Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 3 of 15 (xv) Affiliate shall exercise reasonable care in recruiting and soliciting NMSDC members, as outlined in the SOW, and will align annually with NMSDC member orientation and benefits. Affiliate shall not charge local membership dues to NMSDC national members. (xvi) Affiliate is eligible to access the NMSDC database during the term of this Agreement, for the specific purposes set forth in this Agreement. a. Affiliate may not copy, transfer, assign, or sublicense the database. b. Affiliate may not allow third party access to or use of database of NMSDC without NMSDC prior written approval. c. Affiliate agrees to protect the integrity of the NMSDC database and only use the NMSDC database as set forth in this Agreement. In the event the Affiliate fails to take steps to protect the integrity of the NMSDC database or otherwise violates use or any provision of this Agreement, NMSDC reserves the right to take any but not limited to the following corrective measures: immediately suspend use of the database, levy penalties to cover corrective measures, terminate Agreement for material breach. (c) Quality Control and Site Visits. The nature and quality of services rendered by Affiliate must conform to the level of quality deemed appropriate by NMSDC and must conform to the standards and any reasonable standards set by NMSDC from time to time by way of the NMSDC Affiliate Handbook. NMSDC shall have the right to make any reasonable number of site visits to monitor the quality of services provided by Affiliate, and Affiliate shall assist NMSDC in monitoring quality by, among other things, providing NMSDC staff with access to Affiliate’s premises and other locations at reasonable hours to review the quality of the services. Affiliate shall undertake such other steps as NMSDC may reasonably request to assist NMSDC in monitoring the quality of the services provided in connection with the SOW. NMSDC reserves the right to engage in quality management plans with the Affiliate to support remediation of any services or activities believed to be nonconforming to the NMSDC standards, including any and all appropriate penalties. (d) Affiliate in Good Standing. An Affiliate in good standing meets all the required standards and obligations set forth by NMSDC annually, including but not limited to the following: (i) Affiliate adheres to all the rules, policies, and regulations set by NMSDC. This includes following ethical guidelines, operational procedures, and any other directives provided. (ii) Affiliate actively participates in the activities, events, programs, and initiatives of NMSDC as defined in the SOW and KPI metrics. (iii) Affiliate adheres to local, national, and international laws relevant to its operations. (iv) Affiliate maintains a good reputation and ethical conduct. The affiliate shall not engage in activities or make public statements that could harm the reputation and/or brand of NMSDC. (v) Affiliate provides regular reporting to and open communication with NMSDC as SOW and Z.O.N.E. Reporting. (vi) Affiliate adopts and utilizes NMSDC shared services technology in a timely manner. (e) Compensation of Personnel. Affiliate will bear sole responsibility for payment of compensation to its personnel. 4. NMSDC SUPPORT. NMSDC agrees to provide the following support: (a) NMSDC shall make reasonable efforts to provide relevant and appropriate information, both proactively and on request, which will enhance the Affiliate’s capacity to meet the goals set forth in the SOW.
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 4 of 15 (b) NMSDC shall, where it deems appropriate, include Affiliate in NMSDC led national and regional press and public relations efforts and shall develop and manage a website and support tools to benefit the NMSDC Network’s programs and services. (c) NMSDC shall maintain one proprietary database for its national and local members, certified and non-certified MBEs, and other stakeholders, access to which is subject to NMSDC’s Information Security Policy. NMSDC shall be the sole licensor of access to the database to MBEs, members, and others. (d) NMSDC executive leader(s) shall organize and preside over Network Leadership Meetings (NLM) to include Affiliate presidents, Affiliate board chairs, and Affiliate Minority Business Input Committee (MBEIC) chairs. (e) NMSDC will extend appropriate discounts and complimentary registrations for NMSDC events for Affiliate in good standing in accordance Section 3 (d). (f) NMSDC shall include Affiliate in NMSDC led enterprise learning activities, when available, which provides opportunities for Affiliate staff members to share information and engage in peer