PLAN OF EXCHANGE BY WHICH GFR PHARMACEUTICALS INC. (a Nevada corporation) SHALL ACQUIRE NEW CENTURY SCIENTIFIC INVESTMENT LTD. (a corporation organized under the laws of the Peoples republic of China)

I. RECITALS                                               1

1. The Parties to this Agreement:                                                 < font id="tab2" style="letter-spacing: 9pt">                    1

(1.1) GFR Pharmaceuticals Inc.                                                                     1

(1.2) New Century Scientific Investment Ltd.                                                    1

. (1.3) Richard Pierce                                                                               1

 

2. Capital of the Parties:                                                                             1

(2.1) The Capital of GFRP                                                                      1

(2.2) The Capital of New Century Scientific Investment Ltd.                                                  1

3. Transaction Descriptive Summary:                                                & #160;           1

4. SEC compliance.                                                                                    2

5. Nevada compliance.                                                                             2

6. Audited Financial Statements.                                                 0;                   2

II. PLAN OF EXCHANGE                                        3

1. Conditions Precedent to Closing.                                                & #160;                      7

(1.1) Shareholder Approval.                                                             7

(1.2) Board of Directors.                                                                        7

(1.3) Due Diligence Investigation.                                                           7

(1.4) The rights of dissenting shareholders,                                                              7

(1.5) All of the terms, covenants and conditions                                                              7

(1.6) The representations and warranties                                                
60;                  7

(1.7) Certification of GFRP                                                                             3

(1.8) Certification of New Century                            4

(1.9)_Certification of Mr. Pierce                                                                                   4

(1.10) Absence of GFRP Liabilities, Corporate Name Rights and Transaction Fees.                                                  5

(1.11) Delivery of Audited Financial Statements                                                       5

(1.12) Subsidiary Transfer                                                                    5

(1.13) Assignment of Subsidiary Debt                                                               5

(1.14) Share Transfer                                                                             6

(1.15) Appointment of Nominee                                                                  6

2. Conditions Concurrent and Subsequent to Closing.                                                        9

(2.1) Delivery of Registered Capital of New Century.                                                   &# 160;  9

(2.2) Acquisition Share Issuance and Purchase of Common Stock                                              9

(2.3) Resignation of Richard Pierce and Appointment of New Century Nominee                                     10

3. Plan of Exchange                                                                                  10

(3.1) Exchange and Reorganization:                                                              10

    (3.2) Delivery of Common Stock:                                                                       10

(3.3) Issuance of Common Stock:                                                                      10

(3.4) Closing/Effective Date:                                                               10

(3.5) Surviving Corporations                                                                      10

    (3.6) Rights of Dissenting Shareholders:                                                                         10

(3.7) Service of Process and Address:                                                &# 160;                     10

(3.8) Surviving Articles of Incorporation:                                                                11

(3.9) Surviving By-Laws:                                                                    11

(3.10) Further Assurance, Good Faith and Fair Dealing:                                                ;    11

(3.11) General Mutual Representations and Warranties.                                                    11

(3.11.1) Organization and Qualification.                                                &# 160;       11

(3.11.2) Corporate Authority.                                                                 11

(3.11.3) Ownership of Assets and Property.                                                                11

(3.11.4) Absence of Certain Changes or Events.                                                   11

(3.11.5) Absence of Undisclosed Liabilities.                                                      13

(3.11.6) Legal Compliance.                                                                     13

(3.11.7) Legal Proceedings.                                                                    13

(3.11.8) No Breach of Other Agreements.                                                                                                            13

(3.11.9) Capital Stock.                                                                             13

(3.11.10) SEC Reports, Liabilities and Taxes                                                               ; 13

(3.11.11) Brokers' or Finder's Fees.                                                 < font id="tab2" style="letter-spacing: 9pt">                      14

(3.11) Miscellaneous Provisions                                                                                  14

(3.11.1)                                                                                      14

(3.11.2)                                                                          14

(3.11.3)                                                                                      15

(3.11.4)                                                                              15

(3.11.5)                                                                                      15

(3.11.6)                                                                                      15

4. Termination.                                                                                                         15

5. Closing                                                                                                          15

6. Merger Clause                                                                                      16

 

Signatures                                                                                17

The Remainder of this Page is Intentionally left Blank 

 

ADJUSTMENTS: lead This Plan of Exchange (“Agreement” or “Plan of Exchange”) is made and dated as of this 26^th day of June, 2006, and is intended to supersede all previous oral or written agreements, if any, between the parties, with respect to its subject matter. Notwithstanding the foregoing, it is subject to, and shall be interpreted together with the Letter of Intent, dated June 6, 2006 ("LOI"), and the Escrow Agreement, dated June 20, 2006 ("Escrow Agreement"). This Agreement anticipates that extensive due diligence shall have been performed by both parties.

