Document:

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                                                                    EXHIBIT 10.3

                             EMPLOYMENT AGREEMENT
                             --------------------

          THIS AGREEMENT is made as of the 31st day of December, 1999, by and
between FILM ROMAN, INC., a California corporation, 12020 Chandler Street, North
Hollywood, California 91607 ("Company") and JON VEIN, 101 No. Las Palmas Avenue,
Los Angeles, California 90004 ("Executive").

          In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     1.   Employment:
          ----------

          1.1  Company shall employ Executive and Executive accepts such
employment with the Company upon the terms and conditions set forth in this
agreement.

          1.2  During the Term defined below Executive shall serve as a senior
executive of Company as Executive Vice President performing (i) services as
supervisor of the business affairs and internal legal areas, (ii) services
overseeing feature development and production, and (iii) any other duties
including all activities incidental thereto which are consistent with
Executive's title as may be assigned to him by the Company's Chief Executive
Officer or the Board of Directors ("Board"); Executive shall be included in
consideration of material business decisions of management.

          1.3  Executive shall devote Executive's best efforts and Executive's
exclusive full business time and attention (as required by the Chief Executive
Officer of the Company or the Board) to the business and affairs of Company, its
parent, and their direct or indirect wholly owned subsidiaries, if any. In
connection with the foregoing, Executive shall be located at and perform his
services primarily at the Company's principal executive offices located in the
greater Los Angeles Metropolitan area (it being understood that the performance
of Executive's duties shall include business travel from time to time outside of
such area).

          1.4  Executive shall perform Executive's duties and responsibilities
to the best of Executive's abilities in a diligent, trustworthy, business-like
and efficient manner and shall comply with Company's reasonable instructions and
regulations in all matters, including, if applicable, artistic taste.

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          1.5  Reference is made to Company's "Executive Handbook" as the same
may be currently in effect or hereafter modified (modifications, if any, which
are inconsistent with specific provisions of this agreement shall not be deemed
incorporated herein). Said Executive Handbook shall be deemed a part of this
Agreement, except that the Company's termination rights hereunder shall be only
as set forth in this Agreement and if there are any other inconsistencies
between the handbook and this agreement the provisions of this Agreement shall
prevail.

          1.6  Executive shall cooperate with Company to enable Company to
obtain, at its expense, life insurance on the life of Executive for the benefit
of Company in such amounts as Company may from time to time determine, but
failure to qualify for insurance shall not be a breach hereof.

     2.   Term:
          ----

          2.1  The term (herein "Term") of this agreement shall commence as of
January 1, 1999, and shall continue, unless sooner terminated as elsewhere
herein provided, for two (2) consecutive "contract years" as defined below. The
date on which the Term is scheduled to expire shall be referred to herein as the
"Expiration Date."

          2.2  The term "contract year" as used above means each period of
fifty-two (52) consecutive weeks; provided, however, that if the Term were to
                                  --------  -------
expire in the middle of any week, the Term shall be deemed extended so as to
expire on the Friday of such week.

     3.   Termination and Effect of Termination:
          --------------------------------------

          3.1  Expiration of Term. Executive's employment by the Company and
               ------------------
this Agreement shall automatically expire and terminate on the expiration of the
Term unless sooner terminated pursuant to the provisions of this Section 3.

          3.2  Death. Executive's employment by the Company and this Agreement
               -----
shall automatically terminate upon Executive's death.

          3.3  Disability. The Company shall have the right and option,
               ----------
exercisable by giving written notice to Executive, to terminate Executive's
employment by the Company and this Agreement at any time after Executive has
been unable to perform the services or duties required of Executive in
connection with Executive's employment by the Company as a result of physical or
mental disability (or disabilities) which has (or have) continued for a period
of 60 days in the aggregate, during any twelve (12) month period. Executive
shall be deemed to be physically or mentally incapacitated if Executive is
unable for any reason whatsoever to devote substantial time to the business of
the Company, as determined by

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the Board in good faith. If the Company determines that Executive is disabled or
incapacitated and if Executive does not agree, determination shall be made by a
panel of three (3) doctors, the first to be chosen by the Company, the second to
be chosen by Executive and the third to be chosen by the first two. Any doctor
selected by a party will not be affiliated, associated or related to the party
selecting that doctor in any manner whatsoever. The opinion of a majority of the
panel of doctors shall be binding on the parties hereto. Each party shall bear
its own cost for their own doctor, and the parties shall split the cost of the
third doctor (unless it is determined that Executive is not permanently
incapacitated, in which even all doctor costs shall be borne by Company).

