SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

Exhibit 3.1

EXECUTION COPY

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

HARD ROCK HOTEL HOLDINGS, LLC

dated as of

May 30, 2008

TABLE OF CONTENTS

		Page
ARTICLE 1. DEFINED TERMS			2
ARTICLE 2. FORMATION			24
2.1 Intent			24
2.2 Certificate of Formation; Filings			24
2.3 Name, Registered Office and Agent; Principal Place of Business			24
2.4 Purpose of Company			24
2.5 Term			24
2.6 Issuance of Membership Interests			24
ARTICLE 3. CAPITAL CONTRIBUTIONS, PERCENTAGE INTERESTS, CAPITAL ACCOUNTS AND CLASSES OF INTERESTS			25
3.1 Capital Commitments; Percentage Interests			25
3.2 Initial Assignment by Morgans			25
3.3 Initial Capital Contributions			25
3.4 Additional Contributions			26
3.5 Failure to Contribute			32
3.6 Percentage Interest Adjustment			34
3.7 Return of Capital, No Interest on Capital			35
3.8 Additional Members			35
3.9 New Financing; New Equity			35
3.10 Limited Liability of Members			36
3.11 Capital Accounts.			36
3.12 Classes of Interests; Voting Rights			38
ARTICLE 4. DISTRIBUTIONS			39
4.1 Distributions Generally			39
4.2 Distributions of Cash Available for Distribution			40
4.3 Tax Distributions			42
4.4 The Right to Withhold			43
ARTICLE 5. ALLOCATIONS			43
5.1 Allocations Generally			43
5.2 Allocations of Net Profits and Net Losses			43
5.3 Allocations Upon Final Liquidation			44
5.4 Additional Allocation Provisions			44
5.5 Other Tax Provisions			45
ARTICLE 6. MANAGEMENT OF COMPANY			47
6.1 Board of Directors			47
6.2 Officers			48
6.3 Required Board Decisions			48

		Page
6.4 DLJMB LLC Decisions			50
6.5 Morgans Decisions			51
6.6 Affiliate Transactions			52
6.7 Proposed Operating Plan			52
6.8 Class B Members and Class C Members			53
6.9 Limitation of Liability; Indemnification			53
6.10 DLJMB Consulting Fee			55
6.11 Expansion Project			55
6.12 Additional Covenant			56
ARTICLE 7. COVENANTS			56
7.1 Gaming Operations			56
7.2 Further Assurances regarding New Financing or New Equity			56
7.3 Piggyback Registration Rights; Initial Public Offering			56
7.4 General			57
ARTICLE 8. BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS			57
8.1 Company Books			57
8.2 Delivery of Records			57
8.3 Inspection			58
8.4 Reports and Tax Information			58
8.5 Tax Elections			58
8.6 Tax Matters Member			59
8.7 Accounting; Fiscal Year and Audited Financial Statements			59
ARTICLE 9. TRANSFERS OF AND ENCUMBRANCES ON MEMBERSHIP INTERESTS			59
9.1 General			59
9.2 Indirect Transfers			60
9.3 Permitted Transfers			61
9.4 Right of First Offer			64
9.5 Drag — Along and Tag — Along Rights			67
9.6 Management Agreement Termination Fee			68
ARTICLE 10. RESIGNED, ADDITIONAL AND SUBSTITUTE MEMBERS			68
10.1 Admissions and Resignations			68
10.2 Substitute Members			69
10.3 Cessation of Certain Members			69
ARTICLE 11. EVENT OF DEFAULT.			69
11.1 Events of Default			69
11.2 Remedies			70
11.3 Fair Market Value			71
11.4 Non — Exclusive			72
11.5 Disputes			72

		Page
ARTICLE 12. DISSOLUTION AND WINDING UP			72
12.1 Dissolution and Distribution of Company Assets			72
12.2 Dissolving Events			72
12.3 Wind — up, Liquidation and Final Distribution of Proceeds			73
12.4 No Restoration of Deficit Capital Account Balances			74
ARTICLE 13. INVESTMENT REPRESENTATIONS			74
ARTICLE 14. REPRESENTATIONS AND WARRANTIES; COVENANTS			74
14.1 Representations and Warranties of the Company and the Members			74
14.2 Representations and Warranties of the Company			75
14.3 Indemnity for Breaches of Representations and Warranties			75
ARTICLE 15. GUARANTY LIABILITIES			75
15.1 Net Worth and Effective Liquidity			75
15.2 Special Indemnity for Construction Completion Guaranties			76
15.3 Special Indemnity for Closing Completion Guaranties			77
15.4 Special Indemnity for Non — Recourse Carve — Out Guaranties			78
15.5 Special Indemnity for Mandatory Prepayment Guaranties			80
15.6 Capital Contributions for Indemnity Payments			80
15.7 Covenant to Pay Pro Rata Share of Liabilities			81
15.8 Non — Assignability of Obligations			81
ARTICLE 16. CONFIDENTIALITY			81
16.1 Confidentiality of Information			81
16.2 Gaming Information			82
16.3 Public Statements			82
ARTICLE 17. MISCELLANEOUS			82
17.1 Injunctive Relief			82
17.2 Further Assurances			82
17.3 Governing Law			83
17.4 Compliance with Laws			85
17.5 Entire Agreement; Amendment; Waiver			85
17.6 Binding Effect			85
17.7 Invalidity of Provision			85
17.8 Notices			85
17.9 Limitation on Damages			86
17.10 Headings; Execution in Counterparts			87
17.11 Rules of Construction			87
17.12 Third Party Beneficiaries			87
17.13 DLJMB Joint and Several Obligations			88

EXHIBITS AND SCHEDULES:
EXHIBIT A		—		Capital Commitments; Percentage Interests
EXHIBIT B		—		Board of Directors
EXHIBIT C		—		Requirements for Operating Plan and Budget
EXHIBIT D		—		Expansion Capital Equity Commitment Letter
SCHEDULE 1.1(a) — List of Acquisition Agreements

SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
HARD ROCK HOTEL HOLDINGS, LLC

          THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “ Agreement ”) of Hard Rock Hotel Holdings, LLC, a Delaware limited liability company (the “ Company ”), is made and entered into as of May 30, 2008 (the “ Agreement Date ”), by and among the Company, DLJ MB IV HRH, LLC, a Delaware limited liability company (“ DLJMB ”), DLJ Merchant Banking Partners IV, L.P., a Delaware limited partnership (“ DLJMB Partners ”), DLJMB HRH VoteCo, LLC, a Delaware limited liability company (“ DLJMB LLC ”), Morgans Hotel Group Co., a Delaware corporation (“ Morgans Co. ”), and Morgans Group LLC, a Delaware limited liability company (“ Morgans ”), for the purpose of continuing the Company as a limited liability company organized under the Act.

RECITALS

          WHEREAS, on January 16, 2007, a limited liability company was formed by Morgans Co. pursuant to the Act by filing a Certificate of Formation of the Company with the office of the Secretary of State of the State of Delaware;

          WHEREAS, Morgans Co. entered into that certain Limited Liability Company Agreement dated as of January 22, 2007, which from the date of the formation of the Company to the Original Agreement Date (as defined below) governed the affairs of the Company as set forth therein;

          WHEREAS, the DLJMB Parties and the Morgans Parties previously have entered into the Amended and Restated Limited Liability Company Agreement of the Company (the “ Original Agreement ”), dated as of February 2, 2007 (the “ Original Agreement Date ”), pursuant to which such parties agreed to form a joint venture for the purpose of acquiring Hard Rock Hotel, Inc. and related land and assets (the “ Acquired Assets ”) and pursuing certain activities relating thereto; and

          WHEREAS, the DLJMB Parties and the Morgans Parties desire to amend and restate the Original Agreement in its entirety (a) to modify the provisions in Article 3 relating to Additional Capital Contributions provided by the Parties and the calculation of the Parties’ Percentage Interests, (b) to modify the provisions relating to distributions to the Parties under Article 4 , (c) to decrease the current number of directors of the Company from six (6) to five (5) and to make other changes to the Board under Article 6 , (d) to permit the admission of the Class C Members hereunder from time to time, (e) to provide for certain terms and conditions applicable to the Class C Members and the Class C Units held by them, which are intended to constitute “profits interests” in the Company within the meaning of Rev. Proc. 93-27, 1993-2 C.B. 343 and Rev. Proc. 2001-43, 2001-2 C.B. 191, (f) to remove certain provisions from the Original Agreement no longer needed regarding certain matters pertaining to the closing of the acquisition of the Acquired Assets (the “ Closing ”) and a former lease of the casino at the Hotel/Casino, (g) to continue the Company in accordance with the Act and pursuant to the terms and conditions contained herein, and (h) to make certain other modifications provided for herein.

AGREEMENT

          NOW, THEREFORE, in consideration of the recitals, promises and covenants set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Members (each of the parties hereto, a “ Party ” and collectively, the “ Parties ”), the Parties hereby agree:

ARTICLE 1.
DEFINED TERMS

          “ Acquired Assets ” is defined in the Recitals.

          “ Acquisition ” means the acquisition of the Acquired Assets.

          “ Acquisition Agreements ” means, collectively, the agreements listed on Schedule 1.1(a) relating to the acquisition of the Acquired Assets as each such agreement may be amended, modified, supplemented or assigned from time to time.

          “ Act ” means, as of any time, the Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et seq., as amended at such time.

          “ Additional Capital Contribution ” means a Capital Contribution made pursuant to Section 3.4 or Article 15 .

          “ Additional Member ” means any Person that has been admitted to the Company as a Member pursuant to Section 3.8 and Article 10 of the Agreement by virtue of such Person receiving its Membership Interest from the Company and not from another Member or any Assignee.

          “ Adjusted Capital Account ” means, with respect to any Member, the balance in such Member’s Capital Account as of the end of the relevant Fiscal Year of the Company, after giving effect to the following adjustments:

          (a) Add to such Capital Account the following items:

     (i) The amount, if any, that such Member is obligated to contribute to the Company upon liquidation of such Member’s Interest; and

     (ii) The amount that such Member is obligated to restore or is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

          (b) Subtract from such Capital Account such Member’s share of the items described in Regulations Sections 1.704-1(b)(2)(ii)( d )( 4 ), ( 5 ) and ( 6 ).

The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)( d ) and shall be interpreted consistently therewith.

          “ Adjusted Percentage Interests ” means, with respect to any distribution to be made pursuant to Section 4.2(b)(ii) , (iii) or (iv) , the then-current Percentage Interests of the applicable Members as of the date of such distribution, adjusted so as to (x) disregard the effect of any prior adjustments made thereto as a result of any Non-Qualifying Contributions, and (y) make, or modify, any other adjustments required to reflect the fact that Non-Qualifying Contributions are being disregarded.

          “ Affiliate ” shall mean as to any Person any other Person that directly or indirectly controls, is controlled by, or is under common control with such first Person. For the purposes of this Agreement, a Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management, policies and/or decision making of such other Person, whether through the ownership of voting securities, by contract or otherwise.

          “ Affiliate Agreement ” means any Agreement between the Company (or one of its Subsidiaries) and one or more of the following: (i) a Member, (ii) an Affiliate of a Member, or (iii) any other Affiliated Counterparty.

          “ Affiliate Transfer ” is defined in Section 9.3(c) .

          “ Affiliated Counterparty ” is defined in Section 6.6 .

          “ Aggregate Asset Value ” means, as of any time, the fair market value of the Company Assets, as determined by agreement among the Members, or if such an agreement cannot be reached, or upon an Event of Default, by the methods set forth in Section 11.3 .

          “ Agreement ” is defined in the Preamble.

          “ Agreement Date ” is defined in the Preamble.

          “ Annual Incentive Fee ” has the meaning ascribed to it in the Management Agreement.

          “ Applied Amounts ” is defined in Section 3.2 .

          “ Approved Development Budget ” means the development and construction budget approved by the Board in accordance with Article 6 in respect of any Approved Development Project (together with such amendments as may be approved by the Board in accordance with Article 6 ). If approved by the Mortgage Lender in accordance with the Mortgage Loan Agreement, the Loan Budget (as defined in the Loan Agreements) shall be deemed to be the Approved Development Budget for the Expansion Project (as it may be amended by the Board in accordance with Article 6 ).

