<PAGE>   1

                                                                   Exhibit 10.3



                              EMPLOYMENT AGREEMENT


                 AGREEMENT made as of September 18, 1996, between EQUITY
MARKETING, INC., a New York corporation with an office at 131 South Rodeo
Drive, Beverly Hills, CA  90212 (the "COMPANY"), and Merryl Lambert Reynolds,
an individual residing at 122 Morehouse Road, Easton, Connecticut 06612 (the
"EXECUTIVE").


                             W I T N E S S E T H :


                 WHEREAS, the Company desires that the Executive be employed to
serve in a senior executive capacity with the Company, and the Executive
desires to be so employed by the Company, upon the terms and conditions set
forth in this Agreement.

                 NOW, THEREFORE, in consideration of the premises and of the
mutual promises, representations and covenants contained in this Agreement, the
parties agree as follows:


         1.      EMPLOYMENT.

                 The Company hereby employs the Executive and the Executive
hereby accepts such employment, subject to the terms and conditions set forth
in this Agreement, as a Vice President.


         2.      TERM.

                 The term of employment under this Agreement shall begin as of
the date hereof (the "EMPLOYMENT DATE") and shall continue through and
including December 31, 1999, subject to prior termination in accordance with
the terms of this Agreement.  Thereafter, this Agreement may be extended for
such period or periods as shall be mutually agreed in writing by the Executive
and the Company.


         3.      DUTIES.

                 (a)      The Executive shall perform the duties and functions
normally associated with the office of Vice President of a corporation and
shall report to the Company's Senior Vice President, Equity Toys.

                 (b)      The Executive agrees to devote all his or her working
time, attention and energies to the performance of the business of the Company
and of any of its affiliates by which he or she may be employed; and the
Executive shall not,





<PAGE>   2
directly or indirectly, alone or as a member of any partnership or other
organization, or as an officer, director or employee of any other corporation,
partnership or other organization, be actively engaged in or concerned with any
other duties or pursuits which materially interfere with the performance of his
or her duties under this Agreement, or which, even if non-interfering, may be
contrary to the best interests of the Company, except those duties or pursuits
specifically authorized by the Chairman or the President.

                 (c)      The Executive acknowledges that he or she will be
required to relocate to the Los Angeles area, and hereby agrees to do so.  The
Company will pay the Executive's reasonable moving expenses in connection with
such relocation.


         4.      COMPENSATION.

                 As compensation for the employment services to be rendered by
the Executive under this Agreement, including any services as an officer or
director of the Company and any of its affiliates, the Company agrees to pay,
or cause to be paid, to the Executive, and the Executive agrees to accept,
annualized compensation of $125,000 for the period from the date hereof through
December 31, 1996 and $125,000 thereafter, or such higher amount as the Board
of Directors may determine, payable in equal installments in accordance with
Company practice.  In addition, the Executive shall receive an annualized bonus
of $25,000 for the period from the Employment date through December 31, 1996
and a bonus of $25,000 following each subsequent full year of employment
hereunder, paid in accordance with the annual bonus timetable for other senior
officers of the Company.


         5.      EXPENSES.

                 The Company shall pay or reimburse the Executive, subject to
prior approval and upon presentment of such vouchers, receipts and other
supporting information as the Company may require, for all reasonable business
and travel expenses (other than those related to the Executive's automobile,
which shall be limited to the automobile allowance set forth below) which may
be incurred or paid by the Executive in connection with the employment of the
Executive by the Company in accordance with the Company's standard policies
then in effect.  In addition, the Company shall provide an automobile allowance
in accordance with the policy for other Vice Presidents of the Company.  The
Executive shall comply with such restrictions and shall keep such records as
the Company may require of its executives generally to facilitate compliance
with the requirements of the Internal Revenue Code of 1986, as amended from
time to time, and regulations promulgated thereunder.





                                      -2-
<PAGE>   3
         6.      INSURANCE AND OTHER BENEFITS.

                 The Executive shall be entitled to three weeks annual vacation
and to participate in and receive any other benefits provided by the Company to
other executive employees generally (including any personal and sick days,
401(k), health insurance, dental coverage, life insurance and short and
long-term disability insurance plans in accordance with the terms of such
plans), all as determined from time to time by the Board of Directors of the
Company or appropriate committee thereof.


