Document:

kura-ex103_11.htm

Exhibit 10.3

 

Kura Oncology, Inc.

Executive Employment Agreement

for

Kathleen Ford

This Executive Employment Agreement (the “Agreement”), entered into between Kura Oncology, Inc. (the “Company”) and Kathleen Ford (the “Executive”) (collectively, the “Parties”), is effective as of August 9, 2019 (the “Effective Date”).  

Whereas, the Company desires Executive to provide employment services to the Company, and wishes to provide Executive with certain compensation and benefits in return for such employment services; and

Whereas, Executive wishes to be employed by the Company and to provide personal services to the Company in return for certain compensation and benefits. 

Now, Therefore, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:

1.Employment by the Company.

1.1Position.  Executive will serve as the Chief Operating Officer of the Company.  During the term of Executive’s employment with the Company, Executive will devote Executive’s best efforts and substantially all of Executive’s business time and attention to the business of the Company, except for approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies.  

1.2Duties and Location.  Executive will perform such duties as are required by the Company’s Chief Executive Officer (currently Troy E. Wilson, Ph.D., J.D.), to whom Executive will report.  Executive’s primary office location will be the Company’s Cambridge, Massachusetts office.  The Company reserves the right to reasonably require Executive to perform Executive’s duties at places other than Executive’s primary office location from time to time, including, but not limited to, at the Company’s office in San Diego, California, and to require reasonable business travel.  The Company may modify Executive’s job title and duties as it deems necessary and appropriate in light of the Company’s needs and interests from time to time.  

1.3Policies and Procedures.  The employment relationship between the Parties will be governed by the general employment policies and practices of the Company, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement will control.

2.Compensation.

2.1Salary.  For services to be rendered hereunder, Executive will receive a base salary at the rate of $400,000 per year (the “Base Salary”) payable in installments in accordance with the 

 

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Company’s regular payroll schedule.  

2.2Bonus.  Executive will be eligible for an annual discretionary bonus of up to 40% of Executive’s Base Salary (the “Annual Bonus”).  Whether Executive receives an Annual Bonus for any given year, and the amount of any such Annual Bonus, will be determined by the Company’s Board of Directors (“Board”) in its sole discretion based upon the Company’s and Executive’s achievement of objectives and milestones to be determined on an annual basis by the Board.  Executive must remain an active employee through the end of any given calendar year in order to earn an Annual Bonus for that year and any such bonus will be paid prior to March 15 of the year following the year in which such bonus was earned.  Executive will not be eligible for, and will not earn, any Annual Bonus (including a prorated bonus) if Executive’s employment terminates for any reason before the end of the calendar year.

2.3 Equity.  Subject to the approval by the Board, and as further consideration for Executive’s employment, the Company shall grant Executive an option to purchase 250,000 shares of the Company’s common stock (“Common Stock”) at a per share exercise price equal to the closing sales price for the Common Stock on the principal trading market for the Common Stock on the grant date of the option (the “Option”).  The Option will be subject to the terms and conditions of the Company’s Amended and Restated 2014 Equity Incentive Plan (the “Plan”), and an option agreement between Company and Executive.  The Option will be subject to vesting over a four year period according to the following schedule: 1/48th of the shares will vest monthly following the vesting commencement date, so long as Executive remains in continuous service with the Company through the applicable vesting dates. 

3.Standard Company Benefits.  Executive shall be entitled to participate in all employee benefit programs for which Executive is eligible under the terms and conditions of the benefit plans that may be in effect from time to time and provided by the Company to its employees.  The Company reserves the right to cancel or change the benefit plans or programs it offers to its employees at any time.

4.Vacation.  Executive will be entitled to accrue and use paid vacation in accordance with the terms of the Company’s vacation policy and practices, provided, however, that in no event will Executive’s vacation accrual rate be lower than 3 weeks per year.

5.Expenses.  The Company will reimburse Executive for reasonable travel, entertainment or other expenses incurred by Executive in furtherance or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time.  

6.Termination of Employment; Severance.

6.1At-Will Employment.  Executive’s employment relationship is at-will.  Either Executive or the Company may terminate the employment relationship at any time, with or without Cause or advance notice.  

6.2Termination Without Cause; Resignation for Good Reason.  

(a)Not in Connection with a Corporate Transaction.  In the event Executive’s employment with the Company is terminated by the Company without Cause (other than by reason of death or disability), or Executive resigns for Good Reason, then provided such termination or resignation constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”), the Separation from Service 

 

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occurs more than 59 days prior to or 12 months after the closing of a Corporate Transaction, the Company shall pay Executive’s base salary and accrued and unused vacation benefits earned through the date of termination, at the rate in effect at the time of termination, less standard deductions and withholdings.  In addition, if Executive provides a signed release of claims in a form reasonably satisfactory to the Company (the “Release”) and allows such Release to become irrevocable and effective no later than 60 days following Executive’s Separation from Service, and provided that Executive remains in compliance with the terms of this Agreement, the Company will provide Executive with the following severance benefits:

(i)A cash lump-sum payment in an amount equal to 12 months of Executive’s annual base salary at the rate in effect on the effective date of Executive’s Separation from Service, ignoring any decrease in base salary that forms the basis for Good Reason, less standard deductions and withholdings, payable on the 60th day following Executive’s Separation from Service.

(ii)Provided Executive timely elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company will reimburse Executive’s COBRA premiums to continue Executive’s coverage (including coverage for eligible dependents, if applicable) through the period (the “COBRA Premium Period”) starting on the Executive’s Separation from Service and ending on the earliest to occur of: (i) 12 months following Executive’s Separation from Service; (ii) the date Executive becomes eligible for group health insurance coverage through a new employer; or (iii) the date Executive ceases to be eligible for COBRA continuation coverage for any reason.  In the event Executive becomes covered under another employer's group health plan or otherwise ceases to be eligible for COBRA during the COBRA Premium Period, Executive must immediately notify the Company of such event.  It shall be Executive’s obligation to complete the steps necessary to continue this coverage under COBRA, to pay the required COBRA premiums, and to submit to the Company sufficient documentation of such payments within sixty (60) days of making such payments to obtain reimbursement from the Company pursuant to this paragraph.

