Document:

Exhibit 10.2

     

    Exhibit
      10.2

     

    PLAN
      OF EXCHANGE

    BY
      WHICH

    GFR
      PHARMACEUTICALS INC.

    (a
      Nevada corporation)

    SHALL
      ACQUIRE

    Harbin
      Yinhai Technology Development Company Ltd.

    (a
      corporation organized under the laws of the Peoples’ republic of
      China)

    

    
       

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

    

    

      
        	
                I.
                  RECITALS

              	
                4

              
	 	
                 

              
	 	
                 

              
	
                1.
                  The Parties to this Plan of Exchange:

              	
                4

              
	
                (1.1)
                  GFR Pharmaceuticals Inc..

              	
                4

              
	
                (1.2)
                  Harbin Yinhai Technology Development Company Ltd..

              	
                4

              
	 	
                 

              
	
                2.
                  The Capital of the Parties:

              	
                4

              
	
                (2.1)
                  The Capital of GFRP

              	
                4

              
	
                (2.2)
                  The Capital of Yinhai

              	
                4

              
	 	
                 

              
	
                3.
                  Transaction Descriptive Summary:

              	
                4

              
	 	
                 

              
	
                4.
                  SEC compliance.

              	
                2

              
	 	
                 

              
	
                5.
                  Nevada compliance.

              	
                2

              
	 	
                 

              
	
                6.
                  Audited Financial Statements.

              	
                2

              
	 	
                 

              
	
                II.
                  PLAN OF REOGANIZATION

              	
                3

              
	 	
                 

              
	
                1.
                  Conditions Precedent to Closing.

              	
                3

              
	
                (1.1)
                  Shareholder Approval.

              	
                3

              
	
                (1.2)
                  Board of Directors.

              	
                3

              
	
                (1.3)
                  Due Diligence Investigation.

              	
                3

              
	
                (1.4)
                  The rights of dissenting shareholders,

              	
                4

              
	
                (1.5)
                  All of the terms, covenants and conditions

              	
                4

              
	
                (1.6)
                  The representations and warranties

              	
                4

              
	
                (1.7)
                  Certificate of majority shareholders of GFRP

              	
                4

              
	
                (1.8)
                  Absence of GFRP Liabilities

              	
                4

              
	
                (1.9)
                  Delivery of Audited Financial Statements

              	
                4

              
	 	
                 

              
	
                2.
                  Conditions Concurrent and Subsequent to Closing.

              	
                6

              
	
                (2.1)
                  Delivery of Registered Capital of Yinhai.

              	
                6

              
	
                (2.2)
                  Acquisition Share Issuance

              	
                5

              
	
                (2.3)
                  Execution of Acquisition Agreements

              	
                5

              
	
                (2.4)
                  Execution of Debt Assignment Agreement

              	
                5

              
	 	
                 

              
	
                3.
                  Plan of Acquisition

              	
                7

              
	
                (3.1)
                  Reorganization and Acquisition:

              	
                7

              
	
                (3.2)
                  Conversion of Outstanding Stock:

              	
                7

              
	
                (3.3)
                  Closing/Effective Date:

              	
                7

              
	
                (3.4)
                  Surviving Corporations

              	
                8

              
	
                (3.5)
                  Rights of Dissenting Shareholders:

              	
                8

              
	
                (3.6)
                  Service of Process:

              	
                8

              
	
                (3.7)
                  Surviving Articles of Incorporation:

              	
                8

              
	
                (3.8)
                  Surviving By-Laws:

              	
                8

              
	
                (3.9)
                  Further Assurance, Good Faith and Fair Dealing:

              	
                8

              
	
                (3.10)
                  General Mutual Representations and Warranties.

              	
                8

              
	
                (3.10.1)
                  Organization and Qualification.

              	
                8

              
	
                (3.10.2)
                  Corporate Authority.

              	
                8

              
	
                (3.10.3)
                  Ownership of Assets and Property.

              	
                9

              
	
                (3.10.4)
                  Absence of Certain Changes or Events.

              	
                9

              
	
                (3.10.5)
                  Absence of Undisclosed Liabilities.

              	
                10

              
	
                (3.10.6)
                  Legal Compliance.

              	
                10

              
	
                (3.10.7)
                  Legal Proceedings.

              	
                10

              
	
                (3.10.8)
                  No Breach of Other Agreements.

              	
                10

              
	
                (3.10.9)
                  Capital Stock.

              	
                10

              
	
                (3.10.10)
                  Brokers' or Finder's Fees.

              	
                11

              
	 	 
	
                (3.11)
                  Miscellaneous Provisions

              	
                11

              
	
                (3.11.1)

              	
                11

              
	
                (3.11.2)

              	
                11

              
	
                (3.11.3)

              	
                12

              
	
                (3.11.4)

              	
                12

              
	
                (3.11.5)

              	
                12

              
	
                (3.11.6)

              	
                12

              
	
                 

              	
                 

              
	
                4.
                  Termination

              	
                12

              
	 	
                 

              
	
                5.
                  Closing

              	
                12

              
	 	
                 

              
	
                6.
                  Merger Clause

              	
                12
                  

              
	 	
                 

              
	 	
                 

              
	 	
                 

              
	
                THE
                  REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

              	
                 

              

      

    

     

     

    
      
        
        

      

      
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    PLAN
      OF EXCHANGE

    BY
      WHICH

    GFR
      Pharmaceuticals, Inc.