          “ Approved Development Plans ” means the plans and specifications approved by the Board in accordance with Article 6 in connection with any Approved Development Project. If approved by the Mortgage Lender in accordance with the Mortgage Loan Agreement, the Plans and Specifications (as defined in the Loan Agreements) shall be deemed to be the Approved Development Plan for the Expansion Project.

          “ Approved Development Project ” means the Expansion Project and any other development project or other material capital expenditure initiative that has been approved by the Board pursuant to Article 6 .

          “ Approved Operating Plan ” means the Proposed Operating Plan approved by the Board pursuant to Section 6.7 .

          “ Approved Sale ” is defined in Section 9.5(a) .

          “ Approved Sale Notice ” is defined in Section 9.5(b) .

          “ Assignee ” means any Person to which a Member or another Assignee has Transferred all or any part of its Economic Interest in accordance with Article 9 , but which has not been admitted as a Substitute Member pursuant to Section 10.2 .

          “ Bankruptcy ” means the occurrence of any one or more of those events set forth in Section 18-304 of the Act.

          “ Base Management Fee ” has the meaning ascribed to it in the Management Agreement.

          “ Board ” is defined in Section 6.1(a) .

          “ Bridge LC ” is defined in Section 3.4(a)(iii) .

          “ Business Day ” means any weekday excluding any legal holiday observed pursuant to United States federal or Nevada or New York state law or regulation.

          “ Buying Member ” is defined in Section 9.4(a)(iii) .

          “ Capital Account ” means the capital account maintained for each Member on the Company’s books and records in accordance with Section 3.11 and Article 8 .

          “ Capital Call Indemnification Notice ” is defined in Section 6.9(d) .

          “ Capital Call Notice ” is defined in Section 3.4(b) .

          “ Capital Contribution ” means, collectively, (a) the total amount of money and (b) the initial Gross Asset Value of property (other than cash), if any, contributed to the Company (or deemed to be contributed to the Company pursuant to the terms of this Agreement) by a Member in accordance with this Agreement, whether as an initial Capital Contribution or as an Additional Capital Contribution. For the avoidance of doubt, and notwithstanding anything to the contrary in this Agreement, a Member shall not be deemed to have made a Capital Contribution by posting a Letter of Credit pursuant to this Agreement, unless, until and to the extent that such Letter of Credit is actually drawn by the beneficiary thereof and such Member reimburses the issuer of such Letter of Credit with respect to all obligations resulting from such draw, or such Member funds a payment in connection with the release or reduction of such Letter of Credit in accordance with the Loan Agreements or other document governing the

delivery and maintenance of such Letter of Credit, as provided in Section 3.4(a)(v) (in which event the Capital Contribution shall be the amount of such payment).

          “ Capital Member ” means each Member of the Company other than a Class C Member in its capacity as such.

          “ Cash Available for Distribution ” means, with respect to any fiscal quarter or other period as determined by the Board, all available cash of the Company, after deducting payments for operating expenses, payments required to be made in connection with any loan to the Company or its Subsidiaries or any other loan secured by a lien on any Company Assets as the Board shall determine, any other expenses of the Company or its Subsidiaries (including fees payable under the Management Agreement and the DLJ Consulting Fee), capital expenditures, commitments and other amounts (as set forth in the Approved Operating Plan or otherwise approved by the Board) set aside for the restoration, increase or creation of reasonable reserves. Cash contributed and distributed pursuant to Section 9.3(c) shall not be considered “Cash Available for Distribution” for purposes of Article 4 .

          “ Cash Requirements ” means cash amounts necessary to pay for the operating costs and expenses of the Hotel/Casino or the general and administrative costs of the Company and its Subsidiaries, but excluding capital expenditures, investments (including without limitation investments relating to intellectual property rights controlled by the Company), and other expenditures outside the ordinary course of business (unless the use of Required Expansion Capital for such expenditure is approved by the Board and the Morgans Parties).

          “ Certificate ” means the Certificate of Formation of the Company, and any duly authorized, executed and filed amendments or restatements thereof, which are filed in the office of the Secretary of State of the State of Delaware.

          “ Class A Member ” means any Person in its capacity as a holder of Class A Membership Interests and a Member of the Company who is listed as holding Class A Membership Interests on Exhibit A hereto, as such exhibit may be updated from time to time according to the books and records of the Company pursuant to Section 3.1 .

          “ Class A Membership Interest ” is defined in Section 3.12(a) .

          “ Class B Member ” means any Person in its capacity as a holder of Class B Membership Interests and a Member of the Company who is listed as holding Class B Membership Interests on Exhibit A hereto, as such exhibit may be updated from time to time according to the books and records of the Company pursuant to Section 3.1 .

          “ Class B Membership Interest ” is defined in Section 3.12(a) .

          “ Class C Member ” means any Person in its capacity as a holder of Class C Membership Interests (or Class C Units representing such Interests) and a Member of the Company who is listed as holding Class C Membership Interests on Exhibit A hereto or on the books and records of the Company as updated from time to time pursuant to Section 3.1 .

          “ Class C Membership Interest ” is defined in Section 3.12(a) .

          “ Class C Units ” is defined in Section 3.12(b) .

          “ Closing ” is defined in the Recitals.

          “ Closing Completion Guaranties ” means, collectively, (a) that certain Closing Guaranty of Completion, dated as of February 2, 2007, by DLJMB and Morgans in favor of Mortgage Lender, as amended by the Modification and Ratification of Guaranties, (b) that certain First Mezzanine Closing Guaranty of Completion, dated as of November 6, 2007, by DLJMB and Morgans in favor of First Mezzanine Lender, (c) that certain Second Mezzanine Closing Guaranty of Completion, dated as of November 6, 2007, by DLJMB and Morgans in favor of Second Mezzanine Lender, and (d) that certain Third Mezzanine Closing Guaranty of Completion, dated as of November 6, 2007, by DLJMB and Morgans in favor of Third Mezzanine Lender, each as amended, restated, replaced, supplemented or otherwise modified from time to time.

          “ Closing Completion Guaranty Liabilities ” is defined in Section 15.3(a) .

          “ Code ” means the Internal Revenue Code of 1986, as amended.

          “ Committed Capital ” means, in respect of any Member or the Member(s) collectively, the sum of: (a) the aggregate Capital Contributions made by such Member(s); plus (b) the Deemed Value of any Equity Letters of Credit posted by such Member(s) pursuant to Section 3.4(a) included in such Member(s) Committed Capital in accordance with Section 3.4(a)(vi) .

          “ Company ” means the limited liability company continued pursuant to this Agreement.

          “ Company Assets ” means, collectively, (a) the Acquired Assets as the same may be disposed of from time to time to the extent authorized by the Board, and (b) any additional assets acquired by the Company or its Subsidiaries after the Original Agreement Date and owned by the Company or its Subsidiaries as of the applicable date, subject to approval of the Board and any other applicable provisions of this Agreement.

          “ Company Loan ” is defined in Section 3.5(a)(ii) .

          “ Company Minimum Gain ” has the meaning set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d)(1) for the phrase “partnership minimum gain.”

          “ Confidential Information ” is defined in Section 16.1 .

          “ Construction Completion Guaranties ” means, collectively, (a) that certain Construction Guaranty of Completion, dated after the date hereof, by DLJMB and Morgans in favor of Mortgage Lender, (b) that certain First Mezzanine Construction Guaranty of Completion, dated after the date hereof, by DLJMB and Morgans in favor of First Mezzanine Lender, (c) that certain Second Mezzanine Construction Guaranty of Completion, dated after the date hereof, by DLJMB and Morgans in favor of Second Mezzanine Lender, and (c) that certain Third Mezzanine Construction Guaranty of Completion, dated after the date hereof, by DLJMB

and Morgans in favor of Third Mezzanine Lender, each as amended, restated, replaced, supplemented or otherwise modified from time to time.

          “ Construction Completion Guaranty Liabilities ” is defined in Section 15.2(a) .

          “ Contributing Member ” is defined in Section 3.5(a) .

          “ Contribution Agreement ” means the Amended and Restated Contribution Agreement dated as of December 2, 2006 by and between the DLJMB Parties and Morgans Co, as amended, modified or supplemented from time to time.

          “ Conversion Notice ” is defined in Section 3.5(c) .

          “ Deemed Value ” means, in respect of any Equity Letter of Credit posted by a Member pursuant to Section 3.4(a) , the maximum amount originally available to be drawn under such Equity Letter of Credit (assuming the satisfaction of any conditions to any draw of such Equity Letter of Credit), less any amount (with respect to such Equity Letter of Credit) funded or reimbursed by or on behalf of the Member that posted such Equity Letter of Credit which is treated as a Capital Contribution pursuant to Section 3.4(a)(v) .

          “ Defaulting Member ” is defined in Section 11.1 .

          “ Delaware Arbitration Act ” is defined in Section 17.3(a)(iv) .

          “ Depreciation ” means, for each Fiscal Year of the Company or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such Fiscal Year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period is zero (0), Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Members.

          “ Disproportionate Contributions ” means, with respect to a Capital Member, any Capital Contribution and/or other increase in Committed Capital (in each case, other than in respect of New Capital) in a relative amount other than in accordance with such Capital Member’s Percentage Interest, together with all Capital Contributions and/or other increase in Committed Capital being made as of the same time.

          “ DLJ Consulting Agreement ” means the Advisory Services and Monitoring Agreement to be entered into by and among the Company, DLJMB VoteCo and DLJ Merchant Banking, Inc., as may be amended, supplemented or modified from time to time.

          “ DLJ Consulting Fee ” is defined in Section 6.10 .

          “ DLJ Fund ” means, collectively, DLJMB Partners, DLJMB HRH Co-Investments, L.P., DLJ Offshore Partners IV, L.P., DLJ Merchant Banking Partners IV (Pacific), L.P. and MBP Plan Investors, L.P.

          “ DLJ Intermediate Subsidiary ” means any Subsidiary of any DLJ Fund that indirectly holds the equity interests of the Company.

          “ DLJ Parent ” means any Person that directly or indirectly holds the equity interests of any DLJ Fund.

          “ DLJ Parent Change of Control ” means, with respect to a DLJ Parent, any of the following:

          (a) any merger, consolidation or business combination of a DLJ Parent into or with another Person in which holders of the voting securities of such DLJ Parent immediately prior to the consummation of the transaction hold, directly or indirectly, immediately following the consummation of the transaction, securities or other equity interests in the surviving entity in such transaction possessing less than a majority of the outstanding voting power of the surviving entity; or

          (b) any other transaction, including the sale by a DLJ Parent of new shares of capital stock or new equity interests or a transfer of existing shares of capital stock or existing equity interests of such DLJ Parent, the result of which is that a third party not an Affiliate of such DLJ Parent or their respective stockholders or equity holders (or “group” of third parties not an Affiliate of such DLJ Parent or their respective stockholders or equity holders) directly or indirectly acquire or hold securities or other equity interests of such DLJ Parent representing a majority of such DLJ Parent’s outstanding voting power; or

          (c) if such DLJ Parent is subject to the reporting requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, during any period of two consecutive years, individuals who, at the beginning of such period, constitute the directors of the board of such DLJ Parent together with any new director (other than a director designated by a person who shall have entered into an agreement with such DLJ Parent to effect a transaction described in clauses (a) or (b)) whose election by the directors or nomination for election by such DLJ Parent’s stockholders or other equity holders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority of the directors of such DLJ Parent’s board of directors.

          “ Director ” means a member of the Board.

          “ DLJ Parent Transfer ” is defined in Section 9.3(f) .

          “ DLJ Upper Tier Holder ” or “ DLJ UTH ” are defined in Section 9.2(a) .

          “ DLJMB ” is defined in the Preamble.

          “ DLJMB Indemnitees ” is defined in Section 15.2(b) .

          “ DLJMB Indemnitors ” is defined in Section 15.2(a) .

          “ DLJMB LLC ” is defined in the Preamble.

          “ DLJMB’s Closing Completion Guaranty Liabilities ” is defined in Section 15.3(b) .

