General Description This agreement sets out a Tenants in Common arrangement for the ownership of a 1978 Cessna R172K Hawk XP with serial number R1722884 and FAA identification N736YB, between Co-tenants James D. Carlson and Todd M. Brooks. This document constitutes the entire agreement for this arrangement. Amendments are made by mutual consent of the Co-tenants. Definitions Aircraft Above identified Hawk XP. Co-tenant The parties agreeing to and bound by this contract, or their legal successors. Pilot Person manipulating the controls in Aircraft while in flight or in ground operations, with or without the engine running. Primary Pilot Co-tenant with scheduling privileges as described in this Agreement. Owner FAA-registered owner of the Aircraft. Interest Total dollar amount invested in the Aircraft for a given Co-tenant divided by the total investments of all Co-tenants. Rules for investment tracking are described elsewhere in this document. Account A joint savings account will be established at Metro Credit Union in Lawrence, MA, for the purpose of holding funds related to the upkeep of the Aircraft. Debts Unpaid bills relating to the Aircraft, its upkeep or maintenance, or properly registered liens against the Aircraft title. Base The home base for the Aircraft is the Lawrence Municipal Airport, in North Andover, Massachusetts; ICAO identifier KLWM. Normal Procedures Schedule A schedule for usage of the Aircraft will be established and maintained by the Owner. The schedule will call for a Primary Pilot on a rotating weekly basis. When one of the Co-tenants is Primary Pilot, he may use the Aircraft without coordinating with the other Co-tenants. When a Co-tenant is not Primary Pilot, he may use the Aircraft after coordinating with the Co-tenant that is considered Primary Pilot at that point in time. This schedule will run from midnight Wednesday/Thursday of each week to midnight Wednesday/Thursday the following week. When the Primary Pilot title is handed off from one Co-tenant to another, the Co-tenants agree that the Aircraft will be secured at the Base and will have at least 1/2 fuel and have the POH and other required documentation inside, unless specific prior arrangements are made. If a Primary Pilot intends to have the Aircraft away from Base when the hand-off time occurs, the Co-tenant using the Aircraft must first secure agreement from the other Co-tenants regarding a revised schedule. When not in use, whether at Base or away, the Aircraft must be properly tied-down, hangared, and/or chocked as necessary to prevent damage. Maintenance Maintenance tasks necessarily disrupt the normal schedule for use of the Aircraft. Any maintenance requiring one day or more "in the shop" will be compensated in the schedule so that, as much as possible, it has no impact on any Co-tenant's use. Longer maintenance times will result in suspending the normal schedule and resuming when complete. Post-maintenance check-out will be performed by an appropriately rated test pilot and with only required personnel on board. Co-tenants may perform preventative maintenance as permitted under 14CFR43 and in conformance with FAA Advisory Circular AC 43-12A. The cost of maintenance, after any insurance settlement, is treated as a fixed expense and shared equally among the Co-tenants. Maintenance related to at-fault accidents is paid by the responsible Co-tenant as described under "Accidents and Damage." See also "Upgrades" for maintenance items that affect the value of the Aircraft. Maintenance required by ADs and by mandatory manufacturer's Service Bulletins will be scheduled and accomplished as required for continued airworthiness. Incidental maintenance, not to exceed $500 per month, may be scheduled by any Co-tenant as required. Other maintenance will be scheduled as agreed by the Co-tenants. Operators The Co-tenants agree that only the Co-tenants named in this Agreement, qualified instructors providing instruction to one of the named Co-tenants, or an appropriately rated and current pilot agreed on by all Co-tenants may act as Pilot-in-Command of the Aircraft. As a special exception, Co-tenants agree that a qualified instructor may provide "pinch hitter" and other basic instruction to immediate family members (parents, spouse, children) of a Co-tenant under that Co-tenant's direction. Insurance and Registration The Owner of the Aircraft will maintain current and appropriate insurance covering use and storage, and will designate all Co-tenants as authorized pilots for purposes of coverage in the Aircraft. As the insurance will cover only the Owner's use of other non-owned aircraft, Co-tenants are encouraged to carry their own insurance as necessary. The Owner will update the insurance policy each year to cover the total Interest in the Aircraft or other basis agreed to by the Co-tenants. The cost of insurance will be shared by the Co-tenants with one-third of the cost covered