EXHIBIT 10.1

MEDIA ARTS GROUP, INC.
EMPLOYEES STOCK OPTION PLAN
Amended and Restated as of June 18, 1997

MEDIA ARTS GROUP, INC. hereby adopts a stock option plan for the benefit of certain persons and subject to the terms and provisions set forth below.

1. DEFINITIONS. The following terms shall have the meanings set forth below whenever used in this instrument:

(a) The word "Board" shall mean the Board of Directors of the Company.

(b) The word "Code" shall mean the United States Internal Revenue Code of 1986, as amended, or successor provisions of future United States revenue laws (Title 26 of the United States Code).

(c) The word "Committee" shall mean the Compensation Committee of the Board, which committee shall satisfy the requirements of (i) Rule 16b-3((c)(2)(i) under the Exchange Act, as such Rule may be amended in the future and (ii) Section 162(m) of the Code, as such Section may be amended in the future.

(d) The words "Common Stock" shall mean the common stock, $.01 par value, of the Company.

(e) The word "Company" shall mean Media Arts Group, Inc., a Delaware corporation, and any successor thereto which shall maintain this Plan.

(f) The word "Disability" shall mean the Optionee's inability to engage in substantial gainful activity for the Company by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Committee pursuant to written certificate of such Disability from a physician acceptable to the Committee.

(g) The word "Employee" shall mean any person who is determined by the Committee to be a high-level executive officer or other valuable managerial or technical employee of either the Company or any Subsidiary.

(h) The words "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

(i) The words "Incentive Stock Option" shall mean any option which qualifies as an Incentive Stock Option under terms of Section 422 of the Code.

(j) The word "Officer" shall mean an officer of the Company or any Subsidiary, as defined in Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the future.

(k) The word "Optionee" shall mean any Employee to whom a stock option has been granted pursuant to this Plan.

(l) The word "Plan" shall mean this instrument, the Media Arts Group, Inc. Employees Stock Option Plan, as it is originally adopted and as it may be amended hereafter.

(m) The word "Subsidiary" shall mean any corporation at least 50% of the common stock of which is owned directly or indirectly by the Company.

(n) The words "Substantial Shareholder" shall mean any Employee who owns directly and through attribution more than 10% of the total combined voting power of all classes of stock of either the Company or any Subsidiary. Ownership shall be determined in accordance with Section 424(d) of the Code and lawful applicable regulations.

2. PURPOSE OF THE PLAN. The purpose of the Plan is to provide Employees of the Company and its Subsidiaries with greater incentive to serve and promote the interests of the Company and its shareholders. The premise of the Plan is that, if such persons acquire a proprietary interest in the business of the Company or increase such proprietary interest as they may already hold, then the incentive of such persons to work toward the Company's continued success will be commensurably increased. Accordingly, the Company will, from time to time during the effective period of the Plan, grant to such Employees as may be selected to participate in the Plan options to purchase Common Shares on the terms and subject to the conditions set forth in the Plan. Options may be either Incentive Stock Options or non-qualified stock options.

3. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective on February 1, 1994, subject to approval by holders of a majority of the outstanding shares of voting capital stock of the Company. In the event that the foregoing condition is not satisfied within twelve (12) months after the date the Plan is adopted, the Plan and any options granted hereunder shall be null and void. If, however, the Plan is so approved, subject to the provisions of Section 8, no further shareholder approval shall be required with respect to the granting of any options pursuant to the Plan.

4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Compensation Committee of the Board. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in

writing by all of the members, shall be acts of the Committee. Subject to the terms and conditions of the Plan, the Committee shall have full and final authority in its absolute discretion:

(a) To select the Employees to whom options will be granted;

(b) To determine the number of shares of Common Stock subject to any option;

(c) To determine the time or times when options will be granted;

(d) To determine the option price of shares of Common Stock subject to an option;

(e) To determine the time or times when each option may be exercised and the duration of the exercise period;

(f) To determine at the time of grant of an option whether and to what extent such option is an Incentive Stock Option under
Section 422 of the Code and regulations thereunder as the same or any successor statute or regulations may at the time be in effect;

(g) To determine whether stock appreciation rights shall be made part of any option grant pursuant to Section 9 hereof (such determination to be made after the Committee has consulted with the Chief Financial Officer of the Company regarding the impact of such a grant upon the earnings of the Company), the method of valuing the stock appreciation rights and whether the stock appreciation rights may be exercised in lieu of or in addition to the related option;

(h) To prescribe the form of the option agreements governing the options which are granted under the Plan and to set the provisions of such option agreements as the Committee may deem necessary or desirable provided such provisions are not contrary to the terms and conditions of either the Plan or, where the option is an Incentive Stock Option, Section 422 of the Code and regulations thereunder as the same or any successor statute or regulations may at the time be in effect;

(i) To adopt, amend and rescind such rules and regulations as, in the Committee's opinion, may be advisable in the administration of the Plan; and

(j) To construe and interpret the Plan, the rules and regulations and the instruments evidencing options granted under the Plan and to make all other determinations deemed necessary or advisable for the administration of the Plan.

Any decision made or action taken by the Committee in connection with the administration, interpretation, and implementation of the Plan and of its rules and regulations, shall, to the extent permitted by law be conclusive and binding upon all Optionees under the Plan and upon any person claiming under or through such an Optionee. Neither the Committee nor any of its members shall be liable for any act taken by the Committee pursuant to the Plan. No member of the Committee shall be liable for the act of any other member.

5. PERSONS ELIGIBLE FOR OPTIONS. Subject to the restrictions herein contained, options may be granted from time to time in the discretion of the Committee only to such Employees, as designated by the Committee, whose initiative and efforts contribute or may be expected to contribute to the continued growth and future success of the Company and/or its Subsidiaries. Notwithstanding the preceding sentence, an Employee who renounces in writing any right he may have to receive stock options under the Plan shall not be eligible to receive any stock options under the Plan. No option shall be granted to any Employee during any period of time when he is on leave of absence. The Committee may grant more than one option, with or without stock appreciation rights, to the same Employee.

6. SHARES SUBJECT TO THE PLAN. Subject to the provisions of Section 9 concerning payment for stock appreciation rights in shares of Common Stock and subject to the provisions of the next succeeding paragraph of this Section 6, the aggregate number of shares of Common Stock for which options may be granted under the Plan shall be 1,124,863 shares of Common Stock. Either treasury or authorized and unissued shares of Common Stock, or both, in such amounts, within the maximum limits of the Plan, as the Committee shall from time to time determine, may be so issued. All shares of Common Stock which are the subject of any lapsed, expired or terminated options may be made available for reoffering under the Plan to any Employee. If an option granted under this Plan is exercised pursuant to the terms and conditions determined by the Committee under Subsection 7(d), and a stock appreciation right is not granted in conjunction with the option pursuant to Section 9, any shares of Common Stock which are the subject thereof shall not thereafter be available for reoffering under the Plan to any Employee. If a stock appreciation right is granted in conjunction with an option pursuant to Section 9, and if the option agreement with the Optionee provides that exercise of the stock appreciation right shall be in lieu of exercise of the options, and the stock appreciation right is thereafter exercised in whole or in part, then the option or the portion thereof with respect to which the stock appreciation right was exercised shall be deemed to have been exercised and the shares of Common Stock which otherwise would have been issued upon exercise of such option, to the extent not used in payment for the stock appreciation rights, may be made available for reoffering under the Plan to any Employee.

