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Exhibit 10.89

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GUARANTY

dated as of December 21, 2001

of

MANDALAY RESORT GROUP
AND ITS SUBSIDIARIES NAMED HEREIN

in favor of

WELLS FARGO BANK NORTHWEST, N.A.

and

THE OTHER BENEFICIARIES
NAMED HEREIN

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TABLE OF CONTENTS

 
   
  Page

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SECTION 1.   Guaranty   1
SECTION 2.
 
Each Guarantor's Guaranteed Obligations Unconditional
 
2
SECTION 3.
 
Waiver and Agreement
 
3
SECTION 4.
 
Assignment
 
4
SECTION 5.
 
Waiver of Subrogation
 
5
SECTION 6.
 
Rights of the Beneficiaries
 
5
SECTION 7.
 
Term of Guaranty
 
5
SECTION 8.
 
Representations and Warranties of Guarantors
 
5
SECTION 9.
 
Notices, etc.
 
5
SECTION 10.
 
Severability of this Guaranty
 
6
SECTION 11.
 
Miscellaneous
 
6
SECTION 12.
 
Termination
 
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GUARANTY

        This GUARANTY ("Guaranty"), dated as of December 21, 2001, of MANDALAY
RESORT GROUP, a Nevada corporation ("Mandalay"), MANDALAY CORP., a Nevada
corporation, RAMPARTS, INC., a Nevada corporation, NEW CASTLE CORP., a Nevada
corporation, CIRCUS CIRCUS CASINOS, INC., a Nevada corporation, COLORADO BELLE
CORP., a Nevada corporation, EDGEWATER HOTEL CORPORATION, a Nevada corporation,
and SLOTS-A-FUN, INC., a Nevada corporation (each, a "Guarantor" and
collectively, "Guarantors"), is made in favor of WELLS FARGO BANK NORTHWEST,
N.A., a national banking association, in both its individual capacity and as
trustee (the "Trustee"), and the other Beneficiaries named below, pursuant to
that certain Participation Agreement dated as of December 21, 2001, entered into
among Trustee, as Lessor, Mandalay and the other Lessees party thereto,
Guarantors, the Certificate Holders identified on Schedule II thereto, the
Lenders identified on Schedule III thereto, and Wells Fargo Bank Nevada, N.A.,
as the Collateral Agent (as amended, modified, restated or supplemented from
time to time, the "Participation Agreement"). Capitalized terms used and not
otherwise defined in this Guaranty shall have the meaning assigned to such terms
in Appendix 1 to the Participation Agreement.

        WHEREAS, pursuant to the Master Lease and the Participation Agreement,
Trustee has agreed, on behalf of the Trust and each Participant, to purchase the
Equipment and lease such Equipment to Lessees pursuant to the Master Lease and
one or more Lease Supplements executed and delivered in connection therewith;

        WHEREAS, Trustee and the other Beneficiaries are unwilling to enter into
the Participation Agreement and other Operative Documents unless Guarantors
execute this Guaranty and, as an inducement to Trustee and such other
Beneficiaries, Guarantors are entering into this Guaranty and the guaranty
provided for herein;

        AND WHEREAS, it is in the best interest of each Guarantor to execute
this Guaranty inasmuch as such Guarantor will derive substantial direct and
indirect benefits from the transactions contemplated by the Participation
Agreement and other Operative Documents.

        NOW, THEREFORE, each Guarantor covenants and agrees as follows:

        SECTION 1.    Guaranty.    Each Guarantor jointly and severally hereby
absolutely, unconditionally and irrevocably guarantees to Trustee (both
individually and in its capacity as Trustee), the Collateral Agent, each
Certificate Holder, each Lender and each other Indemnitee and their respective
successors and permitted assigns (individually, a "Beneficiary" and,
collectively, the "Beneficiaries") as their respective interests may appear:
(a) the due, punctual and full payment by Lessees of all amounts (including,
without limitation, amounts payable as damages in case of default and all such
amounts which would become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a) and the
operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C. 502(b) and §506(b)) to be paid by Lessees in accordance with the Lease
and/or any other Operative Document to which any Lessee is or is to be a party
whether such obligations now exist or arise hereafter, as and when the same
shall become due and payable in accordance with the terms thereof; and (b) the
due, prompt and faithful performance when due of, and compliance with, all other
obligations, covenants, terms, conditions and undertakings of each of the
Lessees contained in the Participation Agreement, the Lease or any and all other
Operative Documents to which any Lessee is or is to be a party in accordance
with the terms thereof (such obligations referred to in clauses (a) and
(b) above being hereinafter called the "Guaranteed Obligations"); provided,
however, that such Guarantor shall be liable under this Guaranty only for the
maximum amount of such liability that can be hereby incurred without rendering
this Guaranty, as it relates to such Guarantor, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount and, provided further that, in the case of any Guarantor that is
also a Lessee, such Guarantor shall be liable under this Guaranty only for that