          “ DLJMB’s Construction Completion Guaranty Liabilities ” is defined in Section 15.2(b) .

          “ DLJMB’s Mandatory Prepayment Guaranty Liabilities ” is defined in Section 15.5(b) .

          “ DLJMB’s Non-Recourse Carve-Out Liabilities ” is defined in Section 15.4(b) .

          “ DLJMB Parties ” means, collectively, DLJMB, DLJMB Partners, DLJMB LLC and any other Affiliate of DLJMB that becomes a Member pursuant to the terms of this Agreement after the date hereof.

          “ DLJMB Partners ” is defined in the Preamble.

          “ Drag-Along Right ” is defined in Section 9.5(a) .

          “ Economic Interest ” means a Person’s right to share in the Net Profits, Net Losses, or similar items of, and to receive distributions from, the Company, but does not include any other rights of a Member including, without limitation, the right to vote or to participate in the management of the Company, or, except as specifically provided in this Agreement or required under applicable law, any right to information concerning the business and affairs of the Company.

          “ Electing Member ” is defined in Section 11.2 .

          “ Encumbrance ” means a pledge, alienation, mortgage, hypothecation, encumbrance or similar collateral assignment by any other means, whether for value or no value and whether voluntary or involuntary (including, without limitation, by operation of law or by judgment, levy, attachment, garnishment, bankruptcy or other legal or equitable proceedings). The term “ Encumber ” shall have a correlative meaning.

          “ Equity Letter of Credit ” means any letter of credit posted by the Company, any of its Subsidiaries or a Member (or its Affiliate) in favor of a Lender pursuant to Section 3.2(h), 3.3(d), 3.12 or 3.17.1(k) of the Mortgage Loan Agreement, as the same may be replaced, reduced, split, substituted, modified, amended, supplemented, assigned or otherwise restated from time to time.

          “ Event of Default ” is defined in Section 11.1 .

          “ Excess Incremental Capital ” is defined in Section 3.4(a)(ii) .

          “ Excess Land ” means the approximately fifteen (15) acre parcel of real property (together with any improvements thereon) currently being held for sale by HRHH Development, LLC, a Delaware limited liability company (or any subsequent transferee of such real property that is directly or indirectly owned by the Company).

          “ Existing Capital ” is defined in Section 3.4(a)(i) .

          “ Existing Equity ” means, as of any time, the lesser of: (a) the aggregate Committed Capital of the Members less any recovery or return of any Capital Contribution received by the Members, as of such time, or (b) the sum of: (i) aggregate distributions in liquidation to which the Members would be entitled upon a sale of all of the Company Assets at the then-current Aggregate Asset Value and the subsequent dissolution and liquidation of the Company pursuant to Article 12 ; plus (ii) without duplication, the Deemed Value of any Equity Letters of Credit posted by the Members pursuant to Section 3.4(a) .

          “ Expansion Project ” means the proposed development project associated with expanding the Hotel/Casino described in the related Approved Development Plans, as may be modified by the Board from time to time in accordance with the terms hereof.

          “ Expert ” is defined in Section 17.3(a)(ii) .

          “ Fair Market Terms ” is defined in Section 3.9 .

          “ Fee Agreement ” means the Amended and Restated Fee Agreement, dated as of May 30, 2008, between the DLJMB Parties and the Morgans Parties, as amended, modified or supplemented from time to time.

          “ Financial Manager ” is defined in Section 8.1

          “ Financing ” means (a) the Initial Acquisition Financing obtained by the Company and/or its Subsidiaries to facilitate the acquisition of the Acquired Assets, and (b) any New Financing obtained by the Company and/or its Subsidiaries after the Original Agreement Date.

          “ First Mezzanine Lender ” means Brookfield Financial, LLC – Series B, a Delaware limited liability company, as assignee of Column Financial, Inc., in its capacity as lender under the First Mezzanine Loan Agreement, together with any additional or subsequent lender under the First Mezzanine Loan Agreement (including, without limitation, any Person that becomes a lender by purchasing the loan thereunder) or any Person performing similar duties under any subsequent refinancing or replacement thereof.

          “ First Mezzanine Loan Agreement ” means that certain First Mezzanine Loan Agreement, dated as of November 6, 2007 (as it may be amended, supplemented, extended, restated or otherwise modified from time to time), among First Mezzanine Lender, HRHH Gaming Senior Mezz, LLC, a Delaware limited liability company, and HRHH JV Senior Mezz, LLC, a Delaware limited liability company.

          “ Fiscal Year ” is defined in Section 8.7 .

          “ Funding Notice ” is defined in Section 3.4(a)(iv) .

          “ GAAP ” means United States Generally Accepted Accounting Principles.

          “ Gaming Authorities ” means any Governmental Authority with jurisdiction over the ownership of an interest in an entity that is licensed to conduct gaming activities or with jurisdiction over gaming operations relating to the Company Assets including, without limitation, the Nevada State Gaming Control Board, the Nevada Gaming Commission and the Clark County Liquor and Gaming License Board.

          “ Gaming Compliance Program ” is defined in Section 7.1 .

          “ Gaming Facilities Support Fee ” has the meaning ascribed to it in the Management Agreement.

          “ Gaming Regulations ” mean any applicable statutes, laws, rules, regulations, or other legal requirements of or promulgated by any legislative body, Gaming Authorities, police or investigative agency, or other government or political subdivisions or agency or subdivision thereto in the United States (including those in the State of Nevada) or elsewhere in the world pertaining to the ownership or operation of casinos, the suitability of Persons involved in gaming or gambling or otherwise relating to gaming or gambling, including, without limitation, the Nevada Gaming Control Act (Nevada Revised Statutes Chapter 463) and the regulations promulgated thereunder, as amended from time to time.

          “ Governmental Authority ” means any nation or government (including, without limitation, the government of the United States), any state, county, municipal or other political subdivision thereof (including the State of Nevada and Clark County, Nevada) and any Person exercising legislative, judicial, regulatory or administrative functions of or pertaining to the government.

          “ Gross Asset Value ” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

          (a) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as determined by the mutual consent of the Class A Members.

          (b) The Gross Asset Values of all Company assets immediately prior to the occurrence of any event described in subparagraphs (i) through (v) below shall be adjusted to equal their respective gross fair market values, as determined by the mutual consent of the Class A Members, as of the following times:

     (i) the acquisition of an additional Interest in the Company (other than in connection with the execution of this Agreement) by a new or existing Member in exchange for more than a de minimis Capital Contribution, if the Members reasonably determine that such adjustment is necessary or appropriate to reflect the relative Interests of the Members in the Company;

     (ii) the distribution by the Company to a Member of more than a de minimis amount of Company assets as consideration for an Interest in the Company, if the Members reasonably determine that such adjustment is necessary or appropriate to reflect the relative Interests of the Members in the Company;

     (iii) the liquidation or dissolution of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

     (iv) the grant of an Interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a partner capacity, or by a new Member acting in a partner capacity or in anticipation of becoming a Member of the Company, if the Members reasonably determine that such adjustment is necessary or appropriate to reflect the relative Interests of the Members in the Company; and

     (v) at such other times as the Members shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2.

          (c) The Gross Asset Value of any Company asset distributed to a Member shall be the gross fair market value of such asset on the date of distribution as determined by the Members.

          (d) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that an adjustment pursuant to subparagraph (b) above is made in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d).

          (e) If the Gross Asset Value of a Company asset has been determined or adjusted pursuant to subparagraph (a), subparagraph (b) or subparagraph (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such Company asset for purposes of computing Net Profits and Net Losses.

          “ Guaranty Agreements ” means, collectively, the Construction Completion Guaranties, the Closing Completion Guaranties, the Non-Recourse Carve-Out Guaranties and the Mandatory Prepayment Guaranties.

          “ Hotel/Casino ” means the hotel and casino known as the Hard Rock Hotel & Casino, which has been acquired by the Company (through its Subsidiaries) pursuant to the Acquisition Agreements.

          “ Incapacity ” means the Bankruptcy or dissolution of any Person. “ Incapacitated ” shall have a correlative meaning.

          “ Incremental Capital ” is defined in Section 3.4(a)(ii) .

          “ Indemnitees ” is defined in Section 6.9(a) .

          “ Index ” means the Consumer Price Index for Clark County, Nevada, as published by the U.S. Census Bureau using the period October/November 1995, as a base of 100, or if such index is discontinued, the most comparable index published by any Governmental Authority, acceptable to all of the Class A Members.

          “ Indirect Interest ” means, as applicable, a DLJ UTH’s equity interest in a DLJ Intermediate Subsidiary or a DLJMB Party or a Morgans LTH’s equity interest in a Morgans Intermediate Subsidiary or a Morgans Party.

          “ Initial Acquisition Financing ” means, collectively, (a) the financing obtained by the Company or its Subsidiaries in connection with the consummation of the transactions contemplated by the Acquisition Agreements and (b) any other form of debt financing (including construction financing) provided to the Company or its Subsidiaries under the Loan Agreements.

          “ Initial Construction Completion Guaranty Costs ” is defined in Section 15.2(c) .

          “ Intracompany Transfer ” is defined in Section 9.3(c) .

          “ JAMS ” is defined in Section 17.3(a)(i) .

          “ Key Employees ” means, collectively, the Hotel President, Hotel Chief Financial Officer, Casino General Manager, Hotel General Manager, the Hotel Food & Beverage Manager, the Head of Development (i.e., currently Brian Feigenbaum) and any Project Manager in charge of the Expansion Project (i.e. currently Michael Dean).

          “ Land Loan Agreement ” means a loan agreement which may be entered into (as it may be amended, supplemented, extended, restated or otherwise modified from time to time), among Column Financial, Inc., in its capacity as Lender thereunder, and HRHH Development Transferee, LLC, a Delaware limited liability company, or any other agreement governing the financing for the purchase of the Excess Land, but only to the extent that any such loan agreement or other agreement is actually and fully executed and delivered by all parties thereto.

          “ Lenders ” means, collectively, (a) Mortgage Lender, (b) First Mezzanine Lender, (c) Second Mezzanine Lender and (d) Third Mezzanine Lender.

          “ Letter of Credit ” means any Equity Letter of Credit or Non-Equity Letter of Credit.

          “ Listing Vehicle ” is defined in Section 7.3 .

          “ Loan Agreements ” means, collectively, (a) the Mortgage Loan Agreement, (b) the First Mezzanine Loan Agreement, (c) the Second Mezzanine Loan Agreement and (d) the Third Mezzanine Loan Agreement.

          “ Lock-Out Period ” means the period commencing on the Original Agreement Date and ending on the earlier to occur of (a) the fourth (4 ^th ) anniversary of the Original Agreement Date or (b) termination of the Management Agreement.

          “ Management Agreement ” means that certain Amended and Restated Property Management Agreement, dated as of May 30, 2008, among HRHH Hotel/Casino, LLC, HRHH Development, LLC, HRHH Cafe, LLC and Manager, as further amended, modified or supplemented from time to time. The Management Agreement constitutes an Affiliate Agreement.

          “ Manager ” means Morgans Hotel Group Management, LLC, a Delaware limited liability company, or any successor Manager selected by the Company upon the expiration or termination of the Management Agreement, subject to the terms of this Agreement and the Management Agreement.

          “ Mandatory Prepayment Guaranties ” means, collectively, (a) that certain Guaranty Agreement (Non-Qualified Mandatory Prepayment), dated as of February 2, 2007, by DLJMB and Morgans in favor of Mortgage Lender, as amended by the Modification and Ratification of Guaranties, (b) that certain First Mezzanine Guaranty Agreement (Non-Qualified Mandatory Prepayment), dated as of November 6, 2007, by DLJMB and Morgans in favor of First Mezzanine Lender, (c) that certain Second Mezzanine Guaranty Agreement (Non-Qualified Mandatory Prepayment), dated as of November 6, 2007, by DLJMB and Morgans in favor of Second Mezzanine Lender and (d) that certain Third Mezzanine Guaranty Agreement (Non-Qualified Mandatory Prepayment), dated as of November 6, 2007, by DLJMB and Morgans in favor of Third Mezzanine Lender, each as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

          “ Mandatory Prepayment Liabilities ” is defined in Section 15.5(a) .