    (a
      Nevada corporation)

    SHALL
      ACQUIRE

    Harbin
      Yinhai Technology Development Company Ltd.

    (a
      corporation organized under the laws of the Peoples’ Republic of
      China)

    

        This
      Plan of Exchange (the
      “Agreement” or “Plan of Exchange”) is
      made
      and dated as of this 25th
      day of
      August, 2005, 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 that certain Letter of Intent, dated August 12, 2005. This
      Agreement anticipates extensive due diligence by both parties, and may be
      terminated by written notice, at any time (i) by mutual consent; or (ii) by
      either party during the due diligence period.

     

    I.
      RECITALS

    

    1.
      The Parties to this Agreement:

    

    (1.1)
      GFR Pharmaceuticals Inc. ("GFRP"), a
      Nevada
      corporation.

    

    (1.2)
      Harbin Yinhai Technology Development Company Ltd., a
      corporation organized under the laws of the Peoples’ Republic of China
      (“Yinhai”).

    

    2.
      The Capital of the Parties: 

    

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

    

    (2.2)
      The Capital of Yinhai consists
      of RMB 21,580,000 in registered capital (US$1=8.2 RMB), which for the purposes
      of this Agreement, is referred to as “common stock” or “capital
      stock”.

    

    3.
      Transaction Descriptive Summary:
      GFRP
      desires to acquire Yinhai and the shareholders of Yinhai (the “Yinhai
      Shareholders”) desire Yinhai to be acquired by a public company. GFRP would
      acquire 95% of the capital stock of Yinhai for 20,000,000 new shares of GFRP.
      In
      addition, Yinhai and/or the Yinhai Shareholders would acquire 200,000 common
      shares from Richard Pierce for an aggregate amount equal to $550,000, at the
      Closing. 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. The Parties acknowledge that the
      20,000,000 new shares of common stock of GFRP will be issued pursuant to
      Regulation S under the Securities Act of 1933, as amended, and that they will
      contain a restrictive legend, which, among other things, prohibits resale into
      the U.S. for a period of one year, in compliance with the requirements of said
      Regulation S. 

     

    
      
        
        

      

      
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      PLAN
        OF EXCHANGE

      GFRP/YINHAI

      Page
        2

    

     

     

    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. 

    

    5.
      Nevada compliance.
      Articles
      of Exchange are required to be filed by Nevada law as the last act to make
      the
      plan of exchange 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 Yinhai to be filed with the
      SEC within 71 days of the initial Form 8-K filing with respect to this
      transaction. In connection with GFRP’s filing of a Current Report on Form 8-K/A
      within 71 days after the closing, as it relates to this transaction, audited
      financial statements of Yinhai will be filed with the SEC in accordance with
      Form 8-K. Yinhai has agreed to provide audited financial statements prepared
      in
      conformity with U.S. GAAP to GFRP at or prior to closing.

    

    

    

    The
      Remainder of this Page is Intentionally left Blank

    

    

    
      
        
        

      

      
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      PLAN
        OF EXCHANGE

      GFRP/YINHAI

      Page
        3

    

     

     

    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.
      Yinhai
      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 of Yinhai and GFRP shall have approved the
      transaction and this agreement, in accordance with the laws of its place of
      incorporation and its constituent documents.

    

    (1.3)
      Appointment of YHT nominee to GFRP’s Board.
      On the
      signing of the Plan of Exchange, GFRP’s Board of Directors will appoint YHT’s
      nominee to GFRP’s Board to fill the vacancy created by the resignation of one of
      the current board members of GFRP.

    

    (1.4)
      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, shall expire on the Closing
      Date. 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.

    

    
      
        
        

      

      
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      PLAN
        OF EXCHANGE

      GFRP/YINHAI

      Page
        4

    

    
 

        (1.5)
      The rights of dissenting shareholders,
      if any,
      of each Party shall have been satisfied and the Board of Directors of each
      Party
      shall have determined to proceed with the Plan
      of
      exchange.

        (1.6)
      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; 

        (1.7)
      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, the conditions precedent
      of
      Yinhai’s obligation to consummate the closing include:

    

                   
      (i)
      A
      certificate of good standing on GFRP shall have been delivered to it by the
      Secretary of State of Nevada;

    

    (ii)
      The
      Stock Purchase Agreements providing for the sale of 100% of the common stock
      of
      GFR Pharma, Inc. and GFR Health, Inc., GFRP’s wholly owned subsidiaries (the
“Subsidiaries”),
      shall
      have been executed, and they shall provide that Richard Pierce or his nominee
      shall purchase said common stock.

    

    (iii)
      The Debt
      Assignment Agreement shall have been signed by GFRP and Richard Pierce or his
      nominee regarding the debt owned to GFRP by its Subsidiaries, and it shall
      provide that GFRP shall assign such indebtedness to Richard Pierce or his
      nominee.

