NOTES PURCHASE AGREEMENT

This Notes Purchase Agreement (this “ Agreement ”) is dated as of April 24, 2007, by and between China Security & Surveillance Technology, Inc., a Delaware corporation (the “ Company ”), the other Group Companies listed on the signature pages hereto, and Citadel Equity Fund Ltd. (the “ Purchaser ”).

WHEREAS, the Company proposes to issue, and the Purchaser proposes to purchase, US$50,000,000 Guaranteed Senior Unsecured Convertible Notes due 2012 on the terms of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.       Definitions

For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires the following terms shall have the meanings set forth below. Defined terms used but not otherwise defined herein shall have the meanings given to such terms in the other Sections of this Agreement or the Indenture (as defined below).

“ Act ” means the Securities Act of 1933, as amended.

“ Affiliate ” of any specified Person means:

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.

“ Agreement ” has the meaning given in the recitals.

“ Amended Investor Rights Agreement ” means the amended and restated investor rights agreement dated as of April 24, 2007 by and among the Company, the other Group Companies, the Shareholders and the Purchaser, a form which is attached hereto as Exhibit B .

“ Applicable Agreements ” has the meaning given in Section 6(i).

“ Applicable Law ” has the meaning given in Section 6(i).

“ Business Day ” has the meaning given in the Conditions.

“ BVI ” means the British Virgin Islands.

“ 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.

“ Chain Star ” means Chain Star Investments Ltd., a wholly-owned subsidiary of Safetech, incorporated under the laws of Hong Kong.

“ Charter Documents ” has the meaning given in Section 6(i).

“ Cheng Feng ” means Shanghai Cheng Feng Digital Technology Co., Ltd., a wholly-owned subsidiary of CSST HK, incorporated under the laws of PRC.

“ Cheng Feng Equipment ” means Shanghai Cheng Feng Digital Equipment Ltd., a ninety percent (90%) owned subsidiary of Cheng Feng, incorporated under the laws of PRC.

“ Cheng Feng Public Safety ” means Shanghai Cheng Feng Public Safety Prevention Technology Co., Ltd., a seventy percent (70%) owned subsidiary of Cheng Feng, incorporated under the laws of PRC.

“ Clearing Facilities ” means Clearstream and Euroclear.

“ Clearstream ” means Clearstream Banking, société anonyme, and any successor thereto.

“ Closing ” has the meaning given in Section 5.

“ Closing Date ” means the date of the Closing.

“ Commission ” means the Securities and Exchange Commission.

“ Common Stock ” means shares of common stock of the Company, par value US$0.0001 per share.

“ Company ” has the meaning given in the recitals.

“ Conditions ” means the terms and conditions of the Notes.

“ Conversion Shares ” means shares of Common Stock issuable under the conversion of the Notes.

“ CSST HK ” means China Security & Surveillance Technology (HK) Ltd., a wholly-owned subsidiary of Safetech, incorporated under the laws of Hong Kong.

“ CSST PRC ” means China Security & Surveillance Technology (PRC), Inc., a wholly-owned subsidiary of the Company, incorporated under the laws of PRC.

“ Disclosure Schedule ” has the meaning given in Section 6.

“ Environmental Laws ” has the meaning given in Section 6(bb).

“ Euroclear ” means Euroclear Bank, S.A./N.V. and any successor thereto.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ FCPA ” has the meaning given in Section 6(dd).

“ Fully-Diluted ” has the meaning given in Section 6(d)(ii).

“ GAAP ” has the meaning given in Section 6(a)(i).

“ Golden ” means Golden Group Corporation (Shenzhen) Limited, a wholly-owned subsidiary of Safetech, incorporated under the laws of PRC.

“ Governmental Authority ” has the meaning given in Section 6(i).

“ Group Companies ” means the Company, Safetech, CSST HK, Chain Star, Golden, Cheng Feng, Cheng Feng Equipment, Cheng Feng Public Safety, Hongtianzhi, Tongxing, Shixing and CSST PRC and the Company’s other existing and future, direct and indirect, Subsidiaries.

“ Guarantees ” has the meaning given in Section 4.

“ Guarantor ” has the meaning given in Section 4.

“ Hongtianzhi ” means Shenzhen Hongtianzhi Electronics Co., Ltd., a wholly-owned subsidiary of Chain Star, incorporated under the laws of PRC.