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portion—if any—of the Guaranteed Obligations with respect to which such
Guarantor is not liable as a Lessee.

        Each Guarantor further agrees to pay any and all reasonable costs and
expenses (including reasonable fees and disbursements of counsel) that may be
paid or incurred by any Beneficiary in collecting any Guaranteed Obligations
and/or in preserving or enforcing any rights under this Guaranty or under the
Guaranteed Obligations.

        The Guaranty is a guaranty of payment, performance and compliance and
not of collectability, is in no way conditioned or contingent upon any attempt
to collect from or enforce performance or compliance by any Lessee or upon any
other event, contingency or circumstance whatsoever, and shall be binding upon
and against each Guarantor without regard to the validity or enforceability of
the Participation Agreement, the Lease or any other Operative Document.

        If for any reason whatsoever any Lessee shall fail or be unable duly,
punctually and fully to pay such amounts as and when the same shall become due
and payable or to perform or comply with any such obligation, covenant, term,
condition or undertaking when due to be performed or observed, in each case, in
accordance with the Operative Documents, each applicable Guarantor will
immediately pay or cause to be paid such amounts to the Person or Persons
entitled to receive the same (according to their respective interests) under the
terms of the Operative Documents, as appropriate, or perform or comply with any
such obligation, covenant, term, condition or undertaking or cause the same to
be performed or complied with, together with interest at the Applicable Default
Rate on any amount due and owing from the date the same shall have become due
and payable to the date of payment.

        SECTION 2.    Each Guarantor's Guaranteed Obligations
Unconditional.    The covenants and agreements of each Guarantor set forth in
this Guaranty shall be primary obligations of such Guarantor, and such
obligations shall be continuing, absolute and unconditional, shall not be
subject to any counterclaim, setoff, deduction, diminution, abatement,
recoupment, suspension, deferment, reduction or defense (other than full and
strict compliance by such Guarantor with its obligations hereunder or the full
and strict compliance by Lessees of all of the Obligations), whether based upon
any claim that any Lessee, such Guarantor, or any other Person may have against
any Beneficiary or any other Person or otherwise, and shall remain in full force
and effect without regard to, and shall not be released, discharged or in any
way affected by, any circumstance or condition whatsoever (whether or not such
Guarantor or any Lessee shall have any knowledge or notice thereof) including,
without limitation:

        (a)  Any amendment, modification, addition, deletion, supplement or
renewal to or of or other change in the Guaranteed Obligations, the Lease or any
other Operative Document or any of the agreements referred to in any thereof, or
any other instrument or agreement applicable to any Operative Document or any of
the parties to such agreements, or to the Equipment, or any assignment, mortgage
or transfer thereof or of any interest therein, or any furnishing or acceptance
of additional security for, guaranty of or right of offset with respect to, any
of the Guaranteed Obligations; or the failure of any security or the failure of
any Beneficiary to perfect or insure any interest in any collateral;

        (b)  Any failure, omission or delay on the part of any Lessee or any
Beneficiary to conform or comply with any term of any instrument or agreement
referred to in clause (a) above;

        (c)  Any waiver, consent, extension, indulgence, compromise, release or
other action or inaction under or in respect of any instrument, agreement,
guaranty, right of offset or security referred to in clause (a) above or any
obligation or liability of any Lessee or any Beneficiary, or any exercise or
non-exercise by any Beneficiary of any right, remedy, power or privilege under
or in respect of any such instrument, agreement, guaranty, right of offset or
security or any such obligation or liability;

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        (d)  Any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to any
Lessee, any Beneficiary or any other Person or any of their respective
properties or creditors, or any action taken by any trustee or receiver or by
any court in any such proceeding;

