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Model contract “Sponsoring an event”

Model contract “Sponsoring an event”

This model is based on the model of sicoimg.itslogic.nl

The undersigned:

A.

1. ………………………….., living in …………… ……………,

2. ………………………….., living in …………… ……………, acting in their respective capacities as chairman and secretary of the ……………….. ………., established association ………………………… (registered in the Chamber of Commerce and Factories in …………………………, Register of Associations, number …………. ..).

And legally representing this association in accordance with the provisions of article …… of the articles of association;

hereinafter referred to as: “the association”; party on the one hand; (1)

and

B. ………………………….., living in …………… ……………, acting in this regard in its quality of ………………………. … of the company established in ………………………… and to ………. ……………….. office-based private limited liability company: ………………….. …….B.V. (registered in the Chamber of Commerce and Industry in ………………………….. Trade Register, number ……. ……..) and legally representing this company in accordance with the articles of association; hereinafter referred to as: “the sponsor”; party on the other side; (2)

WHEREAS:

a. The association organizes an event in the field of …. from …………… to …………… …………………….. by the alias ………………… ………, which event will be held in the Netherlands in ………………………….. (3 )

b. To achieve its goals, the association needs financial support. The association has the exclusive right to conclude sponsorship agreements with regard to this event on aspects as described below. (4)

c. The sponsor is willing to support the association financially and/or organizationally, provided that the sponsor can profile itself in any way, directly or indirectly, in the context of this event. The parties have held consultations with regard to the foregoing

HAVE AGREED AS FOLLOWS:

1. The association hereby grants the sponsor, who hereby accepts from the association, the right to use (or have used) the communication options of the association, described in detail below, which arise from or are related to the event mentioned above under a. to promote the sponsor’s name, goods and/or services.

2. These communication options are expressly limited to the following (5);

a. connecting a trade or brand name of the sponsor to the name of the event, so that this name will be …………………….. …..;

b. the mention of the title “official sponsor” and the company, trade, product or brand name on all official printed matter from the association, such as admission tickets, the program book, posters, press releases, stationery, etc.;

c. ½ page advertisement in the program book;

d. 1/1 editorial space in the program book;

e. making space available for placing advertising billboards in the following locations …………………………..

f. applying the company, trade, product or brand name of the sponsor to:

– the competition and training clothing and other equipment of the participant(s) and/or officials at the event, insofar as the association does not need to request permission from these participants and/or officials and/or third parties, amounting to .. …. and in the following places ………………………….;

– the starting numbers of the participants, insofar as these are not part of the competition clothing of these participants;

– the attributes necessary for the event, more specifically on the start and finish liners, …………………………..;

g. naming and making available its own tournament prize, for which there will be sound advertising at the location where the event is held and mention in the program book;

h. permission for the sponsor to make public and reproduce images of the participants present at the event and the activities covered by the event, insofar as the association does not have to request permission from these participants or third parties for this;

i. permission to distribute free samples and/or other promotional items (sampling) during the event, including via a promotional stand at the event measuring …… m²;

j. the right to offer one’s own goods and/or services exclusively during the event, therefore to the exclusion of competing brands; the right to obtain bleacher seats for employees, relations and consumers, costs and numbers to be determined in further consultation;

l. the right to obtain a (limited) lockable space, where only the sponsor can carry out activities in the context of good hospitality of the persons mentioned under 2.k;

m. (other) …………………………..

3. The sponsor may use the communication options referred to under 2 from the moment the relevant communication option is available to the association and/or the sponsor, depending on the nature of the communication option and (if necessary) in mutual consultation. The sponsor will be allowed to use the remaining options for communication until …… weeks after the end of the event in order to gain post-publicity. After this period has expired, all options offered to the sponsor for this purpose will expire. (6)

4. The rights of the sponsor arising from this agreement, subject to the provisions of 11, exclusively relate to the following industry(s), products, trade name and brands:

a. …………………………

b. ………………………….. (7)

5. The Sponsor undertakes to: (8)

a. payment of an amount of € …………… (in words: …………………… ……) in cash, excluding sales tax. This amount is to be paid in two instalments, with the first instalment due on …………… and the second instalment on ……………;

b. providing the following services and making the following material available for the purpose of ………………………………… activities of the association, namely: …………………………..;

c. (other) The association will not yet send an invoice specifying an amount of turnover tax to be charged, but reserves the right to send an appropriate invoice to the sponsor at a later stage and have it paid, after deduction of advances made, if the association will owe sales tax on the sponsorship amount. These invoices can also be sent after the event.

