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Employment Agreement - Media Arts Group Inc. and Richard F. Barnett

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                              EMPLOYMENT AGREEMENT

        This Employment Agreement (this "Agreement") is made as of March 31,
1996 and is entered into by and between MEDIA ARTS GROUP, INC., a Delaware
corporation, located at Ten Almaden Blvd., Ninth Floor, San Jose, California
95113 (the "Employer"), and RICHARD F. BARNETT, 14 Middle Canyon Way, Carmel
Valley, CA 93924 (the "Executive").

        In consideration of the mutual promises made herein, the parties,
intending to be legally bound, agree as follows:

                           ARTICLE 1. EMPLOYMENT; TERM

SECTION 1.1. EMPLOYMENT. The Employer hereby employs Executive and Executive
hereby accepts employment with Employer, upon the terms and conditions set forth
in this Agreement.

SECTION 1.2. TERM. Subject to the provisions of Article 8, the initial term of
the Executive's employment under this Agreement will be for a period of three
(3) years (the "Initial Term"), beginning on April 1, 1996 and ending on March
31, 1999.

SECTION 1.3. OPTION TO RENEW. Executive is hereby given four (4) options of
three (3) years each to extend the Initial Term of this Agreement on all of the
provisions contained in this Agreement, except for Salary, following the
expiration of the Initial Term (hereinafter individually referred to as a
"Renewal Term"). Executive shall be deemed to have exercised an option for a
Renewal Term unless Executive shall have given written notice of his election
not to renew on or before the end of the Initial Term or any then existing
Renewal Period of this Agreement.

        All rights of Executive to a Renewal Period shall be void and of no
effect, the Renewal Period shall not commence and the Renewal Period and all
future Renewal Periods shall terminate and be of no effect if, during the three
(3) year period immediately preceding the commencement of the Renewal Period,
Executive has not developed the target number of independently owned art
galleries dedicated to selling only Thomas Kinkade product (the "National
Program") as set forth below and achieved through such galleries aggregate
annual wholesale sales equal to or greater than an amount equal to the total
number of galleries multiplied by $150,000; provided, however, that if
Executive's development of the National Program is hampered by unreasonable
budget and/or operations constraints of Employer, then the target number of
galleries and the aggregate annual wholesale sales shall be equitably adjusted.
The target number of new galleries developed by Executive annually shall be ten
(10) galleries in the first year of the term of this Agreement, fifteen (15)
galleries in the second year, twenty (20) galleries in the third year, and
twenty five (25) galleries in the fourth and each succeeding year of the term of
this Agreement.

If the Executive continues in the employment of Employer after the expiration of
the Initial Term or any applicable Renewal Period, then the Executive shall be
considered an "at will" employee for all purposes.


SECTION 2.1. TITLE AND DESCRIPTION OF DUTIES. Executive shall serve as Vice
President of Retail Operations, Thomas Kinkade Stores, Inc. In that capacity,
Executive shall do and perform all services, acts, or things necessary or
advisable to fulfill the duties of that position, including management and
development of Employer-owned galleries, development of the National Program,
and other duties as assigned. However, Executive shall at all times be subject
to the direction of the President, and to the policies established by the Board
of Directors, of Employer.

<PAGE>   2


        (a) Executive shall devote his entire business time, ability, and
attention to the business of Employer during each employment term of this
Agreement, except as provided below.

        (b) During the term of this Agreement, Executive shall not, whether
directly or indirectly, render any services of a commercial, or professional
nature to any other person or organization, whether for compensation or
otherwise, without the prior written consent of Employer's President.

        (c) This Agreement shall not be interpreted to prohibit Executive from
making passive personal investments or conducting private business affairs if
those activities do not materially interfere with the services required under
this Agreement.

SECTION 2.3. COMPETITIVE ACTIVITIES. During the term of this Agreement,
Executive shall not directly engage in any business activity in the United
Stated now engaged in by Employer so long as Employer shall engage in that
activity. Notwithstanding anything to the contrary set forth in this Agreement,
Executive shall retain and operate as a proprietorship (i) the art gallery
business located in Catalina, California, which is engaged in the selling of
Kinkade artwork, and (ii) the business operated under the fictitious business
name "Fine Art Framing" located in Monterey, California, which is primarily
engaged in the business of the framing of artwork, but which is also engaged in
the incidental sales of Kinkade artwork (which sales of Kinkade artwork shall
not exceed 20% of the gross sales from the business of Fine Art Framing in any
calendar year). Executive shall endeavor in good faith to divest himself of the
Catalina gallery as soon as reasonably practicable; provided, however, that
Executive shall not be required in any event to sell or otherwise transfer the
Catalina gallery for less than its then-current fair market value.