 

(1.1) GFR Pharmaceuticals, Inc. ("GFRP"), Suite 11405 - 201A Street, Maple Ridge, British Columbia V2X 0Y3, a Nevada corporation.

 

(1.2) New Century Scientific Investment Ltd. (“New Century”), 99 Yan Xiang Road, Biosep Building, Xi An, Peoples’ Republic of China a corporation organized and existing under the laws of the Peoples' Republic of China.

(1.3) Richard Pierce, President, Chief Executive Officer and controlling shareholder of GFRP ("Mr. Pierce").

 

(2.1) The Capital of GFRP consists of 100,000,000 shares of common voting stock of $0.001 par value authorized, of which 1,079,940 shares are issued and outstanding.

(2.2) The Capital of New Century consists of RMB 30,000,000 in registered capital (US$1=RMB 8), which for the purposes of this Agreement, is referred to as “common stock” or “capital stock”.

3. Transaction Descriptive Summary: GFRP and it's directors and shareholders will approve the acquisition of New Century prior to Closing and the shareholders of New Century (“New Century Shareholders”) have consented to the acquisition of New Century by GFRP, a publicly traded company. GFRP would acquire a 90+% interest in New Century in exchange for 40,000,000 new shares of GFRP to New Century Shareholders (the “Share Exchange”). In addition, New Century and/or the New Century Shareholders would acquire 200,000 freely transferable common shares of GFRP from Mr. Pierce for a payment by New Century and/or the New Century Shareholders of an amount equal to $500,000, less related expenses (the “Share Purchase”). The distributions of payments will be made by New Century to Mr. Pierce in accordance with the Escrow Agreement. The above purchase and issuance will give New Century a 'controlling interest' in GFRP representing approximately 95% of the issued and outstanding shares. The transaction will not immediately close but shall be conditioned upon (1) the delivery into escrow of the 200,000 shares from Mr. Pierce, (2) the delivery into escrow of the 40,000,000 shares for the benefit of New Century Shareholders, (3) the absence of material liabilities in GFRP as defined by Generally Accepted Accounting Principles, and (4) the vend out of the three subsidiaries prior to Closing, along with the conditions precedent to closing listed in this agreement. The parties intend that the transactions qualify and meet the Internal Revenue Code requirements for a tax free reorganization, in which there is no corporate gain or loss recognized by the parties, with reference to Internal Revenue Code (IRC) sections 354 and 368.

 

 

4. SEC compliance. GFRP shall cause the filing with the Commission of a Current Report on Form 8-K, within four business days of the date hereof, reporting the execution of this Agreement, and, after the Closing, the filing and mailing to its shareholders of an Information Statement on Schedule 14F-1 pursuant to Rule 14f-1 under the Securities Exchange Act of 1934, as amended, which is required to be filed and mailed ten days before a change in the majority of the Board of Directors of GFRP other than at a shareholders’ meeting. The parties contemplate that any change in the majority of the Board of Directors will occur after the closing.

5. Nevada compliance. Articles of Exchange are required to be filed by Nevada law as the last act to make the acquisition final and effective under Nevada law.

6. Audited Financial Statements. Certain filings under the Securities Exchange Act of 1934, such as a Current Report on Form 8-K, require audited financial statements of New Century to be filed with the SEC within 71 days of the initial Form 8-K filing with respect to the Share Exchange. In connection with GFRP’s filing of a Current Report on Form 8-K/A within 71 days after the Share Exchange, as it relates to that transaction, audited financial statements of New Century will be filed with the SEC in accordance with Form 8-K. New Century has agreed to provide audited financial statements prepared in conformity with U.S. GAAP to GFRP within 71 days upon the closing of the Share Exchange.

 

The Remainder of this Page is Intentionally left Blank

 

The obligation of the parties to consummate the transactions contemplated herein are subject to the fulfillment or waiver prior to the closing of the following conditions precedent:

(1.1) Shareholder Approval. Each corporate party shall have secured shareholder approval for this transaction, if required, in accordance with the laws of its place of incorporation and its constituent documents.

