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Exhibit 10.2
 
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Date:22nd February 2010
 
Our Ref: OCC/LC/TEAM3/BKG
 
CONFIDENTIAL
 
Comtech International (Hong Kong) Limited
Room 514, 5/F., Manhattan Centre,
8 Kwai Cheong Road,
Kwai Chung,
New Territories.
 
 
Attn: Mr. Frank Zheng, Chief Financial Officer /
          Mr. Allen Wu, Financial Controller      
 
 
Dear Sirs,
 
BANKING FACILITIES
 
Standard Chartered Bank (Hong Kong) Limited (Chinese characters) (the "Bank") is
pleased to offer certain banking facilities including, amongst other facilities,
those terms set out in this facility letter (the "Facilities") to the
Customer(s) below for the purpose(s) of general working capital, trade finance
and treasury requirement, subject to the Bank's Standard Terms and Conditions
for Banking Facilities and Services (including the Trade Finance Supplement) and
Terms and Conditions for Foreign Exchange Business attached and the terms and
conditions set out in this facility letter.
 
A.    CUSTOMER(S):
 
Comtech International (Hong Kong) Limited
Keen Awards Limited
Comtech Broadband Corporation Limited
 
B.    FACILITY LIMITS: General Banking Facilities
 
Type(s) of Facility
Facility Limit(s)
Designated Customer(s) and Sub­limit(s), if applicable
1.     Current Account Overdraft
USD1,000,000.-
• All Customers
2.     Trade Finance
(Please refer to Appendix 1 for product  details.)
USD14,000,000.-
 
(Of which USD5,000,000.- is theseasonallimit, only
available during April to September and December of each calendar year)
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Comtech International (Hong Kong) Limited
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(a) Trade Finance Group All
 
·     All Customers (USD14,000,000.-)
 
(Of which USD5,000,000.- is the seasonal limit, only available during April to
September and December of each calendar year)
(b) Trade Finance Group 1
 
·     All Customers (USD14,000,000.-)
 
(Of which USD5,000,000.- is the seasonal limit, only available during April to
September and December of each calendar year)
(c) Trade Finance Group 2
 
·     All Customers (USD14,000,000.-)
 
(Of which USD5,000,000.- is the seasonal limit, only available during April to
September and December of each calendar year)
(d) Trade Finance Group 3
 
·     All Customers (USD14,000,000.-)
 
(Of which USD5,000,000.- is the seasonal limit, only available during April to
September and December of each calendar year)
 
3. Guarantees or Standby Letters of Credit
(USD7,000,000.-)
·      All Customers

Total Facility Limit:
USD15,000,000.-

Notes:-
·       The aggregate outstanding of Facilities 2 and 3 shall not at any time
exceed USD14,000,000.
·
The aggregate amounts outstanding under all Sub-limits shall not at any time
exceed the Facility Limit to which the Sub-limits relate and the aggregate
amounts outstanding under all Facilities shall not at any time exceed the Total
Facility Limit.

 
C.     PRICING AND CONDITIONS:
 
1. Current Account Overdraft
Availability:
This facility is available in both USD and HKD.
 
Interest: the higher of 0.5% per annum over HKD Prime or 0.5% per annum over
HIBOR for HKD overdraft and 0.5% per annum over USD Prime for USD overdraft,
payable monthly in arrears.
   

 

 
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Comtech International (Hong Kong) Limited
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2.
Trade Finance
Interest:
HKD import/export facilities: 2% per annum over HIBOR.
 
Foreign currency import/export facilities: 2% per annum over the Bank's cost of
funds.
 
Commission:
Standard rates unless otherwise stipulated.
 
Letters of Credit Opening / Amendment Commission /
Commission in lieu of Exchange:      
First USD50,000.-                                          1/4%
USD50,001.- to USD500,000.-                      1/16%
Balance                                                           1/24%
 
Commission for Import Invoice Financing:
First USD50,000.-                                          1/8%
USD50,001.- to USD500,000.-                      1/16%
Balance                                                           1/24%
 
Maximum tenor/advance percentage for:
Import facilities: Combined usance and import loan period of any transaction is
not to exceed 90 days.
 
