definiens: . Net Sales means, with respect to a Product, the gross amount invoiced by the Royalty - Paying Party, its Affiliates and/or its sublicensees on sales or other dispositions of Products to Third Parties, less the following deductions : ( a ) Trade, cash and/or quantity discounts actually allowed and taken directly with respect to such sales ; ( b ) Tariffs, duties, excises, sales taxes or other taxes imposed upon and paid directly by a Party with respect to the production, sale, delivery or use of the Product ( excluding national, state or local taxes based on income ), as reflected in the amount invoiced ; ( c ) Amounts repaid or credited by reason of rejections, defects, recalls or returns or because of chargebacks, refunds, rebates or retroactive price reductions ; and ( d ) Freight, insurance and other transportation charges incurred in shipping a Product to Third Parties, as reflected in the amount invoiced