“ Indemnified Party ” has the meaning given in Section 10(a).

“ Indemnifying Party ” has the meaning given in Section 10(a).

“ Indenture ” means an indenture dated as of the Closing Date by and among the Company, other Group Companies and the Trustee, a form of which is attached hereto as Exhibit A.

“ Intellectual Property ” has the meaning given in Section 6(q)(i).

“ Lien ” means a mortgage, charge, pledge, lien, hypothecation or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

“ Material Adverse Change ” has the meaning given in Section 6(s)(ii).

“ Material Adverse Effect ” means a material adverse effect on:

(a)      the business, operations, property, earnings, assets, liabilities or condition (financial or otherwise) of the Group Companies taken as a whole;

(b)      the ability of the Group Companies or any Shareholder to perform its material obligations under the Transaction Documents; or

(c)      the validity or enforceability of the Transaction Documents or the rights and remedies of any holder of the Notes under the Notes.

“ Money Laundering Laws ” has the meaning given in Section 6(jj).

“ Most Recent Balance Sheet ” has the meaning given in Section 6(s)(iii).

“ Notes ” has the meaning given in Section 3.

“ OFAC ” has the meaning given in Section 6(ii).

“ Outside Financing ” has the meaning given in Section 7(l).

“ Permits ” has the meaning given in Section 6(m).

“ Person ” means any individual, corporation, company (including any limited liability company), association, partnership, joint venture, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“ PFIC ” has the meaning given in Section 6(hh).

“ PRC ” means the People’s Republic of China, not including Taiwan, Hong Kong and Macau.

“ Proceedings ” has the meaning given in Section 6(l).

“ Proposal ” has the meaning given in Section 7(u).

“ Purchaser ” has the meaning given in the recitals.

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

“ SEC Reports ” has the meaning given in Section 6(a)(i).

“ Securities ” means, collectively, the Notes, the Conversion Shares and the Guarantees.

“ Shareholder ” means any of Mr. Tu Guo Shen, Ms. Li Zhi Qun and Whitehorse.

“ Shixing ” means Guangzhou Shixing Digital Technology Co., Ltd., a seventy percent (70%) owned subsidiary of Hongtianzhi, incorporated under the laws of PRC.

“ Subsidiary ” means, in respect of any Person, any corporation, company (including any limited liability company), association, partnership, joint venture or other business entity of which at least a majority of the total voting power of the voting stock is at the time owned or controlled, directly or indirectly, by:

(a)      such Person,

(b)      such Person and one or more Subsidiaries of such Person, or

(c)      one or more Subsidiaries of such Person.

“ Superior Proposal ” has the meaning given in Section 7(u).

“ Tax ” has the meaning given in Section 6(p).

“ Tongxing ” means Shenzhen Tongxing Shixun Technology Co., Ltd., a seventy percent (70%) owned subsidiary of Hongtianzhi, incorporated under the laws of PRC.

“ Trading Market ” has the meaning given in Section 5.

“ Transaction Document ” means this Agreement, the Indenture, the Notes, the Guarantees and the Amended Investor Rights Agreement, or any of them as the context may so require.

“ Trustee ” means The Bank of New York, a New York banking corporation, acting as trustee under the Indenture.

“ US$ ” means the lawful currency of the United States from time to time.

“ Whitehorse ” means Whitehorse Technology Limited, a British Virgin Islands company wholly owned by Mr. Tu Guo Shen and the registered owner of Mr. Tu Guo Shen’s equity interest in the Company.

2.       Rules of Construction .

Unless the context otherwise requires:

(a)      a term has the meaning assigned to it;

(b)      “or” is not exclusive;

(c)      words in the singular include the plural, and in the plural include the singular;

(d)      all references in this Agreement to “Sections”, “Exhibits” and other subdivisions are to the designated Sections, Exhibits and subdivisions of this Agreement as originally executed;

(e)      a reference to any person is, where relevant, deemed to be a reference to or to include, as appropriate, that person’s successors and permitted assignees or transferees;

(f)      a reference to (or to any specified provision of) any agreement or document (including any Transaction Document) is to be construed as a reference to that agreement or document as it may be amended from time to time;

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

(h)      “including” means “including without limitation;”

(i)       provisions apply to successive events and transactions; and

(j)      references to a statute or statutory provision is to be construed as a reference to that statute or statutory provision as it may be amended from time to time.

