Associated Risk Managers International, Inc

ASSOCIATED RISK MANAGERS INTERNATIONAL, INC. (An Illinois Corporation)

SHAREHOLDER AGREEMENT

THIS AGREEMENT is made by and between ASSOCIATED RISK MANAGERS INTERNATIONAL, INC., an Illinois business corporation (hereinafter "ARMI"), and the undersigned shareholder of ARMI (hereinafter "SHAREHOLDER”).

W I T N E S S E T H:

A. ARMI and the undersigned SHAREHOLDER wish to operate a cooperative development and marketing business for certain programs, products, services, and facilities which have been or will be created: (1) by ARMI, (2) by SHAREHOLDERS of ARMI, including the undersigned SHAREHOLDER, (3) by agents and brokers affiliated with SHAREHOLDERS of ARMI (hereinafter "AFFILIATED AGENCY" OR "AFFILIATED AGENCIES"), or (4) by others not associated with ARMI, a SHAREHOLDER, or an AFFILIATED AGENCY.

B. ARMI owns the trademark, trade names (ARM, ARM International, and Associated Risk Managers), service marks, and rights to the ARM logo (including U.S. Patent and Trademark Office Registration No. 3,228,683 and Serial Number 78-609,107, filed April 14, 2005), necessary for the business, which all parties wish to protect from unauthorized use.

C. ARMI is an Illinois business corporation, and the undersigned SHAREHOLDER owns and holds in its own right and not for the benefit of any other person shares of stock in ARMI as indicated opposite such SHAREHOLDER's name in Annex A. The SHAREHOLDER will have certain rights and powers as provided by Illinois law, and subject to and in accordance with the provisions of the ARMI Articles of Incorporation, the ARMI By-laws, resolutions of the Board of Directors of ARMI, and this AGREEMENT.

D. The purposes of this Agreement are:

a. To assure that the stock in ARMI remains closely held; and

b. To provide for the obligations of the SHAREHOLDER to supplement the business income of ARMI, by funding expenses necessary or desirable for ARMI's business operations by assessments or other charges on its SHAREHOLDERS (herein called "shareholder payments").

1 Initials of both parties ______E. SHAREHOLDER payments may be in such amounts, and may be imposed and apportioned in such a manner (whether or not each shareholder of ARMI is equally burdened thereby), as from time to time the Board of Directors shall determine. It is further understood that shareholder payments may include initiation fees, user fees, commitment fees, commissions, overrides, proceeds from distribution or sale of ARMI programs, products, services, and facilities, and other payments, as determined by the Board of Directors. Benefits to SHAREHOLDERS of ARMI and to AFFILIATED AGENCIES are expected to depend upon the activity of SHAREHOLDERS and their AFFILIATED AGENCIES in selling programs, products, and services, and in creating new programs, products, and services for sale by SHAREHOLDERS and AFFILIATED AGENCIES. Such activity may generate revenue to reduce the payments due from the SHAREHOLDERS, if the Board of Directors so determines. The income or other financial benefits to accrue to each AFFILIATED AGENCY from participation in ARMI is expected to total less than twenty percent (20%) of the total income of each AFFILIATED AGENCY for each fiscal year.

F. Participation in ARMI should be limited to those SHAREHOLDERS and their AFFILIATED AGENCIES that comply with the policies and procedures of ARMI, as approved by the Board of Directors.

G. No person shall own shares of the capital stock of ARMI that has not entered into a Shareholder Agreement in the form of this Agreement, or in a form otherwise approved by the ARMI Board of Directors.

NOW, THEREFORE, ARMI and the undersigned SHAREHOLDER hereby represent and agree as follows:

1. Authorization to Participate. ARMI hereby authorizes the SHAREHOLDER to distribute all ARMI programs, products, services, and facilities directly or through the SHAREHOLDER'S AFFILIATED AGENCIES.

2. Grant of License. ARMI hereby grants to the SHAREHOLDER and the SHARE- HOLDER’S AFFILIATED AGENCIES a non-exclusive license to use all ARMI trade names, trademarks, service marks, logos, and materials embodying them, subject to certain limitations, restructures, and other requirements, to include, but not be limited to, the color of the logo in printed materials.

