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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
[x] Filed by the Registrant
[ ] Filed by a Party Other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Materials [ ] Confidential, For Commission Use Only
[x] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec 240.14a-12
SUNBURST ACQUISITIONS VII, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
Fee previously paid with preliminary materials:
________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
PROXY
SUNBURST ACQUISITIONS VII, INC.
SOLICITED BY THE BOARD OF DIRECTORS
For use at the March 15, 2007 Special Meeting
The undersigned hereby appoints Robert Brantl as Proxy with power of
substitution, who shall be present at the meeting to vote all of the shares of
the undersigned as follows:
(1) PROPOSAL TO CHANGE THE NAME OF THE CORPORATION AND TO CHANGE THE STATE OF
INCORPORATION OF THE CORPORATION FROM COLORADO TO NEVADA
/ / FOR / / AGAINST / / ABSTAIN
and in his discretion upon such other business as may be properly brought before
the Special Meeting of Shareholders of Sunburst Acquisitions VII, Inc., to be
held at the offices of Robert Brantl, Esq., 52 Mulligan Lane, Irvington, NY
10533 on March 15, 2007 at 11:00 a.m. local time, and any adjournments thereof.
This proxy revokes all prior proxies given by the undersigned.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL.
Date: ___________________
Signature: ___________________
Print Name: ___________________
Signature: ___________________
(if jointly held)
IMPORTANT: Please sign exactly as name appears on your stock certificate. Joint
owners should both sign. When signing as executor, trustee, guardian, attorney
or officer of a corporation, give title as such. If a partnership, please sign
in partnership name.
PLEASE COMPLETE, SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
SUNBURST ACQUISITIONS VII, INC.
Citic Plaza, 233 TianHeBei Road, Room 1602B-1603
Guangzhou, P.R. China 510260
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 15, 2007
A Special Meeting of Shareholders of Sunburst Acquisitions VII, Inc., to be held
at the offices of Robert Brantl, Esq., 52 Mulligan Lane, Irvington, NY 10533 on
March 15, 2007 at 11:00 a.m., local time, for the following purposes:
(1) To vote upon a proposal to change the name of the corporation
to "China Junlian Integrated Surveillance, Inc." and to change
the state of incorporation of the corporation from Colorado to
Nevada; and
(2) To transact such other business as may properly come before
the meeting.
Stockholders of record as of the close of business on February 23, 2007 will be
entitled to vote at the meeting.
Enclosed is a proxy statement and form of proxy. Shareholders who do not expect
to attend the Special Meeting are requested to sign and return the proxy in the
enclosed envelope.
By Order of the Board of Directors
Zhang Jun Chuan
Chairman of the Board
March 1, 2007
SUNBURST ACQUISITIONS VII, INC.
PROXY STATEMENT
This Proxy Statement is furnished to shareholders of Sunburst Acquisitions VII,
Inc. in connection with the solicitation by the Board of Directors of proxies to
be used at a Special Meeting of the Shareholders of Sunburst Acquisitions VII.
This Notice of Special Meeting and Proxy Statement, and the accompanying proxy
card have been mailed to the shareholders on or after March 1, 2007 for
the purpose set forth in the Notice of the Special Meeting.
If the enclosed form of proxy is executed and returned, it may nevertheless be
revoked at any time up until the time when it is voted by the Proxy Committee.
The proxy may be revoked by sending written revocation to the Proxy Committee
(c/o Robert Brantl, Esq., counsel to Sunburst Acquisitions VII, 52 Mulligan
Lane, Irvington, NY 10533) or by making a proxy bearing a later date or by
appearing and voting at the Special Meeting. The proxy is in ballot form and
each shareholder may indicate approval or disapproval as to the proposal
identified in the proxy and accompanying Notice of Special Meeting and as set
forth and discussed in this Proxy Statement. The proposals will be presented by
the Board of Directors of Sunburst Acquisitions VII. Where a choice is specified
with respect to a proposal, the shares represented by the proxy will be voted in
accordance with the specification made. Where a choice is not so specified, the
shares represented by the proxy will be voted in favor of the proposal. The
Proxy Committee appointed by the Board of Directors consists of Robert Brantl,
Esq., counsel to Sunburst Acquisition VII.
VOTING SECURITIES OUTSTANDING
Stockholders of record entitled to vote were determined as of the close of
business on February 23, 2007. At that date, there were outstanding and
entitled to vote 9,720,000 shares of common stock of Sunburst Acquisitions VII,
constituting the only class of stock outstanding and entitled to vote at the
meeting. Each share of common stock entitles the holder thereof to one vote.
The following table sets forth the beneficial ownership of outstanding shares of
voting stock of Sunburst Acquisitions VII as of February 23, 2007 by any person
who, to the knowledge of Sunburst Acquisitions VII, owns beneficially more than
5% of the outstanding common stock, by each Sunburst Acquisitions VII director,
and by the directors of Sunburst Acquisitions VII as a group. None of the
individuals identified below owns any equity securities of Sunburst Acquisitions
VII other than the voting stock listed below. All shares are owned of record and
beneficially, except where otherwise noted.
Amount and
Nature of
Name and Address Beneficial Percentage
of Beneficial Owner(1) Ownership of Class
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Zhang Jun Chuan 9,234,000 95.0%
All officers and directors
(4 persons) 9,234,000 95.0%
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(1) Unless otherwise indicated, the address of each individual is c/o Guangzhou
Junlian Correspondence Technology Co, Ltd., Citic Plaza, 233 TianHeBei
Road, Room 1602B-1603, Guangzhou, P.R. China 510260.
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PROPOSAL TO CHANGE THE NAME OF THE CORPORATION AND TO CHANGE THE
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STATE OF INCORPORATION OF THE CORPORATION FROM COLORADO TO NEVADA
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Introduction
For the reasons set forth below, the Board believes that the best interests of
the Corporation and its shareholders will be served by changing the
Corporation's state of incorporation from Colorado to Nevada (the
"Reincorporation"). The Board has approved the Reincorporation, which will be
effected pursuant to the Merger Agreement described below. Under the Merger
Agreement, the Corporation (which will be referred to hereinafter as the
"Colorado Corporation") will be merged with and into a newly formed Nevada
Corporation, China Junlian Integrated Surveillance, Inc. ("Nevada Corporation").
The Nevada Corporation is a wholly-owned subsidiary of the Colorado Corporation
recently incorporated in Nevada solely for the purpose of effecting the
Reincorporation. The Nevada Corporation currently has no material assets and no
business operations. Upon the effectiveness of the Reincorporation, the Colorado
Corporation will cease to exist and Nevada Corporation will continue to operate
the Colorado Corporation's business under the name "China Junlian Integrated
Surveillance, Inc."
At the Special Meeting, the shareholders of the Colorado Corporation will be
asked to consider and vote upon the Reincorporation as outlined in the Agreement
and Plan of Merger by and between the Colorado Corporation and Nevada
Corporation attached as Appendix A (the "Merger Agreement"). For the reasons set
forth below, the Board believes that approval of the Reincorporation is in the
best interests of the Colorado Corporation and its shareholders. Shareholder
approval of the Reincorporation will constitute approval of the Merger Agreement
and all related transactions, which effectuate the change of the legal domicile
of the Colorado Corporation and the change of name of the Corporation.
Due to the nature of this proposed transaction, Shareholders may be entitled to
dissent under Colorado Business Corporations Act Section 7-113-201 et seq. to
the proposed Merger and Reincorporation. A summary of dissenting shareholders
rights and procedure may be found beginning at the bottom of page 14 below.
Additionally, those relevant sections of the Colorado Business Corporation Act
(the "Colorado Act") are set forth in their entirety attached hereto as Appendix
C.