        (e)  Any limitation on the liability or obligations of any Person under
the Participation Agreement, the Lease or any other Operative Document, the
Guaranteed Obligations, any collateral security for the Guaranteed Obligations
or any other guaranty of the Guaranteed Obligations or any discharge,
termination, cancellation, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any of the foregoing, or any other
agreement, instrument, guaranty or security referred to in clause (a) above or
any term of any thereof;

        (f)    Any defect in the title, compliance with specifications,
condition, design, operation or fitness for use of, or any damage to or loss or
destruction of, or any interruption or cessation in the use of any of the
Equipment by any Lessee or any other Person for any reason whatsoever
(including, without limitation, any governmental prohibition or restriction,
condemnation, requisition, seizure or any other act on the part of any
governmental or military authority, or any act of God or of the public enemy)
regardless of the duration thereof (even though such duration would otherwise
constitute a frustration of a lease), whether or not resulting from accident and
whether or not without fault on the part of any Lessee or any other Person;

        (g)  Any merger or consolidation of any Lessee or any Guarantor into or
with any other corporation or any sale, lease or transfer of any of the assets
of any Lessee or any Guarantor to any other Person;

        (h)  Any change in the ownership of any shares of capital stock of any
Lessee or any corporate change in any Lessee; or

        (i)    Any other occurrence or circumstance whatsoever, whether similar
or dissimilar to the foregoing and any other circumstance that might otherwise
constitute a legal or equitable defense or discharge of the liabilities of a
guarantor or surety or that might otherwise limit recourse against such
Guarantor.

        The obligations of each Guarantor set forth herein constitute the full
recourse obligations of such Guarantor enforceable against it to the full extent
of all its assets and properties, notwithstanding any provision in any
agreements limiting the liability of any Beneficiary or any other Person.

        SECTION 3.    Waiver and Agreement.    Each Guarantor waives any and all
notice of the creation, renewal, extension or accrual of any of the Guaranteed
Obligations and notice of or proof of reliance by any Beneficiary upon this
Guaranty or acceptance of this Guaranty, and the Guaranteed Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Guaranty. Each Guarantor unconditionally waives,
to the extent permitted by law: (a) acceptance of this Guaranty and proof of
reliance by any Beneficiary hereon; (b) notice of any of the matters referred to
in Section 2 hereof, or any right to consent or assent to any thereof; (c) all
notices that may be required by statute, rule of law or otherwise, now or
hereafter in effect, to preserve intact any rights against such Guarantor,
including without limitation, any demand, presentment, protest, proof or notice
of nonpayment under the Lease or any other Operative Document, and notice of
default or any failure on the part of any Lessee to perform and comply with any
covenant, agreement, term or condition of the Lease or any other Operative
Document; (d) except to the extent expressly provided in Section 4, any right to
the enforcement, assertion or exercise against any Lessee of any right, power,
privilege or remedy conferred in the Lease or any other Operative Document or
otherwise; (e) any requirement of diligence on the part of any Person; (f) any
requirement of any Beneficiary to take any action whatsoever, to exhaust any
remedies or to mitigate the damages resulting from a default by any Person under
the Lease or any other Operative Document;

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(g) except as otherwise required by law, any notice of any sale, transfer or
other disposition by any Person of any right under, title to or interest in the
Lease, any other Operative Document or any of the Equipment; (h) any and all
benefits under California Civil Code Sections 2787 through 2855 (inclusive),
2899 and 3433 and California Code of Civil Procedure Sections 580a, 580b, 580d
and 726; (i) any law which provides that the obligation of a surety or guarantor
must neither be larger in amount nor in other respects more burdensome than that
of the principal or which reduces a surety's or guarantor's obligation in
proportion to the principal obligation; (j) any failure of any Beneficiary to
file or enforce a claim in any bankruptcy or other proceeding with respect to
any Person; (k) the election by any Beneficiary, in any bankruptcy proceeding of
any Person, of the application or non-application of Section 1111(b)(2) of the
Bankruptcy Code; (l) any extension of credit or the grant of any Lien under
Section 364 of the Bankruptcy Code; (m) any use of cash collateral under
Section 363 of the Bankruptcy Code; (n) any agreement or stipulation with
respect to the provision of adequate protection in any bankruptcy proceeding of
any Person; (o) the avoidance of any Lien in favor of any Beneficiary for any
reason; (p) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against any Person, including any discharge of, or bar or stay against
collecting, all or any of the Obligations (or any interest thereon) in or as a
result of any such proceeding; (q) to the extent permitted in
paragraph 40.495(4) of the Nevada Revised Statutes ("NRS"), the benefits of the
one-action rule under NRS Section 40.430, or (r) any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety, or that might otherwise limit
recourse against any Guarantor.