3. Payments by Shareholders. Each SHAREHOLDER agrees to make such shareholder payments, whether or not equal for all SHAREHOLDERS, as may be set from time to time by the Board of Directors. In the event the payment requirements are changed in any way, each SHAREHOLDER shall be given sixty (60) days' written notice, and shall have the option of withdrawing from ARMI prior to the effective date of the change, in which event ARMI shall have all of the rights and remedies that apply in the event of default.

2 Initials of both parties ______4. Limitations on Transferability. Each SHAREHOLDER shall be issued a certificate evidencing its ownership of shares of stock in ARMI, upon execution of this Agreement. The certificate and the shares evidenced thereby may not be sold, transferred, assigned, negotiated, pledged, or hypothecated, voluntarily, involuntarily or by operation of law, except as expressly provided in this Agreement. By execution of this Agreement, each SHAREHOLDER represents that its intention in becoming a SHAREHOLDER and in making any payments to ARMI is not to seek capital appreciation or profit from the entrepreneurial or management efforts of ARMI or others.

Notwithstanding anything herein to the contrary, the shares of ARMI owned by any SHAREHOLDER may not be sold, transferred, assigned, negotiated, pledged or hypothecated to any person, whether voluntarily, involuntarily or by operation of law, without the prior written consent of ARMI, which consent may be granted or withheld in the sole discretion of ARMI. Any purported transfer in violation of this Agreement shall be void and ineffectual, shall not operate to transfer any interest in or title to the shares purported to be transferred, and shall be considered an event of default hereunder. No certificate evidencing ownership of shares may be issued, except to a SHAREHOLDER approved by the Board of Directors.

For purposes hereof, shares transferred to a SHAREHOLDER’s trustee in bankruptcy, shares transferred as a result of a court or creditor's sale, or the appointment of a receiver for a SHAREHOLDER shall all be considered involuntary transfers without consent of ARMI for purposes of this Agreement (unless ARMI has otherwise granted its express written consent to such action), and shall be considered an event of default hereunder.

Any transferee which receives shares of stock in ARMI shall hold such shares or interest in such shares subject to the terms and provisions of this Agreement, and (provided that the consent of ARMI is obtained, which consent may be granted or withheld in ARMI's sole discretion) shall be a SHAREHOLDER for purposes of this Agreement.

5. No Preemptive Rights. As described in the Articles of Incorporation of ARMI, no SHAREHOLDER of ARMI shall have a preemptive right to acquire new or additional unissued shares proposed to be issued by ARMI.

6. No Reliance. In becoming a SHAREHOLDER, the SHAREHOLDER signing this Agreement represents that it is not relying on any statement or representation by ARMI, oral or written, not contained in this Agreement, and that it has been supplied with a copy of the Articles of Incorporation and By-laws of ARMI.

7. Intellectual Property. This Agreement does not convey any ownership interest in the ARM Concept; or in any ARMI program, product, service, or facility; or in any ARMI trademark, service mark, trade name, logo or other material, to any SHAREHOLDER or to any AFFILIATED AGENCY. Each SHAREHOLDER will take all reasonable steps necessary or desirable to protect ARMI's intellectual property rights, and to require its AFFILIATED

3 Initials of both parties ______AGENCIES to do the same. This will include, without limitation by way of enumeration, display of any notices or any trademark, service mark, copyright, or the like, on all advertising, promotion, or other material, as appropriate.

8. Duties of Shareholder. The undersigned SHAREHOLDER shall comply with the following requirements and failure to comply shall (at ARMI's option) permit ARMI to exercise the options described herein to repurchase such SHAREHOLDER's shares of ARMI:

a. SHAREHOLDER shall be a legal entity in good standing in its jurisdiction. SHAREHOLDER shall not violate any applicable law or regulation relating to its formation or operation.

b. SHAREHOLDER and its AFFILIATED AGENCIES shall be licensed at all times by each jurisdiction in which the SHAREHOLDER or AFFILIATED AGENCY is required to be licensed. No SHAREHOLDER or AFFILIATED AGENCY shall distribute or deal in any ARMI-approved program, product, service, or facility other than in compliance with all applicable laws and regulations. Licensing as an insurance agent or broker is not required as a condition of ownership of ARMI shares (or for any person to be an AFFILIATED AGENCY), unless the SHAREHOLDER or AFFILIATED AGENCY is acting as an agent or broker or is otherwise subject to an applicable licensing act or regulation.