          3.4  For Cause. The Company shall have the right and option,
               ---------
exercisable by giving written notice to Executive, to terminate Executive's
employment by the Company and this Agreement at any time after the occurrence of
any of the following events or contingencies (any such termination being deemed
to be a termination "for cause"):

                    (i)   Executive materially breaches, materially
     repudiates or otherwise materially fails to comply with or
     perform any of the terms of this Agreement, any duties of
     Executive in connection with Executive's employment by the
     Company or any of the Company's policies or procedures, or
     deliberately interferes with the compliance by any other
     Executive of the Company with any of the foregoing; provided,
     that if any action or omission by Executive constituting one of
     the foregoing is curable and does not constitute any of the
     events or actions described in clause (ii), below, Executive
     shall have five (5) business days to cure such breach following
     notice thereof from the Company (which notice shall be written
     or, if immediate written notice is not possible, oral notice may
     be given, provided that such oral notice is confirmed in writing
     within the foregoing five business day period.) (For purposes of
     this clause (i) and clauses (iii) and (iv), below, an action (or
     omission) shall be "intentional" if Executive knows, or
     reasonably should have known, that such action (or omission)
     constitutes a material breach hereof). For these purposes,
     actions (or omissions) by the Executive which he in good faith
     believes to be in the best interests of the Company and are
     permitted by this Agreement shall not be deemed in any
     circumstance to constitute an action (or omission) which he
     "reasonably should have known" to constitute a material breach of
     this Agreement;

                    (ii)  The conviction by Executive of a felony or
     the pleading by Executive of no contest (or similar plea) to any
     felony (other than a crime for which vicarious liability is
     imposed upon Executive solely by reason of Executive's position
     with the Company, and not by reason of Executive's conduct). For
     purposes of this clause, the Company shall bear the burden of
     proof in any action in which the Company attempts to terminate
     Executive based upon the "commission of a felony" unless a
     judgment of "guilty" has been entered against Executive in a
     court of competent jurisdiction with respect to such felony; or

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                    (iii) Any act or omission by Executive
     constituting fraud, gross negligence or willful misconduct in
     connection with Executive's employment by the Company; provided,
     that if any action or omission by Executive constituting one of
     the foregoing is curable and does not constitute any of the
     events or actions described in clause (ii) above, Executive shall
     have five (5) business days to cure such breach following notice
     thereof from the Company (which notice shall be written or, if
     immediate written notice is not possible, oral notice may be
     given, provided that such oral notice is confirmed in writing
     within the foregoing five business day period).

          3.5  Employment Beyond the Term. The Company shall have no obligation
               --------------------------
to renew or extend the Term. Neither (i) the expiration of the Term, (ii) the
failure or refusal of the Company to renew or extend the Term, this Agreement,
or Executive's employment by the Company upon the Expiration of the Term nor
(iii) the termination of this Agreement by the Company pursuant to any provision
of this Section 3, shall be deemed to constitute a termination of Executive's
employment by the Company "without cause" for the purpose of triggering any
rights of or causes of action by Executive. The Company agrees to provide
Executive with at least three months notice of its determination whether to
extend the Term or allow the Term to expire; provided, however, if the Company
                                             --------  -------
provides Executive with less than three months notice, the Term shall be
automatically extended at Executive's option to that date which is three months
following the giving of any such notice.

          3.6  Consequences of Termination. If this Agreement, the Term or
               ---------------------------
Executive's employment by the Company is terminated or expires pursuant to any
provision of this Section 3 (other than Section 3.2, 3.3 or 3.7), or is
terminated by Executive, Executive's right to receive salary or other
compensation from the Company and all other rights and entitlements of Executive
pursuant to this Agreement or as an Executive of the Company shall forthwith
cease and terminate, and the Company shall have no liability or obligation
whatsoever to Executive, except that:

                    (i)   The Company shall be obligated to pay to
     Executive not later than five days following the effective date
     of such termination all unpaid salary, vacation and reimbursable
     expenses which shall have accrued as of the effective date of
     such termination; and

                    (ii)  The terms and conditions of applicable
     Executive Benefit Plans, if any, shall control Executive's
     entitlement, if any, to receive benefits thereunder.

               In event of termination other than for cause Executive
     shall retain rights to stock options which have theretofore
     vested as provided in

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     the Stock Option Agreements, as amended hereby.

