definiens: means the gross amount received by CELGENE or its AFFILIATES or SUBLICENSEES for sale of PRODUCTS to THIRD PARTIES, less : ( i ) cost of freight, postage, and freig ht insurance, ( if paid by seller ) ; ( ii ) sales taxes, value added taxes, excise taxes, and customs duties ; ( iii ) cost of export licenses and any taxes, fees or other charges associated with the exportation or importation of PRODUCTS ; ( iv ) rebates accrued, incurred or paid to Federal Medicare and State Medicaid and any other price reductions required by a governmental agency ; ( v ) rejected shipments, returns, and retroactive deductions ; ( vi ) the am ount received for sales which become the -5- < PAGE > subject of a subsequent temporary or partial recall by a regulatory agency for safety or efficacy reasons outside the control of CELGENE ; and ( vii ) customary cash, quantity, and trade discounts ; provided, however, that a sale or transfer to an AFFILIATE or SUBLICENSEE for re - sale by such AFFILIATE or SUBLICENSEE shall not be considered a sale for the purpose of this provision but the resale by such AFFILIATE or SUBLICENSEE shall be a sale for such purposes . A shall also include a transfer or other disposition for consideration, but not such transfers o r dispositions, without consideration, for pre -clinical, clinical, regulatory or governmental purposes prior to receiving marketing approval for the specific indication for which such transfer is made . In the event that considera tion in addition to or in lieu of money is received for PRODUCT, such consideration shall be added to the NET SALES as valued on the day of receipt thereof by CELGENE . To the extent that a PRODUCT is sold in other than an arms le ngth transaction, NET SALES shall be the fair market value of such PRODUCT if sold in an arms length transaction, less the costs identified in subsections ( i)-(vi ) of this Section 1.12 . PRODUCT shall be considered at the earlier of ( a ) the transfer of title in such PRODUCT to a person other than an AFFILIATE or SUBLICENSEE of CELGENE or ( b ) the shipment of such PRODUCT from the manufacturing or warehouse facilities of CELGENE or its AFFIL IATE or SUBLICENSEE to a THIRD PARTY