INDENTURE

 

 

CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC.

as the Company
 

CHINA SAFETECH HOLDINGS LIMITED

 

as the Guarantor

and

THE BANK OF NEW YORK MELLON,
a New York banking corporation
as the Trustee

__________________________

INDENTURE

Dated September 2, 2009

__________________________

Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible Notes

 

TABLE OF CONTENTS

					Page
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions					1
Section 1.02. Other Definitions					28
Section 1.03. Rules of Construction.					29
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section 2.01. Designation Amount and Issue of Notes					30
Section 2.02. Form of Notes					30
Section 2.03. Date and Denomination of Notes; Payment of Interest					32
Section 2.04. Execution of Notes					32
Section 2.05. Exchange and Registration of Transfer of Notes; Restrictions on Transfer					33
Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes					35
Section 2.07. Temporary Notes					36
Section 2.08. Cancellation of Notes					36
Section 2.09. Defaulted Interest					36
Section 2.10. CUSIP Numbers					37
ARTICLE 3
REDEMPTION AND REPURCHASE OF NOTES
Section 3.01. Redemption					37
Section 3.02. Offer to Purchase					38
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
Section 4.01. Payment of Principal					40
Section 4.02. Maintenance of Office or Agency					41
Section 4.03. Provisions as to Paying Agent					41
Section 4.04. Existence					42
Section 4.05. Maintenance of Properties					42
Section 4.06. Payment of Taxes and Other Claims					43
Section 4.07. Stay, Extension and Usury Laws					43
Section 4.08. Payments for Consent					43

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Section 4.09. Incurrence of Additional Debt; Financial Covenants		44
Section 4.10. Restricted Payments		44
Section 4.11. Liens		46
Section 4.12. Asset Sales		46
Section 4.13. Restrictions on Distributions from Subsidiaries		47
Section 4.14. Affiliate Transactions		49
Section 4.15. Issuance or Sale of Capital Stock of Subsidiaries		50
Section 4.16. Maintenance of Consolidated Tangible Net Worth		50
Section 4.17. Repurchase at the Option of Holders Following a Change of Control		51
Section 4.18. Future Guarantors		51
Section 4.19. Business Activities		52
Section 4.20. Sale and Leaseback Transactions		52
Section 4.21. Reserved		52
Section 4.22. Maintenance of Insurance		52
Section 4.23. Repurchase Upon Termination of Trading		52
Section 4.24. Government Approvals and Licenses; Compliance with Law		52
Section 4.25. [RESERVED]		53
Section 4.26. Notes to Rank Senior		53
Section 4.27. Compliance Certificate		53
Section 4.28. Calculation of Original Issue Discount		53
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation and Sale of Assets		54
Section 5.02. Successor Corporation Substituted		56
ARTICLE 6
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT
Section 6.01. Events of Default		56
Section 6.02. Payments of Notes on Default; Suit Therefor		59
Section 6.03. Application of Monies Collected by Trustee		61
Section 6.04. Proceedings by Noteholder		61
Section 6.05. Proceedings by Trustee		62
Section 6.06. Remedies Cumulative and Continuing		62
Section 6.07. Direction of Proceedings and Waiver of Defaults by Majority of Noteholders		62
Section 6.08. Notice of Default		63
Section 6.09. Undertaking to Pay Costs		63
ARTICLE 7
THE TRUSTEE

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Section 7.01. Duties and Responsibilities of Trustee		64
Section 7.02. Rights of Trustee		65
Section 7.03. No Responsibility for Recitals, Etc		68
Section 7.04. Trustee, Paying Agents, Conversion Agents, Depositary or Registrar May Own Notes		68
Section 7.05. Monies to Be Held in Trust		68
Section 7.06. Compensation and Expenses of Trustee		68
Section 7.07. Eligibility of Trustee		69
Section 7.08. Resignation or Removal of Trustee		69
Section 7.09. Acceptance by Successor Trustee		71
Section 7.10. Succession by Merger		71
Section 7.11. Trustee's Application for Instructions from the Company		72
Section 7.12. Reserved		72
Section 7.13. Certain Provisions		72
ARTICLE 8
SUPPLEMENTAL INDENTURES
Section 8.01. Supplemental Indentures Without Consent of Noteholders		72
Section 8.02. Supplemental Indenture with Consent of Noteholders		74
Section 8.03. Effect of Supplemental Indenture		75
Section 8.04. Notation on Notes		75
Section 8.05. Evidence of Compliance of Supplemental Indenture to Be Furnished to Trustee		76
ARTICLE 9
GUARANTEES
Section 9.01. Guarantee		76
Section 9.02. Limitation on Guarantor Liability		78
Section 9.03. Execution and Delivery of Guarantee		78
Section 9.04. Guarantors May Consolidate, etc., on Certain Terms		79
Section 9.05. Releases Following Merger, Consolidation or Sale of Assets, Etc		79
ARTICLE 10
[RESERVED]
ARTICLE 11
SATISFACTION AND DISCHARGE OF INDENTURE
Section 11.01. Discharge of Indenture		80
Section 11.02. Deposited Monies to Be Held in Trust by Trustee		81
Section 11.03. Paying Agent to Repay Monies Held		81

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Section 11.04. Return of Unclaimed Monies		81
Section 11.05. Reinstatement		82
ARTICLE 12
THE NOTEHOLDERS
Section 12.01. Action by Noteholders		82
Section 12.02. Proof of Execution by Noteholders		82
Section 12.03. Who Are Deemed Absolute Owners		82
Section 12.04. Company-owned Notes Disregarded		83
Section 12.05. Revocation of Consents; Future Holders Bound		83
ARTICLE 13
MEETINGS OF NOTEHOLDERS
Section 13.01. Purpose of Meetings		84
Section 13.02. Call of Meetings by Company or Noteholders		84
Section 13.03. Qualifications for Voting		84
Section 13.04. Regulations		85
Section 13.05. Voting		85
Section 13.06. No Delay of Rights by Meeting		86
ARTICLE 14
CONVERSION OF NOTES
Section 14.01. Right to Convert		86
Section 14.02. Exercise of Conversion Right; Issuance of Common Stock on Conversion; No Adjustment for Interest or Dividends		86
Section 14.03. Cash Payments in Lieu of Fractional Shares		88
Section 14.04. Conversion Rate		88
Section 14.05. Adjustment of Conversion Rate		88
Section 14.06. Effect of Reclassification, Consolidation, Merger or Sale		97
Section 14.07. [RESERVED]		98
Section 14.08. Taxes on Shares Issued		98
Section 14.09. Reservation of Shares; Shares to Be Fully Paid; Compliance with Governmental Requirements; Listing of Common Stock		99
Section 14.10. Responsibility of Trustee		99
Section 14.11. Notice to Holders Prior to Certain Actions		100
Section 14.12. Shareholder Rights Plans		101
ARTICLE 15
MISCELLANEOUS PROVISIONS
Section 15.01. Provisions Binding on Company's Successors		101

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Section 15.02. Official Acts by Successor Corporation		101
Section 15.03. Addresses for Notices, Etc		101
Section 15.04. Governing Law		102
Section 15.05. Evidence of Compliance with Conditions Precedent; Certificates to Trustee		102
Section 15.06. Legal Holidays		103
Section 15.07. Company Responsible for Making Calculations		103
Section 15.08. Benefits of Indenture		103
Section 15.09. Table of Contents, Headings, Etc.		103
Section 15.10. Authenticating Agent		104
Section 15.11. Indenture and Notes Solely Corporate Obligations		104
Section 15.12. Execution in Counterparts		105
Section 15.13. Severability		105
Section 15.14. Consent to Jurisdiction; Consent to Service of Process		105
Section 15.15. Currency Indemnity.		106
Section 15.16. U.S.A. Patriot Act.		106

 

Exhibit A - FORM OF NOTE

Exhibit B - FORM OF NOTATION OF GUARANTEE

Exhibit C - FORM OF CERTIFICATE OF TRANSFER

Exhibit D - FORM OF RESTRICTIVE LEGEND FOR COMMON STOCK ISSUED UPON CONVERSION

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INDENTURE

INDENTURE dated September 2, 2009, between CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC, a Delaware corporation (hereinafter called the “ Company ”), the Guarantor listed on the signature pages hereto, and THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee hereunder (hereinafter called the “ Trustee ”).

WITNESSETH:

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issue of its Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible Notes (hereinafter called the “ Notes ”), in an aggregate principal amount not to exceed $50,000,000 and, to provide the terms and conditions upon which the Notes are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this Indenture; and

WHEREAS, for its lawful corporate purposes, each Guarantor has duly authorized the issue of its Guarantee of the Notes and, to provide the terms and conditions upon which the Guarantee is to be issued and delivered, each Guarantor has duly authorized the execution and delivery of this Indenture; and

WHEREAS, the Notes, the certificate of authentication to be borne by the Notes, a form of notation of Guarantee, a form of Assignment, a form of Purchase Notice and a form of Conversion Notice to be borne by the Notes are to be substantially in the forms hereinafter provided for; and

WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee or a duly authorized authenticating agent, as in this Indenture provided, the valid, binding and legal obligations of the Company, and to constitute this Indenture a valid agreement according to its terms, have been done and performed, and the execution of this Indenture and the issue hereunder of the Notes have in all respects been duly authorized,

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That in order to declare the terms and conditions upon which the Notes are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Notes by the holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective holders from time to time of the Notes (except as otherwise provided below), as follows:

ARTICLE 1

DEFINITIONS

Section 1.01.   Definitions .  

The terms defined in this Section (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section.  All other terms used in this Indenture that are defined in the Securities Act (except as herein otherwise expressly provided or unless the context otherwise requires) shall have the meanings assigned to such terms in the Securities Act as in force at the date of the execution of this Indenture.  The words “herein”, “hereof”, “hereunder” and words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.  The terms defined in this Article include the plural as well as the singular.

“ Additional Assets ” means:

(a) any Property (other than cash, Cash Equivalent and securities) to be owned by the Company or any of its Subsidiaries and used in a Related Business; or

(b) Capital Stock of a Person that becomes a Subsidiary of the Company as a result of the acquisition of such Capital Stock by the Company or another Subsidiary of the Company from any Person other than the Company or an Affiliate of the Company; provided, however , that, in the case of clause (b), such Subsidiary is primarily engaged in a Related Business.

“ Affiliate ” of any specified Person means:

(a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, or

(b) any other Person who is a director or officer of:

(1) such specified Person,

(2) any Subsidiary of such specified Person, or

(3) any Person described in clause (a) above.  

For the purposes of this definition, “control,” when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.  For purposes of Section 4.12 and Section 4.14 and the definition of “Additional Assets” only, “Affiliate” shall also mean any Beneficial Owner of shares representing 5% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such Beneficial Owner pursuant to the first sentence hereof. Notwithstanding the foregoing, in no event shall Citadel Equity Fund Ltd. or any of its Affiliates be considered an Affiliate of the Company.