In the event that subsequent to the date of adoption of the Plan by the Board, the outstanding shares of Common Stock are, as a result of a stock split, stock dividend, combination or exchange of shares, exchange for other securities, reclassification, reorganization, redesignation, merger, consolidation, recapitalization, spin-off, split-off, split-up or other such change (including, without limitation, any transaction described in Section 424(a) of the Code) or a special dividend or other distribution to the Company's shareholders, increased or decreased or changed into or exchanged for a different number or kind of shares of stock or other securities of the Company, then (i) there shall automatically be substituted for each share of Common Stock subject to an unexercised

option granted under the Plan and each share of Common Stock available for additional grants of options under the Plan the number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be exchanged, (ii) the option price per share of Common Stock or unit of securities shall be increased or decreased proportionately so that the aggregate purchase price for the securities subject to the option shall remain the same as immediately prior to such event, and (iii) the Committee shall make such other adjustments to the securities subject to options, the provisions of the Plan, and option agreements as may be appropriate, equitable, in order to prevent dilution or enlargement of option rights and in compliance with the provisions of Section 424(a) of the Code to the extent applicable and any such adjustment shall be final, binding and conclusive as to each Optionee. Any such adjustment may, in the discretion of the Committee, provide for the elimination of fractional shares.

7. OPTION PROVISIONS.

(a) OPTION PRICE. The option price per share of Common Stock which is the subject of an option under the Plan shall be determined by the Committee at the time of grant but shall not be less than one hundred percent (100%) of the fair market value of a share of Common Stock on the date the option is granted; provided, however, that if an Employee to whom an Incentive Stock Option is granted is at the time of the grant a Substantial Shareholder, the option price per share of Common Stock shall be determined by the Committee but shall never be less than one hundred ten percent (110%) of the fair market value of a share of Common Stock on the date the option is granted. Such fair market value shall be determined in accordance with procedures to be established by the Committee. The date on which the Committee approves the granting of an option shall be deemed for all purposes hereunder the date on which the option is granted.

(b) PERIOD OF OPTION. The Committee shall determine when each option is to expire but no option shall be exercisable after ten (10) years have elapsed from the date upon which the option is granted; provided, however, that no Incentive Stock Option granted to a person who is a Substantial Shareholder at the time of the grant of such option shall be exercisable after five (5) years have elapsed from the date upon which the option is granted. Each option shall be subject to earlier termination as provided in Subsection 7(e) hereunder.

(c) LIMITATION ON EXERCISE AND TRANSFER OF OPTION. Except as the Committee may otherwise provide with respect to Options granted to Employees who are not Officers, no Option (or any related stock appreciation right described in Section 9) may be exercised in whole or in part during the six months after the Option is granted. Except as otherwise provided in the event of an Optionee's death, only the Optionee may exercise an option, provided that a guardian or other legal representative who has been duly appointed for such Optionee may exercise an option on behalf of the Optionee. No option granted hereunder shall be transferable other than (i) by the Last Will and Testament of the Optionee or, if the Optionee dies intestate, by the applicable laws of descent and distribution, or (ii) to the extent approved by the Committee, pursuant to a qualified domestic relations order as defined by the Code or the rules thereunder. No option granted hereunder may be pledged or hypothecated, nor shall any such option be subject to execution, attachment or similar process.

(d) CONDITIONS GOVERNING EXERCISE OF OPTION. The Committee may, in its absolute discretion, either require that, prior to the exercise of any option granted hereunder, the Optionee shall have been an employee for a specified period of time after the date such option was granted, or make any option granted hereunder immediately exercisable. Each option shall be subject to such additional restrictions or conditions with respect to the right to exercise and the time and method of exercise as shall be prescribed by the Committee. Upon satisfaction of any such conditions, the option may be exercised in whole or in part at any time during the option period, but this right of exercise shall be limited to whole shares, unless the Committee shall otherwise provide. Options shall be exercised by the Optionee giving written notice to the Secretary of the Company at its principal office, by certified mail, return receipt requested, of the Optionee's exercise of the option and the number of shares with respect to which the option is being exercised, accompanied by full payment of the purchase price either in cash or, with the consent of the Committee, in whole or in part in shares of Common Stock having a fair market value on the date the option is exercised equal to that portion of the purchase price for which payment in cash is not made, or with the consent of the Committee, in whole or in part pursuant to a loan, which the Company may make available, evidenced by a promissory note, the terms and conditions of which shall be determined by the Committee in its sole and absolute discretion. Such notice shall be deemed delivered when deposited in the mails. Notwithstanding anything in the foregoing to the contrary, in the event of a "change in control" the Committee shall have the authority and power: (i) to cause all outstanding options to be immediately exercisable notwithstanding any vesting limitation otherwise previously imposed on such options; and (ii) to accelerate the termination date of all such options. Thereafter, upon such determination, an Optionee may exercise any and all outstanding options (in whole or in part), whether or not such options are by their terms fully exercisable at such time and the Committee may authorize the acceptance of the surrender of the right to exercise such option or any portion thereof, but in no event after the expiration of the term of the option. The term "change in control" shall include, but not be limited to: (i) the first purchase of shares pursuant to a tender offer or exchange (other than a tender offer or exchange by the Company) for all or part of the Company's common stock of any class or any securities convertible into such common stock; (ii) the receipt by the Company of a Schedule 13D or other advise indicating that a person is the "beneficial owner" (as that term is defined in Rule 13d-3 under the Securities Exchange Act of 1934) of twenty percent (20%) or more of the Company's Common Stock calculated as provided in paragraph (d) of said Rule 13d-3; (iii) the date of approval by shareholders of the Company of an agreement providing for any consolidation or merger of the Company in which the Company will not be the continuing or surviving corporation or pursuant to which shares of capital stock, of any class or any securities convertible into such capital stock, of the Company would be converted into cash, securities, or other property, other than a merger of the Company in which the holders of common stock of all classes of the Company immediately prior to the merger would have the same proportion of ownership of common stock of the surviving corporation immediately after the merger; (iv) the date of the approval by shareholders of the Company of any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Company; (v) the adoption of any plan or proposal for the liquidation (but not a partial liquidation) or dissolution of the Company; or (vi) such other event as the Committee shall, in its sole and absolute discretion, deem to be a "change in control." The manner of application and interpretation of the foregoing provisions shall be determined by the Committee in its sole and absolute discretion.

(e) TERMINATION OF EMPLOYMENT, ETC. If an Optionee ceases to be an employee of the Company and all Subsidiaries, his or her option shall, unless otherwise provided in the option agreement between the Optionee and the Company, terminate on the date he or she ceases to be an employee and neither he or she nor any other person shall have any rights after the date he or she ceases to be an employee to exercise all or any part of the option. An Optionee's employment shall not be deemed to have terminated while he or she is on a temporary military, sick or other bone fide leave of absence from the Company or a Subsidiary approved in writing by the Company, such as a leave of absence as is described in Section 1.421-7(h) of the Federal Income Tax Regulations or any lawful successor regulations thereto; provided, however, that the Committee may impose such terms and conditions with respect to such leaves as it deems proper as are consistent with such regulations.

If the stock option is an Incentive Stock Option, no option agreement shall

(i) permit any Optionee to exercise any Incentive Stock Option more than three (3) months after the date the Optionee ceased to be an employee of the Company and all Subsidiaries (but not beyond the original term of the option) if the reason for the Optionee's cessation as an employee was other than his death or his Disability; or

(ii) permit any Optionee to exercise any Incentive Stock Option more than one (1) year after the date the Optionee ceased to be an employee of the Company and all Subsidiaries (but not beyond the original term of the option) if the reason for the Optionee's cessation as an employee was the Optionee's Disability; or

(iii) permit any person to exercise any Incentive Stock Option more than one (1) year after the date the Optionee ceased to be an employee of the Company and all Subsidiaries (but not beyond the original term of the option) if either (A) the reason for the Optionee's cessation as an employee was his death or (B) the Optionee died within three (3) months after ceasing to be an employee of the Company and all Subsidiaries.