3.       Issuance of Notes .

Subject to the terms and conditions of this Agreement, the Company will, on the Closing Date, (i) issue and sell to the Purchaser, and the Purchaser will purchase from the Company, the Company’s 500 Guaranteed Senior Unsecured Convertible Notes due 2012 (the “ Notes ”) of US$100,000 principal amount each, convertible into shares of Common Stock, at an initial conversion price of US$23.60 per share, and (ii) cause the Guarantors to issue the Guarantees. The Notes will be issued pursuant to the provisions of the Indenture.

The Notes will be offered and sold to the Purchaser pursuant to Regulation S or other exemption from the registration requirements under the Act. Upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Act, the Notes and the Conversion Shares shall bear the legends relating to the offer and the sale of the Notes and the Conversion Shares as required by (i) Regulation S under the Act or (ii) any other applicable laws or regulations relating to the issuance of the Notes.

4.       Guarantees.

Pursuant to the Indenture and to the fullest extent permitted by Applicable Laws, Safetech, CSST HK, Chain Star   and all of the Company’s other existing and future direct and indirect Subsidiaries (only to the extent such Subsidiary is permitted under Applicable Laws to do so) (each, a “ Guarantor ”) shall irrevocably and unconditionally guarantee, on a senior basis, to the Purchaser and to the Trustee the payment and performance of the Company’s obligations under this Agreement, the Notes and the Indenture (collectively, the “ Guarantees ”).

5.       Purchase, Sale and Delivery .

The issue and sale of the Notes to be purchased by the Purchaser shall occur at the Hong Kong office of Simpson Thacher & Bartlett LLP, on or about 9:00 a.m., New York time, at a closing (the “ Closing ”) on April 24, 2007 or on such other time or Business Day thereafter on or prior to 31, 2007 as may be agreed upon by the Company and the Purchaser. At the Closing, the Company shall deliver to the Purchaser one or more global certificates representing the Notes, registered in such names and denominations as the Purchaser may request, against payment by the Purchaser of US$50,000,000 as the purchase price therefor by immediately available federal funds bank wire transfer to such bank account or accounts as the Company shall have beforehand designated to the Purchaser. The Notes to be represented by one or more global certificates in book-entry form, will be deposited on the Closing Date, by or on behalf of the Company, with the Trustee as common depositary for Clearstream and Euroclear, or its designated custodian, and registered in the name of the Trustee. The Common Stock is approved for quotation on the Over The Counter Bulletin Board (the “ Trading Market ”).

6.       Representations and Warranties of the Group Companies . Except as set forth in the Disclosure Schedule attached hereto as Exhibit C (“ Disclosure Schedule ”) which exceptions shall be deemed part of the representations and warranties made hereunder, each of the Group Companies, jointly and severally, represents and warrants to the Purchaser the following:

(i)       Except as set forth on Schedule 6(a) of the Disclosure Schedule, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Act and the Exchange Act (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension, and to the Company’s best knowledge after due inquiry, no disciplinary actions or proceedings have been initiated against the Company and no such actions are threatened. As of the date of filing, in the case of SEC Reports filed pursuant to the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twenty-four months preceding the date hereof (or such shorter period as the Company was required by law to file such reports, forms or other information) (and to the extent any such SEC Report was amended, then as of the date of filing of such amendment), and as of the date of effectiveness in the case of SEC Reports filed pursuant to the Act (and to the extent any such SEC Report was amended, then as of the date of effectiveness of such amendment), the SEC Reports complied in all material respects with the requirements of the Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none of the SEC Reports, as of the date of filing, in the case of SEC Reports filed pursuant to the Exchange Act (and to the extent any such SEC Report was amended, then as to the date of filing of such amendment), and as of the date of effectiveness in the case of SEC Reports filed pursuant to the Act (and to the extent any such SEC Report was amended, then as of the date of effectiveness of such amendment), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports have been prepared in accordance with the applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial condition, results of operations and cash flows of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. All other financial, statistical, and market and industry-related data included in the SEC Reports are based on or derived from sources that the Company reasonably believes to be reliable and accurate. For the purposes of this Agreement, the term “filed” (or any derivations thereof) includes filing, furnishing or otherwise providing any reports, forms or other information provided to the Commission.

