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Chapter 17 SeverabilityC. James Levin and Avery R. Brown O’Melveny & Myers LLP Los Angeles, California § 17.05 Negotiating and Dra fting the Severab ility Provision Page 552 If any provision of this Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement remain in full force and effect, if the essential terms and conditions of this Agreement for both parties remain valid, legal and enforceable. Without limiting the previous sentence, the parties acknowledge and agree that the provisions of Sections ____, ____, ______, and _____ constitute essential elements of the agreed exchange that is the subject matter of this Agreement. Accordingly, if any of these provisions is determined to be invalid, illegal or unenforceable in any [material] respect, the remainder of this Agreement is not enforceable against either of the parties. *** The specific enumeration of the provisions listed does not mean or imply that no other provision of this Agreement constitutes an essential element of the agreed exchange that is the subject matter of this Agreement. Page 553 If any provision of this Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement remain in full force, if both the economic and legal substance of the transactions that this Agreement contemplates are not affected in any manner [materially] adverse to any party. Page 554 Any provision of this Agreement held invalid, illegal or unenforceable only in part or degree remains in full force to the extent not held invalid, illegal or unenforceable. *** If any court determines that any provision of this Agreement is unenforceable because of the duration or geographic scope of that provision, the court has the power to reduce the duration or geographic scope of that provision, as the case may be, so that in its reduced form the provision is enforceable. *** If any court determines that any provision of this Agreement is invalid, illegal or unenforceable, the court has the power to fashion and enforce another provision (instead of the provision held to be invalid, illegal or unenforceable) that is valid, legal and enforceable and carries out the parties’ intentions under this Agreement. Page 555 If any provision of this Agreement or its application to any party or circumstance is held invalid, illegal or unenforceable to any extent, the remainder of this Agreement and the application of that provision to the other parties or to other circumstances is not affected and is to be enforced to the fullest extent permitted by applicable law. Page 556 Example 1 If any provision of this Agreement is held invalid, illegal or unenforceable, (a) the validity, legality and enforceability of the remaining provisions of this Agreement are not affected or impaired in any way; and (b) the parties shall negotiate in good faith in an attempt to agree to another provision (instead of the provision held to be invalid, illegal or unenforceable) that is valid, legal and enforceable and carries out the parties’ intentions to the greatest lawful extent under this Agreement. Example 2 If any provision of this Agreement is held invalid, illegal or unenforceable, the parties shall negotiate in good faith to modify this Agreement to fulfill as closely as possible the original intents and purposes of this Agreement. Example 3 If any provision of this Agreement is held invalid, illegal or unenforceable, the parties shall negotiate in good faith so as to replace each invalid, illegal or unenforceable provision with a valid, legal and enforceable provision which will, in effect, from an economic viewpoint, most nearly and fairly approach the effect of the invalid, illegal or unenforceable provision and the intent of the parties in entering into this Agreement. Page 557 If any provision of this Agreement is determined to be invalid, illegal or unenforceable, this Agreement is of no further effect, and none of the remaining provisions of this Agreement is subsequently enforceable against any party to this Agreement.