**Exhibit 10.2**

 

March 20, 2003

 

KevinKelley

4455Paradise Road

Las Vegas, Nevada 89109

 

Re:Performance Awards Plan/Award Agreement

 

Dear Kevin:

 

Pursuantto 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 toKevin Kelley (“*Participant*”) the number of Planperformance units (“*Units*”) specified in Section 1below. Units are granted to Participant subject to the restrictions, terms,conditions and vesting schedule set forth herein and in the Plan and are in allrespects qualified, limited and conditioned by the Plan. In the event of anyconflict or inconsistency between this Agreement and the Plan, the terms of thePlan shall govern. Capitalized terms which are not defined herein have themeaning specified in the Plan. A copy of the Plan will be provided toParticipant upon request or may be reviewed by Participant at the Corporation’sexecutive offices during regular business hours. All references herein to “*Sections*”shall mean the numbered Sections of this Agreement, unless otherwisespecified.

 

1.             *Grant of Units; Types ofAwards*. The Corporation herebygrants to you 2,000 Units, each of which has an index value of $1,000 (“*IndexValue*”) for purposes of this Agreement. All Awards under thisAgreement, whether they are payable as Cash-Based Awards or as Share-BasedAwards, are designated as Performance-Based Awards and shall be subject to theprovisions of the Plan relating to Performance-Based Awards. All Awards payablehereunder 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 aChange in Control, the Committee decides to designate as Share-Based Awards (asauthorized under Section 10).

 

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

 

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requesteddeferred payment date and the amount of the requested deferral. The Committeeshall have absolute discretion to approve or deny such request. An Awardpayment deferral, if approved by the Committee, shall be for a term of one year(a “*DeferralYear*”) from the date on which the Award payment wouldotherwise have been due. A Participant, however, may request subsequent DeferralYears in accordance with the above provisions of this Section. Each suchrequest for a subsequent deferral must be submitted to the Committee not laterthan 120 days prior to the then-scheduled Award payment date.

 

3.             *Vesting; Contingent Units*.

 

(a)           Except as provided in Sections 5(a), 10 or11, Units awarded under this Agreement shall become vested at the rate of 25%per year during the four-year period (the “*Vesting Period*”) commencingon April 1, 2003. Vesting shall occur on March 31 of each year of the VestingPeriod, provided that Participant is still employed by the Corporation or anyof its Subsidiaries on each date fixed for vesting.

 

(b)           Each of the four years commencing on April 1which comprise the Vesting Period, as provided in paragraph (a) of thisSection, is referred to herein as a “*Vesting Year*.” Units which have notyet become vested as of a specified date are sometimes referred to herein as “*ContingentUnits*.”

 

4.             *Calculations of Awards*.

 

(a)           The value assigned to an Award (the “*AssignedValue*”) shall be calculated annually prior to the earlier of(i) the 90th day after the end of each Vesting Year or (ii) any suchearlier date after the end of a Vesting Year by which payment of an Award basedon that calculation is due under this Agreement. If payment of an Award isdeferred pursuant to Section 2, then the Assigned Value also shall becalculated not earlier than 90 days and not later than one day prior to the endof each Deferral Year. The Assigned Value shall equal the sum of (x) theInitial EBITDA Award Value, which shall be calculated in accordance withparagraph (b) of this Section 4, only for Units that became vested either inthe most recently completed Vesting Year prior to the calculation date or subsequentto such most recently completed Vesting Year as a result of accelerated vesting(collectively, “*Newly Vested Units*”), plus (y) themost recent Carryover EBITDA Award Value, which shall be calculated inaccordance with paragraph (c) of this Section 4, for Units that became vestedin any Vesting Year prior to either the most recently completed Vesting Year orthe most recently completed Deferral Year (collectively, “*PreviouslyVested Units*”). The Committee shall certify all suchcalculations prior to payment of the Award. If, as a result of acceleratedvesting, 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 becalculated 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 thefirst one and for each Deferral Year (if any), Carryover EBITDA Award Valueshall 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 numeratorof 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 denominatorof which is EBITDA for the Vesting Year or Deferral Year immediately precedingthe 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 underSection 2, then the amount of the Award payment shall be the greater of (i) themost 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 ofwhich the Award is payable. If an Award payment is deferred pursuant to Section2, then the amount of the Award payment shall be the most recently calculatedAssigned Value as of the Award payment date.

 

5.             *Death, Disability orRetirement of Participant*.

 

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

 

(i)            accelerated vesting of some or all ContingentUnits;

 

(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 toParticipant’s estate in the event of death) prior to the payment date providedfor 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 notapplicable, a physical or mental illness or incapacity of Participant which hasresulted in a determination that Participant is entitled to receive benefits(A) under a long-term disability insurance policy maintained by the Corporationor any of its Subsidiaries for Participant or (B) if no such insurance policyis then in existence, under the federal social security disability insuranceprogram.

