NOTES PAYABLE

3 Months Ended

Jun. 30, 2011

10.ﾠﾠﾠﾠ NOTES PAYABLE

The following is a summary of the Company’s short-term and long-term notes payable as of June 30, 2011 and December 31, 2010:

ﾠ	ﾠ	June 30, 2011	ﾠ	ﾠ	December 31, 2010	ﾠ
Bank loans	$	ﾠ490,959	ﾠ	$	ﾠ256,899	ﾠ
Less: current portion	ﾠ	(191,014	)	ﾠ	(196,329	)
Long-term portion	$	ﾠ299,945	ﾠ	$	ﾠ60,570	ﾠ

As of June 30, 2011, notes payable are due as follows:

ﾠ	ﾠ	Long-term Notes	ﾠ	ﾠ	Short-term Notes	ﾠ	ﾠ	Total	ﾠ
2011(for the remaining six months)	$	ﾠ1,214	ﾠ	$	ﾠ97,273	ﾠ	$	ﾠ98,487	ﾠ
2012	ﾠ	24,028	ﾠ	ﾠ	91,273	ﾠ	ﾠ	115,301	ﾠ
2013	ﾠ	152,721	ﾠ	ﾠ	--	ﾠ	ﾠ	152,721	ﾠ
2014	ﾠ	102,904	ﾠ	ﾠ	--	ﾠ	ﾠ	102,904	ﾠ
2015	ﾠ	3,100	ﾠ	ﾠ	--	ﾠ	ﾠ	3,100	ﾠ
2016	ﾠ	3,308	ﾠ	ﾠ	--	ﾠ	ﾠ	3,308	ﾠ
Thereafter	ﾠ	15,138	ﾠ	ﾠ	--	ﾠ	ﾠ	15,138	ﾠ
Total	$	ﾠ302,413	ﾠ	$	ﾠ188,546	ﾠ	$	ﾠ490,959	ﾠ

On March 1, 2011, the Company entered into a term loan facility agreement with the China Development Bank Corporation Hong Kong Branch (“CDB”), pursuant to which CDB agreed to make available to the Company a term loan facility in an aggregate principal amount of up to $200,000, subject to terms and conditions of the agreement. The Company borrowed $200,000 from this facility on March 1, 2011. The loan carries an annual interest rate of 3% per annum over the applicable six-month London Inter Bank Offered Rate (3.40% as of June 30, 2011). Approximately $800 of other costs directly associated with the facility were recorded as deferred financing costs in the balance sheet on March 1, 2011. The Company is amortizing these financing costs over the term of the loan. The loan under the facility will mature on the third anniversary of the first date when the facility is utilized by the Company with 50% of the principal due in August 2013 and the remaining 50% due in February 2014. Pursuant to the term loan facility agreement, if the Company’s chairman and chief executive officer, Mr. Guoshen Tu, (the “CEO” or “Mr. Tu”) ceases to be the beneficial owner of at least 10% of the Company’s outstanding capital stock, the facility may be cancelled and all outstanding amounts under the facility may become immediately due and payable with no less than 30 days notice. As of June 30, 2011, this condition was satisfied, and management believes the Company is in compliance with all terms and conditions of the term loan facility agreement.

In October 2010, the Company entered into a term loan facility agreement with CDB, pursuant to which CDB agreed to make available to the Company a term loan facility in an aggregate principal amount of up to $50,000, subject to terms and conditions of the agreement. The Company borrowed a total of $50,000 on October 29, 2010 under the facility. The loan carries an annual interest rate of 3% per annum over the applicable six-month London Inter Bank Offered Rate (3.40% as of June 30, 2011). Approximately $1,000 of other costs directly associated with the facility were recorded as deferred financing costs in the balance sheet on October 29, 2010. The Company is amortizing these financing costs over the term of the loan. The loan under the facility is due in October 2013. Pursuant to the term loan facility agreement, if Mr. Tu ceases to be the beneficial owner of at least 10% of the Company’s outstanding capital stock, the facility may be cancelled and all outstanding amounts due under the facility may become immediately due and payable with no less than 30 days notice. As of June 30, 2011, this condition was satisfied, and management believes the Company is in compliance with all terms and conditions of the term loan facility agreement.

On June 17, 2011, the Company entered into a loan agreement with Bank of Jiangsu. The Company borrowed RMB5,000 (approximately $773) with an interest rate equal to the 115% of the 12 month’s benchmark lending rate of the People’s Bank of China (7.26% as of June 30, 2011). The loan is due in June 2012. The loan is guaranteed by the CEO and a subsidiary of the Company and collateralized by the properties and land use rights of two subsidiaries.