learning. NMSDC reserves the right to charge a reasonable fee for participation in such learning activities. (g) NMSDC shall make available personnel of NMSDC, when appropriate and available, for staff training, regional speaking engagements, and general participation in Affiliate services and programs. (h) NMSDC shall provide Affiliate with access to specified technological tools and other shared services (collectively referred to as "Shared Services") designed to enhance network operational efficiency, standardization, and business performance as defined in the SOW. Affiliate agrees to adopt and integrate the provided Shared Services into its operational processes. NMSDC reserves the right to levy a reasonable fee for select Shared Services. (i) NMSDC shall provide financial support (funding) to the Affiliate based on the initial “Funding Formula” detailed in Exhibit A.3. NMSDC retains the right to amend or adjust the formula at its reasonable discretion and at any time. 5. CONFIDENTIAL INFORMATION; NONDISCLOSURE. (a) Confidential Information. “Confidential Information” means any proprietary or non-public information, including information reasonably understood to be of a sensitive or proprietary nature, provided by or on behalf of one party (the “Disclosing Party”) to the other party (the “Receiving Party”), however manifested or communicated. (b) Protection of Confidential Information. The Receiving Party will protect the confidentiality of Confidential Information with the same degree of care as the Receiving Party uses for its own Confidential Information, but no less than a reasonable degree of care. (c) Restrictions on Use of Confidential Information. The Receiving Party may use the Confidential Information of the Disclosing Party solely for the purpose of carrying out this Agreement and any SOW and agrees that it will keep confidential, will maintain the secrecy of Confidential Information, and will not use the information for any other purpose, except as provided herein. (d) Exceptions to Restrictions. Nothing contained in this Agreement shall prohibit a Receiving Party from disclosing Confidential Information of the Disclosing Party pursuant to a court order or investigation by a government body. 6. INTELLECTUAL PROPERTY RIGHTS. (a) Licensed Marks. (i) Grant of License. NMSDC grants Affiliate, and Affiliate accepts, a non-exclusive, nontransferable, non-sublicense-able license to use for purposes of this Agreement, NMSDC
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 5 of 15 programs, services, logo, and trademarks, as well as the phrase “Minority Supplier Development to be used in the name and logo of the Affiliate and the acronym “MSDC” to be used in the acronym and logo of the Affiliate. The items licensed in this section are referred to as the “Licensed Marks”. The Affiliate may use the Licensed Marks in the Affiliate Service Area. (ii) Form of Use. Affiliate shall use the Licensed Marks in the form or forms approved by NMSDC in accordance with the NMSDC Branding Standards as may be promulgated. Affiliate shall make available to NMSDC, upon its request, for its approval, samples of uses of the Licensed Marks on promotional materials or other materials. NMSDC shall have the right to make reasonable objections on the grounds that it believes that the use of such materials by Affiliate will be damaging to, or dilutive of, the value or reputation associated with, the Licensed Marks, or is inconsistent with NMSDC’s national strategy for use of the Licensed Marks. Affiliate must modify and adopt changes promulgated by NMSDC to the NMSDC Branding Standards in a timely manner as determined by NMSDC. (iii) Ownership of Marks. Affiliate acknowledges that it has no interest in, or claim to, the Licensed Marks other than the right to use them as granted under this Agreement and that NMSDC will remain the sole and exclusive owner of all right, title, and interest in the Licensed Marks. Any and all goodwill of the Licensed Marks that may develop from Affiliate’s use of such Licensed Marks hereby inures exclusively to NMSDC. Affiliate shall not do anything to compromise the rights of NMSDC in the Licensed Marks, such as by filing trademark applications for Licensed Marks, by asserting in any way Affiliate’s ownership of the Licensed Marks, or by diluting in any way the value of the Licensed Marks. (b) Ownership of Work Product. All copyrights, patents, trade secrets, or other intellectual property rights associated with any ideas, concepts, techniques, inventions, processes, or works of authorship developed or created by Affiliate or its personnel during the course of performing services for NMSDC hereunder (collectively, the "Work Product") will belong to