Document:

Exhibit
10.60

 

 

AMENDMENT TO AGREEMENT

 

                THIS AMENDMENT TO
AGREEMENT (this “Amendment”) is entered into effective as of August 1, 2002
(the “Effective Date”), between MEDIA ARTS GROUP, INC., a Delaware corporation
(“MAGI”), and CREATIVE BRANDS GROUP, INC., a California corporation (“CBG”),
with respect to the following facts:

 

                A.            MAGI and CBG are parties to that
certain letter agreement dated as of July 17, 2002, a copy of which is attached
hereto and by this reference incorporated herein (the “Agreement”).

 

                B.            MAGI and CBG desire to amend the
Agreement as set forth in this Amendment.

 

NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller
agree as follows:

 

1.             All
capitalized terms used in this Amendment and not otherwise defined herein shall
have the meaning given such terms in the Agreement.

 

2.             The
Agreement will remain in full force and effect until July 31, 2006.  After such expiration date, CBG’s rights
under the Agreement, except for its rights to receive all of the compensation
and reimbursements provided for under the Agreement (as amended by this
Amendment) which accrue as of the expiration date, its right to review and
audit MAGI’s books and records with regard to license revenues to ensure
compliance with the Agreement, and its rights regarding the enforcement of such
rights, all of which rights shall survive the expiration of the Agreement,
shall terminate.

 

3.             Commencing and effective as of the
Effective Date, the “7.5%” and the “20%” rates referred to in the paragraph of
the Agreement captioned “Compensation to CBG; Term of Agreement” (with regard
to increased revenues from pre-existing licensing relationships and with regard
to existing and new licensing relationships) are hereby deleted and replaced
with “24%”.  All amounts necessary to
bring CBG’s compensation current (retroactive to the Effective Date) shall be
paid upon the execution of this Amendment.

 

4.             For purposes of the Agreement (as
amended by this Amendment), the term “existing licensing relationships” (and
terms of similar import) shall be deemed to mean the relationships with the
parties identified in Schedule 1 attached hereto and by this reference
incorporated herein, and shall cover all license and product categories with
such parties which have been, or are hereafter, approved by MAGI.  For purposes of the Agreement (as amended by
this Amendment), the term “new licensing relationships” (and terms of similar
import) shall be deemed to mean the relationships with the parties identified
in Schedule 2 attached hereto and by this reference incorporated herein, all to
the extent that CBG submits a deal point memo, executed by the proposed
licensee, to MAGI not later than sixty (60) days after January 6, 2003, and
shall cover all license and product categories with such parties which have
been, or are hereafter, approved by MAGI. 
The deal point memo shall contain, among other things, the information
set forth in Exhibit “A” attached hereto and by this reference incorporated
herein.  MAGI shall consider for
approval, in good faith, each of the deal memos for each of the new licensing
relationships during the aforesaid sixty (60) day period.  Tony Thomopolous and Steve Paszkiewicz shall
personally oversee, and shall be the individuals making the approval decisions
on behalf of MAGI in connection with, the consideration process with regard to
the new 

 

1

 

licensing
relationships, and interface with Ken Raasch and Eric Kuskey of CBG during such
process.  If MAGI disapproves any of the
new licensing relationships, it shall provide written notice to CBG specifying
the reasons for the disapproval.

 

5.             The
paragraph of the Agreement which begins “On revenues from new business
initiatives...” is hereby deleted.  The
paragraph of the Agreement which begins “The parties shall establish minimum
performance...” is hereby deleted.

 

        6.             For purposes of clarification, the
parties agree that the licenses which are contemplated by the Agreement are
licenses to create art -based or non-art based products and/or services
associated with Thomas Kinkade, his sketches, drawings, paintings and other
works of art, and related trademarks, intellectual property, slogans, painting
titles, etc., but the products will specifically exclude two-dimensional art,
paper art and wall art (e.g., prints, canvases, lithographs and posters), and
any and all media, including, without limitation, television, movies, music
compact discs and other audio recordings, magazines, electronic rights, and,
subject to the following clause, books; specifically excepted from the
foregoing exclusion are books which are the subject of any CBG Protected
Agreements (defined below).

 

7.             Notwithstanding
paragraph 2 above, CBG’s relationship management of the key accounts identified
in the Agreement shall terminate as of December 31, 2002.  CBG will be entitled to the compensation
provided for in the Agreement with regard to said key accounts on all sales
orders placed on or before December 31, 2002.