SECTION 2.4. UNIQUENESS OF EXECUTIVE'S SERVICES. Executive hereby represents and
agrees that the services to be performed under the terms of this Agreement are
of a special, unique, unusual, extraordinary, and intellectual character that
gives them a peculiar value, the loss of which cannot be reasonably or
adequately compensated by damages in an action at law. Executive therefore
expressly agrees that Employer, in addition to any other rights or remedies
which Employer may possess, shall be entitled to injunctive and other equitable
relief to prevent or remedy a breach of this contract by Executive.

covered by any applicable casualty and/or liability insurance carried by
Employer or required to be carried by Employer hereunder, Executive shall
indemnify and hold Employer harmless from all liability for loss, damage, or
injury to persons or property resulting from the culpable negligence or serious
and willful misconduct of Executive. Except as provided above, Employer shall
indemnify, defend and hold Executive harmless from and against all liability
with respect to the performance of his duties hereunder to the maximum extent
permitted by law. Employer shall maintain directors and officers liability
insurance in such amounts as are reasonably customary and which policies of
insurance shall name Executive as an insured thereunder (by definition or rider
to the policy).


<PAGE>   3

        (a) The parties acknowledge and agree that during the term of this
Agreement and in the course of the discharge of his duties hereunder, Executive
shall have access to and become acquainted with information concerning the
operation of Employer, including without limitation, financial, personnel,
sales, planning, and other information that is owned by Employer and regularly
used in the operation of Employer's business and that this information
constitutes Employer's trade secrets; provided, however, that such information
shall only constitute trade secrets of the Employer to the extent such
information is a trade secret within applicable California trade secret law.

        (b) Executive agrees that he shall not disclose any such trade secrets,
directly or indirectly, to any other person or use them in any way, either
during any term of this agreement or at any other time thereafter, except as is
required in the course of his employment with Employer.

        (c) Executive further agrees that all files, records, documents,
equipment, and similar items relating to Employer's business, whether prepared
by Executive or others, are and shall remain exclusively the property of
Employer and that they shall be removed from the premises of Employer only with
the express prior consent of Employer's President.

SECTION 2.7. PHYSICAL EXAMINATIONS. Executive agrees to submit, on a yearly
basis, at any time requested by Employer, to a physical examination by a
physician selected by Employer.

                       ARTICLE 3. OBLIGATIONS OF EMPLOYER

SECTION 3.1. GENERAL DESCRIPTION. Employer shall provide Executive with the
compensation, incentives, benefits, and business expense reimbursement specified
elsewhere in this agreement.

SECTION 3.2. OFFICE AND STAFF. Employer shall provide Executive with a private
office, stenographic help, office equipment and supplies, and other facilities
and services, suitable to Executive's position and adequate for the performance
of his duties.


SECTION 4.1. SALARY. As compensation for the services to be rendered by
Executive hereunder, Employer shall pay Executive an annual salary at the rate
per month of $19,000, payable in equal semi-monthly installments of $9,500 on
the fifteenth (15th) and final days of each month during the term of this
Agreement, prorated for any partial month during the term. The annual salary
payable by Employer to Executive under the terms of this Agreement for any
Renewal Period shall be at the rate per month of $11,000, payable in equal
semi-monthly installments of $5,500. Executive shall receive such annual
increases in salary as may be determined by Employer's president in his sole

SECTION 4.2. TAX WITHHOLDING. Employer shall have the right to deduct or
withhold from the compensation due to Executive hereunder any and all sums
required for federal income and Social Security taxes and all state or local
taxes now applicable or that may be enacted and become applicable in the future.

<PAGE>   4


SECTION 5.1. COMMISSION PLAN. As additional compensation (the "Incentive
Compensation") for the services to be rendered by the Executive pursuant to this
Agreement, the Employer will pay the Executive with respect to each year, or
portion thereof, during the term of this Agreement, certain amounts as follows.