Affiliate. Affiliate grants to NMSDC an irrevocable, unlimited, royalty-free license to reproduce, publish, or otherwise use Work Product, in all or in part, distribute, and authorizes others to distribute Work Product to advance programming across the NMSDC Network. (c) Obligations on Termination. Upon termination or expiration of this Agreement or a SOW, or at any time upon the written request of either party, both parties agree to immediately: (i) cease using the Confidential Information; (ii) return any Confidential Information (including information in computer software or held in electronic storage media); and (iii) destroy any notes or personal memoranda which includes or make reference to such Confidential Information. 7. WARRANTIES, INDEMNITY (a) Warranties. Affiliate represents, warrants and covenants to NMSDC that: (i) It is a 501(c)(3) nonprofit corporation. (ii) It maintains the following insurance coverage: a. Comprehensive general liability coverage of no less than on million dollars ($1,000,000) combined single limit per occurrence, and two million dollars ($2,000,000) aggregate; and b. Directors and officers liability coverage. (iii) All services under this Agreement will be performed in a professional, skillful, and workmanlike manner, and in accordance with applicable SOW and NMSDC policies and industry standards, including but not limited to the following:
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 6 of 15 a. its personnel will devote all due skill, care, attention, and diligence to the proper performance of its obligations and the exercise of its discretions hereunder; b. its personnel will comply with all applicable laws and legal requirements in relation to performance of services under this Agreement and any SOW; c. its personnel will ensure all services outlined in the SOW are performed and a contingency plan is in place for backup. Should there be a cost associated with the contingency plan, that is the sole obligation of the Affiliate. (b) Indemnification. NMSDC will Indemnify Affiliate from and against damages and attorneys fees arising from certification decisions made by NMSDC, or actions or omissions of NMSDC in the certification process, excluding claims arising from misconduct of Affiliate or its employees, volunteers or agents. Affiliate will defend, indemnify, and hold harmless NMSDC and its officers, directors, employees and agents, and the administrators of NMSDC's benefit plans, from and against any claims, liabilities, or expenses relating to misconduct of Affiliate or its employees, volunteers, or agents, or from compensation, tax, insurance, or benefit matters related to compensation of personnel of Affiliate. 8. INFORMATION SECURITY POLICY. Affiliate will adhere to the NMSDC Information Security Policy (available at https://nmsdc.org/information-security-policy/). NMSDC reserves the right to update or modify this policy at any time and for any reason. Any changes will be effective immediately, NMSDC will notify the Affiliate, and Affiliate is responsible for reviewing the changes to the policy and complying. 9. GENERAL PROVISIONS. (a) Force Majeure. Neither party will be considered in default under this Agreement or any SOW to the extent that performance of an obligation is delayed or prevented by any Act of God, fire, flood, earthquake, hurricane or similar natural disasters, and such default is beyond the reasonable control of such party that make it commercially impracticable for such party to perform its duties under this Agreement. In such event, NMSDC shall pay Affiliate for any fees earned to date and any cancellation fees which may be due under any SOW. (b) Assignment. Except as provided in this section, neither NMSDC nor Affiliate will assign or transfer this Agreement without the prior written consent of the other. Consent will not be unreasonably withheld or delayed. NMSDC shall be entitled to assign this Agreement to an affiliate, subsidiary or successor in interest that acquires all or substantially all of the assets of NMSDC. (c) Governing Law and Forum. This Agreement is governed by the laws of Illinois and any disputes shall be heard only in courts located in Chicago, Illinois. (d) Subcontractors. Affiliate will not subcontract services set out in the applicable SOW or this Agreement without prior approval from NMSDC. (e) Interpretation. Section headings in this Agreement are for convenience only. The term "including" when used in this Agreement is deemed to include "without limitation" and the term "purchased" includes "licensed" as applicable. (f) Waiver. No waiver is effective unless in writing signed by the parties and a waiver is not a continuing waiver of the same or any other breach.