(1.2) Board of Directors. The Boards of Directors of each corporate party shall have approved the transaction and this agreement, in accordance with the laws of its place of incorporation and its constituent documents.

(1.3) Due Diligence Investigation. Each party shall have furnished to the other party all corporate and financial information which is customary and reasonable, to conduct its respective due diligence, normal for this kind of transaction. If either party determines that there is a reason not to complete the Plan of Exchange as a result of their due diligence examination, then they must give written notice to the other party prior to the expiration of the due diligence examination period. The due diligence period, for purposes of this paragraph, will expire 21 days after the due diligence documents and information is delivered to the respective parties. The “Closing Date” shall be three days after the satisfaction or waiver of all of the conditions precedent to closing set forth in this Plan of Exchange, unless extended to a later date by mutual agreement of the parties.

(1.4) The rights of dissenting shareholders, if any, of each party shall have been satisfied prior to Closing.

(1.5) All of the terms, covenants and conditions of the Plan of exchange to be complied with or performed by each party before Closing shall have been complied with, performed or waived in writing.

(1.6) The representations and warranties of the parties, contained in the Plan of exchange, as herein contemplated, except as amended, altered or waived by the parties in writing, shall be true and correct in all material respects at the Closing Date with the same force and effect as if such representations and warranties are made at and as of such time; and each party shall provide the other with a certificate, certified either individually or by an officer, dated the Closing Date, to the effect, that all conditions precedent have been met, and that all representations and warranties of such party are true and correct as of that date. The form and substance of each party's certification shall be in form reasonably satisfactory to the other. In addition, it shall be a condition precedent to New Century’s obligation to consummate the closing that a certificate of good standing on GFRP shall have been delivered to it from the Secretary of State of Nevada.

 

    (1.7)  Certification of GFRP. It shall be a condition precedent to the obligation of New Century and the New Century Shareholders and Mr. Pierce to consummate the transactions contemplated herein that a certification of GFRP, signed in its corporate capacity, and substantially similar to the following form be delivered to New Century and Mr. Pierce on Closing:

 

  (vii)  GFRP’s three wholly-owned subsidiaries, GFR Pharma, Inc., GFR Health, Inc. and Nutritionals Direct, Inc. (the “Subsidiaries”) have been vended out from 

           GFRP prior to Closing.

 (viii) GFRP confirms that the Board of Directors has authorized and GFRP has established the 2000 Incentive and Non-qualified Stock Option Plan under which GFRP

           is authorized to issue up to 100,000 shares of GFRP's common stock with such exercise price and vesting periods as the Board of Directors deems to be in the

           best interest of GFRP. As of May 31, 2006, no options have been granted. GFRP represents that there are no warrants outstanding.

           (iv) GFRP agrees, for a period of eighteen months, not to rollback, consolidate, or merge its shares in any way that would effectively reduce the shareholdings of

                   Pierce or New Century.

 

    (1.8)  Certification of New Century. It shall be a condition precedent to the obligation of GFRP and Mr. Pierce to consummate the transactions contemplated herein that a certification of New Century, signed in its corporate capacity, and substantially similar to the following form be delivered to GFRP and Mr. Pierce on Closing:

 

 

    (1.9)  Certification of Mr. Pierce. It shall be a condition precedent to the obligation of GFRP and New Century and the New Century Shareholders to consummate the transactions contemplated herein that a certification of Mr. Pierce, signed in his individual capacity, and substantially similar to the following form be delivered to GFRP and New Century on Closing:

(1.10) Absence of GFRP Liabilities, Corporate Name Rights and Transaction Fees. GFRP shall have no material liabilities as such term is defined by U.S. Generally Accepted Accounting Principles and counsel to GFRP shall deliver to New Century a comfort letter with respect to the absence of said liabilities prior to Closing. . Mr. Pierce will retain the right to future use of GFR Pharmaceuticals Inc. only if the new management changes GFRP's corporate name. All expenses to prepare and file documents connected to the Plan of Exchange will be paid by New Century. The attorney comfort letter, not to exceed $3,000, will be paid by New Century. The quarterly accounting review fees will also be paid by New Century.