6. All costs associated with the use of the (rights to) communication options as stated above under 2 will be borne by the sponsor, with the exception of the costs associated with those stated under 2.a, b and with regard to c, the costs otherwise than for design, litho costs and the like, the latter costs being borne by the sponsor.

7. To the extent that the sponsor undertakes or will undertake to provide sums of money for certain additional activities of the association, this will be done in close consultation with the association. The association will only be allowed to spend these amounts after the sponsor has approved the relevant expenditure.

8. The association will cooperate to ensure that the sponsor can make optimal use of the communication options described above and will continue to maintain contact with a person to be announced to the association by the sponsor.

If the sponsor so wishes, the association will consult in advance with the sponsor or with a third party specially designated by the sponsor for this purpose ( communications expert). The association will only publicize its relationship with the sponsor in the context of the event and within the period in which the sponsor is entitled to the communication options described in this agreement.

9. The association is obliged to optimally organize the event, taking into account any national and international regulations that may apply. The association must ensure, to the extent that this is within its power, that the field of participants is filled as strongly as possible. The association guarantees in any case the participation in this event of: ………………………….., while the other participants of at least or more equal strength. (9)

10. The association will strive to ensure that the event is given the greatest possible publicity. This mainly concerns publicity via television, radio and printed media. The association guarantees the sponsor that the board of the association, as well as officials and supporting volunteers at the event, will not be or will not be involved in advertising activities for the benefit of companies in the 4 sectors committed to the sponsor in the context of the event ( s).

11. The association has currently concluded sponsorship agreements with or has to take into account sponsorship contracts concluded by third parties and externally imposed with: (10)

a. ………………………… for the industry …………… ……………

b. (other) …………………………

and will be entitled to conclude further sponsorship agreements in the sector(s) not allocated to a sponsor(s), but not more than a total number of …… sponsors, with communication options equal importance. The association is entitled to attract unlimited sponsors with regard to billboards, insofar as this is possible within the rules stated in 20.

12. The association will keep the sponsor informed of the progress regarding the preparation of the event as well as the progress during the event, so that the sponsor can respond as best as possible to the positive effects or negative effects thereof and will be able to adapt the use of the communication options accordingly.

13. Neither the sponsor nor the association is permitted to transfer the rights under this agreement in whole or in part to third parties.

14. The sponsor is not permitted to enter into other sponsorship agreements in the context of this event, for example with participants, without prior approval from the association. The sponsor is not currently bound by any such agreement.

15. In the event of failure by one of the parties to fulfill one or more obligations under this agreement or the law, the other party has the right, after notice of default, to demand that the agreement be dissolved, without prejudice to the right from the other party to demand compliance with the agreement and/or compensation.

16. After termination of this agreement, for whatever reason, the parties will no longer be permitted to exercise any rights that each of them could derive from this agreement, especially with regard to the use of the other party’s name or event. exercise in any way.

17. All disputes that may arise as a result of this agreement, or from further agreements arising from it, will be settled by the Sports Sponsorship Arbitration Committee, as described in the regulations of this committee, set up by the NOC*NSF, to the exclusion of normal rights. and the Association for Sports Sponsorship in the Netherlands (VSN), the latter organization being merged into the Society for Advertising on December 31, 1988.