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 7 of 15 (g) Severability. If a court of competent jurisdiction holds any provision of this Agreement to be invalid or unenforceable, the remaining provisions will remain in effect, and the parties will engage in good faith negotiations to amend the Agreement to substitute a valid and enforceable provision that most nearly reflects the parties' intent with respect to such provision. (h) Remedies Cumulative. The remedies under this Agreement are cumulative and a remedy under this Agreement is in addition to all other remedies available at law or in equity. (i) Language. This Agreement has been drafted in the English language at the mutual request of the parties hereto. (j) Survival. Terms which by their nature are intended to survive and the following terms will survive expiration or termination of this Agreement in particular Section 1 (Post-termination), Section 5 (Confidentiality Information; Nondisclosure), Section 6 (Intellectual Property Rights), and Section 7 (Warranties, Indemnity) of this Agreement. (k) Notices. Any notice required or permitted under this Agreement shall be given in writing to the email address provided for a party below (or such other address or number as any party may provide to the other in writing in the manner contemplated hereby). If to NMSDC, to: If to Affiliate, to: Name _________________________ Name __________________________ Title ___________________________ Title____________________________ Email Address ___________________ Email Address ___________________ (l) Entire Agreement. This Agreement and any SOW and Exhibits constitute the entire Agreement between the parties with respect to the subject matter hereof and supersede all other previous statements communications or agreements, whether oral or written, including press releases, advertising and sales literature. No modification, alteration or waiver of any provision hereof will be binding upon the Parties unless evidenced in writing and signed by both parties. (m) Counterparts. This Agreement may be signed in counterparts, each of which when taken together will constitute one Agreement, and signatures provided by electronic means will be valid. By the signature of its duly authorized representative below, each party agrees to be bound by this Agreement as of the Effective Date first set forth above. NATIONAL MINORITY SUPPLIER [AFFILIATE NAME] DEVELOPMENT COUNCIL By: _____________________________ By: _____________________________ Name: _____________________________ Name: _____________________________ Title: _____________________________ Title: _____________________________ Date: _____________________________ Date: _____________________________
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 8 of 15 EXHIBIT A.1 – STATEMENT OF WORK 1. OBJECTIVE. This Scope of Work (SOW) outlines the responsibilities of Affiliate and expectations of NMSDC for the Affiliate in the provision of services to actively support NMSDC’s mission to serve as a growth engine for NMSDC-certified MBEs and enable members to advance economic equity. The parties agree on the following services, deliverables, and key performance indicators. 2. SERVICES TO BE PROVIDED. Below is an outline of the services to be provided by Affiliate with a focus on connecting NMSDCcertified MBEs to growth opportunities. Services will be provided in accordance with the Affiliate Handbook. (a) Certification Support. (i) MBE Recruitment and Onboarding a. Identify and recruit qualified MBEs to join the NMSDC network through certification. This effort is intended to increase the number of certified MBEs that are of the appropriate industries and qualifications to obtain corporate and government contracts. b. Follow up and document active leads through the NMSDC database. c. Promote NMSDC online pre-certification workshop and supplement with complimenting regional workshops. d. Conduct monthly onboarding workshops for newly certified MBEs to orient them to the NMSDC network, including the services provided nationally and by the affiliate, and help them realize value from their certification. (ii) MBE Certification Site Visits (When Applicable) a. Complete site visits as required and defined in the certification process to help ensure only qualified companies are certified. b. When conducting site visits, utilize the NMSDC-designated system and follow the NMSDC-defined processes for scheduling, conducting, and documenting certification site visits within the NMSDC-defined timeline. c. Site visits must be completed by individuals who have successfully completed the NMSDC-prescribed training. (iii) MBE Recertification Support a. Encourage and promote MBE recertification. b. Leverage NMSDC database to maximize recertification. (iv) MBE Compliance Assistance a. Participate in NMSDC staff certification workshops and leverage NMSDC resources to maintain knowledge of certification requirements and process. b. Assist certified MBEs in updating and maintaining their profile to ensure accuracy, completeness, and discoverability in the MBE search database. c. Notify NMSDC when the Affiliate has knowledge that an MBE may no longer meet NMSDC certification qualifications. . (v) Measure success through: a. Aggregate MBE Satisfaction Score b. MBE retention and growth rate measured by number of certified MBEs in the service area. (b) Growth and Development. (i) MBEs a. MBE Assessment