          “ Maximum Rate ” means the maximum interest rate permitted by applicable usury and similar laws.

          “ Mediation ” is defined in Section 17.3(a)(i) .

          “ Mediation Service ” is defined in Section 17.3(a)(i) .

          “ Mediator ” is defined in Section 17.3(a)(i) .

          “ Member Minimum Gain ” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i) with respect to “partner minimum gain.”

          “ Member Nonrecourse Debt ” has the meaning set forth in Regulations Section 1.704-2(b)(4) for the phrase “partner nonrecourse debt.”

          “ Member Nonrecourse Deductions ” has the meaning set forth in Regulations Section 1.704-2(i) for the phrase “partner nonrecourse deductions.”

          “ Members ” means, collectively, the Persons owning Membership Interests, including any Additional Members and Substitute Members. Reference to a “Member” shall refer to any one or more of the Members, as the context may require. As of the Agreement Date, the Members are DLJMB, DLJMB Partners, DLJMB LLC, Morgans Co. and Morgans.

          “ Membership Interest ” or “ Interest ” means the entire ownership interest of a Member in the Company at any particular time, including Class A Membership Interests, Class B Membership Interests and/or Class C Membership Interests, and also including without limitation, any and all rights to vote and otherwise participate in the Company’s affairs, and the rights to any and all benefits to which a Member may be entitled as provided in this Agreement, together with the obligations of such Member to comply with all of the terms and provisions of this Agreement.

          “ Merger Agreement ” means that certain Agreement and Plan of Merger, dated as of May 11, 2006, by and among Morgans Co., MHG HR Acquisition Corp., Hard Rock Hotel, Inc. and Peter H. Morton, as amended, modified or supplemented from time to time.

          “ Modification and Ratification of Guaranties ” means that certain Modification and Ratification of Guaranties, dated as of November 6, 2007, among DLJMB, Morgans and Mortgage Lender.

          “ Morgans ” is defined in the Preamble.

          “ Morgans Change of Control ” means, with respect to Morgans Co. or Morgans (each, a “ Morgans Parent ”), any of the following:

          (a) any merger, consolidation or business combination of a Morgans Parent into or with another Person in which holders of the voting securities of such Morgans Parent immediately prior to the consummation of the transaction hold, directly or indirectly, immediately following the consummation of the transaction, securities or other equity interests in the surviving entity in such transaction possessing less than a majority of the outstanding voting power of the surviving entity; or

          (b) any other transaction, including the sale by a Morgans Parent of new shares of capital stock or new equity interests or a transfer of existing shares of capital stock or existing equity interests of such Morgans Parent, the result of which is that a third party not an Affiliate of such Morgans Parent or their respective stockholders or equity holders (or “group” of third parties not an Affiliate of such Morgans Parent or their respective stockholders or equity holders) directly or indirectly acquire or hold securities or other equity interests of such Morgans Parent representing a majority of such Morgans Parent’s outstanding voting power; or

          (c) during any period of two consecutive years, individuals who, at the beginning of such period, constitute the directors of the board of Morgans together with any new director (other than a director designated by a person who shall have entered into an agreement with Morgans to effect a transaction described in clauses (a) or (b)) whose election by the directors or nomination for election by Morgans’ stockholders or other equity holders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election

was previously so approved cease for any reason to constitute a majority of the directors of Morgans’ board of directors.

          “ Morgans Co. ” is defined in the Preamble.

          “ Morgans’ Competitors ” means any present or future operator or manager of a hotel or other hospitality and/or gaming property, which operator or manager is primarily in the business of operating (as opposed to investing in or owning) hotels or other hospitality and/or gaming properties.

          “ Morgans’ Closing Completion Guaranty Liabilities ” is defined in Section 15.3(a) .

          “ Morgans’ Construction Completion Guaranty Liabilities ” is defined in Section 15.2(a) .

          “ Morgans’ Mandatory Prepayment Guaranty Liabilities ” is defined in Section 15.5(a) .

          “ Morgans’ Non-Recourse Carve-Out Liabilities ” is defined in Section 15.4(a) .

          “ Morgans Indemnitees ” is defined in Section 15.2(a) .

          “ Morgans Initial Capital Commitment ” is defined in Section 3.3(a) .

          “ Morgans Intermediate Subsidiary ” means any Subsidiary of Morgans Co. or Morgans (other than any Member hereunder) that indirectly holds the equity interests of the Company.

          “ Morgans Lower Tier Holder ” or “ Morgans LTH ” is defined in Section 9.2(b) .

          “ Morgans Parent Transfer ” is defined in Section 9.3(e) .

          “ Morgans Parties ” mean, collectively, Morgans Co., Morgans and any other Affiliate of Morgans Co. that becomes a Member pursuant to the terms of this Agreement after the date hereof.

          “ Morgans Parties’ Diluted Capital Contributions ” means, as of any time, an amount equal to the product of (a) the Morgans Parties’ aggregate Adjusted Percentage Interest as of such time, multiplied by (b) the quotient obtained by dividing the aggregate Capital Contributions of the DLJMB Parties as of such time by the DLJMB Parties’ aggregate Adjusted Percentage Interest as of such time.

          “ Mortgage Lender ” means Vegas HR Private Limited, a Singapore corporation, as assignee of Column Financial, Inc., in its capacity as lender under the Mortgage Loan Agreement, together with any additional or subsequent lender under the Mortgage Loan Agreement (including, without limitation, any Person that becomes a lender by purchasing the

loan thereunder) or any Person performing similar duties under any subsequent refinancing or replacement thereof.

          “ Mortgage Loan Agreement ” means that certain Amended and Restated Loan Agreement, dated as of November 6, 2007 (as it may be amended, supplemented, extended, restated or otherwise modified from time to time), among Mortgage Lender, HRHH Hotel/Casino, LLC, a Delaware limited liability company, HRHH Cafe, LLC, a Delaware limited liability company, HRHH Development, LLC, a Delaware limited liability company, HRHH IP, LLC, a Delaware limited liability company, and HRHH Gaming, LLC, a Nevada limited liability company.

          “ Necessary Capital ” is defined in Section 3.4(b) .

          “ Net Profits ” or “ Net Losses ” means, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such year or period determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, deduction or credit required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

          (a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition of Net Profits and Net Losses shall increase the amount of such income and/or decrease the amount of such loss;

          (b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition of Net Profits and Net Losses, shall decrease the amount of such taxable income and/or increase the amount of such loss;

          (c) Gain or loss resulting from any disposition of Company assets where such gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the Company assets disposed of, notwithstanding that the adjusted tax basis of such Company assets differs from its Gross Asset Value;

          (d) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period;

          (e) To the extent an adjustment to the adjusted tax basis of any asset included in Company assets pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for the purposes of computing Net Profits and Net Losses;

          (f) If the Gross Asset Value of any Company asset is adjusted in accordance with subparagraph (b) or subparagraph (c) of the definition of “Gross Asset Value” above, the amount of such adjustment shall be taken into account in the taxable year of such adjustment as gain or loss from the disposition of such asset for purposes of computing Net Profits or Net Losses; and

          (g) Notwithstanding any other provision of this definition of Net Profits and Net Losses, any items that are specially allocated pursuant to Section 5.4 hereof shall not be taken into account in computing Net Profits or Net Losses. The amounts of the items of Company income, gain, loss or deduction available to be specially allocated pursuant to Section 5.4 hereof shall be determined by applying rules analogous to those set forth in this definition of Net Profits and Net Losses.

          “New Capital” is defined in Section 3.4(a)(ii).

          “ New Capital Funding ” means, with respect to a DLJMB Party, any Capital Contribution and/or other increase in Committed Capital (arising from the posting of Equity Letters of Credit as permitted under Section 3.4(a) ) paid, posted or funded by such DLJMB Party, in each case, in respect of New Capital.

          “ New DLJMB Commitment ” is defined in Section 3.4(a)(ii) .

          “ New Equity ” is defined in Section 3.9 .

          “ New Financing ” is defined in Section 3.9 .

          “ Non-Contributing Member ” is defined in Section 3.5(a) .

          “ Non-Equity Letter of Credit ” means any letter of credit posted by the Company, any of its Subsidiaries or a Member (or its Affiliate) pursuant to a binding agreement or obligation of the Company or a Subsidiary thereof in favor of a Lender or any other Person (other than an Equity Letter of Credit), as the same may be replaced, reduced, split, substituted, modified, amended, supplemented, assigned or otherwise restated from time to time; provided that any Non-Equity Letter of Credit shall be subject to the approval of all Capital Members, which approval shall not be unreasonably withheld, delayed or conditioned.

          “ Non-Qualifying Contributions ” means, with respect to any distribution to be made pursuant to Section 4.2(b)(ii) , (iii) or (iv) , any Disproportionate Contributions prior thereto that resulted in an adjustment to the Members’ Percentage Interests (to the extent such adjustment resulted from an increase in Committed Capital due to the posting of Equity Letters of Credit).

          “ Non-Recourse Carve-Out Guaranties ” means, collectively, (a) that certain Guaranty Agreement, dated as of February 2, 2007, by DLJMB and Morgans in favor of Mortgage Lender, as amended by the Modification and Ratification of Guaranties, (b) that certain First Mezzanine Guaranty Agreement, dated as of November 6, 2007, by DLJMB and Morgans in favor of First Mezzanine Lender, (c) that certain Second Mezzanine Guaranty Agreement, dated as of November 6, 2007, by DLJMB and Morgans in favor of Second

Mezzanine Lender, (d) that certain Third Mezzanine Guaranty Agreement, dated as of November 6, 2007, by DLJMB and Morgans in favor of Third Mezzanine Lender and (e) any non-recourse carve-out guaranty that may (in the sole discretion of DLJMB and Morgans) be entered into by DLJMB and/or Morgans in connection with the Land Loan Agreement, each as amended, restated, replaced, supplemented or otherwise modified from time to time.

          “ Non-Recourse Carve-Out Liabilities ” is defined in Section 15.4(a) .

          “ Nonrecourse Deductions ” has the meaning set forth in Regulations Sections 1.704-2(b)(1) and 1.704-2(c).

          “ Nonrecourse Liability ” has the meaning set forth in Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2).

          “ Note Rate ” is defined in Section 3.5(a)(ii) .

          “ Officer ” and “ Officers ” is defined in Section 6.2 .

          “ Operating Capital ” is defined in Section 3.4(b) .

          “ Operating Year ” means each calendar year (and in the case of the first Operating Year, the remainder of the calendar year starting on the Original Agreement Date) during the term of this Agreement.

          “ Order of Registration ” is defined in Section 7.1 .

          “ Original Agreement ” is defined in the Recitals.

          “ Original Agreement Date ” is defined in the Recitals.

          “ Party ” and “ Parties ” are defined in the Preamble.

          “ Percentage Interest ” means, with respect to a Capital Member, as of any time, that percentage which is initially set forth on Exhibit A attached hereto, as modified from time to time according to the books and records of the Company pursuant to the terms of this Agreement.

          “ Person ” means and includes an individual, a corporation, a partnership, a limited liability company, a joint venture, a trust, an unincorporated organization, a government or any department or agency thereof, or any entity similar to any of the foregoing.

          “ Profits Interest Plan ” means the Hard Rock Hotel Holdings, LLC 2008 Profits Interest Award Plan, as amended, modified, supplemented or replaced from time to time.

          “ Profits Interest Agreement ” means any Profits Interest Agreement pursuant to which Class C Units are issued to a participant under the Profits Interest Plan, as such agreement may be amended, modified or supplemented from time to time.

          “ Profits Percentage Interest ” means, as of any time (a) with respect to each Class C Member, a fraction (expressed as a percentage rounded to the third decimal point, with any 5 in the fourth decimal point being rounded down) calculated as the product of (i) a fraction, the numerator of which is the number of Class C Units held by such Class C Member and the denominator of which is the aggregate number of Class C Units authorized for issuance pursuant to Section 3.12(b) , multiplied by (ii) another fraction, the numerator of which is equal to Seventeen Million Five Hundred Thousand Dollars ($17,500,000) and the denominator of which is the greater of (A) Three Hundred Fifty Million Dollars ($350,000,000) and (B) the aggregate amount of Capital Contributions made and the Deemed Value of Equity Letters of Credit posted by the Capital Members in accordance with this Agreement on or after the Original Agreement Date; and (b) with respect to each Capital Member, a percentage equal to the product of (i) One Hundred (100) minus a number equal to the aggregate Profits Percentage Interest held by all Class C Members (as calculated pursuant to clause (a) of this definition) as of such time; and (ii) such Capital Member’s Percentage Interest (expressed as a decimal) as of such time.