     

        (1.8)
      Certificate of the Majority Shareholder of GFRP. It
      shall
      be a condition precedent to the obligation of Yinhai and the Yinhai Shareholders
      to consummate the transactions contemplated herein that a certificate of the
      Majority Shareholders of GFRP in substantially the following form be delivered
      to them on the date of execution: 

    

    
      	(i)  	
              GFRP
                is a corporation duly organized, validly existing and in good standing
                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 the 20,000,000 new
                shares
                of GFRP common stock to be issued at closing) have been duly authorized
                and validly issued and are fully paid and
                non-assessable.

            

    

    
      	(iv)  	
              GFRP
                has the full right, power and authority to sell, transfer and deliver
                20,000,000 new shares of its common stock to the Yinhai Shareholders,
                and,
                upon delivery of the certificates representing such shares as contemplated
                in the Plan of Exchange, will transfer to the Yinhai Shareholders
                good,
                valid and marketable title thereto, free and clear of all liens,
                except
                for any applicable trading restrictions imposed by, among other things,
                Regulation S under the Securities Act of 1933, as
                amended.

            

    

    
      	(v)  	
              To
                the best of his knowledge, there is no litigation, proceeding or
                governmental investigation pending or threatened against or relating
                to
                GFRP, except for a potential claim by GFR Pharma relating to a dispute
                with the landlord over the right to lease additional space, which
                has been
                disclosed to the Yinhai
                Shareholders.

            

    

    
      	(vi)  	
              As
                of the Closing Date but not thereafter, the Majority Shareholder
                of GFRP
                shall have caused GFRP to take all steps in connection with the Plan
                of
                Exchange and the issuance of shares by GFRP thereunder 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.

            

    

    
      	(vii)  	
              As
                of the Closing Date, GFRP shall have no material liabilities as such
                term
                is defined by U.S. generally accepted accounting principles. 

            

    

    

    
      
        
        

      

      
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      PLAN
        OF EXCHANGE

      GFRP/YINHAI

      Page
        5

    

    
 

        (1.9)
      Absence
      of GFRP Liabilities. GFRP
      shall have no material liabilities as such term is defined by U.S. generally
      accepted accounting principles. The certified public accounting firm of GFRP
      shall deliver to Yinhai a letter to such effect, and counsel to GFRP shall
      deliver to Yinhai a comfort letter with respect to the absence of liabilities.
      In addition, Richard Pierce hereby agrees to indemnify and hold harmless GFRP
      with respect to any liability of GFRP that existed prior to Closing and was
      not
      recorded in the accounting records of GFRP that arises following the acquisition
      for a period of three years after the Closing.

    

        (1.10)
      Delivery of Audited Financial Statements.
      Yinhai
      shall have delivered to GFRP audited financial statements and an audit report
      thereon for the year ended December 31, 2004, which audit shall be prepared
      by a
      PCAOB member audit firm in accordance with U.S. GAAP at Yinhai’s
      expense.

     

        (1.11)
      Delivery of Non-Refundable Deposit.
      On the
      signing of the Plan of Exchange, Yinhai and/or the Yinhai Shareholders will
      a
      US$50,000 deposit, which is non-refundable under certain circumstances, to
      Richard Pierce as a deposit for the purchase price of the 200,000 common shares
      from Richard Pierce.

     

    2.
      Conditions Concurrent to Closing.

    

    (2.1)
      Delivery of Registered Capital of Yinhai. Immediately
      upon or prior to the Closing, the Yinhai Shareholders shall transfer to GFRP
      95%
      of their shares of registered capital of Harbin Yinhai Technology Development
      Company, Ltd.

    

    (2.2)
      Acquisition Share Issuance. Immediately
      upon the Closing, GFRP shall issue the acquisition shares of common stock,
      as
      follows:

    

    
      	
              GFRP
                Issued

            	
               
                1,079,940

            
	
              Acquisition
                Share Issuance

            	
              20,000,000

            
	
              Resulting
                Total

            	
              21,079,940
                

            

    

     

    (2.3)
      Acquisition of Subsidiaries.
      Immediately upon Closing, the Stock Purchase Agreements for acquiring a 100%
      interest in GFRP's Subsidiaries shall have been signed, pursuant to which stock
      of the Subsidiaries shall be assigned to Richard Pierce or his nominee for
      a
      negotiated purchase price.

     

    (2.4)
      Assignment of Debt.
      Immediately upon Closing, the Debt Assignment Agreement shall have been signed
      by Richard Pierce or his nominee regarding the debt owned to GFRP by its
      Subsidiaries, pursuant to which the debt will be assigned to Richard Pierce
      or
      his nominee for a negotiated purchase price.

     

    
      
        
        

      

      
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      PLAN
        OF EXCHANGE

      GFRP/YINHAI

      Page
        6

    

     

     

        (2.5)
      Resignation of Director and Officer.
      Immediately upon Closing, Richard Pierce will resign as director and officer
      of
      GFRP effective immediately. The Parties understand that GFRP shall have filed
      with the Commission and mailed to shareholders a Schedule 14F-1 ten days after
      the Closing Date that will set forth the names and backgrounds of the majority
      of the directors that will be appointed after the Closing Date and the offices
      which they shall hold with GFRP.