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 9 of 15 1) Offer and if accepted, coordinate a self-directed online assessment of MBEs to understand their current capabilities, strengths, weaknesses, and growth potential for segmented capability and capacity building to support various stages of MBE growth. b. MBE Capability and Capacity Building 1) Identify and connect to capability building programs for MBEs including but not limited to marketing, sales, finance, and operational improvements. 2) Promote and recruit MBEs to NMSDC’s capacity building programs. 3) Identify and connect to other capacity building programs that are complementary to NMSDC offerings. 4) Develop and administer, when feasible, measurable training, workshops, mentoring programs, and capital sources, complementary to NMSDC’s offerings to enhance the capacity and competitiveness of MBEs in scaling and pursuing contracting opportunities. 5) Partner with NMSDC to evaluate and market best in class capacity building programs nationwide. (ii) Member Support a. Promote NMSDC’s annual Business Diversity Leadership Summit (BDLS) and monthly webinars designed to share industry trends and best practices on supplier/business diversity programs. b. Provide supplemental programming to support corporate members and government staff in the Service Area to establish and enhance supplier/business diversity programs. (iii) Measure success through: a. MBE revenue growth and tier progression b. MBE participation in NMSDC programs and events c. Aggregate MBE Satisfaction Score d. Aggregate Member Satisfaction Score (c) Connect (i) Contracting Opportunity Identification and Connection a. Build relationships with members, government, and MBEs (“Buying Entities”) decision makers, including but not limited to supplier diversity and procurement professionals, business leaders, and other decision makers. b. Submit quarterly mid-to-long-term demand insights from Buying Entities to NMSDC using designated tool and build a pipeline of qualified MBEs for relevant opportunities. c. Identify Buying Entities’ short-to-mid-term contracting opportunities in the Service Area relevant to the MBEs' industries and capabilities and refer contracting opportunities outside of Service Area to appropriate Affiliate. d. Create platforms (i.e., events, programs, channels) for MBEs to connect with other MBEs, capital providers, industry experts, and potential customers and partners. e. Promote NMSDC quarterly matchmaking events and in addition to hosting regional matchmaking events to connect MBEs to local opportunities and capital. f. Utilize NMSDC database to post contracting opportunities and notify relevant MBEs. g. Maintain local membership data in the NMSDC database to facilitate connections. h. Assist corporate members in identifying NMSDC-certified MBEs to be included in Buying Entities’ contracting opportunities. (ii) Measure success through: a. Quarterly demand insights submission to NMSDC b. Connection Opportunities Provided (events/programs) c. MBE revenue growth and Tier Progression d. Aggregate MBE Satisfaction Score e. Aggregate Member Satisfaction Score
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 10 of 15 (d) Advocate. (i) Develop a regional advocacy strategy within the framework of the NMSDC advocacy strategy and share with NMSDC to inform the national strategy. (ii) Work with local, state, and government agencies, chambers of commerce, financial institutions, and economic development entities in Service Area to advocate and influence policies and legislation on behalf of the mission and vision of NMSDC and its constituents and provide feedback to NMSDC to inform the national strategy. (iii) Participate in NMSDC advocacy activities. (iv) Advocate on behalf of MBEs to Buying Entity decision makers when appropriate and within legal parameters. (v) Advocate for annual spend reporting to NMSDC. (vi) Measure success through: a. Quarterly Success Stories b. Spend Reporting c. Quarterly Media Clippings/Presence d. Aggregate MBE Satisfaction Score e. Aggregate Corporate Member Satisfaction Score (e) Operational Efficiencies. (i) Continuous Improvement a. MBE Certification Improvement 1) Provide feedback and recommendations to improve the certification process, customer experience, policy, and technology. 2) Provide feedback as to why MBEs are not certifying/renewing to inform outreach and retention planning. (ii) Shared Services a. Shared Services or tools will be used for the following but not limited to: 1) Certification reporting. 2) MBE search and lead management. 3) Registration of local members. 4) Local and national member communications. 5) Contract opportunity leads. 6) MBE pre-qualification and certification referral. 7) KPI and other reporting as detailed in the SOW. 3. KEY PERFORMANCE INDICATORS. Exhibit A.2 of the Agreement contains a detailed description of the key performance indicators (KPIs). Affiliate is required to submit their KPIs scorecards to NMSDC on a quarterly basis as part of the ZONES Report. NMSDC reserves the right to schedule a quarterly review to enhance performance. 4. DELIVERABLES. NMSDC will monitor and measure Affiliate progress and impact quarterly according to the KPIs set out as Exhibit A.2. Deliverables Due Date Affiliate Agreement Adoption Jan. 31, 2024 ZONES Reporting, including 2024 additions: • Demand Insights Quarterly