On June 14, 2011, the Company entered into a loan agreement with Guangdong Development Bank. The Company borrowed RMB49,600 (approximately $7,664) with an annual interest rate equal to 110% of the 12 months’ benchmark lending rate of the People’s Bank of China (6.94% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in June 2012 and guaranteed by the CEO and a subsidiary of the Company.

On June 13, 2011, the Company entered into a loan agreement with China Everbright Bank Co., Ltd. The Company borrowed RMB16,000 (approximately $2,472) with an interest rate equal to 5.27% as of June 30, 2011, with interest payable on the 20th of each month. The loan is due in December 2011. The loan is guaranteed by a subsidiary of the Company and collateralized by a restricted cash amount of RMB16,000 (approximately $2,472) of a subsidiary of the Company.

On May 27, 2011, the Company entered into a loan agreement with Bank of Jiangsu. The Company borrowed RMB15,000 (approximately $2,318) with an interest rate equal to the 110% of the 12 month’s benchmark lending rate of the People’s Bank of China (6.94% as of June 30, 2011). The loan is due in May 2012. The loan is guaranteed by the CEO and a subsidiary of the Company and collateralized by the properties and land use rights of two subsidiaries.

On May 3, 2011 the Company entered into a loan agreement with Shanghai Pudong Development Bank. The Company borrowed RMB80,000 (approximately $12,362) with an interest rate equal to 108% of the 12 month’s benchmark lending rate of the People’s Bank of China (6.81% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in May 2012. The loan is guaranteed by the CEO and a subsidiary of the Company and collateralized by the properties and land use rights of a subsidiary of the Company.

On April 29, 2011, the Company entered into a loan agreement with Shanghai Pudong Development Bank. The Company borrowed RMB80,000 (approximately $12,362) with an interest rate equal to 108% of the 12 month’s benchmark lending rate of the People’s Bank of China (6.81% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in April 2012. The loan is guaranteed by the CEO and collateralized by the properties and land use rights of a subsidiary of the Company.

On April 20, 2011, the Company entered into a loan agreement with Bank of Jiangsu. The Company borrowed RMB50,000 (approximately $7,726) with an interest rate equal to 110% of the 12 month’s benchmark lending rate of the People’s Bank of China (6.94% as of June 30, 2011). The loan is due in April 2012. The loan is guaranteed by the CEO and a subsidiary of the Company and collateralized by the properties and land use right of two subsidiaries of the Company.

On April 1, 2011, the Company entered into a loan agreement with the Industrial and Commercial Bank of China. The Company borrowed RMB27,270 (approximately $4,214) on April 1, 2011 and RMB12,770 (approximately $1,973) on May 17, 2011 with interest rate equal to 12 month’s benchmark lending rate of the People’s Bank of China (6.31% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in March 2012 and guaranteed by three subsidiaries of the Company and is collateralized by the properties and land use rights of a subsidiary of the Company.

On April 1, 2011, the Company entered into a loan agreement with Societe Generale with loan facility up to RMB27,000 (approximately $4,172), and in the same month, the Company withdrew RMB27,000 (approximately $4,172) from the loan facility with annual interest rates ranging from 6.56% to 6.84% and are all due in October 2011. The loans are guaranteed by a subsidiary of the Company.

On March 24, 2011, the Company entered into a loan agreement with China Merchants Bank. The Company borrowed RMB31,500 (approximately $4,867) with an annual interest rate equal to the 1 to 6 month’s benchmark lending rate of the People’s Bank of China (5.85% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in September 2011 and guaranteed by a subsidiary of the Company.

On March 21, 2011, the Company entered into a loan agreement with China Construction Bank. The Company borrowed RMB50,000 (approximately $7,726) with an annual interest rate equal to 7.20%, with interest payable on the 20th of each month. The loan is due in March 2012. The loan is guaranteed by the CEO and two subsidiaries of the Company and collateralized by the property of a subsidiary of the Company.

On March 16, 2011, the Company entered into a loan agreement with Guangdong Development Bank. The Company borrowed RMB121,000 (approximately $18,697) with an annual interest rate equal to 105% of the 1 to 6 month’s benchmark lending rate of the People’s Bank of China (6.14% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in March 2012 and collateralized by a restricted cash amount of $20,000 of a subsidiary of the Company.