          3.7  Termination Without Cause. The Company shall not be obligated to
               -------------------------
utilize Executive's services or any of the results and proceeds thereof or to
permit Executive to retain any corporate office or to continue to do so; and the
Company shall have the unilateral right, at any time, without notice, in the
Company's sole and absolute discretion, to terminate Executive's employment by
the Company, without cause, and for any reason or for no reason (the Company's
"Termination Rights"). The Company's Termination Rights are not limited or
restricted by, and shall supersede, any policy of the Company requiring or
favoring continued employment of its Executives during satisfactory performance,
any seniority system or any procedure governing the manner in which the
Company's discretion is to be exercised. No exercise by the Company of its
Termination Rights shall, under any circumstances, be deemed to constitute (i) a
breach by the Company of any term of this Agreement, express or implied
(including without limitation a breach of any implied covenant of good faith and
fair dealing), (ii) a wrongful discharge of Executive or a wrongful termination
of Executive's employment by the Company, or (iii) a wrongful deprivation by the
Company of Executive's corporate office (or authority, opportunities or other
benefits relating thereto). If the Company elects to terminate Executive's
employment by the Company without cause prior to the expiration of the Term, the
Company shall have no obligation or liability to Executive pursuant to this
Agreement or otherwise, except to pay to Executive not later than the effective
date of such termination (i) all unpaid vacation which shall have accrued as of
the effective date of such termination, (ii) a lump-sum payment equal to the
aggregate amount of salary provided in Section 4.1 hereto that would have been
payable to Executive during the remainder of the Term, as if Executive's
employment by the Company had not been terminated. If the Company terminates
Executive's employment without cause prior to the Expiration Date, Executive
shall have no obligation to mitigate and the Company shall have no right to
offset the Company's payment obligations against any employment income received
by Executive.

          3.8  Termination by Executive. Executive shall have the right to
               ------------------------
terminate the term of this Agreement prior to the expiration date specified
herein:

                    (i)   If the Company materially breaches this
     Agreement (including, but not limited to, the provisions of
     Section 1.2 hereof) and such breach is not cured within five (5)
     business days after receipt of written notice from Executive
     alleging such breach; or

                    (ii)  Executive shall have the right and option,
     exercisable by giving written notice to the Company, to terminate
     Executive's employment by the Company and this Agreement at any
     time during the 90-day period following the occurrence of a
     Change of Control, in which case the Company shall make the
     payments required by Section 3.7.

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                    For purposes of this agreement the term "Change of Control"
shall have the same meaning here as in the Company's current Stock Option Plan
namely,

               (a)  A merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company's incorporation.

               (b)  The sale, transfer or other disposition of all or
substantially all of the assets of the Company, or

               (c)  any other corporate reorganization or business combination
in which fifty (50%) percent or more of the Company's outstanding voting stock
is transferred to different holders in a single transaction or a series of
related transactions.

          3.9  Consequences of Termination - By Reason of Death or Disability.
               --------------------------------------------------------------

               If this Agreement, the Term or Executive's employment by the
Company is terminated or expires pursuant to the provisions of Section 3.2
(Death) or Section 3.3 (Disability), Executive's right to receive salary or
other compensation from the Company and all other rights and entitlements of
Executive pursuant to this Agreement or as an Executive of the Company shall
forthwith cease and terminate, and the Company shall have no liability or
obligation whatsoever to Executive, except that:

                    (i)   The Company shall be obligated to pay to Executive or
     Executive's estate, as applicable, not later than the effective date of
     such termination all unpaid salary, vacation and reimbursable expenses
     which shall have accrued as of the effective date of such Termination;

                    (ii)  The Company shall be obligated to pay to Executive or
     Executive's estate, as applicable, an amount equal to the Base Salary that
     would have accrued during the six months following the effective date of
     such termination, as if such termination had not occurred; and

                    (iii) The terms and conditions of applicable Executive
     Benefit Plans, if any, and the Stock Option Agreements referred to below
     and as hereby amended shall control Executive's entitlement, if any, to
     receive benefits thereunder.

     4.   Salary and Bonuses: Provided Executive fully and faithfully renders
          ------------------
all services required hereunder and is not otherwise in material breach hereof,
Company will

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pay salary (in equal weekly or bi-weekly installments) and bonuses as follows:

          4.1  Base Salary:
               -----------

               (a)  First contract year - for the period from January 1, 1999
                    until August 3, 1999: at rate of $235,000.00 per annum and
                    for the period from August 4, 1999 until December 31, 1999:
                    at rate of $250,000.00 per annum.

