Company
      during the lease term.

    

    Neither
      Ehe China nor Quartz Mine China has secured any land use rights for any real
      property as of the date of this Agreement.

    

    Schedule
      3.15

    

    Subsidiaries

    

      
        	
                Name

              	 	
                Jurisdiction

              	 	
                Equity Owners and

                Percentage of Equity

                Securities Held

              
	
                Yili
                  Carborundum USA, Inc.

              	 	
                Delaware,
                  U.S.A.

              	 	
                Paragon
                  Semitech USA, Inc.

              
	 	 	 	 	 
	
                C3
                  Capital Limited

              	 	
                British
                  Virgin Islands

              	 	
                100%
                  owned by Yili Carborundum USA, Inc.

              
	 	 	 	 	 
	
                Yili
                  Master Carborundum Production Co., Ltd. (“Yili China”)

              	 	
                China

              	 	
                100%
                  owned by C3 Capital, Limited after giving effect to the Purchase
                  of Yili
                  China

              
	 	 	 	 	 
	
                Xinjiang
                  Ehe Mining and Metallurgy Co., Ltd. (“Ehe China”)

              	 	
                China

              	 	
                90%
                  owned by C3 Capital, Limited after giving effect to the Purchase
                  of Ehe
                  China The
                  rest 10% is to be owned by the local electric power
                  supplier.

              
	 	 	 	 	 
	
                Xinjiang
                  Paragon Master Mining Co., Ltd. (“Quartz Mine China”)

              	 	
                China

              	 	
                100%
                  owned by C3 Capital, Limited after giving effect to the Purchase
                  of Quartz
                  Mine China

              

      

    

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    Exhibit
      A

    

    Form
      of Warrant

    
 

    See
      Exhibit 4.2 to the Current Report on Form 8-K
      filed herewith. 

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    Exhibit
      B

    

    CERTIFICATE
      OF DESIGNATIONS

    

    OF

    

    SERIES
      A CONVERTIBLE PREFERRED STOCK

    

    OF

    

    PARAGON
      SEMITECH USA, INC.

     

     

    See
      Exhibit 3.1 to the Current Report on Form 8-K
      filed herewith.

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    Exhibit
      C

     

    
      
        JOINDER
          AGREEMENT

         

        JOINDER
          AGREEMENT,
          dated
          as of __________, 2008 between the investor set forth on the signature
          page
          hereto (the “Additional Purchaser”) and Paragon Semitech USA, Inc., a Delaware
          corporation with offices at 197 Route 18 South, Suite 3000, PMB 4157, East
          Brunswick, NJ 08816 (the “Company”) Capitalized terms used but not otherwise
          defined herein shall have the meanings ascribed to them in the Securities
          Purchase Agreement dated as of _____________, 2008 among the Company and
          The
          China Hand Fund I, LLC and/or its successor and assigns (the
“Agreement”).

         

         RECITALS

        

        WHEREAS,
          the
          Company desires to issue and sell to the Additional Purchaser and the Additional
          Purchaser agrees to purchase from the Company, pursuant to an exemption
          from
          registration provided by Section 4(2) and/or Regulation D under the Securities
          Act of 1933, as amended (the “1933 Act”) or other applicable exemptions, that
          number of units of the Company’s securities (each unit consisting of one share
          of Series A Preferred Stock and a Warrant to purchase 25 shares of Common
          Stock)
          set forth on the signature page hereto on the same terms and conditions
          as the
          terms and conditions of the sale of the units set forth in the Agreement;
          and

        

        WHEREAS,
          the
          issuance of the Common Stock and Warrants pursuant to this Joinder Agreement
          is
          in the best interests of the Company and the parties desire to provide
          for such
          issuance and sale; and

        

        WHEREAS,
          the
          Additional Purchaser desires to enter into this Joinder Agreement to become,
          for
          all purposes, an Investor under the Agreement and to thereby evidence its
          agreement to be bound by the terms of the Agreement as if it were an original
          party thereto; and 

        

        WHEREAS,
          the
          Company desires to enter into this Joinder Agreement to evidence its agreement
          to be bound by the terms of the Agreement, with respect to the Additional
          Purchaser, except to the extent set forth herein.