On February 9, 2011, the Company entered into a loan agreement with Societe Generale. The Company borrowed RMB27,000 (approximately $4,172) with an annual interest rate equal to 9.10%, with interest payable on the due date of the loan. The loan was due and repaid in March 2011 and guaranteed by a subsidiary of the Company.

On February 1, 2011, the Company entered into a loan agreement with China Merchants Bank. The Company borrowed RMB59,000 (approximately $9,117) with an annual interest rate equal to 105% of the 1 to 3 year’s benchmark lending rate of the People’s Bank of China (6.72% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in November 2012. The loan is guaranteed by the CEO, his wife and a subsidiary of the Company and collateralized by the property and land use rights of a subsidiary of the Company.

On January 31, 2011, the Company entered into a loan agreement with the Industrial and Commercial Bank of China. The Company borrowed RMB100,040 (approximately $15,458) with an annual interest rate equal to 95% of the 12 month’s benchmark lending rate of the People’s Bank of China (5.99% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in January 2012 and guaranteed by four subsidiaries of the Company.

On January 12, 2011, the Company entered into a loan agreement with China Zheshang Bank. The Company borrowed RMB20,000 (approximately $3,090) with an annual interest rate equal to 120% of the 6 to 12 month’s benchmark lending rate of the People’s Bank of China (7.57% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in August 2011 and guaranteed by the CEO and two subsidiaries of the Company.

On January 10, 2011, the Company entered into a loan agreement with China Merchants Bank. The Company borrowed RMB40,000 (approximately $6,180) on January 10, 2011, and RMB169,340 (approximately $26,167) on February 9, 2011 with an annual interest rate equal to 105% of the 5 to 10 year’s benchmark lending rate of the People’s Bank of China (7.14% as of June 30, 2011), with principal and interest payable in each quarter. In March and June 2011, the Company repaid principal of the loan in the amount of RMB5,439 (approximately $840) and RMB3,704 (approximately $572) in accordance with the terms of the loan, respectively. The final maturity of the loan is January 2021. The loan is guaranteed by Shenzhen Zhonghe Industrial Limited, an independent third party, and is secured by the rights of properties currently under construction which will be acquired by the Company upon their completion.

On January 4, 2011, the Company entered into a loan agreement with China Merchants Bank. The Company borrowed RMB10,000 (approximately $1,545) with an annual interest rate equal to 105% of the 1 to 3 year’s benchmark lending rate of the People’s Bank of China (6.72% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in November 2012. The loan is guaranteed by the CEO, his wife and a subsidiary of the Company, and collateralized by the property and land use rights of a subsidiary.

On December 29, 2010, the Company entered into a loan agreement with Bank of China. The Company borrowed RMB71,100 (approximately $10,986) with an annual interest rate equal to 5.15%, with interest payable on the 20th of each month. The loan is due in December 2011. The loan is guaranteed by the CEO and a subsidiary of the Company and collateralized by the property and land use rights of a subsidiary.

On December 24, 2010, the Company entered into a loan agreement with Bank of China. The Company borrowed RMB71,100 (approximately $10,986) with an annual interest rate equal to 5.15%, with interest payable on the 20th of each month. The loan is due in December 2011. The loan is guaranteed by the CEO and a subsidiary of the Company and collateralized by the property and land use rights of a subsidiary.

On December 10, 2010, the Company entered into a loan agreement with Shanghai Pudong Development Bank. The Company borrowed RMB66,000 (approximately $10,198) with an annual interest rate equal to the 6 month’s benchmark lending rate of the People’s Bank of China (5.85% as of June 30, 2011), with interest payable on the 20th of each month. The loan was due in June 2011. The loan was collateralized by a cash deposit of Whitehorse Technology Limited, a company wholly-owned by the CEO. The Company repaid RMB6,650 (approximately $1,028), RMB6,600 (approximately $1,020), RMB20,250 (approximately $3,129) and RMB32,500 (approximately $5,021) in January, March, April and June 2011, respectively.

On December 2, 2010, the Company entered into a loan agreement with China Merchants Bank. The Company borrowed RMB70,000 (approximately $10,816) with an annual interest rate equal to 105% of the 1 to 3 year’s benchmark lending rate of the People’s Bank of China (6.72% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in November 2012. The loan is guaranteed by the CEO, his wife and a subsidiary of the Company and collateralized by the property and land use rights of a subsidiary.