 

8.             During
the term of the Agreement, MAGI shall have the right, in the exercise of its
sole and absolute discretion, to (a) enter into or to reject agreements
proposed by CBG (“Proposed Agreements”) involving parties which are the subject
of new licensing relationships, as described in paragraph 3 above, (b) to renew
or elect not to renew upon the expiration of the license agreements which are
the subject of the Agreement, and/or (c) allow the expansion into new
categories of products involving such license agreements.  With regard to (x) licensees under existing
licensing relationships, and (y) licensees under the new licensing
relationships who are listed in “category 1” in Schedule 2 attached hereto
(i.e., new licensing relationships with respect to which MAGI has approved a
signed letter of intent or deal memorandum, or equivalent writing, or is ready
to proceed to prepare or negotiate a license agreement) (licensing agreements
described in clauses (x) and (y) are referred to below collectively as the “CBG
Protected Agreements”), the following provisions shall apply:

 

(a)                                                          If MAGI fails or refuses to renew upon
expiration a CBG Protected Agreement, and MAGI subsequently (prior to the
second anniversary of the scheduled expiration of such license) enters into a
license agreement with a company or companies whose product(s) which is/are
licensed under such new license agreement(s) are substantially similar to the
products which were approved or produced under the CBG Protected Agreements, CBG
shall be compensated, on an annual basis for each year (prorated for any
partial year) of the remaining term of the Agreement, at a rate equal to 12% of
the revenues received by MAGI (as compared to the 24% rate described in
paragraph 3 above) with regard to the last twelve (12) months of the license
agreement(s) with respect to the licensee(s) whose licenses were not renewed
(subject to the provisions of clause 8(b) below).  Notwithstanding the foregoing, 

 

2

 

the 12% rate described in
the preceding sentence shall be increased to 24% in the event that there is a
change of control at MAGI prior to any non-renewal of a CBG Protected
Agreement.

 

(b)                                                         If MAGI fails or refuses to renew upon
expiration a CBG Protected Agreement, and MAGI subsequently (prior to the
second anniversary of the scheduled expiration of such license) enters into a
license agreement with a company who was the subject of a CBG Protected
Agreement, for a product in a product category which the licensee produced
prior to the expiration, CBG shall be compensated, on an annual basis for the
remaining term of the Agreement, at a rate equal to 24% of the revenues
received by MAGI (as described in the Agreement and in paragraph 3 above) with
regard to the last twelve (12) months of the license agreement(s) with respect
to the licensee(s) whose licenses were not renewed.

 

(c)                                                          If MAGI fails or refuses to renew upon
expiration a CBG Protected Agreement, and MAGI subsequently (prior to the
second anniversary of the scheduled expiration of such license) enters into a
license agreement with a company who was the subject of a CBG Protected
Agreement, for a product in a product category which is different than the one
that the licensee produced prior to the expiration, CBG shall be compensated,
on an annual basis for the remaining term of the Agreement, at a rate equal to
12% of the revenues received by MAGI (as described in the Agreement and in
paragraph 3 above) under such new license agreement(s).  Notwithstanding the foregoing, the 12% rate
described in the preceding sentence shall be increased to 24% in the event that
there is a change of control at MAGI prior to any non-renewal of a CBG
Protected Agreement.

 

(d)                                                         If MAGI fails or refuses to enter into a
license agreement with a proposed licensee which is the subject of a CBG
Protected Agreement, and MAGI subsequently (prior to the second anniversary of
the date of a writing evidencing the end of negotiations regarding the proposed
license agreement) enters into a license agreement with that proposed licensee,
for a product in a product category which the licensee proposed to produce, CBG
shall be compensated, on an annual basis for the remaining term of the
Agreement, at a rate equal to 24% of the revenues received by MAGI (as
described in the Agreement and in paragraph 3 above) under such license
agreement(s).

 

9.             MAGI
shall control the direction of its licensing program.  Accordingly, with regard to proposed expansions of licenses under
the existing licensing relationships and/or the new licensing relationships,
unless and until CBG and MAGI have conferred and discussed new product
categories which may be approved with parties to the CBG Protected Agreements,
and MAGI has approved, in concept, potential new product categories, CBG will
not initiate discussions with such licensees to suggest new product categories.