(1.11) Delivery of Audited Financial Statements. New Century shall have delivered to GFRP audited financial statements and an audit report thereon for the year ended December 31, 2005 and unaudited financial statements for the quarter ended March 31, 2006, any required audits shall be prepared by a PCAOB member audit firm in accordance with U.S. GAAP at New Century’s expense.

(1.12) Subsidiary Transfer. Pursuant to the LOI, Mr. Pierce or his nominee will acquire a 100% interest in the Subsidiaries simultaneously with Closing pursuant to the terms and conditions of a subsidiary transfer agreement (the “Subsidiary Transfer Agreement”).

(1.13) Assignment of Subsidiary Debt. GFRP will also assign to Mr. Pierce or his nominee the debt owed to GFRP by the Subsidiaries simultaneously with Closing. The Board of Directors will approve after appropriate review (with Mr. Pierce abstaining) the settlement of debt with GFR Pharma Ltd. and will approve the acceptance of shares of the capital stock of GFR Pharma Ltd., as full payment of said GFR Pharma Ltd. debt.

 

 

(1.14) Share Transfer. Pursuant to the LOI, Mr. Pierce will transfer 200,000 shares of common voting stock of GFRP to New Century simultaneously with Closing pursuant to the terms and conditions of a share purchase agreement (the “Share Purchase Agreement”).

(1.15) Appointment of Nominee. Pursuant to the LOI and prior to closing any transaction contemplated in this agreement, GFRP’s board of directors will appoint the nominee of New Century to the board of directors of GFRP to fill the vacancy created by the resignation of one of the current board members of GFRP.

(2.1) Delivery of Registered Capital of New Century. At Closing, GFRP shall have 90+% of the beneficial interest of New Century.

(2.2) Acquisition Share Issuance and Purchase of Common Stock. Immediately upon the Closing, Mr. Pierce shall deliver his 200,000 shares of Common Stock of GFRP to the New Century Shareholders in exchange for total payments of $500,000 in cash, less related expenses. In addition, GFRP shall issue 40,000,000 new investment shares of Common Stock of GFRP to the New Century Shareholders in exchange for a 90+% interest in New Century, and, as a result, the then outstanding shares shall be as follows:

 

GFRP Shares Issued and Outstanding	1,079,940
Of which, shares purchased from Mr. Pierce	200,000
Acquisition Share Issuance	40,000,000
Resulting Total	41,079,940
Of which, shares controlled by New Century	40,200,000

    (2.3) Resignation of Richard Pierce and Appointment of New Century Nominee. On or immediately after the Closing, Pierce shall resign from the positions of director and officer of GFRP and a nominee of New Century shall be appointed to the Board of Directors of GFRP to fill the vacancy created by Pierce's resignation. Said appointment will occur within 10 days of the closing after proper notice has been given pursuant to Rule 14f-1 under the Securities Exchange Act of 1934, as amended. Upon resignation, Pierce shall hand deliver to GFRP a signed letter regarding and confirming his resignation to the positions of director and officer of GFRP.

 

(3.1) Exchange and Reorganization: GFRP and New Century shall be hereby reorganized, such that GFRP shall acquire a 90+% interest in New Century, and New Century shall become a 90+% owned subsidiary of GFRP.

(3.2) Delivery of Common Stock: At Closing, Mr. Pierce shall deliver the 200,000 shares of Common Stock of GFRP to or for the New Century Shareholders.

(3.3) Issuance of Common Stock: Within 60 days upon the effective date of the Plan, GFRP shall issue 40,000,000 new investment shares of Common Stock of GFRP to or for the New Century Shareholders.

(3.4) Closing/Effective Date: The Plan of exchange shall become effective immediately upon approval and adoption by the parties hereto, in the manner provided by the law of the places of incorporation and constituent corporate documents, and upon compliance with governmental filing requirements, such as, without limitation, filings under the Securities Exchange Act of 1934, and the filing of Articles of Exchange, if applicable under State Law. “Closing” shall occur when all conditions precedent to closing have been met or are waived by the parties. The parties anticipate the filing of a Schedule 14F-1 Information Statement at least ten days prior to any change in majority of the Board of Directors of GFRP. The parties expect to make such filing after the Closing.

(3.5) Surviving Corporations: Both corporations shall survive the exchange and reorganization herein contemplated and shall continue to be governed by the laws of its respective jurisdiction of incorporation.