Reasons for the Name Change
The primary purpose of the name change is to better represent Sunburst
Acquisitions' business. Sunburst Acquisitions recently acquired, through a
wholly owned subsidiary, 100% of the equity in Guangzhou Junlian Correspondence
Technology Co., Ltd., a corporation organized under the laws of the People's
Republic of China. Guangzhou Junlian Correspondence Technology Co., Ltd. is
engaged in the business of developing and installing wireless digital
communications and surveillance systems in the People's Republic of China. The
Board of Directors has determined to change Sunburst Acquisitions' name to
reflect this new direction for the business of the corporation.
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Reasons for the Reincorporation
The Board believes that the Reincorporation will provide flexibility for both
the management and business of the Colorado Corporation. In recent years, Nevada
has adopted a policy of encouraging incorporation in that state and has been a
leader in adopting, construing and implementing comprehensive, flexible
corporate laws responsive to the legal and business needs of corporations
organized under its laws. Such an environment will enhance the Colorado
Corporation's operations and its ability to obtain equity financing, to attract
highly qualified directors, and to effect acquisitions and other transactions.
Nevada has followed a policy of encouraging incorporation in that state and, in
furtherance of that policy, has adopted comprehensive, modern and flexible
corporate laws that are periodically updated and revised to meet changing
business needs.
The Nevada courts have developed considerable expertise in dealing with
corporate issues, and a substantial body of case law has developed in the
construction of Nevada law, resulting in greater predictability with respect to
corporate legal affairs. The Nevada courts can rely on numerous precedents in
interpreting the legal principles applicable to measures that may be taken by a
corporation and as to the conduct of the board of directors under the business
judgment rule. Consequently, many corporations originally domiciled elsewhere
have subsequently changed corporate domicile to Nevada in a manner similar to
that proposed by the Colorado Corporation.
The Merger
After the Reincorporation is effected by the Merger Agreement, the Nevada
Corporation will emerge as the surviving corporation. The terms and conditions
of the Reincorporation are set forth in the Merger Agreement attached to this
Proxy Statement, and the summary of the terms and conditions of the
Reincorporation set forth below is qualified by reference to the full text of
the Merger Agreement. Upon consummation of the Reincorporation, the Nevada
Corporation will continue to exist in its present form under the name "China
Junlian Integrated Surveillance, Inc.," and the Colorado Corporation will cease
to exist. The Reincorporation will change the legal domicile of the Colorado
Corporation, but will not result in a change in the principal offices, business,
management, capitalization, assets or liabilities of the Colorado Corporation.
By operation of law, the Nevada Corporation will succeed to all of the assets
and assume all of the liabilities of the Colorado Corporation. The officers and
directors of the Colorado Corporation are the officers and directors of the
Nevada Corporation, and will be the officers and directors of the surviving
corporation.
After the Reincorporation, the rights of shareholders and the Colorado
Corporation's corporate affairs will be governed by the Nevada Revised Statutes
("NRS") and by the articles of incorporation and bylaws of the Nevada
Corporation, instead of the Colorado Act and the articles of incorporation and
bylaws of the Colorado Corporation. Certain material differences are discussed
below under "Comparison of Shareholders Rights under Nevada and Colorado
Corporate Law and Charter Documents." A copy of the Articles of Incorporation of
the Nevada Corporation (the "Nevada Articles") is included as Appendix B to this
Proxy Statement. A copy of the articles of incorporation and bylaws of the
Colorado Corporation and the bylaws of Nevada Corporation (the "Nevada Bylaws")
are available for inspection by shareholders of the Colorado Corporation at the
offices of Firstrade International Securities, Inc., 133-25 37th Avenue,
Flushing, NY 11354.
Upon the effectiveness of the Reincorporation, each outstanding share of the
authorized common stock of the Colorado Corporation will be automatically
converted into one fully paid and nonassessable share of common stock of the
Nevada Corporation (the "Nevada Capital Stock"). Each stock certificate
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representing issued and outstanding shares of the Colorado Corporation's common
stock will continue to represent the same number of shares of Nevada Capital
Stock, and such certificates will be deemed for all corporate purposes to
evidence ownership of shares of Nevada Capital Stock.
IT IS NOT NECESSARY TO SEND IN ANY OF YOUR STOCK CERTIFICATES REPRESENTING
SHARES OF THE COLORADO CORPORATION'S COMMON STOCK, AS IT WILL NOT BE NECESSARY
FOR STOCKHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR NEVADA
CORPORATION STOCK CERTIFICATES. If, however, a shareholder wishes to acquire a
certificate reciting the name "China Junlian Integrated Surveillance, Inc."
after the effective date of the Reincorporation, he may do so by surrendering
his certificate to the Nevada Corporation with a request for a replacement
certificate. Share certificates may be sent to the Nevada Corporation c/o its
counsel:
Robert Brantl, Esq.
52 Mulligan Lane
Irvington, NY 10533
Telephone: (914) 693-3026
Consummation of the Reincorporation is subject to the approval of the Colorado
Corporation's shareholders. The Reincorporation will be approved if there is a
quorum at the Special Meeting and the shareholder votes cast at the meeting in
favor of the proposal exceed the votes cast opposing it. A quorum exists if the
holders of a majority of the shares of common stock outstanding are present at
the meeting in person or by proxy. Zhang Jun Chuan, the Chairman of the Board of
Directors of the Colorado Corporation, owns 95% of the outstanding shares of
common stock. His shares will be voted in favor of the proposal and his vote
will be sufficient to approve the proposal on behalf of the shareholders.
Federal Income Tax Consequences of the Reincorporation
The Reincorporation of the Colorado Corporation pursuant to the Merger Agreement
will be a tax-free reorganization under the Internal Revenue Code of 1986, as
amended. Accordingly, a holder of the common stock (a "Holder") will not
recognize gain or loss in respect of Holder's common stock as a result of the
Reincorporation. The Holder's basis in a share of the Nevada Corporation will be
the same as Holder's basis in the corresponding share of the Colorado
Corporation held immediately prior to the Reincorporation. The Holder's holding
period in a share of the Nevada Corporation will include the period during which
Holder held the corresponding share of the Colorado Corporation, provided the
Holder held the corresponding share as a capital asset at the time of the
Reincorporation. In addition, neither the Colorado Corporation nor the Nevada
Corporation will recognize gain or loss as a result of the Reincorporation, and
the Nevada Corporation will generally succeed, without adjustment, to the tax
attributes of the Colorado Corporation.
The Colorado Corporation has not requested a ruling from the Internal Revenue
Service (the "IRS") or an opinion of counsel with respect to the federal income
tax consequences of the Reincorporation under the Internal Revenue Code. A
successful IRS challenge to the reorganization status of the Reincorporation
would result in a stockholder recognizing gain or loss with respect to each
share of the Colorado Corporation's common stock exchanged in the
Reincorporation equal to the difference between the stockholder's basis in such
shares and the fair market value, as of the time of the Reincorporation, of the
shares of the Nevada Corporation common stock received in exchange therefor. In
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such event, a stockholder's aggregate basis in the shares of the Nevada
Corporation common stock received in the exchange would equal their fair market
value on such date, and the stockholder's holding period for such shares would
not include the period during which the stockholder held shares of the Colorado
Corporation's Common Stock.
State, local, or foreign income tax consequences to stockholders may vary from
the federal tax consequences described above. Stockholders should consult their
own tax advisors as to the effect of the Reincorporation under applicable
federal, state, local, or foreign income tax laws.
Securities Act Consequences
Pursuant to Rule 145(a)(2) under the Securities Act of 1933, as amended (the
"Securities Act"), a merger which has the sole purpose of changing an issuer's
domicile within the United States does not involve a sale of securities for the
purposes of the Securities Act. Accordingly, separate registration of shares of
common stock of Nevada Corporation will not be required.
Description and Comparison of Capital Stock and Voting Rights
The Colorado Corporation's authorized Capital Stock consists of one hundred and
twenty million (120,000,000) shares, of which one hundred million (100,000,000)
shares are Common Stock, without par value, and twenty million (20,000,000)
shares are Preferred Stock, without par value. On February 23, 2007, there were
outstanding and entitled to vote 9,720,000 shares of common stock of the
Colorado Corporation, constituting the only class of stock outstanding and
entitled to vote at the meeting. Each share of common stock entitles the holder
thereof to one vote.