 “ Amended Investor Rights Agreement ” means the second amended and restated investor rights agreement dated the Issue Date by and among the Company, the Guarantor, the Operating Subsidiary, and Citadel Equity Fund Ltd.

“ Applicable Procedures ” means, with respect to any transfer, repurchase or exchange of or for beneficial interests in any Global Note, the rules and procedures of DTC that apply to such transfer, repurchase or exchange.

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“ Asset Sale ” means any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions) by the Company or any of its Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a “disposition”), of

(a) any shares of Capital Stock of a Subsidiary of the Company (other than directors' qualifying shares), or

(b) any other Property of the Company or any of its Subsidiaries outside of the ordinary course of business of the Company or such Subsidiary,

other than, in the case of clause (a) or (b) above,

(1) any disposition by a Subsidiary of the Company to the Company or by the Company or one of its Subsidiaries to a Wholly Owned Subsidiary,

(2) any disposition that constitutes a Permitted Investment or Restricted Payment permitted by Section 4.10,

(3) any disposition effected in compliance with the first paragraph of Section 5.01,

(4) any disposition of inventory of the Company or any of its Subsidiaries in the ordinary course of business, or inventory or other property that in the reasonable judgment of the Company have become uneconomic, obsolete or worn out,

(5) the sale or discount of accounts receivable in connection with the compromise or collection thereof in the ordinary course of business, and

(6) any disposition in a single transaction or a series of related transactions of assets for aggregate consideration of less than $5.0 million.

“ Attributable Debt ” in respect of a Sale and Leaseback Transaction means, at any date of determination,

(a) if such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Debt represented thereby according to the definition of “Capital Lease Obligations,” and

(b) in all other instances, the present value (discounted at the weighted average interest rate borne by the Notes, compounded annually in the most recently completed twelve months) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended).

“ Average Life ” means, as of any date of determination, with respect to any Debt or Preferred Stock, the quotient obtained by dividing:

(a) the sum of the product of the numbers of years (rounded to the nearest one-twelfth of one year) from the date of determination to the dates of each successive scheduled principal payment of such Debt or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by

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(b) the sum of all such payments.

“ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors, or the law of any other jurisdiction relating to bankruptcy, insolvency, winding up, liquidation, reorganization or relief of debtors.

“ Beneficial Owner ” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as such term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition or passage of time.  The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

“ Board of Directors ” means (1) in respect of a corporation, the board of directors of the corporation, or (except if used in the definition of “Change of Control”) any duly authorized committee thereof; and (2) in respect of any other Person, the board or committee of that Person serving an equivalent function.

“ Board Resolution ” of a Person means a copy of a resolution (in form and substance satisfactory to the Trustee) certified by the secretary or an assistant secretary (or individual performing comparable duties) of the applicable Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“ Business Day ” means any day other than a Legal Holiday.

“ Capital Expenditures ” means expenditures (whether paid in cash or other consideration or accrued as a liability and including that portion of Capital Lease Obligations which is capitalized on the consolidated balance sheet of the Company and its Subsidiaries) by the Company and its Subsidiaries that, in conformity with GAAP, are included in “additions to property, plant and equipment” or as capitalized internally developed software or comparable items reflected in the consolidated balance sheet of the Company and its Subsidiaries.

“ Capital Lease Obligations ” means any obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP; and the amount of Debt represented by such obligation shall be the capitalized amount of such obligations determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.  For purposes of Section 4.11 a Capital Lease Obligation shall be deemed secured by a Lien on the Property being leased.

“ Capital Stock ” means, with respect to any Person, any shares or other equivalents (however designated) of any class of corporate stock or partnership interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt security convertible or exchangeable into such equity interest.

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“ Capital Stock Sale Proceeds ” means the aggregate cash proceeds received by the Company from the issuance or sale (other than to a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees) by the Company of its Capital Stock (other than Disqualified Stock) after the Issue Date, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.

“ Cash Equivalents ” means any of the following:  

(a) Investments in U.S. Government Securities maturing within 365 days of the date of acquisition thereof;

(b) Investments in time deposit accounts, certificates of deposit and money market deposits maturing within 90 days of the date of acquisition thereof issued by a bank or trust company organized under the laws of the United States of America or any state thereof having capital, surplus and undivided profits aggregating in excess of $500 million and whose long-term debt is rated “A-3” or “A-” or higher according to Moody's or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act));

(c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) entered into with:

(1) a bank meeting the qualifications described in clause (b) above, or

(2) any primary government securities dealer reporting to the Market Reports Division of the Federal Reserve Bank of New York;

(d) Investments in commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America with a rating at the time as of which any Investment therein is made of “P-1” (or higher) according to Moody's or “A-1” (or higher) according to S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act));

(e) direct obligations (or certificates representing an ownership interest in such obligations) of any state of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of such state are pledged and which are not callable or redeemable at the issuer's option, provided that:

(1) the long-term debt of such state is rated “A-3” or “A-” or higher according to Moody's or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)), and

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(2) such obligations mature within 180 days of the date of acquisition thereof; and

(f) time deposit accounts, certificates of deposit and money market deposits with (i) Bank of China, Industrial and Commercial Bank of China, China Construction Bank and China Merchants Bank or (ii) any other bank or trust company organized under the laws of the PRC whose long-term debt is rated as high or higher than any of those banks.

 “ Change of Control ” means the occurrence of any of the following events:

 (a) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the Property of the Company and its Subsidiaries, considered as a whole (other than a disposition of such Property as an entirety or virtually as an entirety to a Wholly Owned Subsidiary or one or more Permitted Holders), shall have occurred, or the Company merges, consolidates or amalgamates with or into any other Person (other than one or more Permitted Holders) or any other Person (other than one or more Permitted Holders) merges, consolidates or amalgamates with or into the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where:

(1) the outstanding Voting Stock of the Company is reclassified into or exchanged for other Voting Stock of the Company or for Voting Stock of the Surviving Person, and

(2) the holders of the Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the Company or the Surviving Person immediately after such transaction and in substantially the same proportion as before the transaction; or

(b)

Continuing Directors cease for any reason to constitute a majority of the Board of Directors then in office; or

(c)

the shareholders of the Company shall have approved any plan of liquidation or dissolution of the Company.

“ Clearstream ” means Clearstream Banking, S.A. (or any successor securities clearing agency).
 

 “ Closing Sale Price ” of the shares of Common Stock on any date means (i) if Common Stock is primarily traded on a securities exchange, the last sale price on such securities exchange on the applicable day, or if no sale occurred on such day, the mean between the closing “bid” and “asked” prices on such day, (ii) if the principal market for Common Stock is in the over-the-counter market, the closing sale price on the applicable day as published by The NASDAQ Stock Market, Inc. or similar organization, or if such price is not so published on such day, the mean between the closing “bid” and “asked” prices, if available, on such day, which prices may be obtained from any reputable pricing service, broker or dealer, and (iii) if neither clause (i) nor clause (ii) is applicable, the Fair Market Value as determined in good faith by the Board of Directors of the Company or an Independent Financial Advisor, as applicable. The Closing Sale Price shall be determined based on regular market hours without reference to extended after hours trading or pre-market trading.

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“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.

“ Commission ” means the U.S. Securities and Exchange Commission.

“ Commodity Price Protection Agreement ” means, in respect of a Person, any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement designed to protect such Person against fluctuations in commodity prices.

“ Common Stock ” means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company.  Subject to the provisions of Section 14.06 , however, shares issuable on conversion of Notes shall include only shares of the class designated as common stock of the Company at the date of this Indenture (namely, the Common Stock, par value $0.0001) or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that, if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.

“ Company ” means the corporation named as the “Company” in the first paragraph of this Indenture, and, subject to the provisions of Article 5 and Section 14.06 , shall include its successors and assigns.

“ Consolidated Interest Expense ” means, for any period, the total interest expense of the Company and its consolidated Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent Incurred by the Company or its Subsidiaries, without duplication,

(a) interest expense attributable to leases constituting part of a Sale and Leaseback Transaction and to Capital Lease Obligations,

(b) amortization of debt discount and debt issuance cost, including commitment fees,

(c) capitalized interest,

(d) non-cash interest expense,

(e) commissions, discounts and other fees and charges owed with respect to letters of credit and banker's acceptance financing,

(f) net costs associated with Hedging Obligations (including amortization of fees),

(g) Disqualified Stock Dividends (other than dividends payable in Capital Stock other than Disqualified Stock),

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(h) Preferred Stock Dividends (other than dividends payable in Capital Stock other than Disqualified Stock) of Subsidiaries,

(i) interest accruing on any Debt of any other Person to the extent such Debt is guaranteed by the Company or any of its Subsidiaries, and

(j) the cash contributions to any employee stock ownership plan or similar trust, if any and to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Debt Incurred by such plan or trust.

“ Consolidated Net Income ” means, for any period, the net income (loss) of the Company and its consolidated Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income:

(a) any net income (loss) of any Person (other than the Company) if such Person is not a Subsidiary of the Company, except that:

(1) subject to the exclusions contained in clauses (c), (d) and (e) below, equity of the Company and its consolidated Subsidiaries in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to the Company or any of its Subsidiaries as a dividend or other distribution (subject, in the case of a dividend or other distribution to such Subsidiary, to the limitations contained in clause (b) below), and

(2) the equity of the Company and its consolidated Subsidiaries in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income,

(b) any net income (loss) of any Subsidiary of the Company if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to the Company, except that:

(1) subject to the exclusions contained in clauses (c), (d) and (e) below, the equity of the Company and its consolidated Subsidiaries in the net income of any such Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Subsidiary during such period to the Company or another of its Subsidiaries as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Subsidiary of the Company, to the limitation contained in this clause), and

(2) the equity of the Company and its consolidated Subsidiaries in a net loss of any such Subsidiary for such period shall be included in determining such Consolidated Net Income,

(c) any gain (but not loss) realized upon the sale or other disposition of any Property of the Company or any of its consolidated Subsidiaries (including pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business,

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(d) any extraordinary gain or loss, and

(e) the cumulative effect of a change in accounting principles.  

“ Consolidated Net Worth ” means the total of the amounts shown on the consolidated balance sheet of the Company and its Subsidiaries as of the end of the most recent Fiscal Quarter of the Company ending prior to the taking of any action for the purpose of which the determination is being made, as:

(a) the par or stated value of all outstanding Capital Stock of the Company, plus

(b) paid-in capital or capital surplus relating to such Capital Stock, plus

(c) any retained earnings or earned surplus, less:

(1) any accumulated deficit, and

(2) any amounts attributable to Disqualified Stock or any equity security convertible into or exchangeable for Debt, the cost of treasury stock and the principal amount of any promissory notes receivable from the sale of Capital Stock of the Company or any of its Subsidiaries, each item to be determined in conformity with GAAP.

“ Consolidated Tangible Net Worth ” means, as of any date of determination, the Consolidated Net Worth less the Intangible Assets.