A dispute is deemed to exist as soon as one of the parties notifies the other party of this by means of a bailiff’s writ or registered letter. The dispute will be submitted in the manner further described in the aforementioned Arbitration Rules. (11)

18. Dutch law applies to this agreement.

19. Parties may only deviate from this agreement in writing. Additions must be recorded in writing between the parties.

20. The national and international sponsorship regulations of the umbrella national and international organizations apply to this agreement, as the association is bound by them as an organizer. The sponsor will receive a copy of these regulations if desired, but is in any case expected to be familiar with these regulations. Furthermore, the sponsor is familiar with the national and international rules of the Dutch Government (or at least the relevant Ministry) and the European Broadcasting Union, respectively, regarding (surreptitious) advertising in television broadcasts of events such as the present. All mentioned and intended arrangements are deemed to form part of this agreement. (12)

21. If, pursuant to one of the regulations mentioned under 20, this agreement requires approval from a third party(ies), this agreement is entered into under the condition precedent that no later than ……….. ………………. this approval will have been granted.

Thus drawn up and signed in …………………………. on ………….. .

Organizer:                                                                  SPONSOR:

Explanation of model contract Sponsoring an event

The numbering below follows the numbering in the text of the model contract.

1. The present model contract can be used in the event of sponsorship of both a sporting event and a cultural or other event. The organization of events outside sports is mainly done by associations. In recent years it has been common for sports events to be organized by national sports associations and sports associations. Most sports associations have the association form, although the association form is also not unusual. In recent years, however, the association form has been increasingly used in event organization, for organizational and fiscal reasons, but also in connection with financial liability. More information regarding the choice of a specific legal form is included in the theoretical part of this chapter. When drawing up the contract, the chosen legal form must therefore be taken into account. In addition, the following questions are important, for which reference is made to the legal entity’s own articles of association.

– Is the legal entity represented according to the articles of association by one board member, two or more board members, by the director or is the representation arranged differently?

If the legal entity is an association, is the prior approval of the General Meeting of the association required?

– Has the board of the legal entity made the decision in a legally valid manner? Wasn’t a qualified majority necessary?

– Does the legal entity require prior approval from third parties? This could include approval by an umbrella national or international sports association or by a municipality or a province, for example, because it has guaranteed against any loss. It is advisable to investigate this very well in advance, otherwise, major problems may arise later.

2. The model is based on the idea that the sponsor is a private company with limited liability (B.V.). The sponsor can of course also have a different legal form. The same investigation into powers is necessary as mentioned under 1. In addition, it may be important to have a look in the Trade Register, which is kept by the Chamber of Commerce and Industry of the place where the sponsor is located, before signing the contract, for a small fee. The name of the person signing the contract must be included in the extract to be issued by the Trade Register, otherwise, the contract may be invalid.

3. It is wise to arrange as much as possible in a contract regarding sponsorship so that both parties know exactly where they stand. For that reason, it is also important to know when exactly the event will take place and in which city or cities. A sponsor may have an interest in a specific period or a specific city. In that case, it cannot be the case that the organization simply makes changes.

4. This model contract assumes that the organization has the right to conclude sponsorship agreements. That is not always the case. Sometimes international or national organizations release certain events to third parties, while these organizations reserve marketing rights. The legal entity organizing the event then receives financial compensation, but has to work with sponsors who are then imposed “from above”. It is therefore recommended that when starting an event or when you apply to organize an event, you carefully check whether the organization itself has those rights or whether third parties must be taken into account. See also 20 in the model contract with the accompanying explanation.

5. This article gives some examples. There are undoubtedly more examples if one thinks creatively. It is of the utmost importance to display various communication options as precisely as possible and also who pays the costs, so that neither the organization nor the sponsor are faced with any surprises at a later stage. By drawing up different sponsorship packages, an organization can give certain rights exclusively to a certain group of sponsors and other rights to another group. Some communication options will require permission from participants or third parties. This must be announced in advance (e.g. in a registration form), otherwise conflicts may arise. A common case is that the main sponsor of a participant is in the same industry as the main sponsor of a tournament. It is questionable whether this participant would have registered if the participant had known this in advance, because that participant is being used to advertise a competing company.