     

    3.
      Plan of Exchange

    

    (3.1)
      Exchange and Reorganization: GFRP and
      Yinhai shall be hereby reorganized, such that GFRP shall acquire 95% the capital
      stock of Yinhai, and Yinhai shall become a 95%-owned subsidiary of
      GFRP.

    

    (3.2)
      Conversion of Outstanding Stock:
      Forthwith upon the Closing, GFRP shall issue 20,000,000 new investment shares
      of
      its common stock to or for the Yinhai Shareholders.

    

    (3.3)
      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 of 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 control of the Board of
      Directors of GFRP.

     

    
      
        
        

      

      
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      PLAN
        OF EXCHANGE

      GFRP/YINHAI

      Page
        7

    (3.4)
      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. 

    

    (3.5)
      Rights of Dissenting Shareholders:
      Each
      Party is the entity responsible for the rights of its own dissenting
      shareholders, if any.

    

    (3.6)
      Service of Process and Address:
      Each
      Party shall continue to be amenable to service of process in its own
      jurisdiction, exactly as before this acquisition. The address of GFRP is
9160
      E.
      Deer Trail, Tucsan, AZ 85710.
      The
      address of Yinhai is 18 Dalian Road, Pingfang Industrial Development Zone,
      Harbin, Peoples’ Republic of China 150060.

    

    (3.7)
      Surviving Articles of Incorporation:
      the
      Articles of Incorporation of each Party shall remain in full force and effect,
      unchanged.

    

    (3.8)
      Surviving By-Laws:
      the
      By-Laws of each Party shall remain in full force and effect,
      unchanged.

    

    (3.9)
      Further Assurance, Good Faith and Fair Dealing:
      the
      Directors of each Party 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 Parties 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.

    

    (3.10)
      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.

     

            (3.10.1)
      Organization and Qualification.
      Each
      corporation is duly organized and in good standing, and is duly qualified to
      conduct any business it may be conducting, as required by law or local
      ordinance.

     

            (3.10.2)
      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. 

    

    
      
        
        

      

      
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        PLAN
          OF EXCHANGE

        GFRP/YINHAI

        Page
          8

      

       

              (3.10.3)
        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.

       

           (3.10.4)
        Absence of Certain Changes or Events.
        Each
        Party 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:

    

    

    
      	 	 	
               (3.10.4-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;

            

    

    

    
      	 	 	
               (3.10.4-b)
                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;

            

    

    

    
      	 	 	
               (3.10.4-c)
                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;

            

    

    

    
      	 	 	
               (3.10.4-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;

            

    

     

    
      
        
        

      

      
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               (3.10.4-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;

            

    

    

    
      	 	 	
               (3.10.4-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.

            

    

     

            (3.10.5)
      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.

     

            (3.10.6)
      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.

     

            (3.10.7)
      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.

     

            (3.10.8)
      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.

     

            (3.10.9)
      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.

     

            (3.10.10)
      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.

     

     

    
      
        
        

      

      
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          (ii)
        Except
        as disclosed in the GFRP
        SEC
        Reports filed prior to the date hereof, GFRP
        and 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. 

       

              (3.10.
        11) Brokers' or Finder's Fees.
        Each
        Party 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.

    

     

    (3.11)
      Miscellaneous Provisions

     

            (3.11.1)
      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 Party 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.

     

            (3.11.2)
      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 Party as soon as practicable after the facsimile signatures have been
      delivered.

     

    
      
        
        

      

      
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              (3.11.3)
        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.

       

              (3.11.4)
        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.

       

              (3.11.5)
        No
        waiver
        by any Party of any occurrence or provision hereof shall be deemed a waiver
        of
        any other occurrence or provision.

       

              (3.11.6)
        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, by either Party
      whether before or after approval by the shareholders of Yinhai; (i) by mutual
      consent; (ii) by either Party during the due diligence period, or (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 45 days
      from the date of this Agreement or as soon as reasonably possible after 45
      days,
      but not more than 60 days after the signing of the Plan
      of
      Exchange.
      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 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 the Letter of
      Intent, dated August 12, 2005. On the Closing Date, certificates for the
      20,000,000 shares of GFRP
      common
      stock will be delivered to Yinhai for distribution to the Yinhai Shareholders
      and Richard Pierce shall be paid by Yinhai and/or the Yinhai Shareholders an
      aggregate amount equal to $550,000. Such payment to Pierce may be offset by
      any
      amounts owing to GFRP under the Stock Purchase Agreements for the purchase
      of
      the stock of GFRP’s two subsidiaries, and any amounts owing to GFRP under the
      Debt Assignment Agreement. 

     

    6.
      Merger Clause. This
      Plan
      of Exchange, together with the Letter of Intent, 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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      PLAN
        OF EXCHANGE

      GFRP/YINHAI

      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.	 	 	
              HARBIN YINHAI TECHNOLOGY 

              DEVELOPMENT
                COMPANY LTD.

