definiens: shall mean ( i ) a device containing a variation of or to the Product or the Secondary Packaging that is permitted under the 510(k ) Premarket Notification K991923 for the Device, for use in the Field and ( ii ) any device containing any other Non­Absorbable Cyanoacrylate Product with a different Indication in the Field that requires a new regulatory applicatio ~ i.e., a Combination Device } I - PHl1289160.11 4 1.36 shall mean the actual costs of manufacturing Non - Absorbable Cyanoacrylate Product ( determined in a reasonable manner in accordance with generally accepted accounting principles, consistently applied, for determining direct costs ) which shall include the following : ( i)@irect costs oflabor ( which shall include cost increases of no more than 5 % annually ) ( ii)@irect costs of raw and packaging materia(~ ; ( iiiGlY Third Party royaltie~ and ( iv)Ulie lesser of ( a ) the overhead and profit allocation to the Non­Absorbable Cyanoacrylate Product as of the Effective Date ( determined based on the 2001 budget ) and ( b ) the overhead and profit allocation to the Non - Absorbable Cyanoacrylate Product as of the comparison date ( determined based on the actual allocation for the most recent fiscal quarter for which financial information is available on the comearison dat1 - To the extent that manufacturing o ~ on - Absorbable Cyanoacrylate Produc,!lor any component thereof is performe<{for Closure Medical by a Third Party, amounts paid to such Third Party in connection with the manufacturing of Non - Absorbable Cyanoacrylate Product or any component thereof shall be included in Manufacturing Cos ] 1.37 shall mean Closure Medical 's U.S. manufacturing facility located at 5250 Greens Dairy Road, Raleigh, North Carolina