definiens: means ( a ) to the extent that aCollaboration Product is sourced from a party or its AffiliatedSubcontractor(s ), the cost of Manufacture of such Collaboration Product, including ( i ) direct material and direct labor costs, ( ii ) manufacturingoverhead fairly allocated to such Collaboration Product and ( iii ) [ * * ], allcalculated in accordance with GAAP and without regard to whether or not suchcosts result in usable products or materials, and ( b ) to the extent that aCollaboration Product is sourced from a Third Party, subject to Sections 2.2.4and 7.1.2, the actual price paid to such Third Party for the manufacture, supplyand packaging of such Collaboration Product . For purposes of the foregoing, ( i ) means actual costs incurred in manufacturing orpurchasing materials, including freight - in costs, sales and excise taxes imposedthereon and customs duty and charges levied by government authorities, and allcosts of packaging components ; ( ii ) means actual cost ofemployees engaged in direct manufacturing activities and quality control andquality assurance activities who are directly employed in manufacturing andpackaging such Collaboration Product ; and ( iii ) attributable to such Collaboration Product will include a reasonable allocationof indirect labor ( not previously included in direct labor costs ), a reasonableallocation of administrative costs, and a reasonable allocation of facilitiescosts, all in accordance with GAAP, but will not include corporateadministrative overhead or plant start - up costs or costs associated with excesscapacity . All allocations will be based on the assumption that such party'splant and equipment are utilized to their reasonable full capacity ( except withrespect to equipment that is specific to the Collaboration Product beingManufactured ), and all costs and allocations shall be consistent with 12 < PAGE > the methods used for such costs and allocations for such party 's internalpurposes . More specifically, the components of Product Supply Costs shallcomprise : ( A ) direct labor ( fermentation, purification personnel ) ; ( B ) directmaterials ; ( C ) facility costs ( rent, property taxes, depreciation of leaseholds, utilities, spare parts, maintenance contracts ) ; ( D ) manufacturing equipmentdepreciation ; ( E ) allocations for information technology, document control, quality engineering, purchasing, warehouse management, microbiology ( with suchallocations to be based on estimated service levels, headcount or square footageoccupancy, depending on the category ) ; ( F ) indirect labor ( manufacturingsupervision ) ; ( G ) manufacturing department overhead ( uniforms, materials used inplant maintenance ) ; ( H ) quality assurance / quality control ; and ( I ) such othersimilar costs as may be reasonably included in such definition