NATIONAL ASSOCIATION OF SMALL BUSINESS INVESTMENT COMPANIES

The National Association of Small Business Investment Companies was founded in 1958, shortly after the enactment of the Small Business Investment Act of 1958. Representing the majority of all companies licensed to date under the program, NASBIC serves as a clearing house for information relating to the SBIC industry and as the spokesman for its member companies in dealing with the legislative and executive branches of the Federal Government and the public.

Affiliated with NASBIC are eight Regional Associations of Small Business Investment Companies. These groups bring together Licensees in all parts of the country. They conduct local, state and regional meetings, and work to solve problems peculiar to their areas.

Through NASBIC News, published monthly, and frequent special bulletins, members are kept informed of all developments relating to SBIC's. National, regional and local meetings alert member companies to problems and difficulties as they arise, and a mutually profitable, constructive relationship between small business concerns and SBIC's is encouraged.

From the outset, NASBIC has fostered the development of the highest standards of business conduct. Its Code of Ethics and Trade Practice Rules, developed and voluntarily adopted by its member companies, insure fair dealings within the Association and with the small business community.

To meet its obligations of providing continuous service to its member companies and their clients, NASBIC has adopted the arbitration procedures contained in this pamphlet for the prompt resolution of disputes involving SBIC's.

AMERICAN ARBITRATION ASSOCIATION

Arbitration is the voluntary submission of a dispute by the interested parties to a disinterested person or persons for final determination. To achieve orderly, economical and expeditious settlement of controversies, in accordance with federal and state laws, the American Arbitration Association, together with the National Association of Small, Business Investment Companies, prepared the procedures contained herein.

The American Arbitration Association maintains throughout the United States a National Panel of Arbitrators consisting of experts in all trades and professions. In arranging for arbitration to be administered by the Association, NASBIC members will have the benefit of arbitrators who are experienced in SBIC matters.

The American Arbitration Association is devoted wholly to the advancement of the knowledge and use of arbitration. It is privately organized and financed, and is incorporated as a non-profit organization of a scientific and educational nature. In order to maintain its facilities for arbitration, a fee is charged for administrative services in commercial cases, generally based upon the amount involved.

The Association never acts as arbitrator. Its function is to administer arbitrations in accordance with the Rules, maintain Panels from which arbitrators may be chosen by parties, or make appointments of arbitrators when parties are unable to agree on their own selections. Once designated, the arbitrator decides the issue and his award is final and binding.

When an agreement to arbitrate is written into a commercial contract, it is an expression of goodwill and a promise of fair dealing in business relations. Such agreements to arbitrate create an informal atmosphere which often leads to peaceful settlement without the necessity of going to arbitration at all. Thus, the arbitration clause is a form of insurance against loss of goodwill.

NASBIC ARBITRATION PROCEDURES

The following Procedures modify the corresponding Sections of the Commercial Arbitration Rules. Section 1. (NASBIC) Agreement of Parties—Whenever parties agree to arbitrate under the NASBIC Arbitration Procedures, the arbitration shall be administered in accordance with the Commercial Arbitration Rules of the American Arbitration Association, except as otherwise modified herein. Section 3. (NASBIC) Administrator-Any reference in the Commercial Arbitration Rules of the American Arbitration Association to an office of the Administrator, for purposes of the NASBIC Arbitration Procedures, shall be deemed to refer to the appropriate Regional Office of the AAA.

Section 5. (NASBIC) Panels of Arbitrators—The AAA shall establish and maintain as members of its National Panel of Arbitrators individuals competent to hear and determine disputes administered under NASBIC Arbitration Procedures. The AAA shall consider for appointment to the NASBIC Panel persons recommended by the Arbitration Committee of NASBIC as qualified to serve by virtue of their experience with Small Business Investment Companies. The NASBIC Panel shall be used for all disputes arising between NASBIC members.

The AAA National Panel of Arbitrators shall also include individuals qualified to serve as arbitrators by virtue of their experience with Small Business Investment Companies. These Panel Arbitrators need not have been nominated for membership by the Arbitration Committee of NASBIC.

Section 16. (NASBIC) Designation of Number of Arbitrators Unless the parties mutually agree otherwise, or unless the amount in controversy is less than $25,000, any arbitration pursuant to these Procedures shall be before three (3) arbitrators.

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Section 6. OFFICE OF TRIBUNAL · The general office of a Tribunal is the headquarters of the AAA, which may, however, assign the administration of an arbitration to any of its Regional Offices.

Section 7. INITIATION UNDER AN ARBITRATION PROVISION IN A CONTRACT Arbitration under an arbitration provision in a contract may be initiated in the following manner:

(a) The initiating party may give notice to the other party of his intention to arbitrate (Demand), which notice shall contain a statement setting forth the nature of the dispute, the amount involved, if any, the remedy sought, and

(b) By filing at any Regional office of the AAA two (2) copies of said notice, together with two (2) copies of the arbitration provisions of the contract, together with the appropriate administrative fee as provided in the Administrative Fee Schedule. The AAA shall give notice of such filing to the other party. If he so desires, the party upon whom the demand for arbitration is made may file an answering statement in duplicate with the AAA within seven days after notice from the AAA, in which event he shall simultaneously send a copy of his answer to the other party. If a monetary claim is made in the answer the appropriate fee provided in the Fee Schedule shall be forwarded to the AAA with the answer. If no answer is filed within the stated time, it will be assumed that the claim is denied. Failure to file an answer shall not operate to delay the arbitration.