        Each Guarantor represents and warrants to the Beneficiaries that it has
established adequate means of obtaining from Lessees and any sublessees on a
continuing basis, financial and other information pertaining to the businesses,
operations and condition (financial and otherwise) of each Lessee and any such
sublessees and their properties, and such Guarantor now is and hereafter will be
completely familiar with the businesses, operations and condition (financial and
otherwise) of each Lessee and any sublessees and their properties. Each
Guarantor hereby expressly waives and relinquishes any duty on the part of any
Beneficiary (should any such duty exist) to disclose to such Guarantor any
matter, fact or thing related to the businesses, operations or condition
(financial or otherwise) of any Lessee or any sublessee or such party's
properties, whether now known or hereafter known by any Beneficiary during the
life of this Guaranty. With respect to any of the Guaranteed Obligations, no
Beneficiary need inquire into the powers of any Lessee or any sublessee or the
officers or employees acting or purporting to act on such party's behalf, and
all Guaranteed Obligations made or created in good faith reliance upon the
professed exercise of such power shall be guarantied hereby.

        Each Guarantor agrees that this Guaranty shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf
of any Lessee is rescinded or must be otherwise restored by any of the
Beneficiaries, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise.

        Each Guarantor further agrees that, without limiting the generality of
this Guaranty, if an Event of Default shall have occurred and be continuing and
Trustee or its assignee is prevented by applicable law from exercising its
remedies under the Lease, Trustee shall be entitled to receive hereunder from
such Guarantor, upon demand therefor, the sums which would have otherwise been
due from Lessees had such remedies been exercised.

        SECTION 4.    Assignment.    Each Guarantor hereby acknowledges that it
is contemplated that on the date hereof the Trustee will assign to the
Collateral Agent for the benefit of the Lenders and the Certificate Holders all
of the Trustee's rights, title and interest in and to this Guaranty in respect
of any Guaranteed Obligations hereunder which are part of the Trust Estate and
such Guarantor hereby agrees to such assignment.

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        SECTION 5.    Waiver of Subrogation.    Each Guarantor hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against any Lessee that arise from the existence, payment, performance
or enforcement of such Guarantor's obligations under this Guaranty or any other
Operative Document, including any right of subrogation, reimbursement,
exoneration, or indemnification, any right to participate in any claim or remedy
of the Beneficiaries against any Lessee or any Collateral which Trustee, on
behalf of the Participants, now has or hereafter acquires, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including the right to take or receive from any Lessee, directly or
indirectly, in cash or other property or by set-off or in any manner, payment or
security on account of such claim or other rights, in each case, unless and
until the Guaranteed Obligations shall have been fully and finally paid in cash
and, in the case of a bankruptcy or insolvency of any Lessee, one year has
elapsed from the date the Guaranteed Obligations shall have been fully and
finally paid in cash. If any amount shall be paid to any Guarantor in violation
of the preceding sentence and the Guaranteed Obligations shall not have been
fully and finally paid in cash, such amount shall be deemed to have been paid to
such Guarantor for the benefit of, and held in trust for, the Beneficiaries, and
shall forthwith be paid to Collateral Agent to be credited and applied pursuant
to the terms of the Participation Agreement and the other Operative Documents.
Each Guarantor acknowledges that it will receive direct and indirect benefits
from the financing arrangements contemplated by the Participation Agreement and
the Lease and that the waiver set forth in this Section 5 is knowingly made in
contemplation of such benefits. Each Guarantor hereby absolutely,
unconditionally and irrevocably waives and agrees not to assert or take
advantage of any defense based upon an election of remedies by Trustee and/or
Collateral Agent, including an election to proceed by non-judicial rather than
judicial foreclosure, which destroys or impairs any right of subrogation of such
Guarantor or the right of such Guarantor to proceed against any Person for
reimbursement or both.

