COMMERCIAL SUCCESS. Upon obtaining the requisite governmental and/or regulatory approvals as required by Section 5.4 of this Agreement, Kidde shall use commercially reasonable efforts to commercialize the Product in substantially all major channels and major geographic markets in the world in accordance with the annual sales targets for such channels and markets as set forth in Exhibit F, which is incorporated herein by such reference. The parties shall update such sales targets on an annual basis. If, during the time period beginning on the date of the First Commercial Sale in the U.S. and ending five (5) years thereafter, annual sales of Products invoiced by Kidde and its Affiliates and any sublicensees with respect to major channels and major geographic markets continuously fall short of the sales targets set forth in Exhibit F for such channels and geographic markets, then the parties agree to meet and confer in good faith regarding the most appropriate corrective actions to take in such channels and markets. The following factors shall be considered by the parties in determining the most appropriate course of action to take with respect to such channels and markets: (i) Kidde's and its Affiliates and sublicensees competitive position, including promotional spending levels, sizes of field sales forces and market development expenditures, relative to competitive products in such channels and markets; (ii) USGN's interest in, and ability to increase revenues by, assuming all/or partial rights to the Product in such channels and markets and (iii) the policy of the governing health, safety or other applicable regulatory authority in such channels and markets with respect to any required marketing, safety, efficacy and/or pricing approval. USGN shall not have the right to terminate Kidde's license in Section 2.1 of this Agreement with respect to any such channel and/or market where Kidde can show that it used commercially reasonable efforts and that there are impediments beyond Kidde's reasonable control to commercializing the Products in the channel and/or market in question. In the event the parties agree in writing that all or partial rights to the Product shall revert to USGN with respect to such channel and market, the parties shall thereupon mutually agree on appropriate commercial terms for the reversion of such rights.
COMMERCIAL SUCCESS. The picture's success is primarily dependent on audience acceptance of the picture, which is extremely difficult to predict and, therefore, inherently risky. Many films are produced each year and never released. Many films are released each year, which are not commercially successful and fail to recoup their production costs from United States theatrical distribution. Foreign and ancillary markets have therefore become increasingly important. Licensing of a motion picture in the ancillary markets is particularly dependent upon performance in domestic theatrical distribution. Neither the Managers nor the Company can predict the economic success of the picture because the revenue derived from the distribution of a motion picture (which does not necessarily bear any correlation to the production or distribution costs incurred) depends primarily upon its acceptance by the public, which cannot be accurately predicted. The economic success of a motion picture also depends upon the public's acceptance of competing films, the availability of alternative forms of entertainment and leisure-time activities, general economic conditions and other tangible and intangible factors, all of which can change and cannot be predicted with certainty. Neither the Managers nor the Company can assure Investors that the picture will generate enough revenue to offset its distribution and marketing costs, in which case the Company would not receive any net revenues for the picture.