“ Continuing Directors ” means, as of any date of determination, any member of the Board of Directors who (a) was a member of the Board of Directors on the date of this Indenture or (b) was nominated for election to the Board of Directors by, or whose election was ratified with the approval of, a majority of the Continuing Directors who were members of the Board of Directors at the time of such nomination or election.

“ Conversion Price ” as of any day will equal $100,000 divided by the Conversion Rate as of such date.

“ Corporate Trust Office ” shall be the address of the Trustee specified in Section 15.03 hereof, or such other address as to which the Trustee may give notice to the Company.

“ Credit Facilities ” means, with respect to the Subsidiaries (including any Person who becomes a Subsidiary after the Issue Date), one or more debt or commercial paper facilities with banks or other institutional lenders in the PRC providing for revolving credit loans, term loans, receivables or inventory financing (including through the sale of receivables or inventory to such lenders or to special purpose, bankruptcy remote entities formed to borrow from such lenders against such receivables or inventory) or trade letters of credit, in each case together with any Refinancings thereof by any lender or syndicate of lenders.

 “ Currency Exchange Protection Agreement ” means, in respect of a Person, any foreign exchange contract, currency swap agreement, currency option or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates.

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“ Custodian ” means, with respect to the Notes issuable or issued in global form, the Person specified in Section 2.02(e) as Custodian with respect to the Notes, and any and all successors thereto appointed as custodian hereunder and having become such pursuant to the applicable provisions of this Indenture.

“ Debt ” means, with respect to any Person on any date of determination (without duplication):

(a) the principal of and premium (if any) in respect of:

(1) debt of such Person for money borrowed, and

(2) debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;

(b) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person;

(c) all obligations of such Person representing the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);

(d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit);

(e) the amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends);

(f) all obligations of the type referred to in clauses (a) through (e) above of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any guarantee;

(g) all obligations of the type referred to in clauses (a) through (f) above of other Persons secured by any Lien on any Property of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such Property and the amount of the obligation so secured; and

(h) to the extent not otherwise included in this definition, Hedging Obligations of such Person.  

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The amount of Debt of any Person at any date shall be the outstanding balance, or the accreted value of such Debt in the case of Debt issued with original issue discount, at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date.  The amount of Debt represented by a Hedging Obligation shall be equal to the notional amount of such Hedging Obligation. ›

“ Default ” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“ Definitive Note ” means a certificated Note registered in the name of the holder thereof and issued in accordance with Section 2.05 or 2.07 hereof, in substantially the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“ Depositary ” means with respect to the Notes issuable or issued in whole or in part in the form of one or more Global Notes, the Person designated as Depositary by the Company pursuant to the Indenture and its successors.  

“ Disqualified Stock ” means any Capital Stock of the Company or any of its Subsidiaries that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, in either case at the option of the holder thereof) or otherwise:

(a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,

(b) is or may become redeemable or repurchaseable at the option of the holder thereof (except that any Capital Stock that would constitute Disqualified Stock solely because the holders of such Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.10 hereof), in whole or in part, or

(c) is convertible or exchangeable at the option of the holder thereof for Debt or Disqualified Stock,

on or prior to, in the case of clause (a), (b) or (c), the first anniversary of the Final Redemption Date.

“ Disqualified Stock Dividends ” means all dividends with respect to Disqualified Stock of the Company held by Persons other than a Wholly Owned Subsidiary.  The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the Company.

 “ DTC ” means The Depositary Trust Company.

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“ EBITDA ” means, for any period, an amount equal to, for the Company and its consolidated Subsidiaries:

(a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period:  

(1) the provision for taxes based on income or profits or utilized in computing net loss,

(2) Consolidated Interest Expense,

(3) depreciation,

(4) amortization of intangibles, and

(5) any other non-cash items (other than any such non-cash item to the extent that it represents an accrual of, or reserve for, cash expenditures in any future period or amortization of a prepaid cash expense paid in a period prior to the period that is subject to calculation), minus

(b) all non-cash items increasing Consolidated Net Income for such period.  

Notwithstanding the foregoing clause (a), the provision for taxes and the depreciation, amortization and non-cash items of a Subsidiary of the Company shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Subsidiary or its shareholders.

“ Euroclear ” means Euroclear Bank S.A./N.V., as operator of the Euroclear system (or any successor securities clearing agency).
 

 “ Exchange Act ” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.

“ Ex-Dividend Time ” means, with respect to any distribution on shares of Common Stock, the first date on which the shares of Common Stock trade regularly on the principal securities market on which the shares of Common Stock are then traded without the right to receive such distribution.

“ Fair Market Value ” means, with respect to any Property at the time of determination, the price that could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction.  Fair Market Value shall be determined, except as otherwise provided,

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(a) if such Property has a Fair Market Value equal to or less than $1.0 million, by any Officer of the Company,

(b) if such Property has a Fair Market Value in excess of $1.0 million but less than or equal to $5.0 million, by a majority of the Board of Directors and evidenced by a Board Resolution delivered to the Trustee, or

(c) if such Property has a Fair Market Value in excess of $5.0 million, by an Independent Financial Advisor and evidenced by a written opinion from such Independent Financial Advisor dated within 30 days of the relevant transaction delivered to the Trustee.

“ Final Redemption Date ” means September 2, 2012.

“ Fiscal Quarter ” means each of the three month periods ending on March 31, June 30, September 30 and December 31.

“ Foreign Subsidiary ” means any Subsidiary of the Company which is not organized under the laws of the United States of America or any State thereof or the District of Columbia.

“ GAAP ” means United States generally accepted accounting principles as in effect on the Issue Date, including those set forth in:

(a) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants,

(b) the statements and pronouncements of the Financial Accounting Standards Board,

(c) such other statements by such other entity as approved by a significant segment of the accounting profession, and

(d) the rules and regulations of the Commission governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the Commission.

All ratios and computations based on GAAP contained in this Indenture will be computed in conformity with GAAP.

“ Global Note Legend ” means the legend set forth on all Global Notes issued under this Indenture.

“ Global Notes ” means the global Notes in the form of Exhibit A hereto issued in accordance with Article 2 hereof.

“ Governmental Approval ” means any authorization of or by, consent of, approval of, license from, ruling of, permit from, tariff by, rate of, certification by, exemption from, filing with (except any filing relating to the perfection of security interests), variance from, claim of, order from, judgment from, decree of, publication to or by, notice to, declaration of or with or registration by or with any Governmental Authority, whether tacit or express.

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“ Governmental Authority ” means any federal, state, national, provincial, municipal, local, territorial or other government department, ministry (including local counterparts thereof), commission, board, agency, regulatory authority, instrumentality, judicial or administrative body, domestic or foreign.

“ guarantee ” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Debt of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(a)

to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise), or

(b)

entered into for the purpose of assuring in any other manner the obligee against loss in respect thereof (in whole or in part);

provided, however, that the term “guarantee” shall not include:

(1) endorsements for collection or deposit in the ordinary course of business, or

(2) a contractual commitment by one Person to invest in another Person for so long as such Investment is reasonably expected to constitute a Permitted Investment under clause (a), (b) or (c) of the definition of “Permitted Investment.”  

The term “guarantee” used as a verb has a corresponding meaning.  The term “guarantor” shall mean any Person guaranteeing any obligation.

“ Guarantee ” means the Guarantee of the Notes by each of the Guarantors pursuant to Article 9 and in the form of the Guarantee attached as Exhibit B and any additional Guarantee of the Notes to be executed by any Subsidiary of the Company pursuant to Section 4.18 .

“ Guarantor ” means Safetech and any other Subsidiary of the Company that becomes a Guarantor pursuant to Section 4.18 or who otherwise executes and delivers a supplemental indenture (in form satisfactory to the Trustee) to the Trustee providing for a Guarantee; provided that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its respective Guarantee is released in accordance with the terms of this Indenture.

“ Hedging Obligation ” of any Person means any obligation of such Person pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement, Commodity Price Protection Agreement or any other similar agreement or arrangement

“ Incur ” means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by merger, conversion, exchange or otherwise), extend, assume, guarantee or become liable in respect of such Debt or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Debt or obligation on the balance sheet of such Person (and “Incurrence” and “Incurred” shall have meanings correlative to the foregoing); provided, however, that a change in GAAP that results in an obligation of such Person that exists at such time, and is not theretofore classified as Debt, becoming Debt shall not be deemed an Incurrence of such Debt; and provided further , however , that any Debt or other obligations of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary.

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“ Indenture ” means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented.

“ Independent Financial Advisor ” means an investment banking firm of international standing or any third party appraiser of international standing, provided that such firm or appraiser is not an Affiliate of the Company.

“ Intangible Assets ” shall mean as of the date of any determination thereof the total amount of all assets of the Company and its Subsidiaries classified as goodwill, patents, trade names, trademarks, copyrights, franchises, experimental expense, organization expense, unamortized debt discount and expense, deferred assets other than prepaid insurance and prepaid taxes, the excess of cost of shares acquired over book value of related assets and such other assets as are properly classified as “ intangible assets ” in accordance with GAAP.

“ Interest ” means, when used with reference to the Notes, any interest payable under the terms of the Notes.

“ Interest Rate Agreement ” means, for any Person, any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement designed to protect against fluctuations in interest rates.

“ Investment ” by any Person means any direct or indirect loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person), advance or other extension of credit or capital contribution (by means of transfers of cash or other Property to others or payments for Property or services for the account or use of others, or otherwise) to, or Incurrence of a guarantee of any obligation of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Debt issued by, any other Person.  

In determining the amount of any Investment made by transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such Investment.

“ Issue Date ” means September 2, 2009.

 “ Legal Holiday ” means a Saturday, a Sunday or a day on which banking institutions in the City of New York, the PRC, London, England, the city in which the Corporate Trust Office of the Trustee is located or any other place of payment on the Notes are authorized by law, regulation or executive order to remain closed.  

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“ Leverage Ratio ” means the ratio of:

(a) the outstanding Debt of the Company and its Subsidiaries on a consolidated basis, to

(b) EBITDA for the most recently completed four Fiscal Quarters; provided , that,

(1) if:

(A)

since the beginning of such period the Company or any of its Subsidiaries has Incurred any Debt that remains outstanding or Repaid any Debt, or

(B)

the transaction giving rise to the need to calculate the Leverage Ratio is an Incurrence or Repayment of Debt,

Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Incurrence or Repayment as if such Debt was Incurred or Repaid on the first day of such period, provided that, in the event of any such Repayment of Debt, EBITDA for such period shall be calculated as if the Company or such Subsidiary had not earned any interest income actually earned during such period in respect of the funds used to Repay such Debt, and provided further that the amount of Debt Incurred under revolving credit facilities shall be deemed to be the average daily balance of such Debt during such period (or any shorter period in which such facilities are in effect) and

(2) if

(A) since the beginning of such period, the Company or any of its Subsidiaries shall have made any Asset Sale or an Investment (by merger or otherwise) in any Subsidiary of the Company (or any Person that becomes such a Subsidiary) or an acquisition of Property,

(B) the transaction giving rise to the need to calculate the Leverage Ratio is such an Asset Sale, Investment or acquisition, or

(C) since the beginning of such period any Person (that subsequently became a Subsidiary of the Company or was merged with or into the Company or any of its Subsidiaries since the beginning of such period) shall have made such an Asset Sale, Investment or acquisition,

EBITDA for such period shall be calculated after giving pro forma effect to such Asset Sale, Investment or acquisition as if such Asset Sale, Investment or acquisition occurred on the first day of such period.

