Document:

<<<### Document last closed 8:59:11 AM September 24, 1996

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Exhibit

10.54

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is

entered into as of January 9, 2002 (“Contract Date”) between MEDIA ARTS

GROUP, INC., a Delaware corporation (the “Company”) and Ron D. Ford

(“Executive”).

 

WHEREAS, the Company hired Executive on

January 14, 2002 to serve as an employee and officer of the Company;

 

WHEREAS, the Company desires to continue to employ

Executive as an employee and officer of the Company and Executive desires to

serve as an employee and officer of the Company on the terms and subject to the

conditions set forth herein;

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.             Employment and

Term.

 

The Company hereby agrees to employ Executive, and

Executive hereby agrees to be employed by the Company, on the terms and subject

to the conditions set forth in this Agreement. 

The parties agree that the term of employment of Executive by the

Company pursuant to this Agreement is three years (the “Contract Term”), which

term commenced on January 14, 2002  (“Start Date”) and shall end on January 14, 2005

unless earlier terminated or extended as expressly provided herein (the final

date of Executive’s employment, under any circumstances, shall be referred to

herein as the “Completion Date”; the actual period of Executive’s employment

from Start Date until Completion Date shall be referred to herein as

“Employment Period”).

 

2.             Position and Duties.

 

The Company shall employ Executive during the

Employment Period as Chief Executive Officer and President; provided,

however, that Executive may have such other titles in addition to or

in lieu thereof as the Company and Executive may mutually agree.  Executive shall report to the Board of

Directors of the Company.  During the

Employment Period, Executive shall perform faithfully and loyally and to the

best of his abilities the duties assigned to him hereunder.  Executive shall perform his duties at the

Company offices in Morgan Hill, California. 

During the Employment Period, Executive shall devote his full business

time, attention and effort to the affairs of the Company and its subsidiaries; provided,

however, that Executive may engage in charitable, civic or community

activities to the extent that such activities do not materially interfere with

his duties hereunder, and Executive may serve as a director of any other

corporation or other entity only with the consent of the Board of Directors and

on the condition that the Executive does not devote a material amount of time

to such service

 

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or participate in the

management or operation of such entity. 

Executive agrees to comply with the provisions of the Company’s employee

handbook, as it may be revised from time to time during the Employment Period; provided,

however, that if there is a conflict between the terms of the handbook and this

Agreement, this Agreement will control. 

If any provision of the handbook is held to be invalid, illegal or

unenforceable, such invalidity, illegality or unenforceability shall not affect

the validity, legality or enforceability of this Agreement. Company will

nominate Executive to be a member of the Board of Directors.

 

3.             Compensation and

Benefits.

 

3.1           Base Salary.  During the Employment Period, the Company

shall pay to Executive a base salary at the rate of $500,000 per annum (the

“Base Salary”) and increase to $550,000 on the first anniversary of employment

and $600,000 on the second anniversary of employment.  Executive’s Base Salary may be increased at the sole discretion of

the Board, upon recommendation from the Compensation Committee.  Executive’s Base Salary shall be paid to him

according to the regular payroll schedule utilized by the Company with respect

to salary payment of the other executives of the Company. The Company shall

deduct from all amounts payable to Executive pursuant to this Agreement the

amount of all required federal, state and local withholding taxes in accordance

with Executive’s W-4 on file with the Company, as well as any other authorized

deductions.  In the event Executive

receives any benefits under the Company’s long term disability plan or policy

during the Employment Period, any Base Salary accrued during the Employment

Period shall be reduced by the amount of the benefits received.

 

3.2           Bonus Plan.  Executive will be eligible for bonus

potential of up to 100% of Base Salary per year under the Company’s Executive

Management Bonus Program, contingent upon achievement of set performance goals

to be established and agreed to by Executive and Board at a later date (see

attached example). Executive will be eligible for an additional bonus potential

of up to 50% of Base Salary per year contingent upon meeting performance goals

set by the Board of Directors. Such additional bonus will be paid in the form

of a grant of stock.  The number of

shares shall be equal to the dollar value of the additional bonus divided by

the market price of the stock on the date of grant.

 

3.3           Participation in the Stock Option

Plan.  The Company will grant Executive

options on January 24, 2002, to purchase a total of 525,000 shares of Media

Arts Group, Inc. common stock under the Company’s 1998 Stock Incentive Plan

(the “Stock Option Plan”) at an exercise price equal to the fair market value

of the shares on the date of grant. Such options shall vest at the rate of

175,000 upon hire, 175,000 on the first anniversary and 175,000 on the second

anniversary dates of employment and any unvested options shall immediately vest

and be exercisable upon a change of control of the Company (as defined in the

Stock Option Plan) or a termination of Executive’s employment.

 

Such options shall

be treated as “incentive stock options” under section 422 of the Internal

Revenue Code to the maximum extent permitted under the applicable limitations,

and shall also have an exercise price equal to no more than 100% of the fair

market value of the shares on the date of option grant and a term of at least

ten years.  Such options may be

exercised after the termination of Executive’s employment (to the extent such

options were exercisable on such date after giving effect to any acceleration

of exercisability by reason of termination of

 

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employment) at any time

or from time to time during the two-year period commencing on the date of

termination of employment (but not after expiration of the applicable option

term) if the termination of employment was for any reason other than a

termination by the Company for Cause. If the termination was by the Company for

Cause, the options may be exercised at any time or from time to time during the

ninety day period commencing on the date of termination of employment (but not

after expiration of the applicable option term). The exercise price of the

options may be paid in cash, with previously-owned shares of common stock of

the Company (which, if acquired from the Company or an affiliate, shall have

been held by Executive for at least six months), or pursuant to a “cashless

exercise” through a broker-dealer.  The

Company shall use its reasonable efforts to cause all shares of common stock

issued upon the exercise of the options to be registered or qualified under all

applicable securities laws so that all such shares shall be unrestricted and

freely transferable.  The other terms of

the options shall be no less advantageous to Executive than currently in place

for executive employees generally.

 

Executive

acknowledges that any additional option grants to Executive shall be at the

sole discretion of the Board or Committee as defined in the Stock Option Plan,

as it may be amended from time to time, or any successor plan, and shall be

governed by the terms of the applicable plan and option agreement.

 

3.4           Employee Benefits.  Except as otherwise provided in this

Agreement, during the Employment Period Executive shall be entitled to

participate in the Company’s employee benefit plans generally available to

regular, full-time salaried employees of the Company and any nonqualified

deferred compensation plans generally available to executives and officers of

the Company (such benefits being hereinafter referred to as the “Employee

Benefits”).  As a supplement to the

standard benefits package, Media Arts Group, Inc. will pay the employee portion

of the Executive’s benefit contribution for whatever coverage (including family

coverage) that he elects under the Company’s Employee Benefit plans.  Executive’s participation in the Employee

Benefits shall be subject to the terms and conditions of the Employee Benefits

including, without limitation, the Company’s right to amend or terminate the

Employee Benefits at any time and without notice to participants. Company will

pay for reasonable and appropriate club memberships for Executive, including

Executive’s participation in YPO (up to two meetings per year) and a membership

in a country club in California.

 

3.5           Employee Art Purchase and Art

Bonus Credit Program Enhancement. 

During the Employment Period, the Company will provide Executive with an

enhancement of the Employee Art Purchase and Art Bonus Credit Program (the “Art

Program”) as follows: Executive shall be entitled to receive, on each of the

three anniversaries of the Start Date in the term of this Agreement, provided

he is actively employed on that anniversary date, ten (10) lithographs of

such selection as permitted within and under the terms of the Art Program, at

no cost to Executive; and (b) Executive shall receive ten thousand

(10,000) Art Bonus Credits upon execution of this Agreement by both parties,

subject to use as permitted within and under the terms of the Art Program.

 

3.6           Automobile Expense Reimbursement.  The Company shall provide the Executive with

a Company Automobile, or pay Executive an automobile allowance of $1000.00 per

month for the Employment Period, and Executive agrees that such allowance shall

reimburse him for all costs of owning and operating said vehicle, including

insurance, with the exception of mileage.

 

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3.7           Flexible Time Off/Vacation.  Executive shall be entitled to FTO accrued

at the rate applicable to executives of the Company (provided that such rate

shall be at least 16.66 hours per month), to be used in accordance with the FTO

policy applicable to executives of the Company as in effect from time to time.  Executive agrees to advise the Board of

Directors of his anticipated vacation dates within a reasonable period, and

such vacation dates shall be subject to approval by the Board of Directors.

 

3.8           Cellular Telephone.  The Company agrees to provide Executive with

a cellular telephone of the Company’s selection, and to pay normal and

customary expenses for the business use of the telephone during the Employment

Period.

 

3.9           Life Insurance Enhancement.  The Company will provide Executive with an

enhancement of the group term life insurance and supplemental group term life

insurance plans generally made available to Company employees as follows:  The Company agrees to pay the premiums for

an individual term life insurance policy for Executive, with a death benefit of

one million dollars ($1,000,000), during the Employment Period.  Executive understands and agrees that, at

the end of the Employment Period, the Company’s obligation to pay premiums for

this term life policy shall cease; that he may elect, subject to the terms of

the policy, to assume responsibility for such premiums in the event he desires

to continue that term life coverage; and that, if he does not assume payment of

said premiums, his term life insurance will cease as of the Completion Date.

 

3.10         Expense Reimbursement.  During the Employment Period, the Company

shall reimburse Executive, in accordance with the Company’s policies and

procedures, for all proper expenses incurred by him in the performance of his

duties hereunder.

 

3.11         Living Expenses. The Company

agrees to pay Executive’s travel, meals and lodging expenses, as needed per

week during which Executive is travelling to and physically located and working

at the Company’s offices in Morgan Hill, for up to twelve months following the

Start Date.  The living expense

reimbursements will be grossed up to cover any related taxes if such payments

are deemed taxable income to the Executive.

