exv10w4






Exhibit 10.4




Loan Number: 2757504497




UNCONDITIONAL GUARANTY




     THIS UNCONDITIONAL GUARANTY is executed by the undersigned on this 28th day of October, 2008.



     LYLE BERMAN (the “Guarantor”), hereby requests and authorizes FIRST STATE BANK (“Lender”) to
extend credit to LAKES ENTERTAINMENT, INC. (the “Borrower”), an affiliate of the Guarantor,
pursuant to the terms and conditions of, among other documents:




	 	(a)	 	that $8,000,000 Secured Line of Credit Promissory Note;
	 
	 	(b)	 	that Mortgage, Security Agreement, and Absolute Assignment of Rents (the
“Mortgage”);
	 
	 	(c)	 	that Secured Line of Credit Loan Agreement;
	 
	 	(d)	 	that Regulatory Indemnification Agreement;
	 
	 	(e)	 	that Collateral Assignment of Life Insurance Policy; and
	 
	 	(f)	 	that Absolute Assignment of Leases, Rents, Contracts, Permits and Agreements, all of
even date herewith




all of the above-referenced documents, along with all other documents executed by Borrower and
Guarantor to and in favor of Lender, being collectively referred to herein as the “Loan Agreement.”




     It is recognized and agreed that Guarantor is a key employee, shareholder, and chief executive
officer of Borrower and will receive substantial financial consideration, benefit and gain as a
result of Lender’s extension of credit to Borrower and Guarantor’s execution of this document.



     In consideration of the granting of said financial and credit accommodations by Lender to
Borrower, and for other good and valuable consideration, and recognizing that Lender would not
otherwise advance a loan to Borrower absent the execution of this Unconditional Guaranty by
Guarantor, Guarantor hereby covenant and agrees with Lender as follows:



     1. Performance. Guarantor hereby guarantees the prompt payment and performance, on
demand, of:




	 	(a)	 	All of Borrower’s financial and other obligations and liabilities of every
nature as are set forth and specified in the Loan Agreement and in all other documents
referenced in the Loan Agreement or otherwise pertaining to the subject financial
transaction;
	 
	 	(b)	 	All of Borrower’s present and future obligations and indebtedness incurred or
created with respect to the Loan Agreement or which otherwise may be created and
reduced to writing by and between Lender and Borrower; and
	 
	 	(c)	 	Any and all obligations of Borrower under the terms of the Loan Agreement or
any instrument evidencing, securing or pertaining thereto.




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Loan Number: 2757504497



Time is of the essence in connection with the performance of Guarantor’s obligations hereunder.
Payment shall be made in any certified and readily-available funds that, at the time of payment,
are legal tender in the United States of America for public and private debts. Guarantor’s
obligations hereunder are unconditional and irrevocable.




     2. Change of Terms. In such manner, upon such terms, and at such times as Lender
deems best, and without notice to the undersigned, by agreement between them, Lender and Borrower
may alter, compromise, accelerate, extend, or change the time or manner for the payment of the
indebtedness hereunder or the performance of any other obligation hereby guaranteed; release
Borrower, by acceptance of a deed in lieu of foreclosure or otherwise, as to all or any portion of
the indebtedness; release, substitute, or add any one or more guarantors or endorsers; accept
additional or substituted security therefor; or exchange, release, surrender, realize upon, or
subordinate any security therefor or deal with it in any manner that Lender may determine. No
exercise or non-exercise by Lender of any right hereby given Lender, no dealing by Lender with
Borrower or guarantor, endorser, or any other person, and no change, impairment, or suspension of
any right or remedy of Lender shall in any way affect any of the obligations of Guarantor hereunder
or any security furnished by Guarantor or give Guarantor any recourse against Lender.



     3. Continuing Guaranty. This is a continuing guaranty relating to any and all
indebtedness extended by Lender to Borrower in connection with the Loan Agreement from time to
time. This continuing guaranty shall ensure the payment and performance by Guarantor of all
renewals, modifications and/or extensions of the Loan Agreement.



     4. All Liability Included. The guaranteed debt includes, without limit, all liability
of the Borrower to the Lender, whether now or hereafter incurred under the Loan Agreement, and any
other document executed in connection therewith or otherwise executed by Borrower or its affiliates
in favor of Lender up to a principal amount of $8,000,000 plus all other amounts owed pursuant to
the Loan Agreement. Termination of this Guaranty shall be effective only as to that portion of the
debt incurred after written notice of termination has been received by an officer of Lender, and
this Guaranty shall remain in full force and effect as to all debt incurred before that time
including loan commitments. Regardless of when a renewal, extension, or pre-termination of the
debt guaranteed hereby occurs (with or without adjustment of interest rate or other terms), the
debt is deemed to have been incurred prior to termination to the extent of the renewal or extension
and to be fully covered by this Guaranty.