(3.6) Rights of Dissenting Shareholders: Each Corporation is the entity responsible for the rights of its own dissenting shareholders, if any.

(3.7) Service of Process and Address: Each Corporation shall continue to be amenable to service of process in its own jurisdiction, exactly as before this acquisition. The address of GFRP is Suite 11405 - 201A Street, Maple Ridge, British Columbia V2X 0Y3. The address of New Century is 99 Yan Xiang Road, Biosep Building, Xi An, Peoples’ Republic of China.

(3.8) Surviving Articles of Incorporation: the Articles of Incorporation of each Corporation shall remain in full force and effect, unchanged.

(3.9) Surviving By-Laws: the By-Laws of each Corporation shall remain in full force and effect, unchanged.

(3.10) Further Assurance, Good Faith and Fair Dealing: the Directors of each Corporation shall and will execute and deliver any and all necessary documents, acknowledgments and assurances and do all things proper to confirm or acknowledge any and all rights, titles and interests created or confirmed herein; and both companies covenant expressly hereby to deal fairly and in good faith with each other and each others shareholders. In furtherance of the parties desire, as so expressed, and to encourage timely, effective and businesslike resolution the parties agree that any dispute arising between them, capable of resolution by arbitration, shall be submitted to binding arbitration. As a further incentive to private resolution of any dispute, the parties agree that each party shall bear its own costs of dispute resolution and shall not recover such costs from any other party.

(3.11) General Mutual Representations and Warranties. The purpose and general import of the Mutual Representations and Warranties are that each party has made appropriate full disclosure to the others, that no material information has been withheld, and that the information exchanged is accurate, true and correct. These warranties and representations are made by each party to the other, unless otherwise provided, and they speak and shall be true immediately before Closing.

 

(3.11.1) Organization and Qualification. Each Corporation is duly organized and in good standing (where applicable as a matter of law), and is duly qualified to conduct any business it may be conducting, as required by law or local ordinance.

 

 (3.11.2) Corporate Authority. Each Corporation has corporate authority, under the laws of its jurisdiction and its constituent documents, to do each and every element of performance to which it has agreed, and which is reasonably necessary, appropriate and lawful, to carry out this Agreement in good faith.

 

(3.11.3) Ownership of Assets and Property. Each Corporation has lawful title and ownership of it property as reported to the other, and as disclosed in its financial statements.

 

 (3.11.4) Absence of Certain Changes or Events. Each Corporation has not had any material changes of circumstances or events which have not been fully disclosed to the other party, and which, if different than previously disclosed in writing, have been disclosed in writing as currently as is reasonably practicable. Specifically, and without limitation:

 

(3.11.4-a) The business of each Corporation shall be conducted only in the ordinary and usual course and consistent with its past practice, and neither party shall purchase or sell (or enter into any agreement to so purchase or sell) any properties or assets or make any other changes in its operations, respectively, taken as a whole, or provide for the issuance of, agreement to issue or grant of options to acquire any shares, whether common, redeemable common or convertible preferred, in connection therewith;

 

(3.11.4-b) Except as set forth in this Plan of Exchange, neither Corporation shall (i) amend its Articles of Incorporation or By-Laws, (ii) change the number of authorized or outstanding shares of its capital stock, or (iii) declare, set aside or pay any dividend or other distribution or payment in cash, stock or property to the extent that which might contradict or not comply with any clause or condition set forth in this Plan of Exchange, LOI or Escrow Agreement;

 

(3.11.4-c) Except for the issuance of shares and vending out of subsidiaries set forth in this Plan of Exchange, neither Corporation shall (i) issue, grant or pledge or agree or propose to issue, grant, sell or pledge any shares of, or rights of any kind to acquire any shares of, its capital stock, (ii) incur any indebtedness other than in the ordinary course of business, (iii) acquire directly or indirectly by redemption or otherwise any shares of its capital stock of any class or (iv) enter into or modify any contact, agreement, commitment or arrangement with respect to any of the foregoing;

 

      (3.11.4-e) Neither party shall assume, guarantee, endorse or otherwise become responsible for the obligations of any other individual, firm or corporation or make any loans or advances to any individual, firm or corporation, other than obligations and liabilities expressly assumed by the other that party;

      (3.11.4-f) Neither party shall make any investment of a capital nature either by purchase of stock or securities, contributions to capital, property transfers or otherwise, or by the purchase of any property or assets of any other individual, firm or corporation. 