(ii)   Except as set forth on Schedule 6(a) of the Disclosure Schedule, the Company has not, in the 12 months preceding the date hereof, received notice from the Trading Market to the effect that the Company is not in compliance with the requirements of the Trading Market, and to the Company’s best knowledge after due inquiry, no disciplinary actions or proceedings have been initiated against the Company and no such actions are threatened. The Company is, and upon consummation of the transactions contemplated hereby expects to be, in compliance with all of the listing requirements of the Trading Market.

(i)       Schedule 6(b)(i) of the Disclosure Schedule contains complete and correct lists of each Person in which the Company owns, directly or indirectly, any Capital Stock, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its Capital Stock outstanding owned by the Company and each other Subsidiary.

(ii)      All of the outstanding shares of Capital Stock of each Subsidiary shown in Schedule 6(b)(i) of the Disclosure Schedule as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by the Company or another Subsidiary free and clear of any Lien.

(iii)     No Subsidiary is a party to, or otherwise subject to any legal or regulatory restriction or any agreement (other than this Agreement) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of Capital Stock of such Subsidiary.

(c)       Organization . Each of the Group Companies (i) has been duly organized, is validly existing and is in good standing under the laws of its jurisdiction of organization, (ii) has all requisite power and authority to carry on its business and to own, lease and operate its properties and assets, and (iii) is duly qualified or licensed to do business and is in good standing as a domestic or foreign corporation or limited liability company, as the case may be, authorized to do business in each jurisdiction in which the nature of such business or the ownership or leasing of such properties requires such qualification, except where, for the purposes of (ii) or (iii) only, the failure to have all such requisite power and authority or to be so duly qualified or licensed does not, and would not, individually or in the aggregate, have a Material Adverse Effect. The constitutional documents and certificates of each of Golden, Cheng Feng, Cheng Feng Equipment, Cheng Feng Public Safety, Hongtianzhi, Tongxing, Shixing and CSST PRC are valid and have been duly approved or registered (as applicable) by competent PRC Governmental Authorities.

(d)       Capitalization and Voting Rights .

(i)       Capital Stock . All of the outstanding shares of Capital Stock of the Company have been validly issued and are fully paid and non-assessable.

(ii)     Issued and Issuable Shares . Except as set forth on Schedule 6(d)(ii) of the Disclosure Schedule, as at the date hereof and immediately prior to the Closing, there is no Capital Stock issued or issuable pursuant to any exercise, conversion, exchange, subscription or otherwise in connection with any warrants, options (including pursuant to the Company’s stock option plan), convertible securities or any agreement to sell or issue Capital Stock or securities which may be exercised, converted or exchanged for Capital Stock (collectively, “ Fully-Diluted ”). The Conversion Shares issuable upon conversion of the Notes have been duly reserved for issuance, and will constitute 5.16% of the Company’s Capital Stock on a Fully-Diluted basis. All of the issued and outstanding shares of each of the Group Company’s Capital Stock as of the Closing are duly authorized, validly issued, fully paid and non-assessable, were issued in accordance with the registration or qualification provisions of the Act, if applicable, and any relevant “blue sky” laws of the United States, if applicable, or pursuant to valid exemptions therefrom and were issued in compliance with other applicable laws (including, without limitation, applicable PRC or BVI laws, rules and regulations) and are not subject to any rescission right or put right on the part of the holder thereof nor does any holder thereof have the right to require the Company to repurchase such Capital Stock.

(iii)       Voting and Other Agreements . There are no outstanding (A) options, warrants or other rights to purchase from any Group Company, (B) agreements, contracts, arrangements or other obligations of any Group Company to issue, or (C) other rights to convert any obligation into or exchange any securities for, in the case of each of clauses (A) through (C), shares of Capital Stock of, or other ownership or equity interests in, any Group Company. The Company is not a party or subject to any agreement or understanding and there is no agreement or understanding with any Person that affects or relates to (x) the voting or giving of written consents with respect to any security of the Company (including, without limitation, any voting agreements, voting trust agreements, shareholder agreements or similar agreements) or the voting by a director of the Company or (y) the sale, transfer or other disposition with respect to any security of the Company.