 

3.12         Relocation.  Executive intends to relocate to the Morgan

Hill/Bay Area not later than twelve months after the Start Date, and shall use

his reasonable best efforts to complete his relocation within such period.  The Company will reimburse Executive for the

standard and reasonable costs of relocating Executive and his family to the

Morgan Hill/Bay Area.  This will include

the transportation of household goods, standard fees and commissions related to

the sale of Executive’s current home (up to 6%) and the reasonable closing

costs associated with the purchase of a new home.  The relocation expense reimbursements will be grossed up to cover

any related taxes.

 

4.             Termination.

 

4.1           Death.  Upon the death of Executive, this Agreement

shall automatically terminate and all rights of Executive and his heirs,

executors and administrators to compensation and other benefits under this

Agreement shall cease, except as provided in Section 5.2 hereof.

 

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4.2           Disability.  The Company may, in its sole discretion,

terminate this Agreement upon written notice to Executive if Executive, because

of physical or mental incapacity or disability, fails to perform the essential

functions of his position required of him hereunder for a continuous period of

30 days or any 60 days within any twelve-month period.  Upon such termination, all obligations of

the Company hereunder shall cease, except as provided in Section 5.2

hereof.  In the event of any dispute

regarding the existence of Executive’s incapacity hereunder, the matter shall

be resolved by the determination of a physician to be selected by the

Executive.  Executive agrees that he

will submit to appropriate medical examinations for purposes of such

determination.  During the Employment

Period, the Company will reimburse Executive’s premium cost (up to $10,000 per

year) for his existing disability insurance policy. In addition, the Company

will provide Executive with disability insurance coverage under the Company’s

disability insurance plans and policies generally applicable to executives and

officers of the Company.

 

4.3           Termination by the Company.

 

4.3.1        The Company may terminate Executive’s

employment hereunder at any time, whether or not for Cause.  Any termination for Cause shall be

authorized by the Board of Directors. 

Executive shall be given written notice by the Company of the intention

to terminate his employment hereunder for Cause (a “Cause Notice”).  Each Cause Notice shall state the particular

action(s) or inaction(s) giving rise to termination for Cause.  If the basis for such termination is one

that is capable of being cured, Executive shall have thirty (30) days

after receipt of the Cause Notice to cure the particular action(s) or

inaction(s). If Executive effects a cure to the satisfaction of the Board of

Directors, exercised in their good faith reasonable business judgment, the

Board of Directors shall provide written notice of the rescission of the Cause

Notice, and it shall be of no further force or effect. If the basis for

termination is not one that is capable of being cured, the Cause Notice shall

serve as the Notice of Termination and the date thirty-one (31) calendar

days after the date of the Cause Notice shall be the Completion Date for all

other purposes of this Agreement.

 

4.3.2        “Cause” shall mean any one or more of

the following:

 

4.3.2.1     any

willful and material failure or refusal by Executive to perform his duties

under this Agreement (other than by reason of Executive’s death or disability);

excluding,

however, any failure by Executive to perform any specific duties

because such performance is subject to the existence of or satisfaction of

conditions, or the occurrence of events, that are not within Executive’s

control;

 

4.3.2.2     any

intentional act of fraud or embezzlement by Executive in connection with his

duties hereunder or in the course of his employment hereunder, or the admission

or conviction of, or entering of a plea of nolo contendere by, Executive of any

felony or any lesser crime involving moral turpitude, fraud, embezzlement or

theft;

 

4.3.2.3     any

gross negligence or willful misconduct of Executive resulting, in the good

faith determination of the Board of Directors, in a significant loss to

 

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the Company or any of their subsidiaries, or in damage

to the reputation of the Company or any of their subsidiaries; and/or

 

4.3.2.4     any

material breach by Executive of any of his covenants contained in this

Agreement.

 

4.4           Termination by Executive.

 

4.4.1        Executive shall be

entitled to terminate his employment hereunder for Good Reason or

otherwise.  “Good Reason” shall mean any

one or more of the following:

 

4.4.1.1     any

failure by the Company to comply with any material provision of this Agreement,

which failure has not been cured within thirty (30) days after receipt by

the Company of notice from Executive of such noncompliance; or

 

4.4.1.2     the

assignment to Executive by the Company of a significant amount of duties

inconsistent in a material respect with Executive’s position (including titles

and reporting responsibilities), authority, duties or responsibilities or any

other action which results in a significant and material diminution in such

position, authority, duties or responsibilities, unless remedied by the Company

within thirty (30) days after receipt of notice thereof given by Executive;

or

 

4.4.1.3     any

failure or refusal of a successor to the Company or the purchaser of all, or

substantially all, of the assets of the Company to assume the Company’s

obligations under this Agreement; or

 

4.4.1.4     any

Change of Control, as defined below.

 

4.4.2        “Change of Control”

shall mean (i) the disposition by the Company or its subsidiaries of all

or substantially all of its assets, in contemplation of the distribution of the

net proceeds of such sale to the Company’s stockholders; or (ii) a merger

or consolidation in which the shares of Common Stock are converted into

securities of another entity and/or the right to receive cash or other property

and as a result of which the stockholders of the Company immediately prior to

such transaction own less than 50% of the surviving entity; or (iii) the

Company ceasing to be a corporation whose stock is publicly traded; or

(iv) an event after which any “person” (as that term is used in

Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as

amended) is or becomes the “beneficial owner” (as defined in Rule 13d-j of the

Securities Exchange Act of 1934, as amended), directly or indirectly, of

securities of the Company representing 51% or more of the combined voting power

of the Company’s then outstanding securities; provided, that, this subparagraph

(iv) shall not apply to ownership by (x) any trustee or other

fiduciary holding securities under an employee benefit plan of the Company; or

(y) ownership by any corporation or entity owned, directly or indirectly,

by the stockholders of the Company in substantially the same proportions as

their ownership of the stock of the Company.

 

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4.5           Notice of Termination.  Any purported termination of Executive’s

employment by the Company or by Executive shall be communicated by written

Notice of Termination to the other party hereto in accordance with

Section 7 hereof.  “Notice of

Termination” shall mean a notice that indicates the specific termination

provision in this Agreement relied upon and shall set forth in reasonable

detail the facts and circumstances claimed to provide a basis for termination

of Executive’s employment under the provision so indicated.

 

4.6           Completion Date.  “Completion Date” shall mean (i) if

Executive’s employment is terminated because of death, the date of Executive’s

death; (ii) if Executive’s employment is terminated for disability, the

date of such notice to Executive pursuant to Section 4.2 herein;

(iii) if Executive’s employment is terminated for Cause pursuant to

Section 4.3.1 and 4.3.2, or for Good Reason pursuant to Section 4.4.1

hereof, or for any other reason other than death or disability, the date

specified in the Notice of Termination; and (iv) if the parties have not

mutually agreed to engage in good faith negotiations as provided hereinafter in

Section 5.1, and no other termination of the Agreement occurs prior to the

expiration of the Contract Term, January 14, 2005.

 

5.             Compensation Upon Termination.

 

5.1           Extension

of Agreement.  No less than ninety

(90) days prior to January 14, 2005, the Company shall give notice to

Executive if it is interested in extending or renewing the Agreement or

entering into a successor agreement for Executive’s services.  The parties hereby agree that, if both

parties are interested in extending or renewing the Agreement or entering into

a successor agreement for Executive’s services, they will engage in good faith

negotiation of such terms.  In the event

one or both party(ies) is not interested in extending or renewing the Agreement

or entering into a successor agreement for Executive’s services, Executive

agrees that he will nonetheless complete the Contract Term to the best of his

abilities and will be entitled to all of and only the compensation provided for

in this Agreement and additional compensation and/or benefits, if any, in

accordance with the terms of the plans and programs of the Company then in

effect.

 

If the contract is not renewed

at the end of the three-year term, Executive will receive a lump sum severance

payment as soon as practicable following the termination of employment equal to

one year of Base Salary, plus continued participation for Executive (and his

family) for a period of one year in the Company’s welfare benefit plans,

including without limitation medical, dental, vision, life insurance, and

disability insurance plans (provided, however, that if Executive is not

entitled to continue to participate in such plans under applicable law or plan

terms, the Company shall reimburse Executive for the cost of obtaining such

coverage for Executive (including his family)). In the event of a Change of

Control prior to the Completion Date, the Contract Term will automatically

renew for a new three year period effective on the Change of Control date.  In the event the Contract Term is extended

pursuant to this provision, all terms and conditions of this Agreement (other

than the provision for automatic three-year renewal effective on a subsequent

Change of Control) will remain in full force and effect for the additional

three-year period; provided, however, that no additional stock options will be

granted unless determined by the Board of the Directors at their sole and

absolute discretion.

 

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5.2           Death/Disability/Non-Good

Reason/Cause Termination Payment. 

If Executive’s employment is terminated prior to the end of the Contract

Term (i) by reason of Executive’s death or disability,  (ii) by Executive for other than Good

Reason, or (iii) by the Company for Cause, Executive shall be entitled to

receive only any Base Salary accrued for the time period up to the Completion

Date and not previously paid. 

Executive’s participation in the Art Program, FTO accrual, life insurance,

reimbursement for automobile expense, cellular telephone expense, living

expense (if still in effect), and business expenses described in

Sections 3.5 through and including 3.11 shall cease on and/or be paid on a

pro rata basis, as applicable, through the Completion Date (and Executive shall

be promptly paid for accrued but unreimbursed expenses). Executive’s

participation in and rights and obligations under Employee Benefits pursuant to

Section 3.4 shall be governed by the terms of the plans and programs of

the Company then in effect; and Executive’s rights and obligations under any

incentive stock option agreement and/or non-qualified stock option agreement to

which he is a party, including the agreements listed in Sections 3.2 and

3.3, shall be governed by the terms and conditions of the applicable option

agreement and the terms of the Stock Option Plan then in effect.  In addition, if Executive’s employment is

terminated prior to the end of the Contract Term by reason of Executive’s death

or disability, Executive shall be entitled to receive a prorated portion of

100% of his targeted bonus for that year in a lump sum as soon as practicable

following the termination of employment.