The Nevada Articles provide that the authorized capital stock of the Nevada
Corporation consists of one hundred and twenty million (120,000,000) shares, of
which one hundred million (100,000,000) shares are Common Stock, each share
having a par value of $0.001, and twenty million (20,000,000) shares are
Preferred Stock, each share having a par value of $0.001. "Par value" refers to
the nominal dollar amount assigned to a share of stock by a company, and it
bears no relationship to the value of the stock. The fact that the common stock
of the Colorado Corporation has no par value and the common stock of the Nevada
Corporation has par value is not a significant difference with respect to the
rights of the shareholders. The articles of incorporation of both the Colorado
and the Nevada Corporations authorize the Board to provide for the issuance of
the preferred shares in one or more series, and to determine the preferences,
limitations and relative rights of each series.
The Colorado Articles also authorize the Board to issue a class of Series A
Preferred Stock. No shares of the Series A Preferred Stock are outstanding. The
Nevada Articles do not authorize a Series A preferred Stock, although the Board
of Directors will have discretion to designate shares of preferred stock that
have rights similar to the Series A Preferred Stock.
The Merger Agreement provides that each outstanding share of the Colorado
Corporation's common stock will be exchanged for one share of the Nevada
Corporation's common stock. Accordingly, the interests of the shareholders
relative to each other will not be affected by the Merger.
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Comparison of Shareholder Rights Under Nevada and Colorado Corporate Law And
Charter Documents
Subject to shareholder approval prior to the effective time (the "Effective
Time") of the Reincorporation, the Colorado Corporation will change its domicile
to Nevada and shall thereafter be governed by the NRS and by the Nevada Articles
and the Nevada Bylaws ("Nevada Charter Documents"). Upon the filing with and
acceptance by the Secretary of State of Nevada of the Articles of Merger in
Nevada, the Colorado Corporation will be merged into the Nevada corporation, and
the outstanding shares of the Colorado Corporation's Common Stock will be deemed
for all purposes to evidence ownership of, and to represent, shares of Nevada
Corporation Common Stock.
The Nevada Charter Documents effectively replace the Colorado Corporation's
current Articles of Incorporation ("Colorado Articles") and the Colorado Bylaws
(together, the "Colorado Charter Documents") including providing officers,
directors and agents of the Nevada Corporation with certain indemnification
rights in addition to those currently provided for the under the Colorado
Charter Documents.
If the Reincorporation is consummated, holders of the Colorado Corporation's
Common Stock will become holders of Nevada Common Stock, which will result in
their rights as shareholders being governed by the laws of the State of Nevada.
In addition, their rights as shareholders will be governed by the Nevada Charter
Documents.
It is not practical to describe all of the differences between the Nevada
Articles and the Colorado Articles and the Nevada Bylaws and the Colorado Bylaws
or all of the differences between the laws of the States of Nevada and Colorado.
The following is a summary of some of the significant rights of the shareholders
under Colorado and Nevada law and under the Colorado and Nevada Charter
Documents. This summary is qualified in its entirety by reference to the full
text of such documents and laws.
Authorized Capital Stock
The following discussion is qualified in its entirety by reference to the Nevada
Charter Documents.
The total number of shares that may be issued by Nevada Corporation is one
hundred and twenty million (120,000,000) shares, of which one hundred million
(100,000,000) shares are Common Stock, par value $0.001 per share, and twenty
million (20,000,000) shares are Preferred Stock, par value $0.001 per share. The
description of the classes of shares and a statement of the number of shares in
each class and the relative rights, voting power, restrictions and preferences
granted to and imposed upon the shares of each class are discussed below. Each
share of Common shall have, for all purposes, one vote per share. The holders of
Nevada Common Stock issued and outstanding have and possess the right to receive
notice of shareholders' meetings and to vote upon the election of directors or
upon any other matter as to which approval of the outstanding shares of Nevada
Common Stock or approval of the common shareholders is required or requested.
Shareholders will not have a right to cumulate their votes for the election of
directors.
Voting Rights With Respect To Extraordinary Corporate Transactions
Nevada. Approval of mergers and consolidations and sales, leases or exchanges of
all or substantially all of the property or assets of a corporation, requires
the affirmative vote or consent of the holders of a majority of the outstanding
shares entitled to vote, except that no vote of shareholders of the corporation
surviving a merger is necessary if: (i) the merger does not amend or alter, in
any way the articles of incorporation of the corporation; (ii) each outstanding
share immediately prior to the merger is to be an identical share after the
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merger; (iii) no common stock of the corporation and no securities or
obligations convertible into common stock are to be issued in the merger, or the
common stock to be issued in the merger along with the conversion of other
securities issued in the merger does not exceed 20% of the common stock of the
corporation outstanding immediately before the merger; and, (iv) the number of
participating shares outstanding immediately before the merger, plus the number
of participating shares issuable as a result of the merger, either by conversion
of securities issued pursuant to the merger or the exercise of rights and
warrants issued pursuant to the merger, will not exceed by more than 20% the
total number of participating shares outstanding immediately before the merger.
Colorado. Approval of mergers and consolidations and sales, leases or exchanges
of all or substantially all of the property or assets of a corporation requires
the approval of a majority of shareholders (unless the articles of
incorporation, the bylaws or a resolution of the board of directors requires a
greater number) holding issued shares of the corporation. No vote of the
shareholders of the surviving corporation in a merger is required if: (i) the
articles of incorporation of the surviving corporation will not be changed; (ii)
each shareholder of the surviving corporation whose shares were outstanding
immediately before the effective date of the merger will hold the same number of
shares, with identical designations, preferences, limitations and relative
rights, immediately after the merger; (iii) none of the entities is a nonprofit
corporation; and (iv) the shareholders of the surviving corporation immediately
prior to the merger own at least 80% of the of the value of all interest of the
surviving entity immediately after the merger and are entitled to cast votes or
right to consent equal to 80% of all shareholder votes immediately after the
merger.
Shareholders' Consent without A Meeting
Nevada. Unless otherwise provided in the articles of incorporation, action
requiring the vote of shareholders, may be taken without a meeting, without
prior notice and without a vote, by the written consent of shareholders having
not less than the minimum number of votes that would be necessary to take such
action at a meeting at which all shares entitled to vote thereon were present
and acted.
Colorado. Unless otherwise provided in the articles of incorporation, action
requiring the vote of the shareholders may be taken without a meeting if all the
shareholders entitled to vote consent to take the action in writing. However, no
action taken shall become effective until the corporation receives writings that
describe and consent to the action being taken. Any such action taken shall have
the same effect as any action taken at a meeting of shareholders. The Colorado
Articles do not provide for a lesser vote in the case of shareholder action by
written consent. Therefore, under the Colorado Charter Documents, unanimous
shareholder consent is required in order to approve actions by written consent.
Dividends
Nevada. Distributions under the NRS mean (1) the direct or indirect transfer of
corporate property or cash to shareholders, or (2) the incurrence of
indebtedness by the corporation to or for the benefit of its shareholders. A
distribution may be made in the form of a declaration or payment of a dividend,
a purchase, redemption or other acquisition of shares. However, no distribution
shall be made if following said distribution: (i) the corporation would be
unable to pay its debts; (ii) the distribution would leave the corporation with
assets less than the sum of total liabilities.
Colorado. A corporation is prohibited from making a distribution to its
shareholders if, after giving effect to the distribution, the corporation would
not be able to pay its debts as they become due in the usual, course of business
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or the corporation's total assets would be less than its total liabilities (plus
any amounts necessary to satisfy any preferential rights).