If the stock option is a non-qualified stock option, no option agreement shall

(i) permit any Optionee to exercise any non-qualified stock option more than six (6) months after the date the Optionee ceased to be an employee of the Company and all Subsidiaries (but not beyond the original term of the option) if the reason for the Optionee's cessation as an employee was other than his death or his Disability; or

(ii) permit any Optionee to exercise any non-qualified stock option more than one (1) year after the date the Optionee ceased to be an employee of the Company and all Subsidiaries (but not beyond the original term of the option) if the reason for the Optionee's cessation as an employee was the Optionee's Disability; or

(iii) permit any person to exercise any non-qualified stock option more than one (1) year after the date the Optionee ceased to be an employee of the Company and all Subsidiaries (but not beyond the original term of the option) if either (A) the reason for the Optionee's cessation as an

employee was his death or (B) the Optionee died within three (3) months after ceasing to be an employee of the Company and all Subsidiaries.

If any option is by the terms of the option agreement exercisable following the Optionee's death, then such option shall be exercisable by the Optionee's estate, or the person designated in the Optionee's Last Will and Testament, or the person to whom the option was transferred by the applicable laws of descent and distribution.

(f) LIMITATIONS ON GRANT OF INCENTIVE STOCK OPTIONS. During the calendar year in which any Incentive Stock Options granted by the Company or any Subsidiary first became exercisable by any Optionee, the aggregate fair market value of the shares of Common Stock which are subject to such Incentive Stock Options (determined as of the date the Incentive Stock Options were granted) shall not exceed the sum of One Hundred Thousand Dollars ($100,000.00). Options which are not designated as Incentive Stock Options shall not be subject to the limitation described in the preceding sentence and shall not be counted when applying such limitation.

(g) PROHIBITION OF ALTERNATIVE OPTIONS. It is intended that Employees may be granted, simultaneously or from time to time, Incentive Stock Options or other stock options, but no Employees shall be granted alternative rights in Incentive Stock Options and other stock options so as to prevent options granted as Incentive Stock Options under the Plan from qualifying as such within the meaning of Section 422 of the Code.

(h) WAIVER BY COMMITTEE OF CONDITIONS GOVERNING EXERCISE OF OPTION. The Committee may, in its discretion, waive any restrictions or conditions set forth in an option agreement concerning an Optionee's right to exercise any option and/or the time and method of exercise.

8. AMENDMENTS TO THE PLAN. The Committee is authorized to interpret the Plan and from time to time adopt any rules and regulations for carrying out the Plan that it may deem advisable. Subject to the approval of the Board, the Committee may at any time amend, modify, suspend or terminate the Plan. In no event, however, without the approval of the Company's shareholders, shall any action of the Committee or the Board result in:

(a) Amending, modifying or altering the eligibility requirements provided in Section 5 hereof;

(b) Increasing or decreasing, except as provided in Section 6 hereof, the maximum number of shares for which options may be granted;

(c) Decreasing the minimum option price per share at which options may be granted under the Plan, as provided in Section 7(a) hereof;

(d) Extending either the maximum period during which an option is exercisable as provided in Section 7(b) hereof or the date on which the Plan shall terminate as provided in Section 13 hereof;

(e) Changing the requirements relating to the Committee; or

(f) Making any other change which would cause any option granted under the Plan as an Incentive Stock Option not to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code;

except as necessary to conform the Plan and the option agreements to changes in the Code or other governing law. No option may be granted during any suspension of this Plan or after this Plan has terminated and no amendment, suspension or termination shall, without the Optionee's consent, alter or impair any of the rights or obligations under an option theretofore granted to such Optionee under this Plan.

9. STOCK APPRECIATION RIGHTS. The Committee may provide, at the time of the grant of a stock option and upon such terms and conditions as it deems appropriate, that an Optionee shall have the right with respect to all or a portion of the options granted to him to elect to surrender such options in exchange for the consideration set forth in this Section 9 in lieu of exercising such options. Alternatively, the Committee may provide, at the time of the grant of a stock option and upon such terms and conditions as it deems appropriate, that an Optionee shall have the right with respect to all or a portion of the options granted to him to receive the considerations set forth in this Section 9 upon exercising such options in addition to any Common Stock purchased upon exercise thereof. Stock appreciation rights must be specifically granted by the Committee; provided, however, the Committee shall have no authority to grant stock appreciation rights except in connection with the grant of a stock option pursuant to the Plan, and no Optionee shall be entitled to such rights solely as a result of the grant of an option to him. Stock appreciation rights, if granted, may be exercised either with respect to all or a portion of the option to which they relate. Stock appreciation rights shall not be transferable separate from the option with respect to which they were granted and shall be subject to all of the restrictions on transfer applicable to the said options. Stock appreciation rights shall be exercisable only at such times and by such persons as are specified in the option agreement governing the stock option with respect to which the stock appreciation rights were granted. A stock appreciation right shall provide that an Optionee shall have the right to receive a percentage, not greater than One Hundred Percent (100%), of the excess over the option price, if any, of the fair market value of the shares of Common Stock covered by the option, as determined by the Committee as of the date of exercise of the stock appreciation right, in the manner provided for herein. Such amount shall be payable in one or more of the following manners, as shall be determined by the Committee;

(a) in cash;

(b) in shares of Common Stock having a fair market value equal to such amount; or

(c) in a combination of cash and Common Stock;

provided, however, that stock appreciation rights may be settled only in cash unless the Company shall have been subject to the reporting requirements of
Section 13(a) of the Exchange Act (and complied therewith) for at least a one-year period prior to the settlement.

If payment is made in whole or in part in shares of Common Stock, such payment shall thereby reduce the number of shares available for the grant of options under this Plan.

In no event may any Optionee exercise any stock appreciation rights granted hereunder unless such Optionee is then permitted to exercise the option or the portion thereof with respect to which such stock appreciation rights relate. If the option agreement with the Optionee provides that exercise of the stock appreciation right shall be in lieu of exercise of the option, then (i) upon the exercise of any stock appreciation rights, the option or that portion thereof to which the stock appreciation rights relate shall be canceled, and (ii) upon the exercise of the option or that portion thereof to which the stock appreciation rights relate, the stock appreciation rights shall be canceled, and the option agreement governing such option shall be deemed amended as appropriate without any further action by the Committee or the Optionee. If the option agreement with the Optionee provides that exercise of the stock appreciation right shall be in addition to exercise of the option, then (i) upon the exercise of any stock appreciation rights, the option or that portion thereof to which the stock appreciation rights relate shall be deemed exercised and (ii) upon the exercise of the option, the stock appreciation rights corresponding thereto shall be deemed exercised to the extent the option is exercised. The terms of any stock appreciation rights granted hereunder shall be incorporated into the option agreement which governs the option with respect to which the stock appreciation rights are granted, and shall be such terms as the Committee shall prescribe which are not inconsistent with this Plan. The granting of an option or stock appreciation right shall impose no obligation upon the Optionee to exercise such option or right. The Company's obligation to satisfy stock appreciation rights shall not be funded or secured in any manner.

10. CERTAIN TIMING REQUIREMENTS.

Unless the Committee determines that Rule 16b-3 is not applicable to the participant, shares of Common Stock issuable to the Optionee upon exercise of the Option may be used to satisfy the Option price (or if applicable, the tax withholding consequences of such exercise) only (i) during the period beginning on the third business day following the date of release of the quarterly or annual summary statement of sales and earnings of the Company and ending on the twelfth business day following such date or (ii) pursuant to an irrevocable written election by the Optionee to use shares of Common Stock issuable to the Optionee upon exercise of the Option to pay all or part of the Option price or the withholding taxes (subject to the approval of the Committee) made at least 6 months prior to the payment of such Option price or withholding taxes.