            
	 	 	 	 
	/s/ Richard
              Pierce	 	 	/s/   Tian,
              Ling
	
              
                

                Richard Pierce

              President

            	 	 	
              
                

              

              Tian,
                Ling

              President

            

    

    
 

     

    
      
        
        

      

      
        14EX-10.1

August 29, 2005

Mr. William Keiper

Re: Chief Executive Officer and President Employment Agreement

Dear Will:

Upon execution by you, this letter will constitute your employment agreement (this
“Agreement”) with Hypercom Corporation (the “Company”).

	 	1.	 	Term. This Agreement will be effective as of 12:01 p.m. on August 29, 2005 and will
expire on August 28, 2010 unless mutually extended by the parties in writing.

	 	2.	 	Position with the Company. During the term of this Agreement, you will serve as
Chief Executive Officer and President of the Company. You will faithfully and diligently
perform all duties commensurate with this position, including those duties directed by the
Company’s Board of Directors (the “Board”), as well as those set forth in the
Company’s Bylaws that relate to such positions. The Company acknowledges that you are
currently a member of the boards of directors of JDA Software Group, Inc., Zones, Inc., and
Smith Micro Software, Inc.

	 	3.	 	Compensation. You will receive the following compensation for your services during
the term of your employment:

	 	(a)	 	You will receive a base salary at an annual rate of four hundred thousand
dollars ($400,000), prorated for time worked in any given year (the “Base
Salary”) provided that such Base Salary shall be subject to increase but not
decrease at the discretion of the Board. The Base Salary will be paid in equal
installments in accordance with the Company’s salary payment policies as in effect from
time to time, and such salary payments will be subject to the usual withholding for
income tax and other customary deductions.

	 	(b)	 	Your target annual bonus compensation shall be one hundred percent (100%) of
your then-current Base Salary for each year during the term of this Agreement
(including a pro-rated bonus for the current fiscal year), if the Company achieves the
annual Performance Goals, as defined below, and as solely determined by the Board;
provided that you may be entitled to receive annual bonus compensation in an aggregate
amount up to one hundred and fifty percent (150%) of your then-current base salary for
each year during the term of this Agreement if the Board deems it consistent with the
achievement of the Performance Goals for such year. The Performance Goals, and the
percentage of bonus compensation tied to each, will be specifically defined by the
Board in its sole discretion, but will likely include some or all of the following:
revenue growth, gross margin, earnings per share, market share growth and development
of the organization (the “Performance Goals”). The determination as to whether
the Company has achieved the Performance Goals will be made by the Board in its sole
and reasonable discretion, and the bonus will be paid to you within five (5) business
days following such determination.

	 	(c)	 	Effective upon your execution of this Agreement, the Board will grant to you
50,000 shares of restricted common stock pursuant to the Company’s Long-Term Incentive
Plan. Such shares will be owned by you effective immediately upon the date of the
grant, provided, however, that if you are no longer employed by the Company on August
28, 2006 for any reason other than your death, this grant may be forfeited upon the
Board’s discretion and any taxes paid by the Company on your behalf shall be repaid.
The Company shall make an additional payment (the “Gross-up Payment”) to you
equal to 44.55% of any excise tax imposed under any federal, state and local income and
employment tax and excise tax imposed upon the Gross-up Payment as a result of the
restricted stock award (but not on the cash so paid). Any Gross-up Payment to be paid
pursuant to this Agreement shall be payable by the Company upon thirty (30) days
written notice of the payment and amount due. The Company acknowledges that you are a
resident of California for state income tax purposes for purposes of this subsection
3(c) and any other appropriate provision of this Agreement.

	 	(d)	 	Effective upon your execution of this Agreement the Board will grant to you one
hundred thousand (100,000) shares of restricted common stock of the Company pursuant to
the Long-Term Incentive Plan restricted by achievement of the Performance Goals to be
established by the Board for fiscal years 2006 and 2007, as follows: (i) fifty percent
(50%) of the restricted common stock, or fifty thousand (50,000) shares of common
stock, will vest based upon substantial achievement of 2006 Performance Goals as
determined by the Board and (ii) the remaining fifty percent (50%) of the restricted
common stock or fifty thousand (50,000) shares of common stock will vest based upon
substantial achievement of 2007 Performance Goals as determined by the Board; provided,
however, that if the Board, in its review of the Performance Goals, determines that you
achieved a personal rating of one hundred percent (100%) or higher in either fiscal
year 2006 or 2007, the entire one hundred thousand (100,000) shares of restricted
common stock granted pursuant to this subsection (d) shall vest. If either or both of
the 2006 or 2007 Performance Goals are not fully and completely achieved, the
proportion of the restricted common stock which shall vest pursuant to this subsection
3(d) shall be determined in the Board’s sole discretion taking into account the
Performance Goals achieved for such year, in both quantitative and qualitative degree.
The Company will also provide to you a Gross-up Payment in connection with the
restricted common stock grant (but not on the cash so paid) pursuant to this subsection
3(d).