(b)In Connection with a Corporate Transaction.  In the event Executive’s employment with the Company is terminated by the Company without Cause (other than by reason of death or disability), or Executive resigns for Good Reason, and provided such termination or resignation constitutes a Separation from Service and such the Separation from Service occurs within 59 days prior to, on or within 12 months following the closing of a Corporate Transaction, the Company shall pay Executive’s base salary and accrued and unused vacation benefits earned through the date of termination, at the rate in effect at the time of termination, less standard deductions and withholdings.  In addition, if Executive provides a signed Release and allows such Release to become irrevocable and effective no later than 60 days following Executive’s Separation from Service, and provided that Executive remains in compliance with the terms of this Agreement, the Company will provide Executive with the following severance benefits:

(i)A cash lump-sum payment in an amount equal to 12 months of Executive’s annual base salary at the rate in effect on the effective date of Executive’s Separation from Service, ignoring any decrease in base salary that forms the basis for Good Reason, less standard deductions and withholdings, payable on the 60th day following Executive’s Separation from Service.

(ii)A cash lump-sum payment in an amount equal to the Executive’s full target bonus amount for services to be performed during the year in which the Corporate Transaction occurs, less standard deductions and withholdings, payable on the 60th day following Executive’s Separation from Service.

 

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(iii)Provided Executive timely elects continued coverage under COBRA, the Company will reimburse Executive’s COBRA premiums to continue Executive’s coverage (including coverage for eligible dependents, if applicable) through the COBRA Premium Period.  In the event Executive becomes covered under another employer's group health plan or otherwise ceases to be eligible for COBRA during the COBRA Premium Period, Executive must immediately notify the Company of such event.  It shall be Executive’s obligation to complete the steps necessary to continue this coverage under COBRA, to pay the required COBRA premiums, and to submit to the Company sufficient documentation of such payments within sixty (60) days of making such payments to obtain reimbursement from the Company pursuant to this paragraph.

(iv)One hundred percent of any equity held by Executive will be deemed vested and exercisable (if applicable) as of Executive’s last day of employment, provided, however, that with respect to any performance based vesting equity awards held by Executive that have multiple vesting levels depending upon the level of performance, such equity awards will vest at the target level.

(c)COBRA.  Notwithstanding Sections 6.2(a)(ii) and 6.2(b)(iii), if the Company determines, in its sole discretion, that the Company cannot provide the COBRA premium benefits without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof pay Executive a taxable cash amount, which payment shall be made regardless of whether the Executive or the Executive’s qualifying family members elect COBRA continuation coverage (the “Health Care Benefit Payment”).  The Health Care Benefit Payment shall be paid in monthly installments during the COBRA Premium Period and shall be equal to the amount that the Company otherwise would have paid to Executive for COBRA insurance premiums (which amount shall be calculated based on the premium for the first month of coverage), and shall be paid until the expiration of the COBRA Premium Period, but determined without regard to whether or not the Executive continues to be eligible for COBRA coverage.

6.3Resignation Without Good Reason; Termination for Cause; Death or Disability.  If Executive resigns without Good Reason, or the Company terminates Executive’s service for Cause, or upon a termination due to Executive’s death or disability, then all payments of compensation by the Company to Executive hereunder will terminate immediately (except as to amounts already earned), and Executive will not be entitled to any severance benefits under Section 6.2(a) or Section 6.2(b).  

7.Section 280G.

7.1If any payment or benefit Executive would receive from the Company or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be equal to the Reduced Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Executive.  If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”).  Notwithstanding the foregoing, if the Reduction 

 

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Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A of the Code that would not otherwise be subject to taxes pursuant to Section 409A of the Code, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A of the Code as follows:  (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest  economic benefit for Executive as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A of the Code shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A of the Code.

7.2In the event it is subsequently determined by the Internal Revenue Service that some portion of the Reduced Amount as determined pursuant to clause (x) in the preceding paragraph is subject to the Excise Tax, Executive agrees to promptly return to the Company a sufficient amount of the Payment so that no portion of the Reduced Amount is subject to the Excise Tax.  For the avoidance of doubt, if the Reduced Amount is determined pursuant to clause (y) in the preceding paragraph, Executive will have no obligation to return any portion of the Payment pursuant to the preceding sentence.

7.3Unless Executive and the Company agree on an alternative accounting firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective date of the Corporate Transaction shall perform the foregoing calculations.  If the accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Corporate Transaction, the Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.

7.4The Company shall use commercially reasonable efforts to cause the accounting firm engaged to make the determinations hereunder to provide its calculations, together with detailed supporting documentation, to Executive and the Company within fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by Executive or the Company) or such other time as requested by Executive or the Company.

8.Section 409A.  

8.1It is intended that all of the severance benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulations 1.409A‐1(b)(4), 1.409A‐1(b)(5) and 1.409A‐1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Code Section 409A.

8.2A termination of employment will not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a Separation from Service and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of service” or like terms will mean Separation from Service. If Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered deferred compensation under Code Section 409A payable on account of a Separation from Service, such payment or benefit will be made or provided at the 

 

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date which is the earlier of (A) the expiration of the six-month period measured from the date of such Separation from Service of Executive, and (B) the date of Executive’s death, to the extent required under Code Section 409A.  Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Section 8.2 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) will be paid or reimbursed to Executive in a lump sum, and any remaining payments and benefits due under this Agreement will be paid or provided in accordance with the normal payment dates specified for them herein.

8.3To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (A) all expenses or other reimbursements hereunder will be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Executive, (B) any right to reimbursement or in-kind benefits will not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year will in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

8.4For purposes of Code Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement will be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period will be within the sole discretion of the Company.  Notwithstanding any other provision of this Agreement to the contrary, in no event will any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

9.Definitions.  

9.1“Cause” with respect to Executive means Executive has: (a) been convicted of or pled guilty or nolo contendere to a felony or any crime involving moral turpitude or dishonesty; (b) participated in a fraud or act of dishonesty against the Company; (c) materially breached any agreement between such Executive and the Company or any written policy of the Company, and not cured such breach within five days of the Company’s written notice of such breach; (d) engaged in conduct that demonstrates gross unfitness to serve; or (e) engaged in willful misconduct or refused to comply with any lawful directive of the Company, and not cured such noncompliance within five days of the Company’s written notice of such noncompliance.

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

9.3 “Good Reason” will exist for Executive’s resignation from employment with the Company if any of the following actions are taken by the Company without Executive’s prior written consent: 

(a)a material reduction in Executive’s base salary, unless pursuant to a salary reduction program applicable generally to the Company’s similarly situated employees; 

(b)a material reduction in Executive’s duties (including responsibilities and/or authorities); 

 

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(c)a material reduction in the authority, duties, or responsibilities of the supervisor to whom Executive is required to report, including a requirement that Executive report to an employee of the Company instead of the Chief Executive Officer;

(d)relocation of Executive’s principal place of employment to a place that increases Executive’s one-way commute by more than 50 miles as compared to Executive’s then-current principal place of employment immediately prior to such relocation; or

(e)any other action or inaction that constitutes a material breach by the Company of this Agreement or any agreement under which Executive provides services. 