If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debt shall be calculated as if the base interest rate in effect for such floating rate of interest on the date of determination had been the applicable base interest rate for the entire period (taking into account any Interest Rate Agreement applicable to such Debt if such Interest Rate Agreement has a remaining term in excess of 12 months).  In the event the Capital Stock of any Subsidiary of the Company is sold during the period, the Company shall be deemed, for purposes of clause (1) above, to have Repaid during such period the Debt of such Subsidiary to the extent the Company and its continuing Subsidiaries are no longer liable for such Debt after such sale.

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“ Lien ” means, with respect to any Property of any Person, any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such Property (including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing or any Sale and Leaseback Transaction).

“ Material Adverse Effect ” means a material adverse effect on (a) the property, business, operations, financial condition, liabilities or capitalization of the Company and its Subsidiaries taken as a whole, (b) the ability of any such Person to perform its payment obligations or any of its material obligations under any of the Transaction Documents to which such Person is a party, (c) the validity or enforceability of any of the Transaction Documents, (d) the material rights and remedies of the Trustee, under any of the Transaction Documents or (e) the timely payment of any principal of any of the Notes.

“ Moody's ” means Moody's Investors Service, Inc. or any successor to the rating agency business thereof.

“ Net Available Cash ” from any Asset Sale means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Debt or other obligations relating to the Property that is the subject of such Asset Sale or received in any other non-cash form), in each case net of:

(a) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all U.S. federal, state, national, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale,

(b) all payments made on or in respect of any Debt that is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale,

(c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale, and

(d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed of in such Asset Sale and retained by the Company or any of its Subsidiaries after such Asset Sale.

“ Note Obligations ” means the Notes, the Guarantees and all other obligations of any obligor under this Indenture, the Notes and the Guarantees.

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“ Notes Purchase Agreement ” means the Notes purchase agreement dated August 18, 2009 by and among the Company, the Guarantor, the Operating Subsidiary and Citadel Equity Fund Ltd.

“ Notes ” is defined in the preamble.

“ Noteholder ” or “ holder ” as applied to any Note, or other similar terms (but excluding the term “Beneficial Holder”), means any Person in whose name at the time a particular Note is registered on the Registrar's books.

“ Notice Date ” means the date of mailing of the notice pursuant to Section 3.02(b) .

“ Obligations ” means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Debt.

“ Officer ” means, with respect to the Company, its Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”) and the Treasurer or any Assistant Treasurer, or the Secretary or Assistant Secretary.

“ Officers' Certificate ” means a certificate, in form and substance satisfactory to the Trustee, signed by two Officers of the Company, at least one of whom shall be the principal executive officer or principal financial officer of the Company, and which certificate meets the requirements of Section 15.05 hereof and is delivered to the Trustee.

“ Operating Subsidiary ” means China Security & Surveillance Technology (PRC), Inc., a limited liability company organized and existing under the laws of the PRC and a wholly-owned Subsidiary of the Company.

“ Opinion of Counsel ” means a written opinion, in form and substance satisfactory to the Trustee, from legal counsel who is acceptable to the Trustee and which meets the requirements of Section 15.05 hereof.

“ Outstanding ”, when used with reference to Notes and subject to the provisions of Section 12.04 , means, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except:

(a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(b) Notes, or portions thereof, (i) for the redemption of which monies in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or (ii) which shall have been otherwise discharged in accordance with Article 11 ;

(c) Notes in lieu of which, or in substitution for which, other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.06 ; and

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(d) Notes converted into Common Stock pursuant to Article 14 and Notes deemed not outstanding pursuant to Article 3 .

“ Permitted Holders ” means Mr. Tu Guo Shen, a resident of Hangzhou in the PRC, and his estate, spouse, ancestors and lineal descendants, the legal representatives of any of the foregoing and the trustees of any bona fide trusts of which the foregoing are the sole beneficiaries or the grantors, or any Person of which the foregoing “beneficially owns” (as defined in Rule 13d-3 under the Exchange Act), individually or collectively with any of the foregoing, at least 50% of the total voting power of the Voting Stock of such Person.

“ Permitted Investment ” means any Investment by the Company or any of its Subsidiaries in:

(a)

the Company or any of its Subsidiaries engaged in a Related Business;

(b)

any Person that will, upon the making of such Investment, become a Subsidiary of the Company, provided that the primary business of such Subsidiary is a Related Business;

(c)

any Person if as a result of such Investment such Person is merged or consolidated with or into, or transfers or conveys all or substantially all its Property to, the Company or a Subsidiary of the Company, provided that such Person's primary business is a Related Business;

(d)

cash and Cash Equivalents;

(e)

receivables owing to the Company or any of its Subsidiaries, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however , that such trade terms may include such concessionary trade terms as the Company or such Subsidiary deems reasonable under the circumstances;

(f)

payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses under GAAP and that are made in the ordinary course of business;

(g)

stock, obligations or other securities received in settlement of debts created in the ordinary course of business and owing to the Company or one of its Subsidiaries or in satisfaction of judgments;  

(h)

any Person to the extent such Investment represents the non-cash portion of the consideration received in connection with (A) an Asset Sale consummated in compliance with Section 4.12 or (B) any disposition of Property not constituting an Asset Sale;

(i)

Hedging Obligations by the Company or any Guarantor that are otherwise permitted to be incurred under this Indenture, and which were entered into for financial management of interest rates, foreign currency exchange rates or commodity prices and are directly related to transactions entered into by such Person in the ordinary course of its business, and not for speculative purposes; and

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(j)

other Investments made for Fair Market Value that do not exceed 10% of the aggregate amount of Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the Fiscal Quarter after the Issue Date to the end of the most recent Fiscal Quarter ending prior to the date of such Investment (or if the aggregate amount of Consolidated Net Income for such period shall be a deficit, minus 100% of such deficit).

“ Permitted Liens ” means:

(a)

Liens in favor of the Company or the Guarantors;

(b)

Liens securing, or created for the benefit of securing, the Notes and the Guarantees;

(c)

Liens securing Debt of a PRC Subsidiary under Credit Facilities, provided that any such Lien is limited to the Property of such PRC Subsidiary;

(d)

leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Company or any of the Subsidiaries;

(e)

Liens for taxes, assessments or governmental charges or levies on the Property of the Company or any of its Subsidiaries if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision that shall be required in conformity with GAAP shall have been made therefor;

(f)

Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens and other similar Liens, on the Property of the Company or any of its Subsidiaries arising in the ordinary course of business and securing payment of obligations that are not more than 60 days past due or are being contested in good faith and by appropriate proceedings;

(g)

Liens on the Property of the Company or any of its Subsidiaries Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and Incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property from vendors and others and which do not in the aggregate impair in any material respect the use of Property in the operation of the business of the Company and its Subsidiaries taken as a whole;

(h)

Liens on Property at the time the Company or any of its Subsidiaries acquired such Property, including any acquisition by means of a merger or consolidation with or into the Company or any of its Subsidiaries; provided, however , that any such Lien may not extend to any other Property of the Company or any of its Subsidiaries; provided further, that such Liens shall not have been Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Property was acquired by the Company or any of its Subsidiaries;

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(i)

Liens on the Property of a Person at the time such Person becomes a Subsidiary of the Company; provided, however , that any such Lien may not extend to any other Property of the Company or any other Subsidiary of the Company that is not a direct Subsidiary of such Person; provided further, that any such Lien was not Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a Subsidiary of the Company;

(j)

pledges or deposits by the Company or any of its Subsidiaries under workers' compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Debt) or leases to which the Company or any of its Subsidiaries is party, or deposits to secure public or statutory obligations of the Company, or deposits for the payment of rent, in each case Incurred in the ordinary course of business;

(k)

utility easements, building restrictions and such other encumbrances or charges against real Property as are of a nature generally existing with respect to properties of a similar character;

(l)

Liens existing on the Issue Date not otherwise described in clauses (a) through (k) above;

(m)

Liens on the Property of the Company or any of its Subsidiaries to secure any Refinancing, in whole or in part, of any Debt secured by Liens referred to in clause (g), (h) or (i) above; provided, however , that any such Lien shall be limited to all or part of the same Property that secured the original Lien (together with improvements and accessions to such Property), and the aggregate principal amount of Debt (and other obligations thereunder) that is secured by such Lien shall not be increased to an amount greater than the sum of:

(1)

the outstanding principal amount, or, if greater, the committed amount, of the Debt (and other obligations thereunder) secured by Liens described under clause (g), (h) or (i) above, as the case may be, at the time the original Lien became a Permitted Lien under this Indenture, and

(2)

an amount necessary to pay any fees and expenses, including premiums and defeasance costs, incurred by the Company or such Subsidiary in connection with such Refinancing; and

(n)

judgment Liens not giving rise to en Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired.

 “ Permitted Refinancing Debt ” means any Debt that Refinances any other Debt, including any successive Refinancings, so long as:

(a)

such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of:

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(1) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being Refinanced, and

(2) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing,

(b)

the Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced,

(c)

the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced,

(d)

the new Debt shall not be senior in right of payment to the Debt that is being Refinanced, and

(e)

the new Debt, the proceeds of which are used to Refinance the Notes or any Debt that is pari passu with or subordinate to the Notes or a Guarantee, shall only be permitted if (A) in case the Notes are refinanced in part or the Debt to be Refinanced is pari passu with the Notes or a Guarantee, such new Debt, by its terms or by terms of any agreement or instrument pursuant to which such new Debt is outstanding, is expressly made pari passu with, or subordinate in right of payment to, the remaining Notes or such Guarantee, or (B) in case the Debt to be Refinanced is subordinated in right of payment to the Notes or a Guarantee, such new Debt, by its terms or by the terms of any agreement or instrument to which such new Debt is issued or remains outstanding, is expressly made subordinate in right of payment to the Notes or such Guarantee at least to the extent that the Debt to be Refinanced is subordinated to the Notes or the Guarantee;

provided, however , that Permitted Refinancing Debt shall not include the Debt of any Subsidiary that is not a Guarantor, if such Debt is used to Refinance Debt of the Company or a Subsidiary.

“ Person ” means a corporation, an association, a partnership, a limited liability company, an individual, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof.

“ PRC ” means the People's Republic of China, exclusive of Taiwan, Macau and Hong Kong.