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 11 of 15 • Connection Opportunity Reporting • Success Stories • Earned Media Clippings Annual Financial Review or Audit Annual Additionally, Affiliate will provide upon request the following: • Best practices and industry specific programing documentation. • Strategic and operational plan. • Contract opportunity identification and connection process. • Training materials, workshop documentation, and mentoring records. • Networking and partnership documentation. • Quarterly and annual business reviews with NMSDC to ensure compliance with roles, responsibilities, and adherence to agreement standards and practices. • Other data and Affiliate activity reporting as needed. 5. DURATION. The SOW will be in effect from the Effective Date to December 31, 2024 unless terminated earlier as per the Section 1 (Term and Termination) of this Agreement. The SOW will renew automatically each year if notice is not provided by NMSDC by October 1 each year but will terminate if the Agreement terminates. Additionally, the SOW may be amended only by an agreement in writing signed by both parties hereto. 6. COMPENSATION. Payment to the Affiliate for the services rendered will be in accordance with the agreed-upon payment terms detailed in Exhibit A.3 of the Agreement. 7. SIGNATURES. This Scope of Work is hereby accepted and agreed upon by: NATIONAL MINORITY SUPPLIER [AFFILIATE NAME] DEVELOPMENT COUNCIL By: _____________________________ By: _____________________________ Name: _____________________________ Name: _____________________________ Title: _____________________________ Title: _____________________________ Date: _____________________________ Date: _____________________________
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 12 of 15 EXHIBIT A.2 – KEY PERFORMANCE INDICATORS SCORECARD 1. KPI SCORECARD. The purpose of the KPI Scorecard is to ensure the Affiliate remains focused on the primary objective of growing MBEs and supporting Buying Entities. Category KPI How to Measure Data Source Target Weight MBE Growth MBE Revenue Growth $ of MBE revenue at the end of the Year - $ of MBEs revenue at the start of the Year ÷ by $ of MBEs revenue at the start of the Year MBE Growth / Zoho Reports 15.0% 25.0% 50% MBE Growth Rate # of MBEs at the end of the Year ÷ by # of MBEs at the start of the Year MBE Growth / Zoho Reports 110.0% 15.0% MBE Progression # of MBEs that Scale up to the next class Level MBE Growth / Zoho Reports 5.0% 10.0% Opportunities Received from Buying Entities Measure as a percentage of Buying entities submitting. Monitor in year one with no weight, to be able to set a target and add weighting in 2025. TBD TBD 0.0% Connections Made for MBEs (capital, development resources, opportunities) Measure as a percentage of Buying entities submitting. Monitor in year one with no weight, to be able to set a target and add weighting in 2025. TBD TBD 0.0% Member Retention and Growth National Member Retention Rate # of National Members Renewing ÷ # of National Members at the start of the Year Member Success / Zoho CRM 95.0% 12.5% 35% National Member Growth Rate (# National Members at end of year - # National Members at start of year) ÷ # National Member Success / Zoho CRM 10.0% 10.0%
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 13 of 15 Members at start of year Local Member Growth Rate (excludes national members) (# Local Members at end of year - # Local Members at start of year) ÷ # Local Members at start of year Network Success / ZONES Reports 10.0% 7.5% Local Member Retention Rate (excludes national members) # of Local Members Renewing ÷ # of Local Members at the start of the Year Network Success / ZONES Reports 95.0% 5.0% Customer Satisfaction Member Satisfaction Score from Constituent Survey NMSDC Marketing / Survey Results 3.1 7.5% 15% MBE Satisfaction Score from Constituent Survey NMSDC Marketing / Survey Results 3.1 7.5% 2. STANDARD BONUS CRITERIA. Affiliate can qualify for a Full Bonus, Half Bonus, Quarter Bonus, or No Bonus depending on the following standard bonus criteria: (a) Must be an Affiliate in good standing. (b) Must score above an 85% and be in the top 20% of results for a Full Bonus (4 bonus shares) (c) Must score over an 80% and be in the top 40% of results to get a Half Bonus (2 bonus shares) (d) Must score over 75% and be in the top 75% to get a Quarter Bonus (1 bonus share) (e) Failing to be in good standing, scoring below 75%, and/or falling below the top 75% of results will result in No Bonus. The percentage of results calculations includes all Affiliates as a base, including any not in good standing. To qualify for Council of the year, the Affiliate must be in good standing and either produce results in the top 75% of scores or demonstrate significant improvement in results from the previous year. If no Affiliate qualifies for a Full Bonus, NMSDC may designate one (1) to three (3) top performing councils to receive a Full Bonus. If no Affiliate qualifies for a Full Bonus or Half Bonus, NMSDC may also designate one (1) to three (3) high performing councils to receive a Half Bonus.
