Common use of Cost Calculation Clause in Contracts

Cost Calculation. The calculation of costs of engaging sales representatives in the US Territory for purposes of calculating Operating Profits or Losses shall be based on the FTE Rate, and such FTE Rate shall be used by both Parties for promotion of Shared Products in the US Territory; provided, however, that (A) if the costs of engaging a sales representative (whether or not as an employee) in the US Territory is (x) above the FTE Rate, the costs shall be capped at the FTE Rate and (y) below the FTE Rate, the actual costs shall be used instead of the FTE Rate; and (B) with respect to any sales representative who is detailing pharmaceutical products other than Shared Products, the applicable Party shall allocate costs of engaging such sales representative with respect to such pharmaceutical products and Shared Products based on the weighted Incentive Compensation of such sales representative. For purposes of this Section 6.5(b)(v), “Incentive Compensation” means, with respect to a sales representative, the variable, periodic target compensation (not including equity compensation) the sales representative earned based on such sales representative’s performance.