“ Predecessor Note ” of any particular Note means every previous Note evidencing all or a portion of the same Debt as that evidenced by such particular Note; and any Note authenticated and delivered under Section 2.06 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same Debt as the lost, destroyed or stolen Note.

“ Preferred Stock ” means any Capital Stock of a Person, however designated, which entitles the holder thereof to a preference with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by such Person.

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“ Preferred Stock Dividends ” means all dividends with respect to Preferred Stock of the Company's Subsidiaries held by Persons other than the Company or any of its Wholly Owned Subsidiaries.  The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Preferred Stock.

“ pro forma ” means, with respect to any calculation made or required to be made pursuant to the terms hereof, a calculation performed in accordance with Article 11 of Regulation S-X promulgated under the Securities Act, as interpreted in good faith by the Board of Directors after consultation with the independent certified public accountants of the Company, or otherwise a calculation made in good faith by the Board of Directors after consultation with the independent certified public accountants of the Company, as the case may be.

“ Property ” means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including intellectual property rights and Capital Stock in, and other securities of, any other Person.  For purposes of any calculation required pursuant to this Indenture, the value of any Property shall be its Fair Market Value.

“ Refinance ” means, in respect of any Debt, to refinance, extend, renew, refund or Repay (in whole or in part), or to issue other Debt, in exchange or replacement for (in whole or in part), such Debt.  “Refinanced” and “Refinancing” shall have correlative meanings.

“ Related Business ” means the manufacturing, distributing, installing, servicing and maintaining security, surveillance, fire and alarm products and systems, and other products or systems in the similar nature.

“ Repay ” means, in respect of any Debt, to repay, prepay, repurchase, redeem, legally defease or otherwise retire such Debt. “Repayment” and “Repaid” shall have correlative meanings.  For purposes of Section 4.12 and the definition of “Leverage Ratio,” Debt shall be considered to have been Repaid only to the extent the related loan commitment, if any, shall have been permanently reduced in connection therewith.

“ Repurchase Amount ” means, with respect to any Note, the aggregate Installment Redemption Amounts then remaining unpaid.

 “ Responsible Officer ” shall mean, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee with direct responsibility for the administration of this Indenture.

“ Restricted Payment ” means:

(a)

any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of the Company or any of its Subsidiaries (including any payment in connection with any merger or consolidation with or into the Company or any of its Subsidiaries), except for any dividend or distribution that is made solely to the Company or any of its Subsidiaries (and, if such Subsidiary is not a Wholly Owned Subsidiary, to the other shareholders of such Subsidiary on a pro rata basis or on a basis that results in the receipt by the Company or any of its Subsidiaries of dividends or distributions of greater value than it would receive on a pro rata basis) or any dividend or distribution payable solely in shares of Capital Stock (other than Disqualified Stock) of the Company;

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(b)

the purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of the Company or any of its Subsidiaries (other than from the Company or any of its Subsidiaries) or any securities exchangeable for or convertible into any such Capital Stock, including the exercise of any option to exchange any Capital Stock (other than for or into Capital Stock of the Company that is not Disqualified Stock);

(c)

the purchase, repurchase, redemption, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other installment payment, of any Subordinated Obligation (other than the purchase, repurchase or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation, in each case due within one year of the date of acquisition); or

(d)

any Investment (other than Permitted Investments) in any Person.

“ RMB ” means the lawful currency of the PRC.

“ S&P ” means Standard & Poor's Ratings Services, a division of McGraw Hill, Inc., or any successor to the rating agency business thereof.

“ Safetech ” means China Safetech Holdings Limited, a wholly-owned subsidiary of the Company, incorporated under the laws of British Virgin Islands.

“ Sale and Leaseback Transaction ” means any direct or indirect arrangement relating to Property now owned or hereafter acquired whereby the Company or any of its Subsidiaries transfers such Property to another Person and the Company or any of its Subsidiaries leases it from such Person.

“ Securities Act ” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time.

“ Senior Debt ” of the Company means:

(a)

all obligations consisting of the principal, premium, if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such post-filing interest is allowed in such proceeding) in respect of:

(1) Debt of the Company for borrowed money, and

(2) Debt of the Company evidenced by notes, debentures, bonds or other similar instruments permitted under this Indenture for the payment of which the Company is responsible or liable;

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(b)

all Capital Lease Obligations of the Company and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by the Company;

(c)

all obligations of the Company

(1) for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction,

(2) under Hedging Obligations, or

(3) issued or assumed as the deferred purchase price of Property and all conditional sale obligations of the Company and all obligations under any title retention agreement permitted under this Indenture; and

(d)

all obligations of other Persons of the type referred to in clauses (a), (b) and (c) for the payment of which the Company is responsible or liable as guarantor;

  provided, however , that Senior Debt shall not include:

(A)

Debt of the Company that is by its terms subordinate in right of payment to the Notes , including any Subordinated Obligations;

(B)

any Debt Incurred in violation of the provisions of this Indenture;

(C)

accounts payable or any other obligations of the Company to trade creditors created or assumed by the Company in the ordinary course of business in connection with the obtaining of materials or services (including guarantees thereof or instruments evidencing such liabilities);

(D)

any liability for U.S. federal, state, national, provincial, local or other taxes owed or owing by the Company;

(E)

any obligation of the Company to any of its Subsidiaries; or

(F)

any obligations with respect to any Capital Stock of the Company.  

To the extent that any payment of Senior Debt (whether by or on behalf of the Company as proceeds of security or enforcement or any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law, then if such payment is recovered by, or paid over to, such trustee, receiver or other similar party, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred.

“Senior Debt” of any Guarantor has a correlative meaning.

 “ Significant Subsidiary ” means any Subsidiary that would be a “significant subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the Commission.

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“ Stated Maturity ” means, with respect to any installment of interest or principal on any series of Debt (including, without limitation, a scheduled repayment or a scheduled sinking fund payment), the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Debt, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment hereof.

 “ Subordinated Obligation ” means any Debt of the Company or any Guarantor (whether outstanding on the Issue Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes or the applicable Guarantee pursuant to a written agreement to that effect.

“ Subsidiary , ” with respect to any Person, means (i) any corporation of which the outstanding Capital Stock having a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, through one or more intermediaries, by such Person or (ii) any other Person of which a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, through one or more intermediaries, owned by such Person.

“ Surviving Person ” means the surviving Person formed by a merger, consolidation or amalgamation and, for purposes of Section 5.01 , a Person to whom all or substantially all of the Property of the Company or a Guarantor is sold, transferred, assigned, leased, conveyed or otherwise disposed.

“ Tax Original Issue Discount ” means the amount of ordinary interest income on a Note that must be accrued as original issue discount for United States federal income tax purposes.

“ Termination of Trading ” will be deemed to have occurred if, (i) the Common Stock (or other common stock, depositary receipts, ordinary shares or other certificates representing common equity interests into which the Notes are then convertible) is neither listed for trading on a United States national securities exchange, listed for trading on a United States national or regional securities exchange nor approved for trading on any of the NASDAQ's Capital Market, Global Market, Global Select Market or the OTC Bulletin Board, (ii) trading in the Common Stock on any such exchange or market has been suspended for thirty or more consecutive Trading Days, or (iii) a transaction or event (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) occurs in connection with which all or substantially all of the Common Stock is exchanged for, converted into, or acquired for, consideration which is not all or substantially all common stock, depositary receipts, ordinary shares or other certificates representing common equity interests that are (or, upon consummation of or immediately following such transaction or event, will be) listed on a United States national securities exchange or approved (or, upon consummation of or immediately following such transaction or event, will be approved) for quotation on the NASDAQ Capital Market, NASDAQ Global Market, NASDAQ Global Select Market, the OTC Bulletin Board or any similar United States system of automated dissemination of quotations of securities prices.

“ Tranche B Indenture ” means the Indenture dated as of even date between the Company and the Trustee, governing the terms and conditions of the Tranche B Notes.  

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“ Tranche B Notes ” means the Tranche B Zero Coupon Guaranteed Senior Unsecured Notes issued by the Company as of even date in an aggregate principal amount not exceeding $84,000,000.

“ Transaction Documents ” means this Indenture, the Notes, the Guarantees, Notes Purchase Agreement, the Amended Investor Rights Agreement, certain Non-Competition Covenant and Agreement dated February 16, 2007 by and between Citadel Equity Fund Ltd. and Mr. Tu Guo Shen, or any of them as the context may so require.

“ Trading Day ” shall mean (x) if the applicable security is quoted on the NASDAQ National Market, a day on which trades may be made thereon, (y) if the applicable security is listed or admitted for trading on the American Stock Exchange, New York Stock Exchange or another United States national securities exchange, a day on which such securities exchange is open for business, or (z) if the applicable security is not so listed, admitted for trading or quoted, any day other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

“ Trading Market ” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NASDAQ Capital Market, the American Stock Exchange, the New York Stock Exchange, the NASDAQ Global Market, the NASDAQ Global Select Market or the OTC Bulletin Board.

“ Trading Reference VWAP ” means, as of March 2, 2011, the simple arithmetic average of the VWAPs as shown on Bloomberg for the forty-five Trading Days preceding such date, as proportionally adjusted for any subdivision, consolidation, reclassification or similar event of the Shares; provided that if the actual Trading Reference VWAP be less than $6.00, the Trading Reference VWAP shall be deemed to be exactly $6.00.

“ Trustee ” means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean such successor Trustee.

“ U.S. Government Securities ” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America are pledged and which are not callable or redeemable at the issuer's option.

“ Voting Stock ” of any Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

“ VWAP ” means, for any date, the price per share determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg Financial L.P. through its “Volume at Price” functions (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; or (c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the average of the highest closing bid price and lowest closing ask price of any of the market makers for such security as reported, and in each of the foregoing clauses ignoring any block trade (which for purposes of this definition means any transfer of more than 100,000 shares). If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as mutually determined by the Company and the Noteholders of at least a majority in aggregate principal amount of the Notes then outstanding.

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“ Wholly Owned Subsidiary ” means, at any time, a Subsidiary all the Voting Stock of which (except directors' qualifying shares) is at such time owned, directly or indirectly, by the Company and its other Wholly Owned Subsidiaries.

Section 1.02.   Other Definitions .