	 	(e)	 	Effective upon your execution of this Agreement, the Board will grant to you an
option to purchase one hundred thousand (100,000) shares of common stock of the Company
(the “Option”) pursuant to the Company’s Long-Term Incentive Plan with a per
share exercise price equal to the fair market value of the per share price of the
common stock on the date of grant. The Option shall vest and be fully exercisable
immediately upon the execution of this Agreement with respect to twenty-five percent
(25%) of the number of shares subject to the Option. The remaining seventy-five
percent (75%) of the Option shall vest in equal monthly installments over a period of
thirty six (36) months from the effective date of this Agreement. The Option is
intended to be treated as an “incentive stock option” to the maximum extent permitted
under the Internal Revenue Code of 1986, as amended.

	 	(f)	 	You covenant and agree that, as soon as practicable but in no event more than
three (3) years from the date of this Agreement, you will beneficially own, hold and
retain, for the duration of this Agreement including any extension or amendment related
thereto, shares of common stock of the Company equal in value to your Base Salary for
such given year (the “Minimum Ownership”); provided, however, that this
covenant shall not be construed to require you to purchase shares of the Company’s
common stock on the open market for the sole purpose of achieving the Minimum
Ownership. You also covenant and agree that you will not sell or dispose of, or cause
anyone else to sell or dispose of, any common stock of the Company that you have
received (i) as a result of this Agreement or (ii) pursuant to any other Company
compensation, until and unless you have achieved (and will continue to maintain
following such sale or disposition) the Minimum Ownership.

	 	(g)	 	You will be eligible, but not entitled, to receive additional grants of
restricted capital stock of the Company and additional options to purchase common stock
of the company in such quantities and subject to such conditions as the Board may
determine in its sole and absolute discretion.

	 	(h)	 	You will be eligible, but not entitled, to receive such other compensation as
may from time to time be granted to you by the Board in its sole and absolute
discretion, including additional bonuses approved by the Board or the Board’s
Compensation Committee.

	 	(i)	 	The Company will provide you with housing reimbursement in connection with your
business travel to the Company’s headquarters in Phoenix in a reasonable amount to be
determined by the Board, provided, however, that such reimbursement will be in an
amount comparable to the cost of a standard room at the Sheraton Crescent Hotel located
in Phoenix, Arizona and shall only apply to housing costs incurred while residing in
Phoenix, Arizona on business.

	 	(j)	 	For each week during the term of this Agreement, the Company will provide you
with a reasonable allowance for one round-trip airline ticket from Oakland or San
Francisco, California to Phoenix, Arizona (or comparable destinations), and back,
consistent with the terms of the Company’s travel policies then in effect for executive
officers.

	 	(k)	 	In the event that you decide to move to Phoenix, Arizona from your current
residence, the Company will provide you with a full executive moving package to be
determined by the Board. If you resign for any reason, except as a result of a Change
of Control as defined in the Definitions section, attached hereto, within twelve (12)
months of the date of reimbursement for the move, you must reimburse the Company the
full amount of the moving package granted pursuant to this section.

	 	(l)	 	You may participate in any pension or profit sharing plan, stock purchase plan,
group benefit plan, medical plan, and/or other benefit plans, either currently in
effect or as may be established from time to time by the Board, for which you as an
officer of the Company are, and remain, eligible to participate. (You acknowledge that
you will not be entitled to any benefits under any discretionary plan unless actually
provided to you in accordance with such plan).

	 	(m)	 	You will be permitted to take vacations and sick leave in accordance with the
Company’s policies and procedures as in effect for officers of the Company.

	 	4.	 	Business Expenses. The Company will pay or reimburse you for all ordinary and
necessary business expenses incurred or paid by you in furtherance of the Company’s business,
in accordance with the Company’s policies and procedures. Without limitation, such expenses
include reasonable costs for a cellular telephone and Blackberry and other comparable wireless
communications devices.

	 	5.	 	Termination for Cause or by Voluntary Resignation.

	 	(a)	 	The Company may terminate you for Cause, as defined below. Upon any
termination for Cause, or in the event that you voluntarily resign from the Company,
you will be entitled to receive only that compensation due you through the date of
termination or resignation, as the case may be.

	 	(b)	 	For purposes of this Agreement, “Cause” means if the Board, in its
reasonable and good faith discretion, determines that you (i) have developed or pursued
interests substantially adverse to the Company, (ii) have materially breached any
employment or confidentiality agreement or otherwise failed to satisfactorily discharge
your duties, (iii) have not devoted a majority of your business time, effort and
attention to the affairs of the Company (or such lesser amount as has been agreed to in
writing by the Company), (iv) are charged with or convicted of a felony, or (v) have
engaged in activities or omissions that are detrimental to the well-being of the
Company.