 

3

 

 

10.           During
the term of the Agreement, CBG shall assist MAGI as the parties deem reasonably
appropriate with regard to the management of licensee relationships under the
existing licensing relationships and the new licensing relationships.  Each party shall maintain, and make
available to the other, upon notice by the other, for review and copying, its
agreements, books and records which involve and/or relate to the license
agreements, the revenues to be derived therefrom, and other matters related
thereto.

 

11.           During
the term of the Agreement, CBG shall be compensated as described in the Agreement
and in paragraph 3 above with regard to all agreements entered between MAGI and
a party under an existing licensing relationship and/or a new licensing
relationship.

 

12.           The
first sentence of the Agreement is hereby deleted in its entirety and replaced
with the following: “The purpose of this Letter Agreement (‘Agreement’) is to
set forth the terms of the agreement by which Creative Brands Group, Inc.
(‘CBG’) will manage and develop, and be compensated with respect to, certain
licensing and key account activities for Media Arts Group, Inc. (‘MAGI’ or the
‘Company’).”  Additionally, the second
sentence of the Agreement is hereby deleted in its entirety.

 

13.           The
first sentence of the section of the Agreement captioned “Nature of Services to
be Provided” (which sentence begins with the words “CBG shall manage”) is
hereby deleted in its entirety and replaced with the following: “CBG shall
manage, grow, develop and service certain of MAGI’s licensing relationships
(including under the ‘CBG Protected Agreements’ and the ‘new licensing
relationships’, as defined herein) and key account relationships as set forth
herein.”

 

14.           The
third and fourth sentences of the second paragraph of the section of the
Agreement captioned “Compensation to CBG; Term of Agreement” (beginning with
the words “To the extent”) are hereby deleted in their entirety.  The fourth paragraph of that section is
hereby deleted in its entirety.

 

15.           The
first sentence of the fourth paragraph of the section of the Agreement
captioned “Additional Terms” (which sentence begins with the words “CBG shall
provide”) is hereby deleted in its entirety and replaced with the following:
“At MAGI’s request, CBG shall provide on-site (at MAGI’s Morgan Hill
headquarters) personnel for management of licensing issues and approvals, with
MAGI having final approval on such issues.”

 

16.           The
fifth paragraph of the section of the Agreement captioned “Additional Terms”
(which begins with the words “MAGI shall provide”) is hereby deleted in its
entirety and replaced with the following: “If MAGI chooses to have a booth at
licensing trade shows, CBG shall have the right to have its representatives
present in the booth in order to interact with licensees under the CBG
Protected Agreements and the new licensing relationships.  If MAGI elects not to have a booth, and CBG
has a booth, MAGI shall have the right to negotiate with CBG to have CBG act as
a representative of MAGI at the show (which negotiation will also involve MAGI
sharing some of the related costs and expenses).”

 

17.           IF A DISPUTE
OCCURS BETWEEN THE PARTIES WHICH ARISES OUT OF OR RELATES IN ANY WAY TO THIS
AGREEMENT OR ANY OTHER DOCUMENT SIGNED OR INITIALED IN CONNECTION WITH THIS
AGREEMENT, 

 

4

 

