Initial ESA Modification Payments. Each ESA Party will treat its receipt of an Initial ESA Modification Payment as being immediately taxable in full and NCM LLC will treat such Initial ESA Modification Payments as giving rise to, in the aggregate, a $686,334,398 intangible asset within NCM LLC that will be amortized on a straight-line basis over the thirty (30) year term of the Exhibitor Services Agreements.
Initial ESA Modification Payments. (1) Initial ESA Modification Payment Basis Schedule. Within 180 calendar days after the date hereof, NCM LLC shall deliver to each of the ESA Parties a schedule (the “Initial ESA Modification Payment Basis Schedule”) approved by the Audit Committee that confirms, in reasonable detail, for purposes of Covered Taxes, (i) the tax basis as of the date hereof of the expected $[ ] million intangible asset created by the Initial ESA Modification Payments, and (ii) the thirty-year period over which such asset is expected to be amortizable or depreciable for purposes of Covered Taxes. At the time NCM LLC delivers the Initial ESA Modification Payment Basis Schedule to the ESA Parties, NCM LLC shall (x) deliver to the ESA Parties any schedules and work papers providing reasonable detail regarding the preparation of the Initial ESA Modification Payment Basis Schedule and an Advisory Firm Letter supporting such Initial ESA Modification Payment Basis Schedule and (y) allow the ESA Parties reasonable access to the appropriate representatives at NCM Inc., NCM LLC, and the Advisory Firm in connection with their review of such schedule. The Initial ESA Modification Payment Basis Schedule shall become final and binding on the Parties unless the ESA Parties, within 30 calendar days after receiving such Initial ESA Modification Payment Basis Schedule, provide NCM LLC with a written notice of a material objection to such Initial ESA Modification Payment Basis Schedule made in good faith and specifying the reasons for such material objection. If the ESA Parties and NCM LLC, negotiating in good faith, are unable to successfully resolve the issues raised in such written notice within 60 calendar days after such Initial ESA Modification Payment Basis Schedule was delivered to the ESA Parties, the ESA Parties and NCM LLC shall employ the Reconciliation Procedures.
