definiens: means, with respect to any CONTRACT PRO DUCT for a given calendar quarter, [ … * * * … ] of the aggregate of internal and external costs of VER ENIUM to manufacture, formulate and supply such CONTRACT PRODUCT, as determined for the immediately preceding calendar quarter, calculated as follows : a. to the extent that VERENIUM performs all or any part of the manufacturing, formulating, supplying o r distributing of such CONTRACT PRODUCT, the direct m aterial costs, direct labor costs, storage, packagi ng and shipping for, plus manufacturing overhead ( whic h may include facilities ’ start - up costs, the costs of audits, insurance, and manufacturing administrative and fac ilities costs, including allocable depreciation and repairs and maintenance of existing capital assets and new capi tal assets, but excluding any capital investment to build or construct a manufacturing facility ), reasonably all ocable to, such manufacturing, formulating or suppl ying of such CONTRACT PRODUCT ( which may include unsuccessf ul or low yielding production runs ), all determined in accordance with the Accounting Standa rds ( as defined below ) ; and b. to the extent that manufacturing, formulating or supplying of such CONTRACT PRODUCT is performed by a third party, the out - of - pocket expenses paid by VER ENIUM for such manufacturing, formulating or supply ing activities ( including, to the extent included in th e fees charged by such third party, direct raw mate rials and rent for fermentors, repairs and maintenance of capital assets, costs for unsuccessful or low yielding prod uction runs ), and the reasonably allocated direct labor costs inc urred by VERENIUM in managing and overseeing the th ird party relationship, determined in accordance with t he Accounting Standards ; and * * * Confidential Treatment Requested Page 14 of 24 c. royalties, license or other fees paid by VERENIU M to any third party to license intellectual proper ty rights specifically for the manufacture and supply of such CONTRACT PRODUCT ( to the extent not already includ ed in the out - of - pocket expenses under clause b. above )