by the Owner, and the remainder split among all Co-tenants, including the Owner. The named insured will be the Owner. The Owner is responsible for maintaining proper FAA and State registration. Expenses for registration will be shared equally by all Co-tenants. Before any international operations are performed, the Owner must provide an FCC radio station license, CBP decals, and any other documentation requrired for international use. Expenses for this registration are to be shared among all Co-tenants equally. Life Insurance Each Co-tenant may, at his option and at his expense, purchase life insurance on the other Co-tenants in order to allow for unexpected events. Fixed Expenses Fixed expenses are recurring costs associated with owning and maintaining the Aircraft, and that are not substantially affected by use. These expenses include tie-down or hangaring at the home Base, insurance, registration, and annual inspection. Current total monthly amounts are $85 for tie-down, $59.50 for insurance, $13.75 for registration, and an estimated $233 for annual inspection. Tie-down, registration, and annual inspection will be shared equally among the Co-tenants. The Owner will pay two shares and the other Co-tenants will each pay one share for the insurance, because the Owner receives additional non-owned aircraft benefits. With an Owner and one other Co-tenant, the Owner will pay $212.42 and the other Co-tenant $185.71. This amount will be adjusted in the future as determined by actual inspection and insurance costs. See "Long-term versus Short-term Shared Expenses" for details on how these expenses are handled. Normal Operating Expenses Normal operating expenses include fuel, landing fees, parking away from KLWM, border crossing charges, and any other costs that are related to a Co-tenant's use of the Aircraft and that may be imposed on a per-flight or per-hour basis. Co-tenants agree that the Co-tenant using the Aircraft is responsible for all normal and reasonable operating expenses arising from that use. When two or more Co-tenants use the Aircraft at once, those Co-tenants must agree to a sharing arrangement for operating expenses. Pilots are required to observe any certificate restrictions regarding share of expenses in operation. As described under "Schedule," the Co-tenant using the Aircraft is expected to leave the Aircraft with fuel at the Base when handing off to the next Co-tenant. When fueled at the Base, fuel bills will be paid directly by the Owner, and the Owner will apportion the fuel cost among the Co-tenants according to the tach hours flown by each. When fueled away from Base by one Co-tenant, that actual cost will be apporitioned among the other Co-tenants as necessary at the next monthly accounting interval. Long-term versus Short-term Shared Expenses Except as provided in this section, all long-term expenses are to be paid into the common Account. All short term expenses, such as unexpected maintenance, will be split among the Co-tenants as the expenses are incurred and do not involve the Account. As engine overhaul is a substantial long-term expense, the Co-tenants agree that it will be handled as a separate matter. The Pilots using the Aircraft will contribute $22.50 per tach hour (to the nearest tenth) to the Account to defray the cost of future overhaul. The Co-tenant keeping the schedule will make totals for the prior month available to each Co-tenant on the first day of each month. Pilots are expected to make these deposits by the seventh day of each month. Oil changes will be performed at regular intervals and apportioned to Co-tenants based on tach hours flown. The required annual inspection and maintenance associated with the inspection represents a similar substantial expense. The Co-tenants agree to an equal amount into the Account in anticipation of this expense on the seventh day of each month to cover the previous month. Certain long-term expenses, such as insurance and tie-down/hangaring, are normally paid in advance. The Owner is responsible for paying these expenses when due. The Co-tenants other than the Owner must pay an equal share of these expenses into the Account on a monthly basis. Upgrades Upgrades include all maintenance activities that materially affect the value of the Aircraft, and include adding new avionics, installing provisions needed for over-water operation, and replacing existing equipment with new systems that have new features. Replacement of a defective piece of equipment with a new item of the same kind is not considered an "upgrade" for purposes of this section, and is instead regular maintenance. An upgrade changes the total Interest of the Co-tenants paying for the maintenance. In the case of a replacement of an existing component, the total increase in Interest is the cost of the new item and labor, minus any resale or "core value" of the old item if removed. Unequal Payment The Co-tenants may agree