EXHIBIT 10.4
FIRST AMENDMENT TO MORGANS LAS VEGAS, LLC
LIMITED LIABILITY COMPANY AGREEMENT
THIS FIRST AMENDMENT ("Amendment") made effective as of the 15th day of
May, 2006 ("Effective Date"), by and between MORGANS/LV INVESTMENT LLC, a
Delaware limited liability company ("Morgans"), and ECHELON RESORTS CORPORATION,
a Nevada corporation ("▇▇▇▇"). Morgans and ▇▇▇▇ may hereinafter be referred to
singularly as a "Party" or "Member" or collectively as the "Parties" and the
"Members".
W I T N E S S E T H:
WHEREAS, Morgans and ▇▇▇▇ entered into a certain Limited Liability Company
Agreement, dated January 3, 2006, for the formation of the Company (the
"Operating Agreement").
WHEREAS, each of the Members desire to enter into this Amendment to amend
the Operating Agreement upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual promises of the
Members and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Members agree as follows:
A. INCORPORATION OF RECITALS/DEFINITIONS. The foregoing recitals are hereby
incorporated herein and made a part hereof as if fully set forth herein. Unless
specifically defined herein, all defined terms used in this Amendment shall have
the same meanings as those set forth in the Operating Agreement.
B. OPERATIVE AMENDMENTS.
1. DEFINITIONS. The following definitions are hereby added to the Operating
Agreement:
"HARD ROCK PROPERTY" shall mean, collectively, (a) that certain hotel
casino property currently known as the "Hard Rock Hotel and Casino" and located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, comprised of, but not
necessarily limited to, ▇▇▇▇▇ County Assessor's Parcel Numbers 162-22-202-001,
002, and 003, 162-22- 103-004, 162-21-504-005, 162-21-602-002, 003, (b) any
expansions of such hotel casino property and improvements, and (c) other
adjacent or otherwise related properties and assets to be acquired by Morgans or
a Morgans Affiliate.
"NON-RECOURSE FINANCING" shall mean, in this instance, loan financing
pursuant to which neither Morgans Parent nor any of its Affiliates, shall have
any financial or credit obligations or any related liability to any lender or
other third party, related to any capital contributions or payment or credit
support arising from or related to such financing of the Hard Rock Property
(other than carve-outs and exceptions that may be reasonably customary for
non-recourse financings).
2. COLLATERAL FOR FUNDING OBLIGATIONS AND COMMITMENTS. The following new
Section 5.09 is hereby added to the Operating Agreement:
Section 5.09. MORGANS COLLATERAL AND FAILURE TO PROCEED.
(a) Upon the closing of the acquisition by Morgans or a Morgans
Affiliate of the Hard Rock Property, Morgans agrees to wire transfer to
▇▇▇▇, into a segregated account designated by ▇▇▇▇, a cash deposit in the
amount of Thirty Million Dollars ($30,000,000) (the "Deposit"), and such
Deposit shall be maintained in such account by ▇▇▇▇ and shall be retained
or applied by ▇▇▇▇, or refunded to Morgans, in accordance with this Section
5.09. As consideration for ▇▇▇▇'▇ agreement with respect to the acquisition
of the Hard Rock Property (as permitted by Section 8.05(b) of the Operating
Agreement, as amended pursuant to this Amendment), ▇▇▇▇ shall have the
right to retain and shall have no obligation to return or otherwise
reimburse to Morgans the amount of the Deposit upon the occurrence of any
of the following: (i) Morgans fails to satisfy any of its financial
commitments contained in this Operating Agreement following written notice
from ▇▇▇▇ and the expiration of any applicable cure period set forth in the
Operating Agreement and the Hotel Management Agreement, including, without
limitation, any obligation to fund a Capital Contribution or Cost Overruns,
and/or (ii) the Contribution Date does not occur prior to the Outside Start
Date ("Contribution Date Passage") due to a breach by Morgans of its
obligations under the Operating Agreement and/or the Hotel Management
Agreement following written notice from ▇▇▇▇ and expiration of all
applicable cure periods set forth in the Operating Agreement (the
occurrence of either (i) or (ii) above shall hereinafter be referred to as
a "Morgans Default"). In the event that the Contribution Date shall occur
in accordance with this Operating Agreement, then the amount of the Deposit
shall be applied by ▇▇▇▇ against the Morgans Capital Commitment required to
be contributed by Morgans on such date. The parties agree that the
Contribution Date Passage date shall be extended day for day as a result of
any decision by ▇▇▇▇, made prior to the Outside Start Date, to delay the
commencement of construction and/or pre-construction activities of a
material portion of Echelon Place (excluding the Hotels, to the extent
caused by a breach of Morgans as set forth above) beyond June 30, 2008.