     5. Security Interest. In addition to all liens and rights of setoff given to Lender
by law against any property of Borrower or of Guarantor, Lender shall have a general lien on and
security interest in and a right of setoff against all property of Guarantor now or hereafter in
the physical possession of or on deposit with Lender, whether held in a general or special account,
on deposit or for safekeeping or otherwise. Each such lien, security interest, and right of setoff
may be enforced or exercised without demand upon or notice to Guarantor (unless such notice or
demand is required by statute), shall continue in full force unless specifically waived or released
by Lender in writing and shall not be deemed waived by any conduct of Lender, by any failure of
Lender to exercise any
such right of setoff or to enforce any such lien or security interest or by any neglect or
delay in so doing.



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Loan Number: 2757504497




     6. Waiver. Guarantor hereby waives and agrees not to assert or take advantage of:




	 	(a)	 	Any right to require Lender to proceed against Borrower or any other person or
to proceed against or exhaust any security held by Lender at any time or to pursue any
other remedy in Lender’s power before proceeding against Guarantor;
	 
	 	(b)	 	The defense of the statute of limitations in any action hereunder or in any
action for the collection of the Loan Agreement or the performance of any other
obligation hereby guaranteed;
	 
	 	(c)	 	Any defense that may arise by reason of the incapacity, illegality, lack of
authority, death or disability of any other person or persons or the failure of Lender
to file or enforce a claim against the estate (in administration, bankruptcy or any
other proceeding) of any other person or persons;
	 
	 	(d)	 	Demand, protest, and notice of any kind including, without limiting the
generality of the foregoing, notice of the existence, creation, or incurring of any new
or additional indebtedness or obligation or of any action or non-action on the part of
Borrower, Lender, and endorser or creditor of Borrower or Guarantor or on the part of
any other person whomsoever under this or any other instrument in connection with any
obligation or evidence of indebtedness held by Lender as collateral or in connection
with the Loan Agreement or any other obligation hereby guaranteed;
	 
	 	(e)	 	Any defense based upon an election of remedies by Lender, including without
limitation an election to proceed by non-judicial rather than judicial foreclosure,
which destroys or otherwise impairs the subrogation rights of Guarantor or the rights
of Guarantor to proceed against Borrower for reimbursement, or both; and
	 
	 	(f)	 	Any duty on the part of Lender to disclose to Guarantor any facts Lender may
now or hereafter know about Borrower, regardless of whether Lender has reason to
believe that any such facts materially increase the risk beyond that which Guarantor
intends to assume or has reason to believe that such facts are unknown to Guarantor or
has a reasonable opportunity to communicate such facts to Guarantor, it being
understood and agreed that Guarantor is fully responsible and has the means available
for being and keeping informed of the financial condition of Borrower and of all
circumstances bearing on the risk of non-payment of the Loan Agreement or
nonperformance of any other obligation hereby guaranteed.




The foregoing is not to be construed as a waiver of any notice requirement explicitly set forth in
the Loan Agreement or related documents.




     7. Guarantor Information. Guarantor warrants to Lender that he has adequate means to
obtain from Borrower, on a continuing basis, information concerning the financial condition of
Borrower and that he is not relying on Lender to provide such information either now or in the



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Loan Number: 2757504497



future. Guarantor shall supply to Lender his financial statement on Lender’s written request and
in no event more frequently than on each anniversary date of this Loan Agreement and otherwise as
reasonably requested by Lender. Guarantor covenants and agrees that he will always be fully
informed regarding the status of the Loan Agreement, all advances of principal under the Loan
Agreement, the in-balance or out-of-balance nature of the Loan Agreement, and all other financial
and other aspects of every nature pertaining to the Loan Agreement. Lender will possess no
obligation of any nature to provide Guarantor with any information regarding the status of the Loan
Agreement.




