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MEMORANDUM OF TERMS OF AGREEMENT

1. A corporation (D) is to be formed to carry on the business of Art of Industry.

2. There shall be two classes of stock, voting and dividend. Of the voting stock, C will have 60%, and A and B will have 40% between them. Of the dividend stock, C will have one-third, and A and B two-thirds.

3. The Board of Directors will consist of five members, A and B being two, and C having the right to choose three. A and B will be the officers of D.

4. C shall at all times have the option of purchasing from A and B all or any part of their stock at the book value thereof.

5. Each certificate of stock shall have endorsed thereon a legend to the effect that it is issued pursuant and subject to the terms of this agreement.

6. For a period of one year, D will have the use of space in C's establishment, rent free. C agrees to decorate one room in his establishment for this purpose at his expense. For the same period, C will also provide a secretary, telephone service, stationery and postage, and a limited amount of printing, at his expense. All other expenses to be borne by D.

7. C is not bound to devote any time to the business. A and B will devote all their time and efforts to the best interests of the business, and also agree that they will not engage in any business in any way related to the business of D, whether as manufacturer, designer, salesman, proprietor, partner, or otherwise.