definiens: means the actual gross amount invoiced on sales of the Licensed Product in the Territory byEsprit, its Affiliates, sublicensees and assigns to independent, unrelated Third Parties during a calendar year in bonafide arms length transactions, less the following deductions 2 allowed and taken by Third Parties and not otherwise recovered by or reimbursed to Esprit, its Affiliates, sublicenseesor assigns : ( a ) freight, insurance and other transportation charges to the extent added to the sales price and set forthseparately as such on the total amount invoiced ; ( b ) any sales, use, value - added, excise taxes and/or duties orallowances on the selling price of the Licensed Product which fall due and are paid as a consequence of such sale;(c ) chargebacks, trade, quantity and cash discounts and rebates actually allowed and taken to the extent customaryin the trade, including, without limitation, governmental rebates ; ( d ) allowances or credits, including but not limited to, allowances or credits to customers on account of rejection, defects or returns of the Licensed Product or because of aretroactive price reduction, and such other deductions ( including without limitation shortage deductions ) actually takenby customers that are customary in the trade ; and ( e ) bad debt . Net Sales shall not include a sale or transfer to anAffiliate, sublicensee and assign or if done for clinical, regulatory or governmental purposes where no consideration isreceived but the resale by such Affiliate, sublicensee, or assign shall be considered a sale of such Licensed Product