Exhibit 10.2

 

March 20, 2003

 

Kevin Kelley

4455 Paradise Road

Las Vegas, Nevada 89109

 

Re: Performance Awards Plan/Award Agreement

 

Dear Kevin:

 

Pursuant to the Hard Rock Hotel, Inc. Performance Awards Plan (as presently in
effect, and as it may be amended from time to time hereafter, the “Plan”) and
this Award Agreement (this “Agreement”), Hard Rock Hotel, Inc., a Nevada
corporation (the “Corporation”), hereby awards to Kevin Kelley (“Participant”)
the number of Plan performance units (“Units”) specified in Section 1 below.
Units are granted to Participant subject to the restrictions, terms, conditions
and vesting schedule set forth herein and in the Plan and are in all respects
qualified, limited and conditioned by the Plan. In the event of any conflict or
inconsistency between this Agreement and the Plan, the terms of the Plan shall
govern. Capitalized terms which are not defined herein have the meaning
specified in the Plan. A copy of the Plan will be provided to Participant upon
request or may be reviewed by Participant at the Corporation’s executive offices
during regular business hours. All references herein to “Sections” shall mean
the numbered Sections of this Agreement, unless otherwise specified.

 

1.             Grant of Units; Types of Awards. The Corporation hereby grants to
you 2,000 Units, each of which has an index value of $1,000 (“Index Value”) for
purposes of this Agreement. All Awards under this Agreement, whether they are
payable as Cash-Based Awards or as Share-Based Awards, are designated as
Performance-Based Awards and shall be subject to the provisions of the Plan
relating to Performance-Based Awards. All Awards payable hereunder are
Cash-Based Awards, except (i) Awards payable under Section 11(b) which are
Share-Based Awards to the extent provided therein and (ii) Awards which, in
connection with a Change in Control, the Committee decides to designate as
Share-Based Awards (as authorized under Section 10).

 

2.             Award Payment Date; Payment Deferrals. Except as provided in
Sections 5(a), 6, 9, 10 or 11, all Awards payable pursuant to this Agreement
shall be paid 90 days after the end of the four-year Vesting Period (as defined
in Section 3). Participant, however, may request deferral of the payment of
Awards by submitting to the Committee, not later than 30 days prior to the end
of the Vesting Period, a written request stating the

 

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requested deferred payment date and the amount of the requested deferral. The
Committee shall have absolute discretion to approve or deny such request. An
Award payment deferral, if approved by the Committee, shall be for a term of one
year (a “Deferral Year”) from the date on which the Award payment would
otherwise have been due. A Participant, however, may request subsequent Deferral
Years in accordance with the above provisions of this Section. Each such request
for a subsequent deferral must be submitted to the Committee not later than 120
days prior to the then-scheduled Award payment date.

 

3.             Vesting; Contingent Units.

 

(a)           Except as provided in Sections 5(a), 10 or 11, Units awarded under
this Agreement shall become vested at the rate of 25% per year during the
four-year period (the “Vesting Period”) commencing on April 1, 2003. Vesting
shall occur on March 31 of each year of the Vesting Period, provided that
Participant is still employed by the Corporation or any of its Subsidiaries on
each date fixed for vesting.

 

(b)           Each of the four years commencing on April 1 which comprise the
Vesting Period, as provided in paragraph (a) of this Section, is referred to
herein as a “Vesting Year.” Units which have not yet become vested as of a
specified date are sometimes referred to herein as “Contingent Units.”

 

4.             Calculations of Awards.

 

(a)           The value assigned to an Award (the “Assigned Value”) shall be
calculated annually prior to the earlier of (i) the 90th day after the end of
each Vesting Year or (ii) any such earlier date after the end of a Vesting Year
by which payment of an Award based on that calculation is due under this
Agreement. If payment of an Award is deferred pursuant to Section 2, then the
Assigned Value also shall be calculated not earlier than 90 days and not later
than one day prior to the end of each Deferral Year. The Assigned Value shall
equal the sum of (x) the Initial EBITDA Award Value, which shall be calculated
in accordance with paragraph (b) of this Section 4, only for Units that became
vested either in the most recently completed Vesting Year prior to the
calculation date or subsequent to such most recently completed Vesting Year as a
result of accelerated vesting (collectively, “Newly Vested Units”), plus (y) the
most recent Carryover EBITDA Award Value, which shall be calculated in
accordance with paragraph (c) of this Section 4, for Units that became vested in
any Vesting Year prior to either the most recently completed Vesting Year or the
most recently completed Deferral Year (collectively, “Previously Vested Units”).
The Committee shall certify all such calculations prior to payment of the Award.
If, as a result of accelerated vesting, Units become vested prior to completion
of the first Vesting Year, then for purposes of the above calculations specified
in this paragraph (a) such Units shall be deemed to have become vested in the
first Vesting Year.

