definiens: means any payments or other consideration that Licensee or any of its Affiliates receives in connection with a Sublicense, other than : ( i ) royalties based on Net Sales ; ( ii ) amounts received to cover actual, documented, direct costs incurred by Licensee du ring defined periods in the performance of research or development activities under a Sublicense agreement in connection with a Licensed Product, as indicated by inclusion as specific line items in a written agreement between Licensee and such Sublicensee ( to the extent such costs are not actually incurred by Licensee during the defined periods in 4 accordance with such Sublicense agreement, such amounts shall be deemed Sublicense Income ) . In the event that Licensee or an Affiliate of Licensee receive s, in connection with a Sublicense, either ( i ) non - cash consideration or ( ii ) consideration not at arm ’s length, Non -Royalty Sublicense Income shall be calculated based on the fair market value of such consideration or transaction, at the time of the trans action, assuming an arm ’s length transaction made in the ordinary course of business