Anti-Takeover Statutes
Nevada. Except under certain circumstances, Nevada law prohibits a "combination"
between a corporation and an "interested shareholder" within three years of the
shareholder becoming an "interested shareholder." An "interested shareholder,"
as defined under the NRS, is a person that, directly or indirectly, controls 10%
or more of the outstanding voting stock, or is an affiliate or associate of the
corporation and was the owner of 10% or more of such voting stock at any time
within the previous three years. A "combination" includes a merger,
consolidation, sale or other disposition of assets having an aggregate value in
excess of 5% of the aggregate market value of the consolidated assets of the
corporation or its outstanding stock, disposition of assets having an aggregate
market value equal to 5% or more of the market value of all the outstanding
shares of the corporation, or said assets represent 10% or more of the earning
power or net income of the corporation. Additionally, certain other business
combinations that would increase the interested shareholder's proportionate
share under the NRS are prohibited.
The following are considered to be authorized combinations: Generally,
corporations may not engage in any combination with an interested shareholder of
the resident domestic corporation after the expiration of 3 years after his date
of acquiring shares, unless (1) a the combination is approved by the board of
directors of the corporation before the interested shareholder's date of
acquiring shares, the purchase of shares made by the interested stockholder on
that date having been approved by the board of directors before that date, or
(2) a combination approved by vote of the holders of stock representing a
majority of the outstanding shares not beneficially owned by the interested
shareholder proposing the combination, or any affiliate or associate of the
interested shareholder proposing the combination, at a meeting called for that
purpose no earlier than three years after the interested shareholder's date of
acquiring shares.
The NRS also imposes requirements in connection with the acquisition of a
controlling interest in a corporation. The acquiring person may obtain only such
voting rights in his shares as are conferred by a resolution of the stockholders
of the corporation. If the shares of the acquiring person are accorded full
voting rights and the acquired shares constitute a majority of the voting power
of all the outstanding shares, a stockholder whose share were not voted in favor
of authorizing the voting rights is entitled to exercise dissenters' rights.
(The NRS provisions regarding dissenters' rights are explained below.) The NRS
permits a corporation to elect not to be governed by the provisions regarding
acquisition of a controlling interest, as described in this paragraph. The
Nevada Corporation has made such an election in the Nevada Charter.
Colorado. The Colorado Act does not provide guidance regarding anti-takeover
provisions.
Quorum of Directors
Nevada. Unless a greater or lesser number is required for a quorum by the
articles of incorporation or bylaws a majority of the directors then in office,
at a meeting duly assembled shall constitute a quorum.
Colorado. A quorum of the board of directors consists of a majority of the fixed
number of directors if the corporation has a fixed board size, or if the
corporation's bylaws provide for a variable board size, a majority of the number
of directors prescribed, or if no number is prescribed, the number in office.
The corporation's bylaws may provide that a quorum consists of a majority of the
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number of directors fixed, or no fewer than a majority of the number of
directors fixed, or if no fixed number then no fewer than a majority of the
number of directors in office immediately prior to the beginning of the meeting.
Derivative Suits
Nevada. A person may not commence a derivative action unless the person was a
shareholder of the corporation at the time when the transactions complained of
occurred (unless the person became a shareholder through transfer by operation
of law from a person who was a shareholder at the time). The complaint must be
verified and allege with particularity the efforts of the plaintiff(s) to secure
the desired action from the board of directors or from the shareholders if
necessary and the reasons for plaintiff(s) failure to secure such action or the
reasons for not making the effort to secure such action. The action may not be
maintained if the plaintiff(s) do not fairly and adequately represent the
interests of the shareholders similarly situated.
Colorado. A person may not commence a derivative action unless the person was a
shareholder of the corporation at the time when the transactions complained of
occurred (unless the person became a shareholder through transfer by operation
of law from a person who was a shareholder at the time). The complaint must be
verified and allege with particularity (i) the demand made on the board of
directors and that either the demand was refused or ignored by the board of
directors, or (ii) if no demand was made on the board of directors, why the
person did not make the demand. The action may not be maintained if the
plaintiff(s) do not fairly and adequately represent the interests of the
shareholders similarly situated.
Special Meetings of Shareholders
Nevada. Unless otherwise provided in the articles of incorporation or bylaws,
only the president or any two or more directors, acting in concert may call for
a special meeting. Unless otherwise specified by the articles of incorporation
or bylaws, the special meeting need not be held in the state of incorporation,
and notice of any meeting must be sent to shareholders indicating the purpose(s)
for the meeting and the location of the meeting, and the notice must be signed
by a officer or other person so authorized to sign on behalf of the corporation
within the articles of incorporation or bylaws. The Nevada Bylaws permit a
special meeting to be called at any time by a majority of the board of
directors, the executive committee, the chairman of the board, the chief
executive officer, or the president, or by vote of, or instrument in writing
signed by at least ten percent (10%) of the shareholders of the issued and
outstanding capital stock of Nevada Corporation. Notice of said meeting must be
given no fewer than 10 days and no more than 60 days prior to the date scheduled
for the meeting.
Colorado. A special meeting of shareholders shall be held by the corporation, if
called by the board of directors, the person or persons authorized by the bylaws
to call a special meeting, or written demands from the holders of shares
representing at least 10% of all votes entitled to be cast on any issue proposed
to be considered at the special meeting. The corporation shall give notice of
the date, time and place of the meeting no fewer than 10 and no more than 60
days before the meeting. Notice of a special meeting must include a description
of the purposes for which the special meeting is called, and unless otherwise
specified by the articles of incorporation or bylaws, the special meeting need
not be held within the state of incorporation; however if there be no place
specified in the articles of incorporation or bylaws, the meeting shall be held
at the corporation's principal place of business.
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Amendments to Charter
Nevada. Amendments to the articles of incorporation require that the board of
directors adopt a resolution setting forth the proposed amendment and the
purpose(s) thereof, declare the amendment's advisability, and call for a general
or special meeting. All shareholders are entitled to vote for the consideration
of the proposed amendment. At the meeting held for said purpose and upon a
canvassing of the shareholders, if it appears that the majority will affirm the
amendment, the corporation's secretary shall file the with the secretary of
state a certificate setting forth the amendment. However, if the amendment
proposes to change any preference or any relative or other right given to any
class of security, then the amendment must be approved by the vote of the
majority of the shareholders of each class of shares affected by the amendment
regardless of the limitations or restrictions on the voting power of said
classes of stock.
Colorado. Unless otherwise provided in the articles of incorporation, the board
of directors may, under very limited circumstances, amend the articles without
shareholder approval. Otherwise the board of directors or the holders of shares
representing at least 10% of the all votes entitled to be cast may propose an
amendment to the articles of incorporation. The board of directors shall either
recommend to the shareholders the adoption of the board proposed amendment or
recommend against or in favor of any proposed shareholder amendment. The
amendment shall be duly voted upon and will be adopted if approved by an
affirmative vote by a majority of shareholders.
Notice, Adjournment and Place of Stockholders' Meetings
Nevada. The NRS and the Nevada Charter Documents require that notice of
shareholders' meetings be given between 10 and 60 days before a meeting unless
the shareholders waive or reduce the notice period by unanimous consent in
writing. If the meeting is to be postponed for a period of more than 60 days,
the corporation shall be required to fix a new record date and new notice must
be sent to all shareholders of record as of that date.
Colorado. The Colorado Act and the Colorado Charter Documents require that
notice of shareholders' meetings be given between 10 and 60 days before a
meeting unless the shareholders waive or reduce the notice period by unanimous
consent in writing. If the meeting is moved to more than 120 days from the
originally scheduled date the corporation shall be required to fix a new record
date and new notice must be sent to all shareholders of record as of that date.
Directors
Nevada. The Nevada Bylaws provide the number of members of the Nevada Board
shall not be reduced to less than one (1) nor exceed ten (10), and may, at any
time or times, be increased or decreased by a duly adopted amendment to the
Nevada Bylaws. A majority of the number of directors then in office constitutes
a quorum for the transaction of business. In the absence of a quorum, a majority
of the directors present may adjourn any meeting from time to time until a
quorum is present.