Unless the Committee determines that Rule 16b-3 is not applicable to the participant, any exercise by a participant of a stock appreciation right for cash shall be made only (i) during the period beginning on the third business day following the date of release of the quarterly or annual summary statement of sales and earnings of the Company and ending on the twelfth business day following such date or (ii) pursuant to an irrevocable written election by the participant to receive

cash, in whole or in part, upon exercise of his stock appreciation right (subject to the approval of the Committee) made at least 6 months prior to the exercise of the stock appreciation right.

11. INVESTMENT REPRESENTATION, APPROVALS AND LISTING. The Committee may condition its grant of any option hereunder upon receipt of an investment representation from the Optionee which shall be substantially similar to the following:

"Optionee agrees that any shares of Common Stock of Media Arts Group, Inc. which Optionee may acquire by virtue of the exercise of this option shall be acquired for investment purposes only and not with a view to distribution or resale; provided, however, that this restriction shall become inoperative in the event the shares of Common Stock of Media Arts Group, Inc. which are subject to this option shall be registered under the Securities Act of 1933, as amended, or in the event Media Arts Group, Inc. is otherwise satisfied that the offer or sale of the shares of Common Stock which are subject to this option may lawfully be made without registration under the Securities Act of 1933, as amended".

The Company shall not be required to issue any certificates for shares of Common Stock upon the exercise of an option or a stock appreciation right granted under the Plan prior to (i) obtaining any approval from any governmental agency which the Committee shall, in its sole discretion, determine to be necessary or advisable, (ii) the admission of such shares of Common Stock to listing on any national securities exchange on which the shares of Common Stock may be listed,
(iii) completion of any registration or other qualification of the shares of Common Stock under any state or federal law or ruling or regulations of any governmental body which the Committee shall, in its sole discretion, determine to be necessary or advisable, or the determination by the Committee, in its sole discretion, that any registration or other qualification of the shares of Common Stock is not necessary or advisable, and (iv) obtaining an investment representation from the Optionee in the form set forth above or in such other form as the Committee, in its sole discretion, shall determine to be adequate.

12. GENERAL PROVISIONS.

(a) OPTION AGREEMENTS NEED NOT BE IDENTICAL. The form and substance of option agreements and grants of stock appreciation rights, whether granted at the same or different times, need not be identical.

(b) NO RIGHT TO BE EMPLOYED, ETC. Nothing in the Plan or in any option agreement shall confer upon any Optionee any right to continue in the employ or to be a consultant of the Company or a Subsidiary, or to serve as a member of the Board, or to be entitled to receive any remuneration or benefits not set forth in the Plan or such option agreement, or to interfere with or limit either the right of the Company or a Subsidiary to terminate his or her employment at any time or the right of the shareholders of the company to remove him or her as a member of the Board with or without cause.

(c) OPTIONEE DOES NOT HAVE RIGHTS OF SHAREHOLDER. Nothing contained in the Plan or in any option agreement shall be construed as entitling any Optionee to any rights of a

shareholder as a result of the grant of an option until such time as shares of Common Stock are actually issued to such Optionee pursuant to the exercise of an option or stock appreciation right.

(d) SUCCESSORS IN INTEREST. The Plan shall be binding upon the successors and assigns of the Company.

(e) NO LIABILITY UPON DISTRIBUTION OF SHARES. The liability of the Company under the Plan and any distribution of Common Stock made hereunder is limited to the obligations set forth herein with respect to such distribution and no term or provision of the Plan shall be construed to impose any liability on the Company or the Committee in favor of any person with respect to any loss, cost or expense which the person may incur in connection with or arising out of any transaction in connection with the Plan, including, but not limited to, any liability to any Federal, state, or local tax authority and/or any securities regulatory authority.

(f) TAXES. Appropriate provisions shall be made for all taxes required to be withheld and/or paid in connection with the options or the exercise thereof, and the transfer of shares of Common Stock pursuant thereto, under the applicable laws or other regulations of any governmental authority, whether Federal, state or local and whether domestic or foreign.

(g) USE OF PROCEEDS. The cash proceeds received by the Company from the issuance of shares of Common Stock pursuant to the Plan will be used for general corporate purposes or in such other manner as the Board of Directors deems appropriate.

(h) EXPENSES. The expenses of administering the Plan shall be borne by the Company.

(i) CAPTIONS. The captions and section numbers appearing in the Plan are inserted only as a matter of convenience. They do not define, limit, construe or describe the scope or intent of the provisions of the Plan.

(j) NUMBER. The use of the singular or plural herein shall not be restrictive as to number and shall be interpreted in all cases as the context may require.

(k) GENDER. The use of the feminine, masculine or neuter pronoun shall not be restrictive as to gender and shall be interpreted in all cases as the context may require.

13. TERMINATION OF THE PLAN. The Plan shall terminate on February 1, 2004, and thereafter no options shall be granted under the Plan. Notwithstanding the foregoing and subject to the approval of the Board, the Committee may at any earlier time terminate the Plan and thereafter no options shall be granted under the Plan. All options outstanding at the time of termination of the Plan shall continue in full force and effect according to the terms of the option agreements governing such options and the terms and conditions of the Plan.

14. GOVERNING LAW. The Plan shall be governed by and construed in accordance with the laws of the State of Delaware and any applicable federal law.

15. VENUE. The venue of any claim brought hereunder by an Employee shall be San Jose, California.

16. CHANGES IN GOVERNING RULES AND REGULATIONS. All references herein to the Code or sections thereof, or to rules and regulations of the Department of Treasury or of the Securities and Exchange Commission, shall mean and include the Code sections thereof and such rules and regulations as are now in effect or as they may be subsequently amended, modified, substituted or superseded.

IN WITNESS WHEREOF, MEDIA ARTS GROUP, INC., by its appropriate officers duly authorized, has executed this instrument as of June 18, 1997.

MEDIA ARTS GROUP, INC.

By:  /s/ KENNETH E. RAASCH
   -------------------------------
And: /s/ JAMES F. LANDRUM, JR.
    -------------------------------

EXHIBIT 10.4

AMENDMENT TO EMPLOYMENT AGREEMENT

On January 1, 1994, Media Arts Group, Inc. ("Employer") and Kenneth E. Raasch ("Employee") entered into an employment agreement ("Employment Agreement"), which is attached hereto. The Employment Agreement, except as modified below, shall be incorporated by reference into and made part of this Amendment as if written directly into this Amendment. Employer and Employee now wish to amend the Employment Agreement as follows:

SECTION 1 - EMPLOYMENT

Shall be amended to REPLACE "President and Chief Executive Officer" with "Chairman of the Board".

SECTION 2 - RESPONSIBILITIES AND DUTIES OF EMPLOYEE

Shall be amended to REPLACE entire section with the following language:

It is agreed that Employee is employed on a full-time basis, which is defined to mean Employee's entire productive time, ability and attention. It is further agreed that for so long as the Employee is employed with the Employer, Employee shall not engage in any other business duties or pursuits without the express written consent of the Board. In his capacity as Chairman of the Board, Employee shall have such duties and responsibilities as listed below:

a. Represent the Corporation externally to the investment banking community, analysts, banks, investors, industry and government groups, public relations, etc .;

b. Be responsible for overseeing new business development, new channel development and licensing, as directed by the Board of Directors;

c. Coordinate the day-to-day activities of the Board of Directors;

d. Be the Corporation's spokesperson for the business and financial opportunities the Corporation creates;

e. Provide strategic input in formulating the Business Plan;

f. Help Thomas Kinkade in any way to accomplish his goals internally and externally;

g. Lead negotiations on an as-appropriate basis and execute appropriate documentation

h. Be available in areas where the Chief Executive Officer and President requests his experience and expertise, and in this capacity, seek only to be a support as any other Board member would.

