Exhibit 10.4

FIRST AMENDMENT TO MORGANS LAS VEGAS, LLC

LIMITED LIABILITY COMPANY AGREEMENT

THIS FIRST AMENDMENT (“Amendment”) made effective as of the 15th day of May,
2006 (“Effective Date”), by and between MORGANS LAS VEGAS LLC, a Delaware
limited liability company (“Morgans”), and ECHELON RESORTS CORPORATION, a Nevada
corporation (“Boyd”). Morgans and Boyd may hereinafter be referred to singularly
as a “Party” or “Member” or collectively as the “Parties” and the “Members”.

W I T N E S S E T H:

WHEREAS, Morgans and Boyd entered into a certain Limited Liability Company
Agreement, dated January 3, 2006, for the formation of the Company (the
“Operating Agreement”).

WHEREAS, each of the Members desire to enter into this Amendment to amend the
Operating Agreement upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, for and in consideration of the mutual promises of the Members
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Members agree as follows:

A. Incorporation of Recitals/Definitions. The foregoing recitals are hereby
incorporated herein and made a part hereof as if fully set forth herein. Unless
specifically defined herein, all defined terms used in this Amendment shall have
the same meanings as those set forth in the Operating Agreement.

B. Operative Amendments.

1. Definitions. The following definitions are hereby added to the Operating
Agreement:

“Hard Rock Property” shall mean, collectively, (a) that certain hotel casino
property currently known as the “Hard Rock Hotel and Casino” and located at 4455
Paradise Road, Las Vegas, Nevada 89109, comprised of, but not necessarily
limited to, Clark County Assessor’s Parcel Numbers 162-22-202-001, 002, and 003,
162-22- 103-004, 162-21-504-005, 162-21-602-002, 003, (b) any expansions of such
hotel casino property and improvements, and (c) other adjacent or otherwise
related properties and assets to be acquired by Morgans or a Morgans Affiliate.

“Non-Recourse Financing” shall mean, in this instance, loan financing pursuant
to which neither Morgans Parent nor any of its Affiliates, shall have any
financial or credit obligations or any related liability to any lender or other
third party, related to any capital contributions or payment or credit support
arising from or related to such financing of the Hard Rock Property (other than
carve-outs and exceptions that may be reasonably customary for non-recourse
financings).

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2. Collateral for Funding Obligations and Commitments. The following new
Section 5.09 is hereby added to the Operating Agreement:

Section 5.09. Morgans Collateral and Failure to Proceed.

(a) Upon the closing of the acquisition by Morgans or a Morgans Affiliate of the
Hard Rock Property, Morgans agrees to wire transfer to Boyd, into a segregated
account designated by Boyd, a cash deposit in the amount of Thirty Million
Dollars ($30,000,000) (the “Deposit”), and such Deposit shall be maintained in
such account by Boyd and shall be retained or applied by Boyd, or refunded to
Morgans, in accordance with this Section 5.09. As consideration for Boyd’s
agreement with respect to the acquisition of the Hard Rock Property (as
permitted by Section 8.05(b) of the Operating Agreement, as amended pursuant to
this Amendment), Boyd shall have the right to retain and shall have no
obligation to return or otherwise reimburse to Morgans the amount of the Deposit
upon the occurrence of any of the following: (i) Morgans fails to satisfy any of
its financial commitments contained in this Operating Agreement following
written notice from Boyd and the expiration of any applicable cure period set
forth in the Operating Agreement and the Hotel Management Agreement, including,
without limitation, any obligation to fund a Capital Contribution or Cost
Overruns, and/or (ii) the Contribution Date does not occur prior to the Outside
Start Date (“Contribution Date Passage”) due to a breach by Morgans of its
obligations under the Operating Agreement and/or the Hotel Management Agreement
following written notice from Boyd and expiration of all applicable cure periods
set forth in the Operating Agreement (the occurrence of either (i) or (ii) above
shall hereinafter be referred to as a “Morgans Default”). In the event that the
Contribution Date shall occur in accordance with this Operating Agreement, then
the amount of the Deposit shall be applied by Boyd against the Morgans Capital
Commitment required to be contributed by Morgans on such date. The parties agree
that the Contribution Date Passage date shall be extended day for day as a
result of any decision by Boyd, made prior to the Outside Start Date, to delay
the commencement of construction and/or pre-construction activities of a
material portion of Echelon Place (excluding the Hotels, to the extent caused by
a breach of Morgans as set forth above) beyond June 30, 2008. Morgans and Boyd
each agree to proceed at all times in good faith in connection with the
pre-development of the Hotels pursuant to the Operating Agreement.

