definiens: means the gross amounts invoiced by [COMPANY], its Affiliates and their respective sublicensees for sales of LicensedProduct to unaffiliated Third Parties, less the following deductions to the extent reasonable and customary provided to unaffiliatedentities and actually allowed and taken with respect to such sales:(a ) reasonable cash, trade or quantity discounts and charge - back payments, and rebates actually granted to tradecustomers, managed health care organizations, pharmaceutical benefit managers, group purchasing organizations and national, state, or local government ; provided, however, that in each case such amounts shall be applied in a normal and customary manner withrespect to other similarly situated products of [COMPANY] and not applied disproportionately to a Licensed Product;(b ) credits, rebates or allowances actually allowed upon prompt payment or on account of claims, damaged goods, rejections or returns of such Licensed Product, including in connection with recalls;(c ) freight, postage, shipping, transportation and insurance charges, in each case actually allowed or paid for delivery ofLicensed Product, to the extent included in such invoice;(d ) taxes ( other than income taxes ), duties, tariffs or other governmental charges levied on the sale of such LicensedProduct, including VAT, excise taxes and sales taxes, to the extent included in such invoice ; and(e ) the lesser of : ( i ) two percent ( 2.0 % ) of the aggregate gross amount invoiced on sales of a Licensed Product in therelevant country or ( ii ) the actual amount of any write - offs for bad debts relating to such sales during the period in which there is anobligation to pay a royalty under this Agreement