Exhibit
10.41


 


GUARANTY


 


 


DATED:  February 24, 2004


 


PARTICULAR
TERMS - DEFINITIONS


 


As used in this Guaranty, the following terms and
expressions have the respective meanings indicated opposite each of them; where
the meaning of any term is stated to be “None”, provisions involving the
application of that term shall be disregarded:


 


	
  Guarantor:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  Johan P. Finley

  
	
   

  	
   

  	
  Address:

  	
   

  	
  c/o Borrower

  6171 McLeod Drive
Las Vegas, NV 89120

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lender:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  FIRST
  STATE BANK OF THERMOPOLIS, a state chartered bank

  
	
   

  	
   

  	
  Address:

  	
   

  	
  435
  Arapahoe

  Thermopolis, WY 82443-1232
Attn: Brian Yarrington, President
Telephone: (307) 864-5561
Fax: (307) 864-9326

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Borrower:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  PDS GAMING  CORPORATION,
  a Minnesota corporation (“PDS-M”), PDS GAMING CORPORATION-NEVADA,
  a Nevada corporation (“PDS-NV”), PDS GAMING
  CORPORATION-MISSISSIPPI, a Mississippi corporation (“PDS-MS”), and PDS GAMING
  CORPORATION-COLORADO, a Colorado corporation (“PDS-CO”)  (PDS-M,
  PDS-NV, PDS-MS and PDS-CO are jointly and severally, the “Borrower”)

  
	
   

  	
   

  	
  Address:

  	
   

  	
  6171
  McLeod Drive

  Las Vegas, NV 89120
Attn: Peter D. Cleary, President
Telephone: (702) 736-0700
Fax: (702) 740-8692

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Amount:

  	
   

  	
  A Promissory Note
  for $7,691,796 (the “Note”)

  
	
   

  	
   

  	
  Date:

  	
   

  	
  Dated of even date herewith,
  including any extensions, renewals or

  



 


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  modifications thereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Collateral:

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Collateral Documents:

  	
   

  	
  Collateral Documents
  mean any other document executed by the Borrower or required of the Guarantor
  as the same may be extended, replaced, renewed or modified related to or
  executed in conjunction with the Note

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Indebtedness:

  	
   

  	
  The amount of the Note
  as the same may be extended, replaced, renewed or modified.

  



 


THIS GUARANTY, by the Guarantor (“Guarantor”) is made
on the above date to Lender:


 


Section 1.                         Consideration/Nature
of Guaranty.


 


In order to induce Lender to make the loan evidenced
by the Note to Borrower, and in consideration thereof and of other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor hereby unconditionally guarantees to the Lender:  (a) the due and punctual payment, and not
just the collectibility, of the principal of, and interest on the Note when
due, whether at maturity, pursuant to mandatory or optional prepayments, by
acceleration or otherwise, and further including all Indebtedness, all at the
times and place and at the rates described in, and otherwise according to the
tenor of the Note and Collateral Documents, (b) the punctual and faithful
performance and observation by the Borrower of all duties, agreements, and
obligations of Borrower contained in the Collateral Documents, including but
not by way of limitation, the affirmative covenants, the negative covenants and
the truth and accuracy of all Representations and Warranties therein set forth.


 


Section 2.                         Security
Instruments.


 


The Note and Collateral Documents, and all other, by
way of example, related instruments, documents and writings (sometimes
hereinafter collectively referred to as the “Security Instruments”) are
hereby  made a part of this Guaranty by
reference thereto, with the same force and effect as if fully set forth herein.


 


Section 3.                         Continuation
of Liability.


 


The liability of the Guarantor shall in no way be affected or impaired
by: (a) any amendment, alteration, extension, renewal, waiver, indulgence or
other modification of the Security Instruments or Indebtedness; (b) any
settlement or compromise in connection with the Indebtedness or Security Instruments;
(c) any subordination of payments under the Indebtedness or Security
Instruments to any other debt or claim; (d) any substitution, exchange, release
or other disposition of all or any part of the Indebtedness or Security
Instruments; (e) any failure, delay, neglect, act or omission by Lender to act
in connection with the Indebtedness or Security Instruments; (f) any advances
for the purpose of performing any covenant or agreement of the Borrower, or
curing or otherwise in connection with any breach, event of default, Event of
Default (any default, Default or Event of Default, collectively an “Event of
Default”, shall mean the occurrence of any act, omission or failure (including
failure to pay all sums due at maturity) of the Note or the Indebtedness
(herein “Events of Default”) of any of the following, after any applicable
notice and the expiration of time to cure as hereinafter provided:


 


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Borrower shall fail to
make payment of any installment of principal and/or interest required or of any
payment by Borrower, within ten (10) days from the date same is due and payable
except at maturity ; or


 