OR IF
EITHER PARTY ALLEGES THAT THE OTHER PARTY IS IN DEFAULT UNDER THIS AGREEMENT OR
ANY OF THOSE OTHER DOCUMENTS, THEN THE DISPUTE OR ALLEGATION SHALL BE RESOLVED
BY ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION.  EITHER
PARTY MAY INITIATE THE ARBITRATION BY GIVING WRITTEN NOTICE TO THE OTHER PARTY
AND THE ESCROW HOLDER.  THE ARBITRATION
SHALL BE CONDUCTED BY A NEUTRAL AND IMPARTIAL ARBITRATOR IN THE OFFICE OF
JAMS/ENDISPUTE, IN SAN FRANCISCO OR SAN JOSE, CALIFORNIA (“JAMS”) OR SUCH OTHER
ARBITRATOR AS IS MUTUALLY AGREED UPON IN WRITING BY THE PARTIES.  THE ARBITRATOR’S JUDGMENT SHALL BE FINAL AND
BINDING UPON THE PARTIES, AND MAY BE ENTERED IN ANY COURT HAVING PROPER
JURISDICTION.  IF THE PARTIES DO NOT
AGREE UPON AN ARBITRATOR WITHIN TEN (10) BUSINESS DAYS AFTER THE DATE THE
ARBITRATION IS INITIATED, THEN THE ARBITRATOR SHALL BE CHOSEN BY JAMS.  IN SELECTING THE ARBITRATOR, THE PROVISIONS
OF SECTION 1297.121 AND 1297.124 OF THE CODE OF CIVIL PROCEDURE SHALL
APPLY.  THE FEE TO INITIATE THE
ARBITRATION SHALL BE PAID BY THE INITIATING PARTY, AND THAT FEE AND ALL OTHER
COSTS OF THE ARBITRATION, INCLUDING ATTORNEYS’ FEES INCURRED, SHALL ULTIMATELY
BE BORNE BY THE LOSING PARTY, AS DETERMINED BY THE ARBITRATOR.  IN THE ABSENCE OF A DETERMINATION BY THE
ARBITRATOR, THE PARTIES SHALL EACH BEAR ONE-HALF OF THE FEES AND COSTS OF THE
ARBITRATION AND ALL OF ITS OWN ATTORNEYS’ FEES AND OTHER COSTS IN CONNECTION
THEREWITH.  THE RESULTS OF THE ARBITRATION
SHALL BE FINAL, NON-APPEALABLE, BINDING UPON BOTH PARTIES, AND MAY BE ENFORCED
BY EITHER PARTY.  THE ARBITRATION SHALL
BE PROMPTLY AND TIMELY COMMENCED (AND, IN ANY EVENT, WITHIN THIRTY (30) DAYS OF
THE DATE ON WHICH THE ARBITRATOR SHALL HAVE BEEN SELECTED) AND COMPLETED.

 

18.           In
the event of any conflict between the provisions of the Agreement (and/or any
other agreement between the parties) and the provisions of this Amendment, the
provisions of this Amendment shall control. 
Except as set forth above, the Agreement shall continue in full force
and effect.

 

19.           All
exhibits and schedules attached to this Amendment are incorporated in full
herein and in the Agreement by this reference.

 

IN WITNESS WHEREOF, this Amendment has been executed
as of the date first set forth above.

 

	
  MEDIA ARTS GROUP, INC.,

  	
   

  	
  CREATIVE BRANDS GROUP, INC.,

  	
   

  
	
  a Delaware corporation

  	
   

  	
  a California corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Anthony D. Thomopoulos

  	
   

  	
  By:

  	
  /s/ Ken Raasch

  	
   

  
	
  Its:

  	
  Chairman & CEO

  	
   

  	
  Its:

  	
  CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert Murray

  	
   

  	
  By:

  	
  /s/ Eric Kusky

  	
   

  
	
  Its:

  	
  VP, General Counsel & Secretary

  	
   

  	
  Its:

  	
  President

  	
   

  
							

 

5

 

 

Creative Brands
Group — Media Arts Group Inc.

Licensee Deal Memorandum

 

 

	
  Licensee:

  	
   

  	
  XYZ Corp

  City, State

  	
   

  	
  Date:

   

  Contract
  Version:

  	
  3/24/03

   

  New Contract

  

 

	
  CONTRACT
  DETAILS

  
	
  Articles:

  
	
   

  
	
  Territory:

  
	
   

  
	
  Market:

  
	
   

  
	
  Exclusions:

  
	
   

  
	
  Term:

  
	
   

  
	
  Exclusivity:

  
	
   

  
	
  First
  Marketing Deadline:

  
	
  Minimum
  Production Qty:

  
	
   

  
	
  Royalty
  Rate:

  
	
   

  
	
  Advance:

  
	
  Guarantee:

  
	
   

  
	
   

  

Notice to Licensee:

 

If the foregoing accurately states our
understanding, please sign and return a copy of this Deal Memorandum on or
before 5:00 p.m. on __________, 200_. Upon receipt of the signed Deal
Memorandum from you, we will forward it to Media Arts Group, Inc.  This Deal Memorandum is not a binding
agreement on you, Creative Brands Group, Inc., or Media Arts Group, Inc.

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

6Exhibit 10.61

 

THIS
WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED.

Void after

December 3, 2007

MEDIA ARTS GROUP,
INC.

