definiens: means ( a ) with respect toLexicon, [ fifty percent ( 50 % ) ], and ( b ) with respect to [COMPANY], [ fifty percent(50 % ) ] . [ Ratio in effect under Collaboration Agreement when JointCommercialization Agreement is signed ] 1.19 means ( a ) to the extent that the LicensedProduct is sourced from a party, the unit cost of manufacture of the LicensedProduct ( i.e., direct material and direct labor costs, plus manufacturingoverhead fairly allocated to the Licensed Product, all calculated in accordancewith GAAP ), and ( b ) to the extent that the Licensed Product is sourced from [ theapplicable [COMPANY] Affiliated Subcontractor under that certain Manufacturing andSupply Agreement dated _ _ _ _ ] [ and/or ] [ a Third Party, subject to Section 2.2.3],the actual price paid to such [ [COMPANY] Affiliated Subcontractor ] [ and/or ] [ ThirdParty ] for the manufacture, supply and packaging of the Licensed Product . Forpurposes of the foregoing, ( i ) means actual costsincurred in manufacturing or purchasing materials, including freight - in costs, sales and excise taxes imposed thereon and customs duty and charges levied bygovernment authorities, and all costs of packaging components ; ( ii ) means actual cost of employees engaged in direct manufacturingactivities and quality control and quality assurance activities who are directlyemployed in manufacturing and packaging the Licensed Product ; and ( iii ) attributable to the Licensed Product will include areasonable allocation of indirect labor ( not previously included in direct laborcosts ), a reasonable allocation of administrative costs, and a reasonableallocation of facilities costs, all in accordance with GAAP, but will notinclude corporate administrative overhead or plant start - up costs or costsassociated with excess capacity . All allocations will be based on the assumptionthat such party 's plant and equipment are utilized to their reasonable fullcapacity, and all costs and allocations shall be consistent with the methodsused for such costs and allocations for such party 's internal purposes . Morespecifically, the components of Cost of Goods Sold shall comprise : ( A ) directlabor ( fermentation, purification personnel ) ; ( B ) direct materials ; ( C ) facilitycosts ( rent, property taxes, depreciation of leaseholds, utilities, spare parts, maintenance contracts ) ; ( D ) manufacturing equipment depreciation ; ( E)allocations for information technology, document control, quality engineering, purchasing, warehouse management, microbiology ( with such allocations to bebased on estimated service levels, headcount or square footage occupancy, depending on the category ) ; ( F ) indirect labor ( manufacturing supervision ) ; ( G)manufacturing department overhead ( uniforms, materials used in plantmaintenance ) ; ( H ) quality assurance / quality control ; and ( I ) such other similarcosts as may be reasonably included in such definition