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 14 of 15 3. ACCELERATOR BONUS CRITERIA. Affiliate can qualify for an Accelerator Bonus (equivalent to a Quarter Bonus) by being in good standing and achieving at least four of the following: (a) Submits complete and accurate ZONES Report on or before due date. (b) 100% participation at Network Leadership Meetings and NMSDC Annual Conference & Exchange. (c) Promotion of NMSDC Annual Conference & Exchange, Business Diversity Leadership Summit, and all active NMSDC national programs. (d) Collaborate on an effective and timely Certification Project deployment and assist MBEs to update their profiles to become more discoverable. (e) Submit at least one best practice aligned to the four pillars. (f) NMSDC grant reliance percentage improvement (NMSDC grants to Affiliate ÷ Affiliate Total Revenue. Total Income includes in-kind. Based on self-reported year end data).
Confidential | Not for Distribution Outside of Authorized or Permitted Use Confidential | Not for Distribution Outside of Authorized or Permitted Use Page 15 of 15 Exhibit A.3 – Funding Model 1. TYPES OF FUNDING. NMSDC will provide two types of funding to each Affiliate in good standing in 2024 for services specified in the SOW. (a) Type #1. Certification revenue collected by NMSDCi minus site visit costs led and managed by NMSDC (“NMSDC Network Certification Revenue”), excluding certification revenue received through the NMSDC Growth Initiative as well as Capital Manager Program for Minority Investment Firms certification. (b) Type #2. Thirty-five percent (35%) of all other unrestricted revenue to include NMSDC membership dues, event-sponsorships, registration, booth sales, advertising, unrestricted grants, and personal giving (“Total Unrestricted Revenue”), excluding restricted grants and NMSDC Network Certfiication Revenue. 2. FUNDING DISTRIBUTION METHOD. (a) Type #1. NMSDC Network Certification Revenue received by NMSDC will be distributed to the NMSDC Network, attributed by Affiliate Service Area. Costs for site visits including virtual and onsite will be deducted from Affiliate reimbursement for Affiliate who has opted out of site visits. This distribution model is applicable for calendar year 2024 and 2025. (b) Type #2. The following distribution formula will be used for 2024: 70% Base allocation - divided equally among the NMSDC Network. 20% Performance bonus - allocated according to performance metrics in Exhibit A.2 for 2024. 10% Headquarter stipend - allocated on the basis of NMSDC national member headquarter location. Stipend allocation may vary across the NMSDC Network based on level of dues paid by NMSDC national members. The distribution formula is subject to change at the discretion of the NMSDC. A Performance Bonus is awarded to Affiliate in good standing and meets the agreed-upon performance metrics, expressed in Exhibit A.2. An Affiliate Performance Management Report will be distributed annually by NMSDC. i During 2024, the NMSDC Network will be migrating to a hybrid certification model, centralizing the processing at NMSDC. Certification revenue received by the Affiliate prior to migration to the hybrid certification model will remain with the Affiliate.
Subject: Notice of Need for Further Negotiations and Alignment Dear NMSDC Constituent: We hope this message finds you well. We are writing to you on behalf of the 23 Regional Minority Supplier Development Councils (RMSDCs) across the US regarding the 2024 Affiliate Agreement. We value the time, effort, and resources all parties have invested thus far. Our shared goal has always been to reach a mutually beneficial agreement that respects the interests of the RMSDCs and NMSDC while fostering a productive and successful collaboration that benefits our stakeholders—our MBEs and our corporate members-- locally, regionally, and nationally. It has come to our collective attention that after fifty years of working together, the NMSDC and the RMSDCs are not in alignment, despite our best efforts to conform to the NMSDC’s transformation strategy. This is now reflected in the proposed 2024 Affiliate Agreement sent to each of the RMSDCs from NMSDC in December 2023. Given the complexity and importance of the matters at hand, we believe it is crucial to take a reasonable amount of time to negotiate and seek alignment, instead of attempting to force the RMSDCs to sign an agreement that does not consider the implications to corporate members, MBEs, revenue, or employees. This will enable us to thoroughly address concerns and ensure our agreement is robust, fair, and sustainable. We understand the potential implications of this on the NMSDC’s network transformation timeline, and we regret any inconvenience this may cause. However, we firmly believe that taking the necessary time to achieve alignment now will prevent future disputes and misunderstandings, thereby ensuring the sustainability of this long-standing collaboration. We have appointed a subcommittee to work directly with NMSDC to negotiate the proposed 2024 Affiliate Agreement. As we have all learned from experience,
individual negotiations jeopardize smaller RMSDCs, and our goal remains steadfast: to build a strong network allows us to serve the interests of all of our stakeholders. So, we ask that NMSDC work only with the subcommittee in negotiating this agreement versus contacting any RMSDC individually regarding the 2024 Affiliate Agreement or any transformation processes. Finally, due to the countless delays in receiving the affiliate agreement, we believe it is important to restate our commitment to negotiate terms in a realistic timeframe, so all references to a January/February completion are premature, as twenty-three boards, etc., must approve the final agreement. Thank you for your understanding, patience, and commitment to reaching a satisfactory agreement. We look forward to starting our discussions and working towards alignment on the matters at hand.