(e)       No Registration Rights . Except as set forth on Schedule 6(e) of the Disclosure Schedule, no holder of securities of any of the Group Companies is or will be entitled to have any registration rights with respect to such securities.

(f)       Authorization . (i) Each of the Group Companies has all requisite corporate power and authority to execute, deliver and perform its obligations under each of the Transaction Documents to which it is a party and to consummate the transactions contemplated thereby, (ii) this Agreement has been duly authorized, executed and delivered by the Group Companies. and (iii) each of the Transaction Document has been duly authorized and when executed and delivered by the Group Companies (to the extent they are parties thereto) shall constitute a legal, valid and binding obligation of each of the Group Companies (to the extent they are parties thereto) enforceable against the Group Companies (to the extent they are parties thereto) in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally.

(g)       Valid Issuance of Notes and the Guarantees . The Notes, when issued, sold and delivered in accordance with the terms thereof and for the consideration set forth herein, will be free of restrictions on transfer, other than restrictions on transfer under applicable state and federal securities laws. Assuming the accuracy of the Purchaser’s representations in Section 8 below, the Notes will be issued in compliance with applicable state and federal securities laws. The Notes have been duly authorized by the Company and, when executed and delivered by the Company, authenticated by the Trustee, and delivered to the Purchaser, in accordance with the terms of this Agreement, the Notes will have been duly executed, issued and delivered by the Company and will constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally. The Guarantees have been duly authorized, and, when the Notes have been duly executed, authenticated and issued in accordance with the provisions of the Indenture and delivered to and paid for by the Purchaser with the Guarantees endorsed thereon by the Guarantors, will constitute the legal, valid and binding obligations of each Guarantor entitled to the benefits of the Indenture.

(h)       Valid Issuance of Conversion Shares . The conversion rights attached to the Notes, when the Notes are issued on the Closing Date, will provide for the right to convert the Notes into up to 2,118,644 shares of Common Stock of the Company (subject to subdivision or consolidation thereof) as of the Closing Date (as calculated immediately following the Closing and assuming the conversion of all the Notes). The Conversion Shares have been duly and validly authorized for issuance by the Company, and when issued pursuant to the terms of the Notes and the Indenture, will be validly issued, fully paid and non-assessable, not subject to any preemptive or similar rights, free from all taxes, Liens, charges and security interests with respect to the issuance thereof and free of restrictions on transfer other than as expressly contemplated by the Transaction Documents.

(i)       Compliance with Instruments . None of the Group Companies is in violation of its respective articles of incorporation, certificate of incorporation, by-laws or other organizational documents (the “ Charter Documents ”). None of the Group Companies is, nor does any condition exist (with the passage of time or otherwise) that could reasonably be expected to cause any of the Group Companies to be, (i) in violation of any statute, rule, regulation, law or ordinance, or any judgment, decree or order applicable to any of the Group Companies or any of their properties (collectively, “ Applicable Law ”) of any federal, state, national, provincial, local or other governmental authority, governmental or regulatory agency or body, court, arbitrator or self-regulatory organization of applicable jurisdictions (each, a “ Governmental Authority ”), or (ii) in breach of or in default under any bond, debenture, note or other evidence of indebtedness, indenture, mortgage, deed of trust, lease or any other agreement or instrument to which any of them is a party or by which any of them or their respective property is bound (collectively, “ Applicable Agreements ”), other than in each of clause (i) and (ii) such violations, breaches or defaults that do not, and would not, individually or in the aggregate, have a Material Adverse Effect.

(j)       No Conflicts . Neither the execution, delivery or performance of this Agreement or any other Transaction Document nor the consummation of any of the transactions contemplated herein or therein will conflict with, violate, constitute a breach of or a default (with the passage of time or otherwise) under, require the consent of any Person or a Governmental Authority (other than consents already obtained) or result in the imposition of a Lien on any assets of any of the Group Companies under or pursuant to (i) the Charter Documents, (ii) any Applicable Agreement, or (iii) any Applicable Law, other than in each of clause (ii) and (iii) such violations, breaches or defaults that do not, and would not, individually or in the aggregate, have a Material Adverse Effect. Immediately following consummation of the transactions contemplated in the Transaction Documents, no default will exist under the Indenture.

