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)
BY
WHICH
(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: 1
(1.1)
GFR
Pharmaceuticals Inc. 1
(1.2)
New
Century Scientific Investment Ltd.
1
. (1.3)
Xxxxxxx Xxxxxx
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: 1
4.
SEC
compliance.
2
5.
Nevada
compliance. 2
6.
Audited Financial Statements. 2
II.
PLAN
OF EXCHANGE
3
1.
Conditions Precedent to Closing.
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
7
(1.7)
Certification of GFRP
3
(1.8) Certification
of New Century
4
(1.9)_Certification
of Xx.
Xxxxxx
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.
9
(2.2)
Acquisition Share Issuance and Purchase of Common Stock
9
(2.3)
Resignation of Xxxxxxx Xxxxxx 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:
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.
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. 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
BY
WHICH
(a
Nevada corporation)
SHALL
ACQUIRE
NEW
CENTURY SCIENTIFIC INVESTMENT LTD.
(a
corporation organized under the laws of the Peoples' Republic of
China)
ADJUSTMENTS:
lead This
Plan of Exchange (“Agreement”
or “Plan of Exchange”) is
made
and dated as of this 26th
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.
I.
RECITALS
1.
The Parties to this Agreement:
(1.1)
GFR Pharmaceuticals, Inc. ("GFRP"), Suite
00000 - 000X Xxxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxxxxx X0X 0X0,
a
Nevada corporation.
(1.2)
New Century Scientific Investment Ltd. (“New Century”), 00 Xxx
Xxxxx
Xxxx, Xxxxxx Xxxxxxxx, Xx Xx, Xxxxxxx’ Xxxxxxxx of China a
corporation organized and existing under the laws of the Peoples' Republic
of
China.
(1.3)
Xxxxxxx Xxxxxx, President,
Chief Executive Officer and controlling shareholder of GFRP ("Xx.
Xxxxxx").
2.
The Capital of the Parties:
(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 Xx. Xxxxxx 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 Xx. Xxxxxx 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 Xx. Xxxxxx, (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.
Page
- 1
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
Page
- 2
II.
PLAN OF EXCHANGE
1.
Conditions Precedent to Closing.
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 Xx. Xxxxxx 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
Xx.
Xxxxxx on Closing:
Page
- 3
| (i) |
GFRP
is a corporation duly organized and validly existing under the laws
of the
State of Nevada and has all requisite corporate power to own, operate
and
lease its properties and assets and to carry on its
business.
|
| (ii) |
The
authorized capitalization and the number of issued and outstanding
capital
shares of GFRP are accurately and completely set forth in the Plan
of
Exchange.
|
| (iii) |
The
issued and outstanding shares of GFRP (including 40,000,000 new investment
shares of Common Stock of GFRP to be issued to the New Century
Shareholders pursuant to Regulation S) have been duly authorized and
validly issued and are fully paid and
non-assessable.
|
| (iv) |
GFRP
has the full right, power and authority to issue and deliver the
40,000,000 new investment shares of Common Stock of GFRP to the New
Century Shareholders, and, upon delivery of the certificates representing
such shares as contemplated in the Plan of Exchange, will deliver to
the
New Century Shareholders good, valid and marketable title thereto,
free
and clear of all liens.
|
| (v) |
GFRP
has taken all steps in connection with the Plan of Exchange and the
issuance of the 40,000,000 new investment shares of Common Stock of
GFRP
to the New Century Shareholders pursuant to Regulation S, which are
necessary to comply in all material respects with the Securities Act
of
1933, as amended, and the Securities Exchange Act of 1934, as well
as the
rules and regulations promulgated pursuant thereto.
|
| (vi) |
GFRP
has no material liabilities as such term are defined by U.S. Generally
Accepted Accounting Principles.
|
(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
Xxxxxx or New Century.
(1.8) Certification
of New Century. It
shall
be a condition precedent to the obligation of GFRP and Xx. Xxxxxx 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 Xx. Xxxxxx on Closing:
| (i) |
New
Century is a corporation duly organized and validly existing under
the
laws of the Peoples' Republic of China and has all requisite corporate
power to own, operate and lease its properties and assets and to carry
on
its business.
|
| (ii) |
The
authorized capitalization and the number of issued and outstanding
capital
shares of New Century are accurately and completely set forth in the
Plan
of Exchange.
|
| (iii) |
The
issued and outstanding shares of New Century (including 90%+ of the
issued
and outstanding shares of common stock of New Century to be transferred
to
GFRP from the New Century Shareholders) (the “New
Century Shares”)
have been duly authorized and validly issued and are fully paid and
non-assessable.
|
| (iv) |
The
New Century Shareholders have the full right, power and authority to
sell,
transfer and deliver the New Century Shares to GFRP, and, upon delivery
of
the certificates representing the New Century Shares as contemplated
in
the Plan of Exchange, will transfer to GFRP good, valid and marketable
title thereto, free and clear of all
liens.
|
| (v) |
New
Century has taken all steps in connection with the Plan of Exchange
and
the transfer of the New Century Shares of common stock of New Century
to
GFRP, which are necessary to comply in all material respects with
regulations and rules applicable to the transfer of common stock and
ownership in New Century.
|
Page
- 4
(1.9) Certification
of Xx. Xxxxxx. 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 Xx. Xxxxxx, signed in his individual capacity, and
substantially similar to the following form be delivered to GFRP and New Century
on Closing:
| (i) |
Xx.