        (a) Thomas Kinkade Galleries. Employer will pay Executive (1) five
percent (5%) of the amount by which the net income from all art galleries
featuring Thomas Kinkade artwork owned now and/or in the future by Employer or
any subsidiary or affiliate of Employer including, but not limited to Thomas
Kinkade Stores, Inc. ("Thomas Kinkade Galleries") in any fiscal year during the
term of this Agreement exceeds one hundred six percent (106%) of the immediately
prior fiscal years' net income, and (2) an additional five percent (5%) of the
amount by which the net income from the Thomas Kinkade Galleries in any fiscal
year of this Agreement exceeds one hundred twenty five percent (125%) of the
immediately prior fiscal year's net income (such that for all amounts by which
the net income exceeds 125% of the prior years' net income, Executive will
receive a total of ten percent (10%) of such excess). For the purposes of this
provision, the net income of the Thomas Kinkade Galleries is defined as net
income from all products sold or supplied by the Thomas Kinkade Galleries in a
fiscal year, calculated after expenses and taxes.

        (b) National Program. Employer will pay Executive (1) for the fiscal
year ending March 31, 1997, three percent (3%) of the total wholesale sales of
Employer to independently-owned galleries participating in the National Program
(collectively, "National Program Galleries" and individually, a "National
Program Gallery") in that fiscal year, (2) for the fiscal year ending March 31,
1998 and each year during the term of this Agreement thereafter, three percent
(3%) of the total wholesale sales of Employer to National Program Galleries;
provided that only the wholesale sales to National Program Galleries that have
purchased at least $150,000 of Kinkade product from Employer in that fiscal year
("Benchmark") shall be included, which Benchmark shall increase by six percent
(6%) per annum for each fiscal year after the fiscal year ending March 31, 1998,
and (3) for each year of the term of this Agreement, an additional two percent
(2%) of the amount by which the total wholesale sales of Employer to each
National Program Gallery in any year exceeds one hundred eight percent (108%) of
the immediately prior fiscal year's wholesale sales to such National Program
Gallery (such that for all amounts by which the wholesale sales to a National
Program Gallery exceed 108% of the prior year's wholesale sales, Executive will
receive a total of five percent (5%) of such excess).

        (c) The amounts due pursuant to subparagraph (a) ("TKS Commissions") and
subparagraph (b) ("National Program Commissions") shall be computed annually
within thirty (30) days of the end of Employer's fiscal year. For the purposes
of this section 5.1, the net income of Thomas Kinkade Galleries and the
wholesale sales of National Program Galleries shall be determined by the firm of
certified public accountants retained by Employer in accordance with generally
accepted accounting principles consistently applied. After deducting draws
against TKS Commissions (as provided in subparagraph (d), below), the remaining
amount will be paid to Executive in four (4) equal installments payable on the
first (1st) day of each calendar quarter in the fiscal year following the year
in which the commissions were earned.

        (d) In addition to payment for commissions earned in the prior year,
Executive shall be paid a draw against future commissions each quarter as

                1.      During the fiscal year ending March 31, 1997, each
                        quarter's draw shall be $10,000 per quarter.

                2.      During the fiscal year ending March 31, 1998 and
                        thereafter, each quarter's draw shall equal ten percent
                        (10%) of previous year's total TKS Commissions actually
                        earned plus twenty percent (20%) of the previous year's
                        total National Program Commissions actually earned. For
                        example, if $200,000 in TKS Commissions and $200,000 in

<PAGE>   5
                        National Program Commissions are earned in 1997, the
                        draw for each quarter in 1998 would be $20,000 (10% of
                        TKS Commissions) plus $40,000 (20% of National Program

SECTION 5.2. CASH COMPENSATION LIMITS. Should total compensation per year be
earned in excess of $500,000.00 (including base, bonus and benefits), Employer
shall have the option of paying Executive all such excess amounts either (1) in
cash or (2) in a combination of 50% cash and 50% stock (shares of stock to be
computed with the prevailing market price on the date such excess amounts are
due, as listed in the Wall Street Journal under Media Arts Group, Inc. NASDAQ
symbol: ARTS).