               (b)  Second contract year - for the period from January 1, 2000
                    until August 3, 2000: at rate of $250,000.00 per annum and
                    for the period from August 4, 2000 until December 31, 2000:
                    at rate of $275,000 per annum.

               Nothing herein shall preclude Company from reviewing and
increasing any compensation provided for herein which review shall occur not
more often than semi-annually; any such increases shall require the approval of
the Board.

          4.2  Bonuses: Executive may be entitled to an annual performance
               -------
bonus as from time to time determined by the Board of Directors (it being
acknowledged that there is no obligation to grant such a Bonus).

          4.3  Feature Film Bonuses.
               --------------------

               (a)  Executive shall receive bonuses with respect to the project
currently entitled, "There Goes The Neighborhood," which was the subject of a
development-production agreement between Company and Universal Pictures dated as
of March 4, 1996. If such project goes into production as either a motion
picture or a television program or television series produced by Company or
under its authority such bonuses shall equal:

                    (i)   five percent of fixed fees including
     production fee (limited to $1 million of production fees) and any
     animation production fee (limited to $1.5 million to $2.0 million
     of such fees) payable to Company with respect to each such motion
     picture or television production or episode of a television
     series; and

                    (ii)  seven percent of any contingent payments
     such as gross participations, adjusted gross participations, net
     profit participations or the like, no matter how characterized.

               Said bonuses shall be payable only to the extent Company actually
receives revenues upon which bonuses are based and at the time when the same are
so received by the Company, or within sixty (60) days thereafter, whether such
revenues are received during or after the Term. If Company becomes obligated to
return any portion of a payment, Executive shall likewise return his share of
the same. The bonuses referred

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to in this subparagraph (a) are fully vested.

               (b)  Omitted

          4.4  Compliance with Laws.  Company's obligation for payment of
               --------------------
compensation hereunder shall be subject to all present and future laws, rules,
regulations and executive orders affecting such obligation. No withholding,
deduction, reduction or limitation of payments hereunder by reason of any such
law, rule, regulation or order shall be deemed a breach of this agreement or
relieve Executive from Executive's obligations hereunder or give Executive any
right to terminate this agreement. If Company is unable to make full payments
hereunder because of any wage control law or regulation, Company shall pay
Executive any portion of such payment (which is not paid when due) at such time
when such law or regulation no longer prohibits such payment (unless such law or
regulation prohibits such retroactive payments).

     5.   Expenses:
          --------

          5.1  (a) Company shall reimburse Executive for such expenses which are
reasonably incurred by Executive on behalf of or for the benefit of Company in
accordance with the Company's then current expense reimbursement policies
applicable to senior executive officers (which in any event shall be no less
favorable than that applicable to the Chief Executive Officer) and the
presentation by Executive from time to time of an itemized account of such
expenditures setting forth the date, the purposes for which incurred, and the
amounts thereof, and such other information as Company may reasonably require,
together with such receipts showing payments as Executive has been able to
obtain. Company shall either pay for or reimburse Executive for all such travel
expenses as well as reasonable living expenses while he is outside of the
greater Los Angeles area.

               (b)  Further, Executive shall be entitled to a Company telephone
credit card. Executive shall also be entitled to a car allowance in the amount
of Five Hundred Dollars ($500.00) per month, which amount shall be reported on
Executive's W-2 or on Form 1099 (as Company may determine) and shall cover all
normal work-related automobile expenses and shall be payable in accordance with
Company's then existing policies (currently, payment to be made at the beginning
of each applicable month). Company shall reimburse Executive for 75% of all
charges relating to cellular telephone, and car telephone uses pertaining to
Company's business upon receipt of substantiating vouchers. With respect to the
car allowance, cellular telephone and car telephone, Company shall treat
Executive in accordance with the Company's then current policies applicable to
senior executive officers (which in any event shall be no less favorable than
that applicable to the Chief Executive Officer).

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     6.   Benefits:
          --------

          6.1  Medical Plans, etc.
               -------------------

               (a)  During the Term, Executive shall also be entitled to and
shall be accorded all rights and benefits under any life insurance, disability,
health and major medical insurance policy or policies, and any other plans or
benefits, 401(K) Plan and pension plans which Company may provide during the
Term ("Employee Benefit Plans") to senior executive officers generally.

