definiens: means, with respect to any Licensed Product supplied by oron behalf of Entasis to Zai hereunder : ( a ) if such Licensed Product ( or any precursor or intermediate thereof ) is manufactured by aThird Party manufacturer, ( i ) the amount paid by Entasis to such Third Party to acquire such Licensed Product, plus(ii ) any internal costs incurred by Entasis in association with such manufacturing, including for reasonable overhead, process development, project management ( at the FTE Rate ), manufacturing oversight ( including at the FTE Rate forany Entasis person - in - plant ), and quality control and assurance ; or ( b ) if such Licensed Product ( or any precursor or intermediate thereof ) is manufactured byEntasis or its Affiliates, the actual, fully burdened cost of such manufacturing, including the cost of raw materials, direct labor and benefits, a proportionate share of indirect manufacturing costs, including intellectual propertyacquisition and licensing costs ( including royalties, upfront fees ) paid by Entasis with respect to the manufacture ofsuch Licensed Product, and all other reasonable and customary manufacturing - related costs for such LicensedProduct, including actual product inventory write - offs, factory, plant or equipment start - up or start - up amortizationcosts, scale - up expenses, and freight in / out and sales and excise taxes imposed thereon, customs and duty andcharges levied by government authorities, and all costs of packaging . Such fully burdened costs shall be calculated inaccordance with GAAP