6. It must be clearly agreed during which period the sponsor is entitled to use the agreed communication options. It is usually very important to also use the period prior to the event for communication because this can be useful for both parties. The opposite is also possible. Furthermore, an organization will not want a sponsor to continue to use the opportunities offered in this contact for too long, because this could make sponsorship for a new event more difficult. The nature of event sponsorship means that this follow-up period is quite short. The model contract assumes that the sponsorship agreed in the contract applies to one event. It is of course also possible to conclude a contract for a number of events to be held annually. There is even a requirement for a minimum period of three years if the sponsor wants to attach the name to an event in connection with the regulations of the Dutch Government in the field of television advertising and the Dutch Sports Federation. Reference is made to the text of these regulations, as included in this manual as an appendix.

The text could, for example, read as follows:

“This agreement has been entered into for a period of …… years, commencing …………… and ending ……………

During this period, the sponsor can only exercise its rights from …… months before an event. The association strives to hold the intended events annually, but cannot guarantee this. The association will have to inform the sponsor of a final decision on this no later than …… months before the event. If this decision is not final or has not been given in time or means that the event cannot be held in that year, this agreement may be terminated at the request of the sponsor or, if the sponsor terminates the association in the context of a wishes to adhere to this agreement for the upcoming event, the parties are released from their obligations to each other insofar as they relate to the year in which the event could not take place.”

It is also possible to give a sponsor an option for a subsequent period, whereby it must also be determined within which period the sponsor must have expressed its opinion on its option. Within the scope of this model contract, a text example on this point is not appropriate.

7. In connection with the provisions in the model contract, the exclusivity of the sponsor must be guaranteed. It is possible to agree with the sponsor that there will be only one sponsor. The model contract must then be adjusted on this point. However, usually one specific sector is agreed with a sponsor, within which the organization cannot also do business with a competing company. If a sponsor also has a billboard at the event, this exclusivity is usually arranged quickly and efficiently. However, if the event is organized with the permission of and with the reservation of (certain) sponsorship rights by an umbrella organization, this can cause problems. Many sports associations enter into multi-year sponsorship agreements for their national teams. The contract often states that a sign from the sponsor (whether or not for a previously agreed fee or sometimes even free) will be present at the event in a so-called television location. The organization cannot then sell another sign at that event to a competitor. A similar problem arises if the organization is not allowed to place signs at all because this is reserved for the umbrella organization. It is then very difficult for an organization to find additional sponsors!

For large companies it makes sense to indicate a specific group of products. A company like Philips is so large that a general provision such as: “the organization will be prohibited from entering into sponsorship agreements with companies that are perceived as competitive by the sponsor” is so broad that hardly any additional sponsors can be found. For example, one will have to choose the section “televisions and video” or “hi-fi equipment” or “household appliances” or “computers”. Negotiations at this point require a lot of energy and precision.

8. It was already indicated in the explanation under 5 that one cannot be specific enough. This also applies to the sponsor’s obligations. There are many options, but possible tax consequences (sales tax) should not be forgotten. It is important for both the sponsor and the organization to be informed about this by experts at an early stage, because the consequences can be very far-reaching. It is also possible to give the sponsor the right to view the organization’s finances, both budget and profit and loss account, but this of course depends on the amount of the sponsor’s contribution in relation to the total financial picture. The moments at which (instalment) payments must be made are left to the contract partners. The sponsor will want to pay as late as possible, preferably partly after the event. Payment in advance will be more convenient for the organization. If payment has only been agreed just before or just after the event, it is wise to have the sponsor provide a bank guarantee as security for compliance with its obligations. If it concerns a multi-year contract, the amount for the following years must also be determined. Perhaps partly through a provision regarding indexation of the sponsorship amount. It is dangerous to leave this point open, because people then assume that they have a sponsorship agreement, which, however, turns out to not be worth much due to the possible negative outcome of negotiations about the amount of new contributions. If the sponsor also provides services and materials, this must be clearly described. For example, if an agreement is entered into with a manufacturer of copy machines, the copying speed and quality and any copying costs must also be considered and discussed, the period within which malfunctions must be resolved, the precise number of sheets of paper of a certain quality to be supplied free of charge. and so on.

It is often not certain whether the association is liable for VAT or not. Because prevention is better than cure, a clause about this has been included in the model contract. The sponsorship amount could otherwise be “including sales tax” afterwards and that would save a lot of money.

