Exhibit 10.07
 
OPTION AGREEMENT
 
This Option Agreement (this “Agreement”) is dated May 26, 2010, and is entered
into in Ningguo City, Anhui Province, People’s Republic of China (“PRC” or
“China”) by and between Ningguo Taiyang Incubation Plant Co., Ltd. (“Party A”),
and Auhui Taiyang Poultry Co., Ltd. (“Party B”), and the undersigned
shareholders of Party B (each a “Shareholder” and collectively the
“Shareholders”). Party A, Party B and the Shareholders are each referred to in
this Agreement as a “Party” and collectively as the “Parties.”
 
R E C I T A L S
 
1.           Party B is engaged in the business of cultivating and trading
ducks; processing, trading and selling ducklings, feeds, byproducts of
ducklings, and raw materials and byproducts of feeds (to operate according to
relevant administration license where so required for an item) (the “Business”).
Party A has the expertise in consulting, and Party A and Party B has entered
into a Consulting Services Agreement to provide Party B with various consulting
services in connection with the Business.
 
2.           The Shareholders collectively holds 100% of the issued and
outstanding equity interests of Party B (collectively the “Equity Interest”).
 
3.           The Parties are entering into this Agreement in connection with the
Consulting Services Agreement.
 
NOW, THEREFORE, the Parties to this Agreement hereby agree as follows:
 
1.           PURCHASE AND SALE OF EQUITY INTEREST
 
1.1           Grant of Rights. The Shareholders (hereinafter the “Transferors”)
hereby collectively and irrevocably grant to Party A or a designee of Party A
(the “Designee”) an option to purchase at any time, to the extent permitted
under PRC Law, all or a portion of the Equity Interest in accordance with such
procedures as determined by Party A, at the price specified in Section 1.3 of
this Agreement (the “Option”). No Option shall be granted to any party other
than to Party A and/or a Designee. Party B hereby agrees to grant the Party C’s
Option to Party A and/or the Designee. As used herein, Designee may be an
individual person, a corporation, a joint venture, a partnership, an enterprise,
a trust or an unincorporated organization.
 
1.2           Exercise of Rights. According with the requirements of applicable
PRC laws and regulations, Party A and/or the Designee may exercise the Option at
any time by issuing a written notice (the “Notice”) to one or more of the
Transferors and specifying the amount of the Equity Interest to be purchased
from such Transferor(s) and the manner of purchase.
 
 
 

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1.3          Purchase Price.
 
1.3.1           The purchase price of the Equity Interest pursuant to an
exercise of the Option shall be equal to the capital paid in by the Transferors,
adjusted pro rata for purchase of less than all of the Equity Interest, unless
applicable PRC laws and regulations require an appraisal of the Equity Interest
or stipulate other restrictions regarding the purchase price of the Equity
Interest.
 
1.3.2           If the applicable PRC laws and regulations require an appraisal
of the Equity Interest or stipulate other restrictions regarding the purchase
price of the Equity Interest at the time Party A exercises the Option, the
Parties agree that the purchase price shall be set at the lowest price
permissible under the applicable laws and regulations.
 
1.4          Transfer of Equity Interest. Upon each exercise of the Option under
this Agreement:
 
1.4.1           The Transferors shall hold or cause to be held a meeting of
shareholders of Party B in order to adopt such resolutions as necessary in order
to approve the transfer of the relevant Equity Interest (such Equity Interest
hereinafter the “Purchased Equity Interest”) to Party A and/or the Designee;
 
1.4.2           The relevant Parties shall, enter into an Equity Interest
Purchase Agreement, in a form reasonably acceptable to Party A, setting forth
the terms and conditions for the sale and transfer of the Purchased Equity
Interest;
 
1.4.3           The relevant Parties shall execute, without any security
interest, all other requisite contracts, agreements or documents, obtain all
requisite approval and consent of the government, conduct all necessary actions,
transfer the valid ownership of the Purchased Equity Interest to Party A and/or
the Designee, and cause Party A and/or the Designee to be the registered owner
of the Purchased Equity Interest. As used herein, “security interest” means any
mortgage, pledge, the right or interest of the third party, any purchase right
of equity interest, right of acquisition, right of first refusal, right of
set-off, ownership detainment or other security arrangements; however, such term
shall not include any security interest created under that certain Equity Pledge
Agreement dated as of May 26, 2010 by and among the Parties (the “Pledge
Agreement”).
 