	 	6.	 	Death or Disability.

	 	(a)	 	Except as provided in this subsection 6(a), no salary or benefits shall be
payable under this Agreement following the date of your death. In the event of your
death, any Base Salary earned by you up to the date of your death, as well as any
unreimbursed expenses or Gross-up Payment, shall be paid to your estate or named
beneficiary within a reasonable time following your death. In addition, the title to
(i) such restricted common stock granted pursuant to subsection 3(c) hereof and (ii)
any other restricted common stock not governed by a conflicting agreement, the vesting
of which is contigent upon continued employment with the Company shall immediately pass
to your estate or named beneficiary.

	 	(b)	 	If during the term of this Agreement you become so disabled or incapacitated by
reason of any physical or mental illness or any substance or chemical dependency which
renders you unable to perform the services required of you pursuant to this Agreement
for a continuous period of three (3) months, then, at the option of the Board, this
Agreement will terminate at the end of such three (3) month period, provided that
during such period of disability, incapacity or incapacity, you will be paid your Base
Salary and expenses otherwise payable to you.

	 	(c)	 	In the event of your death or termination pursuant to subsection 6(b), for a
period of eighteen (18) months from the date of your death or such termination, the
Company will pay for COBRA benefits (or the equivalent) due you or your estate.

	 	7.	 	Termination by the Company Other than for Cause.

	 	(a)	 	In the event that you are terminated without Cause within twelve (12) months
from the effective date of this Agreement, you will be entitled to immediately receive
an amount equal to two (2) years of Base Salary. In the event that you are terminated
without Cause after twelve (12) months from the effective date of this Agreement, you
will be entitled to immediately receive an amount equal to one (1) year of Base Salary.
Upon any termination without Cause, (i) such restricted common stock granted pursuant
to subsection 3(c) hereof and any other restricted common stock not governed by a
conflicting agreement, the vesting of which is contigent upon continued employment with
the Company shall immediately vest, and (ii) all your options to purchase common stock
of the Company, the exercise price of which is less than the then fair market value of
such common stock upon the date of termination, shall immediately vest (the “Vested
Options”). You shall have the later of (i) ninety (90) days from the date of your
termination or (ii) the expiration date of such options to exercise the Vested Options;
provided, however, that if your termination without Cause and subsequent acceleration
of all of a portion of your Vested Options under this subsection 7(a) were to occur
pursuant to, or immediately prior to, a Change in Control and, would cause a charge to
the Company’s earnings, then the Board shall have discretion to offer you a consulting
position in lieu of accelerating your Vested Options during which consulting period
your options would continue to vest as if you had not been terminated, as deemed
appropriate by the Board.

	 	(b)	 	For a period of eighteen months from the date of your termination without
Cause, the Company will pay for the COBRA benefits due you. For purposes of this
Agreement, the date of termination of employment without Cause shall be the date
specified in a written notice of termination to you.

	 	(c)	 	Notwithstanding the above, at all times under the terms of this Section 7, the
lump sum portion of your payments must be paid no later than the date that is two and
one-half months after the end of the later of (i) the Company’s fiscal year, or (ii)
the calendar year, in which the payments are no longer subject to a substantial risk of
forfeiture, as determined in accordance with the guidance promulgated under Section
409A of the Internal Revenue Code of 1986, as amended (“Code”).

	 	8.	 	Resignation Following Change of Control.

If, after a Change of Control, as defined in the Definition section, attached hereto, you
resign for Good Reason within the 60-day period following the last event that constitutes
Good Reason, and the Change of Control occurs within thirty-six (36) months from the
effective date of this Agreement, you will receive

	 	(a)	 	Payment equal to two (2) years Base Salary in a lump sum upon effectiveness of
the release contemplated by Paragraph 15 below; and

	 	(b)	 	For a period of eighteen (18) months from the date of your termination, the
Company will pay for the COBRA benefits due you.

In the event that you resign for Good Reason, following a Change of Control, and the Change
of Control occurs after thirty six (36) months from the effective date of this Agreement,
you will receive:

	 	(a)	 	Payment equal to one (1) year Base Salary in a lump sum upon effectiveness of
the release contemplated by Paragraph 15 below; and

	 	(b)	 	For a period of eighteen (18) months from the date of your termination, the
Company will pay for the COBRA benefits due you.

Notwithstanding the above, at all times under the terms of this Section 8, the lump sum portion of
your payments must be paid no later than the date that is two and one-half months after the end of
the later of (i) the Company’s fiscal year, or (ii) the calendar year, in which the payments are no
longer subject to a substantial risk of forfeiture, as determined in accordance with the guidance
promulgated under Section 409A of the Code.

	 	9.	 	Confidential Information and Non-Disclosure. You hereby agree to execute and deliver
to the Company the Hypercom Employee Non-Disclosure Agreement attached hereto in Exhibit A
contemporaneously with the execution and delivery of this Agreement.

	 	(a)	 	You hereby acknowledge and understand that the provisions of the Employee
Non-Disclosure Agreement are incorporated into this Agreement.

	 	(b)	 	You also hereby agree that at any time during your employment with the Company
or at any time thereafter, you shall not make, or cause or assist any other person to
make, any statement or other communication which impugns or attacks, or is otherwise
critical of, the reputation, business or character of the Company, any subsidiary or
any of their respective officers, directors, employees products or services.

