THIRD AMENDMENT TO MORGANS LAS VEGAS, LLC LIMITED LIABILITY COMPANY AGREEMENT
Exhibit 10.1
THIRD AMENDMENT TO MORGANS LAS VEGAS, LLC
THIS THIRD AMENDMENT (“Amendment”) is made effective as of the 23rd day of September, 2008
(“Effective Date”), by and between MORGANS/LV INVESTMENT LLC, a Delaware limited liability company
(“Morgans”), and ECHELON RESORTS CORPORATION, a Nevada corporation (“Xxxx”). Morgans and Xxxx 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 Xxxx entered into a certain Limited Liability Company Agreement, dated
January 3, 2006, for the formation of the Company (the “Original Agreement”).
WHEREAS, Morgans and Xxxx amended the Original Agreement pursuant to that certain First
Amendment to Morgans Las Vegas, LLC Limited Liability Company Agreement made effective as of May
15, 2006 (the “First Amendment”).
WHEREAS, Morgans and Xxxx further amended the Original Agreement pursuant to that certain
Second Amendment to Morgans Las Vegas, LLC Limited Liability Company Agreement made effective as of
June 30, 2008 (the “Second Amendment” and together with the Original Agreement and the First
Amendment, the “Operating Agreement”).
WHEREAS, the Members have jointly decided to delay the construction of the Hotels based upon
credit market conditions and the availability of satisfactory financing.
WHEREAS, the Members desire to extend the Outside Start Date and make certain other
modifications and amendments to the Operating Agreement.
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. Revised Definitions
The following definitions of the Operating Agreement are hereby amended and restated in their
entirety to read as follows:
“Outside Start Date” shall mean December 31, 2009.
2. New Definition
The following new definitions shall be added to the Operating Agreement:
“Early Termination Notice” shall mean a notice provided by either Morgans or Xxxx as
set forth in Section 4.03(c).
“Operating Agreement” or “Agreement” shall mean the Morgans Las Vegas, LLC
Limited Liability Company Agreement, dated as of January 3, 2006, between Morgans and Xxxx, as
amended by the First Amendment to Morgans Las Vegas, LLC Limited Liability Company Agreement, dated
as of May 15, 2006; the Second Amendment to Morgans Las Vegas, LLC Limited Liability Company
Agreement, dated as of June 30, 2008; and the Third Amendment.
“Third Amendment” shall mean the Third Amendment to Morgans Las Vegas, LLC Limited
Liability Company Agreement, dated as of September 23, 2008.
3. Modifications to Operating Agreement; Outside Start Date
Section 4.03 is hereby deleted in its entirety and replaced with the following:
“Section 4.03 Modifications to Operating Agreement; Outside Start Date.
(a) As soon as practicable after the date hereof and in any event prior to the
Contribution Date, the Members shall seek to agree upon modifications to this Agreement (to
be approved by each Member, in its sole and absolute discretion) to provide for (i) a
reduced Percentage Interest for each Member in the Company (and in connection therewith,
the Members may elect to obtain additional third party equity to cover any shortfall in the
required equity for the Project as a result of such reduction), (ii) a reduction in
Morgans’ Capital Commitment, and in Morgans’ and Xxxx’x respective Capital Contribution
obligations, to an amount equal to (x) Morgans’ and Xxxx’x pro rata share of
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Predevelopment Costs incurred by the Company through the date of the Third Amendment
pursuant to the Predevelopment Budgets previously approved by Morgans and Xxxx, together
with the payments made pursuant to Section 6(a) and Section 6(b) of the Third Amendment,
plus (y) Morgans’ and Xxxx’x pro rata share of Predevelopment Costs incurred by the
Company from October 1, 2008 through December 31, 2009 pursuant to the new Predevelopment
Budget as described in Section 7 of the Third Amendment, plus (z) such additional
amounts (if any) as may be determined by each of Morgans and Xxxx in their sole discretion,
respectively, (iii) such other amendments to this Agreement that either Member deems
appropriate as a result of such reductions. In amplification and not in limitation of the
foregoing, and notwithstanding anything to the contrary in this Agreement, the definition
of Morgans Capital Commitment set forth in Section 1.01 of this Agreement, and the Capital
Contribution amounts and requirements of each Member as set forth in Section 5.01(b) and
5.01(c) of this Agreement, shall be null, void and of no further force or effect unless and
until the Members mutually agree upon amendments to such provisions as described in the
preceding sentence.