1.5          Payment. Payment of the purchase price shall be determined through
negotiation between the Transferors and Party A （including the Designee） in
accordance with the applicable laws at the time of the exercise of the Option.
 
Option Agreement
TAIYANG
 
 
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2.           REPRESENTATIONS RELATING TO EQUITY INTEREST
 
2.1          Party B’s Representations. Party B hereby represents and warrants:
 
2.1.1           Without Party A’s prior written consent, Party B’s Articles of
Association shall not be supplemented, changed or renewed in any way, Party B’s
registered capital of shall not be increased or decreased, and the structure of
the registered capital shall not be changed in any form;
 
2.1.2           To maintain the corporate existence of Party B and to prudently
and effectively operate the business according with customary fiduciary
standards applicable to managers with respect to corporations and their
shareholders;
 
2.1.3           Without Party A’s prior written consent, upon the execution of
this Agreement, to not sell, transfer, mortgage, create pledges, liens, or any
other encumbrances on or dispose, in any other form, any asset, legitimate or
beneficial interest of business or income, or encumber or approve any
encumbrance or imposition of any security interest on Party B’s assets;
 
2.1.4           Without Party A’s prior written consent, to not issue or provide
any guarantee or permit the existence of any debt, other than (i) such debt that
may arise from Party B’s normal or daily business (excepting a loan); and (ii)
such debt which has been disclosed to Party A before this Agreement;
 
2.1.5           To operate and conduct all business operations in the ordinary
course of business, without damaging Party B’s business or the value of its
assets;
 
2.1.6           Without Party A’s prior written consent, to not enter into any
material agreements, other than agreements entered into in the ordinary course
of business (for purpose of this paragraph, if any agreement for an amount in
excess of One Hundred Thousand Renminbi (RMB 100,000) shall be deemed a material
agreement);
 
2.1.7           Without Party A’s prior written consent, to not provide loan or
credit to any other party or organization;
 
2.1.8           To provide to Party A all relevant documents relating to its
business operations and finance at the request of Party A;
 
2.1.9           To purchase and maintain general business insurance of the type
and amount comparable to those held by companies in the same industry, with
similar business operations and assets as Party B, from an insurance company
approved by Party A;
 
2.1.10         Without Party A’s prior written consent, to not enter into any
merger, cooperation, acquisition or investment;
 
2.1.11         To notify Party A of the occurrence or the potential occurrence
of litigation, arbitration or administrative procedure relating to Party B’s
assets, business operations and/or income;
 
Option Agreement
TAIYANG
 
 
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2.1.12         In order to guarantee the ownership of Party B’s assets, to
execute all requisite or relevant documents, take all requisite or relevant
actions, and make and pursue all relevant claims;
 
2.1.13         Without Party A’s prior written notice, to not assign the Equity
Interest in any form; however, Party B shall distribute dividends to the
Shareholders upon the request of Party A; and
 
2.1.14         In accordance with Party A’s request, to appoint any person
designated by Party A to be a management member of Party B.
 
2.2          Transferors’ Representations. The Transferors hereby represent and
warrant:
 
2.2.1           Without Party A’s prior written consent, upon the execution of
this Agreement, to not sell, transfer, mortgage, create pledges, liens, or any
other encumbrances on or dispose in any other form any legitimate or beneficial
interest of the Equity Interest, or to approve any security interest, except as
created pursuant to the Pledge Agreement;
 
2.2.2           Without Party A’s prior written notice, to not adopt or support
or execute any shareholders resolution at any meeting of the shareholders of
Party B that seeks to approve any sale, transfer, mortgage or disposal of any
legitimate or beneficial interest of the Equity Interest, or to allow any
attachment of security interests, except as created pursuant to the Pledge
Agreement;
 