c. SHAREHOLDER shall pay all shareholder payments and other obligations to ARMI within thirty (30) days of the mailing of written notice by regular or certified mail to the current address for the SHAREHOLDER and to the president or head of the SHAREHOLDER, in each case according to the records of ARMI, advising the SHAREHOLDER that payment is overdue and that non-payment shall constitute a default. Penalties for late payments may be imposed by the Board of Directors, and SHAREHOLDER shall promptly pay all such penalties so assessed.

d. SHAREHOLDER shall require its AFFILIATED AGENCIES to protect ARMI's intellectual properties as required under Paragraph 5 of this Agreement.

e. SHAREHOLDER shall ensure that a duly designated representative attends each regular and special meeting of the SHAREHOLDERS of ARMI. SHAREHOLDER shall also encourage a representative of each of its AFFILIATED AGENCIES to attend the Annual Meeting of ARMI.

9. Rights and Remedies of ARMI. Upon occurrence of an event of default by SHAREHOLDER, ARMI may at its option take any one or more of the following actions:

a. Repurchase from the SHAREHOLDER such SHAREHOLDER's shares of stock of ARMI, for cash in the amount of the product of (a) a fraction, the numerator of

4 Initials of both parties ______which is the number of ARMI shares held by the SHAREHOLDER and the denominator of which is the total number of ARMI shares outstanding; multiplied by (b) the book value of ARMI as of a date to be determined by the Board of Directors (the "Valuation Date"). The Valuation Date shall be not earlier than the date of the event of default by the SHAREHOLDER, and shall be not later than 90 days following notice by ARMI to the SHAREHOLDER of its election to exercise the option described in this paragraph.

Book value in event of exercise of an option to purchase as herein provided shall be calculated in accordance with generally accepted accounting principles, consistently applied. SHAREHOLDER acknowledges that it is the intention of ARMI, its shareholders, directors and officers that ARMI function as a service organization and that it is not intended that ARMI would at any time have substantial book value.

In the event that ARMI can not lawfully exercise the option described in this subsection, ARMI may, at the option of the Board of Directors of ARMI, assign, pro rata, to the non-defaulting SHAREHOLDERS of ARMI (or so many as may elect to participate) the right it holds pursuant to this subsection. ARMI may in such event exercise any of the other rights and remedies which it is entitled to exercise under the terms of this Agreement.

No refund of any shareholder payment or other payment need be made by ARMI or any other person, upon exercise of any option described in this Agreement. b. Require immediate payment by the SHAREHOLDER of all money due and payable to ARMI under this or any other Agreement between the parties. c. Require the SHAREHOLDER, and all of its AFFILIATED AGENCIES, to cease all use of ARM trademarks, service marks, trade names, logos, or other intellectual property of ARMI. ARMI may further require assignment to ARMI of any state or other local law rights which the SHAREHOLDER or its AFFILIATED AGENCIES have acquired to any of the above. d. Require the SHAREHOLDER and each AFFILIATED AGENCY of the SHAREHOLDER to change its corporate name and/or trade name to delete all reference to "ASSOCIATED RISK MANAGERS", "ARM', "ARMI", and to any trade name, trademark, service mark, or other reference including them or similar to them or to any being employed by ARMI. e. Create a new SHAREHOLDER using any name (including the same or similar name to that of the SHAREHOLDER), and to solicit any agent, broker, or other person or entity to join or participate in or become owners of the new SHAREHOLDER.

5 Initials of both parties ______10. Severability. The parties hereto intend that the covenants and agreements contained herein shall be deemed to be a series of separate covenants. If, in any judicial proceeding, any court shall refuse to enforce any of the separate covenants, then such unenforceable covenant shall be deemed eliminated from the provisions hereof for the purposes of such proceeding to the extent necessary to permit the remaining separate covenants to be enforced in such proceeding.

11. Injunctive Relief. The parties represent and acknowledge that the remedies provided to ARMI in this Agreement are reasonable and necessary to protect the legitimate interest of ARMI, and that any violation will cause substantial injury to ARMI, and that without such restriction, ARMI would not have entered into this Agreement. Time is of the essence in carrying out the remedies herein provided. In the event any SHAREHOLDER shall fail to timely carry out the requirements of this Agreement, ARMI shall be entitled, in addition to any other relief or remedy, to preliminary and permanent injunctive relief. In the event ARMI shall be required to file suit or to take any other action to enforce any of the remedies contained in this Agreement, ARMI shall be entitled, in addition to any other relief or remedy, to recover all costs and expenses thereof, including all of ARMI's attorneys' fees.

