definiens: shall mean the internal and external costs and expenses incurred by [COMPANY] or its Affiliate to the exten t reasonably and fairly attributable or allocable to the conduct of the [COMPANY] Preclinical Activities conducted in accordance with this Agreement, consisting solely of the following, in each case to the extent reasonably and fairly attributable or allocabl e to the conduct of the [COMPANY] Preclinical Activities : ( a ) internal costs, calculated on the basis of the [COMPANY] FTE Rate, incurred by [COMPANY] or its Affiliate in conducting [COMPANY] Preclinical Activities ; and ( b ) reasonable and documented amounts paid to Th ird Parties for the conduct of [COMPANY] Preclinical Activities by such Third Parties . [COMPANY] Expenses shall in any event exclude : ( i ) all direct and indirect overhead costs of [COMPANY] and its Affiliates, except to the extent that certain direct overhead costs are included in the [COMPANY] FTE Rate ; and ( ii ) the costs of standard reagents, supplies and equipment, and standard services performed by Third Party subcontractors of [COMPANY] . By way of clarity, [COMPANY] ’s engagement of its Affiliates to perform any [COMPANY] P reclinical Activities shall be at arm ’s length transaction basis and hence [COMPANY] Preclinical Expenses shall be computed accordingly