         7.      STOCK OPTIONS.

                 In accordance with the resolution of the Company's Board of
Directors, the Company and the Executive will enter into a Stock Option
Agreement dated as of the date of this Agreement providing for ten year stock
options to purchase 50,000 shares of the Company's Common Stock, at the fair
market value thereof on the date of this Agreement, with 20% of the options
vesting on each anniversary of the grant date, subject to the terms and
conditions of the Company's standard stock option agreement; provided, however,
that all such options shall become fully vested if the Executive is employed by
the Company as of December 31, 1999 and Company determines not to renew this
Agreement after December 31, 1999.  In addition, the Executive may receive
additional options from time to time at the discretion of the Board of
Directors.


         8.      TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.

                 (a)      The Executive's employment may be terminated by the
Company in its sole discretion at any time, with or without cause, upon written
notice to the Executive.

                 (b)      If the Executive shall die during the term of his or
her employment by the Company, this Agreement shall terminate immediately.  In
such event, the estate of the Executive shall thereupon be entitled to receive
such portion of the Executive's annual salary as have been earned or accrued
and remain unpaid through the date of his or her death.

                 (c)      Notwithstanding any provision to the contrary
contained herein, in the event that the Executive's employment is terminated by
the Company at any time for any reason other than Justifiable Cause (as defined
in subsection (e) below), Disability (as defined in subsection (d) below) or
death, the Company shall pay the Executive's salary (payable in such amount and
in such manner as set forth in Section 4 of this Agreement), the bonus set
forth in Section 4 and health insurance (until such time as the Executive
obtains new employment) for the remainder of the stated term of this Agreement,
which payments shall be in lieu of any and all other payments due and owing to
the Executive under the terms of this Agreement.  The Executive shall





                                      -3-
<PAGE>   4
not be required to seek other employment or to otherwise mitigate the effects
of such termination, and such salary payments shall not be reduced by any
income received from other sources.

                 (d)      For the purposes of this Agreement, the term
"DISABILITY" shall mean the inability of the Executive, due to illness,
accident or any other physical or mental incapacity, to perform his or her
duties in a normal manner for a period of two consecutive months or for a total
of four months (whether or not consecutive) in any twelve month period during
the term of this Agreement.

                 (e)      For the purposes of this Agreement, the term
"JUSTIFIABLE CAUSE" shall mean: (i) the willful or material breach by the
Executive of any of the terms of this Agreement; (ii) the Executive's
conviction of (or plea of guilty or nolo contendere with respect to) any theft,
fraud or crime involving moral turpitude or crime or offense involving money or
other property of the Company or any affiliate of the Company or which
constitutes a felony in the jurisdiction involved; (iii) the engaging by the
Executive in willful misconduct which is injurious to the Company or its
affiliates, monetarily or otherwise, including without limitation any act or
acts that in the reasonable opinion of the Company's Chairman or President,
give rise to a material risk of liability for discrimination or sexual or other
forms of harassment or other similar liabilities to subordinate employees; (iv)
insubordination of a material nature; (v) gross negligence by the Executive
with respect to his or her services to the Company which has continued for 15
days after notice to the Executive; (vi) continued and repeated substantive
violations of reasonable, specific written directions of the Executive's
supervisor or the Company's Chairman or President, which directions are
consistent with this Agreement and the Executive's position as an executive
officer or continued and repeated failure to perform duties assigned by or
pursuant to this Agreement or in accordance with the policies of the Company
and which have continued for 15 days after notice to the Executive; (vii) any
unauthorized disclosure by the Executive of any Confidential Information (as
defined in this Agreement); (viii) any material breach by the Executive of his
or her fiduciary duty to the Company, including any misappropriation of a
corporate opportunity; or (ix) excessive absenteeism, or alcohol or drug abuse
which has continued for 15 days after notice to the Executive.


         9.      REPRESENTATIONS AND AGREEMENTS OF THE EXECUTIVE.

                 (a)      The Executive represents and warrants that he or she
is free to enter into this Agreement and to perform the duties required under
this Agreement, and that there are no employment contracts or understandings,
restrictive covenants or other restrictions, whether written or oral,
preventing the performance of his or her duties under this Agreement.

                 (b)      The Executive agrees to submit on reasonable notice
to a medical examination (at the Company's expense) and to cooperate and supply
such other information and documents as are in the Executive's possession as
may reasonably be





                                      -4-
<PAGE>   5
required by any insurance company in connection with the Company's obtaining
any type of insurance or fringe benefit as the Company shall determine from
time to time to obtain for the Executive.  The Executive shall be given a
complete report of each such examination.


