Exhibit

10.9




 




	

  Standard 

  Chartered


  	

  Guarantee - G3 Limited (92)


  
	

   


  	

  (By

  one or more limited companies/


  
	

   


  	

  corporations)


  





 




To:  Standard Chartered Bank




 




1.                                       In

consideration of STANDARD CHARTERED BANK (hereinafter called “the Bank”, which

expression shall include and extend to its successors and assigns) granting or

continuing banking facilities or other accommodation for so long as the Bank

may think fit to DSI (HK) Ltd.

                                                (hereinafter

called the “Customer”)  We DSI Toys.

Inc. of 1100 West Sam Houston Parkway, North, Houston, Texas  77043

                                                                                            hereby

unconditionally guarantee, undertake and agree on written demand by the Bank:




 




(a)                                  to

pay and discharge the following (hereinafter called the “Liabilities”):




 




(i)            all moneys now or hereafter advanced

to or paid for or on account of the Customer (whether alone or jointly with any

other person) by the Bank; and




 




(ii)           all other liabilities of the Customer

to the Bank whatsoever, whether actual or contingent, present or future and

including, without limitation, liabilities incurred as a guarantor or surety

together with all interest thereon and commission, costs, charges and expenses

chargeable by the Bank to the Customer (including legal fees), from time to

time remaining unpaid and undischarged;




 




PROVIDED ALWAYS that (subject as mentioned in Clause

12) the amount for which we shall be liable to the Bank under this sub-clause

(and not including any amounts due under sub-clauses (b) and (c) of this

Clause) shall not exceed HONG KONG DOLLARS NINETEEN MILLION

ONLY                                                                                                        

(HKD19,000,000.—       ) plus interest,

commission, cost, charges and expenses as aforesaid;




 




(b)                                 to

pay interest, in the currency in which such sums are denominated, in the Bank’s

books on all sums due from us to the Bank under this Guarantee (hereinafter

called the “Guaranteed Sums”) or the outstanding balance thereof from time to

time during the period from the date of demand by the Bank as aforesaid or from

the date of discontinuance of this Guarantee by us until the date when the

Guaranteed Sums are discharged in full (after as well as before judgment) at a

rate or rates per annum conclusively certified by the Bank to be one and one

half of one per cent. (1-1/2%) above the rate or rates at which the Customer

would have been liable to pay interest on the amounts demanded by the Bank under

the facilities or other accommodation extended by the Bank to the Customer (and

to the extent permitted by law the Bank shall be entitled to compound such

interest monthly);




 




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(c)                                  to

pay all costs and expenses (on a full indemnity basis) arising out of or in

connection with the recovery or attempted recovery by the Bank of moneys due to

the Bank under this Guarantee.




 




2.                                       This

Guarantee shall extend to cover:




 




(a)           in

the case of the death, bankruptcy or liquidation of the Customer, all sums

which would have been owing to the Bank by the Customer if such death had

occurred or such bankruptcy or liquidation had commenced at the time when the

Bank received actual notice thereof and notwithstanding such death, bankruptcy

or liquidation;




 




(b)           all

moneys obtained from or liabilities incurred to the Bank notwithstanding that

the borrowing or the incurring of such liabilities may have been invalid or in

excess of the powers of the Customer or of any director, attorney, agent or

other person purporting to borrow or act on behalf of the Customer and

notwithstanding any other irregularity in the borrowing or the incurring of

such liabilities;




 




(c)           in

the event of the discontinuance by any means of this Guarantee, all cheques,

drafts, bills, notes and negotiable instruments drawn by or for the account of

the Customer on the Bank and purporting to be dated on or before the date when

such discontinuance became known to the Bank or (in the case of notice to

discontinue given hereunder) took effect although presented to or paid by the

Bank after that date and all liabilities of the Customer to the Bank at such

date whether actual or contingent and whether payable forthwith or at some

future time and also all credits then established by the Bank for the Customer.




 




3.             We

shall be deemed to be liable as the sole or principal debtor(s) for the

Liabilities and this Guarantee shall be binding on us notwithstanding that the

Customer is not so bound either because the Customer is an infant or under a

disability or is an unincorporated body which is under no liability to

discharge obligations undertaken or purported to be undertaken on its behalf or

for any other reason whatsoever.