 

5.3           Non-Cause/Good

Reason Termination Payment.  If

Executive’s employment is terminated prior to the end of the Contract Term by

the Company for other than Cause, or by Executive for Good Reason (other than

pursuant to Section 4.4.1.4), then Executive shall be entitled to receive a

lump sum severance payment as soon as practicable following the termination of employment

equal to the amount of Base Salary otherwise payable through the remainder of

the Contract Term but not less than one year Base Salary. If Executive’s

employment is terminated prior to the end of the Contract Term by Executive for

Good Reason pursuant to Section 4.4.1.4, then Executive shall be entitled to

receive a lump sum severance payment as soon as practicable following the

termination of employment equal to one year Base Salary.  In addition, Executive shall be entitled to

receive the prorated portion of 100% of targeted bonus for the year of

termination (payable in one lump sum as soon as practicable following the

termination of employment), plus continued participation for Executive (and his

family) for one year in the Company’s welfare benefit plans, including without

limitation medical, dental, vision, life insurance, and disability insurance

plans (provided, however, that if Executive is not entitled to continue to

participate in such plans under applicable law or plan terms, the Company shall

reimburse Executive for the cost of obtaining such coverage for Executive

(including his family)). Executive’s participation in the Art Program, FTO

accrual, life insurance, reimbursement for automobile expense, cellular

telephone expense, living expense (if still in effect), and business expenses

described in Sections 3.5 through and including 3.11 shall cease on and/or

be paid on a pro rata basis, as applicable, through the Completion Date (and

Executive shall be promptly paid for accrued but unreimbursed expenses);

Executive’s participation in and rights and obligations under Employee Benefits

pursuant to Section 3.4 shall be governed by the terms of the plans and

programs of the Company then in effect; and Executive’s rights and obligations

under any incentive stock option agreement and/or non-qualified stock option

agreement to which he is a party, shall be governed by the terms and conditions

of the applicable option agreement and the terms of the Stock Option Plan then

in effect.

 

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5.4           Outplacement

Assistance.  Following a termination

of Executive’s employment, Executive shall be reimbursed by the Company for the

costs of outplacement services appropriate to the level of Executive’s

position, up to $10,000, at a firm selected by Executive.

 

6.             Arbitration.  Any dispute or controversy between the

Company and Executive, whether arising out of or relating to this Agreement,

Executive’s employment with the Company, the termination of such employment, or

otherwise, shall be submitted to binding arbitration before a single arbitrator

as set forth in Appendix A attached hereto and incorporated herein in its

entirety.  This provision expressly

waives all rights to a civil court action before a judge or jury for disputes

between Executive and the Company.

 

7.             Notices.  All notices and other communications

required or permitted hereunder shall be in writing and shall be deemed given

when (i) delivered personally or by overnight courier to the following

address of the other party hereto (or such other address for such party as

shall be specified by notice given pursuant to this Section) or (ii) sent

by facsimile to the following facsimile number of the other party hereto (or

such other facsimile number for such party as shall be specified by notice

given pursuant to this Section), with the confirmatory copy delivered by

overnight courier to the address of such party pursuant to this Section:

 

If to the Company, to:

 

Media Arts Group, Inc.

900 Lightpost Way

Morgan Hill, CA 95037

Attn: Board of Directors

Facsimile: (408) 201-5082

 

If to Executive, to:

 

5835 De Clair Court

Atlanta, GA  30328

 

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8.             Severability.  Whenever possible, each provision of this

Agreement shall be interpreted in such manner as to be effective and valid

under applicable law, but if any provision of this Agreement is held to be

invalid, illegal or unenforceable in any respect under applicable law or rule

in any jurisdiction, such invalidity, illegality or unenforceability shall not

affect the validity, legality or enforceability of any other provision of this

Agreement or the validity, legality or enforceability of such provision in any

other jurisdiction, but this Agreement shall be reformed, construed and

enforced in such jurisdiction as if such invalid, illegal or unenforceable

provision had never been contained herein.

 

9.             Entire Agreement.  This Agreement constitutes the entire

agreement and understanding between the parties with respect to the subject

matter hereof except as expressly provided and incorporated herein, and

supersedes and replaces all prior negotiations, understandings, agreements or

representations by or between the parties, written or oral, which may have

related in any manner to the subject matter hereof.

 

10.           Successors and Assigns.  This Agreement is personal to Executive and

shall not be assignable by Executive. 

This Agreement shall inure to the benefit of and be binding upon the

Company and its successors and assigns; the Company may assign this Agreement

or any interest herein, by operation of law or otherwise, to (a) any

successor to all or substantially all of its equity ownership interests, assets

or business by dissolution, merger, consolidation, transfer of assets, or

otherwise; or (b) with the consent of Executive, any direct or indirect

subsidiary of the Company or of any successor referred to in

(a) hereof.  Except as stated

herein, nothing in this Agreement, expressed or implied, is intended to confer

on any person other than the parties and their respective successors and

permitted assigns any rights or remedies under or by reason of this Agreement.

 

11.           Governing Law.  This Agreement shall be governed by,

construed and enforced in accordance with the internal laws of the State of

California without regard to principles of conflict of laws.

 

12.           Amendment and Waiver.  No waiver of any breach of any term or

provision of this Agreement shall be construed to be, nor shall be, a waiver of

any other breach of this Agreement.  No

waiver shall be binding unless in writing and signed by the party waiving the

breach.  No course of conduct or failure

or delay in enforcing the provisions of this Agreement shall affect the

validity, binding effect or enforceability of this Agreement.

 

13.           Modification.  Except as otherwise provided pursuant to

Section 5.1, this Agreement may not be extended, renewed, amended or modified

other than by a written agreement executed by Executive and the Company, and

approved by the Board.

 

14.           Construction.  Each party has cooperated in drafting and

preparation of this Agreement.  Hence,

the usual rule of construction, that ambiguities shall be construed against the

drafter, shall have no force or effect in interpreting this Agreement.

 

15.           Confidential Information.  Executive agrees that all styles, designs,

customer lists, files, reports, correspondence, records, financial data of any

kind and all other confidential documents, regardless of form or medium,

(i) developed by Executive, (ii) received by Executive from or on

 

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behalf of the

Company, or (iii) to which Executive is given access, in the course of

Executive’s services hereunder (the “Confidential Information”) shall remain

the sole and exclusive property of the Company. “Confidential Information”

shall not include any item or information that is known to the public or that

becomes known publicly, after the date of this Agreement, through legitimate

means. Executive shall keep the Confidential Information strictly confidential

and shall not sell, trade, publish or otherwise disclose it to anyone in any

manner whatsoever including, without limitation, by means of photocopy,

reproduction or electronic media. 

Executive agrees that he shall use the Confidential Information only for

the purpose of providing his services under this Agreement.  In the event Executive is requested or

required to disclose any Confidential Information pursuant to a subpoena in the

course of a civil or criminal action, Executive shall provide the Company with

prompt notice of any such request or requirement so that the Company may seek

an appropriate protective order to prevent such disclosure (but in the absence

of any order, Executive may comply with the subpoena).  Executive expressly agrees that, upon

termination of his employment, Executive will return all Confidential

Information to the Company.  The parties

expressly agree that this provision shall continue after and survive the

expiration or termination of this Agreement indefinitely.

 

16.           Nonsolicitation.  Executive agrees that, for a period of one

(1) year following the Completion Date, he will not, without the prior

written consent of the Board, directly or indirectly solicit, induce, or

attempt to solicit or induce any “Company Person” (defined hereinafter) to

terminate his/her employment or other relationship with the Company or any of

its subsidiaries, affiliates, successors or assigns for the purpose of

associating with any entity engaged in the business of the Company; or

otherwise encourage any Company Person to terminate his/her employment or other

relationship with the Company or any of its subsidiaries, affiliates,

successors or assigns for any other purpose or no purpose.  As used herein, “Company Person” is defined

as a person known to Executive to be a partner, principal, member, employee,

officer, director  of the Company, its

parent and/or subsidiary corporations, or their affiliates, successors or

assigns.  Executive further agrees  that, for a period of one year following the

Completion Date, he will not, without the prior written consent of the Board,

directly or indirectly use any Company trade secret, Confidential Information,

proprietary information, knowledge or data to solicit, induce, or attempt to

solicit or induce any person, firms, corporations or entities which were the

Company’s customers during the time of his employment with the Company to enter

into business arrangements with him or any entity or person with whom he is

employed or otherwise affiliated with respect to products or services

competitive with those offered or proposed to be offered by the Company on the

Completion Date.

 

17.           Nondisparagement.  Executive agrees that he will not, at

any time in the future, disparage or discredit the Company, or Thomas Kinkade,

in any  communication, and the Company

agrees that it will not, at any time in the future, disparage or discredit

Executive in any private communication. Any public communication shall be

governed by Securities Exchange Commission rules and regulations and applicable

law.

 

18.           Executive Representations.  Executive represents and warrants that he is

not under contract of any kind with any entity or business that would prohibit

or restrict him from entering into this Agreement.  Executive further warrants, represents and agrees that he neither

has nor will enter into any agreement or other obligation while this Agreement

is in effect that might conflict or interfere with the operation of this

Agreement or his obligations hereunder.

 

11

 

19.           Legal Representation.  The parties understand that this is a

legally binding contract and acknowledge and agree that they have had a

reasonable opportunity to consult with legal counsel of their choice prior to

execution.

 

20.           Counterparts.  This Agreement may be executed in

counterparts, each of which shall be deemed an original, and all of which

together shall constitute one and the same original instrument.

 

21.           Indemnification.  Executive agrees that he will indemnify the

Company for the costs of defense and any liability that results from his

improper conduct as an employee and/or officer including, but not limited to,

all conduct outside the course and scope of employment.  The Company agrees that it will indemnify

Executive, both during and after the Employment Period, for all actions taken

in the course and scope of Executive’s duties under the Agreement, including as

a director, to the fullest extent permitted under Delaware Corporation Law,

including an undertaking to advance litigation expenses; provided, however,

that if the Company’s Certificate of Incorporation and By-Laws impose a lower

limit on indemnification, then such documents will control, except to the

extent such limit is lower than that imposed under the Company’s current

Certificate of Incorporation and By-Laws. 