In addition, Employee shall perform such other duties and responsibilities as the Board shall designate as are not inconsistent with Employee's position with the Employer, including the performance of duties with respect to any subsidiaries of the Employer.

Employee shall at all times perform the duties set forth herein faithfully, industriously, and to the best of Employee's ability, experience and talent.

SECTION 3 - LOCATION OF EMPLOYEE'S WORK

Shall be amended to REPLACE "principal executive offices" with "New Business Development offices, currently located at 333 W. Santa Clara Street, Suite 1000, San Jose, CA 95113".

SECTION 5(C)(I) - COMPENSATION TO EMPLOYEE, BONUSES, SENIOR MANAGEMENT BONUS BASED ON PROFITABILITY

The title of this section shall be amended to REPLACE entire title with the following language: COMPENSATION TO EMPLOYEE, BONUSES

Further, this section of the Employment Agreement shall be amended to REPLACE sections 5(c)(i) and 5(c)(ii):

(i) An Earnings Per Share (EPS) Bonus based on the annual growth in EPS for the fiscal year over the Base EPS. Base EPS is defined as the prior fiscal year published EPS. Base EPS for year one (Fiscal 1998) will be $0.30. A predetermined cash bonus will be paid if established levels of published EPS growth are achieved. The cash bonus amounts are equivalent to approximately 15% of the growth in net income, measured in 10% increments of EPS growth. This bonus will be paid twice per year based on the year to date performance in comparison to the Employer's business plan.

(ii) A Trailing Twelve Months (TTM) Bonus, contingent upon continued employment and paid pro-rata every pay period during the following fiscal year. The bonus will be cumulative and equal to a) the prior year TTM Bonus plus b) the annual growth rate of the published EPS for the fiscal year times the sum of i) the base salary plus ii) the prior year TTM Bonus paid during the fiscal year. In the event that EPS growth is negative, it will result in a negative adjustment to the prior year TTM bonus, but not below the base salary amount.

(iii) A New Business Bonus equal to 5% of the operating income contributed by the New Business venture before reduction by this bonus. The New Business Bonus is subject to the following criteria:

A. The Pro Forma will be based on the Business Plan projected P&L ratios for the year, adjusted either positively or negatively for major functional areas of operating expenses which may be used or not used in the new business.

B. The bonus will be paid based upon actual results with an updated Pro Forma for significant changes in circumstances, which will include the following:
(i) Actual sales and returns;
(ii) Standard costs of goods adjusted for actual variances, whether positive or negative;
(iii) The addition or deletion of significant costs attributable to operating expenses of the major functional areas used in the new business;
(iv) An allocation of interest and other direct financing costs based upon the average period of unrecovered costs;
(v) Other significant changes in circumstances

(iv) A Debt Bonus as an incentive to retire Employer's senior subordinated debt as quickly as possible. To the extent that the Employer prepays principal installments to Levine Leichtman Capital Partners, L.P., Employee will receive 50% of the interest saved as a result of such prepayment.

(v) If Employer achieves the business plan projection in fiscal year 1998, and realizes a 20% or a 40% growth rate the following two years, ignoring the possibility of growth in New Business Bonus, Employee's compensation under the above plan would be as follows:

(Tables below in 000's)

                           Fiscal Year     Fiscal Year    Fiscal Year
20% Growth                    1998            1999           2000
---------------------------------------------------------------------
Base Salary                   360             360            360
TTM Bonus                       0             180            288
EPS Bonus                     253             152            182
New Business                   31              31             31
Debt Bonus                    118             143            204
---------------------------------------------------------------------
Total                         762             866          1,065


40% Growth                    1998            1999           2000
---------------------------------------------------------------------
Base Salary                   360             360            360
TTM Bonus                       0             180            396
EPS Bonus                     253             304            425
New Business                   31              31             31
Debt Bonus                    118             143            204
---------------------------------------------------------------------
Total                         762           1,018          1,416

SECTION 5(C)(II) -DISCRETIONARY BONUS

This entire section 5(c)(ii) shall be removed.

ENTIRE AGREEMENT:

This Amendment, and through incorporation by reference, the Employment Agreement, represent the entire employment agreement of the parties hereto. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by any of the parties which are not expressly set forth in this Amendment or the Employment Agreement.

ACCEPTED AND AGREED:

/s/ Kenneth E. Raasch                  /s/ Michael Kiley
----------------------                 -------------------------
Kenneth E. Raasch                      Michael Kiley
Employee                               Director, Compensation Committee Chairman
                                       Media Arts Group, Inc




Attest: /s/ James F. Landrum, Jr.  10/29/97
       ------------------------------------
            James F. Landrum, Jr.
            Secretary

EXHIBIT 10.5

AMENDMENT TO EMPLOYMENT AGREEMENT

THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of October 10, 1997 by and between MEDIA ARTS GROUP, INC. (the "Company" or "Employer") and JOHN LACKNER ("Employee"). This Agreement is intended to replace the October 1, 1997 employment agreement between the parties in its entirety.

RECITALS

A. The Company desires to engage Employee to perform certain services for the Company on the terms and conditions set forth herein.

B. The Employee desires to perform certain services for the Company on the terms and conditions set forth herein.

C. The Parties desire to amend their agreement, but for purposes of this Agreement, the effective date for the agreement shall remain the original effective date of October 1, 1997 (hereafter, the "Effective Date") so as not to affect certain rights which may already be accruing or accrued.

NOW, THEREFORE, the parties agree as follows:

AGREEMENT

1. TERM OF EMPLOYMENT:

1.1 TERM: For the term and subject to the conditions set forth in this Agreement, the Company hereby employs Employee, for a period which shall begin on the Effective Date and shall end on October 1, 2002 or such earlier date of termination as provided in this Agreement, and Employee hereby accepts such employment. As used herein, the phrase "Employment Term" refers to the entire period of employment by the Company hereunder.

1.2 EXTENSION OF TERM: The term set forth in Section 1.1 may be extended by written amendment to this Agreement signed by both parties. Any continued employment after the expiration of the Employment Term without such written amendment shall be on an "at will" basis and not be construed to be part of this Agreement.

2. TITLE AND RESPONSIBILITIES:

2.1 TITLE: Subject to the provisions of this Agreement, Employee shall serve the Company during the Employment Term as Senior Vice President, Chief Operating Officer of the Company. In this role, Employee shall have (i) oversee limited Company operations, which shall include Manufacturing, Customer Service and MIS, and (ii) perform such other duties and responsibilities as may from time to time be assigned to Employee by the Company's Board of Directors or by the President.

2.2 EMPLOYEE RESPONSIBILITIES: During the Employment Term, Employee shall:

(i) devote 100% of his business time, energy and skill to the affairs of the Company as shall be necessary to perform the duties of such position and at all times during the Employment Term shall have the powers and authority which are necessary to enable him to discharge his duties in the office which he holds and which are commonly incident to such office. Employee shall promptly and faithfully

observe, comply with and conform to the policies, instructions, directions, and requests of applicable senior management and the policies, rules and regulations of the Company; and

(ii) serve the Company on a full-time, exclusive basis during the Employment Term;

(iii) Employee shall work in the Company headquarters, currently located at 521 Charcot Ave., San Jose, CA 95131.

2.3 COMPANY RESPONSIBILITIES: The Company shall provide Employee with the compensation, bonuses, benefits and business expense reimbursement specified elsewhere in this Agreement.