The failure or breach of
any other covenant, warranty, agreement, undertaking, condition, promise,
representation or warranty herein contained and/or contained in the Security
Instruments:


 


(i)                                     a
general assignment by Borrower for the benefit of creditors;


 


(ii)                                  the
filing of a voluntary petition in bankruptcy by Borrower;


 


(iii)                               the
filing of any involuntary petition under any bankruptcy or insolvency law by
Borrower’s creditors, said petition remaining undischarged for a period of
sixty (60) days;


 


(iv)                              the
appointment by any court of a receiver to take possession of substantially all
of Borrower’s assets for a period of sixty (60) days; or


 


(v)                                 attachment,
execution or other judicial seizure of substantially all of Borrower’s assets,
such attachment, execution or other seizure remaining undismissed or
undischarged for a period of sixty (60) days after the levy thereof.


 


(vi)                              the
filing by or against Borrower of bankruptcy, insolvency, reorganization or
other debtor’s relief afforded Borrower pursuant to the present or future
provisions of the Bankruptcy Code or any other state or federal statute or by
the decision of any court; or (h) any other matter whether similar or
dissimilar to the foregoing.  The
obligations of Guarantor are unconditional, notwithstanding any defect in the
genuineness, validity, regularity or enforceability of the Indebtedness or the
Security Instruments, or any other circumstances whether or not referred to
herein, which might otherwise constitute a legal or equitable discharge or
defense of a surety or Guarantor.


 


Section 4.                         Waivers.


 


To the extent permitted by Nevada law, the Guarantor
hereby waives: (a) notice of acceptance of this Guaranty and of creations of
Indebtedness of Borrower to Lender; (b) presentment and demand for payment of
any Indebtedness of Borrower (c) protest, notice of protest, and notice of
dishonor or default to the Guarantor or to any other party with respect to any
of the Indebtedness or Security Instruments; (d) all other notices to which the
Guarantor might otherwise be entitled; (e) any demand for payment under this
Guaranty; (f) any defense arising by reason of any disability or other defense
of Borrower by reason of the cessation from any cause whatsoever of the
liability of the Borrower; (g) any rights to extension, composition or
otherwise under the Bankruptcy Code or any amendments thereof, or under any state
or other federal statute; (h) any right or claim or claim of right to cause a
marshaling of Borrower’s assets; and (j) the provisions of Nevada Revised
Statutes (“NRS”) Section 40.430 through the provisions of NRS 40.495.  No notice to or demand on the Guarantor
shall be deemed to be a waiver of the obligation of the Guarantor or of the
right of Lender to take further action without notice or demand as provided
herein; nor in any event shall any modification or waiver of the provisions of
this Guaranty be effective unless in writing nor shall any such waiver be
applicable except in the specific instance for which given.


 


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Section 5.                         Exercise
of Rights by Lender.


 


This is an irrevocable, unconditional and absolute
guaranty of payment and performance and Guarantor agrees that the liability of
Guarantor on this Guaranty shall be immediate and shall not be contingent upon
the exercise or enforcement by Lender of whatever remedies it may have against
the Borrower or others, or the enforcement of any lien or realization upon any
security or Collateral that Lender may at any time possess.  Any one or more successive and/or concurrent
actions may be brought hereon against Guarantor either in the same action, if
any, brought against Borrower or in separate actions, as often as Lender, in
its sole discretion, may deem advisable. 
No election to proceed in one form of action or proceeding, or against
any party, or on any obligation, shall constitute a waiver of Lender’s right to
proceed in any other form of action or proceeding or against other parties
unless Lender has expressly waived such right in writing.  Specifically, but without limiting the
generality of the foregoing, no action or proceeding by Lender against Borrower
under any document or instrument evidencing or securing the Indebtedness,
including but not by way of limitation, the Security Instruments of Borrower to
Lender shall serve to diminish the liability of Guarantor, except to the extent
Lender realized payment by such action or proceeding, notwithstanding the
effect of any such action or proceeding upon Guarantor’s right of subrogation
against Borrower.  Receipt by Lender of
payment or payments with knowledge of the breach of any provision of any of the
Indebtedness or Security Instruments shall not, as to the Guarantor, be deemed
a waiver of such breach.  All rights,
powers and remedies of Lender hereunder and under any other agreement now or at
any time hereafter in force between Lender and Guarantor shall be cumulative
and not alternative and shall be in addition to all rights, powers and remedies
given to Lender by law.  Notwithstanding
anything herein to the contrary, in the event of default by Borrower under the
Note, for as long as either Guarantor or Borrower shall cause the monthly
installment payments due under the Note to be paid to Lender as and when due
under the Note, for purposes of determining the Guarantor’s liability under the
Note, interest accrual on the outstanding balance due under the Note shall be
calculated at the rate set forth in Section 3. a. (Loan Rate) of the Note,
and not at the rate set forth under Section 3. b. (Default Rate) of the
Note.