     8. Subrogation. Until all obligations outstanding in connection with the Loan
Agreement have been paid in full, Guarantor shall have no right of subrogation and waives any right
to enforce any remedy that Lender now has or may hereafter have against Borrower and any benefit
of, and any right to participate in, any security now or hereafter held by Lender. Until all
obligations outstanding in connection with the Loan Agreement have been paid in full, Guarantor
shall not be a creditor with respect to this Guaranty in any bankruptcy proceeding by or against
Borrower. Instead, Guarantor shall be an “entity” under the bankruptcy code in any such
proceeding. Until all obligations outstanding in connection with the Loan Agreement have been paid
in full, Guarantor shall have neither a contingent nor a non-contingent claim against Borrower
under this Guaranty.



     9. Subordination. Except as otherwise provided in this Paragraph, all existing and
future indebtedness of Borrower to Guarantor or to any person owned in whole or in part by
Guarantor and, if Borrower is a partnership, the right of Guarantor to cause or permit any person
owned in whole or in part by Guarantor to withdraw any capital invested by such person in Borrower,
is hereby subordinated to the obligations under the Loan Agreement and, following an Event of
Default (as defined in the Loan Agreement) without the prior written consent of Lender, such
subordinated indebtedness shall not be paid or withdrawn in whole or in part nor will Guarantor
cause or permit any person owned in whole or in part by Guarantor to accept any payment of or on
account of any such indebtedness or as a withdrawal of capital while this Guaranty is in effect.
At Lender’s request, Guarantor shall cause Borrower to pay to Lender all or any part of such
subordinated indebtedness and any capital which any such person owned by any Guarantor is entitled
to withdraw. Each such payment by Borrower in violation of this Guaranty following an Event of
Default shall be received by the person to whom paid in trust for Lender, and Guarantor shall cause
the same to be paid to Lender immediately on account of the indebtedness.



     10. Bankruptcy. Except as provided in Paragraph 8 above, Guarantor shall file in any
bankruptcy or other proceeding in which the filing of claims is required by law, all claims which
Guarantor may have against Borrower relating to any indebtedness of Borrower to Guarantor and will
assign to Lender all rights of Guarantor thereunder. If Guarantor does not file any such claim,
Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor
or, in Lender’s discretion, to assign the claim to a nominee and to cause proof of claim to be
filed in the name of Lender’s nominee. In all such cases, whether in administration, bankruptcy or
otherwise, the person or persons authorized to pay such claim shall pay to Lender the full amount
hereof and, to
the full extent necessary for that purpose; Guarantor hereby assigns to Lender all of
Guarantor’s rights to any such payment or distributions to which Guarantor would otherwise be
entitled.



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Loan Number: 2757504497




     11. Application of Payment. With or without notice to Guarantor, Lender, in Lender’s
sole discretion and at any time and from time to time and in such manner and upon such terms as
Lender deems fit, may apply any or all payments or recoveries from Borrower or from any other
Guarantor or endorser under any other instrument or realized from any security, in such manner and
order of priority as Lender may determine, to any indebtedness of Borrower to Lender, whether or
not such indebtedness is guaranteed hereby or is otherwise secured or is due at the time of such
application. Any recovery realized from any other Guarantor under any other instrument shall be
first credited upon that portion (if any) of the indebtedness of Borrower to Lender that is not
guaranteed hereby.



     12. Cumulative Rights. The amount of Guarantor’s liability and 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, including any other guarantee executed by Guarantor relating to any
indebtedness of Borrower to Lender, shall be cumulative and not alternative and such rights, powers
and remedies shall be in addition to all rights, powers and remedies given to Lender by law. This
Guaranty is in addition to and exclusive of the guarantee of any other Guarantor of any
indebtedness of Borrower to Lender.



     13. Independent Obligations. The obligations of Guarantor hereunder are independent
of the obligations of Borrower and, in the event of any default hereunder, a separate action or
actions may be brought and prosecuted against Guarantor whether or not Borrower is joined therein
or a separate action or actions are brought against Borrower. In this regard, Guarantor waives any
right to require Lender to (a) proceed against Borrower, (b) proceed against or exhaust any
security held by Lender for payment of the note executed by Borrower pursuant to the Loan
Agreement, or (c) pursue any other remedy that Lender has or to which it may be entitled. Without
limiting the foregoing, Guarantor waives any necessity or requirement, substantive or procedural,
that an action previously be commenced or a judgment previously be rendered against Borrower or any
other person or entity or that any other person or entity be joined in such cause or that a
separate action be brought against Borrower or any other person or entity. Lender may maintain
successive actions for other defaults. Lender’s rights hereunder shall not be exhausted by its
exercise of any of its rights or remedies or by any such action or by any number of successive
actions until and unless all sums owing to Lender in connection with the Loan Agreement have been
paid in full and all other obligations hereby guaranteed have been fully performed.