Xxxxxx has the full right, power and authority to sell, transfer and
deliver the 200,000 shares of Common Stock of GFRP to the New Century
Shareholders for the total purchase price of $500,000, less agreed
upon
expenses, and upon delivery of the certificates representing the Share
Purchase, will transfer to the New Century good, valid and marketable
title thereto, free and clear of all
liens.
|
| (ii) |
Xx.
Xxxxxx confirms that he
will retain 370,000 shares of GFRP as an investment, of which 170,000
shall be locked up and non-transferable for three months after the
Closing
and 200,000 shall be locked up and non-transferable for twelve months
after 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. . Xx. Xxxxxx 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, Xx. Xxxxxx
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 Xx. Xxxxxx or his nominee the debt owed to GFRP by the
Subsidiaries simultaneously with Closing. The Board of Directors will approve
after appropriate review (with Xx. Xxxxxx 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.
Page
- 5
(1.14)
Share Transfer.
Pursuant
to the LOI, Xx. Xxxxxx
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.
Conditions Concurrent and Subsequent to Closing.
(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, Xx. Xxxxxx 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 Xx. Xxxxxx
|
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 Xxxxxxx Xxxxxx and Appointment of New Century Nominee.
On
or
immediately after the Closing, Xxxxxx 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 Xxxxxx'x
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, Xxxxxx shall hand deliver to GFRP a signed letter regarding and
confirming his resignation to the positions of director and officer of GFRP.
3.
Plan of
Exchange
(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.
Page
- 6
(3.2)
Delivery of Common Stock:
At
Closing, Xx. Xxxxxx 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
00000 - 000X Xxxxxx, Xxxxx Xxxxx, Xxxxxxx Xxxxxxxx X0X 0X0.
The
address of New Century is 00 Xxx Xxxxx Xxxx, Xxxxxx Xxxxxxxx, Xx Xx, Xxxxxxx’
Xxxxxxxx xx Xxxxx.
(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.
Page
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(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;
|
|
Page
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(3.11.4-d)
Except
in
the ordinary course of business, neither party shall (i) increase the
compensation payable or to become payable by it to any of its officers or
directors; (ii) make any payment or provision with respect to any bonus,
profit
sharing, stock option, stock purchase, employee stock ownership, pension,
retirement, deferred compensation, employment or other payment plan, agreement
or arrangement for the benefit of its employees (iii) grant any stock options
or
stock appreciation rights or permit the exercise of any stock appreciation
right
where the exercise of such right is subject to its discretion (iv) make any
change in the compensation to be received by any of its officers; or adopt,
or
amend to increase compensation or benefits payable under, any collective
bargaining, bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment, termination or severance or
other
plan, agreement, trust, fund or arrangement for the benefit of employees,
(v)
enter into any agreement with respect to termination or severance pay, or
any
employment agreement or other contract or arrangement with any officer or
director or employee, respectively, with respect to the performance or personal
services that is not terminable without liability by it on thirty days notice
or
less, (vi) increase benefits payable under its current severance or termination,
pay agreements or policies or (vii) make any loan or advance to, or enter
into
any written contract, lease or commitment with, any of its officers or
directors.
(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.
Page
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(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.
Page
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(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)
Miscellaneous Provisions
(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.
Page
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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 Xx. Xxxxxx will
be
delivered to New
Century
for
distribution to the New
Century
Shareholders and Xx. Xxxxxx 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.
The
Remainder of this Page is Intentionally left Blank
Page
- 12
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") XXXXXXX
XXXXXX
By:
/s/ Xxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
Name:
Xxxxxxx Xxxxxx, (Individually)
Title:
President and Chief Executive Officer
Majority
Shareholder
/ Selling Shareholder
NEW
CENTURY SCIENTIFIC INVESTMENT LTD. ("NEW CENTURY")
By:
/s/ Xxxx, Xx Xx
Name:
Xxxx, Xx Xx
Title:
Authorized Representative
XXX,
XX
AN
/s/
Xxx, Xx Xx
(Individually)
Majority
Shareholder
Page
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