WARRANT TO
PURCHASE SHARES

This Warrant is
issued to TBI-Mission West, LLC, a California limited liability company, by
Media Arts Group, Inc., a Delaware corporation (the “Company”).

1.             Purchase of Shares.  Subject to the terms and conditions hereinafter set forth, the
holder of this Warrant is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the Company shall
notify the holder hereof in writing), to purchase from the Company up to
150,000 fully paid and nonassessable shares of Common Stock of the Company (the
“Shares”).

2.             Definitions.

(a)           Exercise Price.  The exercise price for the Shares shall be
$2.00 per share (such price, as adjusted from time to time, is herein referred
to as the “Exercise Price”).

(b)           Exercise Period.  This Warrant shall be exercisable, in whole
or in part, immediately and ending on the expiration of this Warrant pursuant
to Section 14 hereof.

(c)           Change of Control.  The term “Change of Control” shall
mean the occurrence of any of the following events:

(i)      the
approval by stockholders of the Company of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation;

 

 

(ii)     any
approval by the stockholders of the Company of a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of
all or substantially all of the Company’s assets;

(iii)    any
“person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner”
(as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
total voting power represented by the Company’s then outstanding voting
securities; or

(iv)    a change
in the composition of the Board, as a result of which fewer than a majority of
the directors are Incumbent Directors. 
“Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the date hereof, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of those directors whose election or nomination was not in
connection with any transaction described in subsections (i), (ii) or
(iii) or in connection with an actual or threatened proxy contest relating to
the election of directors of the Company.

(d)           Registration.  The terms “register,” “registration”
and “registered” refer to a registration effected by preparing and
filing a registration statement in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement.

(e)           Registrable Securities.  The term “Registrable Securities”
means all the shares of common stock of the Company issued or issuable upon exercise of this Warrant and held by
TBI-Mission West, LLC, excluding without limitation any
Registrable Securities sold to the public or sold pursuant to Rule 144
promulgated under the Act.

3.             Method of Exercise.  While this Warrant remains outstanding and exercisable in
accordance with Section 2 above, the holder may exercise, in whole or in
part, the purchase rights evidenced hereby. 
Such exercise shall be effected by:

(a)           the surrender of the Warrant,
together with a notice of exercise to the Corporate Secretary of the Company at
its principal offices; and

(b)           the payment to the Company of an
amount equal to the aggregate Exercise Price for the number of Shares being
purchased.

4.             Certificates for Shares.  Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.

5.             Issuance of Shares.  The Company covenants that the Shares, when issued pursuant to
the exercise of this Warrant, will be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the
issuance thereof.

-2-

 

6.             Adjustment of Exercise Price and Number of Shares.  The number of and kind of securities
purchasable upon exercise of this Warrant and the Exercise Price shall be
subject to adjustment from time to time as follows:

(a)           Subdivisions, Combinations and
Other Issuances.  If the Company
shall at any time prior to the expiration of this Warrant subdivide the Shares,
by split–up or otherwise, or combine its Shares, or issue additional
shares of its Shares as a dividend, the number of Shares issuable on the
exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination.  Appropriate
adjustments shall also be made to the purchase price payable per share, but the
aggregate purchase price payable for the total number of Shares purchasable
under this Warrant (as adjusted) shall remain the same.  Any adjustment under this Section 6(a)
shall become effective at the close of business on the date the subdivision or
combination becomes effective, or as of the record date of such dividend, or in
the event that no record date is fixed, upon the making of such dividend.

(b)           Reclassification, Reorganization
and Consolidation.  In case of any
reclassification, capital reorganization, or change in the capital stock of the
Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 6(a) above), then the Company shall make
appropriate provision so that the holder of this Warrant shall have the right
at any time prior to the expiration of this Warrant to purchase, at a total price
equal to that payable upon the exercise of this Warrant, the kind and amount of
shares of stock and other securities and property receivable in connection with
such reclassification, reorganization, or change by a holder of the same number
of Shares as were purchasable by the holder of this Warrant immediately prior
to such reclassification, reorganization, or change.  In any such case appropriate provisions shall be made with
respect to the rights and interest of the holder of this Warrant so that the
provisions hereof shall thereafter be applicable with respect to any shares of
stock or other securities and property deliverable upon exercise hereof, and
appropriate adjustments shall be made to the purchase price per share payable
hereunder, provided the aggregate purchase price shall remain the same.