               (b)  During each contract year Executive shall also be entitled
to (i) three (3) weeks of paid vacation at times to be mutually agreed to and
(ii) sick leave on a basis accorded other senior executives generally during the
Term.

               (c)  Provided that Executive meets qualifications (including
medical qualifications) for the same, Company shall furnish Executive with term
life insurance having a face value of $500,000.00, which insurance coverage
shall remain in effect during the Term hereof.

          6.2  Employee Stock Options:
               ----------------------

               (a)  Executive is currently entitled to participate in the
Employee Stock Option Plan of Film Roman, Inc., a Delaware corporation ("FRI
Delaware"). Said Plan includes usual provisions included in a non-qualified
stock option plan including the right to satisfy the exercise price with cash,
promissory notes (if secured to the reasonable satisfaction of FRI Delaware) or
stock in the FRI Delaware. Executive acknowledges that such Plan is not intended
to be an "incentive stock option" within the meaning of Section 422A of the
Internal Revenue Code of 1986 as amended and is to be considered in all respects
as "non-qualified." Executive's entitlement to participate in the Plan is set
forth in two (2) existing Stock Option Agreements both dated June 17, 1998; one
Stock Option Agreement relates to options pertaining to 62,500 shares and the
other relates to options pertaining to 40,000 shares.

               (b)  Additionally Company has caused FRI Delaware to grant to
Executive stock options concurrently herewith under the Plan pursuant to a Stock
Option Agreement dated January 1, 1999, containing the terms and conditions
summarized below, to purchase seventy-five thousand (75,000) shares of FRI
Delaware's common stock at an exercise price equal to its fair market value (as
defined in the Plan) as of December 17,

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1998, which options shall vest as follows:

                    (i)   an option as to 37,500 shares to vest
     immediately upon effective date of this agreement; and

                    (ii)  an option as to 37,500 shares to vest in
     twelve monthly installments, the first installment date being the
     first day of the second contract year with respect to 6,250
     shares; the following 10 installment dates being the first day of
     each of the following ten months with respect to 2,840 shares;
     and the last installment date being the first day of the last
     month of the second contract year with respect to 2,850 shares.

               Said options shall remain exercisable for a period ending on the
earlier to occur of (i) ten (10) years from the date of the grant, (ii) nine
months from the effective date of termination of this Agreement for any reason
other than Death (Section 3.2) or Disability (Section 3.3); and (iii) two years
from the effective date of termination of this Agreement by reason of Death
(Section 3.2) or Disability (Section 3.3).

          (c)  With respect to all stock options granted Executive, Executive
may elect to exercise such options on a cashless basis, deducting from the
number of option shares to be received a number of shares equal in value to the
exercise price of the option as determined in accordance with the provisions of
the Plan, as applicable. Without limiting the foregoing, in the event of
termination of this Agreement, unvested stock options granted hereunder shall be
canceled as and to extent provided in the Plan; except that if termination of
this agreement is by reason of Death (as provided in Section 3.2), Disability
(as provided in Section 3.3), without cause (as provided in Section 3.7 above)
or by Executive (as provided in Section 3.8 (i), (ii) or (iii) above) then and
in such event all options granted hereunder under subparagraph (b) but not yet
vested shall be accelerated and shall be considered vested as of the date of
such termination.

     7.   Company's Rights:
          ----------------

          7.1  Executive acknowledges that Company, as employer of Executive,
shall own all right, title and interest in and to the results of Executive's
services hereunder within the scope of his employment, including all material
developed or conceived by Executive within the scope of Executive's employment.
Company shall have the right to use all such materials and the elements thereof
and the programs or other productions in which the material is contained
worldwide and in perpetuity, without limitation or restriction whatsoever and
Company may distribute, broadcast and otherwise exhibit, use and/or exploit, in
whole or in part, worldwide, in perpetuity, same in any manner and through any

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media, whether presently in existence or subsequently devised, as Company may
elect. Executive hereby waives the so-called "moral rights" of an author.
Executive agrees and acknowledges that for purposes of Section 201 of the United
States Copyright Act and for ownership purposes, Company is the "employer for
hire" of Executive and shall have all ownership rights in the material and
services of Executive hereunder as the author thereof. Company shall have no
obligation to use the product of Executive's services.