	Defined in
Term	Section
" Adjustment Event "	14.05(m)
" Affiliate Transaction "	4.14
"Agent Members "	2.02(c)
" Allocable Excess Proceeds "	4.12
" Asset Sale Offer "	4.12
" Authentication Order "	2.04
" Benefited Party "	9.01
" Change of Control Offer "	4.17
" Conversion Date "	14.02
" Conversion Notice "	14.02
" Conversion Rate "	14.04
" Current Market Price "	14.05
" Determination Date "	14.05(m)
" Event of Default "	6.01
" Excess Proceeds "	4.12
" Expiration Time "	14.05(f)
" Future Guarantor "	9.03
" Installment Redemption Amount "	3.01(a)
" Installment Redemption Date "	3.01(a)
" Non-electing share "	14.06
" Offer Amount "	3.02(b)
" Offer Period "	3.02(c)
" Offer to Purchase "	3.02(a)
" Paying Agent "	4.02
" Purchase Date "	3.02(c)
" Purchase Price "	3.02(b)
" Purchased Shares "	14.05(f)

 

" Record Date "	14.05(i)
" Redemption Date "	3.01
" Redemption Amount "	3.01
" Registrar "	4.02
" Securities "	14.05(d)
" Security Register "	4.02
" Termination of Trading Offer "	4.23
" Trading Day "	14.05(i)
" Tranche A Voluntary Redemption "	3.01(b)
" Tranche B Voluntary Redemption "	3.01(b)
" Trigger Event "	14.05(d)
" Voluntary Redemption "	3.01(b)
" Voluntary Redemption Notice "	3.01(b)

 

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Section 1.03.   Rules of Construction .

(a)

Unless the context otherwise requires:

(i)

a term has the meaning assigned to it;

(ii)

an accounting term not otherwise defined herein has the meaning assigned to it in accordance with GAAP;

(iii)

“or” is not exclusive;

(iv)

words in the singular include the plural, and in the plural include the singular;

(v)

all references in this instrument to “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as originally executed;

(vi)

the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

(vii)

“including” means “including without limitation;”

(viii)

provisions apply to successive events and transactions;

(ix)

“$” means the lawful currency of the United States of America; and

(x)

references to sections of or rules under the Securities Act or the Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the Commission from time to time thereunder.

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ARTICLE 2

ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

Section 2.01.   Designation Amount and Issue of Notes .  

The Notes shall be designated as “Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible Notes”.  Notes not to exceed the aggregate principal amount of $50,000,000 (except pursuant to Sections 2.05 and 2.06 hereof) upon the execution of this Indenture, or from time to time thereafter, may be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Notes to or upon the written order of the Company, signed by its Chairman of the Board, Chief Executive Officer, President or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”), the Treasurer or any Assistant Treasurer or the Secretary or Assistant Secretary, without any further action by the Company hereunder.  

Section 2.02.   Form of Notes .  

(a)

The Notes and the Trustee's certificate of authentication to be borne by such Notes shall be substantially in the form set forth in Exhibit A .  The terms and provisions contained in the form of Note attached as Exhibit A hereto shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby.

(b)

Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends, endorsements or changes as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required by the Custodian, the Depositary or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Notes may be listed, or to conform to usage, or to indicate any special limitations or restrictions to which any particular Notes are subject.

(c)

So long as the Notes are eligible for book-entry settlement with the Depositary, or unless otherwise required by law, or otherwise contemplated by Section 2.05(a) , all of the Notes will be represented by one or more Notes in global form registered in the name of the Depositary or the nominee of the Depositary.  The transfer and exchange of beneficial interests in any such Global Note shall be effected through the Depositary in accordance with this Indenture and the applicable procedures of the Depositary.  Except as provided in Section 2.05(a) , beneficial owners of a Global Note shall not be entitled to have certificates registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and will not be considered holders of such Global Note.  The Company has initially appointed DTC as the Depositary. Each Global Note initially shall be registered in the name of a nominee for the Depositary and be delivered to the Trustee, as custodian for the Depositary or its nominee. Interests in the Global Note may be held by any member of, or participants in, the Depositary, including Euroclear and Clearstream (collectively, the “ Agent Members ”). Agent Members shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian, the Paying Agent or any agent of any of them as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, the Paying Agent or any agent of any of them, from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Global Note.  The Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

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(d)

Any Global Note shall represent such of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time be increased or reduced to reflect redemptions, repurchases, conversions, transfers or exchanges permitted hereby.  Any endorsement of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in such manner and upon instructions given by the holder of such Notes in accordance with this Indenture.  Payment of principal of, premium, if any, and Interest on any Global Note shall be made to the holder of such Note.

(e)

This Section 2.02(e) shall apply only to Global Notes deposited with the Trustee, as custodian for the Depositary.  Participants shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

The Company shall exchange Global Notes for Definitive Notes if: (1) at any time DTC or any alternative clearing agency on behalf of which the Notes evidenced by the Global Note may be held is closed for business for a continuous period of 14 days (other than reason of holidays, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so, and, in either case, the Company shall not have appointed a successor Depositary within 90 days after the Company receives such notice or becomes aware of such ineligibility, or (2) upon written request of a holder or the Trustee if a Default or Event of Default shall have occurred and be continuing.  

Upon the occurrence of any of the events set forth in clauses (1) or (2) of the immediately preceding paragraph, the Company shall execute, and, upon receipt of an Authentication Order in accordance with Section 2.04 hereof, the Trustee shall authenticate and deliver, Definitive Notes, in authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Notes in exchange for such Global Notes.

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Upon the exchange of a Global Note for Definitive Notes, such Global Note shall be cancelled by the Trustee or an agent of the Company or the Trustee.  Definitive Notes issued in exchange for a Global Note pursuant to this Section shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its Participants or its Applicable Procedures, shall instruct the Trustee or an agent of the Company or the Trustee in writing.  The Trustee or such agent shall deliver such Definitive Notes to or as directed by the Persons in whose names such Definitive Notes are so registered or to the Depositary.

Section 2.03.   Date and Denomination of Notes;   

The Notes shall be issuable in registered form without coupons in denominations of $100,000 principal amount and integral multiples of $1,000 in excess thereof. Each Note shall be dated the date of its authentication.  The Notes shall not bear any interest except for Default Interest, if any.

Default Interest, if any, shall be payable at the office of the Company maintained by the Company for such purposes in the City of New York, which shall initially be an office or agency of the Trustee.  The Company shall pay Default Interest (i) on any Notes in certificated form by (x) check mailed to the address of the Person entitled thereto as it appears in the Security Register (or upon written notice, by wire transfer in immediately available funds, if such Person is entitled to Default Interest on aggregate principal in excess of $1 million) or (y) by transfer to an account maintained by such person in the City of New York or (ii) on any Global Note by wire transfer of immediately available funds to the account of the Depositary or its nominee.

Section 2.04.   Execution of Notes .  

The Notes shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chairman of the Board, Chief Executive Officer, President or any Vice President (whether or not designated by a number or numbers or word or words added before or after the title “Vice President”) and attested by the manual or facsimile signature of its Secretary or any of its Assistant Secretaries or its Treasurer or any of its Assistant Treasurers (which may be printed, engraved or otherwise reproduced thereon, by facsimile or otherwise).  Only such Notes as shall bear thereon a certificate of authentication substantially in the form set forth on the form of Note attached as Exhibit A hereto upon a written order of the Company signed by an Officer (an “ Authentication Order ”), manually executed by the Trustee (or an authenticating agent appointed by the Trustee as provided by Section 15.10 ), shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose.  Such certificate by the Trustee (or such an authenticating agent) upon any Note executed by the Company shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture.

In case any officer of the Company who shall have signed any of the Notes shall cease to be such officer before the Notes so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Notes nevertheless may be authenticated and delivered or disposed of as though the person who signed such Notes had not ceased to be such officer of the Company, and any Note may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Note, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such an officer.

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Section 2.05.   Exchange and Registration of Transfer of Notes; Restrictions on Transfer .

(a)

As provided herein, interests in a Global Note will be exchanged, upon 45 days' notice by a holder of an interest in such Global Note for Definitive Notes. Each Global Note shall be deposited with the Depositary, which shall hold such Global Note in safe custody for the account of DTC and instruct DTC or both of them, as the case may be, to credit the principal amounts of the Notes represented by such Global Note to the holder's distribution account with DTC. Each relevant Global Note shall be exchangeable in whole for an interest, equal to the principal amount of such Global Note being exchanged, for Definitive Notes in the same principal amount, upon request of DTC to the Registrar, but only upon delivery by DTC, acting on behalf of the beneficial owners of such interests, to the Registrar at its principal office in the City of New York, of certificates substantially in the form of Exhibit C hereto. The delivery to the Registrar of any certificate in the form referred to above may be relied upon by the Company, the Trustee and the Registrar as conclusive evidence that related certificates have been delivered to DTC as contemplated by the terms of this Section.

(b)

In accordance with the terms of a Global Note and this Indenture, the Registrar shall deliver at the cost of the Company, upon not less than 45 days' notice to the Registrar by DTC, the relevant Definitive Notes in exchange for interests in such Global Note. For this purpose, the Registrar is authorized and it shall (A) authenticate each such Definitive Note and (B) deliver each such Definitive Note to or to the order of DTC, in exchange for interests in such Global Note. The Registrar shall promptly notify the Company upon receipt of a request for issue of Definitive Notes the aggregate principal amount of the relevant Global Note to be exchanged in connection therewith. The Company undertakes to deliver to, or to the order of, the Registrar sufficient numbers of duly executed Definitive Notes to enable the Registrar to comply with its obligations under this Section 2.05(b) . Such exchange shall be made free of charge to the holder and the beneficial owners of the relevant Global Note and to the holders of the Definitive Notes issued in exchange as provided above, except that a Person receiving Definitive Notes must bear the cost of insurance, postage, transportation and the like in the event that such Person does not receive such Definitive Notes in person at the offices of a Registrar. Notwithstanding the above, interests in a Global Note shall be exchangeable in whole (but not in part) at the cost of the Company for Definitive Notes under the conditions described in Section 2.02(e) .

(c)

Upon any exchange of an interest in a Global Note for Definitive Notes, the relevant Global Note shall be endorsed by the Trustee or the Registrar to reflect the reduction of its principal amount by the aggregate principal amount so exchanged. Until exchanged in full, the holder of any interest in any Global Note shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes authenticated and delivered hereunder. Once exchanged in full, a Global Note shall be canceled and disposed of by the Trustee in accordance with its customary procedures and a certificate of disposition will be sent to the Company.

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(d)

The Trustee or the Registrar shall cause all Global Notes and Definitive Notes delivered to it and held by it hereunder to be maintained in safe custody in accordance with this Section.

(e)

The Security Register shall be in written form in the English language and shall include a record of the certificate number of each Note that has been issued, and shall show the amount of such Notes, the date of issue, all subsequent transfers and changes in ownership in respect thereof and the names, tax identifying numbers (if relevant to a specific holder), addresses of the holders of the Notes and any payment instructions with respect thereto (if different from a holder's registered address).

(f)

The Registrar shall at all reasonable times during office hours make the Security Register available to the Trustee, the Paying Agent, the Company and the holders of such Notes or any person authorized by the Company in writing for inspection and for taking of copies thereof or extracts therefrom, and at the expense of the Company, the Registrar shall deliver to such persons all lists of holders of such Notes, their addresses, amounts of such holdings and other details as they may request.