(b) Notwithstanding anything to the contrary contained herein, if for any reason (i)
the Contribution Date has not occurred on or prior to the Outside Start Date (including as
a result of the issuance of an Early Termination Notice) or (ii) the Members have not, upon
the occurrence of the Outside Start Date, amended this Agreement in writing to reduce their
Percentage Interests, and to make such other amendments to this Agreement as provided in
Section 4.03(a), either Member may dissolve the Company. Upon such dissolution (or
dissolution pursuant to Section 4.03(c) below), this Agreement shall terminate, and neither
Member shall have any claim against the other Member for any costs or expenses incurred or
spent as of such dissolution date, including but not limited to the Predevelopment Costs
funded by such Member and any other such pursuit costs incurred by such Member nor shall
either Member have any other liability or obligation to each other of any kind pursuant to
this Agreement except for (i) any costs or expenses incurred by the Company or Members
prior to such dissolution date, that have not been the subject of a funded Capital Call
Notice, to the extent such costs and expenses are consistent with the Predevelopment
Budget, and (ii) any obligations or liabilities that expressly survive the termination of
this Agreement as provided in this Section 4.03.
(c) Either Member may also dissolve the Company and terminate this Agreement prior to
the Outside Start Date, for any reason in its sole discretion, upon twenty (20) days prior
written notice to the other Member with a reference to this Section 4.03(c) (an “Early
Termination Notice”).
(d) In the event of any dissolution of the Company and termination of this Agreement
by either Member pursuant to this Section 4.03 following the passage of the Outside Start
Date or upon the issuance of an Early Termination Notice by Morgans or Xxxx, then neither
Party shall be entitled to the use or ownership of any plans, specifications, drawings,
reports, test results or other materials
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prepared by or on behalf of the Company with respect to the Project, without the prior
written consent of the other Party. Each Party unconditionally and irrevocably waives and
releases all claims against the other Party arising in connection with such dissolution and
termination, including (without limitation) any claims alleging a failure of the other
Party to negotiate in good faith; provided, however, nothing contained herein shall relieve
the Members’ obligations to fund or reimburse amounts provided for under the Predevelopment
Budget as of such dissolution or termination date or otherwise provided under Section
4.03(b) above. The provisions of this Section 4.03 shall survive the dissolution of the
Company or the termination or expiration of this Agreement.”
4. Section 5.09 and the Deposit
Section 5.09 is hereby deleted in its entirety. Contemporaneously with the execution and
delivery of this Third Amendment, Xxxx shall return to Morgans by wire transfer (x) the Deposit in
the amount of $30,000,000, plus (y) fifty percent (50%) of the interest earned on the
Deposit through September 21, 2008, in the amount of $1,047,645.54, less the $1,541,714
amount described in Section 6(d) hereof. Xxxx shall retain fifty percent (50%) of the interest
earned on the Deposit. Morgans and Xxxx agree that this reimbursement constitutes a complete and
final release and satisfaction of each Member’s obligations related to or arising from the Deposit,
provided that (a) each Member is responsible for all income taxes payable in respect of its portion
of such interest on the Deposit, and (b) Xxxx shall promptly wire to Morgans (or Morgans shall be
entitled to a credit in the Company’s records for) fifty percent (50%) of all interest accrued on
the Deposit in Xxxx’x account after September 21, 2008.
5. Additional Modifications
(a) The following provisions of the Operating Agreement are hereby deleted from the Operating
Agreement: (i) Definition of “Construction Loan Guaranty”; (ii) Second sentence of definition of
“Cost Overruns”; (iii) “Echelon Place Cost Overrun”; (iv) Section 4.01; (v) Section 5.01(b) and
5.01(c); (vi) Section 5.02; (vii) Section 5.06(a) and Exhibit K; (viii) Section 9.03; and (ix)
Section 9.06.
(b) The letter agreement between Morgans and Xxxx dated May 15, 2006 is hereby terminated and
is null, void and of no further force or effect.
6. Certain Payments
(a) Morgans and Xxxx hereby approve, and agree to fund, a Capital Call in the aggregate amount
of $3,946,009 in respect of certain pre-development costs identified in a letter from Xxxx to
Morgans dated September 12, 2008 (the “9/12/08 Invoice”). Morgans and Xxxx agree that the payment
of such Capital Call by both Parties is reflected in the net payment from Xxxx to Morgans set forth
in Section 6(d) below, and such net payment constitutes a complete and final release and
satisfaction of Morgans’ obligations, and the Company’s obligations to Xxxx, related to or arising
from the 9/12/08 Invoice and the costs described therein. Xxxx shall pay all costs set forth in
the
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9/12/08 Invoice by the date fifteen (15) business days after the later of (x) the date of this
Amendment, or (y) receipt of an invoice for the applicable cost, and Xxxx shall have no further
claim against Morgans or the Company for the costs described in the 9/12/08 Invoice or any costs
for similar or related items unless specifically set forth in the revised Predevelopment Budget
described in Section 7 hereof. Morgans and Xxxx shall each receive Capital Contribution credit for
fifty percent (50%) of the amount of the Capital Call described in this Section 6(a).