The Company agrees to maintain adequate Directors and Officers Liability

Insurance naming Executive as insured, covering claims made with respect to

occurrences during the Employment Period and having coverage and policy limits

no less favorable to directors and officers than those in effect at the Start

Date.

 

22.           Legal Fees.  Company will reimburse Executive for

reasonable legal fees incurred by Executive in the negotiation and execution of

the Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed

this Agreement.

 

	

   

  	

  MEDIA ARTS GROUP, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

  Dated:

  	

  1/25/02

  	

   

  	

  By:

  	

  /s/ Anthony D.

  Thomopoulos

  	

   

  
	

   

  	

  Anthony D. Thomopoulos

  
	

   

  	

  Chairman of the Board and Interim CEO

  
	

   

  	

   

  
	

   

  	

   

  
	

  Dated:

  	

  4/5/02

  	

   

  	

  By:

  	

  /s/ Ron D. Ford

  	

   

  
	

   

  	

  Ron D. Ford

  	

   

  
							

 

12

 

APPENDIX A

AGREEMENT TO ARBITRATE

 

Executive understands and agrees that any dispute

arising out of his employment with the Company will be governed by Federal

Arbitration Act, 9 U.S.C. §1 et seq., and resolved by a neutral arbitrator in a

binding arbitration administered by the American Arbitration Association

(“AAA”) under its National Rules for the Resolution of Employment Disputes

(“National Rules”), such arbitration to take place within 50 miles of the

Company’s offices.

 

Executive further understands and agrees that this

agreement to arbitrate applies to any claims or disputes Executive may have

against the Company (including its shareholders, officers, directors,

employees, agents, attorneys, affiliates or benefit plans), and it also applies

to any claims or disputes that the Company may have against Executive.  Executive understands and agrees that it

applies to all statutory claims, except claims filed under workers’

compensation and unemployment insurance statutes and administrative charges

filed under the National Labor Relations Act. 

Executive understands and agrees that it is not intended to supersede

any binding arbitration provision that may exist in an ERISA benefit plan.  Further, Executive understands and agrees

that preliminary injunctive relief and other provisional remedies in aid of

arbitration may be sought by either Executive or the Company in a court under

applicable state laws.

 

Executive and the Company will jointly select the

neutral arbitrator in the manner provided in the National Rules.  The arbitrator’s award will be provided in

writing, as required by the National Rules. 

Discovery will be permitted prior to the arbitration hearing in the

nature and manner as the arbitrator considers necessary to obtain a full and

fair exploration of the issues in dispute, pursuant to the National Rules.

 

Executive understands and agrees that if the Company

or Executive files a claim under this arbitration agreement regarding a

violation of the Agreement, Executive and the Company shall share equally in

the fees and costs associated therewith, including the AAA’s administrative

fees for such disputes, and the fees and expenses of the arbitrator.  Executive expressly acknowledges and agrees

that this arbitration agreement was freely negotiated and the parties agreed to

the cost provisions contained herein with the specific intent of limiting meritless

claims.  Each party shall bear its own

fees and costs; provided, however, that the prevailing party shall be

entitled to recover said fees and costs, including attorneys’ fees, incurred as

a result of the arbitration.

 

Executive understands and agrees that if the Executive

files a claim under this arbitration provision other than for a violation of

this Agreement, Executive will pay part of the AAA’s filing fee for disputes

arising under employer-promulgated plans, in the same amount that Executive

would be required to pay to file a lawsuit in state court.  Under these circumstances, Employer will pay

the remaining part of the filing fee, the AAA’s administrative fees for such

disputes, and the fees and expenses of the arbitrator, and it will provide the

hearing facilities.  Employer acknowledge

that the Company’s payment of such fees shall in no way affect the neutrality

of the arbitrator, and will stipulate to same prior to the commencement of the

arbitration.

 

A-1

 

Executive understands that a claim under this

arbitration provision must be filed with the AAA within the time limit

established by the applicable statute of limitations.  Executive understands and agrees that any claim not filed within

the applicable time limit will be waived.

 

Executive understands that this arbitration provision

and requirement that arbitration be used instead of a court as the forum in

which to resolve employment disputes does not limit any of Executive’s

statutory rights or remedies, except the right to file a lawsuit in court, or

receive a remedy arising in any lawsuit in court.

 

Except as necessary in court proceedings to enforce

this arbitration provision or an award rendered hereunder, or to obtain interim

relief, neither a party nor an arbitrator may disclose the existence, content

or results of any arbitration hereunder without the prior written consent of

the Company and Executive.

 

A-2

 

BONUS

CALCULATION

(Section 3.2)

 

 

Each fiscal year,

management shall prepare a Budget for the following fiscal year; provided that

for the fiscal year ending December 31, 2002, the Budget shall be prepared in

the beginning of such fiscal year.  The

Budget shall contain a “Base Plan,” “Target Plan” and “Superior Plan.”

 

To calculate the Bonus to be paid to Executive for any

period, the following calculations shall be made.

 

Step 1: 

Determine the “Revenue Bonus Payment” as follows.  If revenue for the period equals the Base

Plan revenue, the “Revenue Component” shall be 50% of Base Salary.  If revenue for the period equals Target Plan

revenue, the Revenue Component shall be 100% of Base Salary.  If revenue for the period is between Base

Salary and Target revenue, the Revenue Component shall be the Interpolated

Percentage multiplied by Base Salary. 

The “Interpolated Percentage” is the percentage determined by

interpolation based on the scale set forth above.  If revenue for the period is less than Base Plan revenue, the

Revenue Component shall be $0. Calculate the “Revenue Bonus Payment” by

multiplying the Revenue Component by 37.5%.

 

Step 2: 

Determine the “Income Bonus Payment” as follows.  If income for the period equals the Base

Plan income, the “Income Component” shall be 50% of Base Salary.  If income for the period equals Target Plan

income, the Income Component shall be 100% of Base Salary. If income for the

period is between Base Salary and Target Plan income, the Income Component

shall be the Interpolated Percentage multiplied by Base Salary.  If income for the period is less than Base

Plan income, the Income Component shall be $0. 

As used in this calculation, “income” is the Company’s operating profit

excluding non-recurring charges. Calculate the “Income Bonus Payment” by

multiplying the Income Component by 37.5%.

 

Step 3: 

Determine the “Performance Bonus Payment” as follows.  The Board of Directors or the Compensation

Committee of the Board of Directors shall determine the “Performance Bonus

Component,” which shall be determined based on Executive’s overall performance

during the period.  The Performance

Bonus Component may range from 0% to 100% of Base Salary.  It is expected that if Executive’s overall

performance for the period is generally satisfactory, the Performance Bonus

Component shall be equal to 100% of Base Salary.  Calculate the “Performance Bonus Payment” by multiplying

the Performance Bonus Component by 25%.

 

Step 4:  The

total Bonus payable to Executive for the period shall be the sum of the Revenue

Bonus Payment and the Income Bonus Payment and the Performance Bonus Payment

and shall be paid in cash

 

Step 5:  The

Company shall not pay less than the Bonus payment as calculated above.  Notwithstanding the calculation set forth

above, the Board of Directors or the Compensation 

 

 

Committee of the Board of Directors may pay any additional bonus

payment to Executive, including up to 50% of base salary in company stock based

on their sole discretion.

 

Note 1:  The

incentive compensation plan described above provides compensation to which

employee is entitled, if earned, and is not a limitation on the board to

further reward employee in its sole discretion.

 

Note 2:  The

incentive compensation plan described above does not contemplate stock options,

stock grants or other equity compensation that may be awarded by the board in

its sole discretion.May 1, 2002

Exhibit

10.55

 

May 1, 2002

HAND-DELIVERED

Richard F. Barnett

 

Re:          Letter

Agreement and Release

 

Dear Rick:

 

This Letter Agreement and Release (“Agreement”) is

effective the date hereof and sets forth the specific details of the

arrangements regarding the termination of your employment with Media Arts

Group, Inc. (“MAGI”) and the termination of the Employment Agreement, dated as

of March 31, 1996, between you and MAGI (as it may have been amended to the

date hereof, the “Employment Agreement”).

 

1.               Your employment

with MAGI ended on April 1, 2002.  On

April 1, 2002, the Employment Agreement was terminated, and as of that date, is

of no force or effect; provided that Section 2.5 of the Employment Agreement

shall survive termination of the Employment Agreement.

 

2.               Within three (3)

days after the date of this Agreement, MAGI shall pay you your earned and

unpaid base salary, car allowance and FTO to April 1, 2002.  Such payments shall be less applicable

withholdings.

 

3.               As a severance

payment, MAGI shall pay to you $1,000,000. 

Such payment shall be made in four (4) equal payments of $250,000

payable on July 1, 2002, October 1, 2002, January 1, 2003 and April 1,

2003.  All such payments shall be less

applicable withholdings. From April l, 2002 to March 31, 2003, (i) MAGI shall

provide to you the medical benefits that MAGI was providing as of March 31,

2002 and (ii) MAGI shall provide you use of your current company cell phone on

the same terms and conditions as MAGI’s senior executives.

 

4.               At your option,

exercisable by written notice delivered by you to MAGI at any time within

ninety (90) days after the date of this Agreement (the “Exercise Notice”), MAGI

(i) shall issue to you that number of shares of MAGI common stock equal to

$750,000 divided by the per share price of the stock as reported by the New

York Stock Exchange at the close of trading on the date of the Exercise Notice,

which shares shall be “restricted shares” or (ii) if, on or before the date of

the Exercise Notice, you become the owner and operator of a Thomas Kinkade

Signature Gallery in the Carmel/Monterey area, in accordance with all of the

policies and standard agreements of MAGI, shall provide you with $750,000 in

inventory credit, on the same terms and conditions that inventory credit is

provided to other Signature Gallery dealers. 

You may draw down on all or any portion of such inventory credit at such

time or times as you desire; provided that any portion of the inventory credit

that is not used on or before the fourth anniversary of the date of the

Exercise Notice shall expire.