         10.     CONFIDENTIALITY

                 (a)      The Executive acknowledges that, during the course of
his or her employment by the Company, the Executive will have access to
confidential or proprietary information, documents and other materials relating
to the Company, its affiliates and their respective business which are not
generally known to persons outside the Company (whether conceived or developed
by the Executive or others) and confidential or proprietary information,
documents and other materials entrusted to the Company by third parties,
including, without limitation, any "know-how," trade secrets, customer lists,
details of client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development techniques or
plans, business plans and acquisition plans of the Company or its affiliates
that are valuable and not generally known to the competitors of the Company,
whether or not in written or tangible form, and including all memoranda, notes,
plans, reports, records, documents and other evidence thereof ("CONFIDENTIAL
INFORMATION").  Neither the Executive nor any entity affiliated with the
Executive will, directly or indirectly, during the term of the Executive's
employment by the Company and/or thereafter, disclose to anyone, or use or
otherwise exploit for the Executive's own benefit or for the benefit of anyone
other than the Company or its affiliates, any Confidential Information.
Confidential Information shall not include information which (i) the Executive
can show was not acquired or obtained from the Company or any of its affiliates
(whether received before or after the date of this Agreement), or (ii) is or
becomes generally available to the industry other than as a result of a
disclosure, directly or indirectly by the Executive.

                 (b)      The Executive agrees that all Confidential
Information conceived, discovered or made by the Executive during the term of
employment belongs to the Company.  The Executive will promptly disclose such
Confidential Information to the Company and perform all actions reasonably
requested by the Company to establish and confirm such ownership.

                 (c)      All Confidential Information relating to the Company
and its affiliates shall be the exclusive property of the Company and its
affiliates, and the Executive shall use all reasonable efforts to prevent any
publication or disclosure thereof.  Upon termination of the Executive's
employment with the Company, all documents, records, reports, writings and
other similar documents containing Confidential Information, including copies
thereof, then in the Executive's possession or control shall be returned to and
left with the Company.





                                      -5-
<PAGE>   6
         11.     COPYRIGHTS, PATENTS, TRADEMARKS.

                 (a)      All right, title and interest, of every kind
whatsoever, in the United States and throughout the world, in (i) any work,
including the copyright thereof (for the full terms and extensions thereof in
every jurisdiction), created by the Executive at any time during the term of
this Agreement and all material embodiments of the work subject to such rights;
and (ii) all inventions, ideas, discoveries, designs and improvements,
patentable or not, made or conceived by the Executive at any time during the
term of this Agreement, shall be and remain the sole property of the Company
without payment of any further consideration to the Executive or any other
person, and each such work shall, for purposes of United States copyright law,
be deemed created by the Executive pursuant to his or her duties under this
Agreement and within the scope of his or her employment and shall be deemed a
work made for hire; and the Executive agrees to assign, at the Company's
expense, and the Executive does hereby assign, all of his or her right, title
and interest in and to all such works, copyrights, materials, inventions,
ideas, discoveries, designs and improvements, patentable or not, and any
copyrights, letters patent, trademarks, trade secrets, and similar rights, and
the applications therefor, which may exist or be issued with respect thereto.
For the purposes of this Section 11, "WORKS" shall include all materials
created during the term of this Agreement, whether or not ever used by or
submitted to the Company, including, without limitation, any work which may be
the subject matter of a copyright under United States copyright law.  In
addition to its other rights, the Company may copyright any such work in its
name in the United States in accordance with the requirements of the United
States copyright law and the Universal Copyright Convention and any other
convention or treaty to which the United States is or may become a party.

                 (b)      Whenever the Company shall so request, whether during
or after the term of this Agreement, the Executive shall execute, acknowledge
and deliver all applications, assignments or other instruments; make or cause
to be made all rightful oaths; testify in all legal proceedings; communicate
all known facts which relate to such works, copyrights, inventions, ideas,
discoveries, designs and improvements; perform all lawful acts and otherwise
render all such assistance as the Company may deem necessary to apply for,
obtain, register, enforce and maintain any copyrights, letters patent and
trademark registrations of the United States or any foreign jurisdiction or
under the Universal Copyright Convention (or any other convention or treaty to
which the United States is or may become a party), or otherwise to protect the
Company's interests therein, including any which the Company shall deem
necessary in connection with any proceeding or litigation involving the same.
The Company shall reimburse the Executive for all reasonable out-of-pocket
costs incurred by the Executive in testifying at the Company's request or in
rendering any other assistance requested by the Company pursuant to this
Section 11.  All registration and filing fees and similar expenses shall be
paid by the Company.





                                      -6-
<PAGE>   7
         12.     RESOLUTION OF DISPUTES.