(b) Morgans and Xxxx further approve, and agree to fund, a Capital Call in the aggregate
amount of $862,581 in respect of certain close-out obligations to third parties and reimbursable
expenses paid or to be paid by Morgans on behalf of the Company, as provided by Morgans to Xxxx in
a schedule dated September 22, 2008 (the “9/22/08 Invoice”). Morgans and Xxxx agree that the
payment of such Capital Call by both parties is reflected in the net payment set forth in Section
6(d) below, and such net payment constitutes a complete and final release and satisfaction of
Xxxx’x obligations, and the Company’s obligation to Morgans, related to or arising from the 9/22/08
Invoice and the costs described therein. Morgans shall pay all costs set forth in the 9/22/08
Invoice by the date fifteen (15) business days after the later of (x) the date of this Amendment,
or (y) receipt of an invoice for the applicable cost and Morgans shall have no further claim
against Xxxx or the Company for the costs described in the 9/22/08 Invoice or any costs for similar
or related items unless specifically set forth in the revised Predevelopment Budget described in
Section 7 hereof. Morgans and Xxxx shall each receive Capital Contribution credit for fifty
percent (50%) of the amount of the Capital Call described in this Section 6(b).
(c) The amounts described in this Section 6 represent a complete, final and binding
determination of all unpaid Predevelopment Costs incurred by or on behalf of the Company through
September 30, 2008.
(d) The wire transfer from Xxxx to Morgans of $31,047,645.54 shall be reduced by $1,541,714,
for a total net payment of $29,505,931.54, which represents the net amount payable by Xxxx to
Morgans after taking into account certain outstanding Capital Call amounts owed by Xxxx and Morgans
to the Company and certain amounts owed by the Company to each of Xxxx and Morgans, and which
calculations have been approved in writing by Xxxx and Morgans.
7. Predevelopment Budget
Morgans and Xxxx agree that, notwithstanding anything to the contrary contained in the
Operating Agreement, each Member shall fund fifty percent (50%) of the Predevelopment Costs (which
fifty percent (50%) amount shall not exceed $418,713.84 for each Member) set forth in the revised
9/19/08 Predevelopment Budget covering the period from October 1, 2008 through December 31, 2009,
which Predevelopment Budget is hereby approved by the Parties and supersedes any prior
Predevelopment Budget. The amounts set forth in such revised Predevelopment Budget shall be funded
pursuant to Capital Calls issued in accordance with the terms of the Operating Agreement; provided,
however, the Members agree that any amounts required to be funded by either Member
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pursuant to any pending or future Capital Call Notice shall be netted against any funds
required to be paid to any such Member (or its affiliates) by the other Member or the Company in
respect of the cost items described in such Capital Call Notice, such that the Members shall only
be required to fund a Capital Call if and to the extent that the amount to be reimbursed to such
Member for cost items described in such Capital Call Notice is less than fifty percent (50%) of the
amounts requested in the Capital Call Notice.
8. Exhibit “E”
The Members agree that notwithstanding anything to the contrary contained in the Operating
Agreement, as amended herein, and to the extent not otherwise prohibited, neither Member is
permitted to act unilaterally with respect to the following, which shall be a Joint Decision
effective the date of this Third Amendment, and added as (v) to Exhibit “E” of the Operating
Agreement.
“(v) Entry by the Company, or any of the Members on behalf of the Company, into any agreement
or commitment inconsistent with the Predevelopment Budget, as revised by the Third Amendment, or
which would otherwise require funding by any Member in excess of such revised Predevelopment
Budget.”
C. 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.
D. 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.
E. 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]
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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the day and year first
above set forth.
| MORGANS/LV INVESTMENT LLC |
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| By: | Morgans Group LLC | ||||
| By: | /s/ Xxxx Xxxxxx | ||||
| Name: | Xxxx Xxxxxx | ||||
| Title: | Chief Investment Officer and Executive Vice President, Capital Markets |
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| ONLY TO THE EXTENT NECESSARY TO GIVE EFFECT TO THIS AMENDMENT: Morgans Hotel Group Co. |
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| By: | /s/ Xxxx Xxxxxx | ||||
| Name: | Xxxx Xxxxxx | ||||
| Title: | Chief Investment Officer and
Executive Vice President, Capital Markets |
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[Signatures Continue on Next Page]
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[Signatures Continued]
| ECHELON RESORTS CORPORATION |
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| By: | /s/ Xxxxxx Xxxxxxxx | ||||
| Name: | Xxxxxx Xxxxxxxx | ||||
| Title: | President | ||||
| ONLY TO THE EXTENT NECESSARY TO GIVE EFFECT TO THIS AMENDMENT: XXXX GAMING CORPORATION |
|||||
| By: | /s/ Xxxx X. Xxxxxxx | ||||
| Name: | Xxxx X. Xxxxxxx | ||||
| Title: | EVP & COO | ||||
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