On November 19, 2010, the Company entered into a loan agreement with Industrial and Commercial Bank of China. The Company borrowed RMB30,000 (approximately $4,636) on December 21, 2010, RMB30,000 (approximately $4,636) on December 29, 2010 and RMB40,000 (approximately $6,181) on January 31, 2011 with an annual interest equal to 95% of the 12 month’s benchmark lending rate of the People’s Bank of China (5.99% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in December 2011. The loan is guaranteed by three subsidiaries of the Company and collateralized by the property of a subsidiary.

On November 17, 2010, the Company entered into a loan agreement with Bank of China. The Company borrowed RMB48,600 (approximately $7,510) with an annual interest rate equal to 5.15%, with interest payable on the 20th of each month. The loan was due and repaid in May 2011. The loan was guaranteed by the CEO and a subsidiary of the Company and collateralized by the property and land use rights of a subsidiary.

On October 29, 2010, the Company entered into a loan agreement with the Industrial and Commercial Bank of China. The Company borrowed RMB51,000 (approximately $7,881) with an annual interest rate equal to 95% of the 12 month’s benchmark lending rate of the People’s Bank of China (5.99% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in November 2011. The loan is guaranteed by three subsidiaries of the Company and collateralized by the property of a subsidiary.

On October 18, 2010, the Company entered into a loan agreement with China Merchants Bank. The Company borrowed RMB25,000 (approximately $3,863) with an annual interest equal to 110% of the 12 month’s benchmark lending rate of the People’s Bank of China (6.94% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in October 2011. The Company repaid RMB12,500 (approximately $1,932) in April 2011. The loan is guaranteed by the Chief Operating Officer of the Company, the CEO and his wife.

On August 18, 2010, the Company entered into a loan agreement with Shenzhen Development Bank. The Company borrowed RMB40,000 (approximately $6,181) with an annual interest rate equal to the 12 month’s benchmark lending rate of the People’s Bank of China (6.31% as of June 30, 2011), with interest payable on the 20th of each month. The loan is due in August 2011. The loan is guaranteed by the CEO and two subsidiaries of the Company and collateralized by the property of a subsidiary.

On August 9, 2010, the Company entered into a loan agreement with Societe Generale. The Company borrowed RMB27,000 (approximately $4,172) with an annual interest rate equal to 5.35%, with interest payable on the due date of the loan. The loan was due and repaid in February 2011 and guaranteed by a subsidiary of the Company.

On July 26, 2010, the Company entered into a loan agreement with China Everbright Bank Co., Ltd. The Company borrowed RMB40,000 (approximately $6,181) with an annual interest rate equal to 5.31%, with interest payable on the 20th of each month. The loan was due and repaid in July 2011 and guaranteed by the CEO, a subsidiary of the Company and Chuang Guan.

On July 21, 2010, the Company entered into a loan agreement with the Industrial and Commercial Bank of China. The Company borrowed RMB54,600 (approximately $8,437) with an annual interest rate equal to 12 month’s benchmark lending rate of the People’s Bank of China (6.31% as of June 30, 2011), with interest payable on the 20th of each month. The loan was due and repaid in July 2011. The loan is guaranteed by three subsidiaries of the Company and collateralized by the property of a subsidiary.

On July 15, 2010, the Company entered into a loan agreement with China Construction Bank. The Company borrowed RMB30,000 (approximately $4,636) with an annual interest rate equal to 110% of the 12 month’s benchmark lending rate of the People’s Bank of China (6.94% as of June 30, 2011), with interest payable on the 20th of each month. The loan was due and repaid in July 2011 and collateralized by the property of a subsidiary.

On July 1, 2010, the Company entered into a loan agreement with Guangdong Development Bank. The Company borrowed RMB49,600 (approximately $7,664) with an annual interest rate equal to 110% of the 12 month’s benchmark lending rate of the People’s Bank of China (6.94% as of June 30, 2011), with interest payable on the 20th of each month. The loan was guaranteed by the CEO and a subsidiary of the Company. The loan was due and repaid in June 2011.

On June 18, 2010, the Company entered into a loan agreement with Industrial and Commercial Bank of China (Asia) Limited. The Company borrowed $8,000 and $2,000 on July 15, 2010 and August 12, 2010, respectively, with an effective interest rate at 3% per annum over the applicable one year London Inter Bank Offered Rate (3.73% at June 30, 2011), with interest payable on the due date of the loan. Interest payable is calculated on the basis of the actual number of days elapsed and a 360-day year. The loan was due in July 2011 and extended to July 2012 under a supplementary agreement signed on June 23, 2011. The loan is guaranteed by the CEO of the Company and collateralized by fixed assets of a subsidiary and the shares of a subsidiary.