Provided, however that, such termination by the Executive shall only be deemed for Good Reason pursuant to the foregoing definition if (i) the Company is given written notice from the Executive within 30 days following the first occurrence of the condition that Executive considers to constitute Good Reason describing the condition and the Company fails to satisfactorily remedy such condition within 30 days following such written notice, and (ii) the Executive terminates employment within 90 days following the end of the period within which the Company was entitled to remedy the condition constituting Good Reason but failed to do so. 

9.4“Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events: 

(a)a sale, lease or other disposition of all or substantially all, as determined by the Board in its sole discretion, of the consolidated assets of the Company and its subsidiaries;

(b)a merger, consolidation, or similar transaction of the Company following which such entity is not the surviving entity;

(c)a merger, consolidation or similar transaction of the Company following which such entity is the surviving entity but the shares outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

Notwithstanding the foregoing, the term Corporate Transaction will not include (i) a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company or (ii) the acquisition of securities of the Company by an investor or any affiliate thereof that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities. In addition, to the extent required for compliance with Code Section 409A, in no event will an event be deemed a Corporate Transaction if such transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).

 

 

 

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10.Proprietary Information Obligations.

10.1Confidential Information Agreement.  As a condition of employment, Executive will execute and abide by the Company’s standard form of Proprietary Information and Invention Assignment Agreement (the “Confidentiality Agreement”) and Arbitration Agreement.

10.2Third-Party Agreements and Information.  Executive represents and warrants that Executive’s employment by the Company does not conflict with any prior employment or consulting agreement or other agreement with any third party, and that Executive will perform Executive’s duties to the Company without violating any such agreement.  Executive represents and warrants that Executive does not possess confidential information arising out of prior employment, consulting, or other third party relationships, that would be used in connection with Executive’s employment with the Company, except as expressly authorized by that third party.  During Executive’s employment with the Company, Executive will use in the performance of Executive’s duties only information which is generally known and used by persons with training and experience comparable to Executive’s own, common knowledge in the industry, otherwise legally in the public domain, or obtained or developed by the Company or by Executive in the course of Executive’s work for the Company.  

11.Outside Activities During Employment.  

11.1Non-Company Business.  Except with the prior written consent of the Chief Executive Officer, Executive will not during the term of Executive’s employment with the Company undertake or engage in any employment, occupation or business enterprise, other than ones in which Executive is a passive investor or as permitted under Section 11.2.  Executive shall be entitled to serve on the board of directors of such other companies as may be approved in advance by the Chief Executive Officer, in each case, so long as Executive remain in compliance with Section 11 and such service does not interfere with Executive’s duties under this Agreement.  Executive may engage in civic and not-for-profit activities so long as such activities do not materially interfere with the performance of Executive’s duties hereunder. 

11.2No Adverse Interests.  Except with the prior written consent of the Chief Executive Officer, Executive will not during the term of Executive’s employment with the Company acquire, assume or participate in, directly or indirectly, any position, investment or interest known to be adverse or antagonistic to the Company, its business or prospects, financial or otherwise, provided that this does not prohibit Executive’s continued involvement in any existing investments or ownership, for investment purposes only, of not more than 3% of the outstanding stock of any company listed on a national securities exchange, or actively traded in a national over-the-counter market.  

12.Non-Solicitation.  Executive agrees that during the period of employment with the Company and for 12 months after the date Executive’s employment is terminated for any reason, Executive will not, either directly or through others, solicit or encourage or attempt to solicit or encourage any employee, independent contractor, or consultant of the Company to terminate his or her relationship with the Company in order to become an employee, consultant or independent contractor to or for any other person or entity.

13.Dispute Resolution.  To ensure the timely and economical resolution of disputes that may arise in connection with Executive’s employment with the Company, Executive and the Company agree that any and all disputes, claims, or causes of action arising from or relating to the enforcement, breach, performance, negotiation, execution, or interpretation of this Agreement, Executive’s employment, 

 

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or the termination of Executive’s employment, including but not limited to statutory claims, will be resolved to the fullest extent permitted by law by final, binding and confidential arbitration, by a single arbitrator, in San Diego, California, conducted by JAMS, Inc.  (“JAMS”) under the then applicable JAMS rules (which can be found at the following web address: http://www.jamsadr.com/rulesclauses).  By agreeing to this arbitration procedure, both Executive and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding.  The Company acknowledges that Executive will have the right to be represented by legal counsel at any arbitration proceeding.  The arbitrator will: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award.  The arbitrator will be authorized to award any or all remedies that Executive or the Company would be entitled to seek in a court of law.  The Company will pay all JAMS’ arbitration fees in excess of the amount of court fees that would be required of the Executive if the dispute were decided in a court of law.  Nothing in this Agreement is intended to prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction.  

14.General Provisions.

14.1Notices.  Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery by fax) or the next day after sending by overnight carrier, to the Company at its primary office location and to Executive at the address as listed on the Company payroll.

14.2Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the parties.

14.3Waiver.  Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it will not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

14.4Complete Agreement.  This Agreement, together with the Confidentiality Agreement, constitutes the entire agreement between Executive and the Company with regard to this subject matter and is the complete, final, and exclusive embodiment of the Parties’ agreement with regard to this subject matter.  This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations.  It is entered into without reliance on any promise or representation other than those expressly contained herein, and it cannot be modified or amended except in a writing signed by a duly authorized officer of the Company.

14.5Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

 

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14.6Headings.  The headings of the paragraphs hereof are inserted for convenience only and will not be deemed to constitute a part hereof nor to affect the meaning thereof.

14.7Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of Executive’s duties hereunder and Executive may not assign any of Executive’s rights hereunder without the written consent of the Company, which will not be withheld unreasonably.

14.8Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California.  

In Witness Whereof, the Parties have executed this Agreement on the day and year first written above.

 

Kura Oncology, Inc.