     14. Costs and Fees. Guarantor shall pay to Lender, promptly upon demand, reasonable
attorneys’ fees and all costs and other expenses that Lender expends or incurs in collecting or
compromising the indebtedness under the Loan Agreement or any other obligation hereby guaranteed or
in enforcing this Guaranty against Guarantor whether or not suit is filed, expressly including
without limitation all costs, attorneys’ fees and expenses incurred by Lender in connection with
any insolvency, bankruptcy, reorganization, arrangement or similar proceedings involving Guarantor
that in any way affect the exercise by Lender of its rights and remedies hereunder.



     15. Severability. Should any one or more provisions of this Guaranty be determined to
be illegal or unenforceable, all other provisions shall nevertheless be effective.



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Loan Number: 2757504497




     16. Binding Effect. This Guaranty shall inure to the benefit of Lender, its
successors and assigns, including the assignees of any indebtedness hereby guaranteed, and shall
bind the heirs, executors, administrators, successors and assigns of Guarantor. This Guaranty may
be assigned by Lender with respect to all or any portion of the Loan Agreement, and when so
assigned Guarantor shall be liable under this Guaranty to the assignee(s) of the portion(s) of the
Loan Agreement so assigned without in any manner affecting the liability of Guarantor hereunder to
Lender with respect to any portion of the Loan Agreement retained by Lender.



     17. Expiration. Upon the payment in full to Lender of all sums owing to Lender in
connection with the Loan Agreement and the full performance of all other obligations of Borrower to
Lender hereby guaranteed, this Guaranty shall be of no further force or effect.



     18. Reasonableness. Guarantor warrants and agrees that each of the waivers set forth
in this Guaranty are made with Guarantor’s full knowledge of their significance and consequences,
and that under the circumstances, the waivers are reasonable and not contrary to public policy or
law. No provisions of this Guaranty or right of Lender hereunder can be waived nor can Guarantor
be released from his obligations hereunder except by a writing duly executed by an authorized
officer of Lender.



     19. Terminology. When the context and construction so require, all words used in the
singular herein shall be deemed to have been used in the plural and the masculine shall include the
feminine and neuter and vice versa. The word “person” as used herein shall include any individual,
company, firm, association, partnership, corporation, trust or other legal entity of any kind
whatsoever.



     20. Exclusive Statement. This writing is intended by the parties as a final
expression of this Unconditional Guaranty and is also intended as a complete and exclusive
statement of the terms hereof. No course of dealing, course of performance or trade usage, and no
parol evidence of any nature shall be used to supplement or modify any terms. Nor are there any
conditions to the full effectiveness of this agreement.



     21. Joint and Several Liability. If two or more persons are signing this Guaranty as
Guarantor, then all such persons shall be jointly and severally liable for the obligations of
Guarantor hereunder.



     22. Waiver of Change. Guarantor hereby expressly waives (a) any renewals or
extensions of time for payment of the guaranteed debt (b) any changes in the terms of the
guaranteed debt including increase or decrease in installment payments or any interest rate
adjustments, or (c) any other change in the guaranteed debt including a change in the business
structure of the Borrower.



     23. Dealing with Security Interest. The undersigned Guarantor hereby expressly waives
(a) surrender, release, exchange, substitution, dealing with or taking any additional collateral,
(b) abstaining from taking advantage of or realizing upon any security interest, or other
guarantee, (c) any impairment of collateral by Lender including but not limited to, failure to
perfect a security



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Loan Number: 2757504497



interest in the collateral, and (d) any impairment by Lender of Guarantor’s
rights of recourse against other parties.




     24. Unconditional Liability. Guarantor has signed this Unconditional Guaranty and has
unconditionally delivered it to Lender, and failure to sign this or any other guaranty by any other
person shall not discharge the liability of any signer. The unconditional liability of the signers
applies whether signer is jointly and severally liable for the entire amount of the debt, or for
only a pro rata portion.



     25. Errors and Omissions. Guarantor hereby waives all errors and omissions in
connection with Lender’s administration of the guaranteed debt, except behavior which amounts to
bad faith.



     26. Remedies. As a condition of the payment or performance by Guarantor, Lender is
not required to enforce any remedies against Borrower or any other party liable to Lender on
account of the guaranteed debt. Nor is Lender required to seek to enforce or resort to any
remedies with respect to any security interest, lien or encumbrance to Lender by the Borrower or
any other party.