 

 

5.               Concurrently with

the full execution and delivery of this Agreement, MAGI will execute and

deliver to you a consulting agreement in form and substance as attached hereto

as Exhibit B (the “Consulting Agreement”).

 

6.               You understand,

acknowledge, and agree that, except for the payments explicitly set forth

herein, and in the Consulting Agreement, you are not, and shall not be,

entitled to receive from MAGI, and MAGI has no obligation to pay to you, any

fees, commissions, royalties, bonus payments or any other payments or amounts

(including, without limitation, any payments under the Employment Agreement or

under MAGI’s Management Bonus Program or the Employee Profit Sharing Program)

or any other benefits of any kind.

 

7.               You agree that you

will not, at any time in the future, directly or indirectly, in public or in

private, defame, criticize, disparage or discredit Thomas Kinkade, MAGI, any

other artists represented by MAGI, any artwork of Thomas Kinkade or other artists

represented by MAGI, any officers, directors or employees of MAGI, or MAGI’s

products, business, finances or operations, or otherwise cause Thomas Kinkade,

MAGI, any other artists represented by MAGI, or any of MAGI’s officers,

directors, or employees to appear in a negative light or false light.  In addition, you agree that you will not

publish, or assist in the publishing of, any book, magazine article or similar

publication concerning the life of Thomas Kinkade or the business and

operations of MAGI.  If you

intentionally and materially breach any of your obligations under this section

as finally determined by a court (or arbitration forum), in addition to any

other remedies available to MAGI, at law or in equity, any outstanding

obligations of MAGI under this agreement shall immediately terminate, and any

payments previously made under this Agreement shall be returned to MAGI.

 

8.               You agree as

follows:

 

(i)                                     all

Confidential Information remains the sole and exclusive property of MAGI;

 

(ii)                                  except

in the course of your performing services for MAGI, for a period of two years

after the termination of the Consulting Agreement, you shall keep any and all

Confidential Information strictly confidential and shall not sell, trade,

publish, disclose, use, produce, permit access to or otherwise reveal

Confidential Information to anyone in any manner whatsoever including, without

limitation, by means of photocopy, reproduction or electronic media.

 

(iii)                               “Confidential

Information” means any and all information that is confidential and/or

proprietary to MAGI, whether or not marked as “confidential” or “proprietary”

which relates to MAGI’s past, present or future business activities,

development, or research including, without limitation, all of the following:

sales volume, co-operative advertising information, designs, illustrations,

data, documentation, diagrams, flow charts, research, development, processes,

procedures, “know-how”, new product or new technology information, product

prototypes, product copies, manufacturing, development or marketing techniques

and materials, development or marketing timetables, strategies and development

plans, including trade names, trademarks, customer, supplier or personal names

and other information related to customers, suppliers or personnel, pricing

policies and financial information, designs, drawings, specifications,

techniques, models, source code, object code, and other information of similar

nature, 

 

2

 

whether or not reduced to writing or other tangible

form, and any other trade secrets or nonpublic business information.  Confidential Information does not include

any information which (a) was in the lawful and unrestricted possession of you

prior to its disclosure by MAGI, (b) is or becomes generally available to the

public by acts other than those of you after receiving it, (c) has been

received lawfully and in good faith by you from a third party who did not

derive it from MAGI, (d) is disclosed as required by law, a court order or

other governmental authority, or (e) is disclosed with the prior consent of

MAGI.

 

(iv)                              Confidential

Information includes all styles, designs, customer lists, files, reports,

correspondence, records, financial data of any kind and all other documents,

regardless of form or medium (i) developed by you during your course of

employment with MAGI, (ii) received by you from or on behalf of MAGI and (iii)

to which you were given access in the course of your employment with MAGI.

 

9.               You agree that, for

a period of two years after the termination of the Consulting Agreement, you

will not, directly or indirectly, solicit, induce, encourage or attempt to

solicit, induce or encourage, any “Company Person” (as defined below) to

terminate his/her employment or other relationship with the Company for any

purpose or no purpose at all.  As used

herein “Company” means Media Arts Group, Inc. and its subsidiaries, affiliates,

successors and assigns, and “Company Person” means any partner, principal,

member, employee, officer, director, agent, contractor, or representative of

the Company.  In addition, you agree

that for a period of two years after the termination of the Consulting

Agreement, you will not influence or attempt to influence customers, suppliers

or dealers of the Company, either directly or indirectly, to divert their

business from the Company or to any individual, partnership, firm, corporation

or other entity in competition with the Company; provided that MAGI agrees that

your activities related to the operation of a Signature Dealer gallery, and the

sale of Thomas Kinkade Plein Air or original artwork shall not be a violation

of this provision.

 

10.         You agree that in the

event of a breach of your obligations under Sections 7, 8, and 9, MAGI will suffer

immediate, irreparable harm for which monetary damages will provide inadequate

compensation.  Accordingly, you agree

that MAGI will be entitled, in addition to any other remedies available to it,

at law, in equity or otherwise, to immediate injunctive relief to specifically

enforce the terms of this agreement without the need for the posting of any

bond.

 

11.         Within three (3) days of

the date of this Agreement, you shall return to MAGI any property of MAGI not

provided to you under the terms of this Agreement or the Consulting Agreement,

including any security access and credit cards provided to you by MAGI.

 

12.         On behalf of yourself and

your heirs and assigns, you hereby release and forever discharge MAGI and its

owners, stockholders, parent corporation, affiliates, divisions, subsidiaries,

predecessors, officers, managers, employees, insurers, representatives and

agents (jointly “MAGI Releasees”) from all claims, charges, complaints,

demands, liabilities or causes of action of any kind or nature whatsoever based

upon contract, tort or statute, known or unknown (“Claims”), which you have or

had or claimed to have against MAGI at any time prior to this Agreement,

including, without limitation, any Claims arising out of, based upon, or

relating to your hire, employment, remuneration, termination from MAGI and/or

the

 

3

 

Employment Agreement (and

its termination), including all claims arising under the Employment Agreement,

the Americans with Disabilities Act (the “ADA”); Title VII of the Civil Rights

Act of 1964, as amended; the Equal Pay Act, as amended; the Age Discrimination

in Employment Act, as amended;  the

Employee Retirement Income Security Act, as amended; The Older Workers Benefit

Protection Act, as amended;  the

California Fair Employment and Housing Act, as amended; the California Labor

Code, as amended; and/or any other local, state, or federal law governing

discrimination in employment and/or the payment of wage and benefits.

 

YOU ACKNOWLEDGE THAT YOU HAVE BEEN ADVISED OF AND ARE

FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH

PROVIDES AS FOLLOWS:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING

THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT

WITH THE DEBTOR.”

 

BEING AWARE OF SAID CODE SECTION, YOU HEREBY EXPRESSLY

WAIVE ANY RIGHTS YOU MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES

OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

 

13.         MAGI, on behalf of itself

and its owners, stockholders, parent corporation, affiliates, divisions,

subsidiaries, and predecessors (jointly referred to in this paragraph 13 as

“MAGI”), hereby releases and forever discharges you and your heirs and assigns

from all Claims which MAGI has or had or claimed to have at any time prior to

this Agreement, including, any and all Claims arising out of, based upon, or

relating to your hire, employment, remuneration, termination from MAGI and/or

the Employment Agreement (and its termination), and/or your performance of

services on behalf of MAGI thereunder.

 

MAGI ACKNOWLEDGES THAT IT HAS BEEN ADVISED OF AND IS

FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES

AS FOLLOWS:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF

EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS

SETTLEMENT WITH THE DEBTOR.”

 

BEING AWARE OF SAID CODE SECTION, MAGI HEREBY

EXPRESSLY WAIVES ANY RIGHTS IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER

STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

 

Notwithstanding the foregoing, the release given by MAGI is limited by

(i) any indemnification limitations in MAGI’s by-laws or articles or (ii) the

coverages and limits of liability under the terms of applicable Directors and

Officers insurance policies.

 

14.         MAGI and you have the

right to consult with an attorney before entering into this Agreement

 

4

 

15.         The provisions of this

Agreement are severable.  If any

provision is held to be invalid or unenforceable, it shall not affect the

validity of the remaining provisions of this Agreement.

 

16.         Each of MAGI and you

represent that they have thoroughly read and considered all aspects of this

Agreement, that they understand all of its provisions and that they are

voluntarily entering into this Agreement.

 

17.         You agree that this

Agreement and the Consulting Agreement represents the entire agreement between

you and MAGI with respect to the termination of your employment, the

termination and non-renewal of the Employment Agreement and any subject matter

of this Agreement.  You agree that this Agreement

and the Consulting Agreement supersedes any and all prior or contemporaneous

oral and written agreements or understandings between you and MAGI concerning

the termination of your employment and any subject matter of this Agreement.  Neither MAGI nor you are relying upon any

other agreement, plan, representation, statement, omission, understanding or

course of conduct not expressly set forth in this Agreement.  This Agreement shall be governed by, and

construed in accordance with, California law.

 

18.         You understand and agree

that:

 

(a)                                                          You

have a full twenty-one (21) days within which to consider this Agreement before

executing it;

 

(b)                                                         You

should carefully read and fully understand all of the provisions of this

Agreement;

 

(c)                                                          The

release stated above waives rights or claims arising under the Age

Discrimination in Employment Act.

 

(d)                                                         You

are, through this Agreement, releasing MAGI from any and all claims you may

have against MAGI Releasees;

 

(e)                                                          You

knowingly and voluntarily agree to all of the terms set forth in this

Agreement;

 

(f)                                                            You

knowingly and voluntarily intend to be legally bound by the same;

 

(g)                                                         You

were advised and hereby are advised in writing to consider the terms of this

Agreement and consult with an attorney of your choice prior to executing this

Agreement;

 

(h)                                                         You

have a full seven (7) days following the execution of this Agreement to revoke

this Agreement and have been and hereby are advised in writing that this

Agreement shall not become effective or enforceable until the revocation period

has expired;

 

(i)                                                             You

understand that rights or claims under the Age Discrimination in Employment Act

of 1967, 29 U.S.C. § 621, et seq. that may arise after the date this

Agreement is executed are not waived.