(c)           Notice of Adjustment.  When any adjustment is required to be made
in the number or kind of shares purchasable upon exercise of the Warrant, or in
the Exercise Price, the Company shall promptly notify the holder of such event
and of the number of Shares or other securities or property thereafter
purchasable upon exercise of this Warrant.

7.             No Fractional Shares or Scrip.  No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant, but in
lieu of such fractional shares the Company shall make a cash payment therefor
on the basis of the Exercise Price then in effect.

8.             Representations of the Company.  The Company represents that all corporate
actions on the part of the Company, its officers, directors and stockholders
necessary for the sale and issuance of this Warrant have been taken.

9.             Representations and Warranties by the Holder.  The Holder represents and warrants to the
Company as follows:

-3-

 

(a)           This Warrant and the Shares issuable
upon exercise thereof are being acquired for its own account, for investment
and not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act of 1933,
as amended (the “Act”).  Upon
exercise of this Warrant, the Holder shall, if so requested by the Company,
confirm in writing, in a form satisfactory to the Company, that the securities
issuable upon exercise of this Warrant are being acquired for investment and
not with a view toward distribution or resale.

(b)           The Holder understands that the
Warrant and the Shares have not been registered under the Act by reason of
their issuance in a transaction exempt from the registration and prospectus
delivery requirements of the Act pursuant to Section 4(2) thereof, and
that they must be held by the Holder indefinitely, and that the Holder must
therefore bear the economic risk of such investment indefinitely, unless a
subsequent disposition thereof is registered under the Act or is exempted from
such registration.  The Holder further
understands that the Warrant Shares have not been qualified under the
California Securities Law of 1968 (the “California Law”) by reason
of their issuance in a transaction exempt from the qualification requirements
of the California Law pursuant to Section 25102(f) thereof, which
exemption depends upon, among other things, the bona fide nature of the
Holder’s investment intent expressed above.

(c)           The Holder has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the purchase of this Warrant and the Shares purchasable
pursuant to the terms of this Warrant and of protecting its interests in
connection therewith.

(d)           The Holder is able to bear the
economic risk of the purchase of the Shares pursuant to the terms of this
Warrant.

(e)           The Holder is an “accredited
investor” as such term is defined in Rule 501 of Regulation D promulgated under
the Act.

10.           Restrictive Legend.

The Shares (unless
registered under the Act) shall be stamped or imprinted with a legend in
substantially the following form:

-4-

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED.  SUCH SHARES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.  COPIES OF THE AGREEMENT COVERING
THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO
THE SECRETARY OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.

11.           Rights of Stockholders.  No holder of this Warrant shall be entitled,
as a Warrant holder, to vote or receive dividends or be deemed the holder of
the Shares or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value, consolidation, merger, conveyance, or otherwise) or
to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until the Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.

12.           Expiration
of Warrant; Notice of Certain Events Terminating This Warrant.

(a)           This
Warrant shall expire and shall no longer be exercisable upon the earlier to
occur of:

(i)    5:00 p.m., California local time, on
December 3, 2007; or

(ii)   Any Change of Control (as defined in Section
2(c) hereof).

(b)           The Company shall provide at least
seven (7) days prior written notice of any event set forth in Section 14(a)(ii).

13.           Piggyback Registration Right.

(a)           The Company shall notify TBI-Mission
West, LLC in writing at least fifteen (15) days prior to filing any
registration statement under the Act for purposes of effecting a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to any employee
benefit plan or a corporate reorganization or other transaction covered by
Rule 145 promulgated under the Act, or a registration on any registration
form which does not permit secondary sales or does not include substantially
the 

-5-

 

same information as would be required to be included
in a registration statement covering the sale of Registrable Securities) and
will afford TBI-Mission West, LLC an opportunity to include in such
registration statement all or any part of the Registrable Securities then held
by TBI-Mission West, LLC.  If
TBI-Mission West, LLC desires to include in any such registration statement all
or any part of the Registrable Securities held by it, it shall, within five (5)
days after receipt of the above-described notice from the Company, so notify
the Company in writing, and in such notice shall inform the Company of the
number of Registrable Securities it wishes to include in such registration
statement, and TBI-Mission West, LLC shall execute all customary agreements to
be executed by holders when exercising piggyback registration rights.  If TBI-Mission West, LLC decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, it shall nevertheless continue to have the
right to include any Registrable Securities it holds in any subsequent
registration statement or registration statements as may be filed by the
Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.

