Common use of Covered Claims Clause in Contracts

Covered Claims. Subject to sections 7.2 and 7.3, Sage shall defend Customer and its Affiliates in any third-party claim alleging that the Software infringes or misappropriates the intellectual property rights of a third party and pay any resulting costs and damages finally awarded by a court with respect to any such third-party claim. If the Software infringes (or Sage reasonably believes it may infringe) a third-party’s intellectual property rights, Sage may, at its own expense and option: (i) procure the right for Customer to continue use of the Software; (ii) replace or modify the Software so that it becomes non-infringing without material loss of functionality; or (iii) if (i) and (ii) are not feasible, terminate this Agreement. If this Agreement is terminated pursuant to the foregoing clause (iii), then Sage shall refund or credit Customer fees as follows. If Customer has a perpetual license, the refunded or credited fees shall be a pro rata portion of the fees incurred for the purchase of Customer’s initial license and all upgrades, which pro rata portion will be determined on the basis of the remaining period of a useful life of (5) five years, where the five-year useful life begins on the date of Customer’s initial license purchase. If Customer has purchased a subscription, the refunded or credited fees shall be the pre-paid but unused fees remaining in the then-current subscription period set forth in Customer’s Order Form (starting from the date upon which this Agreement is terminated pursuant to the foregoing clause (iii) through the end of the then-current subscription period).