(g)

The Registrar shall handle all requests for the registration of transfer, or exchange, repurchase or conversion, of Notes and receive certificates for the Notes deposited with the transfer agent for transfer, or exchange, repurchase or conversion, and in doing so, shall ensure that every Note presented or surrendered for registration of transfer, or exchange, repurchase or conversion, (if so required by the Company, the Trustee, the Paying Agent or the Registrar) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer (in form satisfactory to the Company and the Registrar) duly executed by the holder thereof or by such holder's attorney duly authorized in writing.

(h)

Neither the Company nor the Trustee nor any Registrar shall be required to exchange or register a transfer of (a) any Notes or portions thereof surrendered for conversion pursuant to Article 14 or (b) any Notes or portions thereof tendered for purchase pursuant to Section 3.02 (and not withdrawn).

(i)

Until the expiration of the holding period applicable to sales thereof under Rule 144 under the Securities Act (or any successor provision), the Notes shall not be transferred and any certificate evidencing such Note (and all securities issued in exchange therefor or substitution thereof, other than Common Stock, if any, issued upon conversion thereof, which shall bear the legend set forth in Exhibit D , if applicable) shall bear a legend set forth in Exhibit A , unless such Note has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer), pursuant to Rule 144 or other available exemptions from registration under the Securities Act or any similar provision then in force, or unless otherwise agreed by the Company in writing, with written notice thereof to the Trustee.

(j)

Any stock certificate representing Common Stock issued upon conversion of such Note shall bear a legend substantially in the form of Exhibit D .

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(k)

The Trustee and the Registrar shall be entitled to treat a telephone, telex or facsimile communication from a person purporting to be (and who the Trustee or the Registrar believe in good faith to be) the authorized representative of the Company, named in a list furnished to the Trustee and the Registrar from time to time, as sufficient instructions and authority of the Company for the Trustee and the Registrar to act in accordance with this Section.

(l)

Title to the Notes shall pass by delivery. However, title to Notes issued in the form of Global Notes held through DTC shall be transferable only in accordance with the rules and procedures of DTC, as appropriate.

Section 2.06.   Mutilated, Destroyed, Lost or Stolen Notes .  

In case any Note shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon its written request the Trustee or an authenticating agent appointed by the Trustee shall authenticate and make available for delivery, a new Note, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Note, or in lieu of and in substitution for the Note so destroyed, lost or stolen.  In every case, the applicant for a substituted Note shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, to the Trustee and, if applicable, to such authenticating agent evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.

Following receipt by the Trustee or such authenticating agent, as the case may be, of satisfactory security or indemnity and evidence, as described in the preceding paragraph, the Trustee or such authenticating agent may authenticate any such substituted Note and make available for delivery such Note.  Upon the issuance of any substituted Note, the Company or the Trustee, as the case may be, may require the payment by the holder of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.  In case any Note which has matured or is about to mature or has been called for redemption or has been tendered for repurchase upon a Termination of Trading (and not withdrawn) or is to be converted into Common Stock shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or in connection with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, the Trustee and, if applicable, any paying agent or conversion agent evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.

Every substitute Note issued pursuant to the provisions of this Section by virtue of the fact that any Note is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of (but shall be subject to all the limitations set forth in) this Indenture equally and proportionately with any and all other Notes duly issued hereunder.  If, after the delivery of such replacement Note, a protected purchaser of the original Note in lieu of which such replacement Note was issued presents for payment, registration or conversion of such original Note, the Trustee shall be entitled to recover such replacement Note from the Person to whom it was delivered or any Person taking therefrom, except a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Company, the Trustee and any authenticating agent in connection therewith.

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Section 2.07.   Temporary Notes .  

Pending the preparation of Notes in certificated form, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee shall, upon the written request of the Company, authenticate and deliver temporary Notes (printed or lithographed).  Temporary Notes shall be issuable in any authorized denomination, and substantially in the form of the Notes in certificated form, but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company.  Every such temporary Note shall be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the Notes in certificated form.  Without unreasonable delay, the Company will execute and deliver to the Trustee or such authenticating agent Notes in certificated form and thereupon any or all temporary Notes may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 4.02 and the Trustee or such authenticating agent shall authenticate and make available for delivery in exchange for such temporary Notes an equal aggregate principal amount of Notes in certificated form.  Such exchange shall be made by the Company at its own expense and without any charge therefor.  Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Notes in certificated form authenticated and delivered hereunder.

Section 2.08.   Cancellation of Notes .  

All Notes surrendered for the purpose of payment, redemption, repurchase, conversion, exchange or registration of transfer shall, if surrendered to the Company or any paying agent or any Registrar or any conversion agent, be surrendered to the Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be promptly canceled by it, and no Notes shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture.  The Trustee shall dispose of such canceled Notes in accordance with its customary procedures.  If the Company shall acquire any of the Notes, such acquisition shall not operate as a redemption, repurchase or satisfaction of the indebtedness represented by such Notes unless and until the same are delivered to the Trustee for cancellation.

Section 2.09.   Defaulted Interest .  

If the Company defaults in a payment of any Installment Redemption Amount on the Notes, it shall pay the defaulted interest in any lawful manner to the Persons who are holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall mail or cause to be mailed to holders a notice that states the special record date, the related payment date and the amount of such defaulted interest to be paid.

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Section 2.10.   CUSIP Numbers .  

The Company in issuing the Notes may use CUSIP numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption or repurchases as a convenience to Noteholders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption or a repurchase and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption or repurchase shall not be affected by any defect in or omission of such numbers.  The Company will promptly notify the Trustee in writing of any change in the CUSIP numbers.

ARTICLE 3

REDEMPTION AND REPURCHASE OF NOTES

Section 3.01.   Redemption .  

(a)

Redemption in Installments .  Unless previously redeemed or converted or purchased and cancelled, the Company shall redeem the Notes in installments on the dates (each an “ Installment Redemption Date ”) and, for each US$100,000 principal amount of the Notes, in the amounts (each an “ Installment Redemption Amount ”) set forth below:

Installment Redemption Date	Installment Redemption Amount (US$), for each US$100,000 principal amount of the Notes
March 2, 2010	US$  12,500.00
September 2, 2010	$  12,500.00
March 2, 2011	$  12,500.00
September 2, 2011	$  12,500.00
March 2, 2012	$  25,000.00
September 2, 2012	$  25,000.00
Total:	US$100,000.00

 

(b)

Voluntary Redemption .  At any time prior to the Final Redemption Date, the Company may, if the Company gives the Trustee and each holder at such holder's address appearing in the Security Register not less than five (5) Business Days' prior written notice (the “ Voluntary Redemption Notice ”), redeem the Notes (in whole or in part) without any premium or penalty, except for Default Interest, if any (such redemption of the Notes being a “ Tranche A Voluntary Redemption ”), provided that:

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(i)

the Company shall redeem the Tranche B Notes (in whole or in part) on the same date subject to any equivalent provision under the Tranche B Notes and the Tranche B Indenture (such redemption of the Tranche B Notes being a “ Tranche B Voluntary Redemption ” and collectively with the Tranche A Voluntary Redemption, a “ Voluntary Redemption ”) after giving equivalent notice therefor in relation the Tranche B Notes pursuant to applicable provisions under the Tranche B Notes and the Tranche B Indenture;

(ii)

the aggregate amount of any Voluntary Redemption shall be allocated between the Notes and the Tranche B Notes on a prorated basis according to the respective amounts of the Notes and the Tranche B Notes outstanding immediately prior such Voluntary Redemption after taking into account any and all prior redemptions;

(iii)

subject to subclause (iv) below, the aggregate amount of any Tranche A Voluntary Redemption shall be allocated among the Notes on a prorated basis according to the respective amounts of each Note outstanding immediately prior such Tranche A Voluntary Redemption after taking into account any and all prior redemptions of the Notes, subject to rounding to the nearest $1,000;

(iv)

with respect to each Note, the aggregate amount of any Tranche A Voluntary Redemption shall be applied towards reducing the Installment Redemption Amounts of such Note falling on or after such Tranche A Voluntary Redemption in chronological order; and

(v)

the amount of any Tranche A Voluntary Redemption or Tranche B Voluntary Redemption shall be at least $100,000 or integral multiples of $1,000 in excess thereof.  

The Voluntary Redemption Notice shall be irrevocable and obligate the Company to make such redemption on such date as specified in the Voluntary Redemption Notice.

Section 3.02.   Offer to Purchase .

(a)

In the event that, pursuant to Section 4.12 , Section 4.17 or Section 4.23 hereof, the Company shall be required to commence an Asset Sale Offer, a Change of Control Offer or a Termination of Trading Offer (each of the foregoing, an “ Offer to Purchase ”), respectively, it shall follow the procedures specified below.

(b)

The Company shall commence the Offer to Purchase by sending, by first-class mail, with a copy to the Trustee, to each holder at such holder's address appearing in the Security Register, a notice the terms of which shall govern the Offer to Purchase stating:

(i)

that the Offer to Purchase is being made pursuant to this Section and Section 4.12 , Section 4.17 or Section 4.23 , as the case may be, and, in the case of a Change of Control Offer or Termination of Trading Offer, that such event has occurred, the circumstances and relevant facts regarding such event and that a Change of Control Offer or Termination of Trading Offer is being made pursuant to Section 4.17 or Section 4.23 , respectively;

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(ii)

the principal amount of Notes required to be purchased pursuant to Section 4.12 , Section 4.17 or Section 4.23 , as the case may be (the “ Offer Amount ”), the purchase price set forth in Section 4.12 , Section 4.17 or Section 4.23 , as applicable (the “ Purchase Price ”), the Offer Period and the Purchase Date (each as defined below);

(iii)

except as provided in clause (ix), that all Notes timely tendered and not withdrawn shall be accepted for payment;

(iv)

that holders electing to have a Note purchased pursuant to an Offer to Purchase may elect to have Notes purchased in integral multiples of $1,000 only;

(v)

that holders electing to have a Note purchased pursuant to any Offer to Purchase shall be required to surrender the Note, with the form entitled “Purchase Notice” on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, the Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice before the close of business on the third Business Day before the Purchase Date;

(vi)

that holders shall be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, facsimile transmission or letter setting forth the name of the holder, the principal amount of the Note (or portions thereof) the holder delivered for purchase and a statement that such holder is withdrawing his election to have such Note purchased;

(vii)

that, in the case of an Asset Sale Offer, if the aggregate principal amount of Notes surrendered by holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $100,000 or integral multiples of $1,000 in excess thereof shall be purchased);

(viii)

that holders whose Notes were purchased in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer); and

(ix)

any other procedures the holders must follow in order to tender their Notes (or portions thereof) for payment and the procedures that holders must follow in order to withdraw an election to tender Notes (or portions thereof) for payment.

(c)

The Offer to Purchase shall remain open for a period of at least 30 days but no more than 60 days following its commencement, except to the extent that a longer period is required by applicable law (the “ Offer Period ”).  No later than five (5) Business Days (and in any event no later than the 60th day following any Change of Control or Termination of Trading) after the termination of the Offer Period (the “ Purchase Date ”), the Company shall purchase the Offer Amount or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Offer to Purchase.  Payment for any Notes so purchased shall be made in the same manner as interest payments are made.  The Company shall publicly announce the results of the Offer to Purchase on the Purchase Date.