          “ Proposed Operating Plan ” is defined in Section 6.7(a) .

          “ Proposed Treasury Regulation ” is defined in Section 3.12(e) .

          “ Publicly Traded Partnership ” is defined in Section 9.3(g)(iv) .

          “ Qualified Appraiser ” means any nationally recognized valuation or appraisal firm or investment bank with expertise in the gaming industry that: (a) does not currently provide nor is currently negotiating to provide (nor in the last two years has provided) services to the Company or any Member or their respective Affiliates; and (b) does not hold or have Affiliates that hold equity interests in the Company or any Member.

          “ Receiving Party ” is defined in Section 15.7 .

          “ Registration Expenses ” means all expenses incurred by the Listing Vehicle in complying with the Securities Act registration requirements of an initial public offering, including all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, “blue sky” fees and expenses and the expense of any special audits incident to or required by any such registration.

          “ Regulations ” means proposed, temporary and final Treasury Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding Treasury Regulations.)

          “ Regulatory Allocations ” is defined in Section 5.4(h) .

          “ Requesting Party ” is defined in Section 15.7 .

          “ Required Expansion Capital ” means Capital Contributions made, or, to the extent permitted under Section 3.4(a) , Letters of Credit posted, by, or on behalf of, the DLJMB Parties for the following purposes: (i) equity or other payments required under the Loan Agreements as a condition to the disbursement of construction loan proceeds thereunder, for other hard and soft costs relating to the Expansion Project as set forth in the Approved

Development Budget or for interest rate cap agreements(s) entered into by the Company or its Subsidiaries on or prior to the date hereof, (ii) funds for the Cash Requirements of the Company and its Subsidiaries during the pre-construction and construction periods of the Expansion Project, or (iii) interest payment requirements of the Company and its Subsidiaries during the pre-construction and construction periods of the Expansion Project (including, without limitation, any contributions to interest reserve accounts established pursuant to the Loan Agreements); provided that Required Expansion Capital shall not include any funds paid by any of the DLJMB Parties or their Affiliates pursuant to any Guaranty Agreement, except to the extent provided in the following sentence. If the DLJMB Parties fund any payments under the Guaranty Agreements for which Morgans is required to indemnify the DLJMB Parties but has failed to do so in accordance with Article 15 , then such indemnifiable payments actually funded by the DLJMB Parties shall be considered “Required Expansion Capital” for the purposes of this Agreement (including, without limitation, for purposes of determining the Incremental Capital, Excess Incremental Capital, Capital Contributions, Committed Capital, Percentage Interests and Adjusted Percentage Interests of the DLJMB Parties hereunder), except that such indemnifiable payments funded by the DLJMB Parties shall not reduce the amount of the New DLJMB Commitment allocated to Required Expansion Capital the DLJMB Parties are required to fund in accordance with the terms of Section 3.4(a) .

          “ Required Land Capital ” means Capital Contributions made or, to the extent permitted under Section 3.4(a) , Non-Equity Letters of Credit posted, by, or on behalf of, the DLJMB Parties for any of the following purposes in connection with funding and/or financing the purchase, sale or retention of all or a portion of the Excess Land: (a) funds used to finance the acquisition of the Excess Land by a current or future Subsidiary of the Company, (b) funds to support the equity or other requirements of third party purchase transactions relating to the Excess Land, or (c) funds to satisfy or defer payments relating to the Excess Land required under the Loan Agreements, together with all transaction costs related to any such purchase, sale, financing or retention described in this definition.

          “ Responsible Party ” is defined in Section 6.9(f)(i) .

          “ ROFO Offer ” is defined in Section 9.4(a)(ii)

          “ ROFO Offer Notice ” is defined in Section 9.4(a)(i) .

          “ ROFO Offer Period ” is defined in Section 9.4(a)(ii) .

          “ ROFO Offer Price ” is defined in Section 9.4(a)(ii) .

          “ ROFO Offered Interests ” is defined in Section 9.4(a)(i) .

          “ ROFO Recipients ” is defined in Section 9.4(a)(i) .

          “ Safe Harbor ” is defined in Section 3.12(e) .

          “ Second Mezzanine Lender ” means NRFC WA Holdings, LLC, a Delaware limited liability company, as assignee of Column Financial, Inc., in its capacity as lender under the Second Mezzanine Loan Agreement, together with any additional or subsequent lender under

the Second Mezzanine Loan Agreement (including, without limitation, any Person that becomes a lender by purchasing the loan thereunder) or any Person performing similar duties under any subsequent refinancing or replacement thereof.

          “ Second Mezzanine Loan Agreement ” means that certain Second Mezzanine Loan Agreement, dated as of November 6, 2007 (as it may be amended, supplemented, extended, restated or otherwise modified from time to time), among Second Mezzanine Lender, HRHH Gaming Junior Mezz, LLC, a Delaware limited liability company, and HRHH JV Junior Mezz, LLC, a Delaware limited liability company.

          “ Securities Act ” is defined in Article 13 .

          “ SEC ” means the Securities and Exchange Commission.

          “ Segregated Account ” is defined in Section 4.2(c) .

          “ Selling Expenses ” means, in respect of an initial public offering of the Listing Vehicle, all reasonable broker’s commissions, underwriting discounts and selling commissions applicable to such offering.

          “ Selling Member ” is defined in Section 9.4(a)(i) .

          “ Shortfall Amount ” is defined in Section 3.5(a) .

          “ Shortfall Contributions ” is defined in Section 3.5(a)(i) .

          “ Subsidiary ” means, with respect to a specified Person, any other Person of which a majority of the outstanding voting securities or other voting equity interests are owned, directly or indirectly, by the specified Person.

          “ Subsidiary Transfer ” is defined in Section 9.3(c) .

          “ Substitute Member ” means any Assignee that has been admitted to the Company as a Member pursuant to Section 10.2 by virtue of such Assignee’s receiving all or a portion of a Membership Interest from another Member or its Assignee, and not pursuant to Section 3.1 .

          “ Tag-Along Right ” is defined in Section 9.5(c) .

          “ Tax Liability Distribution ” is defined in Section 4.3 .

          “ Tax Matters Member ” means the Member designated as such pursuant to Section 8.6 .

          “ Technical Services Agreement ” means Technical Services Agreement, dated as of February 2, 2007, between HRHH Hotel/Casino, LLC, a Delaware limited liability company, and the Manager, as amended, modified or supplemented from time to time.

          “ Temporary Investments ” means an investment by the Company in (a) securities issued or unconditionally guaranteed by any Governmental Authority, (b) certificates of deposit

of any bank, (c) commercial paper rated “A” or better by Moody’s Investors Service (or rated at an equivalent level by a recognized credit ratings agency of similar repute) or (d) money market mutual funds.

          “ Termination Event ” is defined in Section 6.1(d) .

          “ Third Mezzanine Lender ” means Hard Rock Mezz Holdings LLC, a Delaware limited liability company, as assignee of Column Financial, Inc., in its capacity as lender under the Third Mezzanine Loan Agreement, together with any additional or subsequent lender under the Third Mezzanine Loan Agreement (including, without limitation, any Person that becomes a lender by purchasing the loan thereunder) or any Person performing similar duties under any subsequent refinancing or replacement thereof.

          “ Third Mezzanine Loan Agreement ” means that certain Third Mezzanine Loan Agreement, dated as of November 6, 2007 (as it may be amended, supplemented, extended, restated or otherwise modified from time to time), among Third Mezzanine Lender, HRHH Gaming Junior Mezz Two, LLC, a Delaware limited liability company, and HRHH JV Junior Mezz Two, LLC, a Delaware limited liability company.

          “ Third Party Transferee ” is defined in Section 9.4(a)(iv) .

          “ Transfer ” means, with respect to any Member, any sale, conveyance, exchange, assignment, gift, bequest or other transfer or disposition (whether direct or indirect, by operation of law or by any other means), of all or any part of such Member’s Interest in the Company, whether for value or no value and whether voluntary or involuntary (including, without limitation, by realization upon any Encumbrance or by operation of law or by judgment, levy, attachment, garnishment, bankruptcy or other legal or equitable proceedings) or an agreement to do any of the foregoing.

          “ Unsuitable Person ” is any Person whose ownership of or association with the Company, or in the case of an indirect Transfer, the applicable Morgans Party or DLJMB Party, could reasonably be anticipated to jeopardize the status of or result in the imposition of conditions on, a disciplinary action or the loss of, inability to reinstate, or failure to obtain any registration, permit, order, finding of suitability, exemption, waiver or license or any other rights or entitlements held or required to be held by the Company (or a Subsidiary of the Company) under any Gaming Regulations, or any such Person who is found unsuitable or is denied or disqualified from eligibility for any license or approval by the Nevada Gaming Authorities.

          “ Weighted Amount ” means (a) with respect to any Disproportionate Contribution, the amount of such Disproportionate Contribution, (b) with respect to any Existing Capital, the amount of such Existing Capital, (c) with respect to any New Capital Funding representing Incremental Capital, the amount of such New Capital Funding and (d) with respect to any New Capital Funding representing Excess Incremental Capital, 1.75 multiplied by such New Capital Funding.

ARTICLE 2.
FORMATION

     2.1 Intent . The Members hereby continue the Company pursuant to the terms and conditions set forth in this Agreement and under the Act. If any terms of this Agreement are inconsistent with any of the terms of the Act which are not mandatory, then the terms of this Agreement shall control.

     2.2 Certificate of Formation; Filings . The Members have caused to be executed and filed the Certificate in the Office of the Delaware Secretary of State as required by the Act. Betty W. Gee is hereby designated as an “authorized person” within the meaning of the Act, and has executed, delivered and filed the Certificate with the Secretary of State of the State of Delaware. Upon the filing of the Certificate with the Secretary of State of the State of Delaware, her powers as an “authorized person” ceased, and each Member, Director and Officer thereupon became a designated “authorized person” and shall continue as a designated “authorized person” within the meaning of the Act. Any Member, Director or Officer shall execute, deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in any other jurisdiction in which the Company may wish to conduct business.

     2.3 Name, Registered Office and Agent; Principal Place of Business . The name of the Company is “Hard Rock Hotel Holdings, LLC”. The Company may also conduct business at the same time under one or more fictitious names if the Members determine that such is in the best interests of the Company. The Members may change the name of the Company, from time to time, in accordance with applicable law. The Company’s registered office in the State of Delaware and its registered agent for service of process on the Company in the State of Delaware at such registered office shall be as set forth in the Company’s most recently filed Certificate. The Company’s principal place of business is 475 Tenth Avenue, New York, New York 10018, and thereafter may be at such other place or places as the Members may from time to time designate. The Company may maintain offices and places of business at such other place or places within or outside the State of Delaware as the Members deem advisable.

     2.4 Purpose of Company . The principal purpose of the Company shall be to acquire, operate, manage, develop, renovate, upgrade, improve, finance, market and potentially dispose of the Acquired Assets directly, or through one or more Subsidiaries of the Company. The Company may also engage in any other business or activity ancillary thereto that a limited liability company may be engaged in under applicable law, subject to approval of the Board and any other applicable provisions of this Agreement.

     2.5 Term . The Company commenced as of the date that the Certificate was filed with the Office of the Delaware Secretary of State, and shall continue unless the Company is sooner dissolved until the one hundredth (100 ^th ) anniversary of the Original Agreement Date (as such date may be extended by the mutual written agreement of the Members); provided , however , that the term of the Company shall be subject to the additional provisions for termination set forth in this Agreement.