 

By: _____/s/ Troy E. Wilson, Ph.D., J.D.__________

Name: _____Troy E. Wilson, Ph.D., J.D.__________

Title: ______President and CEO_________________

 

 

Executive

 

/s/ Kathleen Ford

    Kathleen Ford

 

10.cnk-ex101_71.htm

 

 

Exhibit 10.1

FINAL

 

 NOTE: CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF PUBLICLY DISCLOSED. “[***]” INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

FIRST AMENDMENT

TO

AMENDED AND RESTATED EXHIBITOR SERVICES AGREEMENT

 

This First Amendment to Amended and Restated Exhibitor Services Agreement (this “Amendment”), dated September 17, 2019 (the “Amendment Effective Date”), is by and between National CineMedia, LLC (“LLC”) and Cinemark USA, Inc. (“Cinemark”). Capitalized terms used but not defined herein shall have the respective meanings given to them in the Amended and Restated Exhibitor Services Agreement between LLC and Cinemark, dated as of February 13, 2007 and amended and restated as of December 26, 2013 (the “ESA”).

WHEREAS, the Parties desire to amend the ESA; and

WHEREAS, the Board of Directors of National CineMedia, Inc. (“NCM Parent”) and the Transaction Review Committee of NCM Parent have deemed this Amendment to be in the best interest of NCM Parent and its shareholders.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

	
1.
	
Definitions.

 

	
 
	
A.
	
The following definitions are hereby added to the ESA and inserted alphabetically into Section 1.01 thereof:

 

“Aggregate Post-Showtime Revenue” means, for the applicable measurement period, the total revenue, in the form of cash and non-cash consideration, payable to LLC for Advertising Services displayed in any Post-Showtime Inventory, excluding revenue  payable to LLC related to (i) Event Sponsorships, (ii) Advertising Services provided to third parties that are not Founding Members, (iii) Advertising Services provided to Founding Members outside the provisions of this Agreement pursuant to a written agreement between LLC and such Founding Members, (iv) Inventory displayed prior to Showtime, and (v) Trailer Pod Inventory.

 

 

“Aggregate Trailer Pod Revenue” means, for the applicable measurement period, the total revenue, in the form of cash, payable to LLC for Advertising Services displayed in any Trailer Pod Inventory, excluding revenue payable to LLC related to (i) Event Sponsorships, (ii) Advertising Services provided to third parties that are not Founding Members, (iii) Advertising Services provided to Founding Members outside the provisions of this Agreement pursuant to a written agreement between LLC and such Founding Members, (iv) Inventory displayed prior to Showtime, and (v) Post-Showtime Inventory.

 

[***].

“Beverage Slot” means the Inventory sold to Cinemark pursuant to Section 4.06(a).

“Cinemark Pro-Rated Platinum Revenue Minimum” has the meaning assigned to it in Schedule 1.

“Co-Branded Slot” has the meaning assigned to it in Section 4.06(a).

“Exhibitor” means Cinemark or any other motion picture theatre exhibitor which participates in LLC’s Advertising Services.

[***].

“Platinum Contract Year” means the time period of November 1 of each year to October 31 of the following year.

“Platinum Revenue Minimum” has the meaning assigned to it in Section 4.01(b)(i)(B)(I)(8)(ii).

“Platinum Spot” has the meaning assigned to it in Section 4.01(b)(i)(B)(I)(5).

“Post-Showtime Content Revenue” has the meaning assigned to it in Section 4.03A.

“Post-Showtime Inventory” has the meaning assigned to it in Section 4.01(b)(i)(B)(I)(4).

“Post-Showtime Theatre Access Fees” has the meaning assigned to it in Schedule 1.

“Pre-Feature Closing” has the meaning assigned to it in Section 4.05(a).

“Pre-Showtime Reduction” has the meaning assigned to it in Section 4.01(b)(i)(B)(I)(2).

“Pre-Showtime Trailer” is a Trailer up to two and a half (2.5) minutes in length to be displayed by LLC, at Cinemark’s option, on Cinemark’s behalf in the Pre-Feature Program beginning approximately six (6) minutes prior to Showtime and ending approximately three and a half (3.5) minutes prior to Showtime.

 

 

“Trailer Pod Fees” has the meaning assigned to it in Section 2.05(b)(i)(C).

“Trailer Pod Inventory” means, collectively, the Platinum Spot [***].

“Trailer Position” means a specified Inventory slot directly preceding the applicable Trailer. For example, “Third Trailer Position” means a slot directly preceding the third Trailer prior to the feature film.

[***].

	
 
	
B.
	
The definition of “Aggregate Advertising Revenue” in Article 1 of the ESA is hereby deleted and replaced with the following:

 

“Aggregate Advertising Revenue” means, for the applicable measurement period, the total revenue, in the form of cash and non-cash consideration, payable to LLC for Advertising Services, excluding revenue payable to LLC related to (i) Event Sponsorships, (ii) Advertising Services provided to third parties that are not Founding Members, (iii) Advertising Services provided to Founding Members outside the provisions of this Agreement pursuant to a written agreement between LLC and such Founding Members, (iv) Post-Showtime Inventory, and (v) Trailer Pod Inventory.

	
 
	
C.
	
The definition of “Beverage Agreement” in Article 1 of the ESA is hereby deleted and replaced with the following:

“Beverage Agreement” means  the   Marketing,   Advertising   and   Brand   Presence Agreement by and between Coca-Cola North America, a division of The Coca-Cola Company, and Cinemark, dated as of January 1, 2009 and all exhibits and amendments  thereto which is in effect on the effective date of the First Amendment to the Agreement, as such agreement may be amended from time to time, and any subsequent agreements entered into by Cinemark and  its  beverage  concessionaires  at  the  expiration  or  termination  of  the  agreement referenced above.

	
 
	
D.
	
The definition of “Pre-Feature Program” in Article 1 of the ESA is hereby deleted and replaced with the following:

 

“Pre-Feature Program” means a program of digital content of between twenty (20) and thirty (30) minutes in length that is distributed by LLC through the Digital Content Network for exhibition in Digitized Theatres prior to and/or after Showtime (as further described in Section 4.01(b)) of a feature film or other programming or event (other than a Digital Programming Event) or that is distributed non-digitally by some other means, including DVD, for exhibition prior to and/or after Showtime of a feature film or other programming or event (other than a Digital Programming Event) in Non-Digitized Theatres. For the avoidance of doubt, the definition of Pre-Feature Program shall not include any Digital Programming Event Pre-Feature Program.

 

 

	
 
	
E.
	
The definition of “Trailer” in Article 1 of the ESA is hereby deleted and replaced with the following:

 

“Trailer” means a promotion secured by Cinemark, directly or indirectly, for a feature film or other programming, other than a Digital Programming Event, that is exhibited in the Theatres either as the Pre-Showtime Trailer or after Showtime.