	 	10.	 	Personal Rights and Obligations. This Agreement and all rights and obligations
hereunder are personal and will not be assignable by either you or the Company except as
provided in this Paragraph 10, and any purported assignment in violation thereof will be null
and void. Any person, firm or corporation succeeding to the business of the Company by
merger, consolidation, purchase of assets or otherwise will assume by contract or operation of
law the obligations of the Company hereunder and in such a case you will continue to honor
this Agreement with such business substituted for the Company as the employer.

	 	11.	 	Notices. Any notice, election or communication to be given under this Agreement will
be in writing and delivered in person or deposited, certified or registered, in the United
States mail, postage prepaid, addressed as follows:

If to the Company:

Hypercom Corporation

2851 West Kathleen Road

Phoenix, Arizona 85053

Attn: General Counsel

If to you:

William Keiper

or to such other addresses as the Company or you may from time to time designate by notice
hereunder. Notices will be effective upon delivery in person or upon receipt of any
facsimile or e-mail, or at midnight on the fourth business day after the date of mailing, if
mailed.

	 	12.	 	Entire Agreement. Except for the Hypercom Employee Non-Disclosure Agreement attached
hereto as Exhibit A to which you are subject, this Agreement constitutes and embodies the full
and complete understanding and agreement of the Company and you with respect to your
employment by the Company and supersedes all prior understandings or agreements whether oral
or in writing. This Agreement may be amended only by a writing signed by you and the Company.
This Agreement may be executed in any number of counterparts, each of which will be
considered a duplicate original.

	 	13.	 	Arbitration. Any controversy relating to this Agreement or relating to the breach
hereof will be settled by arbitration conducted in Phoenix, Arizona in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in effect. The
award rendered by the arbitrator(s) will be final and judgment upon the award rendered by the
arbitrator(s) may be entered upon it in any court having jurisdiction thereof. The
arbitrator(s) will possess the powers to issue mandatory orders and restraining orders in
connection with such arbitration. The expenses of the arbitration will be borne by the losing
party unless otherwise allocated by the arbitrator(s). This agreement to arbitrate will be
specifically enforceable under the prevailing arbitration law. During the continuance of any
arbitration proceedings, the parties will continue to perform their respective obligations
under this Agreement. Nothing in this Agreement will preclude the Company or any affiliate or
successor from seeking equitable relief, including injunction or specific performance, in any
court having jurisdiction, in connection with any obligations of confidentiality.

	 	14.	 	Governing Law. This Agreement will be governed by and interpreted in accordance with
the laws of the State of Arizona.

	 	15.	 	Withholding and Release. You hereby acknowledge that you have carefully reviewed the
provisions of this Agreement and agree that the provisions are fair and equitable, and that
they are necessary and reasonable in order to protect the Company and its affiliates in the
conduct of their business. You acknowledge and agree that payments made to you hereunder may
be subject to withholding. You further acknowledge and agree that payment of any compensation
to be provided to you following any termination of your employment is subject to your
compliance with any reasonable and lawful policies or procedures of the Company relating to
employee severances, including the execution and delivery by you of a release reasonably
satisfactory to the Company of any and all claims that you may have against the Company or
related persons, except for (i) any continuing obligations required by law or provided herein,
and (ii) for any continuing obligations of indemnification due you as an officer (or a former
officer). Code Section 409A.

	 	16.	 	Code Section 409A. If any payments under this Agreement are subject to the
provisions of Code Section 409A, it is intended that the Agreement will comply fully with and
meet all the requirements of Code Section 409A.

Very truly yours,

/s/ Norman Stout

Norman Stout

Chairman, Compensation Committee of

Hypercom Board of Directors

ACCEPTED:

/s/ William Keiper

William Keiper

Date: August 29, 2005

1

Definitions

“Change of Control” means and includes each of the following:

(1) there shall be consummated any consolidation or merger of the Company in which the Company
is not the continuing or surviving entity, or pursuant to which common stock would be converted
into cash, securities or other property, other than a merger of the Company in which the holders of
the Company’s common stock immediately prior to the merger have at least 80% ownership of
beneficial interest of common stock or other voting securities of the surviving entity immediately
after the merger;

(2) there shall be consummated any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of assets or earning power aggregating more than 40% of the
assets or earning power of the Company and its subsidiaries (taken as a whole), other than pursuant
to a sale-leaseback, structured finance or other form of financing transaction;

(3) the stockholders of the Company shall approve any plan or proposal for liquidation or
dissolution of the Company; or

(4) during any period of two consecutive years, individuals who at the beginning of such
period constituted a majority of the Board shall fail to constitute a majority thereof, unless the
election, or the nomination for election by the Company’s stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office who were directors
at the beginning of the period.

“Good Reason” means, without your consent:

(1) you suffer a reduction in position or a material change in your functions, duties or
responsibilities;

(2) your annual salary is reduced by the Company or there is a material reduction in your
current benefits (other than a reduction in the benefits as part of overall reduction applicable to
all or substantially all other officers); or

(3) you are required to reside other than in Maricopa County, Arizona, or in San Francisco,
California

2

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