 

(b)           Initial EBITDA Award Value shall be calculated as follows:

 

Index
Value

x

number of Newly Vested Units

=

Initial EBITDA Award Value

 

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(c)           For each completed Vesting Year after the first one and for each
Deferral Year (if any), Carryover EBITDA Award Value shall be calculated as
follows:

 

EBITDA Performance Factor (calculated pursuant to paragraph (d) of this Section
4) 

x

the sum of Initial EBITDA Award Value calculated during the immediately
preceding Vesting Year plus Carryover EBITDA Award Value calculated during the
immediately preceding Vesting Year (if any) 

=

Carryover EBITDA Award Value

 

(d)           “EBITDA Performance Factor” shall be calculated as a ratio, the
numerator of which is EBITDA for the most recently completed Vesting Year or
Deferral Year, as the case may be (or $1 if such EBITDA was a negative amount),
and the denominator of which is EBITDA for the Vesting Year or Deferral Year
immediately preceding the most recently completed Vesting Year or Deferral Year,
as the case may be (or $1 if such EBITDA was a negative amount).

 

(e)           If an Award is paid without deferral under Section 2, then the
amount of the Award payment shall be the greater of (i) the most recently
calculated Assigned Value as of the Award payment date or (ii) the product of
the Index Value multiplied by the number of Units in respect of which the Award
is payable. If an Award payment is deferred pursuant to Section 2, then the
amount of the Award payment shall be the most recently calculated Assigned Value
as of the Award payment date.

 

5.             Death, Disability or Retirement of Participant.

 

(a)           If Participant dies or ceases to be an employee of the Corporation
or any of its Subsidiaries by reason of Disability (as defined in paragraph (b)
of this Section) or Retirement (as defined in paragraph (c) of this Section)
while any Units awarded hereunder are still Contingent Units, then the Committee
shall have the authority, in its absolute discretion, to approve and implement
any or all of the following:

 

(i)            accelerated vesting of some or all Contingent Units;

 

(ii)           cancellation of some or all Contingent Units (with no payment or
replacement Units in respect thereof); or

 

(iii)          payment of Awards to Participant (or to Participant’s estate in
the event of death) prior to the payment date provided for in Section 2.

 

(b)           “Disability” means

 

(i)            disability, disabled or permanently disabled, as defined in
Participant’s employment agreement; or

 

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(ii)           if clause (i) of this paragraph (b) is not applicable, a physical
or mental illness or incapacity of Participant which has resulted in a
determination that Participant is entitled to receive benefits (A) under a
long-term disability insurance policy maintained by the Corporation or any of
its Subsidiaries for Participant or (B) if no such insurance policy is then in
existence, under the federal social security disability insurance program.

 

(c)           “Retirement” means

 

(i)            permanent termination of regular full-time employment at a time
when (A) Participant’s age is at least 65 or (B) Participant’s age is at least
55 and the sum of his or her age plus years of regular full-time employment with
the Corporation or any of its Subsidiaries is at least 65; and

 

(ii)           Participant certifies in writing to the Committee that he or she
no longer intends to engage in a full-time vocation.

 

(d)           Except to the extent the Committee takes any of the actions
specified in paragraph (a) of this Section, the payment of Awards and the status
of Contingent Units in the event of Participant’s death, Disability or
Retirement shall be governed by Section 8.

 

6.             Termination of Employment By Corporation Or Subsidiaries Other
Than For Cause. If the Corporation or any of its Subsidiaries terminate
Participant’s employment for any reason other than Cause (as provided in Section
7), then (i) all Contingent Units as of the date of such termination shall be
canceled, (ii) Participant shall not be entitled to any payment or replacement
Units in respect of such Contingent Units, and (iii) all Awards payable pursuant
to this Agreement shall be paid 90 days after the date of such termination.