 


Section 6.                         Subordination


 


In any event that Guarantor shall advance or become
obligated to pay any sums to the Borrower, or in the event that for any reason
Borrower or any subsequent owner of any Collateral granted as security to
Lender under the Security Instruments is now or shall hereafter become indebted
to Guarantor, the amount of such indebtedness shall at all times be subordinate
as to lien, time of payment and in all other respects, to the amounts owing to
Lender by Borrower with regard to the subject property or any right to
participate in any way therein or in the right, title or interest of Lender in
such property, all rights of subrogation and participation being hereby
expressly subordinated as aforesaid.


 


Section 7.                         Representations
and Warranties/Notice/Financial Statements.


 


Guarantor represents, warrants and covenants to Lender
that, as of the date of this Guaranty: the fair salable value of Guarantor’s
assets exceeds its liabilities; Guarantor is meeting its current liabilities as
they mature; any financial statements of Guarantor furnished Lender are true
and correct in all material respects and include in the footnotes thereto all
material contingent liabilities of Guarantor; since the date of said financial
statements there has been no material adverse change in the financial condition
of Guarantor; there are not now pending any material court or administrative
proceedings or undischarged judgments against Guarantor and no federal or state
tax liens have been filed or threatened against Guarantor, is Guarantor in
default or claimed default under any agreement for


 


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borrowed money.  Guarantor agrees to immediately give Lender
written notice of any material adverse change in his financial condition,
including but not limited to material litigation commenced, tax liens filed, default
claimed under his indebtedness for borrowed money or bankruptcy proceedings
commenced by or against Guarantor. 
Guarantor shall deliver, timely to Lender the financial statements and
information required of Guarantor under the Loan Agreement, Guarantor is fully
aware of the financial condition of the Borrower.  Guarantor delivers this Guaranty based solely upon his own
independent investigation and in no part upon any representation or statement
of Lender with respect thereto. 
Guarantor is in a position to and hereby assumes full responsibility for
obtaining any additional information concerning Borrower’s financial condition
as such Guarantor may deem material to his obligations hereunder; and Guarantor
is not relying upon nor expecting Lender to furnish it any information in the
Lender’s possession concerning Borrower’s financial condition.


 


Section 8.                         Expenses/Preferential
Payments.


 


Guarantor further agrees to pay all reasonable
out-of-pocket expenses incurred by Lender in connection with enforcement of its
rights under the Indebtedness, Security Instruments, this Guaranty, or in the
event the Lender is a party to any litigation because of the existence of the
Indebtedness, the Security Instrument or this Guaranty, as well as court costs,
reasonable out-of pocket collection charges and reasonable attorney fees
and disbursements.  Guarantor further
agrees that to the extent Borrower makes a payment or payments to Lender, which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy act, state or federal
law, common law or equitable cause, then to the extent of such payment or
repayment, the obligation or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment had not been
made.


 


Section 9.                         Binding
Effect/Joint and Several Liability.


 


Each reference herein to Lender shall be deemed to
include its successors and assigns, in whose favor the provisions of this
Guaranty shall also run.  The pronouns
and relative words herein used shall be read as if written in the plural,
feminine, masculine or neuter form so as to appropriately refer to the parties
designated.


 


Section 10.                   Termination.


 


Notwithstanding anything herein contained, this
Guaranty shall become null and void and the liability of the Guarantor
terminated only in the event the Borrower shall pay to the Lender in full the
Indebtedness, and the Loan Agreement terminated due to payment in full of the
Indebtedness and further provided Guarantor shall have received written notice
thereof from Lender, and all other sums and payments which may be or become
owing under the Indebtedness, or elsewhere provided for herein, or in any of
the Security Instruments.


 


Section 11.                   Security.


 


None.


 


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Section 12.                   Covenants as
to Loan Agreement.


 


Guarantor has been provided copies of the Security
Instruments, has reviewed the same, and acknowledges the contents thereof,
including, but not by way of limitation, the rights or remedies of Lender, the
Guarantor agrees to be bound by the terms, conditions, requirements, covenants,
representations, warranties, and obligations therein set forth, and the
Security Instruments are hereby incorporated by this reference as if fully
rewritten and the Guarantor shall be bound by same.


 


Section 13.                   Representations
and Warranties.


 


Guarantor represents and warrants to Lender as
follows:


 


A.                         Authority.  Guarantor has full power and authority to
execute and deliver this Guaranty.


 


B.                           Litigation.  There are no actions, suits or proceedings
pending or, to the knowledge of the Guarantor threatened against or affecting
the Guarantor or the property of the Guarantor in any court or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which would be
reasonably likely to result in any material adverse change in the respective
business, properties or assets or in the condition, financial or otherwise, of
either of the Guarantor.  Guarantor is
in default with respect to any order, writ, injunction, decree or demand of any
court or federal, state, municipal or other governmental department,
commission, board, bureau, agency, instrumentality, default under which might
have consequences which would materially and adversely affect the business or
properties of the Guarantor.