        SECTION 6.    Rights of the Beneficiaries.    This Guaranty is made for
the benefit of, and shall be enforceable by, each Beneficiary as its interest
may appear or by the Collateral Agent on behalf of the Beneficiaries.

        SECTION 7.    Term of Guaranty.    This Guaranty and all guaranties,
covenants and agreements of each Guarantor contained herein shall continue in
full force and effect and shall not be discharged until such time as all the
Guaranteed Obligations shall be fully and finally paid in full in cash and all
the agreements of Lessees and such Guarantor hereunder and under the
Participation Agreement, the Lease and the other Operative Documents shall have
been duly performed. If, as a result of any bankruptcy, dissolution,
reorganization, insolvency, arrangement or liquidation proceedings (or
proceedings similar in purpose or effect) or if for any other reason, any
payment received by any Beneficiary in respect of the Guaranteed Obligations is
rescinded or must be returned by such Beneficiary, this Guaranty shall continue
to be effective as if such payment had not been made and, in any event, as
provided in the preceding sentence.

        SECTION 8.    Representations and Warranties of Guarantors.    As of the
date hereof and each Advance Date, each Guarantor represents and warrants to
Trustee and each of the Beneficiaries that this Guaranty constitutes a legal,
valid and binding agreement of such Guarantor and when executed and delivered in
accordance with the terms hereof will constitute legal, valid and binding
obligations of such Guarantor, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditor's rights generally and by general
equitable principles.

        SECTION 9.    Notices, etc.    All notices, demands, requests, consents,
approvals and other instruments hereunder shall be in writing and shall be
deemed to have been properly given if given as provided for in Section 10.5 of
the Participation Agreement to Mandalay, as agent for each of the Guarantors
(and each Guarantor hereby appoints Mandalay as its agent for purposes of
receiving notices and other communications hereunder and under or with respect
to any other Operative

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Documents), at the address set forth below the signature of Guarantors on the
signature page hereof, or such other address as may hereafter be furnished by
any applicable Guarantor to all Beneficiaries in accordance with Section 10.5 of
the Participation Agreement.

        SECTION 10.    Severability of this Guaranty.    In case any provisions
of this Guaranty or any application thereof shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions and statements and any other application thereof shall not in any way
be affected or impaired thereby. To the extent permitted by law, each Guarantor
hereby waives any provision of law that renders any term or provision hereof
invalid or unenforceable in any respect.

        SECTION 11.    Miscellaneous.    THIS GUARANTY SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
This Guaranty shall be binding upon each Guarantor and its successors,
transferees and assigns and inure to the benefit of and be enforceable by the
respective successors, permitted transferees, and permitted assigns of the
Beneficiaries, provided, however, that no Guarantor may assign any of its
obligations hereunder without the prior written consent of Trustee (acting at
the direction of all Participants). The table of contents and headings in this
Guaranty are for purposes of reference only, and shall not limit or otherwise
affect the meaning hereof. This Guaranty constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.

        SECTION 12.    Termination.    Subject to the provisions of Section 7
above, this Guaranty shall remain in full force and effect until the date on
which all Guaranteed Obligations of Guarantors hereunder shall have been
satisfied by full and final payment in cash and performance in full.

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        IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed as of the date first above written.

    MANDALAY RESORT GROUP,
a Nevada corporation
 
 
By
 
/s/

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Glenn W. Schaeffer
President and Chief Financial Officer
 
 
MANDALAY CORP.,
a Nevada corporation
 
 
RAMPARTS, INC.,
a Nevada corporation
 
 
NEW CASTLE CORP.,
a Nevada corporation
 
 
CIRCUS CIRCUS CASINOS, INC.,
a Nevada corporation
 
 
COLORADO BELLE CORP.,
a Nevada corporation
 
 
EDGEWATER HOTEL CORPORATION,
a Nevada corporation
 
 
SLOTS-A-FUN, INC.,
a Nevada corporation
 
 
By
 
/s/

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Glenn W. Schaeffer,
authorized signatory for each of the foregoing
 
 
Address for all Guarantors:         c/o Mandalay Resort Group
3950 Las Vegas Boulevard South
Las Vegas, Nevada 89229
 
 
 
 
Attn:
 
Glenn W. Schaeffer
President and Chief Financial Officer         Phone:   (702) 632-6715        
Facsimile:   (702) 632-6708

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