 




4.             If

this Guarantee is given in respect of the Liabilities of a firm it shall apply

to all moneys borrowed and Liabilities incurred until receipt by the Bank of

actual notice of dissolution of the firm but if there shall be any other change

in the constitution of the firm this Guarantee shall continue and, in addition

to securing the debts and Liabilities of the firm as constituted before the

change, shall apply to the debts and Liabilities of the firm as constituted

after such change.




 




5.             The

Bank may at all times without prejudice to this Guarantee and without

discharging or in any way affecting our liability hereunder:




 




(a)           determine,

vary or increase any credit to the Customer;




 




(b)           grant

to the Customer or to any other person any time or indulgence;




 




(c)           renew any bills,

notes or other negotiable instruments or securities;




 




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(d)           deal

with, exchange, release, modify or abstain from perfecting or enforcing any

securities or other guarantees or rights which the Bank may now or hereafter

have from or against the Customer or any other person;




 




(e)           compound

with the Customer or with any other person or guarantor.




 




6.             This

Guarantee shall not be affected by any failure on the Bank’s part to take any

security or by the invalidity of any security taken or by any existing or

future agreement by the Bank as to the application of any advances made or to

be made to the Customer.  Our liability

hereunder shall not be discharged or in any way affected by any act or omission

on the part of the Bank under or in relation to this Guarantee or by any course

of dealing between the Bank and us.




 




7.             This

Guarantee shall not be considered as satisfied or discharged by any

intermediate payment or satisfaction of the whole or any part of the

Liabilities or by any other matter or thing whatsoever but shall constitute and

be a continuing guarantee to the Bank and shall extend to cover the ultimate

balance of the Liabilities and shall be binding upon us until the expiration of

one month after the receipt by the Bank from us of notice in writing to

discontinue it.




 




8.             This

Guarantee shall be in addition to and is not to prejudice or be prejudiced by

any other guarantee or other security whether by way of mortgage, charge, lien

or otherwise which the Bank may now or at any time hereafter have or hold from

us, the Customer or any other party for all or any part of the Liabilities and

on discharge by payment or otherwise shall remain the property of the Bank.




 




9.             In

the event of this Guarantee being determined or ceasing from any cause to be

binding as a continuing guarantee on us:




 




(a)           it

shall be lawful for the Bank to continue to provide facilities (as hereinbefore

mentioned) to the Customer and to continue any account with the Customer

notwithstanding such event and our liability for the amount of the Liabilities

at the date this Guarantee is determined shall continue notwithstanding any

subsequent payment to or drawing upon or advance by the Bank by or to or for or

on behalf of the Customer; and




 




(b)           the

Bank may forthwith without thereby affecting its rights under this Guarantee

open a new or separate account with the Customer and, if the Bank does not open

a new or separate account, the Bank shall nevertheless be treated as if it had

done so at the time (the “relevant time”) that the Bank received notice or

became aware that this Guarantee had determined or ceased to be binding as a

continuing guarantee and as from the relevant time all moneys paid by or on

behalf of the Customer shall be credited or be treated as having been credited

to the new or separate account and shall on settlement of any claim in respect

of this Guarantee not operate to reduce the amount due from the Customer at the

relevant time or the interest thereon unless the person or persons paying in

such moneys shall at the time of payment direct the Bank in writing to

appropriate the sum specially to that purpose.




 




10.           The

Bank shall be entitled at all times to place and keep in a separate or suspense

account or accounts to our credit or to the credit of such other person as the

Bank may think fit any moneys received under this Guarantee or as a result of

the exercise of any of its rights against the Customer or any other surety in

respect of the Liabilities for so long and in such manner as the




 




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Bank may determine without any intermediate obligation to apply the

same or any part thereof in or towards the discharge of the Liabilities and the

Bank shall be entitled to prove against us as if any amount standing to the

credit of such account had not been received. 

We hereby irrevocably waive any right of appropriation in respect of any

sums paid by us.




 




11.           Until all the

Liabilities have been fully paid and discharged (and notwithstanding that we

may have discharged the amount of this Guarantee), we shall not take any step

to enforce any right against the Customer or his/their representatives in

respect of this Guarantee or of any moneys paid hereunder or prove in any

bankruptcy, liquidation, administration, winding up or other proceeding having

an effect equivalent thereto of the Customer (each of which proceedings are

hereinafter called a “Liquidation”) in respect thereof in competition with the

Bank or claim the benefit of any securities held by the Bank.