        

        In
          consideration of the premises, the agreements herein contained and other
          good
          and valuable consideration, the receipt and sufficiency of which are hereby
          acknowledged, the Additional Purchaser agrees as follows:

         

        1.    Acknowledgement.
          The
          Additional Purchaser hereby acknowledges, agrees, and confirms that upon
          execution and delivery of this Joinder Agreement, the Additional Purchaser
          (and
          any successor in interest thereto) shall irrevocably become and be deemed
          to be
          an Investor under the Agreement and shall have all of the obligations,
          rights
          and benefits of an Investor under the Agreement for all purposes under
          the
          Agreement. 

         

        2.    Purchase
          of Shares and Warrants.
          Subject
          to the satisfaction (or waiver) of the conditions set forth in this Joinder
          Agreement, on the Final Closing Date:

         

        
          
            
            

          

          
            27

            
              

            

          

          
            
            

          

        

        

        (i)
          the
          Company shall issue and sell to the Additional Purchaser, and the Additional
          Purchaser agrees to purchase from the Company, (x) the number of shares
          of
          Series A Preferred Stock set forth on the signature page to this Joinder
          Agreement (the “Shares”), and (y) the Warrants to acquire up to that number of
          shares of Common Stock set forth on the signature page to this Joinder
          Agreement; 

        

        (ii)
          as
          consideration for the issuance of the Shares and Warrants to it, the Additional
          Purchaser agrees to pay to the Company the amount set forth as the Purchase
          Price on the signature page to this Joinder Agreement; and

        

        (iii) the
          Company shall deliver to the Additional Purchaser the Shares and Warrants
          that
          it is then purchasing, duly executed on behalf of the Company. 

        

        (b) Closing
          of Transaction.
          The
          Final Closing Date shall be 10:00 a.m., New York City time, on the first
          Business Day following the satisfaction (or waiver) of the conditions set
          out in
          Sections 3 and 4 of this Joinder Agreement (or such later or earlier date
          as is
          mutually agreed to by the Company and the Additional Purchaser), but not
          later
          than December 31, 2008. 

        

        3.    Conditions
          to the Company’s Obligation to Sell.
          

        

        The
          obligation of the Company hereunder to issue and sell the Shares and Warrants
          to
          the Additional Purchaser is subject to the satisfaction of each of the
          following
          conditions:

        

        (a)     The
          Additional Purchaser shall have executed and delivered to the Company this
          Joinder Agreement;

        

        (b)    The
          Shares and Warrants shall have the same terms and conditions as the Shares
          and
          Warrants issued and sold pursuant to the Agreement; and

        

        (c)    The
          Additional Purchaser shall have delivered to the Company the Purchase Price
          for
          the Shares and Warrants as set out in Section 2(a)(ii).

        

        4.    Conditions
          to Additional Purchaser’s Obligation to Purchase.

         

        The
          Additional Purchaser’s obligation to purchase its Shares and Warrants is subject
          to the satisfaction of each of the following conditions, provided that
          these
          conditions are for the Additional Purchaser’s sole benefit and may be waived by
          the Additional Purchaser in its sole discretion by providing the Company
          with
          prior written notice thereof:

        

        (a)    The
          Company shall have executed and delivered to the Additional Purchaser this
          Joinder Agreement; and

        

        (b)    The
          representations and warranties of the Company set forth in the Agreement
          or any
          other Transaction Documents shall be true and correct
          in all material as of the Final Closing Date as though made at that time
          (except
          for representations and warranties which speak as of a specific date, each
          of
          which shall be true and correct as of such date).

         

        
          
            
            

          

          
            28

            
              

            

          

          
            
            

          

        

         

        5.    Miscellaneous.

        

        (a)    The
          execution, delivery and effectiveness of this Joinder Agreement shall not,
          except as expressly provided herein, be deemed to be an amendment or
          modification of, or operate as a waiver of, any provision of the Agreement
          or
          any right, power or remedy thereunder, nor constitute a waiver of any provision
          of the Agreement or any other document, instrument and/or agreement executed
          or
          delivered in connection therewith.

