Incremental Gross Margin definition
Incremental Gross Margin means the product of (i) the difference between the weighted average sale price of Enhanced Products and the weighted average sales price for comparable Licensee Products, less (ii) the direct and indirect cost by Licensee of incorporating the Technology in such Licensee Products, where the costs of incorporation include, but are not limited to, material, manufacturing labor, plant burden and additional warranty expenses.
Incremental Gross Margin is an amount equal to the product obtained by multiplying (A) the amount by which total sales revenue for the portables products more fully described on Exhibit A hereto ("Portables Products") for the applicable calendar year exceeds the sales revenue targets for Portables Products for the applicable calendar year, also as set forth on Exhibit A by (B) the Gross Margin Percentage (as hereinafter defined) over such year with respect to Portables Products. For purposes of this Agreement, "Gross Margin Percentage" is an amount equal to the quotient obtained by dividing (x) the amount, if any, by which total sales revenue for the Portables Products for the applicable year exceeds the cost of goods sold with respect to the Portables Products for the applicable year by (y) total sales revenue for the Portables Products for the applicable year. For purposes of this Agreement, sales revenue and cost of goods sold shall be determined in accordance with generally accepted accounting principles applied on a basis consistent with the Company's financial statements on the date hereof, and cost of goods sold with respect to the Portables Products shall be determined on a cost allocation basis consistent with that used by the Company on the date hereof, which the Company represents to be a fair and reasonable basis of allocation. Payment of the Annual Bonus, if any, shall be made no later than forty-five (45) days after completion of the calendar year in which the Annual Bonus was earned.