definiens: means those costs actually incurred by [COMPANY] or [COMPANY] for the acquisition ofmaterials from Third Party Suppliers or [COMPANY], and Manufacture and conversion into EQW Product . Such costsinclude, but are not limited to : ( a ) the landed cost of purchased materials, including, without limitation, invoice price, outside processingcosts, freight, duties, and brokers fees ( volume or trade discounts will be reflected in the calculation ) ; 2 ( b ) conversion costs directly associated with the Manufacture of EQW Product at the Facility includingdirect labor and direct overhead costs ; ( c ) an appropriate allocation of the actual indirect overhead costs directly associated with theManufacture of EQW Product incurred by [COMPANY] at the Facility ; ( d ) an appropriate allocation of costs based on actual headcount and actual FTE rate incurred by [COMPANY] outside of the Facility but directly associated with the Manufacture of EQW Product, including but not limitedto those items as set forth on Exhibit A ; ( e ) depreciation of EQW Product - specific capital investments at the Facility ( not including the financingcharge for the Initial Capital Investment or depreciation of capitalized interest for the capital investmentsmade at the Facility ) ; ( f ) EQW Product breakage, damage and Manufacturing losses ; ( g ) an allocation of the depreciation of those capital investments net of capitalized interest in and forAmylin ’s San Diego Quality Control Laboratory to the extent such capital investments directly supportManufacture of the EQW Product ; ( h ) an allocation of depreciation of those capital investments located at Third Party Suppliers but ownedby [COMPANY] to the extent such capital investments directly support Manufacture of the EQW Product ; ( i ) replacement costs for EQW Product that is determined to be defective or recalled during the qualitycontrol process or for EQW Product that is returned to [COMPANY] from [COMPANY] or any customer or to Third PartySuppliers from [COMPANY] ; ( j ) amortization of any pre - paid assets of [COMPANY] at a Third Party Supplier in accordance with the termsof the agreement with any such Third Party Supplier, as well as an appropriate carrying cost of such prepaidassets calculated in accordance with Section 1.2(l ) below ; ( k ) to the extent attributable to the Manufacture of EQW Product, any other costs considered inventorycosts or Costs of Products Sold under Generally Accepted Accounting Principles ; ( l ) an appropriate carrying cost applied to the ending monthly inventory utilizing the interest rate agreedto in the letter agreement between the Parties dated June 12, 2006 ( the ) ; and 3 ( m ) an allocation of [COMPANY] resources directly associated with Manufacture of EQW Product charged at theactual FTE rate and any other expenses incurred by [COMPANY] directly associated with the Manufacture of EQWProduct as agreed to in advance by the Parties