          7.2  Without limiting the foregoing, Executive agrees that all
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports, and all similar or related information which relates to
Company's or any of its subsidiaries' actual or anticipated business, research
and development or existing or future products or services and which are
conceived, developed or made by Executive within the scope of his employment
while employed by Company or its predecessor belong to Company or such
subsidiary. Executive will promptly disclose to the Board and perform all
actions reasonably requested by the Board at Company's expense (whether during
or after the Term) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other instruments).

          7.3  Company shall have the right to use, disseminate, reproduce,
print and publish Executive's name, likeness, voice and approved biographical
material concerning Executive as news or informative matter in connection with
Company's business.

          7.4  Executive's services and rights herein granted are unique in
character and value such that the loss thereof could not reasonably be
compensable in damages in an action at law. Accordingly, Company shall be
entitled to seek equitable relief by way of injunction or otherwise to prevent
the breach or continued breach of this Agreement. The sole right of Executive as
to any breach or alleged breach hereof by Company shall be the recovery of money
damages, and the rights herein granted by Executive shall not be terminated by
reason of such breach. The waiver by either party of any breach hereof shall not
be deemed a waiver of any prior or subsequent breach hereof. All remedies of
either party shall be cumulative and the pursuit of one remedy shall not be
deemed a waiver of any other remedy.

     8.   Federal Communications Act:
          --------------------------

          To the extent that the same may be deemed applicable to any product
hereunder, reference is hereby made to Section 507 of the Federal Communications
Act, making it a criminal offense for any person, in connection with the
production or preparation of any program intended for broadcasting, to accept or
pay any money, service

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or other valuable consideration for the inclusion of any matter as part of any
such program or program matter without disclosing in advance the same to the
employer of the person to whom such payment is made or to the person for whom
such program is being produced, or to the station over which such program is
broadcast. Executive understands that it is the policy of Company not to permit
any employee of Company to accept or pay any such consideration, and Executive
represents and agrees that Executive has not accepted and will not accept, and
has not paid and will not pay, any money, services, or other valuable
consideration for the inclusion of any "plug," reference or product
identification, or any other matter in the programs produced hereunder.

     9.   Confidential Information:
          ------------------------

          Executive acknowledges that the information, observations, work
product, trade secrets and data obtained by Executive while employed by Company
and its subsidiaries concerning the business or affairs of the Company or any
subsidiary thereof ("Confidential Information") are the property of Company or
such subsidiary. Therefore, Executive agrees that Executive shall not disclose
to any unauthorized person or use for Executive's own account any Confidential
Information without the prior written consent of the Board, unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public other than as a result of Executive's acts or
omissions to act in breach of this Agreement or (ii) must be disclosed under a
subpoena or other governmental order or (iii) was possessed by Executive prior
to Executive's employment by the Company or (iv) are disclosed within scope of
period, or at any other time Company may request, all memoranda, notes, plans,
records, reports, computer tapes and software and other documents and data (and
copies thereof) relating to the Confidential Information, work product or the
business of Company or any subsidiary which Executive may then possess or have
under Executive's control; provided that Executive may retain his personal
rolodex and sample agreements.

     10.  Non-Compete, Non-Solicitation:
          -----------------------------

          10.1 Executive acknowledges that in the course of Executive's
employment with Company Executive has and will become familiar with Confidential
Information concerning Company and its subsidiaries and that Executive's
services have been and will be of special, unique and extraordinary value to
Company and its subsidiaries. Therefore, during the Term, Executive will not be
an employee, consultant, advisor, or director of any other person, firm or
corporation which is a Competitive Business. Further, Executive shall not become
financially interested or associated with, directly or indirectly, a Competitive
Business.

          10.2 Notwithstanding anything to the contrary contained herein,
Executive

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may own up to five percent (5%) of any class of a Competitive Business'
outstanding securities which are listed on any national securities exchange,
registered under Section 12(g) of the Securities Exchange Act of 1934 or
otherwise publicly traded, provided that the holdings of Executive of any such
security of a Competitive Business do not represent more than 10% of the
aggregate of Executive's investment portfolio at any time. For these purposes,
"Competitive Business" means all persons engaging in any business which directly
competes with that of the business of the Company.