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(d)

On or prior to the Purchase Date, the Company shall, to the extent lawful:

(i)

accept for payment (on a pro rata basis to the extent necessary in connection with an Asset Sale Offer) from each tendering holder, the Offer Amount of Notes or portions of Notes properly tendered and not withdrawn pursuant to the Offer to Purchase, or if less than the Offer Amount has been tendered, all Notes tendered; and

(ii)

surrender to the Trustee the Notes properly accepted to be cancelled by the Trustee in accordance Section 2.08 hereof, together with an Officers' Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company and that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section.  

(e)

Upon receipt of the Notes in accordance with Section 3.02(d)(i) , the Company shall promptly, and in any event within (1) Business Day after the Purchase Date, deliver to each tendering holder the Purchase Price. In the event that any portion of the Notes surrendered is not purchased by the Company, the Company shall promptly execute and issue a new Note in a principal amount equal to such unpurchased portion of the Note surrendered, and, upon receipt of an Authentication Order in accordance with Section 2.04 hereof, the Trustee shall authenticate and deliver (or cause to be transferred by book-entry) such new Note to such holder, in a principal amount equal to any unpurchased portion of the Note surrendered; provided , however , that each such new Note shall be in a principal amount of $100,000 or an integral multiple of $1,000 in excess thereof.   Any Note not so accepted shall be promptly mailed or delivered by the Company to the holder thereof.

(f)

The Company shall comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the Offer to Purchase.  To the extent that the provisions of any securities laws or regulations conflict with Section 4.12 , Section 4.17 or Section 4.23 , as applicable, this Section or other provisions of this Indenture, the Company shall comply with applicable securities laws and regulations and shall not be deemed to have breached its obligations under Section 4.12 , Section 4.17 or Section 4.23 , as applicable, this Section or such other provision by virtue of such compliance.

ARTICLE 4

PARTICULAR COVENANTS OF THE COMPANY

Section 4.01.   Payment of Principal .  

The Company covenants and agrees that it will duly and punctually pay or cause to be paid the principal (including each Installment Redemption Amount, the purchase price upon an Offer to Purchase or the repurchase price upon repurchase, in each case pursuant to Article 3 ) and premium, if any, of each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes.

The Company shall pay, from time to time on demand, interest (including post-petition interest in any proceeding under any Bankruptcy Law) accrued on overdue principal (including, for the avoidance of doubt, any Installment Redemption Amount not paid on the Installment Redemption Date on which such Installment Redemption Amount is due) and premium, if any, at a rate that is 5% per annum.

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Interest shall be computed on the basis of a 360-day year of twelve 30-day months.

Section 4.02.   Maintenance of Office or Agency .  

The Company will maintain an office or agency in the City of New York, where the Notes may be surrendered for registration of transfer or exchange (“ Registrar ”) or for presentation for payment or for conversion, redemption or repurchase (“ Paying Agent ”) and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Registrar shall keep a register (the “ Security Register ”) of the Notes and of their transfer and exchange. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency not designated or appointed by the Trustee.  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office.

The Company may also from time to time designate co-registrars and one or more offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations.  The Company will give prompt written notice of any such designation or rescission and of any change in the location of any such other office or agency.

The Company hereby initially designates the Trustee as paying agent, Registrar, Custodian and conversion agent and each of the Corporate Trust Office and the office of agency of the Trustee in City of New York, shall be considered as one such office or agency of the Company for each of the aforesaid purposes.

So long as the Trustee is the Registrar, the Trustee agrees to mail, or cause to be mailed, the notices set forth in Section 7.08(a) and the third paragraph of Section 7.09 .  If co-registrars have been appointed in accordance with this Section, the Trustee shall mail such notices only to the Company and the holders of Notes it can identify from its records.

Section 4.03.   Provisions as to Paying Agent .  

(a)

If the Company shall appoint a paying agent other than the Trustee, or if the Trustee shall appoint such a paying agent, the Company will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section:

(i)

that it will hold all sums held by it as such agent for the payment of the principal of or Interest on the Notes (whether such sums have been paid to it by the Company or by any other obligor on the Notes) in trust for the benefit of the holders of the Notes;

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(ii)

that it will give the Trustee notice of any failure by the Company (or by any other obligor on the Notes) to make any payment of the principal of or Interest on the Notes when the same shall be due and payable; and

(iii)

that at any time during the continuance of an Event of Default, upon request of the Trustee, it will forthwith pay to the Trustee all sums so held in trust.

(b)

The Company shall, on the Business Day prior to each due date of the principal or Default Interest, if any, on the Notes, deposit with the paying agent a sum (in funds which are immediately available on the due date for such payment) sufficient to pay such principal or Default Interest, if any, and (unless such paying agent is the Trustee) the Company will promptly notify the Trustee in writing of any failure to take such action; provided that if such deposit is made on the due date, such deposit shall be received by the paying agent by 10:00 a.m. New York City time, on such date.

(c)

If the Company shall act as its own paying agent, it will, on the Business Day prior to each due date of the principal of or Interest on the Notes, set aside, segregate and hold in trust for the benefit of the holders of the Notes a sum sufficient to pay such principal or Interest so becoming due and will promptly notify the Trustee in writing of any failure to take such action and of any failure by the Company (or any other obligor under the Notes) to make any payment of the principal of or Interest on the Notes when the same shall become due and payable.

(d)

Anything in this Section to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust by the Company or any paying agent hereunder as required by this Section, such sums to be held by the Trustee upon the trusts herein contained and upon such payment by the Company or any paying agent to the Trustee, the Company or such paying agent shall be released from all further liability with respect to such sums.

(e)

Anything in this Section to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section is subject to Sections 11.03 and 11.04 .

The Trustee shall not be responsible for the actions of any other paying agents (including the Company if acting as its own paying agent) and shall have no control of any funds held by such other paying agents.

Section 4.04.   Existence .  

Subject to Article 5 , the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and rights (charter and statutory); provided that the Company shall not be required to preserve any such right if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Noteholders.

Section 4.05.   Maintenance of Properties .  

The Company will cause all properties used or useful in the conduct of its business or the business of any Significant Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any subsidiary and not disadvantageous in any material respect to the Noteholders.

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Section 4.06.   Payment of Taxes and Other Claims .  

The Company will pay or discharge, or cause to be paid or discharged, before the same may become delinquent, (i) all taxes, assessments and governmental charges levied or imposed upon the Company or any Significant Subsidiary or upon the income, profits or property of the Company or any Significant Subsidiary, (ii) all claims for labor, materials and supplies which, if unpaid, might by law become a lien or charge upon the property of the Company or any Significant Subsidiary and (iii) all stamp taxes and other duties, if any, which may be imposed by the United States or any political subdivision thereof or therein in connection with the issuance, transfer, exchange, conversion, redemption or repurchase of any Notes or with respect to this Indenture; provided that, in the case of clauses (i) and (ii), the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim (A) if the failure to do so will not, in the aggregate, have a material adverse impact on the Company, or (B) if the amount, applicability or validity is being contested in good faith by appropriate proceedings.

Section 4.07.   Stay, Extension and Usury Laws .  

The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or Default Interest, if any, on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

Section 4.08.   Payments for Consent .

The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to or for the benefit of any holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

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Section 4.09.   Incurrence of Additional Debt; Financial Covenants .

(a)

The Company shall not, and shall not permit any of its Subsidiaries to, Incur, directly or indirectly, any Debt unless, after giving effect to the application of the proceeds thereof, no Default or Event of Default would occur as a consequence of such Incurrence or be continuing following such Incurrence.

(b)

The Company shall maintain:

(i)

a Leverage Ratio, as determined as of the last day of each Fiscal Quarter, for the four Fiscal Quarters ending on such day, not exceeding 4.50 to 1.00.

(c)

Notwithstanding anything to the contrary contained in this Section,

(i)

the Company shall not, and shall not permit any Guarantor to, Incur any Debt pursuant to this covenant if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations unless such Debt shall be subordinated to the Notes or the applicable Guarantee, as the case may be, to at least the same extent as such Subordinated Debt;

(ii)

the Company shall not permit any of its Subsidiaries that is not a Guarantor to Incur any Debt pursuant to this covenant if the proceeds thereof are used, directly or indirectly, to Refinance any Debt of the Company or any Guarantor; and

(iii)

accrual of interest, accretion or amortization of original issue discount and the payment of interest or dividends in the form of additional Debt, will be deemed not to be an Incurrence of Debt for purposes of this Section.

Section 4.10.   Restricted Payments .

The Company shall not make, and shall not permit any of its Subsidiaries to make, directly or indirectly, any Restricted Payment if at the time of, and after giving effect to, such proposed Restricted Payment,

(a)

a Default or Event of Default shall have occurred and be continuing, or

(b)

the Company could not Incur at least $1.00 of additional Debt in compliance with Section 4.09 , or

(c)

the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made since the Issue Date (the amount of any Restricted Payment, if made other than in cash, to be based upon Fair Market Value at the time of such Restricted Payment) would exceed an amount equal to the sum of:

(1)

10% of the aggregate amount of Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the Fiscal Quarter after the Issue Date to the end of the most recent Fiscal Quarter ending prior to the date of such Restricted Payment (or if the aggregate amount of Consolidated Net Income for such period shall be a deficit, minus 100% of such deficit), plus

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(2)

100% of the Capital Stock Sale Proceeds, plus

(3)

the sum of:

(A)

the aggregate net cash proceeds received by the Company or any Guarantor from the issuance or sale after the Issue Date of convertible or exchangeable Debt that has been converted into or exchanged for Capital Stock (other than Disqualified Stock) of the Company, and

(B)

the aggregate amount by which Debt (other than Subordinated Obligations) of the Company or any Guarantor is reduced on the Company's consolidated balance sheet on or after the Issue Date upon the conversion or exchange of any Debt issued or sold on or prior to the Issue Date that is convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company,

excluding, in the case of clause (A) or (B):

(x)

any such Debt issued or sold to the Company or a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees, and

(y)

the aggregate amount of any cash or other Property distributed by the Company or any of its Subsidiaries upon any such conversion or exchange, plus

(4)

an amount equal to the net reduction in Investments in any Person other than the Company or any of its Subsidiaries resulting from dividends, repayments of loans or advances or other transfers of Property, in each case to the Company or any of its Subsidiaries from such Person.

Notwithstanding the foregoing limitation, the Company may:

(a)

pay dividends on its Capital Stock within 60 days of the declaration thereof if, on the declaration date, such dividends could have been paid in compliance with the Indenture; provided , however , that at the time of such payment of such dividend, no other Default or Event of Default shall have occurred and be continuing (or result therefrom); provided further , however , that such dividend shall be included in t