 

(c)           “*Retirement*” means

 

(i)            permanent termination of regular full-timeemployment 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 ofregular full-time employment with the Corporation or any of its Subsidiaries isat least 65; and

 

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

 

(d)           Except to the extent the Committee takes anyof the actions specified in paragraph (a) of this Section, the payment ofAwards 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 EmploymentBy Corporation Or Subsidiaries Other Than For Cause*. If the Corporation or any of its Subsidiariesterminate Participant’s employment forany reason other than Cause (as provided in Section 7), then (i) all ContingentUnits as of the date of such termination shall be canceled, (ii) Participantshall not be entitled to any payment or replacement Units in respect of suchContingent Units, and (iii) all Awards payable pursuant to this Agreement shallbe paid 90 days after the date of such termination.

 

7.             *Termination of EmploymentFor Cause*.

 

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

 

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

 

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

 

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

 

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towhich Participant is a party and the Corporation or any of its Subsidiaries area party or a third party beneficiary;

 

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

 

(iv)          Participant commits any act or omissionconstituting gross negligence or willful misconduct in the performance of hisor her duties.

 

Inaddition, Participant’s employment shall be deemed terminated for Cause ifParticipant resigns or otherwise terminates his or her employment at a timewhen the Corporation or any of its Subsidiaries had grounds to terminateParticipant’s employment under any of clauses (i) through (iv) of thisparagraph (b).

 

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

 

9.             *Special Events*.

 

(a)           If Participant issues written certificationto the Committee that an event specified in paragraph (c) of this Section hasoccurred (the “*Certification*”) and at the time ofthe Certification Participant has been employed by the Corporation or any ofits Subsidiaries for at least two years, then subject to the approval of theCommittee, which shall not be unreasonably withheld and shall be deemed grantedunless the Committee issues written disapproval to Participant within ten daysafter receiving the Certification, Participant shall be entitled to acceleratedpayment of Awards in accordance with paragraph (b) of this Section.

 

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

 

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

 

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

 

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

 

(iii)          payment by Participant of college tuition andrelated 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, theCommittee shall have absolute discretion to accelerate the vesting ofContingents Units or the payment of Awards, to designate Awards as Share-BasedAwards, or to make any other decisions or take any other actions described inSection 7(b) of the Plan.

 

11.           *Initial Public Offering*.

 

(a)           Upon a sale by the Corporation of Stock orother equity securities convertible into Stock in an initial public offeringpursuant to an effective registration statement under the Securities Act of1933, as amended (the “*IPO*”), the Committee shall haveabsolute discretion to accelerate the vesting of Contingent Units and paymentof Awards so that the Contingent Units become vested upon completion of the IPOand all Awards are paid within 30 days after the date on which the IPO iscompleted.

 

(b)           Awards in respect of Contingent Units whichbecome vested pursuant to the acceleration provisions of paragraph (a) of thisSection 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 inSection 5(a) of the Plan. Awards in excess of such limit shall be Cash-BasedAwards.

 

12.           *Payment Dates Falling onHolidays*. If the date on whichany payment due hereunder falls on a Saturday, Sunday or day on which federalgovernment offices and banks are generally closed (a “*Holiday*”), suchpayment shall instead be due on the next subsequent day that is not a Holiday.

 

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

 

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

 

PARTICIPANT:

 

KevinKelley

4455Paradise Road

LasVegas, Nevada 89109

 

TheCORPORATION or the COMMITTEE:

 

HardRock Hotel, Inc.

510North Robertson Boulevard

LosAngeles, California 90048

Attn:Peter A. Morton, Chairman/CEO

 

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Noticesgiven in the aforesaid manner shall be deemed given and received at the time ofdelivery if delivered in person or three days after mailing if sent bycertified or registered mail.

 

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

 

16.           *Gaming Authorities Approval*. Nothing in this Agreement shall be construedto require the performance of any act contrary to law, and if there is anyconflict between any provision of this Agreement and any statute, law,ordinance, or regulation, contrary to which the parties have no legal right tocontract, then the latter shall prevail; but in such an event, the provisionsof this Agreement so affected shall be curtailed and limited only to the extentnecessary to bring it within the legal requirements. Notwithstanding anythingherein to the contrary, the effectiveness of this Agreement, the terms andconditions contained herein and the payment of any Awards hereunder shall be contingentupon all requisite approvals of the Gaming Authorities.

 

17.           *No Assurance of Employment*. Nothing in this Agreement or in any other documentsrelated to this Agreement or the Plan shall confer upon Participant any rightto continue in the employ or other service of the Corporation or any of itsSubsidiaries or constitute any contract (of employment or otherwise) or otherlimitation on the right of the Corporation or any of its Subsidiaries to changeParticipant’s compensation or other benefits or to terminate the employment ofParticipant with or without cause.

 

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

 

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

 

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

 

21.           ***Participant’sWaiver of Certain Legal Rights to Earlier Payments*****.****Participant acknowledges that inthe event of voluntary or involuntary termination of Participant’s employmentwith the Corporation or any of its Subsidiaries, the Nevada Revised Statutes(Nevada law) might call for the Corporation to pay Participant any amounts duehereunder earlier than the payment date called for under this Agreement and thePlan. 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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