Common use of RESEARCH AND DEVELOPMENT FUND Clause in Contracts

RESEARCH AND DEVELOPMENT FUND. While Distributor markets the Products, Distributor shall pay to LipoMatrix an amount equal to five percent (5%) of Distributor's net sales revenue from sales of Products, such payments to be made for each month by the fifteenth day of the following month. Such payments shall commence in respect of sales for the month of April 1997. The payments, and the interest earned on them until expenditure, are intended to be expended on mutually agreed research, development, clinical and manufacturing programs for breast implant products and other products intended for use in cosmetic or reconstructive breast surgery, and if such funding is not expended, the funds shall revert to Distributor. LipoMatrix shall have full ownership of the results of such programs; provided, however, if Distributor and its affiliates beneficially own less than twenty percent (20%) of LipoMatrix, LipoMatrix will pay Distributor a mutually agreed upon royalty for sales of products incorporating the results of such programs outside the Territory and other territories where Distributor and its affiliates are selling Products. Distributor shall have the exclusive right to market in the Territory all products developed with any use of such funds and any such product shall be deemed a Product hereunder. If Distributor does not initiate commercial sales of such Product within ninety (90) days of regulatory clearance, then all rights to such product will revert to LipoMatrix.