12. Termination. Any SHAREHOLDER may terminate this Agreement as to that SHAREHOLDER, with or without cause, upon one hundred eighty (180) days' written notice to ARMI. ARMI may terminate this Agreement, with or without cause, with respect to the SHAREHOLDER, whether or not an event of default has occurred, upon three-fourths (3/4) vote of the entire Board of Directors of ARMI, such termination to be effective 180 days following written notice from ARMI to the SHAREHOLDER. Upon termination of this Agreement, all authority granted to the SHAREHOLDER and its AFFILIATED AGENCIES by this Agreement including the license granted to the SHAREHOLDER and its AFFILIATED AGENCIES by this Agreement shall terminate. All rights and remedies of ARMI shall survive termination of the Agreement.

In the event of termination of this Agreement by either the SHAREHOLDER or ARMI, ARMI shall have the right, exercisable at its option by written notice at any time thereafter to SHAREHOLDER, to repurchase from the SHAREHOLDER such SHAREHOLDER's shares of stock of ARMI, for cash in the amount of the product of (a) a fraction, the numerator of which is the number of ARMI shares held by the SHAREHOLDER and the denominator of which is the total number of ARMI shares outstanding; multiplied by (b) the book value of ARMI as of a date to be determined by the Board of Directors (the "Valuation Date"). The Valuation Date shall be not earlier than the date of the event of default, if any, by the SHAREHOLDER or, if the termination is not based upon an event of default, the date of exercise of the option by the Board of Directors. Whether or not the termination is based upon an event of default, the Valuation Date shall be not later than 90 days following notice by ARMI to the SHAREHOLDER of its election to exercise the option described in this paragraph.

6 Initials of both parties ______Book value in event of exercise of an option to purchase as herein provided shall be calculated in accordance with generally accepted accounting principles, consistently applied. SHAREHOLDER acknowledges that it is the intention of ARMI, its shareholders, directors and officers that ARMI function as a service organization and that it is not intended that ARMI would at any time have substantial book value.

In the event that ARMI can not lawfully exercise the option described in this subsection, ARMI may, at the option of the Board of Directors of ARMI, assign, pro rata, to the non- terminating SHAREHOLDERS of ARMI (or so many as may elect to participate) the right it holds pursuant to this subsection. ARMI may in such event exercise any of the other rights and remedies which it is entitled to exercise under the terms of this Agreement.

No refund of any shareholder payment or other payment need be made by ARMI or any other person, upon exercise of any option described in this Agreement.

13. General Provisions. ARMI and the SHAREHOLDERS and their AFFILIATED AGENCIES are not and shall not be considered partners, joint ventures, agents, servants, employees, or fiduciaries of each other, and shall not have power to bind or obligate each other, except as set forth in this or other Agreements. ARMI and each SHAREHOLDER shall be solely responsible for all taxes as imposed by any governmental authority upon its respective operations, and for compliance with all federal, state, or local securities, insurance, franchise or other laws, orders, rules or regulations applying to its respective operations. No amendment to this Agreement shall be binding unless in writing and executed by ARMI and by the SHAREHOLDER.

This Agreement shall be binding upon and shall inure to the benefit of ARMI and the SHAREHOLDER, upon execution of this Agreement or counterpart of it by both ARMI and the SHAREHOLDER. Execution of this Agreement by the SHAREHOLDER inures to the benefit of ARMI and to benefit of all of the other SHAREHOLDERS of ARMI. This Agreement shall be construed according to the laws of Illinois. Any litigation that may take place as a result of a disagreement between ARMI and SHAREHOLDER shall be resolved in the courts of Cook County, Illinois.

7 Initials of both parties ______IN WITNESS WHEREOF, each party hereto has caused this Agreement to be signed (in duplicate originals and in multiple counterparts) in its corporate name by its duly authorized officer, who represents that he is authorized to execute this Agreement, and to be attested by its secretary, and each such party hereby appoints the below-named officer as its true attorney-in-fact to deliver this Agreement as its act and deed.

ASSOCIATED RISK MANAGERS INTERNATIONAL, INC. P.O. Box 278389 ATTEST: Riverdale, IL 60827

BY : Assistant Secretary Chairman

Date Signed:

ACKNOWLEDGED AND AGREED: SHAREHOLDER:

Name and Address of SHAREHOLDER:

ATTEST:

BY: Secretary President

Date Signed:

8 Initials of both parties ______