to pay an unequal share of any maintenance or upgrade performed on the Aircraft. When this is done, the Interest for the Co-tenant(s) paying a greater share is increased by the amount of the overpayment, and the Interest for the Co-tenant(s) paying a lesser share is decreased by the amount of the underpayment. Fixed costs and operating expenses are not subject to this provision, and Co-tenants are expected to pay these expenses at regular intervals as required by this Agreement. In no case may any Co-tenants Interest in the Aircraft become negative. If circumstances dictate otherwise, then one of the Agreement termination options may be exercised instead, at the option of the other Co-tenants. Annual Interest The Co-tenants expect their respective Interests to become equal in the future. To this end, a certain amount of "unequal payment" as described above will be used for a series of upgrades. The initial plan is for the Co-tenants with an initially small Interest to pay for $6000 worth of upgrades per year for a period of six years. This plan, including the cost of the upgrades and the specific upgrades to be performed, will be reviewed by the Co-tenants at least once every calendar year. The Co-tenants intend that this Agreement will be superseded by a new contract when more than one Co-tenant has a 20 percent Interest in the Aircraft, in order to accommodate the multiple owner status. In the event that one Co-tenants share does not reach the 20 percent threshold after three years from the date of this Agreement, or for non-performance under this section in any calendar year, the other Co-tenants may elect to buy out this Co-tenant to terminate the Agreement. Training The Co-tenants agree that on-going training in addition to FAA-required flight reviews is necessary for safe operation. If the most recent flight as PIC in the Aircraft for a Co-tenant is not within six calendar months of the date for a proposed flight, the Co-tenant agrees to spend at least one Hobbs hour with a CFI or CFII as review before that flight. In addition to FAA currency requirements, Co-tenants with an Instrument Rating must have logged an IPC with a CFII within the preceding 12 calendar months before acting as PIC on an IFR flight plan. An appropriately rated CFII providing training to a Co-tenant is not subject to this requirement. General Requirements 1. Each Pilot will maintain current certifications as necessary for each flight, including pilot certificates, medical certifications, and logbook entries for flight reviews, passenger-carrying, and night currency. 2. Each Pilot will abide by applicable Federal, State, and other laws governing the use of the Aircraft, and, in the event of breach of any law, agrees to hold all other Co-tenants harmless from any action that may be taken as a result of non-compliance. 3. Each Pilot will observe the limitations specified in the POH, including manufacturer's updates to the POH and ADs, and the placards in the Aircraft, and will apply these limitations to the operating environment for each flight. 4. Each Pilot will verify that the Aircraft has sufficient fuel for the intended flight, has required documentation on board, is within weight and balance limitations, and is in a safe condition for flight before each flight. Documentation Co-tenants agree that the airframe, engine, and propeller maintenance logs, maintenance manual, and other official documentation for the Aircraft that is not required for flight will be kept primarily by Co-tenant James D. Carlson. It will be made available to the other Co-tenants for temporary use as required for maintenance or inspection purposes. The Co-tenants agree to record the Pilot name, Hobbs and tach time, date, fuel and oil added, and any discrepancies after each flight. Initial State A detailed report containing the current Interest, Account, and Debts will be presented at signing for review. Included in that report will be $965 for the initial appraisal, $52,000 for the airplane purchase, and $383.30 for the pre-purchase inspection. Also included will be the initial Account amounts for the to-date tach usage. The Agreement effective date is May 1st, 2011. The first scheduled week begins Thursday, June 23rd, 2011, with Todd Brooks as Primary Pilot. Termination General Any funds held on account by other parties that may be refunded, such as insurance or tie-down payments made to third parties in advance, are to be refunded to the payer in event of liquidation. These are not considered part of the Account. At termination of the Agreement, the Co-tenants agree to liquidate the Account and pay all outstanding Debts. Included among the Debts are any long-term payments made in advance by the Owner. In the event that the funds in the Account are insufficient to pay the Debts, each Co-tenant agrees to pay an equal share of the balance. If there are surplus funds, these are to be returned to the Owner, if