     27. Enforceability. This Unconditional Guaranty remains fully enforceable
irrespective of any defenses which Borrower may assert on the underlying debt, including but not
limited to failure of consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction, and usury.



     28. Liability for Full Amount. Guarantor agrees that, if at any time all or any part
of any payment previously applied by Lender to any of the guaranteed debt must be returned by
Lender for any reason, whether by court order, or settlement, the Guarantor remains liable for the
full amount returned as if such amount had never been received by Lender notwithstanding any
termination of the guaranty agreement or cancellation of any note or other agreement evidencing the
obligation of Borrower.



     29. Governing Law. This Guaranty shall be governed by and construed in accordance
with the laws of the State of Arkansas. Except as provided in any other written agreement now or
at any time hereafter in force between Lender and Guarantor, this Guaranty shall constitute the
entire agreement of Guarantor with Lender with respect to the subject matter hereof, and no
representation, understanding, promise or condition concerning the subject matter hereof shall be
binding upon Lender unless expressed herein. Guarantor hereby irrevocably consents to the
exclusive jurisdiction of the courts of the State of Arkansas with respect to any action or
proceedings arising between the parties and expressly covenants and agrees that the exclusive
jurisdiction for all disputes and enforcement actions arising hereunder shall occur in Faulkner
County, Arkansas.



     30. JURY WAIVER. GUARANTOR HEREBY WAIVES GUARANTOR’S RIGHT TO A JURY TRIAL IN THE
EVENT OF ANY DISPUTE OR LITIGATION ARISING HEREUNDER OR UNDER ANY RELATED DOCUMENTS EXECUTED IN
CONNECTION HEREWITH.



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Loan Number: 2757504497




     31. Multiple Counterpart Execution. It is expressly agreed and understood that this
document is being executed in multiple counterparts and with multiple signature pages and that all
signature pages, when attached to and assembled with this document, shall constitute and comprise a
single document that is enforceable against all parties on all signature pages in accordance with
this document’s terms.



     32. Notices. All notices or other written communications hereunder shall be deemed to
have been properly given (a) upon delivery, if delivered in person or by facsimile transmission
with receipt acknowledged by the recipient thereof, (b) one (1) Business Day (defined below) after
having been deposited for overnight delivery with any reputable overnight courier service, or (c)
three (3) Business Days after having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:


If to Guarantor:



LYLE BERMAN

c/o Berman Consulting Corp.

130 Cheshire Lane, Suite 101

Minnetonka, Minnesota 55305-1062



With a copy to:



MASLON EDELMAN BORMAN & BRAND, LLP

3300 Wells Fargo Center

90 South Seventh Street

Minneapolis, Minnesota 55402

Attn: Neil I. Sell



If to Lender:



FIRST STATE BANK

Attn: Randy Sims

620 Chestnut Street

Conway, Arkansas 72032



With a copy to:



GILL ELROD RAGON OWEN & SHERMAN, P.A.

Attn: Daniel Goodwin

425 West Capitol Avenue, Suite 3801

Little Rock, Arkansas 72201



or addressed as such party may from time to time designate by written notice to the other parties.




     Either party by notice to the other may designate additional or different addresses for
subsequent notices or communications.



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Loan Number: 2757504497




     For purposes of this Subsection, “Business Day” shall mean a day on which commercial banks are
authorized to conduct business or Lender is open for business in the State of Arkansas.



[The remainder of this page intentionally left blank;

signatures appear on next page.]




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Loan Number: 2757504497


[Unconditional Guaranty Signature Page]


     THIS UNCONDITIONAL GUARANTY is executed on the date set forth in the preface.


	 	 	 	 	 
	 	GUARANTOR:
 	 
	 	/s/ Lyle Berman 	 
	 	Lyle Berman 	 
	 	 	 
	 



ACKNOWLEDGMENT



STATE OF MINNESOTA )

                                              )ss.

COUNTY OF HENNEPIN )



     On the 27 day of October, 2008, personally appeared before me, the undersigned
authority, duly commissioned and qualified in and for said county and state, the within named LYLE
BERMAN, duly identified before me, who acknowledged that he is the Guarantor in the foregoing
Unconditional Guaranty.


     WITNESS my hand and official seal at my office in the state and county aforesaid on this 27 day of October, 2008.


	 	 	 	 	 
		 	 
	
/s/ Damon E. Schramm 	 
	Notary Public
 	 
	My Commission expires:

Jan 31, 2001 	 
	 



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