Colorado. The Colorado Articles provide that the Board consists of not less than
(one) nor more than five (5) persons or such number as shall be fixed from time
to time by the Board of Directors. Currently, the Colorado Corporation has 1
director. A majority of the number of directors constitutes a quorum for the
transaction of business. The Colorado Bylaws provide that a vacancy among the
directors may be filled for the unexpired term by the affirmative vote of a
majority of the remaining directors in office, though less than a quorum.
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Election and Removal of Directors
Nevada. The Nevada Bylaws provide that the election of directors shall take
place at an annual or special meeting of stockholders. Directors shall hold
office for the terms specified in the bylaws and until their successors have
been elected as provided in said bylaws. Vacancies on the board shall be filled
only by a majority of the directors then in office, although less than a quorum.
Colorado. The Colorado Bylaws provide that each director shall hold office until
the next annual meeting of shareholders and until his or her successor shall
have been elected and qualified. The Bylaws further provide that any director,
or the entire Board, may be removed in accordance with the provisions of the
Colorado Act. Under the Colorado Act, the shareholders may remove one or more
directors with or without cause unless the articles of incorporation provide
that directors may be removed only for cause, and only if the number of votes
cast in favor of removal exceeds the number of votes cast against removal at a
meeting called for the purpose of removing the director. Vacancies on the board
occurring by reason of the resignation or removal of director with or without
cause shall be filled only by a majority of the directors then in office,
although less than a quorum.
Transactions with Officers and Directors
Nevada. Under the NRS, contracts or transactions in which a director or officer
is financially interested are not automatically void or voidable if: (i) the
financial interest is known to the board of directors or committee, and the
board or committee approves, authorizes or ratifies the contract in good faith
by a majority vote of the remaining directors without counting the interested
director(s) vote; (ii) the material facts are disclosed to the shareholders, and
they approve or ratify the transaction in good faith by a majority vote of all
shareholders eligible to vote, including the interested directors' or officers'
votes; or (iii) the contract is fair to the corporation at the time it is
entered into. Board or committee approval must be by a majority of the
disinterested directors, but interested directors may be counted for purposes of
establishing the presence or absence of a quorum.
Colorado. Under the Colorado Act, contracts or transactions in which a director
or officer is financially interested are not automatically void or voidable if:
(i) the material facts are known to the board of directors or committee, and the
board or committee approves, authorizes or ratifies the contract in good faith
by a sufficient vote without counting the interested director(s)' vote; (ii) the
financial interest is known to the shareholders, and they approve or ratify the
transaction in good faith by a majority vote of all shareholders eligible to
vote, including the interested directors' or officers' votes; (iii) the
financial interest is unknown to the interested officer or director at the time
of approval; or (iv) the contract is fair to the corporation at the time it is
entered into. Board or committee approval must be by a majority of the
disinterested directors, but interested directors may be counted for purposes of
establishing the presence or absence of a quorum.
Limitation on Liability of Directors; Indemnification of Officers and Directors
Nevada. Nevada law provides that a corporation may adopt in its bylaws
provisions eliminating or limiting the personal liability of an officer or
director from any threatened civil, criminal, administrative or investigative
action if adjudicated not liable for a knowing breach of fiduciary duty, fraud
or other intentional misconduct or if the officer or director acted in good
faith in the best interest of the corporation, or, with respect to a criminal
action if the officer or director had no reasonable cause to believe that the
conduct was unlawful. The Nevada Articles eliminate the liability of directors
of the corporation for monetary damages to the fullest extent permissible under
Nevada law.
13
Article VII of the Nevada Articles requires the Nevada Corporation to indemnify
all such persons whom it has the power to indemnify to the fullest extent
legally permissible by Nevada law. The Nevada Bylaws permit Nevada Corporation
to advance expenses to a director or officer, provided that the director or
officer undertakes to repay amounts advanced if it is ultimately determined that
such person is not entitled to indemnification, and subject to such other
conditions as the Board may impose.
Indemnification rights under Nevada law are not exclusive. Accordingly, the
Nevada Corporation's Bylaws specifically permit the Nevada Corporation to
indemnify its directors, officers, employees and other agents pursuant to an
agreement, bylaw provision, shareholder vote or vote of disinterested directors
or otherwise, any or all of which may provide indemnification rights broader
than those currently available under the Colorado or Nevada indemnification
statutes.
Colorado. The Colorado Act provides the authority to limit liability against any
director of the corporation made party to a proceeding because of their status
as a director if: (i) the person acted in good faith; (ii) the person reasonably
believed he was acting in his official capacity in the best interest of the
corporation, or if not in his official capacity, the conduct was not opposed to
the best interest of the corporation, and, in the case of any criminal
proceeding, the person had no cause to believe the conduct was wrongful.
However, a corporation may not limit liability in the following situations: (i)
wherein a director is adjudicated liable to the corporation; (ii) wherein a
director is found to have derived an improper personal benefit from the course
of action, whether or not acting within his official capacity. The Colorado Act
provides that the indemnification provided must be limited to reasonable
expenses incurred in connection with the proceedings.
The Colorado Act requires that, unless limited by the articles of incorporation,
a corporation shall indemnify any director who, because of his position as
director, became a party to a proceeding wherein he prevailed on the merits or
otherwise, against reasonable expenses incurred in connection with the
proceeding.
Additionally, both the Nevada Charter Documents and the Colorado Charter
Documents provide that the Nevada Corporation may purchase insurance on behalf
of those persons entitled to be indemnified by the Corporation.
Dissenters' Rights as a Result of the Reincorporation Merger
Colorado Law provides to shareholders opposing the proposed Reincorporation the
right to dissent and receive payment of the fair value of their shares as set
forth in sections 7-113-101 et. seq. of the Colorado Act. (The referenced
Colorado Act provisions are attached hereto in their entirety as Appendix C.)
The material requirements for a shareholder to properly exercise his or her
rights are summarized below. However, the Colorado Act provisions are very
technical in nature, and the following summary is qualified in its entirety by
the actual statutory provisions that should be carefully reviewed by any
shareholder wishing to assert the rights provided therein.
Once proposed, a corporate action that creates dissenters' rights is to be
submitted to a vote of the shareholders, whether at a shareholders' meeting or
via shareholders' written consent. The corporation is required to send notice to
all shareholders informing them of the applicability of dissenters' rights,
accompanied by all relevant Colorado Act provisions relating to dissenters'
rights. The failure to properly give notice shall not bar a shareholder who was
entitled to dissent from asserting those rights subsequent to the corporate
action.
14
Following receipt of adequate notice, shareholders exercising the right to
dissent shall send written notice to the corporation expressing their intention
to demand payment for their shares if the opposed corporate action is taken, and
the objecting shareholders must refrain from voting their shares in favor of the
action. If the proposed action merely requires shareholders' written consent,
the dissenting shareholders shall refrain from executing a writing that would
consent to such action. Compliance with the foregoing is mandatory and if the
shareholders fail to comply, they will be precluded from demanding payment for
their shares if the opposed action is approved.
If the dissenting shareholder complies with the foregoing requirements, the
shareholder may demand payment by sending such request in writing and depositing
with the Corporation the shareholder's certificates for certificated shares. The
shareholder maintains all rights as shareholder until such time as the opposed
corporate is taken. The demand for payment and the deposit of certificates is,
with limited exceptions, irrevocable.
Upon receipt of each demand for payment, the Nevada Corporation, as the
surviving corporation, will pay each dissenting shareholder the "fair value" of
the shares. The fair value of the shares shall be determined as of the time
immediately before the opposed corporate action becomes effective. If the
dissenting shareholder is dissatisfied with the fair value of the shares fixed
by the Corporation, the shareholder may reject in total the Corporation's offer
and send to the Corporation, in writing, an estimate of what such shareholder
considers fair value, plus any interest due if: (i) the shareholder believes
that the fair value offered is less than the fair value of the shares, or if the
interest was miscalculated; or (ii) if the Corporation fails to make payment
within 60 days from the final day that demands for payment would be received; or
(iii) if the Colorado Corporation does not take the action opposed by the
shareholder and fails to return the deposited share certificates. A dissenting
shareholder loses the right to demand payment if he fails to respond to the
Corporation within 30 days of the day the Corporation made or offered payment
for the dissenter's shares.