2.2.3           Without Party A’s prior written notice, to not agree or support
or execute any shareholders resolution at any meeting of the shareholders of
Party B that seeks to approve Party B’s merger, cooperation, acquisition or
investment;
 
2.2.4           To notify Party A the occurrence or the potential occurrence of
any litigation, arbitration or administrative procedure relevant to the Equity
Interest;
 
2.2.5           To cause Party B’s Board of Directors to approve the transfer of
the Purchased Equity Interest pursuant to this Agreement;
 
2.2.6           In order to maintain the ownership of Equity Interest, to
execute all requisite or relevant documents, conduct all requisite or relevant
actions, and make all requisite or relevant claims, or make requisite or
relevant defense against all claims of compensation;
 
2.2.7           Upon the request of Party A, to appoint any person designated by
Party A to be a director of Party B; and
 
2.2.8           To prudently comply with the provisions of this Agreement and
any other agreements entered into with Party A and Party B in connection
therewith, and to perform all obligations under all such agreements, without
taking any action or nonfeasance that may affect the validity and enforceability
of such agreements.
 
Option Agreement
TAIYANG
 
 
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3.           Representations and Warranties. As of the execution date of this
Agreement and on each transfer of Purchased Equity Interest pursuant to an
exercise of the Option, Party B and the Transferors hereby represent and warrant
as follows:
 
3.1           Such Parties shall have the power and ability to enter into and
deliver this Agreement and to perform their respective obligations thereunder,
and at each transfer of Purchased Equity Interest, the relevant Equity Interest
Purchase Agreement and to perform their obligations thereunder. Upon execution,
this Agreement and each Equity Interest Purchase Agreement will constitute
legal, valid and binding obligations and be fully enforceable in accordance with
their terms;
 
3.2           The execution and performance of this Agreement and any Equity
Interest Purchase Agreement shall not: (i) violate any relevant laws and
regulations of the PRC; (ii) conflict with the Articles of Association or other
organizational documents of Party B; (iii) cause to breach any agreements or
instruments or having binding obligation on it, or constitute a breach under any
agreements or instruments or having binding obligation on it; (iv) breach
relevant authorization of any consent or approval and/or any effective
conditions; or (v) cause any authorized consent or approval to be suspended,
removed, or cause other added conditions;
 
3.3           The Equity Interest is transferable in whole and in part, and
neither Party B nor the Transferors has permitted or caused any security
interest to be imposed upon the Equity Interest other than pursuant to the
Pledge Agreement;
 
3.4           Party B does not have any unpaid debt, other than (i) such debt
that may arise during the ordinary course of business; and (ii) debt either
disclosed to Party A before this Agreement or incurred pursuant to Party A’s
written consent;
 
3.5           Party B has complied with all applicable PRC laws and regulations
in connection with this Agreement;
 
3.6           There are no pending or ongoing litigation, arbitration or
administrative procedures with respect Party B, its assets or the Equity
Interests, and Party B and the Transferors have no knowledge of any pending or
threatened claims to the best of their knowledge; and

 
3.7           The Transferors own the Equity Interest free and clear of
encumbrances of any kind, other than the security interest pursuant to the
Pledge Agreement.
 
Option Agreement
TAIYANG
 
 
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4.           ASSIGNMENT OF AGREEMENT
 
4.1           Party B and the Transferors shall not transfer their rights and
obligations under this Agreement to any third party without Party A’s prior
written consent.
 
4.2           Party B and the Transferors hereby agrees that Party A shall be
able to transfer all of its rights and obligations under this Agreement to any
third party, and such transfer shall only be subject to a written notice of
Party A to Party B and the Transferors without any further consent from Party B
or the Transferors.
 
5.           EFFECTIVE DATE AND TERM
 
5.1           This Agreement shall be effective as of the date first set forth
above.
 
5.2           The term of this Agreement shall commence from the effective date
and shall last for the maximum period of time permitted by law unless it is
early terminated in accordance with this Agreement.
 
5.3           At the end of the term of this Agreement (including any extension
thereto), or if earlier terminated pursuant to Section 5.2, the Parties agree
that any transfer of rights and obligations pursuant to Section 4.2 shall
continue to be in effect.
 