	
2.
	
Theatre Access Fees. The heading of Section 2.05(b) and Sections 2.05(b)(i) - (ii) of the ESA are hereby deleted and replaced with the following:

 

(b)Fees: Theatre Access Fees, Post-Showtime Theatre Access Fees and Trailer Pod Fees.

 

(i)Calculation.

 

(A)Theatre Access Fees. In consideration for utilization of the Theatres pre-Showtime pursuant to the terms hereof, LLC shall calculate and Cinemark shall be entitled to receive a Theatre Access Fee, as set forth in Schedule 1, which shall be paid based on Cinemark Attendance for the relevant fiscal month in which LLC provides the Advertising Services and number of Digital Screens during the fiscal month in which LLC provides the Advertising Services (calculated as the average between the number of Digital Screens on the last day of the fiscal month preceding the relevant fiscal month in which LLC provides the Advertising Services and the last day of the fiscal month in which LLC provides the Advertising Services), and which shall include the amount of 4.03 Revenue allocated to Cinemark for the same fiscal month.

 

(B)Post-Showtime Theatre Access Fees. In consideration for utilization of the Theatres post-Showtime pursuant to the terms hereof (other than for [***] Platinum Spots), LLC shall calculate and Cinemark shall be entitled to receive Post-Showtime Theatre Access Fees as set forth in Schedule 1, which shall be paid based on Cinemark Attendance for the relevant fiscal month in which LLC provides the Post-Showtime Inventory, and which shall include the amount of Post-Showtime Content Revenue allocated to Cinemark for the same fiscal month.  For the avoidance of doubt, the Parties agree that the Post-Showtime Theatre Access Fees for the relevant fiscal month are owed to Cinemark even if the amount of Aggregate Post-Showtime Revenue for the same fiscal month is zero dollars ($0).

 

(C)Trailer Pod Fee. In consideration for the utilization of the Theatres post-Showtime for [***] Platinum Spots pursuant to the terms hereof, LLC shall calculate and Cinemark shall be entitled to receive twenty-five (25%) of all revenue generated by LLC from the actual display of [***] Platinum Spots in the Theatres (as more particularly calculated in Schedule 1, the “Trailer Pod Fees”).

 

 

 

(ii)Payment. LLC shall pay Cinemark its Theatre Access Fees, Post-Showtime Theatre Access Fees, [***], and Trailer Pod Fees, as applicable, on or before the last day of LLC’s fiscal month following the fiscal month in which the applicable Advertising Services are provided by LLC; provided that Cinemark has, by the fourteenth (14th) day of LLC’s fiscal month following the fiscal month in which Advertising Services are provided by LLC, given LLC the data regarding attendance and number of Digital Screens necessary for LLC to calculate the Theatre Access Fees, the Post-Showtime Theatre Access Fees, [***], and the Trailer Pod Fees. If Cinemark has not, by the fourteenth (14th) day of LLC’s fiscal month following the fiscal month in which Advertising Services are provided by LLC, given LLC the data regarding attendance and number of Digital Screens necessary for LLC to calculate the Theatre Access Fee, Post-Showtime Theatre Access Fee, [***], or Trailer Pod Fee, the due date of the payment for the relevant fee for which data has not been provided shall be extended by one day for each day that Cinemark is late in providing such data. LLC shall provide Cinemark with a detailed report of the calculation of the Theatre Access Fees, Post-Showtime Theatre Access Fees, [***], and Trailer Pod Fees, pursuant to Schedule 1, which report shall accompany each such payment.

 

	
3.
	
Non-Cash Consideration. The reference to “Aggregate Advertising Revenue” in Section 2.06 is hereby deleted and replaced with the following: “Aggregate Advertising Revenue and Aggregate Post-Showtime Revenue”.

 

	
4.
	
Pre-Feature Programs. Section 4.01(b)(i) of the ESA is hereby deleted and replaced with the following:

(i)Pre-Feature Program.

 

(A)Generally. The Pre-Feature Program shall consist of the following elements: (I) commercial advertising; (II) promotions for the Cinemark brand (including the Brand and Branded Slots), Concessions sold and services used by Cinemark and other products and services in accordance with Section 4.05; (III) interstitial content, including the Pre-Feature Closing; (IV) subject to Section 4.01(b)(i)(B)(I)(1), the Pre-Showtime Trailer; and (V) other entertainment programming content which, while promotional of businesses or products, shall be primarily entertaining, educational or informational in nature, rather than commercially inspired. Additionally, only to the extent required by the terms of the Alternative Content Services Agreement and subject to the limitations set forth therein, Event Sponsorships and promotions for Digital Programming Events may be included in the Pre-Feature Program.

 

(B)Pre-Showtime and Post-Showtime Allocations.

 

(I)Beginning on November 1, 2019:

 

 

 

	
 
	
(1)
	
Cinemark will have the option to display a Pre-Showtime Trailer.  Pre-Showtime Trailer display requests will be in accordance with the then-current LLC national advertising delivery guidelines and specifications.  

 

	
 
	
(2)
	
The amount of time included in the Pre-Feature Program displayed prior to Showtime for any Play List shall be reduced by five (5) minutes (not including the Pre-Showtime Trailer) plus the lengths of any Platinum Spot [***] displayed after such Showtime in that Play List (the “Pre-Showtime Reduction”).  For the purposes of clarity, in the event that there is no Trailer Pod Inventory displayed in the applicable Play List, the Pre-Showtime Reduction for that Play List will be five (5) minutes (not including the Pre-Showtime Trailer).

 

	
 
	
(3)
	
The Event Trailer (commonly known as the “Fathom trailer”) will display at Showtime.

 

	
 
	
(4)
	
LLC will be entitled to display up to five (5) minutes of the Pre-Feature Program post-Showtime (“Post-Showtime Inventory”), to be displayed between the Event Trailer and the Pre-Feature Closing and followed by the Pre-Feature Closing, a Beverage Slot, the Co-Branded Slot, and the Policy Trailer.

 

	
 
	
(5)
	
LLC will be entitled to display an additional single unit that is either thirty seconds (:30) or sixty seconds (:60) of the Pre-Feature Program in the Final Trailer Position, i.e. directly prior to the attached Trailer(s) (the one to two (1-2) Trailer(s) immediately) preceding the feature film (the “Platinum Spot”).