9. Speaking bluntly, one could say that every organization will try to extract as much money as possible from the sponsor for as little security as possible on the part of the organization itself. That is not the intention of course. The agreement must therefore state as specifically as possible what kind of event it is and what the importance of this particular event is compared to possible other events. Many problems can be prevented this way. If there are no hard guarantees, it is recommended to choose a vague clause.

For example: “The association is currently negotiating with ………………………….. and with …….. …………………. The negotiations are going well. As far as other participants are concerned, the association focuses on ………….. ……………. and …………………………”

10. In order to inform the sponsor as well as possible about its position in relation to the organization, this clause has been included in the contract. I refer to numbers 4, 5 and 7 of this explanation.

11. No matter how clear an agreement is, there is always the possibility of disputes. Legal proceedings are not recommended, because this is less desirable from a publicity perspective, often takes quite a lot of time and the subject matter is very specific. For this reason, the NSF and the VSN founded an Arbitration Institute for sports sponsorship, which consists of specialists in the field of sponsorship, both from the sports side and from the advertising side, called arbitrators as “judges”.

The Arbitration Rules of this Sports Sponsorship Arbitration Committee are included in part N5200 of this manual with the permission of the partners at this Arbitration Institute. If the agreement is not a sporting event, you can still opt for dispute resolution via arbitration. Perhaps the Sports Sponsorship Arbitration Committee could even be chosen. If not, the following text could possibly be included in the agreement:

– All disputes that may arise as a result of this agreement, or from other agreements arising from it, will be settled by arbitration, to the exclusion of the ordinary courts.

To this end, an arbitration committee will be established, consisting of three people, whereby each of the parties will appoint an arbitrator and the two arbitrators thus appointed will jointly appoint a third arbitrator. A dispute is initiated by the most willing party, by notifying the other party by registered letter. The appointment of the arbitrators must be completed within one month after the dispute arose. The working methods of the arbitration committee are governed by the rules for arbitration by the Netherlands Arbitration Institute, as applicable at the time the dispute was submitted.

– The costs of the arbitration and the enforcement of the award will be borne by the losing party, without prejudice to the authority of the arbitration committee to make a different allocation of costs.

– The arbitration committee must have reached a decision within one month of its institution, so that the time factor must be taken into account when exchanging any conclusions and determining a possible appearance.

– When appointing the arbitrators, both parties must take into account the required expertise of the arbitrators in relation to the dispute that has arisen.

12. In 4 of these explanations, attention has already been paid to the possibility that the organizer of the event must take into account the requirements of the national or international umbrella organization. Due to the fact that the sponsor must also be aware of these arrangements, so that the sponsor cannot cause problems with the organization at a later stage, if the positive effect for the sponsor is less than intended, it can also be important to attach these arrangements to the agreement to be concluded.

It also remains possible to refer to these regulations and explicitly state that the sponsor claims to be aware of these regulations.

It is also important that the sponsor is aware of the restrictive measures taken by the Dutch Government, which, based on the currently existing regulations at the European Broadcasting Union (EBU), will also be taken over by the latter organization. Precisely because sponsorship on television is much less possible in the Netherlands than in other countries, the sponsor should not be able to think that he will receive as much and as clear publicity as, for example, a sponsor in Spain or Italy, in which countries much more is possible.

If, as an organizer in the Netherlands, you are saddled with an EBU contract imposed from above, consultation at an early stage with the Dutch broadcasting agents is of great importance. Under the EBU agreements, Dutch television will have to supply the images, which will then be beamed to European countries. In order to be broadcast on Dutch television, the images must comply with or not conflict with the regulations regarding surreptitious advertising, for which reference is also made to the provisions of 6 of these explanatory notes. These restrictions must be taken into account when drawing up sponsorship packages and concluding sponsorship agreements. The regulations identified in this article may also imply restrictions on the freedom to use communication options. The mention of product or brand names is often prohibited if it concerns an article that is too general or if it concerns an article for which the regulations state that it cannot be the subject of sponsorship, at least not in the intended form.

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