Export facilities: Not to exceed 90 days.
 
Packing credit: Up to 90 days or expiry of the letter of credit, whichever is
earlier, and up to 70% of the letter of credit amount.
 
Export invoice discounting: Up to 90 days, and up to 100% of the invoice amount.
 
Import invoice financing: Up to 90 days, and up to 100% of the invoice amount.
Proceeds from import invoice financing must be directly transferred to the
supplier's accounts.
 
Drawing on invoice discounting must be accompanied with confirmed purchasing
order from buyers.
 
3.
Guarantees or Standby Letters of Credit
Purpose: To facilities credit purchase from supplier(s) with beneficiary(ies)
acceptable to the Bank. Tenor: Up to 1 year.
Commissions: Standard rates.
 
Tenor: Up to 1 year.
 
Commissions: Standard rates.

 
Handling Fee of Facilities:
HKD150,000.-, payable upon your signing of this letter, and other handling fee
to be mutually agreed and payable on each anniversary of the date of this letter
if the Facilities are continuing.
       

 
 
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Comtech International (Hong Kong) Limited
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D.    SECURITY AND CONDITIONS PRECEDENT:
 
The availability of the Facilities is conditional upon the Bank's receipt of the
following documents, items and evidence (both in form and substance)
satisfactory to the Bank:
 
1.
This letter duly executed by the Customer.

 
2.
A Security Agreement over Bank Account (All Monies) executed by Comtech
International (Hong Kong) Limited in favour of the Bank in respect of the
obligations of all Customers.

 
3.
A corporate guarantee dated 22nd April 2008 (as amended from time to time)
executed by Comtech International (Hong Kong) Limited for USD15,000,000.- plus
interest and other charges to secure the liabilities of Keen Awards Limited and
Comtech Broadband Corporation Limited.

 
4.
A corporate guarantee dated 22nd April 2008 (as amended from time to time)
executed by Keen Awards Limited for USD15,000,000.- plus interest and other
charges to secure the liabilities of Comtech International (Hong Kong) Limited
and Comtech Broadband Corporation Limited.

 
5.
A corporate guarantee executed by Comtech Broadband Corporation Limited for
USD15,000,000.­plus interest and other charges to secure the liabilities of
Comtech International (Hong Kong) Limited and Keen Awards Limited.

 
6.
A corporate guarantee executed by Cogo Group, Inc. (previously known as Comtech
Group, Inc.) for USD15,000,000.- plus interest and other charges to secure the
liabilities of Comtech International (Hong Kong) Limited, Keen Awards Limited
and Comtech Broadband Corporation Limited.

 
7.
A letter of undertaking issued by Cogo Group, Inc. agreeing to maintain its
minimum tangible net worth at not less than USD120,000,000.- at all times.

 
8.
Certified true copies of the certificate of incorporation, memorandum and
articles of association or equivalent constitutional documents of Comtech
Broadband Corporation Limited.

 
9.
Original/Certified copies of all necessary consents, approvals and other
authorisations (including board resolutions) in connection with the execution,
delivery and performance of this letter and all other documents mentioned above,
if applicable.

 
10.
(if any of the facilities referred to in this letter are to be made available by
Standard Chartered Bank or other members of the Standard Chartered Group) All
such documents, items or evidence with, in favour of or to Standard Chartered
Bank or, as the case may be, such member of the Standard Chartered Group as the
Bank may request.

 
11.
Such other documents, items or evidence that the Bank may request from time to
time.

 
E.     COVENANTS AND UNDERTAKINGS:
 
The Customer undertakes to the Bank that it will:
 
1.    promptly submit to the Bank:
 
 
·
certified copies of the annual audited financial statements of the Customers
within 9 months after their financial year end;

 
·
a certified copy of the annual audited financial statements of Cogo Group, Inc.
within 120 days after its financial year end;

 
·
certified copies of the quarterly management accounts of the Customers and Cogo
Group-, Inc. within 60 days after the end of the relevant accounting period; and

 
·
other information that the Bank may request from time to time.