 

	
 
	
(6)
	
The Platinum Spot shall only be used for advertising across LLC’s national network and shall not be used for local advertising or self-promotion of LLC or its brands.

 

	
 
	
(7)
	
[***].

 

	
 
	
(8)
	
(i) If LLC does not sell the Platinum Spot in any given Play List, there will be no Trailer Pod Fee [***] for the applicable Play List.   

 

(ii) If NCM sells a Platinum Spot (whether a sixty second (:60)  spot or a thirty second (:30) spot) in all Exhibitor theatres (i.e. all of LLC’s network of Exhibitors) across all Play Lists, then the Aggregate Trailer Pod Revenue specific to the Platinum Spot displayed in all Exhibitor theatres is expected (on an annualized basis, using a Platinum Contract 

 

 

Year)  to be [***] dollars ($[***]) (the “Platinum Revenue Minimum”) and, as applied to Cinemark, shall be pro-rated based on the annual Cinemark Attendance (as defined in Schedule 1) as a percentage of all aggregate Exhibitor attendance for such period. Notwithstanding the foregoing, in the event that the Platinum Spot (whether a sixty second (:60) spot or a thirty second (:30) spot) is sold in less than all Exhibitor theatres (i.e. all of LLC’s network of Exhibitors) or less than across all Play Lists, then the amount of the Platinum Revenue Minimum in respect to such Platinum Spot, as applied to Cinemark, shall be the Cinemark Pro-Rated Platinum Revenue Minimum (as defined in Schedule 1).

	
 
	
(9)
	
Subject to Sections 4.01(b)(i)(B)(I)(10) and (11), if LLC is selling a Platinum Spot, LLC shall always offer Cinemark the ability to display such Platinum Spot in 100% of auditoriums in all Theatres. 

 

	
 
	
(10)
	
In the event that a particular advertiser [***] opts out of displaying its Platinum Spot in front of [***], then LLC shall be entitled to sell the Platinum Spot to such advertiser and shall offer Cinemark the ability to display such Platinum Spot in 100% of auditoriums in all Theatres excluding auditoriums showing [***].

 

	
 
	
(11)
	
LLC may elect to display up to [***] advertisers’ Platinum Spots concurrently by way of a Network Split (as defined in Schedule 1).  In the event that LLC is displaying [***] advertisers’ Platinum Spots by way of a Network Split, then LLC shall procure that the average cost per mille for each set of concurrent Platinum Spots will be equal to or greater than an average cost per mille of [***] dollars ($[***]).

 

	
 
	
(12)
	
Cinemark will display the Trailer Pod Inventory in accordance with technical specifications, including delivery and update timelines and file specifications in the same manner as have been customarily agreed by the Parties.  Cinemark will notify LLC of the success or failure to display the Trailer Pod Inventory in order for LLC to comply with its obligations to advertising clients in the same manner as Cinemark customarily provides reporting to LLC of advertising displays.

 

	
 
	
(13)
	
LLC acknowledges and agrees that the Trailer Pod Inventory shall not be sold for non-cash consideration.

 

	
 
	
(14)
	
Subject to any applicable health or safety legal requirements or regulations, Cinemark will ensure that at and after Showtime, the auditorium lighting in each Theatre will be materially similar to the 

 

 

	
 
		
auditorium lighting in that Theatre during the Trailers as of the Amendment Effective Date.  In the event that such health or safety issues arise from the auditorium lighting, the Parties agree to work in good faith to find a resolution.  

 

(II)[***].

 

	
5.
	
As of November 1, 2019, NCM acknowledges that (until it is notified otherwise by Cinemark in writing): (i) the first Beverage Slot shall be displayed immediately after the Pre-Feature Closing, shall be thirty (:30) seconds in length, and shall immediately be followed by the Co-Branded Slot; and (ii) the second Beverage Slot shall be thirty (:30) seconds in length and shall be displayed immediately after the Final Trailer Position.

 

	
6.
	
Content Standards. All references to “Advertising Services” throughout Section 4.03 will be deleted and replaced with the following: “Advertising Services, excluding Post-Showtime Inventory and Trailer Pod Inventory”.

 

	
7.
	
Content Standards. The following is hereby added to the ESA immediately after Section 4.03 as a new and separate Section 4.03A:

 

Section 4.03A Post-Showtime and Trailer Pod Content Standards. The Parties agree that (unless mutually agreed by the Parties with respect to clauses (i), (iii), (iv), (v) or (vi)) all content within the Post-Showtime Inventory or the Trailer Pod Inventory will not contain content or other material that: (i) has received, or had it been rated would have received, an MPAA “X” or “NC-17” rating (or the equivalent); (ii) promotes illegal activity; (iii) promotes the use of tobacco, sexual aids, birth control, firearms, weapons or similar products; (iv) promotes alcohol, except prior to “R”-rated films in the auditorium; (v) constitutes religious advertising (except on a local basis, exhibiting time and location for local church services); (vi) constitutes political advertising or promotes gambling; (vii) promotes theatres, theatre circuits or other entities that are competitive with Cinemark or LLC; (viii) would violate any of Cinemark’s Beverage Agreements or the exclusive contractual relationships identified in the Specification Documentation (including renewals and extensions of the foregoing, but excluding any amendments or modifications thereto as such relate to such content standards) and any subsequent exclusive arrangement entered into by LLC with respect to the Theatres; or (ix) otherwise reflects negatively on Cinemark or adversely affects Cinemark’s attendance as determined in Cinemark’s reasonable discretion. Cinemark may, without liability, breach or otherwise, prevent and/or take any other actions with respect to the use or distribution of content that violates the foregoing standards; provided, that with respect to Section 4.03A(ix), Cinemark may opt out of such content in Post-Showtime Inventory or the Trailer Pod Inventory only with respect to Theatres in the geographic locations identified, which may include all of Cinemark’s Theatres. To the extent Post-Showtime Inventory or Trailer Pod Inventory is displayed using the Digital Content Service, if either the Post-Showtime Inventory or Trailer Pod Inventory contains any content that violates the foregoing standards, LLC must remove such content as soon as reasonably practical, but no later than within twenty-four (24) hours of Cinemark notifying LLC of such violation. If LLC fails to 

 

 

remove such content within such twenty-four (24)-hour period, Cinemark may discontinue the Digital Content Service in such auditoriums where such content is shown until the violating content is removed and shall have no liability for such discontinuation. To the extent the Post-Showtime Inventory or Trailer Pod Inventory is displayed using Cinemark’s equipment and contains any content that violates the foregoing standards, Cinemark may remove such content after notifying LLC of such violation and shall have no liability for such discontinuation.  If any Founding Member does not agree to exhibit any content of the Advertising Services subject to Section 4.03A(i), (iii), (iv), (v) or (vi), then LLC shall apply any revenue it is entitled to receive from such Post-Showtime Inventory (“Post-Showtime Content Revenue”) to adjust payments of the Post-Showtime Theatre Access Fee as set forth in Schedule 1.