6.           APPLICABLE LAWS AND DISPUTE RESOLUTION
 
6.1           Applicable Laws. The execution, validity, interpretation and
performance of this Agreement and the dispute resolution under this Agreement
shall be governed by the laws of PRC.
 
6.2           Dispute Resolution. The Parties shall strive to resolve any
disputes arising from the interpretation or performance of this Agreement
through amicable negotiations. If such dispute cannot be settled within thirty
(30) days, any Party may submit such dispute to China International Economic and
Trade Arbitration Commission (“CIETAC”) for arbitration. There shall be three
(3) arbitrators. Party B shall select one (1) arbitrator and Party A shall
select one (1) arbitrator, and both arbitrators shall be selected within thirty
(30) days after giving or receiving the demand for arbitration. Such arbitrators
shall be freely selected, and the Parties shall not be limited in their
selection to any prescribed list. The chairman of the CIETAC shall select the
third arbitrator. If a Party does not appoint an arbitrator who consents to
participate within thirty (30) days after giving or receiving the demand for
arbitration, the relevant appointment shall be made by the chairman of the
CIETAC. The arbitration shall abide by the rules of CIETAC, and the arbitration
proceedings shall be conducted in Beijing, China in English. The determination
of CIETAC shall be final and binding upon the Parties.
 
7.           Taxes and Expenses. Each Party shall, according with PRC laws, bear
any and all registration taxes, costs and expenses for the transfer of equity
arising from the preparation, execution and completion of this Agreement and all
Equity Interest Purchase Agreements.
 
Option Agreement
TAIYANG
 
 
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8.           Notices. Notices or other communications required to be given by
any Party pursuant to this Agreement shall be written in English and Chinese and
delivered personally or sent by registered mail or prepaid mail or by a
recognized courier service or by facsimile transmission to the relevant address
of each Party as set forth below or other addresses of the Party as specified by
such Party from time to time. The date when the notice is deemed to be duly
served shall be determined as follows: (a) a notice delivered personally is
deemed duly served upon the delivery; (b) a notice sent by mail is deemed duly
served the tenth (10th) day after the date of the air registered mail with the
postage prepaid has been sent out (as is shown on the postmark), or the fourth
(4th) day after the delivery by an internationally recognized courier service;
and (c) a notice sent by facsimile transmission is deemed duly served upon the
receipt time as shown on the transmission confirmation.
 
Party A
 
Ningguo Taiyang Incubation Plant Co., Ltd.
     
 
 
Address: Heli Park, Ningguo Economic and Technology Development Zone,
    Anhui Province, China
 
 
Attn: WU Qiyou
     
 
 
Fax: +86-563-4309932
 
 
Tel: +86-563-4309932
   
Party B:
 
Auhui Taiyang Poultry Co., Ltd.
     
 
 
Address: No.88 East Waihuan Road, Ningguo City, Anhui Province, China
     
 
 
Attn: WU Qiyou
     
 
 
Fax: +86-563-4309977
 
 
Tel: +86-563-4309933

 
Option Agreement
TAIYANG
 
 
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Party C:
     
PartyC1
: WU Qiyou
         
Address: No.88 East Waihuan Road, Ningguo City, Anhui Province, China
         
Tel: +86-563-4309999
   
Fax: +86-563-4309977
       
PartyC2:
   
 
CHEN Beihuang
         
Address: No.88 East Waihuan Road, Ningguo City, Anhui Province, China
         
Tel: +86-563-4309998
   
Fax: +86-563-4309977
       
PartyC3:
   
 
WU Qida
         
Address: No.88 East Waihuan Road, Ningguo City, Anhui Province, China
         
Tel: +86-563-4309998
   
Fax: +86-563-4309977

 
9.           Confidentiality. The Parties acknowledge and confirm that any oral
or written information exchanged by the Parties in connection with this
Agreement is confidential. The Parties shall maintain the confidentiality of all
such information. Without the written approval by the other Parties, any Party
shall not disclose to any third party any confidential information except as
follows:
 