If the dissenting shareholders and the Corporation are unable to agree on the
fair value of the shares, then the Corporation may commence a proceeding in the
Colorado courts within 60 days after the receipt of the dissenter's notice of
estimate of fair value and interest owed. If the Corporation does not commence
such proceedings within the 60 day period, it must pay each dissenter the amount
demanded. If the proceeding is properly commenced, the court will determine the
fair value of the shares.
The foregoing is merely a summary of the dissenters' rights as provided within
the Colorado Act. Shareholders that are considering dissenting from the proposed
action are strongly encouraged to seek outside independent counsel, because the
rules are highly technical and there are many deadlines for notices and
responses of which a dissenter must be aware in order to preserve all rights
provided under the law.
Amendment to the Merger Agreement; Termination
The Merger Agreement may be terminated and the Reincorporation abandoned,
notwithstanding shareholder approval, by the Board of Directors of the Colorado
Corporation at any time before consummation of the Reincorporation if the Board
of Directors of the Colorado Corporation determines that in its judgment the
Reincorporation does not appear to be in the best interests of the Colorado
Corporation or its shareholders.
15
OTHER MATTERS
Transaction of Other Business
As of the date of this Proxy Statement, Management has no knowledge of any
business which will be presented for consideration at the meeting other than
that described above. Should any other matter come before the meeting, it is the
intention of the Proxy Committee to vote such proxy in accordance with their
best judgment.
Shareholder Proposals
In order for shareholder proposals intended to be presented at the next meeting
of Shareholders to be eligible for inclusion in the corporation's proxy
statement and the form of proxy for such meeting, they must be received by the
Corporation at its principal executive offices a reasonable time before the
Corporation prints its proxy materials for the meeting. In addition, if the
Corporation does not receive notice of a shareholder proposal within a
reasonable time before the Corporation mails its proxy materials to the
shareholders, then the proxies solicited by the Board of Directors may confer on
the proxy committee discretionary authority to vote on the shareholder proposal.
The Board of Directors has not determined when there will be another meeting of
the shareholders.
Solicitation of Proxies
The entire expense of preparing, assembling and mailing this proxy statement,
the form of proxy and other material used in the solicitation of proxies will be
paid by the Colorado Corporation. In addition to the solicitation of proxies by
mail, arrangements may be made with brokerage houses and other custodians,
nominees and fiduciaries to send proxy material to their principals, and the
Colorado Corporation will reimburse them for expenses in so doing. To the extent
necessary in order to insure that sufficient votes are cast, officers and agents
of the Colorado Corporation, who will not be additionally compensated therefor,
may request the return of proxies personally. The extent to which this will be
necessary depends on how promptly proxies are received, and shareholders are
urged to send their proxies without delay.
By Order of the Board of Directors
Zhang Jun Chuan
Chairman of the Board
Dated March 1, 2007
16
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made as of this
23rd day of February, 2007, by and between Sunburst Acquisitions VII, Inc., a
Colorado corporation (the "Colorado Corporation"), and China Junlian Integrated
Surveillance, Inc., a Nevada corporation (the "Nevada Corporation").
W I T N E S S E T H:
WHEREAS, the Colorado Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado;
and
WHEREAS, the Nevada Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada; and
WHEREAS, the respective Boards of Directors of the Colorado Corporation
and the Nevada Corporation have determined that, for purposes of effecting the
reincorporation of the Colorado Corporation in the State of Nevada, it is
advisable, to the advantage of and in the best interests of the Nevada
Corporation and its stockholder and the Colorado Corporation and its
stockholders that the Colorado Corporation merge with and into the Nevada
Corporation upon the terms and subject to the conditions herein provided; and
WHEREAS, the parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and to cause the merger described herein
to qualify as a reorganization under the provisions of Section 368 of the Code;
and
WHEREAS, the respective Boards of Directors of the Colorado Corporation
and the Nevada Corporation and the stockholder of the Nevada Corporation have
unanimously adopted and approved this Agreement, and the Board of Directors of
the Colorado Corporation has directed that this Agreement be submitted to the
stockholders of the Colorado Corporation for their consideration.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and intending to be legally bound, the Colorado Corporation
and the Nevada Corporation hereby agree as follows:
1. Merger. Subject to the approval of the stockholders of the Colorado
Corporation in accordance with the Colorado Business Corporation Act (the
"Colorado Act"), at such time hereafter as the parties hereto shall mutually
agree, the Colorado Corporation shall be merged with and into the Nevada
Corporation (the "Merger"), and the Nevada Corporation shall be the surviving
company (hereinafter sometimes referred to as the "Surviving Corporation"). The
Merger shall be effective upon (a) the filing of this Agreement together with
Statement of Merger (the "Statement of Merger") with the office of the Colorado
Secretary of State in accordance with the provisions of Section 111-104.5 of the
Colorado Act; and (b) the filing of a duly certified counterpart of this
Agreement and a duly executed Articles of Merger (the "Articles of Merger") with
the Secretary of State of the State of Nevada in accordance with the applicable
provisions of Chapter 92A of the Nevada Revised Statutes regarding Private
Corporations ( the "Nevada Private Corporation Statutes"); the date and time of
the later of such filings being hereinafter referred to as the "Effective Date."
Following the due approval of the Merger by the stockholders of the Colorado
Corporation, subject to the provisions of this Agreement, the Statement of
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Merger shall be duly executed by the Nevada Corporation and the Colorado
Corporation and thereafter delivered to the office of the Secretary of State of
the State of Colorado, as provided in Section 111-104.5 of the Colorado Act, and
the Articles of Merger shall be duly executed by the Nevada Corporation and the
Colorado Corporation and thereafter delivered to the office of the Secretary of
State of Nevada, pursuant to Section 92A.200 of the Nevada Private Corporation
Statutes.
2. Governing Documents.
a. The Certificate of Incorporation of the Nevada Corporation shall be
the Certificate of Incorporation of the Surviving Corporation.
b. The By-Laws of the Nevada Corporation shall be the By-Laws of the
Surviving Corporation.
3. Officers and Directors. The directors of the Colorado Corporation
immediately prior to the Effective Date shall be the directors of the Surviving
Corporation and the officers of the Colorado Corporation immediately prior to
the Effective Date shall be the officers of the Surviving Corporation. Such
directors and officers will hold office from the Effective Date until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation and By-Laws of the Surviving
Corporation, as the same may be lawfully amended, or as otherwise provided by
law.
4. Succession; Name of Surviving Corporation. As of the Effective Date,
the separate existence of the Colorado Corporation shall cease and the Colorado
Corporation shall be merged with and into the Nevada Corporation, and the name
of the Surviving Corporation shall be China Junlian Integrated Surveillance,
Inc. The Surviving Corporation shall have all of the rights, privileges,
immunities and powers and be subject to all of the duties and liabilities
granted or imposed by Section 92A.250 of the Nevada Private Corporation
Statutes.
5. Further Assistance. From and after the Effective Date, as and when
required by the Nevada Corporation or by its successor and assigns, there shall
be executed and delivered on behalf of the Colorado Corporation such deeds and
other instruments, and there shall be taken or caused to be taken by it such
further and other action, as shall be appropriate or necessary in order to vest,
perfect or confirm, of record or otherwise, in the Nevada Corporation the title
to and possession of all the property, interests, assets, rights, privileges,
immunities, power, franchises and authority of the Colorado Corporation, and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of the Nevada Corporation are fully authorized in the name and on
behalf of the Colorado Corporation or otherwise to take any and all such action
and to execute and deliver any and all such deeds and other instruments.