any, or (if the Aircraft is lost) are split evenly among the Co-tenants. If any funds in the Account were paid in advance by any Co-tenant, then those are returned directly to the Co-tenant. The normal accounting procedure does not include advance payments. Sale This Agreement may be terminated by sale of the Aircraft. In the event of a sale, the net proceeds (less any costs of the sale) shall be distributed among the Co-tenants in proportion to their Interest. For purposes of a sale, an NAAA certified appraiser may be hired to set a price on the Aircraft, certain repairs may be made, and advertisements may be secured. These are all examples of costs of the sale that are to be paid directly from net proceeds. Buy-out By mutual agreement, any Co-tenant may purchase the Interest of the other Co-tenant(s) at any time. If one Co-tenant has a 80 percent or greater Interest, then the purchase amount is the other Co-tenant's investment, minus any outstanding amounts owed for the other Co-tenant's past use of the Aircraft. If no Co-tenant has a 80 percent or greater Interest, then the Co-tenants agree to obtain a current NAAA certified appraisal for the Aircraft, and the purchase amount paid to each Co-tenant will be a fraction of the appraised amount based on the Interest of that Co-tenant divided by the Interest of all Co-tenant(s). Succession This Agreement may terminate by the creation of a new agreement. In this case, the new agreement must specify how existing Interests, Accounts, and Debts will be handled. Death of Co-tenant On death of a Co-tenant, the Aircraft may be purchased from that Co-tenant's estate by the remaining Co-tenants or sold as described above. In no case does this Agreement permit a Co-tenant's successors to operate the Aircraft. Abnormal Procedures Prohibited Operations Except in case of emergency, no Pilot may perform any intentional acrobatic maneuvers, including spins and inverted flight. All normal maneuvers required for Private and Commercial certification are permitted. No Co-tenant may use the Aircraft for any illegal or prohibited purpose. The Aircraft may not be used for hire or compensation under 14 CFR parts 119, 121, or 135, nor any operation that would require certification under those parts. Only operations under part 91 are authorized. The Aircraft may not be lent, leased, or sublet to any other party not covered by this Agreement. Co-tenants with instruction privileges may not use the Aircraft to provide instruction to anyone other than another Co-tenant or immediate family member as described under "Operators" above. Accidents and Damage In the event of an accident or theft resulting in damage to or loss of the Aircraft, all FAA rules and insurance company requirements must be followed for securing the Aircraft and its contents. If damage or loss is the result of action or inaction by a Pilot, then the Co-tenant serving as Pilot will hold the other Co-tenant(s) harmless for the results. The at-fault Co-tenant will pay any insurance differential required, any reasonable insurance deductible, and any amounts fairly assessed that are not covered by insurance. If damage or loss is due to the actions of some party not included in this Agreement, an act of war, natural disaster, or similar "act of God," the Co-tenants will share equally in the resulting costs. Liens No Co-tenant may use the Aircraft as collateral for a loan or otherwise encumber the Aircraft without agreement of all Co-tenants. Except as provided under "Termination," no Co-tenant may sell, hypothecate, pledge, transfer, gift, or lease any part of the Co-tenant's Interest or of the Aircraft. Delinquent Payment In the event that any Co-tenant's payments are not made within 60 days of initial assessment, the remaining Co-tenant(s) may terminate the Agreement using one of the methods documented in "Termination" without requiring agreement from the delinquent Co-tenant. Loss of Aircraft If the Aircraft is lost or involuntarily surrendered, the salvage value (if any) will be treated as gross proceeds from a sale, and the procedures outlined for sale of the Aircraft, described above, will be followed, except for any requirement of agreement between the Co-tenants. Forced Sale If a sale of the Aircraft is forced by a court having jurisdiction, the proceeds from the sale will be treated in the same manner as an ordinary sale, as described above. Severability If any section of this Agreement is held by a court or arbitrator to be invalid, the other sections remain in force. Interpretation This Agreement is subject to the laws of the Commonwealth of Massachusetts. Disagreements In the event of unresolved disagreement between the Co-tenants relating to this Agreement, the Co-tenants (and their successors) agree to submit to binding arbitration in the Commonwealth of Massachusetts, with an arbitrator chosen from the National Academy of Arbitrators membership by the Owner.