Revenue Recognition  Revenue is recognized upon shipping, or receipt by the Company s customers of the processed tissue for implantation, depending on the Company s distribution agreements with the Company s customers or distributors. Other revenues are recognized when all significant contractual obligations have been satisfied. The Company permits returns of tissue in accordance with the terms of contractual agreements with customers if the tissue is returned in a timely manner, in unopened packaging, and from the normal channels of distribution. Allowances for returns are provided based upon analysis of the Company s historical patterns of returns matched against the revenues from which they originated. On September 3, 2010, the Company and Zimmer Dental Inc. ( Zimmer ), a subsidiary of Zimmer, Inc., entered into a new exclusive distribution agreement (the  Agreement ), with an effective date of September 30, 2010. The Agreement has an initial term of ten years. Under the terms of the Agreement, the Company has agreed to supply sterilized allograft and xenograft implants at an agreed upon transfer price, and Zimmer has agreed to be the exclusive distributor of the implants for dental and oral applications worldwide (except the Ukraine), subject to certain Company obligations under an existing distribution agreement with a third party with respect to certain implants for the dental market. In consideration for Zimmer s exclusive distribution rights, Zimmer agreed to the following: 1) payment to the Company of $13,000 within ten days of the effective date ( the Upfront Payment ), 2) annual exclusivity fees ( Annual Exclusivity Fees ) paid annually for the term of the contract to be paid at the beginning of each calendar year, and, 3) escalating annual purchase minimums to maintain exclusivity. Upon occurrence of an event that materially and adversely affects Zimmer s ability to distribute the implants, Zimmer may be entitled to certain refund rights with respect to the Upfront Payment and the then current Annual