                 (a)      Except as provided in Section 13 below, any
controversy or claim between or among the parties relating to the Executive's
employment with the Company, including but not limited to those arising from an
alleged tort, shall at the request of either party be determined by
arbitration.  The arbitration shall be conducted in Los Angeles, California, in
accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision in this Agreement, and under the
Commercial Rules of the American Arbitration Association ("AAA").  The parties
shall have the right to review and approve a panel of prospective arbitrators
supplied by AAA, but the arbitration shall be conducted by a single arbitrator
selected from the approved panel by AAA or by stipulation of the parties.  The
arbitrator(s) shall give effect to statutes of limitation in determining any
claim.  Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s).  The arbitrator(s) shall be entitled to order
specific performance of the obligations imposed by this Agreement.  Judgment
upon the arbitration award may be entered in any court having jurisdiction.

                 (b)      All decisions of the arbitrator(s) shall be final,
conclusive and binding on all parties and shall not be subject to judicial
review.  The arbitrator(s) shall divide all costs (other than fees of counsel)
incurred in conducting the arbitration proceeding in the final award in
accordance with what they deem just and equitable under the circumstances.


         13.     RIGHT TO INJUNCTION.

                 In the event of a breach of Section 10 or 11 of this Agreement
by the Executive, the Company shall be entitled to injunctive relief or any
other legal or equitable remedies.  The Executive recognizes that the services
to be rendered by him or her under this Agreement are of a special, unique,
unusual, extraordinary and intellectual character involving skill of the
highest order and giving them peculiar value the loss of which cannot be
adequately compensated for in damages.  The remedies provided in this Agreement
shall be deemed cumulative and the exercise of one shall not preclude the
exercise of any other remedy at law or in equity for the same event or any
other event.  Section 12(a) above does not prohibit a party from seeking and
obtaining injunctive relief pending the outcome of arbitration.  A party
bringing an action for injunctive relief shall not be deemed to have waived its
right to demand arbitration of all disputes.


         14.     ASSIGNMENT.

                 The rights and obligations of the Company under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Company.





                                      -7-
<PAGE>   8
         15.     AMENDMENT OR ALTERATION.

                 No amendment or alteration of the terms of this Agreement
shall be valid unless made in writing and signed by both of the parties to this
Agreement.


         16.     ATTORNEY'S FEES.

                 If any action, proceeding or arbitration is brought to enforce
or interpret any provision of this Agreement, the Prevailing Party shall be
entitled to recover as an element of its costs, and not its damages, its
reasonable attorneys' fees, costs and expenses.  The "PREVAILING PARTY" is the
party who would have been entitled to recover its costs under the California
Code of Civil Procedure had the action been maintained in the Superior Court of
California, regardless of whether there is a final judgment.  A party not
entitled to recover its costs may not recover attorneys' fees.  No sum for
attorneys' fees shall be counted in calculating the amount of a judgment for
purposes of determining whether a party is entitled to recover its costs or
attorneys' fees.


         17.     GOVERNING LAW.

                 This Agreement shall be governed by the laws of the State of
California applicable to agreements made and to be performed therein.


         18.     SEVERABILITY.

                 The holding of any provision of this Agreement to be invalid
or unenforceable by a court of competent jurisdiction shall not affect any
other provision of this Agreement, which shall remain in full force and effect.


         19.     NOTICES.

                 Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if delivered by hand, or sent
by certified mail, return receipt requested, to the addresses set forth above
or such other address as either party may from time to time designate in
writing to the other, and shall be deemed given as of the date of the delivery
or mailing.


         20.     WAIVER OR BREACH.

                 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.





                                      -8-
<PAGE>   9
         21.     ENTIRE AGREEMENT AND BINDING EFFECT.

                 This Agreement contains the entire agreement of the parties
with respect to the subject matter hereof and shall be binding upon and inure
to the benefit of the parties to this Agreement and their respective legal
representatives, heirs, distributors, successors and assigns.  Notwithstanding
the foregoing, no prior agreements between the Executive and the Company
relating to the confidentiality of information, trade secrets and patents shall
be affected by this Agreement.


         22.     SURVIVAL.

                 The termination of the Executive's employment hereunder shall
not affect the enforceability of Sections 10, 11 and 13 of this Agreement.


         23.     FURTHER ASSURANCES.

                 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.


         24.     HEADINGS.

                 This Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.


                 IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.



                                       EQUITY MARKETING, INC.


                                       By: /s/ STEPHEN P. ROBECK
                                          ----------------------------



                                       /s/ MERRYL LAMBERT REYNOLDS 
                                       --------------------------------
                                           Merryl Lambert Reynolds






                                      -9-