          10.3 During Executive's employment and for two (2) years after the end
of the Term Executive will not attempt to solicit (for Executive's own purposes
or for any other company) any employee of, or independent contractor rendering
exclusive services to, Company at the time of such attempt or solicitation.
Further, during Executive's employment and for two (2) years after the end of
the Term Executive will not (i) transfer or attempt to transfer any projects in
which Company is involved (whether in negotiation, development or production)
from Company to Executive or to any other company and/or (ii) encourage any
company or business with whom Company is doing business (e.g. a network or other
exhibitor) from ceasing to do business with Company with respect to any project
which is then in negotiation, development or production.

     11.  Notices:
          -------

          All notices required to be given hereunder shall be in writing and
shall be delivered personally, or by express, certified or registered mail to
the respective addresses of the parties hereto set forth elsewhere in this
Agreement, or at such other addresses as may be designated by written notice.
Delivery of any notice shall be deemed conclusively made (i) if personally
delivered at the time of delivery, (ii) if delivered by any private overnight
express mail service, twenty-four (24) hours after deposit with such service
(this period shall be seventy-two (72) hours if addressed to or from a party
outside the United States), and (iii) if mailed, properly addressed and postage
prepaid, three (3) business days from date of mailing (seven (7) business days
if mailed to or from a country other than U.S.). A copy of any notice hereunder
to Company shall also be given to Dixon Q. Dern, 1901 Avenue of the Stars, Suite
400, Los Angeles, California 90067.

     12.  Immigration:
          -----------

          Company's engagement of Executive is subject to Executive's compliance
with the terms and provisions of the Federal Immigration and Naturalization Act
which compliance has been effected. In that regard concurrently with the
execution of this agreement Executive shall provide Company with such proof of
Executive's United States Citizenship or authorization to work in the United
States as may be required by the Immigration and Naturalization Service and
shall also complete and return to Company an I-9 Form or such other forms as may
be required.

                                       13
<PAGE>

     13.  Arbitration:
          -----------

          Any controversy or claim arising out of, or relating to, this
agreement, the breach thereof, or the coverage of this arbitration provision
shall be settled by arbitration pursuant to the provisions of Section 1280, et
seq. of the California Code of Civil Procedure (or such substitute provisions
therefor then in effect); provided, that any arbitrator(s) selected shall have
experience in or knowledge of the business(es) in which Company is engaged. Any
such arbitration shall be conducted in Los Angeles, California. The arbitration
of such issues, including the determination of the amount of any damages
suffered by any party hereof by reason of the acts or omissions of another shall
be to the exclusion of any court of law except as set forth below. The decision
of the arbitrators or a majority of them shall be final and binding on all
parties and their respective heirs, executors, administrators, successors and
assigns. Any action to secure a judicial confirmation of the arbitration award
may be brought in any state or federal court of competent jurisdiction. If the
parties or the arbitrators appointed by them are unable to agree upon the
selection of a neutral arbitrator then either party may, at its election,
require that the arbitration shall be conducted under the auspices and rules of
the American Arbitration Association (AAA) and that the neutral arbitrator shall
be selected by the AAA. Arbitration hereunder shall not, in any event, (i)
prevent any party from seeking and obtaining equitable relief, including, but
not limited to, prohibitory or mandatory injunctions, specific performance or
extraordinary writs, in any court of law or equity having jurisdiction, nor (ii)
prevent any party from joining any other party as defendant in any action
brought by or against a third party, nor (iii) prevent any party from filing
legal action hereunder to effectuate any attachment or garnishment, provided
that such party stipulates in such action, at any other party's request, to
arbitration on the merits of said case, nor (iv) prevent a party from filing
legal action to compel arbitration under the arbitration provisions hereof.

     14.  General Provisions:
          ------------------

          14.1 Warranties: Executive warrants that he is free to enter into this
               ----------
Agreement and will not knowingly do or permit any act which will interfere with
or derogate from the full performance of his services or Company's exercise of
the rights herein granted.

          14.2 Indemnity: Executive shall hold Company, its licensees and
               ---------
assigns, and the directors, officers, employees and agents of the foregoing,
harmless from all claims, liabilities, damages, costs and legal fees arising
from any breach by Executive of any warranty or agreement made by Executive
hereunder. Company will hold Executive harmless from all claims, liabilities,
damages, costs and legal fees arising from the use of any material supplied
Executive by Company or incorporated at Company's discretion or in connection
with or arising out of the performance of his duties pursuant to this agreement.
The party receiving notice of any claim or action subject to indemnity hereunder
shall promptly notify the other party. This indemnity shall survive any
termination or expiration of this Agreement. Company shall maintain directors
and officers liability coverage during the Term which coverage shall apply to
all officers of Company including

                                       14
<PAGE>

Executive, to extent provided therein.

