definiens: shall mean, with respect to a given API or product, for a given Calendar Year, the sum(expressed in U.S. Dollars per kilogram ) of ( a ) the direct labor costs incurred by the applicable Material Supplier or its Affiliates in theManufacture of the applicable Material ; ( b ) the direct material costs for materials used by the Material Supplier or its Affiliates in suchManufacture ( including raw materials, intermediate compounds, active compounds, excipients, components and packaging materials, and including shipping and taxes therefor, to the extent borne by such Material Supplier or its Affiliates ) ; ( c ) a reasonable allocation ofoverhead costs ( including facilities expenses, depreciation over the expected life of the buildings and equipment, and costs foradministration and for management of material procurement and other Manufacturing activities, including Quality Control ( QC ) andQuality Assurance ( QA ), performed directly in support of the Manufacture or acquisition of Material ) ; ( d ) the cost of shipping of Material(including inter - plant and inter - location transportation expenses ) ; ( e ) the cost of Manufacturing trial runs, Manufacturing developmentexpenses, and start - up and new product introduction costs ; ( f ) shut - down costs ; ( g ) costs of unusual and excessive material scrapped ; ( h)lower of cost or market inventory adjustments, inventory write - downs and write - offs, and physical inventory adjustments ; and ( i ) amountspaid ( net of rebates or discounts, if any, and not including amounts paid as royalties or any other Third Party License Payments ) to non - Affiliate contract manufacturers or service providers to acquire Material or in connection with the Manufacture of Material ; provided, however, that no cost may be counted more than once in such calculation