6. Capital Stock. At the Effective Date, by virtue of the Merger and
without any action on the part of the holder thereof, each share of common stock
of the Colorado Corporation outstanding immediately prior to the Effective Time
shall be changed and converted into one fully paid and non-assessable share of
common stock of the Nevada Corporation.
7. Outstanding Stock of the Nevada Corporation. At the Effective Date,
the 1,000 shares of the Nevada Common Stock presently issued and outstanding in
the name of the Colorado Corporation shall be canceled and retired and resume
the status of authorized and unissued shares of Nevada Common Stock, and no
shares of Nevada Common Stock or other securities of Nevada Common Stock shall
be issued in respect thereof.
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8. Stock Certificates. From and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of capital
stock of the Colorado Corporation shall be deemed for all purposes to evidence
ownership and to represent the shares of capital stock of the Nevada Corporation
into which such shares of the Colorado Corporation represented by such
certificates have been converted as herein provided. The registered owner on the
books and records of the Nevada Corporation or its transfer agent of any such
outstanding stock certificate shall, until such certificate shall have been
surrendered for transfer or otherwise accounted for to the Nevada Corporation or
its transfer agent, have and be entitled to exercise any voting and other rights
with respect to and to receive any dividend and other distributions upon the
shares of capital stock of the Nevada Corporation evidenced by such outstanding
certificates as above provided.
9. Validity of Nevada Common Stock. All shares of Nevada Common Stock
into which Colorado Common Stock is to be converted pursuant to the Merger shall
not be subject to any statutory or contractual preemptive rights, shall, when
issued, be validly issued, fully paid and nonassessable and shall be issued in
full satisfaction of all rights pertaining to such Colorado Common Stock.
10. Rights of Former Holders. From and after the Effective Date, no
holder of certificates which evidenced Colorado Common Stock immediately prior
to the Effective Date shall have any rights with respect to the shares formerly
evidenced by those certificates, other than the right to receive the shares of
Nevada Common Stock into which such Colorado Common Stock shall have been
converted pursuant to the Merger.
11. Abandonment and Termination. At any time before the Effective Date,
this Agreement may be terminated and the Merger may be abandoned by the Board of
Directors of either the Colorado Corporation or the Nevada Corporation or both,
notwithstanding approval of this Agreement by the sole stockholder of the Nevada
Corporation and the stockholders of the Colorado Corporation.
12. Third Parties. Except as provided in this Agreement, nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the parties hereto or their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
13. Approval of Colorado Corporation as the Sole Stockholder of the
Nevada Corporation. By its execution and delivery of this Agreement, the
Colorado Corporation, as the sole stockholder of the Nevada Corporation,
consents to, approves and adopts this Agreement and approves the Merger, subject
to the approval and adoption of this Agreement by the holders of a majority of
the shares of the Colorado Common Stock. The Colorado Corporation agrees to
execute such instruments as may be necessary or desirable to evidence its
approval and adoption of this Agreement and Merger as the sole stockholder of
the Nevada Corporation.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed as of this day and year first
above written.
Sunburst Acquisitions VII, Inc. China Junlian Integrated Surveillance, Inc.
By: /s/ Yuan Gang By: /s/ Yuan Gang
---------------------------- -----------------------------
Name: Yuan Gang Name: Yuan Gang
Title: Chief Executive Officer Title: Chief Executive Officer
A-3
APPENDIX B
DEAN HELLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretaryofstate.biz
Articles of Incorporation
(PURSUANT TO NRS 78)
1. Name of Corporation: China Junlian Integrated Surveillance, Inc.
2. Resident Agent name: CSC Services of Nevada, Inc.
Resident Agent Street Address: 502 East John Street,
Carson City Nevada 89706
3. Number of shares: 120,000,000
Par value: $0.001
4. Name & Address of Board of Directors/Trustees:
* Zhang Jun Chuan
FuLiQianXi Business Ctr. Rm606, 1 XinGangXi Road, Guangzhou, China
5. Purpose: To engage in any lawful activity within or without the State of
Nevada
6. Names, Address and Signature of Incorporator:
* Jennifer N. Boyd
82 Noroton Avenue Darien CT 06820
* Signature: /S/ Jennifer N. Boyd
--------------------
7. Certificate of Acceptance of Appointment of Resident Agent:
I hereby accept appointment as Resident Agent for the above named
corporation.
________________________________________________ Date:
Authorized Signature of R.A. or On behalf of R.A. Company
B-1
ARTICLES OF INCORPORATION
OF
CHINA JUNLIAN INTEGRATED SURVEILLANCE, INC.
(Additional Provisions)
8. Indemnification
Any person made a party to any action, suit or proceeding by reason of the fact
that he is or was a director, officer or employee of the Corporation or of any
corporation which he served as such at the request of the Corporation, shall be
indemnified by the Corporation against all expenses and other amounts for which
indemnification may be made under law. The indemnification provided for herein
shall be made at the times, in the manner and to the fullest extent provided by
law.
Neither any amendment nor repeal of this Article 8, nor the adoption of any
provision of the Corporation's Articles of Incorporation inconsistent with this
Article, shall eliminate or reduce the effect of this Article in respect of any
matter occurring, or any action or proceeding accruing or arising or that, but
for this Article, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
9. Elections.
The Corporation expressly elects not to be governed by Nevada Revised Statutes
78.411 to 78.444, inclusive. Further, the provisions of the Nevada Revised
Statutes 78.378 to 78.3793, inclusive, shall not apply to the Corporation.
10. Limitation of Director and Officer Liability
No director or officer of the Corporation shall be personally liable to the
Corporation or its shareholders for damages for breach of their fiduciary duty
as a director or officer; provided, however, that this Article X shall not
eliminate or limit the liability of a director of officer for (i) acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law; or (ii) authorizing the payment of distributions in violation of Nevada
Revised Statutes 78.300.
B-2
APPENDIX C
TITLE 7. CORPORATIONS AND ASSOCIATIONS
CORPORATIONS
COLORADO BUSINESS CORPORATIONS
ARTICLE 113. DISSENTERS' RIGHTS
PART 1. RIGHT OF DISSENT - PAYMENT FOR SHARES
7-113-101. Definitions
For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action, or the surviving or acquiring domestic or foreign corporation,
by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under section 7-113-102 and who exercises that right at the time and in
the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of the
shares immediately before the effective date of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans or, if none, at the legal rate as specified in
section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are registered in
the records of a corporation or the beneficial owner of shares that are
registered in the name of a nominee to the extent such owner is recognized by
the corporation as the shareholder as provided in section 7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial shareholder.
7-113-102. Right to dissent
(1) A shareholder, whether or not entitled to vote, is entitled to dissent and
obtain payment of the fair value of the shareholder's shares in the event of any
of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party if:
(I) Approval by the shareholders of that corporation is required for the merger
by section 7-111-103 or 7-111-104 or by the articles of incorporation; or
(II) The corporation is a subsidiary that is merged with its parent corporation
under section 7-111-104;
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(b) Consummation of a plan of share exchange to which the corporation is a party
as the corporation whose shares will be acquired;
(c) Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of the corporation for which a shareholder
vote is required under section 7-112-102 (1); and
(d) Consummation of a sale, lease, exchange, or other disposition of all, or
substantially all, of the property of an entity controlled by the corporation if
the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to section 7-112-102 (2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class or
series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended, or
on the national market system of the national association of securities dealers
automated quotation system, or were held of record by more than two thousand
shareholders, at the time of:
(a) The record date fixed under section 7-107-107 to determine the shareholders
entitled to receive notice of the shareholders' meeting at which the corporate
action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine shareholders
entitled to sign writings consenting to the corporate action; or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section shall not
apply if the shareholder will receive for the shareholder's shares, pursuant to
the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan of merger
or share exchange;
(b) Shares of any other corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended, or
on the national market system of the national association of securities dealers
automated quotation system, or will be held of record by more than two thousand
shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) (Deleted by amendment, L. 96, p. 1321, Sec 30, effective June 1, 1996.)