 

      (3.11.5) Absence of Undisclosed Liabilities. Each Corporation has, and has no reason to anticipate having, any material liabilities which have not been disclosed to the other, in the financial statements or otherwise in writing.

 

      (3.11.6) Legal Compliance. Each Corporation shall comply in all material respects with all Federal, state, local and other governmental (domestic or foreign) laws, statutes, ordinances, rules, regulations (including all applicable securities laws), orders, writs, injunctions, decrees, awards or other requirements of any court or other governmental or other authority applicable to each of them or their respective assets or to the conduct of their respective businesses, and use their best efforts to perform all obligations under all contracts, agreements, licenses, permits and undertaking without default.

 

     (3.11.7) Legal Proceedings. Each Corporation has no legal proceedings, administrative or regulatory proceeding, pending or suspected, which have not been fully disclosed in writing to the other.

 

 

      (3.11.8) No Breach of Other Agreements. This Agreement, and the faithful performance of this agreement, will not cause any breach of any other existing agreement, or any covenant, consent decree, or undertaking by either, not disclosed to the other.

 

            (3.11.9) Capital Stock. The issued and outstanding shares and all shares of capital stock of each Corporation is as detailed herein, that all such shares are in fact issued and outstanding, duly and validly issued, were issued as and are fully paid and non-assessable shares, and that, other than as represented in writing, there are no other securities, options, warrants or rights outstanding, to acquire further shares of such Corporation.

 

      (3.11.10) SEC Reports, Liabilities and Taxes.(i) GFRP has filed all required registration statements, prospectuses, reports, schedules, forms, statements and other documents required to be filed by it with the SEC since the date of its registration under the Securities Act of 1933, as amended (collectively, including all exhibits thereto, the "GFRP SEC Reports"). None of the GFRP SEC Reports, as of their respective dates, contained any untrue statements of material fact or failed to contain any statements which were necessary to make the statements made therein, in light of the circumstances, not misleading. All of the GFRP SEC Reports, as of their respective dates (and as of the date of any amendment to the respective GFRP SEC Reports), complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder.

 

    (ii) Except as disclosed in the GFRP SEC Reports filed prior to the date hereof, GFRPand its Subsidiaries have not incurred any liabilities or obligations (whether or not accrued, contingent or otherwise) that are of a nature that would be required to be disclosed on a balance sheet of GFRP and its Subsidiaries or the footnotes thereto prepared in conformity with GAAP, other than (A) liabilities incurred in the ordinary course of business or (B) liabilities that would not, in the aggregate, reasonably be expected to have a material adverse effect on GFRP.

 

    (iii) Except as disclosed in the GFRP SEC Reports filed prior to the date hereof, GFRP and each of its Subsidiaries (i) have prepared in good faith and duly and timely filed (taking into account any extension of time within which to file) all material tax returns required to be filed by any of them and all such filed tax returns are complete and accurate in all material respects; (ii) have paid all taxes that are shown as due and payable on such filed tax returns or that GFRP or any of its Subsidiaries are obligated to pay without the filing of a tax return; (iii) have paid all other assessments received to date in respect of taxes other than those being contested in good faith for which provision has been made in accordance with GAAP on the most recent balance sheet included in GFRP’s financial statements; (iv) have withheld from amounts owing to any employee, creditor or other person all taxes required by law to be withheld and have paid over to the proper governmental authority in a timely manner all such withheld amounts to the extent due and payable; and (v) have not waived any applicable statute of limitations with respect to United States federal or state income or franchise taxes and have not otherwise agreed to any extension of time with respect to a United States federal or state income or franchise tax assessment or deficiency.

 

 

              (3.11.11) Brokers' or Finder's Fees. Each Corporation is not aware of any claims for brokers' fees, or finders' fees, or other commissions or fees, by any person not disclosed to the other, which would become, if valid, an obligation of either company.

 

 

      (3.12.1) . Except as required by law, no party shall provide any information concerning any aspect of the transactions contemplated by this Agreement to anyone other than their respective officers, employees and representatives without the prior written consent of the other parties hereto. The aforesaid obligations shall terminate on the earlier to occur of (a) the Closing, or (b) the date by which any party is required under its articles or bylaws or as required by law, to provide specific disclosure of such transactions to its shareholders, governmental agencies or other third parties. In the event that the transaction does not close, each party will return all confidential information furnished in confidence to the other. In addition, all parties shall consult with each other concerning the timing and content of any press release or news release to be issued by any of them.