3. SALARY, BENEFITS AND BONUS COMPENSATION:

During the Employment Term, as full compensation for all services to be performed by Employee pursuant to this Agreement, the Company agrees to pay Employee compensation and provide Employee with benefits as set forth in this
Section 3.

3.1 BASE COMPENSATION: The Company shall pay Employee base compensation of $175,000 per annum (the "BASE COMPENSATION") during the Employment Term, with such salary to be increased, at such times, if any, as the Board may deem appropriate, to an amount determined by the Board, which increases shall be consistent with the normal historical practices of Employer and the salary adjustments for other senior managers of Employer. The Base Compensation will be paid in equal installments in conformity with the Company's normal payroll period.

3.2 ARTWORK BONUS: Employee shall receive from the Company an artwork bonus of $5,000 at wholesale cost, from which to purchase any of the Company's products. Employee shall receive one framed lithograph (S/N), which is produced and distributed by the Employer and which the Employee shall select, per year of employment, commencing after the first twelve months of employment.

3.3 ADDITIONAL BENEFITS: In addition to his Base Compensation and Artwork Bonus, Employee shall:

(i) Be granted the following options:
a. 15,000 shares of Media Arts Group, Inc. common stock at fair market value on the Effective Date, such options to be based on the terms of the Employee Stock Option Plan and vesting over 3 years of employment (34% at one year from the Effective Date, 33% at two years from the Effective Date, and 33% at three years from the Effective Date);

b. 18,000 shares of Media Arts Group, Inc. common stock at fair market value on October 29, 1997, such options to be based on the terms of the Employee Stock Option Plan and vesting over 3 years of employment (34% at one year from the Effective Date, 33% at two years from the Effective Date, and 33% at three years from the Effective Date);

(ii) Receive a temporary living allowance of $2,500.00 per month, until the earlier of either a) when Employee's home sells or b) four (4) months from the Effective Date;

(iii) Receive $500.00 auto allowance per full month of service;

(iv) Receive $17,500.00 in relocation costs, related commissions and closing costs;

(v) Receive a one-time moving allowance of $7,500.00;

(vi) Participate in the Senior Manager Bonus Program or equivalent substitute program. In 1998, Employee shall receive a bonus payment of $25,000.00;

(vii) Participate in the Company Profit Sharing Plan, if any, pursuant to the conditions of the plan;

(viii) Receive medical, dental and vision insurance coverage for Employee and his dependents under the Company's group medical insurance plan, at a cost as set forth in the plan;

(ix) Receive $250,000 of life insurance coverage under a life insurance plan selected by the Employer, towards which Employer will contribute the lowest cost of coverage (i.e. the cost of coverage for someone of Employee's same age, without any pre-existing conditions or other risk factors which would increase premiums above the best rate available for that age);

(x) Be entitled to vacation, sick time and personal time off under the Company's Flexible Time Off (FTO) plan at an accrual of 13.33 hours per full month of service; and

(xi) Receive such additional benefits as the Company may from time to time in its sole discretion determine.

4. TERMINATION OF EMPLOYMENT:

4.1 DEATH, DISABILITY, TERMINATION FOR JUSTIFIABLE CAUSE: Employee's employment pursuant to this Agreement may be terminated at any time upon thirty
(30) days written notice by the Company upon the occurrence of any of the following events;

(i) Death of employee;

(ii) Disability of Employee (as defined below). For purposes of this Agreement, the term "Disability" shall mean mental incapacity to perform his duties in a normal manner for a total of three (3) months (whether or not consecutive) in any twelve (12) month period during the term of this Agreement; or

(iii) Justifiable Cause (as defined below) for such termination. For purposes of this Agreement, the term "Justifiable Cause" shall mean any of the following:

(a) If Employee shall fail to (i) perform any of his material obligations under this Agreement and/or (ii) comply with reasonable directions from the Board, which failure continues after the Company gives Employee written notice of such failure and an opportunity for thirty (30) days to remedy such failure;

(b) If Employee shall have engaged in willful misconduct in any material matter affecting the Company or;

(c) If Employee shall be convicted of, or shall plead guilty or nolo contendere to, a felony where such crime materially interferes with Employee's ability to fulfill his duties under this Agreement or is otherwise materially injurious to the Company.

4.2 CORPORATE REORGANIZATION: This Agreement shall not be terminated by any voluntary or involuntary dissolution of the Company resulting from either a merger or consolidation in which the Company is not the consolidated or surviving corporation, or a transfer of all or substantially all of the stock or assets of the Company. In the event of any such merger or consolidation or transfer of stock or assets, the Company's rights, benefits, and obligations hereunder may be assigned to the surviving or resulting corporation or the transferee of the Company's assets.

4.3 EFFECT OF TERMINATION: Upon any termination of this Agreement by the Company pursuant to Section 4.1, the Company shall pay Employee (or in the event of his death, his designated beneficiary) at the end of applicable notice period the accrued and unpaid amount of the Base Compensation and Additional Benefits payable pursuant to Section 3.1 3.2 and 3.3, prorated through the date of such termination, and the Company shall have no further liability to Employee or his estate pursuant to this Agreement, including without limitation, severance compensation. If this Agreement terminates for any reason other than by the Company pursuant to Section 4.1, then, effective upon the termination of this Agreement, the Company shall pay Employee such compensation as provided in sections 3.1, 3.2, and 3.3 of this Agreement, prorated through the date of termination on a fair and equitable basis. The Company shall pay Employee all amounts due under this paragraph upon Employee's termination or as soon thereafter as is reasonably practicable.

5. RIGHT TO COMPANY MATERIALS: Employee agrees that all styles, designs, lists, materials, books, files, reports, correspondence, and other documents ("COMPANY MATERIALS") used, prepared, or made available to the Employee, shall be and shall remain the property of the Company. Upon termination of employment or the expiration of this Agreement, all Company Materials shall be returned immediately to the Company; provided, however, that Employee shall be entitled to make and retain any copies thereof with respect to matters involving Employee.

6. ANTISOLICITATION: Employee promises and agrees that while this Agreement continues in effect, he will not influence or attempt to influence customers or suppliers of the Company or any of its present or future affiliates, either directly or indirectly, to divert their business to any individual, partnership, firm, corporation, or other entity then in competition with the business of the Company, or any affiliates of the Company.

7. SOLICITING EMPLOYEES: Employee promises and agrees that while this Agreement continues in effect and for one year thereafter, he will not directly or indirectly solicit any of the employees of the Company or its affiliates to work for or invest in, as the case may be, any business, individual, partnership, firm, or corporation, that is in direct competition with the Company or any of its affiliates.

8. RESTRICTION ON USE OR DISCLOSURE OF TRADE SECRETS: It is expressly understood that Employee may be dealing with trade secrets of the Company and its affiliates, including but not limited to information system(s), inventions and processes, all of a confidential nature, that concern the operations of the Company or its affiliates and that are the Company's property and are used in the course of the Company's business or that of its affiliates. Employee promises and agrees that he will not disclose to anyone, directly or indirectly, either while this Agreement is in effect or at any time thereafter any trade secrets learned in the course of his employment with the Company or its affiliates. Employee acknowledges that the Company may use all remedies, including injunctive relief, in order to enforce the provisions of this paragraph 8.

9. CHOICE OF LAW AND JURISDICTION: The validity, interpretation and effect of this Agreement shall be governed by the laws of the State of California applicable to agreements to be performed wholly within California by California residents.

10. COUNTERPARTS: This Agreement may be executed in counterparts, each of which shall be an original, and all of which together shall constitute one and the same instrument.