 

(j)                                                             The

payment described above is consideration in exchange for your waiver of rights

or claims in this Agreement.

 

19.         If you do not execute

this Agreement and deliver it to MAGI by the 22nd day after you

receive it from MAGI, the offer contained herein shall be withdrawn and the

Agreement shall

 

5

 

be null and void, and any subsequent execution of this

Agreement by you shall be of no force or effect.

 

20.         This Agreement is subject

to the arbitration provisions attached hereto and made a part hereof.

 

21.         You understand, acknowledge and agree

that this Agreement and its effectiveness is subject to the approval of the

Board of Directors of MAGI.  If the

Board of Directors of MAGI does not approve this Agreement, this Agreement

shall not become effective and shall be of no force or effect.

 

Rick, I believe the foregoing represents all of the

matters upon which we have agreed concerning the termination of your

employment.  Provided you are in

agreement, please sign in the space provided below and return the signed

document to me.  Two originals of this

Agreement are provided so that you may keep one fully executed document for you

own file.

 

	

   

  	

  Media Arts Group, Inc.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Ron D. Ford

  	

   

  
	

   

  	

   

  	

  Ron D. Ford

  
	

   

  	

   

  	

  Chief Executive Officer

  
	

  Accepted and Agreed:

  	

   

  
	

   

  	

   

  
	

  /s/ Richard F. Barnett

  	

   

  	

   

  
	

  Richard F. Barnett

  	

   

  
	

   

  	

   

  
	

  Date:

  	

  5/02/02

  	

   

  	

   

  
						

 

6

 

APPENDIX A

AGREEMENT TO ARBITRATE

 

You understand and agree that any dispute arising out of this Agreement

will be governed by Federal Arbitration Act, 9 U.S.C. §1 et seq., and resolved

by a neutral arbitrator in a binding arbitration administered by the American

Arbitration Association (“AAA”) under its National Rules for the Resolution of

Employment Disputes (“National Rules”), such arbitration to take place within

50 miles of the Company’s offices.

 

You further understand and agree that this agreement to arbitrate

applies to any claims or disputes you may have against the Company (including

its shareholders, officers, directors, employees, agents, attorneys, affiliates

or benefit plans), and it also applies to any claims or disputes that the

Company may have against you.  You

understand and agree that it applies to all statutory claims, except claims

filed under workers’ compensation and unemployment insurance statutes and

administrative charges filed under the National Labor Relations Act.  You understand and agree that it is not

intended to supersede any binding arbitration provision that may exist in an

ERISA benefit plan.  Further, you

understand and agree that preliminary injunctive relief and other provisional

remedies in aid of arbitration may be sought by either you or the Company in a

court under applicable state laws.

 

You and the Company will jointly select the neutral arbitrator in the

manner provided in the National Rules. 

The arbitrator’s award will be provided in writing, as required by the

National Rules.  Discovery will be

permitted prior to the arbitration hearing in the nature and manner as the

arbitrator considers necessary to obtain a full and fair exploration of the

issues in dispute, pursuant to the National Rules.

 

You understand and agree that if the Company or you files a claim under

this arbitration agreement regarding a violation of the Agreement, you and the

Company shall share equally in the fees and costs associated therewith,

including the AAA’s administrative fees for such disputes, and the fees and

expenses of the arbitrator.  You

expressly acknowledge and agree that this arbitration agreement was freely

negotiated and the parties agreed to the cost provisions contained herein with

the specific intent of limiting meritless claims.  Each party shall bear its own fees and costs; provided,

however, that the prevailing party shall be entitled to recover said

fees and costs, including attorneys’ fees, incurred as a result of the

arbitration.

 

You understand and agree that if the you file a claim under this

arbitration provision other than for a violation of this Agreement, you will

pay part of the AAA’s filing fee for disputes arising under

employer-promulgated plans, in the same amount that you would be required to

pay to file a lawsuit in state court. 

Under these circumstances, the Company will pay the remaining part of

the filing fee, the AAA’s administrative fees for such disputes, and the fees

and expenses of the arbitrator, and it will provide the hearing

facilities.  The Company acknowledges

that the Company’s payment of such fees shall in no way affect the neutrality

of the arbitrator, and will stipulate to same prior to the commencement of the

arbitration.

 

You understand that a

claim under this arbitration provision must be filed with the AAA within the

time limit established by the applicable statute of limitations.  You understand and agree that any claim not

filed within the applicable time limit will be waived.

 

7

 

You understand that this

arbitration provision and requirement that arbitration be used instead of a

court as the forum in which to resolve employment disputes does not limit any

of Your statutory rights or remedies, except the right to file a lawsuit in

court, or receive a remedy arising in any lawsuit in court.

 

Except as necessary in

court proceedings to enforce this arbitration provision or an award rendered

hereunder, or to obtain interim relief, neither a party nor an arbitrator may

disclose the existence, content or results of any arbitration hereunder without

the prior written consent of the Company and you.

 

 

8

 

APPENDIX

B

MEDIA

ARTS GROUP, INC.

CONSULTING AGREEMENT

 

This Consulting Agreement, including the attached Exhibits

(“Agreement”) is made and entered into as of the 1st day of April,

2002, by and between MEDIA ARTS GROUP, INC. (“MAGI”), a Delaware corporation,

and Richard F. Barnett (“Consultant”). 

MAGI desires to retain Consultant as an independent contractor to

perform consulting services for MAGI relating to QVC sales, new dealer

recruiting, digital capture of artwork and assistance to the sales department,

and Consultant is willing to perform such services, on terms set forth more

fully below.  In consideration of the

mutual promises contained herein, the parties agree as follows:

 

1.  SERVICES AND COMPENSATION

(a)  Consultant agrees to

perform for MAGI the services described in the attached EXHIBIT A (“Services”).

(b)  MAGI agrees to pay

Consultant the compensation set forth in the attached EXHIBIT B for the

performance of the Services.

 

2.  CONFIDENTIALITY 

(a)  You agree

as follows:

(i)            all Confidential

Information remains the sole and exclusive property of MAGI;

 

(ii)           except in the

course of your performing the Services for MAGI, for a period of two years

after the termination of this Agreement, you shall keep any and all

Confidential Information strictly confidential and shall not sell, trade,

publish, disclose, use, produce, permit access to or otherwise reveal

Confidential Information to anyone in any manner whatsoever including, without

limitation, by means of photocopy, reproduction or electronic media.

 

(iii)          “Confidential

Information” means any and all information that is confidential and/or

proprietary to MAGI, whether or not marked as “confidential” or “proprietary”

which relates to MAGI’s past, present or future business activities,

development, or research including, without limitation, all of the following:

sales volume, co-operative advertising information, designs, illustrations,

data, documentation, diagrams, flow charts, research, development, processes, procedures,

“know-how”, new product or new technology information, product prototypes,

product copies, manufacturing, development or marketing techniques and

materials, development or marketing timetables, strategies and development

plans, including trade names, trademarks, customer, supplier or personal names

and other information related to customers, suppliers or personnel, pricing

policies and financial information, designs, drawings, specifications,

techniques, models, source code, object code, and other information of similar

nature, whether or not reduced to writing or other tangible form, and any other

trade secrets or nonpublic business information.  Confidential Information does not include any information which

(a) was in the lawful and unrestricted possession of you prior to its

disclosure by MAGI, (b) is or becomes generally available to the public by acts

other than those of you after receiving it, (c) has been received lawfully and

in good faith by you from a third party who did not derive it from MAGI, (d) is

disclosed as required by law, a court order or other governmental authority, or

(e) is disclosed with the prior consent of MAGI.

 

(iv)          Confidential

Information includes all styles, designs, customer lists, files, reports,

correspondence, records, financial data of any kind and all other documents,

regardless of form or medium (i) developed by you during the term of this

Agreement, (ii) received by you from or on behalf of MAGI and (iii) to which

you were given access in the course of your providing the Services(c)  Consultant agrees that Consultant will not,

during the term of this Agreement, improperly use or disclose any proprietary

information or trade secrets of any former or current employer or any other

person or entity with which Consultant has an agreement or a duty to keep in

confidence information acquired by Consultant in confidence and that Consultant

will not bring onto the premises of MAGI any unpublished document or

proprietary information belonging to such an employer, person, or entity unless

consented to in writing by such employer, person, or entity.  Consultant will indemnify MAGI and hold it

harmless from and against all claims, liabilities, damages and expenses,

including reasonable attorneys’ fees and costs of suit, arising out of or in

connection with any violation or claimed violation of a third party’s rights

resulting in whole or in part from MAGI’s use of the work product of Consultant

under this Agreement.

 

(b)  Consultant recognizes that

MAGI has received and in the future will receive from third parties their

confidential or proprietary information subject to a duty on MAGI’s part to

maintain the confidentiality of such information and use it only for certain

limited purposes.  Consultant agrees

that Consultant owes MAGI and such third parties, during the term of this

Agreement and

 

9

 

thereafter, a duty to hold all such confidential or proprietary

information in the strictest confidence and not to disclose it to any person,

firm or corporation or to use it except as necessary in carrying out the

Services for MAGI consistent with MAGI’s agreement with such third party.

 

(c)  Upon the termination of

this Agreement, or upon MAGI’s earlier request, Consultant will deliver to MAGI

all of MAGI’s property relating to, and all tangible and electronic embodiments

of, Confidential Information in Consultant’s possession or control.

 

(d)  Consultant represents and

warrants that each employee of Consultant, and each independent contractor of

Consultant, if any, has executed an agreement with Consultant containing

provisions in MAGI’s favor substantially similar to this Section 2.