 


C.                           Adverse
Contracts, etc.  Guarantor is not a
party to any contract or agreement or subject to any other restriction or
unusually burdensome order of any regulatory commission, board or agency which
materially and adversely affect its/his business, properties or assets or its/his
condition, financial or otherwise.  The
execution and performance of this Guaranty will not result in the creation of
any other encumbrance or charge upon any asset of Guarantor pursuant to the
terms of any other agreement.  No
provision of any existing mortgage, indenture, contract or agreement binding on
Guarantor or affecting his/her property is in effect which would conflict with
or in any way prevent the execution, delivery or carrying out of the terms of
the Guarantor’s Collateral Documents that has not been waived or consented to.


 


D.                          Default.  There is no Event of Default (as defined in
the Loan Agreement) under this Guaranty, now existing or hereafter executed,
and no event, act or omission has occurred and is continuing which, with
applicable notice or the passage of time or either, would constitute an Event
of Default thereunder.


 


E.                            Survival
and Continuation.  All
representations and warranties contained herein are and shall continue to be
true and accurate, at all times while any Indebtedness is outstanding, and the
continuing truth and accuracy thereof shall survive the execution hereof and
the consummation of the transactions herein contemplated or contemplated in the
Loan Agreement.


 


Section 14.                   Covenants.


 


Guarantor covenants and agrees that, so long as any
Indebtedness is due Lender, it will;


 


A.                         Performance
of Obligations.  Perform all of the
obligations, covenants and agreements of Guarantor under this Guaranty, or any
other agreement, or other document executed between the


 


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Lender and Guarantor or to which it is a party,
whether now existing or hereafter created, and maintain and take all action (or
not fail to take any action or suffer or permit any omission) necessary to
maintain the representations and warranties made, as true and accurate, and
will not permit or suffer a Event of Default to occur.


 


B.                           Maintenance
of Existence.  Maintain its
corporate existence.


 


C.                           Information.  Furnish promptly and in a form satisfactory
to Lender, such information as Lender may reasonably request, from time to
time.


 


D.                          Litigation.  Notify Lender promptly of any litigation,
administrative or tax proceeding or any other material matter which would be
reasonably likely to adversely impair the Guarantor’s financial condition.  For the purposes hereof, any such
litigation, proceeding, matter or inquiry in which the sum in dispute is One
Hundred Thousand and no/100ths Dollars ($100,000.00) or more and not covered by
insurance shall be deemed to be material.


 


E.                            Income
Taxes.  Pay when due all federal,
state and/or city income taxes, and to notify Lender promptly in the event of
its failure to make any such payment when due.


 


Section 15.                   Remedies in
Event of Default.


 


Upon the occurrence of any Event of Default, the
Lender shall have the right to sell as much of the Collateral as required to
satisfy the Note and/or the Indebtedness and all sums due thereunder including,
but not limited to, the costs of collection, fees, charges, costs of
collection, accrued and unpaid interest whether at the Note rate or any
accelerated rate due at default or maturity, and any and all the rights and
remedies provided in the Note and/or Collateral Documents.


 


Section 16.                   Miscellaneous.


 


A.                         Non-Waiver.  No delay or failure of Lender in exercising
any right, remedy, power or privilege hereunder or other Security Instruments
shall affect such right, remedy, power or privilege, nor shall any single or
partial exercise thereof preclude the exercise of any other right, remedy, power
or privilege.


 


B.                           Enforcement.  Lender shall not seek to enforce this
Guaranty so long as Borrower PDS Gaming Corporation is a publicly traded
corporation.


 


C.                           Delay.  No delay or failure of Lender at any time to
demand strict adherence to the terms hereof or other Security Instruments,
shall be deemed to constitute a course of conduct inconsistent with the
Lender’s right at any time, before or after any Event of Default, to demand
strict adherence to the terms hereof or the Security Instruments.


 


D.                          Governing
Law.  This Guaranty shall be
interpreted and the rights of the parties hereunder shall be determined under
the laws of the State of Nevada.


 


E.                            Invalidity.  Should any part, term or provision of this
Guaranty be by the courts decided to be illegal or in conflict with any law of
the State of Nevada, the validity of the remaining portions or provisions of
this Guaranty shall not be affected thereby.


 


IN WITNESS WHEREOF, the Guarantor hereto has caused
these presents to be executed all as of the day and year first above written.


 


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  WITNESS:

  	
   

  	
  “Guarantor”

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Sheila M. Waid

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Johan P. Finley

  	
   

  



 


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