definiens: means direct project expenses paid or payable to Third Parties which are specifically identifiable and incurred for services or materials provided by them directly in their performance of activities under the applicable Development Plan and Budget or for use i n performing the Development Plan and Budget, in ea ch case to Develop the Product in the Territory ; such expenses to have been recorded as income statement items in accorda nce with GAAP and for the avoidance of doubt, not including pre - paid amou nts ( until expensed in accordance with GAAP, in acc ordance with the Development Plan and Budget ) . For clarity, Out - of - P ocket Costs do not include capital expenditures, pa yments for internal salaries or benefits ; facilities ; utilities ; genera l office or laboratory supplies ; information techno logy ; and the like, or any expenses incurred by FTEs ( all of which shall be de emed included within the FTE Rate and not otherwise reimbursable )