	
8.
	
Branded Content. The second and third sentences of Section 4.05(a) of the ESA are hereby deleted and replaced with the following:

 

The interstitial messaging shall include a Pre-Feature Program introduction and a “Pre-Feature Closing” containing content branded with the Cinemark Marks. The Pre-Feature Closing shall be displayed after Showtime, be no more than thirty (30) seconds in length, and include content branded with the marks of Cinemark’s beverage concessionaire.

	
9.
	
Branded Slot.

 

Each reference in Section 4.05(c) to “of the Play List” is hereby deleted and replaced with the following: “prior to Showtime.”

	
10.
	
Beverage Agreements.

 

	
 
	
A.
	
In the first sentence of Section 4.06(a) of the ESA, “advertising Inventory” is hereby deleted and replaced with the following: “Beverage Slot”.

 

	
 
	
B.
	
In the first sentence of Section 4.06(a) of the ESA, “within the Play List, as set forth in the Specification Documentation,” is hereby deleted and replaced with the following: “following the Pre-Feature Closing”.

 

	
 
	
C.
	
Effective November 1, 2019, the following is hereby inserted at the end of Section 4.06(a) of the ESA: 

“For the avoidance of doubt, other than as set forth in this paragraph, no other amounts shall be payable by Cinemark to LLC in consideration for the Beverage Slot (including, for the avoidance of doubt, the Beverage Slot prior to the Co-Branded Spot (as defined below) and the Beverage Slot which follows the final trailer position). The Parties agree that Cinemark’s co-branded spot with its beverage concessionaire (the “Co-Branded Slot”), which is up to (and including) thirty (:30) seconds in length, shall be displayed prior to the Policy Trailer, and may be an advertisement for or may include advertisements for Cinemark’s beverage concessionaire, (i) is not a Beverage Slot for the purposes of this Agreement, (ii) does not reduce the amount of 

 

 

time allotted under Section 4.05 to its Branded Slots within the Play List, and (iii) Cinemark is not required to pay the Beverage Agreement Advertising Rate for such spot.”

 

	
11.
	
Excluded Theatres. In Section 4.13(a) of the ESA, the words “calculation of Theatre Access Fees” are hereby deleted and replaced with the following: “calculation of Theatre Access Fees, Post-Showtime Theatre Access Fees, Trailer Pod Fees, or [***]”.

 

	
12.
	
Payment. In the first sentence of Section 8.01 of the ESA, the words “(e.g., payment of the Theatre Access Fees pursuant to Section 2.05(b))” are hereby deleted and replaced with the following: “(e.g., payment of the Theatre Access Fees, Post-Showtime Theatre Access Fees, Trailer Pod Fees, and [***] pursuant to Section 2.05(b)(ii))”.

 

	
13.
	
Term. “February 13, 2037” in the first sentence of Section 9.01 of the ESA is hereby deleted and replaced with the following: “February 13, 2041”.

 

	
14.
	
Termination of Post-Showtime Inventory and Post-Showtime Theatre Access Fees. The following is hereby added to the ESA as a new and separate Section 9.02A and is inserted immediately prior to Section 9.03 of the ESA:

 

	

	
Section 9.02A Termination of Post-Showtime Inventory and Post-Showtime Theatre Access Fees. In its sole discretion, LLC may, by written notice to Cinemark no later than August 1, 2022, terminate: (i) the display of the Post-Showtime Inventory and the Trailer Pod Inventory, and (ii) payments of the Post-Showtime Theatre Access Fees and [***], both effective as of November 1, 2022. If LLC exercises such termination option, then, as of November 1, 2022, the First Amendment to Amended and Restated Exhibitor Services Agreement dated September 17, 2019 between LLC and Cinemark (other than Section 15 thereof that amends Section 14.01 of this Agreement) shall be terminated and deemed to be null and void and of no further force or effect with respect to this Agreement.

	
15.
	
Confidential Treatment. “For a period of three years after the termination of this Agreement:” in Section 14.01 of the ESA is hereby deleted and replaced with the following: “During the Term, and for a period of three (3) years after the termination of this Agreement:”.

 

	
16.
	
Fiscal Calendar; No Affiliates. The following is hereby added to the ESA as a new and separate Section 15.05A and Section 15.05B and is inserted immediately after Section 15.05 of the ESA:

 

Section 15.05A Fiscal Calendar.  LLC’s fiscal year ends on the first Thursday after December 25 each year.   LLC shall not change its method of calculating its fiscal year (i) unless for a bona fide accounting reason, and (ii) in any event without prior written notice to Cinemark.

Section 15.05B No Affiliates. As of the date of the First Amendment to the Agreement, LLC hereby represents and warrants to Cinemark that LLC has no Affiliates. LLC acknowledges and agrees that 

 

 

it shall not sell Advertising Services through Affiliates of LLC without Cinemark’s consent, and, if Cinemark so consents, then references in this Agreement to “revenue payable to LLC” or similar phrases shall be deemed to refer to “revenue payable to LLC or its Affiliates”.

	
17.
	
Beverage Agreement Advertising Rate. The first paragraph of Section B of Exhibit B to the ESA is hereby deleted and replaced with the following:

 

The initial Beverage Agreement Advertising Rate as of the Original Effective Date is $[***] in Cinemark Attendance for a thirty second (:30) advertisement. The Beverage Agreement Advertising Rate shall (i) increase eight percent (8%) per year for each of the first two fiscal years beginning at the end of LLC’s 2007 fiscal year; (ii) beginning at the end of the period set forth in clause (i) above, increase six percent (6%) per year for each of the next two fiscal years; and (iii) beginning at the end of the period set forth in clause (ii) above until November 1, 2019, increase in an amount equal to the annual percentage increase in the advertising rates per thousand attendees charged by LLC to unaffiliated third parties (excluding the advertising associated with the Beverage Agreement) for on-screen advertising in the Pre-Feature Program during the last six (6) minutes preceding the start of the Trailers for each fiscal year, but in no event more than the highest advertising rate per thousand attendees being then-charged by LLC.  Commencing on November 1, 2019, the Beverage Agreement Advertising Rate shall be $[***] in Cinemark Attendance for a thirty second (:30) advertisement, which is the cost per mille charged by LLC to Cinemark as of the beginning of LLC’s 2019 fiscal year for the Beverage Slot and shall increase two percent (2%) annually (1) effective beginning the first day of the 2020 fiscal year and (2) thereafter on each fiscal year anniversary of such date.