11. NOTICES: Any notices, requests, demands and other communications under this Agreement shall be in writing and shall be delivered to the person or sent commercial courier service or postage prepaid, and addressed as follows:

The Company:       MEDIA ARTS GROUP, INC.
                   Attention: James F. Landrum, Jr.
                   521 CHARCOT  AVE.
                   SAN JOSE, CA 95131

To Employee:       JOHN LACKNER
                   31493 Bishop Gate
                   Westlake, OH 44145

Any party may from time to time change its address for the purposes of notices to that party by a similar notice specifying a new address, but no such change shall be deemed to have been given until actually received by the party sought to be charged with its contents. All notices and other communications required or permitted under this Agreement which are addressed as provided in this
Section 11 if delivered personally, shall be effective upon delivery and if delivered by mail or by commercial courier service, shall be effective five (5) days after deposit in the United States mail, postage prepaid, registered or certified, return receipt requested or upon receipt by such party from the commercial courier service, as the case may be.

12. REPRESENTATIONS OF EMPLOYEE: Employee represents and warrants that he is now (and will continue to be during the entire term of this Agreement) legally free to enter into this Agreement and to perform the duties required hereunder and that neither the execution and delivery of this Agreement nor the performance of his obligations hereunder will result in any breach or violation of any other agreement or instrument to which he is a party.

13. ENTIRE AGREEMENT ; AMENDMENTS; ASSIGNMENTS: This Agreement constitutes the entire agreement and understanding of the parties with respect to the matters dealt with herein (including the compensation and employment benefits to which Employee is entitled for periods from and after the Effective Date), and supersedes all negotiations, representations or agreements and all other oral, written and other communication between them concerning the subject matter hereof, and all prior arrangements with the Company concerning employment compensation and benefits for periods from and after the Effective Date. This Agreement may be amended in whole or in part only by an agreement in writing signed by all parties hereto. This Agreement and the rights and obligations hereunder shall be deemed personal to Employee and Employee may not transfer, pledge, encumber, assign, or alienate all or any part of this Agreement.

14 WAIVER: The waiver by one party of a breach of any of the terms or conditions of this Agreement shall not operate or be construed as a continuing waiver or as a consent to or waiver of any other subsequent breach thereof.

15. FEES: Should an action be instituted by either of the parties hereto in any court of law or equity pertaining to the enforcement or interpretation of this Agreement, the prevailing party shall be entitled to recover, in addition to any judgment or decree rendered therein, all court costs and reasonable attorneys' and experts' fees and expenses.

16. FURTHER ASSURANCES: From and after the date of this Agreement, the parties hereto shall cooperate in good faith to accomplish the objectives of this Agreement and to that end agree to execute and/or deliver from time to time such further instruments and documents as may be necessary and convenient to the fulfillment of these purposes. Should any documents conflict with this Agreement, this Agreement shall control, unless such other document specifically modifies or replaces this Agreement.

17. CAPTIONS: The Section captions inserted in this Agreement are for convenience of reference and are not intended to influence the interpretation of this Agreement.

18. SEVERABILITY: Should any part or portion of this Agreement or any provision thereof be held invalid, illegal or void, the remainder of such part or portion of this Agreement of provision thereof shall continue in full force and effect as if the void, illegal or invalid part, portion, or provision had been deleted therefrom or never included herein. In the event that any portion of this Agreement is declared invalid, the parties hereto agree to use their best efforts to reform this Agreement in a manner consistent with their original intentions.

19. GENDER: The use of the masculine pronoun hereunder shall not be restrictive as to gender and shall be interpreted in all cases as the context may require.

IN WITNESS WHEREOF, the parties have executed this Agreement effective October 10, 1997.

MEDIA ARTS GROUP, INC.

/s/ Craig A. Fleming
--------------------------------------
Craig A. Fleming, President

EMPLOYEE:

/s/ John Lackner
--------------------------------------
JOHN LACKNER

LICENSE AGREEMENT

This License Agreement, dated effective December 3, 1997 (the "Effective Date"), is made between Thomas Kinkade ("Artist") and Media Arts Group, Inc. ("Publisher" or the "Company"), a Delaware corporation.

RECITALS

WHEREAS, the Artist desires the Publisher to be, and the Publisher desires to be, a company with a business strategy focused upon the brand name Thomas Kinkade and/or the artwork of Artist;

WHEREAS, the Artist desires the Publisher to be, and the Publisher desires to be, the exclusive manufacturer, sub-licensor, marketer and distributor of reproductions of the Artist's original artwork in all available derivative art-based products, such products to include but not be limited to wall art, calendars, stationery items, three-dimensional derivatives and books;

WHEREAS, Artist desires the Publisher to, and Publishers desires to, develop the brand name of Thomas Kinkade, through the exclusive manufacturing, sub-licensing, marketing and distributing of art-based and non-art-based Products, with such non-art-based products to include but not be limited to furniture, apparel, home decor and household furnishings;

WHEREAS, Artist desires Publisher to, and Publisher desires to, continue to develop Company-owned and independently-owned galleries which carry art-based and non-art-based Products relating to Artist, on an exclusive or non-exclusive basis;

NOW THEREFORE, the parties agree as follows:

1. DEFINITIONS

As used herein, the terms listed below shall have the following meanings:

"AFFILIATE" shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.

"AGREEMENT" shall mean this License Agreement, as amended and modified from time to time.

"ARTIST" shall mean Thomas Kinkade and his heirs, agents, estate and personal representatives.

"ARTWORK" shall mean any and all original sketches, drawings, writings (including but not limited to books, advertising copy, slogans and painting titles), paintings and any other works of art created by Artist which are (i) completed as of the Effective Date and which are used for any commercial purpose by Publisher at any time heretofore or hereafter, and (ii) created after the Effective Date and delivered to Publisher under this Agreement as the One Hundred Twenty (120) studio works and Thirty (30) Plein-Air works.

"NEW PRODUCT TERM" shall mean the time period required for Artist to create and provide to Publisher no less than One Hundred Fifty
(150) pieces of Artwork, One Hundred Twenty (120) of which Artwork shall be "studio works" and Thirty (30) of which shall be Plein-Air works, such period not to exceed Fifteen (15) years.

"PERSON" shall mean any person or entity, whether an individual, trustee, corporation, general partnership, limited partnership, trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority.

"PLACERVILLE PROJECT" shall mean the reproduction, manufacture, marketing, distribution and sale of any products based upon one or two pieces of Artwork annually, which art products are sold in and around the City of Placerville, California, and shall also include the sale of Products purchased from Publisher or its licensees.

"PRODUCTS" shall mean any and all art-based or non-art-based products or services associated directly or indirectly with the Artwork or the Artist, whether such Artwork or Products are known or unknown, and whether or not currently in existence at the beginning of this Agreement, such Products including, but not limited to, wall art, calendars, stationery items, ornaments, three-dimensional derivatives (e.g. sculptures based on Artwork), books, furniture, media properties, themed real estate, apparel, home decor products and household furnishings.

"PUBLISHER" shall mean Media Arts Group, Inc., a Delaware corporation, and its subsidiaries, successors and assigns.