 




12.           We have not taken

and, until the Liabilities and Guaranteed Sums have been discharged and

satisfied in full, will not take without the Bank’s prior written consent any

security (which for the purposes of this Clause shall include any promissory

note, cheque or bill of exchange) from the Customer in connection with this

Guarantee; and in the event of our having taken or taking any security in

contravention of this provision we will hold the same on trust for the Bank as

further security for the Bank and will forthwith deposit the same and all

documents relating thereto with the Bank and we will account to the Bank for

all moneys at any time received by us in respect thereof and in default of our

so doing the maximum amount for which we are to be liable under this Guarantee

(as set out in Clause 1(a) above) shall be increased by the amount by which any

dividend in the bankruptcy or in the Liquidation of the Customer or otherwise

payable by the Customer to the Bank is thereby diminished.




 




13.           Any settlement or

discharge between us and the Bank shall be conditional upon no security

(including without limitation, any guarantee) furnished or payment made to the

Bank by the Customer or any other person being avoided or reduced by virtue of

any relevant statutory provisions or enactments relating to bankruptcy, winding

up or liquidation or other proceeding having an equivalent effect to any of the

foregoing for the time being in force in any jurisdiction and the Bank shall be

entitled to retain any security held in respect of our liability hereunder

(hereinafter called the “Guarantee Security”) until the expiration of the

period or periods under such provisions or enactments within which such payment

or security could be avoided or reduced and if within any such period the

payment or security is so avoided or reduced the Bank shall be entitled to

retain the Guarantee Security or any part thereof for and during such further

period as the Bank in its entire discretion shall determine.




 




14.           In any proceedings

under or for any other purpose of this Guarantee a certificate signed by any

officer or representative of the Bank certifying the amount of the Liabilities

shall be accepted by us as conclusive evidence thereof.




 




15.           (a)           We will pay and discharge the

Liabilities and any interest payable by us pursuant to Clause 1(b) hereof, in

whatever currency or currencies the Liabilities are entered in the books of the

Bank and if any part of the Liabilities is entered in a different currency from

any other part or parts of the Liabilities we shall pay and discharge each part

of the Liabilities and any interest payable by us pursuant to Clause 1(b)

hereof, in the currency in which such part or as the case may be such interest

is entered in the books of the Bank and if any such payment or discharge is




 




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subject to any withholding or other tax, duty, levy, impost or charge

imposed or levied by or on behalf of any government or any political

subdivision or taxing authority thereof we shall pay to the Bank such

additional amounts as may be necessary to ensure the receipt by the Bank of the

full amount of the Liabilities and any such interest.




 




(b)           For

the purposes of ascertaining at any time and in particular on the date of any

demand hereunder the maximum amount (if any) for which we are to be liable in

accordance with Clause 1(a) hereof if some or all of the Liabilities are

entered in the books of the Bank in a currency or currencies other than the

currency in which such maximum amount is denominated (the “Limit Currency”)

those parts of the Liabilities denominated in currencies other than the Limit

Currency will be converted, notionally, into the Limit Currency at the rate at

which the Bank would sell to us, in accordance with its usual practices, the currency

in which such other parts of the Liabilities are denominated provided always

and we agree that if some or all of the Liabilities are entered in the books of

the Bank in a currency other than the Limit Currency, and the amount of the

Liabilities exceeds the maximum amount stipulated in Clause 1(a), the Bank

shall be at liberty to elect which parts of the Liabilities shall be and form

part of the Guaranteed Sums.




 




16.           Any

notice or demand hereunder shall be in writing and shall be deemed to have been

sufficiently given if sent by prepaid (and, if posted to a place outside Hong

Kong, air mail) post to the address of the person to whom such notice or demand

is to be given as appearing herein or to such other address as such person may

from time to time have notified to the Bank and any notice or demand so sent

shall be deemed to have been served on the day following the date of posting if

posted in Hong Kong to an address in Hong Kong and on the eighth day following

posting if posted to or from a place outside Hong Kong and in proving such

service it shall be sufficient to prove that the envelope containing the notice

was properly addressed, stamped and posted.