 
 
 
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Comtech International (Hong Kong) Limited
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2.   immediately inform the Bank:
 
 
·
of any change of the Customer's directors or beneficial shareholders or
amendment to its memorandum or articles of association or equivalent
constitutional documents;

 
·
of any substantial change to the general nature of the Customer's existing
business; or

 
·
if it becomes, or is aware that any of its directors, shareholders, partners or
managers becomes, a Related Person (as defined in paragraph 6 of section G of
this letter).

 
3.
procure Mr. Jeffery Kang shall remain as the Chief Executive Officer / Chairman
/ Director of Cogo Group, Inc. and actively involving in the management and
business of the Group.

 
4.
Each Customer agrees to procure Comtech International (Hong Kong) Limited to
deposit the sum of USD5,000,000.- (the "Minimum Deposit") pursuant to the
security document(s) set out in paragraph(s) 2 of Section D of this letter
before availability of the Facilities. Each Customer agrees that the Bank may
change the amount of the Minimum Deposit at the Bank's absolute discretion. Each
Customer undertakes to procure Comtech International (Hong Kong) Limited to
maintain the Minimum Deposit for so long as the Facility/Facilities under this
letter remain outstanding.

 
G.     OTHER TERMS AND CONDITIONS:
 
1.
The Facilities are available at the sole discretion of the Bank. The Bank may at
any time immediately terminate, cancel or suspend the Facilities or otherwise
modify the Facilities without the consent of any party.

 
2.
Notwithstanding any provisions stated in this letter, the Facilities are
repayable on demand by the Bank. The Bank has the overriding right at any time
to require immediate payment and/or cash collateralisation of all or any sums
actually or contingently owing to it under the Facilities. This clause 2 does
not apply to any factoring facility(ies).

 
3.
If there are more than one Customer, each Customer accepting the terms and
conditions set out in this letter is jointly and severally liable with the other
Customer(s) for all sums payable or owing to the Bank under the Facilities
(whether incurred by that Customer or not). The obligations and liabilities of
each Customer shall take effect immediately upon its acceptance of the terms and
conditions set out or referred to in this letter. Each Customer further agrees
that the Bank is not required to make any reference to the other Customer(s) in
relation to the utilisation of the Facilities by any Customer(s).

 
The obligations and liabilities of each Customer shall not be affected by (i)
any time or indulgence granted to or composition with any other Customer(s) or
any other person; (ii) any change, variation or termination of any agreement or
arrangement with any other Customer(s) or any other person; (iii) any release
of, or any neglect to obtain, perfect or enforce, any rights or securities
against any Customer(s) or any other person; or (iv) any unenforceability or
invalidity of any obligations of any Customer(s) or any other persons.
 
4.
The Bank's Standard Terms and Conditions for Banking Facilities and Services
(including the Trade Finance Supplement) and Terms and Conditions for Foreign
Exchange Business ("Standard Terms and Conditions") attached and/or referred to
in this letter forms an integral part of this letter and the Customer agrees to
observe and be bound by such Standard Terms and Conditions.

 
5.
The terms and conditions set out or referred to in this letter supersede and
replace those set out in our letter (if any) previously sent to the Customer(s).

 
 
 
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Comtech International (Hong Kong) Limited
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6.
Please note that section 83 of the Banking Ordinance imposes on the Bank certain
limitations on advances to persons (including firms, partnerships and companies)
related to its directors, employees with lending authority or controllers (each
person so related shall be referred to as a"Related Person"). When acknowledging
and accepting this facility letter, you should advise us if you are, or any of
your directors, shareholders, partners or managers is, a Related Person within
the meaning of the Banking Ordinance. If subsequent to your acceptance of this
facility letter, you become, or are aware that any of your directors,
shareholders, partners or managers is or becomes, a Related Person, you should
immediately advise us in writing.