        

        (b)    This
          Joinder Agreement may be executed in any number of counterparts (including
          by
          facsimile), and by the different parties hereto or thereto on the same
          or
          separate counterparts, each of which shall be deemed to be an original
          instrument but all of which together shall constitute one and the same
          agreement. Each party agrees that it will be bound by its own facsimile
          signature and that it accepts the facsimile signature of each other party.
          The
          descriptive headings of the various sections of this Joinder Agreement
          are
          inserted for convenience of reference only and shall not be deemed to affect
          the
          meaning or construction of any of the provisions hereof or thereof. Whenever
          the
          context and construction so require, all words herein and in the Agreement
          in
          the singular number herein shall be deemed to have been used in the plural,
          and
          vice versa, and the masculine gender shall include the feminine and neuter
          and
          the neuter shall include the masculine and feminine.

        

        (c)    This
          Joinder Agreement may not be changed, amended, restated, waived, supplemented,
          discharged, canceled, terminated or otherwise modified orally or by any
          course
          of dealing or in any manner other than as provided in this Joinder
          Agreement.

        

        (d)    The
          validity of this Joinder Agreement, its construction, interpretation and
          enforcement, the rights of the parties hereunder, shall be determined under,
          governed by, and construed in accordance with the choice of law provisions
          set
          forth in the Agreement.

         

        6.    The
          Additional Purchaser hereby acknowledges, agrees, and confirms that upon
          execution and delivery of this Agreement, all representations and warranties
          made by the Additional Purchaser as an
          “Investor” under the Agreement speak as of the date of execution of this Joinder
          Agreement.

         

        7.    The
          Additional Purchaser represents and warrants that it has fully reviewed
          and
          understands the Agreement and acknowledges that it is not being, and has
          not
          been, represented by legal counsel for any other Additional Purchaser or
          the
          original Purchasers. The Additional Purchaser further acknowledges that
          it has
          been advised to seek legal counsel independent of any party to the Agreement
          before executing this Agreement, and represents that independent legal
          counsel
          has been consulted to the extent deemed necessary by the Additional Purchaser
          or
          its duly authorized representatives.

         

        8.    The
          Additional Purchaser further agrees to execute any and all additional documents,
          instruments or certificates, including, without limitation, a counterpart
          signature page to the Agreement, that the Company may reasonably request
          be
          executed in order for the Additional Purchaser to become a party to the
          Agreement.  

         

        
          
            
            

          

          
            29

            
              

            

          

          
            
            

          

        

        

        SIGNATURE
          PAGE TO JOINDER AGREEMENT

        

        IN
          WITNESS WHEREOF, the parties have caused this Joinder Agreement to be executed
          by their respective officers thereunto duly authorized, as of the date
          first
          written above.

        

        

        PARAGON
          SEMITECH USA, INC.

        

        By:
          ______________________________________________

        

        Name:_____________________________________________

        

        Title:____________________________________________

        

        ADDITIONAL
          PURCHASER:

        

        

        Name:

        

        

        By:_________________________________________

        Name:

        Title:

        

        

        Number
          of
          Shares of Series A Preferred Stock Being Purchased:

        

        

        Warrants
          to Purchase Number of Shares of Common Stock Being Purchased:

        

        

        Purchase
          Price for Shares and Warrants: 

         

        
          
            
            

          

          
            30

            
              

            

          

          
            
            

          

        

      

    

     

    Exhibit
      D

    

    Share
      Exchange Agreement

     

     

    
      See
        Exhibit 10.1 to the Current Report on Form
        8-K filed herewith.

       

      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    

    Exhibit
      E

    

    Yili
      Equity Transfer Agreement

     

     

    See
      Exhibit 10.3 to the Current Report on Form
      8-K filed herewith.

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    

    Exhibit
      F

    

    Ehe
      Equity Transfer Agreement

     

     

    See
      Exhibit 10.4 to the Current Report on Form
      8-K filed herewith.

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    Exhibit
      G

    

    Quartz
      Mine MOU

     

     

    See
      Exhibit 10.5 to the Current Report on Form
      8-K filed herewith.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    Exhibit
      H

    Financial
      Statements

     

     

    
      
        
        

      

      
        35

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