(b) Notwithstanding Section 4.03 or any other provision of the Operating
Agreement to the contrary, in the event of a Morgans Default, Boyd shall have
the exclusive right to use at Echelon Place (and Morgans shall not use within
the greater Las Vegas metropolitan area, including, but not limited to, Clark
County, Nevada), without payment of any fee or any other compensation to the
Company or to Morgans or any of its Affiliates, (i) the plans, specifications,
reports, test results or other work product prepared in connection with the
Project for Boyd to use in its construction of the Hotels on the Land or
anywhere else within Echelon Place, and (ii) for the period of time commencing
on the date of the Contribution Date Passage or the dissolution of the Company
as set forth above through December 31, 2055, the names “Delano Las Vegas” and
“Mondrian Las Vegas”, and other marks and names that are derivative from such
names, pursuant to the brand standards for the Delano and Mondrian brands in
effect

 

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from time to time and pursuant to other customary non-monetary terms and
conditions for licensing arrangements of this type.

(c) Notwithstanding anything to the contrary contained in the Operating
Agreement or the Hotel Management Agreement, the Members agree that in the event
of a Morgans Default, Boyd may, in its sole discretion, terminate the Hotel
Management Agreement, and neither the Company nor any Member or Affiliate of
such Member, shall have any other rights or obligations thereunder.

(d) Morgans agrees that to the extent a dispute arises between the Members under
the Operating Agreement or Hotel Management Agreement relating to or arising
from the use of the Morgans brand names by Boyd, as set forth above in
Section 5.09(b) above, Boyd shall continue to have the right to (i) use the
Morgans Brand Names for the Hotels, during the pendency of such dispute in
accordance with such Section 5.09(b), and (ii) use the plans and specifications
and other materials referenced in Section 5.09(b)(i) above, regardless of the
outcome of such dispute; provided, however, that to the extent that it is
determined by a court of law, with proper jurisdiction over the dispute, that
Boyd does not have a right to use the Brand Names, the use of such Brand Names
shall be discontinued by Boyd in accordance with such ruling or finding, as of
that date, in connection with Boyd’s development, construction, and/or operation
of the Hotels.

(e) Boyd agrees that its rights under Section 5.09(a) and (b) shall be deemed
terminated and void upon the occurrence of any of the following on or prior to
the date of the Contribution Date Passage: (w) any sale or other disposition or
conveyance by Boyd or a Boyd Affiliate of (i) the Land or a material portion
thereof, or its direct or indirect interests therein or (ii) its ownership
interest in substantially all of the land on which Echelon Place is to be built,
if such sale or other disposition, as contemplated under sections (i) and
(ii) above, is made to a third party, but which shall not include an entity that
is a Boyd Affiliate or a Boyd Controlled Affiliate, provided that nothing in
this clause (w) is intended to, or shall have the effect of, granting to Boyd
any rights with respect to the direct or indirect transfer of the Land or Boyd’s
interests therein beyond Boyd’s rights as currently set forth in the Operating
Agreement (without giving effect to this Amendment), (x) the occurrence of the
Contribution Date Passage for any reason other than a Morgans Default, (y) a
merger, sale, consolidation or other transaction (or series of transactions)
shall occur resulting in the change of the direct or indirect ownership of 50%
or more of the outstanding common stock of Boyd Parent, other than (i) through
the trading of publicly held securities in the ordinary course or (ii) as a
result of transfers between and among family members of William S. Boyd,
including estate planning related transfers, or (z) the acquisition by Boyd of
the Morgans Interest pursuant to Section 12.05 of the Operating Agreement. Upon
the occurrence of any such event described in this Section 5.09(e), Boyd shall
not have the right to retain, and shall promptly return or otherwise reimburse
to Morgans, the amount of the Deposit and Boyd shall have no rights under
Section 5.09(b) above.