 

      (3.12.2) This Agreement may be executed simultaneously in two or more counterpart originals. The parties can and may rely upon facsimile signatures as binding under this Agreement, however, the parties agree to forward original signatures to the other parties as soon as practicable after the facsimile signatures have been delivered.

 

      (3.12.3) The Parties to this agreement have no wish to engage in costly or lengthy litigation with each other. Accordingly, any and all disputes which the parties cannot resolve by agreement or mediation shall be submitted to binding arbitration under the rules and auspices of the American Arbitration Association. As a further incentive to avoid disputes, each party shall bear its own costs, with respect thereto, and with respect to any proceedings in any court brought to enforce or overturn any arbitration award. This provision is expressly intended to discourage litigation and to encourage orderly, timely and economical resolution of any disputes which may occur.

 

      (3.12.4) If any provision of this Agreement or the application thereof to any person or situation shall be held invalid or unenforceable, the remainder of the Agreement and the application of such provision to other persons or situations shall not be effected thereby but shall continue valid and enforceable to the fullest extent permitted by law.

 

      (3.12.5) No waiver by any party of any occurrence or provision hereof shall be deemed a waiver of any other occurrence or provision.

 

      (3.12.6) The parties acknowledge that both they and their counsel have been provided ample opportunity to review and revise this agreement and that the normal rule of construction shall not be applied to cause the resolution of any ambiguities against any party presumptively. The Agreement shall be governed by and construed in accordance with the laws of the State of Nevada.

 

4. Termination. The Plan of exchange may be terminated by written notice, at any time prior to closing, (i) by mutual consent, (ii) by either party during the due diligence phase, (iii) by either party, in the event that the transaction represented by the anticipated Plan of exchange has not been implemented and approved by the proper governmental authorities 60 days from the date of this Agreement, (iv) if payments scheduled in the Escrow Agreement are not received when due or (v) by either party in the event that a condition of closing is not met by August 20, 2006. In the event that termination of the Plan of exchange by either or both, as provided above, the Plan of exchange shall forthwith become void and there shall be no liability on the part of either party or their respective officers and directors.

5.  Closing. The parties hereto contemplate that the Closing Date of this Plan of Exchange shall occur no more than three days after all of the conditions precedent have been met or waived. The closing deliveries will be made pursuant to this Agreement and the LOI and the Escrow Agreement. On or prior to Closing, the certificate of the 200,000 shares of Common Stock of GFRP from Mr. Pierce will be delivered to New Century for distribution to the New Century Shareholders and Mr. Pierce shall be paid by New Century and/or the New Century Shareholders an amount aggregately equal to $500,000, of which $175,000 shall be used to settle liabilities and transaction expenses. In addition, within 60 days of signing the Plan of Exchange, GFRP shall issue 40,000,000 new investment shares of Common Stock of GFRP pursuant to Regulation S under the Securities Act of 1933, as amended, to the New Century shareholders for a 90+% interest in New Century. The parties acknowledge that the Escrow Agreement has a default provision that governs the rights of the parties in the event that certain performances are not made on a timely basis and they expressly accept the terms thereof.

6. Merger Clause. This Plan of Exchange, together with the LOI, Escrow Agreement, the Share Purchase Agreement, and the Subsidiary Transfer Agreement, constitute the entire agreement of the parties hereto with respect to the subject matter hereof, and such documents supercede all prior understandings or agreements between the parties hereto, whether oral or written, with respect to the subject matter hereof, all of which are hereby superceded, merged and rendered null and void.

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The parties hereto, intending to be bound, hereby sign this Plan of Exchange below as of the date first written above.

GFR PHARMACEUTICALS, INC. ("GFRP")                     RICHARD PIERCE

By:  /s/ Richard Pierce                           /s/ Richard Pierce  

Name: Richard Pierce,                          (Individually)

Title: President and Chief Executive Officer                        Majority Shareholder

                            / Selling Shareholder      

NEW CENTURY SCIENTIFIC INVESTMENT LTD. ("NEW CENTURY")

By:  /s/ Wang, Li An  

Name: Wang, Li An

Title: Authorized Representative

GUO, LI AN

/s/ Guo, Li An 

(Individually)  

Majority Shareholder