 

7.             Termination of Employment For Cause.

 

(a)           If the Corporation or any of its Subsidiaries terminate
Participant’s employment for Cause as provided in paragraph (b) of this Section,
then all Contingent Units shall be canceled and all vested Units for which
Awards have not yet been paid shall be forfeited. Participant shall not be
entitled to any payment or replacement Units in respect of Units that are
canceled or forfeited pursuant to this Section.

 

(b)           Termination of Participant’s employment for any of the following
reasons shall constitute termination for Cause:

 

(i)            any event or condition occurs which is specified in Participant’s
employment agreement as grounds for termination for cause;

 

(ii)           Participant engages in the operation or management of a business,
whether as owner, partner, officer, director, employee or otherwise, which is in
competition with the Corporation or any of its Subsidiaries, or Participant
otherwise violates the terms of any covenant restricting such competition
contained in any agreement

 

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to which Participant is a party and the Corporation or any of its Subsidiaries
are a party or a third party beneficiary;

 

(iii)          Participant is convicted of, or pleads nolo contendere to, any
felony or other crime which would, in the reasonable judgment of the Committee,
make Participant unsuitable for employment with a licensed gaming enterprise; or

 

(iv)          Participant commits any act or omission constituting gross
negligence or willful misconduct in the performance of his or her duties.

 

In addition, Participant’s employment shall be deemed terminated for Cause if
Participant resigns or otherwise terminates his or her employment at a time when
the Corporation or any of its Subsidiaries had grounds to terminate
Participant’s employment under any of clauses (i) through (iv) of this paragraph
(b).

 

8.             Termination Of Employment By Participant Or Under Certain Other
Circumstances. If Participant resigns or otherwise terminates his or her
employment with the Corporation or its Subsidiaries or if Participant’s
employment terminates due to death or Disability and Section 5(d) provides that
this Section 8 shall govern, then (i) all Contingent Units shall be canceled,
(ii) Participant shall not be entitled to any payment or replacement Units in
respect of such Contingent Units and (iii) the Corporation shall pay Awards with
respect to vested Units 90 days after the end of the Vesting Period.

 

9.             Special Events.

 

(a)           If Participant issues written certification to the Committee that
an event specified in paragraph (c) of this Section has occurred (the
“Certification”) and at the time of the Certification Participant has been
employed by the Corporation or any of its Subsidiaries for at least two years,
then subject to the approval of the Committee, which shall not be unreasonably
withheld and shall be deemed granted unless the Committee issues written
disapproval to Participant within ten days after receiving the Certification,
Participant shall be entitled to accelerated payment of Awards in accordance
with paragraph (b) of this Section.

 

(b)           Awards of which the Committee has approved accelerated payment
under paragraph (a) of this Section shall be paid within 30 days after such
approval.

 

(c)           An event covered by paragraph (a) of this Section is any of the
following:

 

(i)            a purchase by Participant of his or her principal residence;

 

(ii)           a medical emergency requiring payment by Participant (after
giving effect to amounts covered by insurance) of more than $5,000; or

 

(iii)          payment by Participant of college tuition and related expenses of
a dependent in an aggregate amount exceeding $5,000.

 

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10.           Change in Control. In the event of a Change in Control, the
Committee shall have absolute discretion to accelerate the vesting of
Contingents Units or the payment of Awards, to designate Awards as Share-Based
Awards, or to make any other decisions or take any other actions described in
Section 7(b) of the Plan.

 

11.           Initial Public Offering.

 

(a)           Upon a sale by the Corporation of Stock or other equity securities
convertible into Stock in an initial public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the “IPO”),
the Committee shall have absolute discretion to accelerate the vesting of
Contingent Units and payment of Awards so that the Contingent Units become
vested upon completion of the IPO and all Awards are paid within 30 days after
the date on which the IPO is completed.

 

(b)           Awards in respect of Contingent Units which become vested pursuant
to the acceleration provisions of paragraph (a) of this Section shall be paid in
the form of the equity securities that were sold in, and at the price per
security offered in, the IPO (exclusive of underwriters’ discounts), subject to
the aggregate limit on Share-Based Awards specified in Section 5(a) of the Plan.
Awards in excess of such limit shall be Cash-Based Awards.