     2.6 Issuance of Membership Interests . The Membership Interests when issued in accordance with the terms hereof will be duly and validly issued and, assuming the representations and warranties of the Members contained in this Agreement are true and correct on the date of issuance of such Membership Interests, will be issued in compliance with all

applicable federal and state securities laws regarding registration or qualification. The Membership Interests are valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms. Upon its execution of this Agreement, each person identified as a holder of Membership Interests on Exhibit A or in the books and records of the Company is hereby admitted to the Company as a member of the Company.

ARTICLE 3.
CAPITAL CONTRIBUTIONS, PERCENTAGE INTERESTS,
CAPITAL ACCOUNTS AND CLASSES OF INTERESTS

     3.1 Capital Commitments; Percentage Interests . The names, addresses, Committed Capital, Percentage Interests, Adjusted Percentage Interests and Profits Percentage Interests of the Class A Members, Class B Members and Class C Members (and the number of Class C Units held by each Class C Member) as of the date hereof are set forth on Exhibit A attached hereto and incorporated herein, as such exhibit may be modified from time to time according to the books and records of the Company. No Capital Contribution shall be required to be made by a Class C Member in connection with the issuance of Class C Units by the Company to such Member. Any changes in the Members’ respective Percentage Interests, Adjusted Percentage Interests or Profits Percentage Interests from time to time pursuant to the terms of this Agreement shall be recorded in the Company’s books and records.

     3.2 Initial Assignment by Morgans . As of the Original Agreement Date, and subject to and in accordance with the Contribution Agreement, (a) Morgans Co. and Morgans assigned all of their respective right, title and interest in and to the Acquisition Agreements to the Company or one or more of its Subsidiaries, and the Company or such Subsidiaries assumed such right, title and interest in and to the Acquisition Agreements; (b) Morgans Co. contributed all of the stock of MHG HR Acquisition Corp. (a party to the Merger Agreement) to the Company; and (c) Morgans Co. and Morgans were deemed to have made Capital Contributions to the Company of the Morgans Expenses (as defined in the Contribution Agreement) in accordance with Section 3.2(b) of the Contribution Agreement in an amount, when added to the value of the assignment(s) and contribution referenced in clauses (a) and (b), not to exceed Morgans Initial Capital Commitment (the amounts of the assignment(s) and contributions referred to in clauses (a), (b) and (c), collectively, the “ Applied Amounts ”). The Members hereby acknowledge and agree that, for purposes of the immediately preceding sentence, the Acquisition Agreements and the contribution of stock of MHG HR Acquisition Corp. have an aggregate value equal to the amount of the Escrow Deposits (as defined in the Contribution Agreement) credited toward the purchase price of the Acquisition. The foregoing assignments were made by Morgans Co. and Morgans to the Company or its Subsidiaries on an “as is, where is” basis and without representation or warranty of any kind or character, expressed or implied, with respect to the Acquired Assets and without recourse to Morgans Co. or Morgans, except as specifically provided to the contrary herein or in the Contribution Agreement.

     3.3 Initial Capital Contributions . Each of the Members made Capital Contributions to the Company immediately prior to the Closing as follows:

          (a) Morgans contributed the amount of Fifty Seven Million Five Hundred Twenty Five Thousand Three Hundred Seventy Eight and 10/00 Dollars ($57,525,378.10) (the

“ Morgans Initial Capital Commitment ”) to the Company; provided , however , that the Morgans Initial Capital Commitment was deemed satisfied to the extent that the Applied Amounts credited in accordance with Section 3.2 were at least equal to the Morgans Initial Capital Commitment;

          (b) Morgans Co. contributed the amount of One Hundred Fifty Dollars ($150) to the Company;

          (c) DLJMB contributed the amount of Eighty Four Million Seven Hundred Thirty Nine Thousand One Hundred Sixty Nine and 48/00 Dollars ($84,739,169.48) to the Company;

          (d) DLJMB Partners contributed the amount of Thirty Million Three Hundred Eleven Thousand Five Hundred Eighty Six and 72/00 Dollars ($30,311,586.72) to the Company; and

          (e) DLJMB LLC contributed the amount of Three Hundred Dollars ($300) to the Company.

     3.4 Additional Contributions . Except as otherwise required by law or pursuant to this Agreement, no Member or Assignee shall be required or permitted to make any additional Capital Contributions to the Company except as follows:

          (a) Existing Capital; New DLJMB Commitment .

     (i) Existing Capital . As of February 8, 2008, the DLJMB Parties and the Morgans Parties made or were deemed to have made Capital Contributions to the Company (including the Capital Contributions provided for under Section 3.3 ) and posted Equity Letters of Credit in aggregate amounts equal to One Hundred Fifty Million Eight Hundred Sixty Seven Thousand Two Hundred Sixty Eight and 71/00 Dollars ($150,867,268.71) and Seventy Two Million Seven Hundred Thirty Thousand Nine Hundred Nineteen and 95/00 Dollars ($72,730,919.95), respectively (the “ Existing Capital ”), representing aggregate Adjusted Percentage Interests of 67.6% and 32.4%, respectively, and Percentage Interests of 67.5% and 32.5%, respectively (but subject, in the case of the DLJMB Parties, to the receipt of all required regulatory approvals for any Adjusted Percentage Interest or Percentage Interest in excess of 66.7%). For purposes of its Adjusted Percentage Interest and Percentage Interest, each DLJMB Party and Morgans Party has been credited with a portion of the aggregate amount of Capital Contributions made or, as applicable, Equity Letters of Credit posted by the DLJMB Parties and the Morgans Parties, respectively, as of February 8, 2008, equal to its respective Adjusted Percentage Interest or Percentage Interest on the date the applicable Capital Contribution was funded or the Equity Letter of Credit was posted, as applicable.

     (ii) New DLJMB Commitment . Subject to the terms and conditions of this Agreement, the DLJMB Parties hereby commit (the “ New DLJMB

Commitment ”) to make additional Capital Contributions, in excess of the Existing Capital of the DLJMB Parties, in an aggregate amount up to Two Hundred Fifty Four Million Dollars ($254,000,000) (the “ New Capital ”). Of such New Capital, (i) up to One Hundred Forty Four Million Dollars ($144,000,000) shall be allocated for Required Expansion Capital, of which amount at least Four Million Dollars ($4,000,000) in the aggregate shall be made available by the DLJMB Parties after the date hereof for hard and soft costs provided for pursuant to or contemplated by the Approved Development Budget for the Expansion Project; and (ii) up to One Hundred Ten Million Dollars ($110,000,000) shall be allocated for Required Land Capital. Notwithstanding anything to the contrary herein, the following shall not be part of the New DLJMB Commitment and shall not be considered New Capital unless approved by all Capital Members: (1) funds contributed with respect to the Expansion Project or the Excess Land in excess of the portion of the New DLJMB Commitment allocated thereto, (2) funds which do not constitute Required Expansion Capital or Required Land Capital, and (3) any funds paid by any of the DLJMB Parties or their Affiliates pursuant to any Guaranty Agreement, except to the extent provided in the following sentence. If the DLJMB Parties fund any payments under the Guaranty Agreements for which Morgans is required to indemnify the DLJMB Parties but has failed to do so in accordance with Article 15 , then such indemnifiable payments actually funded by the DLJMB Parties shall be considered Required Expansion Capital for the purposes of this Agreement (including, without limitation, for purposes of determining the New Capital, Capital Contributions, Committed Capital, Percentage Interests and Adjusted Percentage Interests of the DLJMB Parties hereunder), except that such indemnifiable payments funded by the DLJMB Parties shall not reduce the amount of the New DLJMB Commitment allocated to Required Expansion Capital the DLJMB Parties are required to fund in accordance with the terms of this Section 3.4(a) . New Capital provided by the DLJMB Parties in an amount up to $99,132,731.29, which equals (x) Two Hundred Fifty Million Dollars ($250,000,000) minus (y) the Existing Capital of the DLJMB Parties as of February 8, 2008 in the amount of $150,867,268.71 is referred to herein as “ Incremental Capital ,” and all New Capital so provided by the DLJMB Parties in excess thereof is referred to as “ Excess Incremental Capital .” Exhibit A hereto sets forth the Percentage Interest and Adjusted Percentage Interest of each of the DLJMB Parties and the Morgans Parties on the date hereof (but subject, in the case of the DLJMB Parties, to the receipt of all required regulatory approvals for any Adjusted Percentage Interest or Percentage Interest in excess of 66.7%). DLJMB has caused to be delivered to Morgans Co. and the Company an equity commitment letter from one or more of the DLJ Funds substantially in the form attached hereto as Exhibit D , pursuant to which such parties have committed to provide the equity capital for the New Capital in an amount up to the New DLJMB Commitment, less the amount of such New Capital required to be funded by DLJMB Partners directly pursuant to this Agreement. The New DLJMB Commitment shall be reduced by Capital Contributions made or Letters of Credit posted after February 8,

2008 that constitute New Capital, subject to clause (iii) below with respect to the Bridge LC. For the avoidance of doubt, the New DLJMB Commitment shall replace all other equity commitments by the DLJMB Parties set forth in Section 3.4(a) of the Original Agreement. The Morgans Parties shall not have the option to fund up to their respective Percentage Interests of the New Capital and the DLJMB Parties shall not be required to fund New Capital in excess of the amount of the New DLJMB Commitment; provided , however , that the Morgans Parties and the DLJMB Parties shall fund other Capital Contributions if and to the extent required under this Agreement. The DLJMB Parties and the Morgans Parties shall cooperate in good faith to complete the Expansion Project and the sale of the Excess Land at the earliest possible date and as approved by the Board in accordance with Article 6 .

     (iii) Treatment of Bridge LC . On February 14, 2008, the DLJMB Parties posted a Non-Equity Letter of Credit with a maximum amount available to be drawn thereunder as of such date of One Hundred Ten Million Dollars ($110,000,000) to the Lenders in accordance with the Loan Agreements (the “ Bridge LC ”, which term shall include any successor Non-Equity Letter of Credit to, and any Non-Equity Letter of Credit posted in replacement or substitution of, the Bridge LC). As a result of the posting of the Bridge LC, the portion of the New DLJMB Commitment comprised of Required Land Capital was reduced from One Hundred Ten Million Dollars ($110,000,000) to Zero (0). Upon the expiration or release of the Bridge LC, the portion of the New DLJMB Commitment relating to Required Land Capital will be restored to One Hundred Ten Million Dollars ($110,000,000), less the amount of New Capital contributed by the DLJMB Parties to fund a transaction that has been approved by the Board or to make all or a portion of the amortization payment required under Section 2.4.2(b) of the Mortgage Loan Agreement (which New Capital to be used to make such amortization payment may be called by the DLJMB Parties in their sole discretion). The New DLJMB Commitment relating to Required Land Capital (including all amounts remaining thereunder) shall terminate, and the DLJMB Parties shall not be required to fund additional Required Land Capital, upon the earlier to occur of: (a) the completion by the DLJMB Parties of their funding of Required Land Capital for a transaction that has been approved by the Board; and (b) satisfaction in full of the amortization payment required under Section 2.4.2(b) of the Mortgage Loan Agreement. In accordance with Section 3.4(a)(vi) , and notwithstanding anything to the contrary in this Agreement, the posting of the Bridge LC by the DLJMB Parties shall not (x) increase the Committed Capital of the DLJMB Parties, (y) result in any adjustment in any Percentage Interests under this Agreement or (z) be treated as a Capital Contribution or a contribution of New Capital under this Agreement (in each case, unless and until otherwise provided by Section 3.4(a)(vi) ). The Morgans Parties shall reimburse the DLJMB Parties for the Morgans Parties’ aggregate Percentage Interest (as it may change from time to time) of the direct out-of-pocket costs incurred by the DLJMB Parties in connection with posting and maintaining such Bridge LC (including lender fees

and charges, but excluding any attorneys’ fees or reimbursement or similar obligations).

