definiens: shall mean with respect to a Licensed Product, the total gross amounts invoiced by [COMPANY] and/or its Affiliates, Sublicensees or Further Sublicensees in respect of such Licensed Product, as established in a bona fide arms - length transaction with an unrelated third party, less the following items ( as they apply to such Licensed Product ): ( i ) quantity and/or cash discounts actually allowed or taken ; ( ii ) customs, duties, sales and similar taxes, if any, imposed on the Licensed Product, to the extent applicable to such sale and included in the invoice in respect of such sale ; ( iii ) amounts actually allowed or credited by reason of rejections, return of goods ( including as a result of recalls ), any retroactive price reductions or allowances specifically identifiable as relating to the Licensed Product ; ( iv ) amounts incurred resulting from government mandated rebate programs ( or -4 - any agency thereof ) ; ( v ) third party ( a ) rebates, ( b ) freight, postage, shipping and applicable insurance charges, to the extent the same are separately itemized on invoices and actually paid as evidenced by invoices or other appropriate supporting documentation, and ( c ) chargebacks or similar price concessions related to the sale of the Licensed Product ; ( vi ) bad debts deriving from Net Sales in respect of which Royalty Payments were paid to [COMPANY] pursuant hereto, ( vii ) royalties paid to third parties by [COMPANY], its Affiliates or Sub - Licensees in respect of the use of such third party 's intellectual property rights ( provided that in no event shall the amounts deducted in respect of such third party royalties under ( vii ) result in the reduction of the Royalty Payments to [COMPANY] to less than three percent ( 3 % ) of the Net Sales attributable to any particular Licensed Product, ( without derogating from any lower royalty rates as determined by Sections 8.2(a ) or 8.2(b ) below ), and ( vi ) reasonable quantities of samples, provided the quantity of Licensed Product actually utilized for purposes of such samples shall not exceed five percent ( 5 % ) of the volume of annual Licensed Product sales during any given year during this Agreement . All of the foregoing shall be calculated in accordance with U.S. GAAP