definiens: shall mean the amounts received by LICENSEE and its AFFILIATES and SUBLICENSEES from the commercial use of LICENSED PRODUCTS, or the commercial sale of LICENSED PRODUCTS, from non - AFFILIATED third parties in arm 's length transactions, less, to the extent such deductions or allowances can be documented by LICENSEE : ( i ) shipping costs ( including freight, postage, handling and standard transportation charges such as insurance and packing and distribution charges ), ( ii ) allowances or credits because of returned, rejected or recalled LICENSED PRODUCTS as actually allowed, ( iii ) other discounts, credits and allowances including normal and customary quantity discounts, cash discounts ( including discounts for prompt payment ), and customary trade promotional allowances and credits ( including adjustments such as those granted on account of co­pay reduction programs, price adjustments, billing errors, damaged goods, rebates, chargeback rebates, fees, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, healthcare insurance carriers, group purchasing organizations, managed health care organizations, wholesalers, pharmacy benefit management or similar organizations, federal, state / provincial, local and other governments, including their agencies, trade customers or other institutions ), and discounts mandated by or granted in response to laws or regulations, retroactive price reductions or rebates paid or credited to any governmental authority or agency or third party payor, administrator or contractee, including in respect of any government subsidized program ( including without limitation Medicare and Medicaid rebates ), and ( iv ) taxes including import, export, use, excise and sales taxes, tariffs and duties ( including customs duties ) and other governmental charges imposed on the importation, use or sale of LICENSED PRODUCTS ( including without limitation, value - added and withholding taxes ) . If LICENSED PRODUCTS are sold through intermediaries such as agents, consignees or co - promoters who do not purchase and take title to LICENSED PRODUCTS, royalties shall be due only on sales to those non - AFFILIATED third parties who actually purchase and take title to LICENSED PRODUCTS through such intermediaries . For non - cash and partial - cash sales, NET SALES shall include the fair market value of non - cash consideratio n received for such sale of the same quantity of LICENSED PRODUCTS . For sales not at arms - length, NET SALES shall be equal to the fair market price of such LICENSED PRODUCTS as when transferred in comparable arms - length transactions . In the event that LICENSED PRODUCTS are used by LICENSEE rather than sold, the parties shall agree upon an appropriate NET SALES price for each such use on which to base a royalty calculation . NET SALES shall not include any amounts received by LICENSEE and/or its AFFILIATES or SUBLICENSEES from the commercial use of LICENSED PRODUCTS, or the commercial sale of LICENSED PRODUCTS, from non­AFFILIATED third parties in arm 's length transactions, in any countries where there are no VALID CLAIMS of LICENSED PATENT RIGHTS covering the manufacture, use or sale of LICENSED PRODUCTS in such countries, and there are no VALID CLAIMS of LICENSED PATENT RIGHTS sf-3500624 4 covering the manufacture of such LICENSED PRODUCTS in the country of manufacture . Royalties shall not be due and payable on any LICENSED PRODUCTS that are provided at no cost as samples, used in the conduct of any non - clinical or pre - clinical studies or clinical trials, testing, promotion or market research, or made available for charitable purposes or for compassionate use