     (iv) Funding of New Capital . The DLJMB Parties shall make in a timely manner all additional Capital Contributions that constitute Required Expansion Capital and are provided for pursuant to or contemplated by the applicable Approved Development Plans and the applicable Approved Development Budget for the Expansion Project. The DLJMB Parties also shall make in a timely manner all additional Capital Contributions that constitute Required Land Capital and either (i) are required for a transaction that has been approved by the Board or (ii) are being funded to make all or a portion of the amortization payment under Section 2.4.2(b) of the Mortgage Loan Agreement. In the event that the DLJMB Parties intend to make a Capital Contribution in respect of New Capital in accordance with this Agreement, they shall provide the Morgans Parties written notice thereof not less than three (3) Business Days prior to the date on which such additional Capital Contribution is to be made (each, a “ Funding Notice ”), which notice shall specify the purpose for which the Capital Contributions will be made and whether the funding will be in cash or satisfied through the posting of a Letter of Credit to the extent permitted hereunder. The DLJMB Parties will fund the New Capital in a timely manner to the extent required herein and as required under the Loan Agreements or other applicable contractual obligations of the Company or its Subsidiaries; provided , however , in lieu of funding New Capital in cash, the DLJMB Parties may elect in their sole discretion to satisfy their obligation to fund the New Capital by posting, or causing one or more of their Affiliates to post, a Letter of Credit to the extent set forth in the Funding Notice, provided that (x) such Letter of Credit satisfies the criteria set forth in the definitions of Equity Letter of Credit or Non-Equity Letter of Credit (as the case may be), and (y) in no event shall the posting by a Member of a Non-Equity Letter of Credit result in any increase in such Member’s Percentage Interest, Adjusted Percentage Interest, Committed Capital or Capital Contribution (unless and until otherwise provided under Section 3.4(a)(vi) ). Upon delivery of such Letter of Credit to the Lenders or other applicable beneficiary (with a copy thereof to the Morgans Parties), the DLJMB Parties shall be deemed to have satisfied the funding requirement set forth in the Funding Notice. Upon the funding of a Capital Contribution (or posting an Equity Letter of Credit in lieu thereof) in accordance with this Section 3.4(a)(iv) , the relative Percentage Interests of the Capital Members shall be adjusted pursuant to Section 3.6 .

     (v) Maintenance, Funding and Termination of Letters of Credit . Any DLJMB Party posting a Letter of Credit pursuant to Section 3.4(a) shall be responsible for maintaining in full force and effect (or if required, replacing) such Letter of Credit as required under the Loan Agreements and/or any other document governing the delivery and maintenance of such Letter of Credit; provided , however , that such DLJMB Party may obtain the release of such Letter of Credit, or a reduction in the amount available to be drawn thereunder, to the extent permitted under the Loan Agreements and/or such other governing

document. In the event that a DLJMB Party funds (or causes an Affiliate to fund) a payment required under the Loan Agreements or such other governing document to secure the release of, or reduction in the amount available to be drawn under, a Letter of Credit posted pursuant to this Section 3.4(a) (including, without limitation, a prepayment of loans under the Loan Agreements), then, if such DLJMB Party provides reasonable supporting documentation to the Morgans Parties of the amount of such funding, then the amount of such funding by or on behalf of the posting DLJMB Party with respect to the released or reduced Letter of Credit will be treated as a Capital Contribution as of the date of the funding, and the Deemed Value of any such Equity Letter of Credit shall be reduced by the amount of such funding. In the event that a Lender or other beneficiary of the Letter of Credit draws upon a Letter of Credit posted pursuant to this Section 3.4(a) and the DLJMB Party that posted the Letter of Credit reimburses (or causes an Affiliate to reimburse) the issuer of the Letter of Credit with respect to all obligations resulting from such drawing, then, if such DLJMB Party provides reasonable supporting documentation to the Morgans Parties of the amount of such reimbursement, the amount reimbursed by or on behalf of the posting DLJMB Party with respect to such Letter of Credit will be treated as a Capital Contribution as of the date of the reimbursement, and the Deemed Value of any such Equity Letter of Credit shall be reduced by the amount of such reimbursement. In addition, if an Equity Letter of Credit is replaced by another Equity Letter of Credit with a greater face amount, then only the incremental Deemed Value of the substituted Equity Letter of Credit in excess of the Deemed Value of the original Equity Letter of Credit being replaced shall be taken into account in determining the increase of Committed Capital of the posting DLJMB Party and any Percentage Interest adjustment hereunder arising from the posting of such Equity Letter of Credit in accordance with this Agreement, it being the intention of the parties that, in determining Capital Contributions, Committed Capital, Percentage Interests and Adjusted Percentage Interests hereunder, the same (or substantively the same) dollars that are committed or contributed as capital hereunder shall be counted (for purposes of such calculations) only one time.

     (vi) Committed Capital . The Deemed Value of any Equity Letter of Credit posted by a DLJMB Party (or its Affiliate) or a Morgans Party in accordance with this Section 3.4(a) shall be included in such Party’s Committed Capital as of the date such Equity Letter of Credit is posted, and the Members’ Percentage Interests shall be adjusted in accordance with Section 3.6 . No adjustment shall be made with respect to the Percentage Interests of the Members (i) in the event that an Equity Letter of Credit is released or reduced, or expires or otherwise terminates pursuant to its terms as permitted under the Loan Agreements and/or other governing document; or (ii) as a result of any Capital Contribution made with respect to such Equity Letter of Credit upon its drawing, release or reduction as contemplated by Section 3.4(a)(v) . If a DLJMB Party (or its Affiliate) posts or has posted any Non-Equity Letter of Credit in accordance with this Section 3.4(a) (including the Bridge LC), then, unless otherwise consented to by Morgans, the posting of such Non-Equity

Letter of Credit shall not increase the Committed Capital of such DLJMB Party or result in any adjustment in any Percentage Interests under this Agreement unless and until such Non-Equity Letter of Credit is drawn by the Lenders or other beneficiary and the DLJMB Parties (or an Affiliate thereof) have reimbursed the issuer of the Non-Equity Letter of Credit, or a DLJMB Party (or an Affiliate thereof) funds a payment for the release or reduction of the Non-Equity Letter of Credit as permitted by this Agreement. In the event of such a drawing or funding, the DLJMB Parties shall be deemed to have made a Capital Contribution as contemplated by Section 3.4(a)(v) and the Percentage Interests of the Members shall be adjusted in accordance with Section 3.6 as of the date of such drawing or funding.

     (vii) Other Credit Support . For the avoidance of doubt, credit support for the Company provided by a Capital Member in the form other than an Equity Letter of Credit (such as a guaranty and/or similar arrangements) will only result in adjustments being made to the Capital Members’ Percentage Interests pursuant to the terms of this Agreement (if any) if and when capital is required to be funded in connection therewith.

          (b) Other Capital Commitments . If the Company requires capital (other than New Capital) that the Board has specifically approved to be contributed by the Capital Members pursuant to an applicable Approved Operating Plan or Approved Development Budget (other than the Approved Development Budget for the Expansion Project, which is addressed in Section 3.4(a) above) (the “ Necessary Capital ”), DLJMB shall request, on behalf of the Company, that the Capital Members make additional Capital Contributions by providing written notice thereof (a “ Capital Call Notice ”) not less than ten (10) Business Days prior to the date on which the additional Capital Contributions are to be made. Each Capital Call Notice shall specify the purpose for which the Capital Contributions are required to be made. Upon receipt of any such Capital Call Notice, the Necessary Capital shall be funded by the Capital Members in accordance with their Percentage Interests. Notwithstanding the foregoing, the Capital Members acknowledge and agree that when approving any Approved Development Project, the Board will also approve a financing plan for such Approved Development Project. Such financing plan shall specify the Capital Members’ obligations, if any, for additional Capital Contributions in connection with such Approved Development Project. No Capital Member shall be obligated under this Section 3.4(b) to make a Capital Contribution in respect of Necessary Capital unless such Capital Contribution is expressly contemplated by the applicable Approved Development Budget (in the case of an Approved Development Project) or Approved Operating Plan. If the Company requires capital (other than New Capital) to be contributed by the Capital Members to fund an unexpected shortfall in capital that was either (i) to be provided by a capital source other than the Capital Members pursuant to such Approved Operating Plan or Approved Development Budget or (ii) not contemplated by the Approved Operating Plan, but reasonably necessary to continue the day to day operations of the Hotel/Casino as then currently conducted (in either case, the “ Operating Capital ”), DLJMB may in its reasonable discretion request, on behalf of the Company, that the Capital Members make additional Capital Contributions by providing a Capital Call Notice not less than ten (10) Business Days prior to the date on which the additional Capital Contributions are to be made. Upon receipt of any such Capital Call Notice, the Operating Capital shall be funded by the Capital Members in accordance with their Percentage

Interests; provided , however , that, notwithstanding anything to the contrary in this Agreement (including Section 3.5 hereof), Morgans Co. may elect in its sole discretion for the Morgans Parties not to fund all or any portion of their aggregate pro rata amount of the Operating Capital, which election shall be made, if at all, by providing DLJMB written notice thereof at least five (5) Business Days prior to the date on which the additional Capital Contributions are to be made. In the event Morgans Co. makes any such election, the DLJMB Parties may in their sole discretion fund, on the date set forth in the Capital Call Notice, that portion of the Morgans Parties’ aggregate pro rata share of the Operating Capital that Morgans Co. (on behalf of the Morgans Parties) elected not to make (in which case the relative Percentage Interests of the Capital Members shall be adjusted pursuant to Section 3.6 ).

          (c) Delivery of Notices . If, for any reason, DLJMB fails, in a timely manner, to issue any Funding Notice for New Capital or any Capital Call Notice for Necessary Capital (excluding, however, Operating Capital) in accordance with this Section 3.4 , then, if such New Capital or Necessary Capital has been approved by the Board pursuant to an applicable Approved Development Budget or Approved Operating Plan, Morgans Co. also shall have the right to issue such notice if DLJMB fails to issue such notice within five (5) Business Days after written notice from Morgans Co. to DLJMB specifying such failure.

     3.5 Failure to Contribute .

          (a) In the event that any Capital Member (each, a “ Non-Contributing Member ”) fails to timely make some or all of any Capital Contribution required to be made by such Capital Member pursuant to Section 3.4 (or fails to post a Letter of Credit in the amount of such Capital Contribution in circumstances where such posting would satisfy the Capital Member’s obligations under the Funding Notice) (in each case, a “ Shortfall Amount ”), and such failure continues for a period of five (5) Business Days after receipt by such Non-Contributing Member of written notice from any other Capital Member specifying such failure, then DLJMB (in the case that the Non-Contributing Member is a Morgans Party) or Morgans Co. (in the case that the Non-Contributing Member is a DLJMB Party) may, in its sole discretion, take, or cause a DLJMB Party or Morgans Party, respectively, to take, any of the following actions (the Person taking such action or caused to take such action being the “ Contributing Member ”):

     (i) make additional Capital Contributions (or post a Letter of Credit in lieu thereof, if permitted) (“ Shortfall Contributions ”) equal to some or all of the Shortfall Amount (in which case, subject to the receipt of all approvals required under Gaming Regulations (to the extent applicable at such time), the relative Percentage Interests of the Capital Members shall be adjusted pursuant to Section 3.5(d) );

     (ii) loan to the Company some or all of the Shortfall Amount (a “ Company Loan ”), provided that: (i) the sums thus advanced shall be deemed to be demand recourse loans from the Contributing Member to the Non-Contributing Member and a contribution of such sums to the Company by the Non-Contributing Member; (ii) such loans shall bear interest at the rate of interest equal to LIBOR, plus six percent (6%) per annum, (provided, however, that if at any time the interest rate provided for herein (the “ Note Rate ”) exceeds the

Maximum Rate, the Note Rate shall be limited to the Maximum Rate, but any subsequent reductions in the Note Rate (i.e., by reason of a reduction in the LIBOR) shall not reduce the rate of interest accruing hereunder below the Maximum Rate until such time as the total amount of interest accrued and paid on such loan equals the amount that would have accrued on such loan if the Note Rate had at all times been in effect), from the date that the advance was made until the date that such advance, together with any reasonable costs and expenses incurred by the Company as a result of the Non-Contributing Member’s failure to contribute, and together with all interest accrued thereon, is repaid to the Contributing Member and the Company, as appropriate; (iii) unless otherwise paid, the repayment of such Company Loan shall be made from any distribution or reimbursement from the Company otherwise to be made to the Non-Contributing Member before any distribution or reimbursement is made to the Non-Contributing Member during the existence of the Company or after dissolution; and (iv) all such repayments shall be first applied to any reasonable costs and expenses incurred by the Company as a result of the Non-Contributing Member’s failure to contribute, then to interest earned and unpaid on the advance, and then to principal; and

     (iii) if a DLJMB Party is a Contributing Member, DLJMB may secure New Financing and/or New Equity for the Company pursuant to Section 3.9 .

