definiens: means [COMPANY] ’s fully - burdened costs ( including the costs associated with producttesting and release activities ) of producing and pa ckaging Licensed Product or API, as applicable, in bulk or finishedform, determined in accordance with GAAP, including the sum of the following components : ( a ) direct co sts, includingmanufacturing labor and materials directly used in producing and packaging ; ( b ) overhead costs attribu table to thecost of goods under the foregoing clause ( a ), inclu ding quality labor and manufacturing and quality su pervisoryservices, depreciation, return on capital assets an d other operating and administrative costs of the m anufacturing andquality departments and occupancy costs which are a llocable to company departments based on space occu pied orheadcount, or other activity - based method ; ( c ) any other reasonable and customary out - of - pocket costs borne byArQule for the testing, transport, customs clearanc e, duty, insurance and/or storage of such products, includingpayments made by [COMPANY] to Third Party Manufacturer s for manufacture, filling, finishing, packaging, l abeling, testing, storage and distribution of such Licensed Product o r API and [COMPANY] ’s handling costs with respect ther eto, asapplicable ; ( d ) [COMPANY] ’s prorata share of costs of A PI and Licensed Product process improvements develo ped byArQule or a Third Party on behalf of [COMPANY] ; and ( e ) [COMPANY] ’s general and administrative costs, including purchasing, human resources, payroll, information system and ac counting, which are directly attributable or reason ably allocableto company departments based on space occupied or h eadcount or other activity - based method