I. PURPOSE

     It is our objective to establish procedures to facilitate
the informal and inexpensive resolution of any disputes arising
under this contract by mutual cooperation and without resort to
outside counsel and litigation.
     To accomplish this objective, we agree that all disputes
arising under this contract will be resolved by submission to
binding arbitration. The parties agree that arbitration must be
initiated within one year after the claimed breach occurs and
that the failure to initiate arbitration within the one-year
period constitutes an absolute bar to the institution of any
proceedings. The parties further agree that, before the
initiation of arbitration proceedings, the following two steps
must be taken and are a condition precedent to institution of
arbitration proceedings: (1) meet and discuss and (2) settlement

                         SETTLE DISPUTES

A.   Meet and Discuss (Party-Only Negotiation)

     1.   The initiating party must write a description of the
alleged breach of contract and send it to the responding party by
certified or registered mail. This letter must explain the nature
of the complaint and refer to the relevant sections of the
contract on which the complaint is based. The initiating party
must also set forth a proposed solution to the problem, including
a specific time frame within which the parties must act.

     2.   The recipient of the above letter must respond in
writing within ten days with an explanation, including references
to the relevant parts of the contract and a response to the
proposed solution.

     3.   Within ten days after receipt of this response, the
parties must meet and discuss options for resolving the dispute.
The initiating party must schedule this resolution meeting.

     4.   The first three steps to resolve contractual disputes
are to be taken by the parties themselves and without the
participation of legal counsel. If, however, the parties are
unable to reach an agreement at the resolution meeting, lawyers
are allowed, but not required, to participate in a settlement

B.   Settlement Conference (Third Party Mediation)

     1.   A settlement conference must be held within 30 days
after an unsuccessful resolution meeting. The initiating party
must contact ___[insert name of alternative dispute resolution
(ADR) service agreed on by the parties]___ to schedule the

     2.   If the dispute is not otherwise resolved, the parties
agree to submit the dispute for binding arbitration under the
following terms and conditions.

                        III. ARBITRATION

A.   Demand

     The aggrieved party may initiate arbitration by sending
written notice of an intention to arbitrate by registered or
certified mail to all parties and to the arbitrator. The notice
must contain a description of the dispute, the amount involved,
and the remedy sought.      

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Legal Forms : Set Two