(a)           Such information was in the public domain at the time it was
communicated;
 
(b)           Such information is required to be disclosed pursuant to the
applicable laws, regulations, policies relating to the stock exchange; or
 
(c)           Such information is required to be disclosed to a Party’s legal
counsel or financial consultant, provided however, such legal counsel and/or
financial consultant shall also comply with the confidentiality as stated
hereof. The disclosure of confidential information by employees or agents of the
disclosing Party is deemed to be an act of the disclosing Party, and such Party
shall be responsible for all breach of confidentiality arising from such
disclosure. This provision shall survive even if certain clauses of this
Agreement are subsequently amended, revoked, terminated or determined to be
invalid or unable to implement for any reason.
 
Option Agreement
TAIYANG
 
 
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10.          Further Warranties. The Parties agree to promptly execute such
documents as required to perform the provisions of this Agreement, and to take
such actions as may be reasonably required to perform the provisions of this
Agreement.
 
11.          MISCELLANEOUS
 
11.1         Amendment, Modification and Supplement. Any amendments and
supplements to this Agreement shall only take effect if executed by both Parties
in writing.
 
11.2         Entire Agreement. Notwithstanding Article 5 of this Agreement, the
Parties acknowledge that this Agreement constitutes the entire agreement of the
Parties with respect to the subject matters therein and supersede and replace
all prior or contemporaneous agreements and understandings, whether oral or in
writing.
 
11.3         Severability. If any provision of this Agreement is deemed invalid
or non-enforceable according with relevant laws, such provision shall be deemed
invalid only within the applicable laws and regulations of the PRC, and the
validity, legality and enforceability of the other provisions hereof shall not
be affected or impaired in any way. The Parties shall, through reasonable
negotiation, replace such invalid, illegal or non-enforceable provisions with
valid provisions in order to bring similar economic effects of those invalid,
illegal or non-enforceable provisions.
 
11.4         Headings. The headings contained in this Agreement are for
reference only and shall not affect the interpretation and explanation of the
provisions in this Agreement.
 
11.5         Language and Copies. This Agreement shall be executed in English in
five (5) duplicate originals. Each Party shall hold one (1) original, each of
which shall have the same legal effect.
 
11.6         Successor. This Agreement shall be binding on the successors of
each Party and the transferee allowed by each Party.
 
11.7         Survival. Each Party shall continue to perform its obligations
notwithstanding the expiration or termination of this Agreement. Article 6,
Article 8, Article 9 and Section 11.7 hereof shall continue to be in full force
and effect after the termination of this Agreement.
 
11.8         Waiver. Any Party may waive the terms and conditions of this
Agreement in writing with the written approval of all the Parties. Under certain
circumstances, any waiver by a Party to the breach of other Parties shall not be
construed as a waiver of any other breach by any other Parties under similar
circumstances.
 
[SIGNATURE PAGE FOLLOWS]
 
Option Agreement
TAIYANG
 
 
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IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal
representatives as of the date first set forth above.
 
PARTY A:          Ningguo Taiyang Incubation Plant Co., Ltd.
 
Legal/Authorized Representative: /s/ WU Qiyou
Name: WU Qiyou
Title: Executive Director
 
PARTY B:          Auhui Taiyang Poultry Co., Ltd.

 
Legal/Authorized Representative: /s/ WU Qiyou
Name: WU Qiyou
Title: Executive Director
 
Option Agreement
TAIYANG
 
 
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SIGNATURE PAGE FOR SHAREHOLDERS OF PARTY B
 
SHAREHOLDERS OF PARTY B:
 
/s/ WU Qiyou
 
WU Qiyou
 
ID Card No.:
 
Owns 96% of Auhui Taiyang Poultry Co., Ltd.
     
/s/ CHEN Beihuang
 
CHEN Beihuang
 
ID Card No.:
 
Owns 2% of Auhui Taiyang Poultry Co., Ltd.
     
/s/ WU Qida
 
WU Qida
 
ID Card No.:
 
Owns 2% of Auhui Taiyang Poultry Co., Ltd.
 

 
Option Agreement
TAIYANG
 
 
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