(k)     Governmental Filings . No filing with, consent, approval, authorization or order of, any Governmental Authority is required to be made by any of the Group Companies for the consummation of the transactions contemplated by the Transaction Documents, except (i) as have been made or obtained prior to the date of this Agreement or obtained after the Closing in accordance with the terms of the Transaction Documents, and (ii) as may be required under the Act or state securities or “blue sky” laws.

(l)       Proceedings . There is no action, claim, suit, demand, hearing, notice of violation or deficiency, or proceeding, domestic or foreign (collectively, “ Proceedings ”), pending or, to the knowledge of the Company, threatened, that seeks to restrain, enjoin, prevent the consummation of, or otherwise challenges any of the Transaction Documents or any of the transactions contemplated therein.

(m)     Permits . Each of the Group Companies possesses all material licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all Governmental Authorities, presently required or necessary to own or lease, as the case may be, and to operate their respective properties and to carry on their respective businesses as now conducted (“ Permits ”), except where the failure to possess such Permits could not, individually or in the aggregate, have a Material Adverse Effect. All of the Permits are valid and in full force and effect. Each of the Group Companies has fulfilled and performed all of its respective obligations with respect to such Permits and no event has occurred which allows, or after notice or lapse of time could allow, revocation or termination thereof or result in any other material impairment of the rights of the holder of any such Permit. None of the Group Companies has received actual notice of any Proceeding relating to revocation or modification of any such Permit.

(n)       Title to Property . Each of the Group Companies has good and marketable title to all real property and personal property owned by it that is material to their respective businesses, in each case free and clear of any Liens as of the Closing Date. For real property not owned by any of the Group Companies and currently used or planned to be used for the business operations of the Group Companies, each of such Group Companies has good and marketable title to all leasehold estates in real and personal property being leased by it that is material to their respective businesses and, in each case free and clear of all Liens as of the Closing Date.

(o)       Insurance . Each of the Group Companies maintains reasonably adequate insurance covering its material properties, operations, personnel and business, and is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which it is engaged. All policies of insurance insuring the Group Companies and their respective businesses, assets, employees, officers and directors are in full force and effect. Each of the Group Companies is in compliance with the terms of such policies and instruments in all material respects, and there are no claims by any of the Group Companies under any such policy or instrument as to which, to the Company’s knowledge, any insurance company is denying liability or defending under a reservation of rights clause. None of the Group Companies has been refused any insurance coverage sought or applied for, and none of the Group Companies has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that does not, and would not, individually or in the aggregate, have a Material Adverse Effect.

(p)       Taxes . All Tax returns required to be filed by each of the Group Companies have been filed (taking into account all extensions of due dates), and all such returns are true, complete and correct in all material respects. All material Taxes that are due from each of the Group Companies have been paid other than those (i) currently payable without penalty or interest or (ii) being diligently contested in good faith and by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP. To the knowledge of the Company, there are no proposed Tax assessments against any of the Group Companies. The accruals and reserves on the books and records of each of Group Companies in respect of any Tax liability for any Taxable period not finally determined are adequate to meet any assessments of Tax for any such period. For purposes of this Agreement, the term “ Tax ” and “ Taxes ” shall mean all federal, state, national, provincial, local and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto.

(q)       Intellectual Property .

(i)       Each of the Group Companies owns, or is validly licensed under, or has the right to use, all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems, software or procedures), trademarks, service marks, trade names or master works, whether or not registered, filed, or issued under the authority of any governmental authority, (collectively, “ Intellectual Property ”) necessary for the conduct of its business and all Intellectual Properties owned by the Group Companies necessary for the conduct of their businesses are valid and in full force and effect. As of the Closing Date, such Intellectual Property is or will be free and clear of all Liens, except where the failure to own, possess, or have the right to use such Intellectual Property does not, and would not, individually or in the aggregate, have a Material Adverse Effect. To the Company’s knowledge, no Proceedings have been asserted by any Person challenging the use of any such Intellectual Property by any of the Group Companies or questioning the validity or effectiveness of the Intellectual Property or any license or agreement related thereto, and, to the Company’s knowledge, there are no facts which would form a valid basis for any such Proceeding. To the Company’s knowledge, the use of such Intellectual Property any of the Group Companies will not infringe on the Intellectual Property rights of any other Person.