 

12.           Payment Dates Falling on Holidays. If the date on which any
payment due hereunder falls on a Saturday, Sunday or day on which federal
government offices and banks are generally closed (a “Holiday”), such payment
shall instead be due on the next subsequent day that is not a Holiday.

 

13.           Governing Law. This Agreement shall be governed by the laws of the
State of Nevada from time to time in effect, without regard to conflicts of law
principles.

 

14.           Notices. Any notice, request, certification or other communication
pertaining to this Agreement or the Plan (collectively, “Notices”) shall be
given in writing and delivered in person or mailed by certified or registered
mail, addressed to the respective party at the address as set out below, or at
such other address as either party may elect to designate in advance in writing,
to the other party:

 

PARTICIPANT:

 

Kevin Kelley

4455 Paradise Road

Las Vegas, Nevada 89109

 

The CORPORATION or the COMMITTEE:

 

Hard Rock Hotel, Inc.

510 North Robertson Boulevard

Los Angeles, California 90048

Attn: Peter A. Morton, Chairman/CEO

 

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Notices given in the aforesaid manner shall be deemed given and received at the
time of delivery if delivered in person or three days after mailing if sent by
certified or registered mail.

 

15.           Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, or unenforceable by
reason of any rule of law or public policy, all other provisions of this
Agreement shall nevertheless remain in effect. No provision of this Agreement
shall be deemed dependent on any other provision unless so expressed herein.

 

16.           Gaming Authorities Approval. Nothing in this Agreement shall be
construed to require the performance of any act contrary to law, and if there is
any conflict between any provision of this Agreement and any statute, law,
ordinance, or regulation, contrary to which the parties have no legal right to
contract, then the latter shall prevail; but in such an event, the provisions of
this Agreement so affected shall be curtailed and limited only to the extent
necessary to bring it within the legal requirements. Notwithstanding anything
herein to the contrary, the effectiveness of this Agreement, the terms and
conditions contained herein and the payment of any Awards hereunder shall be
contingent upon all requisite approvals of the Gaming Authorities.

 

17.           No Assurance of Employment. Nothing in this Agreement or in any
other documents related to this Agreement or the Plan shall confer upon
Participant any right to continue in the employ or other service of the
Corporation or any of its Subsidiaries or constitute any contract (of employment
or otherwise) or other limitation on the right of the Corporation or any of its
Subsidiaries to change Participant’s compensation or other benefits or to
terminate the employment of Participant with or without cause.

 

18.           Merger. This Agreement and the Plan supersede any and all other
agreements and understandings, either oral or in writing, between the parties
hereto with respect to the Units awarded to Participant under this Agreement,
the vesting of such Units and the payment of Awards in respect of such Units.

 

19.           Effectiveness. This Agreement shall be effective upon the parties’
execution of it in the spaces provided below, Participant’s initialing Section
21 in the space provided at the end of that Section, and Participant’s delivery
of an executed copy to the Corporation’s Chairman/CEO.

 

20.           Construction. The section headings in this Agreement are for
convenience only and are not to be given any legal effect and shall not affect
the meaning or interpretation of this Agreement

 

21.           Participant’s Waiver of Certain Legal Rights to Earlier Payments.
Participant acknowledges that in the event of voluntary or involuntary
termination of Participant’s employment with the Corporation or any of its
Subsidiaries, the Nevada Revised Statutes (Nevada law) might call for the
Corporation to pay Participant any amounts due hereunder earlier than the
payment date called for under this Agreement and the Plan. Participant hereby
waives entitlement to such payment by

 

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the date called for under the Nevada Revised Statutes in the event of
termination of Participant’s employment and, in lieu

thereof, accepts the later payment date called for under this Agreement.

 

 

Participant’s Initials

 

 

Hard Rock Hotel, Inc., a Nevada
corporation

 

 

 

By:

/s/ Peter Morton

 

 

Name:

Peter Morton

 

 

Title:

Chairman/CEO

 

 

Accepted and agreed:

 

 

 

PARTICIPANT:

 

 

 

 

 

/s/ Kevin Kelley

 

 

Signature

 

Name: Kevin Kelley

 

 

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