          14.3 Waiver: A waiver by either party of any of the terms or
               ------
conditions of this agreement in any one instance shall not be construed to be a
waiver of such term or condition for the future, or any subsequent breach
thereof; all remedies, rights, undertakings, obligations and agreements
contained in this agreement shall be cumulative, and none of them shall be in
limitation of any other remedy, right, undertaking, obligation or agreement of
either party.

          14.4 Construction: This agreement shall be governed by and construed
               ------------
in accordance with the laws of the State of California applicable to contracts
entered into and fully to be performed therein. In view of the fact that this
agreement was in whole or in part negotiated and entered into in California, the
parties consent to and agree to submit to the jurisdiction of the courts of the
State of California (and/or the federal courts within California), and each
party agrees that service of process may be effected by mail (certified or
registered mail, return receipt requested), to or by personal service upon such
party (or any officer of a corporate party) at such party's address as set forth
in this agreement or such other address as such party may specify in writing.

               Wherever the context of this agreement requires it, each gender
shall be deemed to embrace and include the others, and the singular shall be
deemed to embrace and include the plural.

          14.5 Public Announcement. Subject to the Company's obligations as a
               -------------------
public company, the Company shall provide Executive with the right to review and
approve any public announcement of the terms, provisions, or execution of this
Agreement; provided, however, that Executive shall not unreasonably withhold
           --------  -------
such approval. Further, the Company and Executive shall mutually approve the
timing of the release of any public announcement made with respect to
Executive's employment; provided, however, that any such release shall be made
                        --------  -------
within ten days of the date of execution of this Agreement.

          14.6 Severability of Provisions: If any provision hereof as applied to
               --------------------------
either party or to any circumstance shall be adjudged by a court to be void or
unenforceable, the same shall in no way affect any other provisions hereof, the
application of such provision in any other circumstances or the validity or
enforceability hereof.

          14.7 Entire Understanding: This agreement and the Stock Option
               --------------------
Agreements referred to above contain the entire understanding of the parties
hereto relating to the subject matter herein contained and supersede any and all
prior negotiations, understanding and agreements between the parties (whether
oral or in writing); this agreement cannot be changed, rescinded or terminated
except by a writing signed by the parties.

          14.8 Successors and Assigns: Except where expressly provided to the
               ----------------------
contrary, this agreement, and all provisions hereof, shall inure to the benefit
of and be binding upon the parties hereto, their successors in interest,
assigns, administrators,

                                       15
<PAGE>

executors, heirs and devisees.

          14.9 Section Titles:  The titles of the Sections of this agreement are
               --------------
for convenience only and shall not in any way affect the interpretation of any
paragraphs of this agreement or of the agreement itself.

          IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first above written.

                                        FILM ROMAN, INC.

                                        By:  /s/ John W. Hyde
                                             ------------------------------

                                             Its --------------------------

                                        /s/ Jon Vein
                                        -----------------------------------
                                        JON VEIN

                                        Soc. Sec. No.: --------------------

                                       16<PAGE>

                                                                    EXHIBIT 10.5

                                                                January 14, 2000

TO:       Jon F. Vein

FROM:     Dixon Q. Dern

          Please refer to that certain agreement (the "Employment Agreement")
made as of December 31, 1999, by and between Film Roman, Inc. ("Company") and
you ("Executive"). Please refer further to the two Stock Option Agreements dated
June 17, 1998 between Executive and Company; which such Stock Option Agreement
relate to options pertaining to 62,500 shares and the other relates to options
pertaining to 40,000.

          As additional consideration for Executive's execution of the
Employment Agreement, Company (on its own behalf and on behalf of Film Roman,
Inc., Delaware) agrees that the vesting schedule referred to in paragraph 2.3(c)
of each Stock Option Agreement shall be and is hereby modified so that any
options under either Stock Option Agreement not vested as of December 31, 1999,
shall vest in twelve (12) equal monthly installments commencing on the first day
of January 2000 and thereafter on the first day of each successive month.

          Please indicate your agreement with the foregoing by signing in space
provided below.

                                        FILM ROMAN, INC.

                                        By: /s/ John W. Hyde
                                            ---------------------------------

                                            Its -----------------------------

ACCEPTED AND AGREED TO:

/s/ Jon F. Vein
-----------------------------
JON F. VEIN

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