SECTION 5.3. PHANTOM STOCK RIGHTS. As additional compensation, Employer agrees
to pay to Executive 2.5% of the total value of Thomas Kinkade Stores, Inc.
("TKS") upon the sale or transfer of (1) all or any portion of the TKS capital
stock (irrespective of the form of the transaction, such as through a public or
private offering, an issuer or non-issuer transaction, a merger, reorganization
or otherwise) or (2) all or substantially all of the assets of TKS, or of any
distinct division or other component of the business of TKS. The additional
compensation payable to Executive hereunder shall be paid in cash within thirty
(30) days after the receipt by Employer or TKS, as the case may be, of the
consideration from any such transaction.

                          ARTICLE 6. EXECUTIVE BENEFITS

SECTION 6.1. ANNUAL FLEXIBLE TIME OFF. Executive shall be entitled to twenty
(20) days of Flexible Time Off (FTO) each year with full pay. If Executive is
unable for any reason to take the total amount of authorized FTO time during any
year, the FTO will be accrued per Employer's policies as outlined in the
Executive Handbook. Executive will also be entitled to the paid holidays and
other paid leave set forth in the Employer's policies.


        (a) During the term of this Agreement, Executive shall be entitled to
the full use of a leased automobile of his own choice at a price not to exceed
the greater of (1) $500.00 per month, or (2) a value comparable to that allowed
to those employees in similar positions. Executive may choose to take the cash
value instead, and apply to an employee-owned purchase.

        (b) Upon every termination of lease, upon return to Employer of
Employer's automobile then being used by Executive, Executive shall be entitled
to the full use of a new automobile in the same price range.

        (c) Executive agrees to pay all operating expenses of any nature
whatsoever, including gas and maintenance, with regard to the aforementioned
automobile. Employer shall procure and maintain in force an automobile liability
insurance policy on any leased automobile.

SECTION 6.3. OTHER BENEFITS. Executive will be permitted to participate in such
pension, profit sharing, bonus, life insurance, hospitalization, major medical,
and other employee benefit plans of Employer in effect from time to time, to the
extent Executive is eligible under the terms of those plans. Specifically,
without limiting the generality of the foregoing, Employer agrees to include
Executive under Employer's group medical insurance coverage and Employer's group
dental insurance coverage, or in the alternative, may reimburse Executive for
costs of his own medical and dental insurance.

                          ARTICLE 7. BUSINESS EXPENSES

<PAGE>   6

SECTION 7.1. BUSINESS EXPENSES. Employer shall promptly reimburse Executive for
all reasonable business expenses incurred by Executive in promoting the business
of Employer, including expenditures for entertainment, gifts, and travel.
Executive shall file expense reports with respect to such expenses in accordance
with Employer's policies.



        (a) During the term of this Agreement, this Agreement shall be
terminated only with good cause. If this Agreement is not renewed pursuant to
Section 1.3 (Option to Renew), any continued employment thereafter shall be
considered employment "at will."

        (b) Employer reserves the right to terminate this Agreement if Executive
(1) willfully breaches or habitually neglects the duties which he is required to
perform under the terms of this Agreement, or (2) is convicted of, is indicted
for, or enters a guilty plea or plea of no contest with respect to, a felony
that is directly related to his duties and obligations to Employer and that
would prevent the effective performance of his duties. Termination based on such
acts will be considered "for cause."

        (c) Employer may at its option terminate this Agreement for the reasons
stated in this section by giving written notice of termination to Executive
without prejudice to any other remedy to which Employer may be entitled either
at law, in equity, or under this Agreement. No notice period shall be required
should a termination occur as a result of activities identified in section
8.1(b)(2). A 60-day notice period, during which time Executive shall have an
opportunity to cure any breach, shall be required should a termination occur as
a result of activities identified in section 8.1(b)(1). Employer shall have the
option, should any breach not be cured within the 60-day cure period, to
discharge Executive immediately upon such failure to cure.

        (d) The notice of termination required by this section shall specify the
ground(s) for the termination.

        (e) Termination under this section shall be considered "for cause" for
the purposes of this Agreement.


        (a) This Agreement shall be terminated upon the death of Executive.

