Exhibit 10.2


 


EXECUTION VERSION


 





 


 


GUARANTY


 


 


dated as of June 30, 2003


 


 


of


 


 


MANDALAY RESORT GROUP

AND ITS SUBSIDIARIES NAMED HEREIN


 


 


in favor of


 


 


WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION


 


AND


 


THE OTHER BENEFICIARIES

NAMED HEREIN


 




 





 

















 


TABLE OF CONTENTS


 


	
  SECTION

  	
   

  	
  HEADING

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  GUARANTY

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  EACH
  GUARANTOR’S GUARANTEED OBLIGATIONS UNCONDITIONAL

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  WAIVER AND AGREEMENT

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  ASSIGNMENT

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  WAIVER OF SUBROGATION

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  RIGHTS OF THE BENEFICIARIES

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  TERM OF GUARANTY

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES OF GUARANTORS

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  NOTICES, ETC

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  SEVERABILITY OF THIS GUARANTY

  
	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
   

  	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
   

  	
  TERMINATION

  



 

















 


GUARANTY


 


This GUARANTY (“Guaranty”), dated as of June 30,
2003, of MANDALAY RESORT GROUP, a Nevada corporation (“Mandalay”), MANDALAY CORP.,
a Nevada corporation, RAMPARTS, INC., a Nevada corporation, NEW CASTLE CORP., a
Nevada corporation and CIRCUS CIRCUS CASINOS, INC., a Nevada corporation (each,
a “Guarantor”
and collectively, “Guarantors”), is made in favor of WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, 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
June 30, 2003, entered into among Trustee, as Lessor, Mandalay and the
other Lessees party thereto, Guarantors, the Lenders identified on
Schedule III thereto, and Wells Fargo Bank Nevada, National Association,
as the Collateral Agent (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 and the rules of interpretation
set forth in such Appendix 1 shall apply to this Guaranty.


 


WHEREAS, pursuant to the Master Lease and the
Participation Agreement, Trustee has agreed, on behalf of the Trust and each
Lender, on each Advance Date, 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 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 portion - if
any - of the Guaranteed Obligations with respect to which such Guarantor is not
liable as a Lessee and provided further that no Guarantor shall
raise the foregoing limitation of liability as a defense to payment of any sum
under the Guaranty.


 


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


 


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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;


 


(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;


 


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(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; (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 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; (i) any
failure of any Beneficiary to file or enforce a claim in any bankruptcy or
other proceeding with respect to any Person; 
(j) 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; (k) any extension of credit or the grant of any
Lien under Section 364 of the Bankruptcy Code; (l) any use of cash
collateral under Section 363


 


4

















 


of the Bankruptcy Code; (m) any agreement or stipulation with
respect to the provision of adequate protection in any bankruptcy proceeding of
any Person; (n) the avoidance of any Lien in favor of any Beneficiary for
any reason; (o) 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; (p) 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 (q) 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 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.


 


5

















 


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 Lenders, 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, for a period of 367 days after 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.


 


6

















 


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
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 NEW YORK 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 Lenders).  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.


 


7

















 


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.


 


[Remainder of page intentionally left blank.]


 


8

















 


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


 


	
  GUARANTORS:

  	
  MANDALAY RESORT GROUP,

  
	
   

  	
  a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Glenn W. Schaeffer

  	
   

  
	
   

  	
   

  	
  Name:  Glenn
  W. Schaeffer

  
	
   

  	
   

  	
  Title: 
  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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Glenn W. Schaeffer

  	
   

  
	
   

  	
   

  	
  Name:  Glenn
  W. Schaeffer

  
	
   

  	
   

  	
  Title: 
  authorized signatory for each of the

  foregoing

  
	
   

  	
   

  
	
   

  	
  Address for all Guarantors:

  
	
   

  	
  c/o Mandalay Resort Group

  
	
   

  	
  3950 Las Vegas Boulevard South

  
	
   

  	
  Las Vegas, Nevada 
  89119

  
	
   

  	
   

  
	
   

  	
  Attn:  Glenn
  W. Schaeffer

  
	
   

  	
  President and Chief Financial Officer

  
	
   

  	
  Phone:

  	
  (702) 632-6708

  
	
   

  	
  Facsimile:

  	
  (702) 632-6822

  
					



 


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