(b)           If a registration statement under which
the Company gives notice under this Section 13 is for an underwritten offering,
then the Company shall so advise TBI-Mission West, LLC.  In such event, the right of TBI-Mission
West, LLC’s Registrable Securities to be included in a registration pursuant to
this Section 13 shall be conditioned upon TBI-Mission West, LLC’s participation
in such underwriting and the inclusion of its Registrable Securities in the
underwriting to the extent provided herein. 
If TBI-Mission West, LLC proposes to distribute its Registrable
Securities through such underwriting, it shall enter into an underwriting
agreement in customary form with the managing underwriter or underwriter(s)
selected for such underwriting. 
Notwithstanding any other provision of this Warrant, if the managing
underwriter determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the managing
underwriter(s) may exclude shares (including the Registrable Securities) from
the registration and the underwriting, and the number of shares that may be
included in the registration and the underwriting shall be allocated, first,
to the Company and second, to TBI-Mission West, LLC and any other
holders of piggyback registration rights on a pro rata basis based on the
number of Registrable Securities TBI-Mission West, LLC has requested, and the
number of other registrable securities any other holder has requested, to be
included in the registration.  If
TBI-Mission West, LLC disapproves of the terms of any such underwriting, it may
elect to withdraw therefrom by written notice, given in accordance with Section
14 hereof, to the Company and the underwriter, delivered at least thirty (30)
days prior to the effective date of the registration statement.  Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration.

14.           Notices.  All notices and other communications
required or permitted hereunder shall be in writing, shall be effective when
given, and shall in any event be deemed to be given upon receipt or, if
earlier, (a)  upon delivery, if delivered by hand, (b) one business
day after the business day of deposit with Federal Express or similar overnight
courier, freight prepaid or (c) one business day after the business day of
facsimile transmission, if delivered by facsimile transmission with copy by
first class mail, postage prepaid, and shall be addressed (i) if to the
Holder, at 1960 The Alameda, Suite 20, San Jose, California 95126 (attention:
President) and (ii) if to the Company, at 900 Lightpost Way, Morgan Hill,
California 95037 (attention: Corporate Secretary), or at such other address as
a party may designate by ten (10) days advance written notice to the other
party pursuant to the provisions above.

-6-

 

15.           Governing Law.  This Warrant and all actions arising out of
or in connection with this Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to the
conflicts of law provisions of the State of California or of any other state.

16.           Rights and Obligations Survive
Exercise of Warrant.  Unless
otherwise provided herein, the rights and obligations of the Company, of the
holder of this Warrant and of the holder of the Shares issued upon exercise of
this Warrant, shall survive the exercise of this Warrant.

Issued this 3rd day of December, 2002.

 

	
   

  	
  MEDIA ARTS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Herbert D. Montgomery

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Herbert
  D. Montgomery

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
				

 

Acknowledged and Agreed:

TBI-Mission West, LLC, a California

limited liability company

 

	
  By:

  	
  TBI-MWP I, a California
  limited

  	
   

  	
   

  
	
   

  	
  partnership, Managing
  Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Toeniskoetter &
  Breeding, Inc.

  	
   

  
	
   

  	
   

  	
  Development, a
  California corporation

  	
   

  
	
   

  	
   

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Brad Krouskup

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Brad W. Krouskup

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  	
   

  
							

-7-

 

EXHIBIT A

NOTICE OF EXERCISE

 

 

	
  TO:

  	
  MEDIA ARTS GROUP, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

Attention: 
Corporate Secretary

1.             The undersigned
hereby elects to purchase __________ Shares of _____________ pursuant to the
terms of the attached Warrant.

2.             The undersigned
shall exercise the attached Warrant by means of a cash payment, and tenders
herewith payment in full for the purchase price of the shares being purchased,
together with all applicable transfer taxes, if any.

3.             Please issue a
certificate or certificates representing said Shares in the name of the
undersigned or in such other name as is specified below:

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  

4.             The undersigned
hereby represents and warrants that the aforesaid Shares are being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof, and that the undersigned
has no present intention of distributing or reselling such shares and all
representations and warranties of the undersigned set forth in Section 9
of the attached Warrant (including Section 9(e) thereof) are true and
correct as of the date hereof.

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  	
  (Title)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]