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Break Fee Agreements are essential risk management tools in significant corporate transactions under German law. These agreements are typically used in merger and acquisition contexts, corporate restructurings, or other major business transactions where parties need to allocate risk and ensure commitment. The Break Fee Agreement specifies circumstances triggering payment obligations, usually when one party withdraws from or fails to complete a transaction, with fee amounts typically ranging from 1-3% of the transaction value in accordance with German market practice. The document must comply with German legal requirements, including the Civil Code (BGB), Corporate Law (AktG), and competition regulations (GWB). It's particularly relevant when dealing with listed companies or regulated industries, where additional compliance requirements may apply. The agreement provides security for parties investing significant resources in transaction preparation and can serve as a deterrent against non-serious bidders or last-minute withdrawals.

1. Parties: Identification and details of the contracting parties

2. Background: Context of the agreement, including reference to the primary transaction

3. Definitions and Interpretation: Key terms used in the agreement and rules for interpretation

4. Break Fee Trigger Events: Specific circumstances that will trigger the break fee obligation

5. Break Fee Amount and Calculation: Specification of the break fee amount or calculation methodology

6. Payment Terms: Timing, method, and conditions for payment of the break fee

7. Representations and Warranties: Standard confirmations by the parties regarding their capacity and authority

8. Compliance with Laws: Confirmation of compliance with relevant German laws and regulations

9. Confidentiality: Provisions regarding the confidential treatment of the agreement and related information

10. Notices: Process and requirements for formal communications between parties

11. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction

12. General Provisions: Standard boilerplate clauses including severability, entire agreement, and amendments