 

3.  OWNERSHIP

Consultant agrees that all copyrightable material, notes, records,

drawings, designs, improvements, developments, discoveries and trade secrets

(collectively, “Developments”) conceived, made or discovered by Consultant in

performing the Services, solely or in collaboration with others, during the

term of this Agreement relating to the business of MAGI shall be the sole

property of MAGI.  In addition, to the

extent allowed by law, any Developments which constitute copyrightable subject

matter shall be considered “works made for hire” as that term is defined in the

United States Copyright Act.  Consultant

further agrees to assign (or cause to be assigned) and does hereby assign fully

to MAGI all such Developments and any copyrights, patents, mask work rights, or

other intellectual property rights relating thereto.  If any Development which constitutes copyrightable subject matter

is not deemed to be a “work made for hire” under the United States Copyright

Act, then the Consultant shall, and hereby does, grant to MAGI an exclusive

perpetual, irrevocable, royalty free, transferable, license to use such

Development in any manner and in every medium, whether now known or hereafter

devised, for any purpose throughout the Universe.

 

(b)  Upon the termination of

this Agreement, or upon MAGI’s earlier request, Consultant will deliver to MAGI

all of MAGI’s property relating to, and all embodiments of, Developments in

Consultant’s possession and control.

 

(c)  Consultant agrees to assist

MAGI, or its authorized representative, at MAGI’s expense, to obtain and from

time to time enforce and defend MAGI’s rights in the Developments and any

copyrights, patents, mask work rights or other intellectual property rights

relating thereto in any and all countries, and to execute all documents

reasonably necessary for MAGI to do so.

 

(d)  MAGI agrees that if in the

course of performing the Services, Consultant incorporates into any Development

developed hereunder any invention, improvement, development, concept, discovery

or other proprietary information owned by Consultant or in which Consultant has

an interest (“Item”), MAGI is hereby granted and shall have a nonexclusive,

royalty-free, perpetual, irrevocable worldwide license to make, have made,

modify, reproduce, display, use and sell such Item as part of or in connection

with such Invention.

 

(e)  Consultant agrees that if

MAGI is unable because of Consultant’s unavailability, dissolution, mental or

physical incapacity, or for any other reason, to secure Consultant’s signature

to apply for or to pursue any application for any United States or foreign

patents or mask work or copyright registrations covering the Developments

assigned to MAGI above, then Consultant hereby irrevocably designates and

appoints MAGI and its duly authorized officers and agents as Consultant’s agent

and attorney-in-fact, to act for and in Consultant’s behalf and stead to

execute and file any such applications and to do all other lawfully permitted

acts to further the prosecution and issuance of patents, copyright and mask

work registrations thereon with the same legal force and effect as if executed

by Consultant.

 

(f)  Consultant represents and

warrants that each employee of Consultant, and each independent contractor of

Consultant, if any, has executed an agreement with Consultant containing

provisions in MAGI’s favor substantially similar to this Section 3.

 

(g)  Notwithstanding any other

provision of this Section 3, the provisions of this Section 3 shall not apply

to any Invention that qualifies in all respects under Section 2870 of the

California Labor Code, which provides: “(a) Any provision in an employment

agreement which provides that an employee shall assign, or offer to assign, any

of his or her rights in an invention to his or her employer shall not apply to

an invention that the employee developed entirely on his or her own time

without using the employer’s equipment, supplies, facilities or trade secret

information, except for those Developments that either: (1) Relate at the time

of conception or reduction to practice of the invention to the employer’s

business, or actual demonstrably anticipated research or development of the

employer. (2) Result from any work performed by the employee for the

employer.  (b)  To the extent a provision in an employment agreement purports to

require an employee to assign an invention otherwise excluded from being

required to be assigned under subdivision (a), the provision is against the

public policy of this state and is unenforceable.”  Consultant shall advise MAGI promptly and in writing of any of

his or her previous or

 

10

 

future works or Developments which he believes qualify under the

California Labor Code Section 2870. 

MAGI agrees to receive such information in confidence.

 

4.  CONFLICTING OBLIGATIONS

Consultant represents and warrants that each employee of Consultant,

and each independent contractor of Consultant, if any, has executed an

agreement with Consultant containing provisions in MAGI’s favor substantially

similar to Sections 2, 3 and 7 of this Agreement.

 

5.  TERM AND TERMINATION

(a)  This Agreement will

commence on the date first written above and will continue for one year.  Upon mutual agreement of MAGI and

Consultant, this Agreement may be renewed for up to two additional one-year

periods.

 

(b)  Upon termination all rights

and duties of the parties shall cease except: (i) that MAGI shall be obligated

to pay, within thirty (30) days of the effective date of termination, all

amounts owing to Consultant for unpaid services and related expenses, if any,

in accordance with the provisions of Section 1 (Services and Compensation)

hereof; and (ii) Section 2 (Confidentiality) shall survive termination of this

Agreement for two years after termination, and Sections  3 (Ownership), and 7 (Independent

Contractors) shall survive termination of this Agreement.

 

6.  ASSIGNMENT

Neither this Agreement nor any right hereunder or interest herein may

be assigned or transferred by Consultant without the express written consent of

MAGI.

 

7.  INDEPENDENT CONTRACTORS

(a)  Consultant enters into this

Agreement as, and shall continue to be, an independent contractor.  In no circumstance shall Consultant look to

MAGI as his or her employer, partner, agent, or principal.  Neither Consultant nor any employee of

Consultant shall be entitled to any benefits accorded to MAGI’s employees,

including worker’s compensation, disability insurance, retirement plans, or

vacation or sick pay.  Notwithstanding

the foregoing, any benefits due to Consultant under the Letter Agreement and

Release, dated May 1, 2002, between Consultant and MAGI (the “Letter

Agreement”) shall be provided by MAGI.

 

(b)  Consultant shall be

responsible for providing, at Consultant’s expense and in Consultant’s name,

disability, workers’ compensation, or other insurance required by law or as

Consultant may deem necessary or appropriate, as well as licenses and permits

usual or necessary for performing the Services.  Consultant shall pay, when and as due, any and all taxes incurred

as a result of Consultant’s compensation, including estimated taxes and payroll

taxes, and shall provide MAGI with proof of payment on demand.  Consultant hereby agrees to indemnify MAGI

for any claims, losses, costs, fees, liabilities, damages, or injuries suffered

by MAGI arising from Consultant’s breach of this provision.

 

(c)  Consultant and MAGI shall

provide to each other upon request any information reasonably necessary to

determine their obligations under this Agreement, fulfill the purposes of this

Agreement or maintain accurate records.

 

(d)  Consultant shall perform

the Services in a professional manner and shall have sole discretion and

control of the Services and the manner in which they are to be performed,

without the advice, control, or supervision of MAGI.

 

(e)  Consultant agrees to

indemnify MAGI from any and all loss or liability incurred by reason of the

alleged breach by Consultant of any confidentiality or services agreement with

anyone other than MAGI.

 

8. WAIVER

OF JURY TRIAL; EQUITABLE RELIEF AND ATTORNEYS FEES

(a) Each of Consultant and MAGI agree that neither party shall have the

right to a jury trial, and each hereby does waive any and all rights to a jury.

 

(b)  Consultant agrees that it

would be impossible or inadequate to measure and calculate MAGI’s damages from

any breach of the covenants set forth in Sections 2 or 3 herein.  Accordingly, Consultant agrees that if

Consultant breached Section 2 or 3, MAGI has, in addition to any other right or

remedy available, the right to obtain from any court of competent jurisdiction

an order restraining such breach or threatened breach and specific performance

of any such provision.  Consultant

further agrees to the extent provided by law that no bond or other security

shall be required in obtaining such equitable relief and Consultant hereby

consents to the issuance of such injunction and the ordering of such specific

performance.

 

9.  GOVERNING LAW

This Agreement shall be governed by, and construed and interpreted

under, the laws of the State of California without reference to conflict of

laws principles.

 

10.  ENTIRE AGREEMENT

Except for the Letter Agreement, this Agreement and the Exhibits hereto

form the entire agreement of the 

 

11

 

parties and supersedes any prior agreements between them with respect

to the subject matter hereof.

 

11.  WAIVER

Waiver of any term or provision of this Agreement or forbearance to

enforce any term or provision by either party shall not constitute a waiver as

to any subsequent breach or failure of the same term or provision or a waiver

of any other term or provision of this Agreement.

 

12.  MODIFICATION

No modification to this Agreement, nor any waiver of any rights, shall

be effective unless agreed to in writing by Consultant and MAGI.

 

13.  COUNTERPARTS

This Agreement may be executed in counterpart, each of which shall be

deemed an original, but both of which together shall constitute one and the

same instrument.

 

14.  INTERPRETATION

Consultant and MAGI agree that this Agreement was the product of

negotiation, with each party having the opportunity to propose modification of

terms.  Accordingly, any ambiguity in

this Agreement shall not be construed for or against any party based upon who

prepared such terms;  the parties hereby

expressly waive California Civil Code Section 1654 with respect thereto.

 

15.  SEVERABILITY

Should any provision of this Agreement be found to be void or

unenforceable, the remainder of this Agreement shall remain in full force and

effect.

 

16.  SUBJECT TO APPROVAL OF BOARD OF DIRECTORS

Consultant understands, acknowledges

and agrees that this Agreement and its effectiveness is subject to the approval

of the Board of Directors of MAGI.  If

the Board of Directors of MAGI does not approve this Agreement, this Agreement

shall not become effective and shall be of no force or effect.

 

IN WITNESS WHEREOF, the undersigned are duly authorized to execute this

Agreement on behalf of Consultant and MAGI as of the day and year written

above.

 

	

   

  	

  MEDIA ARTS GROUP INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

  Richard F. Barnett

  	

   

  
	

   

  	

  Name:

  	

   

  
	

   

  	

   

  
	

   

  	

  Title:

  	

   

  
						

 

12

 

EXHIBIT A

 

The following Services are to be performed by Consultant.  MAGI understands and acknowledges that

Consultant may provide consulting services to others and undertake other

activities unrelated to the Services under this Agreement (including, without

limitation, operation of one or more Signature Dealer galleries and the

development and operation of an originals and Plein Air program for Thomas

Kinkade).  In consideration thereof,

based on an average work week of 40 hours, on average over the term of this

Agreement the performance of the Services will constitute 55% of Consultant’s

work time, activities related to the galleries and originals and Plein Air

program will constitute 30% of Consultant’s work time and other activities will

constitute 15% of Consultant’s work time; provided that during the first 90

days of Consultant first commencing gallery operations, the relative

percentages will be 45% for the Services and 55% for the gallery.