        (b) Employer reserves the right to terminate this Agreement not less
than six (6) months after Executive suffers any physical or mental disability
that prevents the performance of his duties under this Agreement for such 180
consecutive day period. Such a termination shall be effected by giving 30 days'
written notice of termination to Executive.

        (c) Termination under this section shall not be considered "for cause"
for the purposes of this Agreement.


        (a) This Agreement shall not be terminated by any voluntary or
involuntary dissolution of Employer resulting from either a merger or
consolidation in which Employer is not the consolidated or surviving
corporation, or a transfer of all or substantially all of the assets of

        (b) In the event of any such merger or consolidation or transfer of
assets, Employer's rights, benefits, and obligations hereunder may be assigned
to the surviving or resulting corporation or the transferee of Employer's

<PAGE>   7

SECTION 8.4. TERMINATION BY EXECUTIVE. Executive may terminate this Agreement by
giving Employer at least two (2) months notice in advance or tendering to
Employer a total amount aggregating two months of his annual salary. If this
Agreement is terminated by Executive, Executive shall be entitled to no further
compensation as of the date of termination.

SECTION 8.5. TERMINATION PAY. Effective upon the termination of this Agreement,
Employer shall pay Executive (or, in the event of his death, his designated
beneficiary) such compensation as is provided in this Section 8.5.

        (a) Termination by Executive or by Employer For Cause. If Executive
terminates this Agreement or if Employer terminates this Agreement for cause,
then Employer will pay Executive (1) the Executive's salary prorated through the
date of termination, and (2) that portion of the Executive's Incentive
Compensation, if any, through the date of termination calculated by comparing
the financial data (net income of Thomas Kinkade Galleries or wholesale sales to
National Program Galleries, as appropriate) for that portion of the fiscal year
elapsed as of the date of termination to the same period of time in the
immediately preceding fiscal year.

        (b) Termination by Employer Without Cause. If Employer terminates this
Agreement without cause during the first year of the Initial Term, then Employer
will pay Executive One Million Dollars ($1,000,000). If Employer terminates this
Agreement without cause at any time after the first year of the Initial Term,
then Employer will pay Executive an amount equal to three times the annual
compensation (calculated based upon an annual salary of $132,000 plus Incentive
Compensation pursuant to section 5.1 of this Agreement) earned by Executive in
the prior twelve (12) months preceding the date of termination. Employer shall
pay Executive all amounts due under this paragraph (b) upon Executive's

        (c) In addition to any other amounts payable to Executive as provided in
this Section 8.5, if this Agreement is terminated by either Employer or
Executive during the Initial Term, then Employer shall pay Executive, upon
termination, an amount equal to the number of months remaining in the Initial
Term as of the date of termination multiplied by Eight Thousand Dollars

                                 ARTICLE 9. GENERAL PROVISIONS

SECTION 9.1. NOTICES. Any notices to be given by either party to the other shall
be in writing and may be transmitted either by personal delivery or by mail,
registered or certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses appearing in the
introductory paragraph of this Agreement, but each party may change that address
by written notice in accordance with this section. Notices delivered personally
shall be deemed communicated as of the date of actual receipt; mailed notices
shall be deemed communicated as of two days after the date of mailing.

SECTION 9.2. ATTORNEYS' FEES AND COSTS. If any legal action is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees and costs, in addition to any other
relief to which that party may be entitled.

<PAGE>   8

SECTION 9.3. ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Executive by Employer, and contains all of the covenants
and agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this Agreement acknowledges that no representations,
inducements, promises, or agreements, orally or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement, or promise not contained in this
Agreement shall be valid or binding.

SECTION 9.4. MODIFICATIONS. Any modification of this Agreement will be effective
only if it is in writing signed by the party to be charged.

SECTION 9.5. EFFECT OF WAIVER. The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this Agreement by
the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.

SECTION 9.6. PARTIAL INVALIDITY. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.

SECTION 9.7. LAW GOVERNING AGREEMENT. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

SECTION 9.8. EFFECTIVE DATE OF AGREEMENT. This Agreement shall be deemed
effective as of March 31, 1996.

Media Arts Group, Inc.:                           Executive:

/s/ Kenneth Raasch                                /s/ Richard F. Barnett
--------------------------------                  ------------------------------
Kenneth Raasch                                    Richard F. Barnett
CEO, Media Arts Group, Inc.