From: NMSDC Executive Office <[email protected]> Sent: Friday, January 12, 2024 4:57 PM To: Margo <[email protected]>; [email protected] Cc: Fernando Martinez <[email protected]> Subject: NMSDC Funding Model Change Notice Good Afternoon, As you saw in the new affiliate master services agreement shared with you on December 20, NMSDC will be adjusting the funding model to include two types of funding and distribution methods for 2024: • Type #1 is related to certification revenue: Those funds, minus in-person site visit costs led and managed by NMSDC will be distributed to the NMSDC Network, attributed by Affiliate Service Area, as we previously communicated. Note: This excludes certification revenues received through NMSDC Growth Initiative as well as Capital Manager Program for Minority Investment Firms certification. • Type #2 is related to all other unrestricted NMSDC revenue to include membership dues, eventsponsorships, registration, booth sales, advertising, unrestricted grants, and personal giving (“Total Unrestricted Revenue”). 35% of those funds will be distributed to the NMSDC Network through a: o Base allocation - 70% divided equally among the NMSDC Network o Performance bonus - 20% allocated according to performance metrics, and o Headquarter stipends - 10% allocated on the basis of NMSDC national member headquarter location. It is important to know that the estimated level funding through this new model in 2024 is consistent with the level of funding that you received this past year and is a result of benchmarking done against other NGOs with similar scopes of services. In fact, NMSDC leads in the level of funding distributed to its regional affiliates in comparison to the benchmarked NGOs. And ultimately, both NMSDC and the regional affiliates will benefit from overall NMSDC fundraising success in all unrestricted revenue categories. To facilitate a smooth transition in the adoption of the new affiliate master services agreement, and in accordance with the current affiliate agreement, Section 5. NMSDC Obligations, point c., that grants NMSDC the right to amend or adjust the formula at its reasonable discretion, the NMSDC Executive Committee has approved the funding formula adjustment as detailed above for Type #1 and Type #2, excluding restricted grants, effective January 1, 2024. Please use this email as official notice. In practice, at the close of each month we will calculate both revenue streams per the above (Type 1 & 2) and payout on actuals received by NMSDC for that month, according to each revenue formula for each affiliate for that month period, no later than the close of the following month. This approach will streamline the distribution model, simplify reconciliation, and ultimately get the funds in your hands more quickly, on a regular cadence, to help fund and enhance your programming and events. If you have any questions regarding the move to the new funding formula, please let us know. Sincerely, Ying & Fernando NMSDC Executive Office
Estimated Outstanding 2022 Dues Distribution to Regional Councils
Estimated 2022 Dues Distribution National Dues Collection Renewals New Member Total Percentage Total Dues Collections $12,556,203 $ 1,196,936 13,753,139 NMSDC’s Share of Dues $ 2,511,240 $ 239,387 $ 2,750,627 20.0% New Member Recruitment Bonus-NMSDC - 363,518 363,518 2.9% New Member Recruitment Bonus-RMSDCs - 119,715 119,715* 1.0% National Services/Benefits to RMSDCs 269,661 - 269,661 2.1% Direct Distribution of Dues 9,775,302 594,031 10,369,333 74.0% 100.0% Allocation of National Dues to RMSDCs Percentage Amount Average Allocation Base Level - Equal Distribution 70% $7,258,533 $315,588 per council Headquarter Stipend 10% 1,036,933 Performance-Based Regional Distribution 20% 2,073,867 $90,168 per council Total Direct Distribution (payments of dues) 100% 10,369,333 Total Paid to Date for 2022 9,461,331 Estimated Outstanding 2022 Dues Allocation to RMSDCs $ 908,002 * Not deducted from the total