 

1.             Upon request of

MAGI, Consultant shall serve as the spokesperson for MAGI and Thomas Kinkade in

connection with QVC programming.

 

2.             Upon request of

MAGI, Consultant shall appear with Thomas Kinkade at personal appearances

organized by MAGI (this portion of the services will involve travelling on the

part of Consultant).

 

3.             Upon request of

MAGI, Consultant shall assist in promotional and other events conducted by

MAGI.

 

4.             Consultant shall

consult with and assist MAGI in monitoring, policing and enforcing unauthorized

use of MAGI’s products, violations of dealer agreements, copyright and

trademark infringement and related matters.

 

5.             Consultant shall

consult with and advise MAGI and Thomas Kinkade on Thomas Kinkade’s release

schedule and work.

 

6.             Consultant shall

provide services as a historian of Thomas Kinkade’s art and MAGI.

 

7.             Consultant shall

assist the Vice President of Sales in the development of a plan for the retail

sale of paper products.

 

8.             As requested by

MAGI, Consultant shall generally consult with the Vice President of Sales and

other members of senior management on the business and direction of MAGI.

 

9.             Upon request of

MAGI, Consultant shall advise MAGI on the development/growth of sales to

specific galleries selected by MAGI.

 

10.           Assist MAGI in acquiring

or locating Thomas Kinkade artwork suitable for publication by MAGI.

 

13

 

11.           Consultant shall

advise MAGI on the development of a gallery featuring Thomas Kinkade’s “Plein

Air” works.

 

12.           MAGI shall provide

an office for Consultant at MAGI’s headquarters.  The office shall be comparable to the offices provided to Vice

Presidents of MAGI.  Consultant shall

perform his duties at such office at least once per week.

 

14

 

EXHIBIT B

 

(a)           MAGI shall pay to

Consultant an amount equal to $250,000 per year during the term of this

Agreement.  Such amount will be paid in

26 approximately equal payments in accordance with MAGI’s payroll practices.  MAGI shall reimburse Consultant for all

reasonable expenses incurred by Consultant in the performance of the Services

to the extent such expenses would be reimbursable by MAGI if incurred by a Vice

President of MAGI in the performance of his/her duties.  In the event this Agreement is terminated

for any reason other than the gross negligence or willful misconduct of

Consultant, MAGI shall pay to Consultant an amount equal to (x) all

compensation due to Consultant under this paragraph (a) for the remainder of

the initial one-year term (payable on the effective date of termination) and

(y) the additional payments set forth in paragraph (b) (calculated based on the

formula set forth below and the actual results for the Period, with such

additional payment to be made 60 days after the end of the Period).

 

(b)           In addition to the

payment provided in paragraph (a) above, MAGI shall be eligible to receive

additional payments based on MAGI’s 2002 and 2003 Plan as set forth below.  Such additional payments, if any, shall be

paid within 60 days after March 31, 2003. 

The period from April 1, 2002 to March 31, 2003 is referred to as the

“Period.”  The terms “Plan,” “Base

Plan,” “Budget,” and “Superior Plan,” refer to MAGI’s approved plan for the 9

months ended December 31, 2002 and the 3 months ended March 31, 2003.  If, during the Period, MAGI’s revenue and

profit is equal to Base Plan, Consultant shall be eligible to receive 33% of

the amounts set forth in (i) through (iv) below.  If, during the Period, MAGI’s revenue and profit is equal to

Budget, Consultant shall be eligible to receive 66% of the amounts set forth in

(i) through (iv) below.  If, during the

Period, MAGI’s revenue and profit is equal or greater than Superior Plan,

Consultant shall be eligible to receive 100% of the amounts set forth in (i)

through (iv) below.  If, during the

Period, MAGI’s revenue or profit is less than Base Plan, Consultant shall not

be entitled to receive any amounts set forth in (i) through (iv) below.  If, during the Period, MAGI’s revenue and

profit is greater than Base Plan but less than Superior Plan, the percentage of

the amounts set forth in (i) through (iii) below to which Consultant shall be

eligible shall be determined by interpolation based on the percentages set

forth above.  In no event shall the

total amount to be paid to Consultant under this paragraph (b) exceed $250,000.

 

(i)                                     If,

during the Period, MAGI’s sales to QVC are equal to Base Plan, MAGI shall pay

to Consultant $50,000 (i.e., 33% of $150,000). 

If, during the Period, MAGI’s sales to QVC are equal to Budget, MAGI

shall pay to Consultant $100,000 (i.e., 66% of $150,000).  If, during the Period, MAGI’s sales to QVC

are equal or greater than Superior Plan, MAGI shall pay to Consultant $150,000

(i.e., 100% of $150,000).  If, during

the Period, MAGI’s sales to QVC are less than Base Plan, MAGI shall not pay

Consultant any amounts under this clause (i). 

If, during the Period, MAGI’s sales to QVC are greater than Base Plan

but less than Superior Plan, the dollar amount to which Consultant shall be

entitled under this clause (i) shall be determined by interpolation based on

the amounts set forth above.  All

amounts determined by the formula in this clause (i) shall be further adjusted

by

 

15

 

the formula set forth in the first paragraph of this

paragraph (b).  In no event shall the

total amount to be paid to Consultant under this clause (i) exceed $150,000.

 

(ii)                                  If,

during the Period, the number of new Signature Dealers opened equals Base Plan,

MAGI shall pay to Consultant $16,667 (i.e., 33% of $50,000).  If, during the Period, the number of new

Signature Dealers opened equals Budget, MAGI shall pay to Consultant $33,333

(i.e., 66% of $50,000).  If, during the

Period, the number of new Signature Dealers opened equals or exceeds Superior

Plan, MAGI shall pay to Consultant $50,000 (i.e., 100% of $50,000).  If, during the Period, the number of new

Signature Dealers opened is less than Base Plan, MAGI shall not pay Consultant

any amounts under this clause (ii).  If,

during the Period, the number of new Signature Dealers opened is greater than

Base Plan but less than Superior Plan, the dollar amount to which Consultant

shall be entitled under this clause (ii) shall be determined by interpolation

based on the amounts set forth above. 

All amounts determined by the formula in this clause (ii) shall be

further adjusted by the formula set forth in the first paragraph of this

paragraph (b).  In no event shall the

total amount to be paid to Consultant under this clause (ii) exceed

$50,000.  A “new” Signature Dealer is a

dealer that signs a new dealer agreement for a new location.  A new dealer does not include (i) a

transfer, assignment or sale of a dealership, gallery, location or territory

(or other change of ownership), (ii) a renewal of a dealer agreement,

dealership, gallery, location or territory, (iii) an upgrade or downgrade of a

dealer agreement, dealership, gallery, location or territory, (iv) the change

in location of a dealership, (v) the closing or termination of a dealer

agreement, dealership, gallery, location or territory, followed by the opening

of a similar dealership, gallery, location or territory, or (vi) the opening or

creation of a gallery or dealership which, in general, does not result in a net

increase in the number of dealerships.

 

(iii)                               If,

during the Period, revenue and profit from sales to the Signature Galleries

selected by MAGI pursuant to Paragraph 9 of Exhibit A of this Agreement (the

“Selected Galleries”) is equal to Base Plan, MAGI shall pay to Consultant

$25,000 (i.e., 33% of $75,000).  If,

during the Period, revenue and profit from sales to the Selected Galleries is

equal to Budget, MAGI shall pay to Consultant $50,000 (i.e., 66% of $75,000).  If, during the Period, revenue and profit

from sales to the Selected Galleries is equal to or greater than Superior Plan,

MAGI shall pay to Consultant $75,000 (i.e., 100% of $75,000).  If, during the Period, revenue or profit

from sales to the Selected Galleries is less than Base Plan, MAGI shall not pay

Consultant any amounts under this clause (iii).  If, during the Period, revenue and profit from sales to the

Selected Galleries is greater than Base Plan but less than Superior Plan, the

dollar amount to which Consultant shall be entitled under this clause (iii)

shall be determined by interpolation based on the amounts set forth above.  All amounts determined by the formula in

this clause (iii) shall be further adjusted by the formula set forth in the

first paragraph of this paragraph (b).  In

no event shall the total amount to be paid to Consultant under this clause

(iii) exceed $75,000.

 

16

 

(iv)                              As

determined in the sole and absolute of MAGI’s CEO, Consultant shall be eligible

to receive an amount up to $25,000 (in addition to the amounts determined in

clauses (i) through (iii) above).  In

making such determination, MAGI’s CEO may consider the overall performance of

Consultant, the time and effort expended by Consultant in connection with the

Services, MAGI’s overall performance during the Period, and such other factors

as MAGI’s CEO, in his sole and absolute discretion, may deem appropriate to

consider.  The amount determined by

MAGI’s CEO to be payable to Consultant under this clause (iv) shall be further

adjusted by the formula set forth in the first paragraph of this paragraph

(b).  In no event shall the total amount

to be paid to Consultant under this clause (iv) be greater than an amount that

when added to the total amounts due to Consultant under clauses (i) through

(iii) above (prior to any adjustments pursuant to the first paragraph of this

paragraph (b)) exceeds $250,000.

 

EXAMPLE:

 

Assume (A) MAGI’s revenue and profit for the Period

equals Budget; (B) MAGI’s sales to QVC for the Period exceed Superior Plan; (C)

the number of new Signature Dealers opened during the Period is less than Base

Plan; (D) MAGI’s revenue and profit from sales to the Selected Galleries for

the Period equals Base Plan; and (E) MAGI’s CEO determines that Consultant

shall be paid an amount equal to $15,000 pursuant to clause (iv) above.

 

Consultant would be entitled to receive 66% x

[$150,000 + $0 + $25,000 + $15,000] = $126,666

 

The

additional payments set forth in this paragraph (b) are applicable only for the

first year of this Agreement.  If this

Agreement is extended past the first year, Consultant would not be eligible for

any of the payments or amounts set forth in this paragraph (b), and any

additional payments or eligibility criteria must be mutually agreed between

Consultant and MAGI.

 

 

17

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