Accounting for Internal Costs Sample Clauses

Accounting for Internal Costs. Each Party will budget and account for Collaboration activities carried out by a Party or its Affiliate, on an FTE basis, at the FTE Rate (defined below in Section 2.2 of this Financial Appendix) on an accrual basis, as those expenses are accrued pursuant to GAAP or GAAP Counterpart, and not a cash basis. Such activities shall be referred to herein as “Internal Activities.” Internal Activities shall not include any activities carried out by any non-employee or by any non-employee Third Party engaged by a Party or any Affiliate. The only Internal Activities for which this rule (of accounting on an FTE basis at the FTE Rate on an accrual basis) does not apply are: (a) Manufacturing activities for which certain specified additional overhead is included in accordance with Section 2.4 of this Financial Appendix, and (b) Sales Force Expenses, which are addressed in Section 3.4(b)(i) of this Financial Appendix. The costs and expenses associated with Extraordinary, Collaboration-Specific Laboratory Supplies, Materials and Equipment necessary to conduct Internal Activities are not incorporated into the FTE Rate and are accounted for in accordance with Section 1.3 below, but the costs and expenses of all other laboratory supplies, materials and equipment used or consumed by FTEs that are funded through Sharing of expenses hereunder are deemed incorporated in the FTE Rate and shall not be separately payable hereunder. “Extraordinary, Collaboration-Specific Laboratory Supplies, Materials and Equipment” as used in this Financial Appendix means those laboratory supplies, materials and equipment that are not routinely used in the ordinary course of research and development of protein-based therapeutics, but that rather are purchased and used solely for Development and Commercialization activities under the Collaboration. As examples (without limitation) to illustrate what are and are not Extraordinary, Collaboration-Specific Laboratory Supplies, Materials and Equipment, pipettes, pipette tips, dishware, and commonly used growth media are not Extraordinary, Collaboration-Specific Laboratory Supplies, Materials and Equipment, but control recombinant proteins that would only be used for Development and Commercialization activities under the Collaboration and mammals used solely for Development and Commercialization activities under the Collaboration would be Extraordinary, Collaboration-Specific Laboratory Supplies, Materials and Equipment.