As previously reported, on August 18, 2009, China Security & Surveillance Technology, Inc., a Delaware corporation (the "Company") and certain of its subsidiaries entered into a Notes Purchase Agreement (the "Notes Purchase Agreement") with Citadel Equity Fund Ltd. ("Citadel") to restructure the Company’s existing US$60,000,000 1.00% Guaranteed Senior Unsecured Convertible Notes due 2012 (the "CSST I Notes") and the US$50,000,000 1.00% Guaranteed Senior Unsecured Convertible Notes due 2012 (the "CSST II Notes", and together with the CSST I Notes, the "Existing Notes"). On September 2, 2009, the closing of the transactions contemplated by the Notes Purchase Agreement occurred and, in accordance with the terms of the Notes Purchase Agreement, the Company 1) issued to Citadel the Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible Notes in the aggregate principal amount of US$50,000,000 (the "Tranche A Notes") and the Tranche B Zero Coupon Guaranteed Senior Unsecured Notes in the aggregate principal amount of $84,000,000 (the "Tranche B Notes", and together with the Tranche A Notes, the "New Notes"); and 2) paid to Citadel additional consideration, consisting of $5,000,000 in cash and 2,902,758 shares of the Company’s common stock (the "Stock Consideration Shares"). The Existing Notes were delivered for cancellation. A copy of the Notes Purchase Agreement was filed as Exhibit 4.1 to the Company’s current report on Form 8-K previously filed on August 21, 2009.

In connection with the closing of the transactions contemplated by the Notes Purchase Agreement, on September 2, 2009, the Company entered into a new indenture for the Tranche A Notes (the "Tranche A Indenture") and a new indenture for the Tranche B Notes (the "Tranche B Indenture", and together with the Tranche A Indenture, the "New Indentures") and issued the New Notes to Citadel.

The Tranche A Notes have a principal amount of $50,000,000, zero coupon interest, and mature on September 2, 2012. The Company will repay the principal amount in six consecutive semi-annual installments, starting March 2, 2010, with 25%, 25% and 50% of the principal amount to be repaid in the first, second and third year, respectively. The conversion price will be $10 per share initially, subject to customary conversion price adjustments, anti-dilution protections and a one-time price reset on March 2, 2011 (the "Reset Date") based on the volume weighted average price of the Company’s shares during the 45 trading days immediately preceding the Reset Date, provided that the conversion price shall be adjusted to no lower than $6.00 per share.

The Tranche B Notes have a principal amount of $84,000,000, zero coupon interest, and mature on September 2, 2012. The Company will repay the principal amount in six consecutive semi-annual installments, starting March 2, 2010, with 46%, 46% and 8% of the principal amount to be repaid in the first, second and third year, respectively. The Tranche B Notes are not convertible. The Company will be entitled to redeem the New Notes at any time with no premium or penalty at a redemption price equal to 100% of the principal amount of the New Notes to be redeemed, plus default interest, if any (the "Redemption Price"). The New Notes are guaranteed by the Company’s significant subsidiaries (as such term is defined under Rule 1-02 of the Regulation S-X) to the extent permitted under the applicable laws (the "Guarantors").

The terms of the New Notes are governed by the New Indentures, which contain customary affirmative and negative covenants that, among other things, limit the ability of the Company and the Guarantors to incur indebtedness, make certain restricted payments, engage in sale and leaseback transactions, effect a consolidation or merger, and create liens on their assets, in each case, subject to exclusions. The New Indentures also contain customary events of default, upon which the Trustee or the holders of the New Notes may declare all outstanding New Notes to be due and payable immediately. If a Change of Control, Asset Sales (as defined in the New Indentures), or certain other designated events including de-listing occur, holders of the New Notes may require the Company to repurchase all or a portion of their New Notes for cash at the Redemption Price.