 




17.           If

any one or more of the provisions of this Guarantee or any part or parts

thereof shall be declared or adjudged to be illegal, invalid or unenforceable

under any applicable law, such illegality, invalidity or unenforceability shall

not vitiate any other provisions of this Guarantee and this Guarantee shall be

construed as if such illegal, invalid or unenforceable provisions were not

contained herein.




 




18.           In

this Guarantee wherever the context so requires or admits (i) where the

Customer comprises two or more persons all references to the Customer shall be

construed as references to all or any of such persons, (ii) the singular shall

include the plural and vice versa, (iii) the expression “person” shall mean and

include a company, society, corporation, firm or an individual and in the case

of an individual his or her executors, administrators, committee, receiver or

other person lawfully acting on behalf of every such person, (iv) the

expression “this Guarantee” shall be construed as including and extending to

any separate or independent stipulation or agreement herein contained, and (v)

any reference to any statutory provision or enactment shall be deemed to

include a reference to any modification or re-enactment thereof for the time

being in force.




 




19.           Where

this Guarantee is signed by more than one party our liability hereunder shall

be joint and several and every agreement and undertaking on our part shall be

construed accordingly




 




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and all references to us in this Guarantee shall, where the context

requires or admits, be construed as references to all or any of us and the Bank

shall be at liberty to release or discharge any of us from the liabilities of

this Guarantee or to accept any composition from or make any other arrangements

with any of us without releasing or discharging the other or others of us or

otherwise prejudicing or affecting the rights and remedies of the Bank against

the other or others of us and no one of us shall be nor shall this Guarantee be

released or discharged by any takeover, reconstruction, amalgamation, merger,

liquidation or change in the constitution of any of us.




 




20.           This

Guarantee shall remain valid and binding for all purposes notwithstanding any

change by amalgamation, consolidation or otherwise which may be made in the

constitution of the company or corporation by which the business of the Bank

may from time to time be carried on and shall be available to the company

carrying on that business for the time being.




 




21.           This

Guarantee is and will remain the property of the Bank notwithstanding the

payment in full of any claim or claims of the Bank hereunder.




 




22.           This

Guarantee shall be governed by and construed in accordance with the laws of

Hong Kong and we hereby submit to the non-exclusive jurisdiction of the Hong

Kong courts.




 




23.           We

hereby appoint the person named below (if any) as our agent to accept service

of any legal process in Hong Kong in connection with this Guarantee.  We agree that any writ, summons, order,

judgment or other document shall be deemed duly and sufficiently served on us

if addressed to us or to the said agent and left at, or sent by post to the

respective address of us or the said agent last known to the Bank.  The foregoing shall not limit the rights of

the Bank to serve process on us in any manner permitted by law in any

jurisdiction.




 




24.           We

agree that the Chinese translation shall not apply in construing this security

and that the English version shall govern for all purposes.




 




Dated   19th  day   of    August    ,

2002.




 




	

  Name of Process Agent

  (if any)


  	

   


  	

   


  
	

  Address of Process

  Agent:


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  





 




 




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Corporate Signatory




 




Signed by:




 




	

  JOSEPH S. WHITAKER


  	

   


  	

  /s/ Joseph S. Whitaker


  
	

  a Director for and on

  behalf of


  	

   


  	

  (Signature of Director)


  
	

   


  	

   


  	

   


  
	

  DSI TOYS, INC.


  	

   


  	

   


  
	

  (Name of Company)


  	

   


  	

   


  





 




in the presence of:




 




	

  Name of Witness:


  	

  THOMAS V. YARNELL


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  I/D Card No.


  (or equivalent)


  of Witness:


  	

  TX. Dr. License

  08433265


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Address of Witness:


  	

  2819 CRYSTAL FALLS


  	

   


  	

   


  
	

   


  	

  KINGWOOD, TX 


  	

   


  	

   


  
	

   


  	

  77345


  	

   


  	

   


  
	

  Occupation of Witness:


  	

  ATTORNEY


  	

   


  	

  /s/ Thomas V. Yarnell


  
	

   


  	

   


  	

   


  	

  Signature of Witness


  
					





 




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