(2.5) A shareholder, whether or not entitled to vote, is entitled to dissent and
obtain payment of the fair value of the shareholder's shares in the event of a
reverse split that reduces the number of shares owned by the shareholder to a
fraction of a share or to scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voided under section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair value of
the shareholder's shares in the event of any corporate action to the extent
provided by the bylaws or a resolution of the board of directors.
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(4) A shareholder entitled to dissent and obtain payment for the shareholder's
shares under this article may not challenge the corporate action creating such
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
7-113-103. Dissent by nominees and beneficial owners
(1) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to the shares held
on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares beneficially
owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents with
respect to the shares held by any one or more beneficial shareholders, each such
beneficial shareholder must certify to the corporation that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
7-113-201. Notice of dissenters' rights
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting, the notice of the
meeting shall be given to all shareholders, whether or not entitled to vote. The
notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of this
article and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to shareholders entitled to vote on the proposed
action at the meeting. Failure to give notice as provided by this subsection (1)
shall not affect any action taken at the shareholders' meeting for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (1).
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(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104, any written or oral solicitation of a shareholder to execute a
writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
shall not affect any action taken pursuant to section 7-107-104 for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (2).
7-113-202. Notice of intent to demand payment
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is submitted to a vote at a shareholders' meeting and if notice of
dissenters' rights has been given to such shareholder in connection with the
action pursuant to section 7-113-201 (1), a shareholder who wishes to assert
dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written notice
of the shareholder's intention to demand payment for the shareholder's shares if
the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized without a meeting of shareholders pursuant to section
7-107-104 and if notice of dissenters' rights has been given to such shareholder
in connection with the action pursuant to section 7-113-201 (2), a shareholder
who wishes to assert dissenters' rights shall not execute a writing consenting
to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1) or (2)
of this section is not entitled to demand payment for the shareholder's shares
under this article.
7-113-203. Dissenters' notice
(1) If a proposed corporate action creating dissenters' rights under section
7-113-102 is authorized, the corporation shall give a written dissenters' notice
to all shareholders who are entitled to demand payment for their shares under
this article.
(2) The dissenters' notice required by subsection (1) of this section shall be
given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the effective date
or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment demands and
the address of a place where certificates for certificated shares must be
deposited;
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(c) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a dissenter to
state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment demand and
certificates for certificated shares, which date shall not be less than thirty
days after the date the notice required by subsection (1) of this section is
given;
(f) State the requirement contemplated in section 7-113-103 (3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
7-113-204. Procedure to demand payment
(1) A shareholder who is given a dissenters' notice pursuant to section
7-113-203 and who wishes to assert dissenters' rights shall, in accordance with
the terms of the dissenters' notice:
(a) Cause the corporation to receive a payment demand, which may be the payment
demand form contemplated in section 7-113-203 (2) (d), duly completed, or may be
stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of this
section retains all rights of a shareholder, except the right to transfer the
shares, until the effective date of the proposed corporate action giving rise to
the shareholder's exercise of dissenters' rights and has only the right to
receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209 (1) (b), the demand for
payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
7-113-205. Uncertificated shares
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
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(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206. Payment
(1) Except as provided in section 7-113-208, upon the effective date of the
corporate action creating dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204, whichever is later,
the corporation shall pay each dissenter who complied with section 7-113-204, at
the address stated in the payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, the
amount the corporation estimates to be the fair value of the dissenter's shares,
plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent fiscal year
or, if that is not available, the corporation's balance sheet as of the end of a
fiscal year ending not more than sixteen months before the date of payment, an
income statement for that year, and, if the corporation customarily provides
such statements to shareholders, a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year, which balance sheet
and statements shall have been audited if the corporation customarily provides
audited financial statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year period, which
financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under section
7-113-209; and
(e) A copy of this article.
7-113-207. Failure to take action
(1) If the effective date of the corporate action creating dissenters' rights
under section 7-113-102 does not occur within sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If the effective date of the corporate action creating dissenters' rights
under section 7-113-102 occurs more than sixty days after the date set by the
corporation by which the corporation must receive the payment demand as provided
in section 7-113-203, then the corporation shall send a new dissenters' notice,
as provided in section 7-113-203, and the provisions of sections 7-113-204 to
7-113-209 shall again be applicable.
7-113-208. Special provisions relating to shares acquired after announcement of
proposed corporate action
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(1) The corporation may, in or with the dissenters' notice given pursuant to
section 7-113-203, state the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action creating dissenters'
rights under section 7-113-102 and state that the dissenter shall certify in
writing, in or with the dissenter's payment demand under section 7-113-204,
whether or not the dissenter (or the person on whose behalf dissenters' rights
are asserted) acquired beneficial ownership of the shares before that date. With
respect to any dissenter who does not so certify in writing, in or with the
payment demand, that the dissenter or the person on whose behalf the dissenter
asserts dissenters' rights acquired beneficial ownership of the shares before
such date, the corporation may, in lieu of making the payment provided in
section 7-113-206, offer to make such payment if the dissenter agrees to accept
it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall include
or be accompanied by the information required by section 7-113-206 (2).
7-113-209. Procedure if dissenter is dissatisfied with payment or offer
(1) A dissenter may give notice to the corporation in writing of the dissenter's
estimate of the fair value of the dissenter's shares and of the amount of
interest due and may demand payment of such estimate, less any payment made
under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section 7-113-206 or
offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206 within sixty
days after the date set by the corporation by which the corporation must receive
the payment demand; or
(c) The corporation does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares as required by section
7-113-207 (1).
(2) A dissenter waives the right to demand payment under this section unless the
dissenter causes the corporation to receive the notice required by subsection
(1) of this section within thirty days after the corporation made or offered
payment for the dissenter's shares.
PART 3. JUDICIAL APPRAISAL OF SHARES
7-113-301. Court action
(1) If a demand for payment under section 7-113-209 remains unresolved, the
corporation may, within sixty days after receiving the payment demand, commence
a proceeding and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay to each dissenter whose demand remains
unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in subsection (1) of
this section in the district court for the county in this state in which the
street address of the corporation's principal office is located, or, if the
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corporation has no principal office in this state, in the district court for the
county in which the street address of its registered agent is located, or, if
the corporation has no registered agent, in the district court for the city and
county of Denver. If the corporation is a foreign corporation without a
registered agent, it shall commence the proceeding in the county in which the
domestic corporation merged into, or whose shares were acquired by, the foreign
corporation would have commenced the action if that corporation were subject to
the first sentence of this subsection (2).
(3) The corporation shall make all dissenters, whether or not residents of this
state, whose demands remain unresolved parties to the proceeding commenced under
subsection (2) of this section as in an action against their shares, and all
parties shall be served with a copy of the petition. Service on each dissenter
shall be by registered or certified mail, to the address stated in such
dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend a decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to such order. The parties to the
proceeding are entitled to the same discovery rights as parties in other civil
proceedings.
(5) Each dissenter made a party to the proceeding commenced under subsection (2)
of this section is entitled to judgment for the amount, if any, by which the
court finds the fair value of the dissenter's shares, plus interest, exceeds the
amount paid by the corporation, or for the fair value, plus interest, of the
dissenter's shares for which the corporation elected to withhold payment under
section 7-113-208.
7-113-302. Court costs and counsel fees
(1) The court in an appraisal proceeding commenced under section 7-113-301 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court. The court shall assess the costs
against the corporation; except that the court may assess costs against all or
some of the dissenters, in amounts the court finds equitable, to the extent the
court finds the dissenters acted arbitrarily, vexatiously, or not in good faith
in demanding payment under section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the court finds
the corporation did not substantially comply with part 2 of this article; or
(b) Against either the corporation or one or more dissenters, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to said counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited.
* * *
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