Morgans and ▇▇▇▇ each agree to proceed at all times in good faith in
connection with the pre-development of the Hotels pursuant to the Operating
Agreement.
(b) Notwithstanding Section 4.03 or any other provision of the
Operating Agreement to the contrary, in the event of a Morgans Default,
▇▇▇▇ shall have the exclusive right to use at Echelon Place (and Morgans
shall not use within the greater Las Vegas metropolitan area, including,
but not limited to, ▇▇▇▇▇ County, Nevada), without payment of any fee or
any other compensation to the Company or to Morgans or any of its
Affiliates, (i) the plans, specifications, reports, test results or other
work product prepared in connection with the Project for ▇▇▇▇ to use in its
construction of the Hotels on the Land or anywhere else within Echelon
Place, and (ii) for the period of time commencing on the date of the
Contribution Date Passage or the dissolution of the Company as set forth
above through December 31, 2055, the names "Delano Las Vegas" and "Mondrian
Las Vegas", and other marks and names that are derivative from such names,
pursuant to the brand standards for the Delano and Mondrian brands in
effect
-2-
from time to time and pursuant to other customary non-monetary terms
and conditions for licensing arrangements of this type.
(c) Notwithstanding anything to the contrary contained in the
Operating Agreement or the Hotel Management Agreement, the Members agree
that in the event of a Morgans Default, ▇▇▇▇ may, in its sole discretion,
terminate the Hotel Management Agreement, and neither the Company nor any
Member or Affiliate of such Member, shall have any other rights or
obligations thereunder.
(d) Morgans agrees that to the extent a dispute arises between the
Members under the Operating Agreement or Hotel Management Agreement
relating to or arising from the use of the Morgans brand names by ▇▇▇▇, as
set forth above in Section 5.09(b) above, ▇▇▇▇ shall continue to have the
right to (i) use the Morgans Brand Names for the Hotels, during the
pendency of such dispute in accordance with such Section 5.09(b), and (ii)
use the plans and specifications and other materials referenced in Section
5.09(b)(i) above, regardless of the outcome of such dispute; provided,
however, that to the extent that it is determined by a court of law, with
proper jurisdiction over the dispute, that ▇▇▇▇ does not have a right to
use the Brand Names, the use of such Brand Names shall be discontinued by
▇▇▇▇ in accordance with such ruling or finding, as of that date, in
connection with ▇▇▇▇'▇ development, construction, and/or operation of the
Hotels.
(e) ▇▇▇▇ agrees that its rights under Section 5.09(a) and (b) shall be
deemed terminated and void upon the occurrence of any of the following on
or prior to the date of the Contribution Date Passage: (w) any sale or
other disposition or conveyance by ▇▇▇▇ or a ▇▇▇▇ Affiliate of (i) the Land
or a material portion thereof, or its direct or indirect interests therein
or (ii) its ownership interest in substantially all of the land on which
Echelon Place is to be built, if such sale or other disposition, as
contemplated under sections (i) and (ii) above, is made to a third party,
but which shall not include an entity that is a ▇▇▇▇ Affiliate or a ▇▇▇▇
Controlled Affiliate, provided that nothing in this clause (w) is intended
to, or shall have the effect of, granting to ▇▇▇▇ any rights with respect
to the direct or indirect transfer of the Land or ▇▇▇▇'▇ interests therein
beyond ▇▇▇▇'▇ rights as currently set forth in the Operating Agreement
(without giving effect to this Amendment), (x) the occurrence of the
Contribution Date Passage for any reason other than a Morgans Default, (y)
a merger, sale, consolidation or other transaction (or series of
transactions) shall occur resulting in the change of the direct or indirect
ownership of 50% or more of the outstanding common stock of ▇▇▇▇ Parent,
other than (i) through the trading of publicly held securities in the
ordinary course or (ii) as a result of transfers between and among family
members of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, including estate planning related transfers, or
(z) the acquisition by ▇▇▇▇ of the Morgans Interest pursuant to Section
12.05 of the Operating Agreement. Upon the occurrence of any such event
described in this Section 5.09(e), ▇▇▇▇ shall not have the right to retain,
and shall promptly return or otherwise reimburse to Morgans, the amount of
the Deposit and ▇▇▇▇ shall have no rights under Section 5.09(b) above.