For clarity, prior to November 1, 2019, the existence of this Amendment shall not impact the then-current Beverage Agreement Advertising Rate.

	
18.
	
Calculation of Exhibitor Allocation, Theatre Access Fee and Run-Out Obligations. Schedule 1 to the ESA is hereby amended as follows:

 

	
 
	
A.
	
Definitions:

The following definitions are hereby added to Schedule 1 to the ESA and inserted alphabetically into Section A thereof:

“Aggregate Post-Showtime Opt-In Attendance” means [***].

“Aggregate Post-Showtime Opt-In Revenue” means [***].

 “Aggregate Post-Showtime Theatre Access Pool” means [***].

[***].

“Cinemark Attendance Allocation” has the meaning assigned to it in Schedule 1, Section E.

“Cinemark Post-Showtime Opt-In Revenue” means [***].

 

 

“Cinemark Post-Showtime Opt-Out Attendance” means [***].

“Cinemark Post-Showtime Opt-Out Revenue” means [***].

“Cinemark Post-Showtime Theatre Access Fee” means the product of (i) the Post-Showtime Theatre Access Fee per Patron and (ii) Cinemark Attendance for the applicable fiscal month.

“Cinemark Pro-Rated Platinum Revenue Minimum” has the meaning assigned to it in Schedule 1, Section E.

“Cinemark Pro-Rated Platinum Revenue Trailer Pod Fee” has the meaning assigned to it in Schedule 1, Section E.

“Cinemark Spot Trailer Pod Fees” means Cinemark’s Trailer Pod Fees for any [***] Platinum Spot.

“Network Split” means displaying [***] concurrent advertisers’ Platinum Spots in different auditoriums in Theatres that receive the applicable advertiser’s Platinum Spot in a Play List (but never, for the avoidance of doubt, in any auditorium in the same Play List).  The [***] Network Splits will always add up to 100% of the auditoriums in 100% of the Theatres, except as provided for in Section 4.01(b)(i)(B)(I)(10).

“Participating Cinemark Attendance” means the Cinemark Attendance for auditoriums in Theatres that: (a) for Platinum Spots, actually displayed the applicable Platinum Spot(s) as Platinum Spot(s) in the Trailer Pod Inventory, and (b) [***].

 “Post-Showtime Content Opt-Out” means the process of opting out of Post-Showtime Inventory under Section 4.03A.

“Post-Showtime Content Participating Attendance” means [***].

“Post-Showtime Content Theatre Access Fee” means [***].

“Post-Showtime Theatre Access Fee” means a monthly payment from LLC to Cinemark in consideration for Theatres’ participation in Post-Showtime Advertising Services, which shall be the sum of (i) the Cinemark Post-Showtime Theatre Access Fee and (ii) the Post-Showtime Content Theatre Access Fee.

“Post-Showtime Theatre Access Fee per Patron” means the fee per patron as follows:

	
 
	
a.
	
Beginning on November 1, 2019, the Post-Showtime Theatre Access Fee per Patron will be $0.025.

 

	
 
	
b.
	
Beginning on November 1, 2020, the Post-Showtime Theatre Access Fee per Patron will increase to $0.0375.

 

 

 

	
 
	
c.
	
Beginning on November 1, 2021, the Post-Showtime Theatre Access Fee per Patron will increase to $0.05.

 

	
 
	
d.
	
Beginning on November 1, 2022, the Post-Showtime Theater Access Fee per Patron shall increase by four percent (4%).

 

	
 
	
e.
	
On November 1, 2027 and every five (5) years thereafter on November 1, the Post-Showtime Theatre Access Fee per Patron shall increase by eight percent (8%).

 

“Post-Showtime Theatre Access Pool Percentage” means [***].

“Pro-Rated Platinum Minimum Ratio” has the meaning assigned to it in Schedule 1, Section E.

“Regal Post-Showtime Theatre Access Fee” means the Regal Post-Showtime Theatre Access Fee, calculated pursuant to the Regal Exhibitor Agreement.

“Spot Trailer Pod Revenue” means all revenue generated from any [***] Platinum Spot as Trailer Pod Inventory that was displayed in the applicable period.

[***].

The following definition in Section A of Schedule 1 to the ESA is hereby deleted and replaced with the following:

[***].

	
 
	
B.
	
Definition References:  The Parties agree that the table at the end of Section A of Schedule 1 to the ESA containing references to the definitions in the main body of the ESA is hereby updated to include all new and updated definitions set forth in the main body of this Amendment.

	
 
	
C.
	
Section C: The calculation for “Aggregate Advertising Revenue” in Section 2(c) of Section C of Schedule 1 to the ESA is hereby deleted and replaced with the definition of Aggregate Advertising Revenue as defined in Section 1.B. of this Amendment.

 

	
 
	
D.
	
Section D:

[***].

	
 
	
E.
	
New Section E: Schedule 1 to the ESA is hereby amended by adding at the end thereof, and as Section E thereto, the section titled “Section E: Post-Showtime Theatre Access Fees and Trailer Pod Fees” set forth in Exhibit A attached hereto.

 

	
19.
	
Remaining Terms; Conflicts. Except as modified by this Amendment, all terms and conditions of the ESA shall remain in full force and effect. To the extent there is a conflict between the terms of the ESA and this Amendment, the terms of this Amendment shall control.

 

 

 

Remainder of page intentionally left blank; signature page follows.

 

 

 

 

 

 

IN WITNESS WHEREOF, the Parties have, by their respective duly authorized representatives, executed this Amendment as of the Amendment Effective Date.

 

			
	
National CineMedia, LLC

By National CineMedia, Inc., its manager

 

/s/ Tom Lesinski
	
 
	
Cinemark USA, Inc.

 

 

/s/ Michael Cavalier

	
Signature
	
 
	
Signature

	
Tom Lesinski
	
 
	
Michael Cavalier

	
Printed Name
	
 
	
Printed Name

	
Chief Executive Officer
	
 
	
Executive Vice President - General Counsel

	
Title
	
 
	
Title

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