 
7.
The Customer acknowledges the following:

 
 
(a)
The Customer has received and read the Bank's Notice to Customers and Other
Individuals relating to the Personal Data (Privacy) Ordinance and the Code of
Practice on Consumer Credit Data; and

 
(b)
The Customer has, or will, notify each of its Relevant Individuals, the Bank
may, in the course of providing banking services to the Customer, receive
Customer information in respect of that Relevant Individual.

 
For the purpose of the above, a "Relevant Individual" is defined as being one of
the following (but not limited to) Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer, department heads, corporate officers (e.g.
authorized signatories, company secretary etc.), directors, major shareholders,
beneficial owners, and guarantors (where applicable).
 
8.
This letter shall be governed by and construed in accordance with the laws of
Hong Kong SAR.

 
Please sign and return to us the enclosed copy of this letter together with the
attached Standard Terms and Conditions for Banking Facilities and Services
(including the Trade Finance Supplement) and Terms and Conditions for Foreign
Exchange Business to the Bank's Credit Risk Control at 11th Floor, Standard
Chartered Tower, 388 Kwun Tong Road, Kwun Tong, Kowloon within one month after
the date of this letter, failing which this offer shall lapse.
 
If you have any queries, please feel free to contact any of the following
persons:-
 
Queries on
Name
Telephone No.
Banking arrangements
Mr. Alan Lam, Relationship Manager
2821-1804

 
Yours faithfully,
For and on behalf of
 
STANDARD CHARTERED BANK (HONG KONG) LIMITED
 
/s/ Chan Kin Man
Chan Kin Man
Senior Credit Documentation Manager
 
 
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Comtech International (Hong Kong) Limited
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We agree and accept all the terms and conditions set out above and the Bank's
Standard Terms and Conditions for Banking Facilities and Services (including the
Trade Finance Supplement) and Terms and Conditions for Foreign Exchange Business
attached and/or referred to in this letter, which we have read and understood.
 
 
For and on behalf of
COMTECH INTERNATIONAL (HONG KONG) LIMITED
 
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For and on behalf of
KEEN AWARDS LIMITED
 

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For and on behalf of
COMTECH BROADBAND CORPORATION LIMITED
 
 
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Each of the undersigned hereby acknowledge the terms of this facility letter and
confirm that their respective obligations under each guarantee and security
document (as applicable) that they have executed in favour of the Bank will
continue in full force and are not and will not be affected, discharged or
varied by the execution of this facility letter.
 
For and on behalf of
COGO GROUP, INC.
 
 
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Comtech International (Hong Kong) Limited
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Appendix 1
 
TRADE FINANCE FACILITY
 
Trade Finance Group All
 
·
Negotiation of export credit documents with discrepancies on a with recourse
basis

 
Trade Finance Group 1
 
·
Purchase of documents against payment bills with title documents on parties
acceptable to the Bank on a with recourse basis

·
Purchase of documents against acceptance bills with ECA/approved insurance cover
on a with recourse basis

·
Issuance of back-to-back letters of credit

·
Issuance of import letters of credit - sight and usance
                                                               - with title
documents

 
Trade Finance Group 2
 
·
Purchase of documents against acceptance bills without ECA/approved insurance
cover on a with recourse basis

·
Purchase of documents against payment bills without title documents on parties
acceptable to the Bank on a with recourse basis

·
Issuance of quasi back-to-back letters of credit - without title documents
(i.e. Import letter of credit supported by export letter of credit acceptable to
the Bank)

·
Issuance of import letters of credit - sight and usance
                                                             - without title
documents

·
Shipping guarantees

      
      
Trade Finance Group 3
 
·
 Pre-shipment loan - i.e. packing credit

·
 Acceptance of drafts under import letters of credit

·
 Release of documents against acceptance supported by trust receipts

·
 Loans against trust receipts

·
 Import loans

·
 Import invoice financing

·
 Export invoice discounting

 
 
 
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