(ii)       Each of the Group Companies has taken reasonable steps and measures to establish and preserve ownership of or right to use all Intellectual Property material to the operation of its business, including any Intellectual Property that was jointly developed with any third-parties, or any Intellectual Property for which improper or unauthorized disclosure would impair its value or validity, and has had executed appropriate nondisclosure and confidentiality agreements and made all appropriate filings, registrations and payments of fees in connection with the foregoing. To the Company’s knowledge, there is no infringement or misappropriation by any other Person of any Intellectual Property of any of the Group Companies. No Proceedings in which any of the Group Companies alleges that any Person is infringing upon, or otherwise violating, any Intellectual Property of any of the Group Companies are pending, and none has been served, instituted or asserted by any of the Group Companies.

(iii)      No former or current employee, no former or current consultant, and no third-party joint developer of any of the Group Companies has any rights in any Intellectual Property made, developed, conceived, created or written by the aforesaid employee or consultant during the period of his or her retention by the Group Companies which can be asserted against any Group Company.

(iv)      No Intellectual Property owned by any Group Company is the subject of any Lien, license or other contract granting rights or security interest therein to any other Person, except for Liens, licenses or other contracts granting rights or security interest that do not materially interfere with the use made and proposed to be made of such Intellectual Property by any Group Company. Each of the Group Companies has not (A) transferred or assigned, (B) granted an exclusive license to or (C) provided or licensed, any Intellectual Property owned by the Group Companies and necessary for the conduct of their business to any Person.

(r)       Internal Controls . Each of the Group Companies maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any material differences.

(s)       Financial Statements; No Undisclosed Liabilities .

(i)      The audited consolidated financial statements and related notes of the Company contained in the Form 10-K for the three years ended December 31, 2006 present fairly in all material respects the financial position, results of operations and cash flows of the Company and its Subsidiaries, as of the respective dates and for the respective periods to which they apply and have been prepared in accordance with GAAP and comply as to form with the applicable requirements of Regulation S-X of the Act.

(ii)      Subsequent to the date of the Company’s audited financial statements filed for the year ended December 31, 2006, except as disclosed therein or in any subsequent SEC Report, (A) none of the Group Companies has incurred any liabilities, direct or contingent, that are material, individually or in the aggregate, to the Company, or has entered into any material transactions not in the ordinary course of business, (B) there has not been any material decrease in the Capital Stock or any material increase in long-term indebtedness or any material increase in short-term indebtedness of the Group Companies, or any payment of or declaration to pay any dividends or any other distribution with respect to the Group Companies, and (C) there has not been any material adverse change in the properties, business, operations, earnings, assets, liabilities or condition (financial or otherwise) of the Group Companies taken as a whole; excluding any changes caused by (x) the condition of the industry of the Company that do not disproportionately affect the Company, (y) the failure of the Company to meet its financial projections or (z) the execution and delivery of this Agreement and consummation of the transactions contemplated hereby (each of clauses (A), (B) and (C), a “ Material Adverse Change ”). To the knowledge of the Company, there is no event that is reasonably likely to occur in the foreseeable future, which if it were to occur, could, individually or in the aggregate, have a Material Adverse Change.

(iii)     Without limiting the generality of the foregoing paragraph (ii), except as disclosed in the SEC Reports, the Company has no liabilities or obligations (whether actual, accrued, absolute, fixed, contingent, liquidated, unliquidated or otherwise, and whether due or to become due), except for (i) liabilities or obligations shown on the balance sheet as of December 31, 2006 (the “ Most Recent Balance Sheet ”), (ii) liabilities under any agreements, contracts, commitments, licenses or leases which have arisen prior to the date of the Most Recent Balance Sheet and which are not required to be reflected in a balance sheet, or the notes thereto, prepared in accordance with GAAP (none of which relates to a breach of contract, breach of warranty, tort, infringement, environmental, health or safety matter, violation of Applicable Laws or proceeding brought by Governmental Authorities), (iii) liabilities incurred in the ordinary course of business since December 31, 2006 (none of which relates to a breach of contract, breach of warranty, tort, infringement, environmental, health or safety matter, violation of Law or proceeding brought by Governmental Authorities) and/or (iv) other liabilities that are, individually and in the aggregate, immaterial.

(t)       Debt . All Debt represented by the Notes and the Guarantees is being incurred for proper purpo