2. EXCLUSIVE LICENSE

a. Commencing on the Effective Date of this Agreement, Artist hereby grants to Publisher the complete, unencumbered, exclusive and perpetual rights to reproduce, adapt, manufacture, sub-license, publish, market, distribute, sell and display all Products based on Artwork for all manners of commercial use, excluding such rights with respect to the Artwork used in the Placerville Project or for works of art created after the New Product Term which are not defined as Artwork.

b. In addition to such rights, the Artist hereby grants the Publisher:

1. the perpetual right to print, vend, sell, reproduce, distribute and otherwise use the Artwork or image thereof in any manner and by any means, whether or not now known, invented, used or contemplated, to promote and advertise the sale of the Products,

2. the perpetual right to use and publish, and to permit others to use and publish, Artist's name (including any professional name heretofore or hereinafter adopted by Artist), likeness, signature and biographical material or any reproduction or simulation thereof, in order to promote and advertise the sale of the Products and/or develop any brand name associated with Artist, and

3. the perpetual right, but not the obligation, to assert, and to defend against any actual or threatened infringement of the Artwork, copyrights and/or trademarks.

c. The perpetual aspects of this Agreement shall in no way be construed to restrict the entering of any Artwork into the public domain by operation of the Copyright Act or other State or Federal laws, shall not be rendered invalid due to the operation of such laws, and in perpetuity, shall be upheld to the maximum extent possible within the parameters of such laws.

d. Artist shall own the original Artwork produced under this Agreement and shall, without limitation, have all rights to the original Artwork, except as otherwise provided in this Agreement.

e. Notwithstanding the grants under this Section 2, Artist reserves the right to use or license, on a royalty free basis, the name "Thomas Kinkade" and Artist's likeness in association with non-profit organizations and activities, including but not limited to the development of museums and Artist's founding or support of organizations with religious and/or secular missions. This right shall include the right to display, promote and exhibit Artwork in connection with these non-profit organizations or activities and, after the New Product Term, the right to permit such non-profit organizations to sell products based on works of art created after the New Product Term which have not otherwise been used commercially by Publisher. Artist shall not derive any economic benefit as a result of such non-profit activities (except for tax benefits related to charitable contributions). If Artist desires to permit use of the name "Thomas Kinkade" in association with a for-profit venture (which shall include a non-profit from which Artist derives an economic benefit), Artist shall first present the opportunity to Publisher. If Publisher does not wish to participate in the for-profit venture, Artist shall then seek Publisher's approval to permit Artist the right to participate in such for-profit venture, and such approval shall not be unreasonably withheld by Publisher. If approval permitting Artist to participate in the for-profit venture is granted, Publisher shall in good faith negotiate an arms length license arrangement with Artist to allow for the use of the Thomas Kinkade name. Reservation of the right to use the name "Thomas Kinkade" in association with a for-profit venture as described

above does not include the right to manufacture, distribute sell, or otherwise use Artwork or other works of art created after the New Product Term in any for-profit venture, except for promotional purposes.

3. ARTWORK CREATION AND DELIVERY

a. Artist agrees to create and provide to Publisher no less than One Hundred Fifty (150) pieces of Artwork during the New Product Term, One Hundred Twenty (120) of which Artwork shall be "studio works" and Thirty (30) of which shall be Plein-Air works. Artwork shall be regularly delivered during each 12 month period following this Agreement based upon a schedule to be reasonably agreed to between Artist and Publisher, but which shall not exceed 12 studio works per year and which shall require a minimum of at least ten (10) studio works per year for at least the first five (5) years of this Agreement. For purposes of clarification, in addition to the Artwork delivered under this section 3(a), Publisher shall also have exclusive rights to any and all original sketches, drawings, writings, paintings and any other works of art created by Artist prior to the date of this Agreement, including any "archive" images to which Artist secures access to, during the New Product Term and which Publisher uses for commercial purposes during the New Product Term. Size, subject, titles, color, composition, style, method of execution and themes of Artwork delivered to Publisher pursuant to this paragraph shall be determined exclusively by the Artist after consultation with the Publisher; further, while Artist shall take into consideration the reasonable requests of the Publisher, Artist shall, in his sole discretion, determine all manners of an artistic nature, including but not limited to size, subject, titles, color, composition, style, method of execution and themes of the Artwork.

b. The Artist (i) shall cause his signature to be affixed to the Artwork by the Artist's actual hand signing of the Artwork, and (ii) shall, as determined by Artist, cause his signature to be affixed to Products either by the Artist's actual hand signing of the Products or by the use of an official signature block, which the Artist shall undertake promptly to develop, or by a mechanical means such as the DNA signature method currently utilized by the Publisher. In the event of the incapacity of the Artist to sign the Products, the Artist's spouse, namely Nanette Kinkade, shall have the right to sign the Artwork and/or Products on behalf of the Artist. Artist shall keep supervision and creative control of all Artwork and Products produced under this License Agreement.

c. Artist shall at all times be the sole owner of all copyrights associated with the Artwork. Publisher will take all necessary steps to protect Artist's copyright in and to Artwork created and utilized under this Agreement. Publisher may develop, and if applicable, register in any jurisdiction, any trademark (including both words and designs), service marks, trade dress, etc, based on the name "Thomas Kinkade", any Artwork, Artwork titles, or Products, and Publisher shall own all right, title and interest in such trademarks.

4. ARTIST APPROVAL RIGHTS

Artist shall have the reasonable right to review and approve any master copies of any Product bearing his name, likeness or Artwork, which is manufactured, marketed, licensed, used and/or sold by Publisher. Artist shall also have the right to review and approve any advertising,

advertising copy, slogans, sales information, Product marketing and/or business plans, ethical and moral codes, corporate vision and mission statements, and strategic relationships relating to the Products or use of Artist's name or likeness. Artist will have 30 days to review and approve any such information sent to Artist, such approval not to be unreasonably withheld. Artist must disapprove of any item in writing within said 30 day period or such item will be considered approved. Artist shall also have the reasonable right to review and approve any market in which any Product shall be sold, including but not limited to approval of Products manufactured or licensed for sale into the Christian market and the mass markets, such approval not to be unreasonably withheld. Artist and the Company shall mutually agree on the number of reproductions included in any limited edition Product.

5. ARTIST PAYMENTS

a. PERCENTAGE OF CONSOLIDATED NET REVENUES.

1. From the Effective Date of this Agreement through May 8, 2000, Artist shall receive 4.5% of Consolidated Net Revenues, calculated and payable 20 days from the last day of the month in which such Consolidated Net Revenue is earned, as determined in accordance with Generally Accepted Accounting Principles (GAAP);

2. Commencing May 9, 2000, Artist shall receive 5.0% of Consolidated Net Revenues, calculated and payable 20 days from the last day of the month in which such Consolidated Net Revenue is earned, as determined in accordance with GAAP; and

3. Should Consolidated Net Revenues of Publisher exceed $500 million dollars, Artist shall receive an additional 1% of all Consolidated Net Revenues in excess of $500 million calculated and payable 20 days from the last day of the month in which such Consolidated Net Revenue is earned.

4. Consolidated Net Revenues shall be all revenues of any Product relating, in any degree, to any use of Artist's name, Artwork, copyrights, slogans, painting titles, and/or trademarks, less any returns and allowances. Artist shall not be entitled to receive a percentage of Consolidated Net Revenues from products, business divisions or other enterprises which do not relate to Artist in any manner. Use of the name "Thomas Kinkade" or any other names, titles, or other Artwork related uses on any products, business divisions or other enterprises shall be deemed related to such products, business divisions or other enterprises.

b. PAYMENTS BASED ON STUDIO PROOF PRODUCT.

From the Effective Date of this Agreement through May 8, 2000, Artist shall receive 65% of Wholesale Gross Profit Margin of Studio Proof ("S/P") product, as determined in accordance with GAAP. Commencing May 9,

2000, Artist shall receive 35% of Wholesale Gross Profit Margin of S/P
product, calculated and payable 20 days from the last day of the month in
which such S/P product is delivered, as determined in accordance with GAAP.

                    c.   PAYMENTS BASED ON MASTERS EDITION PRODUCT.

From the Effective Date of this Agreement, Artist shall receive 50% of Retail Value of Masters Edition ("M/E") product, calculated and payable 20 days from the last day of the month in which such M/E product is delivered, as determined in accordance with GAAP.

d.