(f) The obligations of Boyd under this Section 5.09 shall be guaranteed by the
Boyd Parent.

 

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(g) The obligations of Morgans under this Section 5.09 shall be guaranteed by
the Morgans Parent.

3. Duties and Conflicts. The following sentence shall be added at the end of
Section 8.05(b) of the Operating Agreement:

“Notwithstanding anything in this Section 8.05(b), the provisions of this
subsection shall not apply to any acquisition, investment, management,
development or other activity described in the preceding sentence by Morgans or
any Morgans Affiliate in, at (or of) the Hard Rock Property. In addition, the
provisions of Section 3.5 of the Hotel Management Agreement shall not be
applicable to the Hard Rock Property, and the Hotel Management Agreement shall
be deemed to be amended by this sentence in accordance with Section 22.13 of the
Hotel Management Agreement.”

4. Additional Representation and Covenant. As a material inducement to Boyd to
enter into this Amendment, Morgans represents, warrants and covenants with Boyd
that any financing obtained in connection with the acquisition of the Hard Rock
Property shall be Non-Recourse Financing with respect to Morgans Parent and any
of its Affiliates.

C. Effective Upon Hard Rock Closing. Notwithstanding anything in this Amendment
to the contrary, this Amendment shall only be effective upon, and shall have no
force or effect prior to, the closing by a Morgans Affiliate of the acquisition
of the Hard Rock Property. If, prior to the date of the Contribution Date
Passage, the agreement of a Morgans Affiliate to acquire the Hard Rock Property
shall terminate and if Morgans shall notify Boyd in writing of such termination,
then this Amendment shall thereafter be null, void and of no force or effect.

D. Counterparts. This Amendment may be executed in one or more counterparts,
each of which shall be deemed to be the same document. The provisions of this
Amendment shall survive any termination or dissolution of the Company.

E. No Other Amendments. Except as specifically amended hereby, all of the other
terms and conditions of the Operating Agreement remain in full force and effect
in accordance with its terms.

F. Governing Law. All questions concerning the construction, validity, and
interpretation of this Amendment will be governed by and construed in accordance
with the internal law (and not the law of conflicts) of Delaware.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have executed this Amendment as of the day and
year first above set forth.

 

MORGANS/LV INVESTMENT LLC

By:

  Morgans Group LLC

By:

 

/s/ W. Edward Scheetz

 

Name:

 

W. Edward Scheetz

 

Title:

 

Chief Executive Officer

AS TO SECTIONS 5.06(a) and 5.09 OF THE OPERATING AGREEMENT AS AMENDED HEREBY
ONLY:

MORGANS HOTEL GROUP CO.

By:

 

/s/ W. Edward Scheetz

 

Name:

 

W. Edward Scheetz

 

Title:

 

Chief Executive Officer

[Signatures Continue on Next Page]

 

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[Signatures Continued]

 

ECHELON RESORTS CORPORATION By:   /s/ Paul J. Chakmak   Name:   Paul J. Chakmak
  Title:   Senior Vice President and Treasurer AS TO SECTIONS 4.02(c), 5.06(b),
5.09, 8.05(c) AND 11.02(b) ONLY OF THE OPERATING AGREEMENT AS AMENDED HEREBY:  
  BOYD GAMING CORPORATION By:   /s/ Paul J. Chakmak   Name:   Paul J. Chakmak  
Title:   SVP—Finance and Treasurer

[Signatures Continue on Next Page]

 

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[Signatures Continued]

 

The parties to the Hotel Management Agreement have executed this Amendment below
for purposes of amending the Hotel Management Agreement pursuant to the last
sentence of Section (B)(3) of this Amendment: OWNER MORGANS LAS VEGAS, LLC By:  
Echelon Resorts Corporation By:   /s/ Paul J. Chakmak   Name:   Paul J. Chakmak
  Title:   SVP and Treasurer

 

 

OPERATOR MORGANS/LV MANAGEMENT LLC By:   Morgans Hotel Group Management LLC By:
  Morgans Group LLC By:   Morgans Hotel Group Co. By:   /s/ W. Edward Scheetz  
Name:   W. Edward Scheetz   Title:     

 

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