On April 16, 2010, the Company entered into a loan agreement with Shanghai Pudong Development Bank. The Company borrowed RMB80,000 (approximately $12,362) with an annual interest rate equal to 6.06%, with interest payable on the 20th of each month. The loan was due and repaid in April 2011. The loan was guaranteed by the CEO and a subsidiary of the Company and collateralized by the properties and land use rights of a subsidiary.

On April 15, 2010, the Company entered into a loan agreement with Shanghai Pudong Development Bank. The Company borrowed RMB80,000 (approximately $12,362) with an annual interest rate equal to 6.06%, with interest payable on the 20th of each month. The loan was due and repaid in April 2011. The loan was guaranteed by the CEO and collateralized by the properties and land use rights of a subsidiary of the Company.

On March 31, 2010, the Company entered into a loan agreement with China Merchants Bank. The Company borrowed RMB50,000 (approximately $7,726) with an annual interest rate equal to 5.81%, with interest payable on the 20th of each month. The loan was due and repaid in March 2011. The loan was guaranteed by the CEO, his wife and a subsidiary of the Company and collateralized by the property and land use rights of a subsidiary.

On March 25, 2010, the Company entered into a loan agreement with China Citic Bank. The Company borrowed RMB90,000 (approximately $13,907) with an annual interest rate equal to 5.81%, with interest payable on the 20th of each month. The loan was due and repaid in March 2011. The loan was guaranteed by the CEO, his wife and a subsidiary of the Company and collateralized by the properties of two subsidiaries of the Company.

On March 24, 2010, the Company entered into a loan agreement with China Citic Bank. The Company borrowed RMB60,000 (approximately $9,271) with an annual interest rate equal to 5.81%, with interest payable on the 20th of each month. The loan was due and repaid in March 2011. The loan was guaranteed by the CEO, his wife and a subsidiary of the Company and collateralized by the properties of two subsidiaries of the Company.

On March 4, 2010, the Company entered into a loan agreement with the Industrial and Commercial Bank of China. The Company borrowed RMB31,000 (approximately $4,790) with an annual interest rate equal to 5.23%, with interest payable on the 20th of each month. The loan was due in March 2011, but repaid in February 2011. The loan was guaranteed by three subsidiaries of the Company and collateralized by the property of a subsidiary.

On March 4, 2010, the Company entered into a loan agreement with the Industrial and Commercial Bank of China. The Company borrowed RMB39,000 (approximately $6,026) with an annual interest rate equal to 5.23%, with interest payable on the 20th of each month. The loan was due in March 2011, but repaid in January 2011. The loan was guaranteed by three subsidiaries of the Company and collateralized by the property of a subsidiary.

On March 3, 2010, the Company entered into a loan agreement with China Construction Bank. The Company borrowed RMB50,000 (approximately $7,726) with an annual interest rate equal to 6.10%, with interest payable on the 20th of each month. The loan was due and repaid in March 2011. The loan was guaranteed by the CEO and a subsidiary of the Company and collateralized by the property of a subsidiary.

On March 2, 2010, the Company entered into a loan agreement with China Merchants Bank. The Company borrowed RMB41,000 (approximately $6,335) with an annual interest rate equal to 5.81%, with interest payable on the 20th of each month. The loan was due and repaid in March 2011. The loan was guaranteed by the CEO, his wife and a subsidiary of the Company and collateralized by the property and land use rights of a subsidiary.

On February 3, 2010, the Company entered into a loan agreement with China Merchants Bank. The Company borrowed RMB59,000 (approximately $9,117) with an annual interest rate equal to 5.81%, with interest payable on the 20th of each month. The loan was due and repaid in February 2011. The loan was guaranteed by the CEO, his wife and a subsidiary of the Company and collateralized by the property and land use rights of a subsidiary.

On January 26, 2010, the Company entered into a loan agreement with the Industrial and Commercial Bank of China. The Company borrowed RMB100,000 (approximately $15,452) with an annual interest rate equal to 4.78%, with interest payable on the 20th of each month. The loan was due in January 2011. The Company repaid RMB80,000 (approximately $12,362) and RMB 20,000 (approximately $3,090) in June 2010 and January 2011, respectively. The loan was guaranteed by the CEO.

CHINA SECURITY & SURVEILLANCE TECHNOLOGY, INC. 10-Q