          (b) No right, power or remedy conferred upon any Capital Member (other than the Non-Contributing Member) in this Section 3.5 shall be exclusive, and each such right, power or remedy shall be cumulative and in addition to every other right, power or remedy whether conferred in this Section 3.5 , Article 11 , pursuant to any other provision of this Agreement, or now or hereafter available at law or in equity or by statute or otherwise. In addition, and notwithstanding anything to the contrary in Section 11.1(c) , if such failure of the Non-Contributing Member to make the required Capital Contribution continues for a period of ninety (90) days following notice thereof given by the Contributing Member to the Non-Contributing Member, and the Contributing Member has not theretofore made a Shortfall Contribution or delivered a Conversion Notice pursuant to Section 3.5(c) below with respect to such Capital Contribution, then (and only in such event) the Contributing Member may treat the failure of the Non-Contributing Member to make the required Capital Contribution as an Event of Default, and the Non-Contributing Member as a Defaulting Member, under Section 11.1(c) .

          (c) Provided that the Contributing Member has not elected to treat the failure of the Non-Contributing Member to make the required Capital Contribution (or failure to post a Letter of Credit in circumstance where such posting would satisfy the Capital Members’ obligations under the Capital Call Notice) as an Event of Default pursuant to Section 3.5(b) above, then with respect to any Company Loan made in connection with a Shortfall Amount, in the event that a Contributing Member shall have made a Company Loan and the Company Loan ( plus all accrued and unpaid interest thereon) shall not have been repaid in full (either by the Non-Contributing Member or by the Company out of distributions to which the Non-Contributing Member would otherwise be entitled) within ninety (90) days after the making of such Company Loan, any Contributing Member may, by delivering a notice (the “ Conversion Notice ”) to the Non-Contributing Member at any time after the expiration of such ninety (90)

day period, elect to terminate such Company Loan, convert the Company Loan to equity and have the Non-Contributing Member’s Percentage Interest reduced as set forth in clause (d) below; provided , however , that the Non-Contributing Member shall have the right during the ten (10) day period following the delivery by the Contributing Member of the Conversion Notice to repay in full the Company Loan or the unpaid portion thereof (together with all accrued and unpaid interest earned thereon), and if such repayment shall occur within such ten (10) day period, the Contributing Member shall have no further rights under this Section 3.5(c) with respect to such Company Loan.

          (d) If a Contributing Member makes a Shortfall Contribution pursuant to Section 3.5(a)(i) or elects to terminate a Company Loan pursuant to Section 3.5(c) and the Non-Contributing Member shall fail to repay in full to the Contributing Member the unpaid portion of the Company Loan ( plus all accrued and unpaid interest thereon) (with such amounts also treated as Shortfall Contributions) within the ten (10) day period referred to in such Section 3.5(c) , then, subject to the receipt of all approvals required under Gaming Regulations (to the extent applicable at such time), the Percentage Interest of the Contributing Member shall be, at the election of the Contributing Member, adjusted pursuant to Section 3.6 or, alternatively, increased by adding to such Percentage Interest an additional percentage, stated as a fraction, the numerator of which is equal to 150% of the Shortfall Contribution and the denominator of which is equal to the sum of (i) the Existing Equity immediately prior to the making of the Capital Contributions (and/or other increases in Committed Capital) of which the Shortfall Contribution was a part, plus (ii) the aggregate Capital Contributions (and/or other increases in Committed Capital) being made in connection with which the Shortfall Contribution was made. Subject to the receipt of all approvals required under Gaming Regulations (to the extent applicable at such time), the Percentage Interest of the Non-Contributing Member shall be reduced by the percentage by which the Contributing Member’s Percentage Interest is increased pursuant to the immediately preceding sentence.

     3.6 Percentage Interest Adjustment .

          (a) New Capital Adjustments . In the event that any DLJMB Party makes any New Capital Funding, then, subject to the receipt of all approvals required under Gaming Regulations (to the extent applicable at such time), the Percentage Interests of the Capital Members shall be adjusted automatically such that the relative Percentage Interest of each Capital Member shall equal a percentage, stated as a fraction, the numerator of which equals the Weighted Amount of such Member’s aggregate Committed Capital as of such time (including the Weighted Amount of the New Capital Funding, if applicable), and the denominator of which equals the Weighted Amount of the aggregate Committed Capital of all the Members (including the Weighted Amount of the New Capital Funding, if applicable), as of such time; provided , however , that if prior to any DLJMB Party making such New Capital Funding there has been an adjustment made to the Capital Members’ Percentage Interests pursuant to either Section 3.6(b) or Section 3.5(d) , then the Capital Members shall mutually agree upon an appropriate adjustment of each Capital Member’s Percentage Interest as a result of such New Capital Funding that takes into consideration the Capital Members’ Percentage Interest as previously adjusted (and the New DLJMB Commitment shall be conditioned upon and subject to the Capital Members agreeing upon such adjustment).

          (b) Other Capital Adjustments . Subject to Section 3.6(a) and 3.5(d) , in the event that any Capital Member makes any Disproportionate Contribution, then, subject to the receipt of all approvals required under Gaming Regulations (to the extent applicable at such time), the Percentage Interests of the Capital Members shall be adjusted automatically such that the relative Percentage Interest of each Capital Member shall equal a percentage, stated as a fraction, the numerator of which equals the sum of (i) the Weighted Amount of the Disproportionate Contribution (if any) made by the Capital Member, plus (ii) the Capital Member’s allocable share of the Existing Equity immediately prior thereto (measured by multiplying the Existing Equity by such Capital Member’s Percentage Interest immediately prior to the making of such Disproportionate Contribution), and the denominator of which equals the sum of (x) the Weighted Amount of the Disproportionate Contributions made by all of the Capital Members in respect of which the adjustment is being made plus (y) the Existing Equity immediately prior thereto.

     3.7 Return of Capital, No Interest on Capital . Except as provided in this Agreement: (a) no Member or Assignee shall demand or be entitled to the return of any or all of its Capital Contribution or Capital Account, (b) no Member or Assignee shall withdraw any portion of its Capital Contribution, and (c) the Company shall not redeem or repurchase the Interest of any Member or Assignee. Neither a Member’s Capital Contribution nor its Capital Account shall earn interest.

     3.8 Additional Members . Except as permitted in Section 11.2(b) in connection with an Event of Default, Section 3.9 with respect to New Equity and/or Section 3.12(b) with respect to the Class C Members, the Company may not issue Interests in the Company, or admit one or more recipients of such Interests as additional Members (“ Additional Members ”), without the consent of the Class A Members. No Additional Member shall be admitted without first obtaining all approvals and findings of suitability required under applicable Gaming Regulations. Upon the admission of any Additional Member, the Class A Members shall amend this Agreement to the extent necessary to incorporate the terms and conditions pursuant to which such Additional Member was admitted. As a condition to being admitted to the Company, each Additional Member shall (a) execute an agreement to be bound by the terms and conditions of this Agreement (as so amended); and (b) pay all costs and expenses required in connection with obtaining all approvals and findings of suitability required under applicable Gaming Regulations for such admission.

     3.9 New Financing; New Equity . Subject to Section 6.4 , if, at any time, the Company requires additional capital with respect to actions or matters approved by the Board (to the extent that such approval is required under Section 6.3 or elsewhere in this Agreement), DLJMB shall have the right (but not the obligation), in its reasonable discretion without Board approval, to determine appropriate sources of such capital whether in the form of debt (other than debt convertible into equity) (“ New Financing ”) or equity (or debt convertible into equity) (“ New Equity ”) (or both); provided, however, that any such New Financing or New Equity is funded by either (a) third parties who are not Morgans’ Competitors or Affiliates of any Capital Member, or (b) the existing Capital Members or their Affiliates on Fair Market Terms. “ Fair Market Terms ” as used herein shall mean that the terms of such New Financing or New Equity either (i) have been determined by the Board to be on fair market terms, or (ii) in the case of either (x) absence of Board approval, or (y) the Board being expanded by two (2) additional members, as

contemplated in Section 6.1(d) , have been determined by a written appraisal or fairness opinion issued to the Company by an independent nationally recognized investment banking firm (not affiliated with DLJMB unless otherwise agreed by Morgans Co.) approved by the Capital Members to be on fair market terms (which appraisal or fairness opinion shall be subject to the review of the Capital Members to ensure that the party providing same has followed all reasonable and appropriate procedures and methods for issuing such appraisal or fairness opinion). DLJMB agrees to provide Morgans Co. with reasonable advance notice of and consult with Morgans Co. regarding any proposed transaction involving New Financing or New Equity and further agrees to give due consideration to any advice or recommendations Morgans Co. may have in respect thereto, and upon request DLJMB shall promptly provide to Morgans Co. copies of any commitment letters, proposals, term sheets and communications and material correspondence (whether draft or final) in connection therewith. The Capital Members that are not Defaulting Members shall have the right to participate (on a pro rata basis in accordance with their respective Percentage Interests) in connection with any New Equity transaction. For the avoidance of doubt, to the extent required pursuant to any such New Financing and/or New Equity to be raised pursuant to this Section 3.9 , DLJMB shall have the right, upon reasonable prior written notice to Morgans Co. but without the need for any further consent by any other Member or other Person, to take such additional reasonable actions (including, without limitation, amending this Agreement and/or restructuring the way in which the Company holds the Company Assets) to give effect thereto (subject in all cases to Section 6.4 hereof) to the extent that such actions do not have a disproportionate adverse effect on Morgans Co. Each Party shall take such other actions as are required by Section 7.2 to carry out any transaction involving a New Financing or New Equity.

     3.10 Limited Liability of Members . Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member of the Company.

     3.11 Capital Accounts .

          (a) A Capital Account shall be established for each Member in the books and records of the Company and in accordance with the provisions of this Section 3.11 .

     (i) To each Member’s Capital Account there shall be credited (i) such Member’s Capital Contributions, (ii) such Member’s allocable share of Net Profits and any items in the nature of income or gain that are specially allocated to such Member pursuant to Article 5 hereof or other provisions of this Agreement, and (iii) the amount of any Company liabilities assumed by such Member or which are secured by any property distributed to such Member. The principal amount of a promissory note that is not readily traded on an established securities market and that is contributed to the Company by the maker of the note or a Member related to the maker of the note within the meaning of Regulations Section 1.704-1(b)(2)(ii)(c) shall not be included in the Capital Account of any Member until the Company makes a taxable disposition of the note or until and to

the extent principal payments are made on the note, all in accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(2).

     (ii) To each Member’s Capital Account there shall be debited (i) the amount of (A) cash and (B) the Gross Asset Value of any Company assets (other than cash) distributed to such Member (other than any payment of principal and/or interest to such Member pursuant to the terms of a loan made by the Member to the Company) pursuant to any provision of this Agreement, (ii) such Member’s allocable share of Net Losses and any other items in the nature of expenses or losses that are specially allocated to such Member pursuant to Article 5 or other provisions of this Agreement, and (iii) liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company.

     (iii) In the event any Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Interest.

     (iv) In determining the amount of any liability for purposes of subparagraphs 3.11(a) and 3.11(b) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

     (v) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted and applied in a manner consistent with such Regulations. In the event that the Members determine to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations, the Members may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Member pursuant to Article 5 hereof upon the dissolution of the Company.

          (b) Within each Member’s Capital Account, separate and distinct sub-capital accounts may, in the discretion of the Board, be maintained for such Member with respect to its interest(s) in certain identified assets of, or any separate classes of interests in, the Company, which separate sub-capital accounts shall represent and constitute some or all of such Member’s Capital Account. Any such sub-capital accounts shall be maintained in a manner consistent with the manner in which Capital Accounts generally are to be maintained under this Agreement. Without limiting th