(f) The obligations of ▇▇▇▇ under this Section 5.09 shall be
guaranteed by the ▇▇▇▇ Parent.
-3-
(g) The obligations of Morgans under this Section 5.09 shall be
guaranteed by the Morgans Parent.
3. DUTIES AND CONFLICTS. The following sentence shall be added at the end
of Section 8.05(b) of the Operating Agreement:
"Notwithstanding anything in this Section 8.05(b), the provisions of this
subsection shall not apply to any acquisition, investment, management,
development or other activity described in the preceding sentence by
Morgans or any Morgans Affiliate in, at (or of) the Hard Rock Property.
In addition, the provisions of Section 3.5 of the Hotel Management
Agreement shall not be applicable to the Hard Rock Property, and the Hotel
Management Agreement shall be deemed to be amended by this sentence in
accordance with Section 22.13 of the Hotel Management Agreement."
4. ADDITIONAL REPRESENTATION AND COVENANT. As a material inducement to ▇▇▇▇
to enter into this Amendment, Morgans represents, warrants and covenants with
▇▇▇▇ that any financing obtained in connection with the acquisition of the Hard
Rock Property shall be Non-Recourse Financing with respect to Morgans Parent and
any of its Affiliates.
C. EFFECTIVE UPON HARD ROCK CLOSING. Notwithstanding anything in this
Amendment to the contrary, this Amendment shall only be effective upon, and
shall have no force or effect prior to, the closing by a Morgans Affiliate of
the acquisition of the Hard Rock Property. If, prior to the date of the
Contribution Date Passage, the agreement of a Morgans Affiliate to acquire the
Hard Rock Property shall terminate and if Morgans shall notify ▇▇▇▇ in writing
of such termination, then this Amendment shall thereafter be null, void and of
no force or effect.
D. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed to be the same document. The
provisions of this Amendment shall survive any termination or dissolution of the
Company.
E. NO OTHER AMENDMENTS. Except as specifically amended hereby, all of the
other terms and conditions of the Operating Agreement remain in full force and
effect in accordance with its terms.
F. GOVERNING LAW. All questions concerning the construction, validity, and
interpretation of this Amendment will be governed by and construed in accordance
with the internal law (and not the law of conflicts) of Delaware.
[SIGNATURE PAGE FOLLOWS]
-4-
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the day
and year first above set forth.
MORGANS/LV INVESTMENT LLC
By: Morgans Group LLC
By: /s/ W.▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: W.▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
AS TO SECTIONS 5.06(a) and 5.09 OF THE
OPERAGREEMENT AS AMENDED HEREBY ONLY:
MORGANS HOTEL GROUP CO.
By: /s/ W.▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: W.▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
[SIGNATURES CONTINUE ON NEXT PAGE]
-5-
[SIGNATURES CONTINUED]
ECHELON RESORTS CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President and Treasurer
AS TO SECTIONS 4.02(c), 5.06(b), 5.09, 8.05(c)
AND 11.02(b) ONLY OF THE OPERATING AGREEMENT AS
AMENDED HEREBY:
▇▇▇▇ GAMING CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
Finance and Treasurer
[SIGNATURES CONTINUE ON NEXT PAGE]
-6-
[SIGNATURES CONTINUED]
The Parties to the Hotel Management Agreement
have executed this Amendment below for purposes
of amending the Hotel Management Agreement
pursuant to the last sentence of Section (B)(3)
of this Amendment:
OWNER
MORGANS LAS VEGAS, LLC
By: Echelon Resorts Corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President and Treasurer
OPERATOR
MORGANS/LV MANAGEMENT LLC
By: Morgans Hotel Group Management LLC
By: Morgans Group LLC
By: Morgans Hotel Group Co.
By: /s/ W.▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Name: W.▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
-7-