Document:

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                                                                    EXHIBIT 4.3

                         PICTUREWORKS TECHNOLOGY, INC.

                                1997 STOCK PLAN

         1.       Purposes of the Plan. The purposes of this Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant of an Option and subject to the applicable provisions of Section 422 of
the Code and the regulations promulgated thereunder. Stock Purchase Rights may
also be granted under the Plan.

         2.       Definitions. As used herein, the following definitions shall
apply:

                  (a)      "Administrator" means the Board or any of its
Committees appointed pursuant to Section 4 of the Plan.

                  (b)      "Applicable Laws" means the legal requirements
relating to the administration of stock option plans under U.S. state corporate
laws, U.S. federal and state securities laws, the Code and the applicable laws
of any foreign country or jurisdiction where Options or Stock Purchase Rights
are, or will be, granted under the Plan.

                  (c)      "Board" means the Board of Directors of the Company.

                  (d)      "Code" means the Internal Revenue Code of 1986, as
amended.

                  (e)      "Committee" means a Committee appointed by the Board
of Directors in accordance with Section 4 of the Plan.

                  (f)      "Common Stock" means the Common Stock of the
Company.

                  (g)      "Company" means PictureWorks Technology, Inc., a
Delaware corporation.

                  (h)      "Consultant" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services
and is compensated for such services, and any Director of the Company whether
compensated for such services or not. If the Company registers any class of any
equity security pursuant to the Exchange Act, the term Consultant shall
thereafter not include Directors who are not compensated for their services or
are paid only a Director's fee by the Company.

                  (i)      "Continuous Status as an Employee or Consultant"
means that the employment or consulting relationship with the Company, any
Parent or Subsidiary is not interrupted or terminated. Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of (i)
any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor. A leave of absence approved by the Company shall include sick
leave, military leave, or any other personal leave approved by an authorized
representative of the Company. For purposes of Incentive Stock Options, no such
leave may exceed 90 days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract, including Company policies. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the 91st day of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and shall
be treated for tax purposes as a Nonstatutory Stock Option.

                  (j)      "Director" means a member of the Board of Directors
of the Company.

                                 Exhibit 4.3.1

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                  (k)      "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.

                  (l)      "Exchange Act" means the Securities Exchange Act of
1934, as amended.

                  (m)      "Fair Market Value" means, as of any date, the value
of Common Stock determined as follows:

                           (i)      If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

                           (ii)     If the Common Stock is regularly quoted by
a recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for
the Common Stock on the last market trading day prior to the day of
determination; or

                           (iii)    In the absence of an established market for
the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Administrator.

                  (n)      "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

                  (o)      "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.

                  (p)      "Officer" means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

                  (q)      "Option" means a stock option granted pursuant to
the Plan.

                  (r)      "Optioned Stock" means the Common Stock subject to
an Option or a Stock Purchase Right.

                  (s)      "Optionee" means an Employee or Consultant who
receives an Option or Stock Purchase Right.

                  (t)      "Parent" means a "parent corporation," whether now
or hereafter existing, as defined in Section 424(e) of the Code.

                  (u)      "Plan" means this 1997 Stock Plan.

                  (v)      "Restricted Stock" means shares of Common Stock
acquired pursuant to a grant of a Stock Purchase Right under Section 11 below.

                  (w)      "Section 16(b)" means Section 16(b) of the
Securities Exchange Act of 1934, as amended.

                  (x)      "Share" means a share of the Common Stock, as
adjusted in accordance with Section 12 below.

                  (y)      "Stock Purchase Right" means a right to purchase
Common Stock pursuant to Section 11 below.

                                 Exhibit 4.3.2

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                  (z)      "Subsidiary" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.

         3.       Stock Subject to the Plan. Subject to the provisions of
Section 12 of the Plan, the maximum aggregate number of Shares which may be
subject to option and sold under the Plan is Four Hundred Fifty Four Thousand
Two Hundred Fourteen (454,214) Shares. The Shares may be authorized but
unissued, or reacquired Common Stock.

                  If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an option exchange program, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated). However, Shares that have actually been issued under
the Plan, upon exercise of either an Option or Stock Purchase Right, shall not
be returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by
the Company at their original purchase price, and the original purchaser of
such Shares did not receive any benefits of ownership of such Shares, such
Shares shall become available for future grant under the Plan. For purposes of
the preceding sentence, voting rights shall not be considered a benefit of
Share ownership.

         4.       Administration of the Plan.

                  (a)      Initial Plan Procedure. Prior to the date, if any,
upon which the Company becomes subject to the Exchange Act, the Plan shall be
administered by the Board or a Committee appointed by the Board.

                  (b)      Plan Procedure After the Date, if any, upon Which
the Company becomes Subject to the Exchange Act.

                           (i)      Multiple Administrative Bodies. If
permitted by Rule 16b-3, the Plan may be administered by different bodies with
respect to Directors, Officers and Employees who are neither Directors nor
Officers.

                           (ii)     Administration With Respect to Directors
and Officers. With respect to grants of Options and Stock Purchase Rights to
Employees who are also Officers or Directors of the Company, the Plan shall be
administered by (A) the Board if the Board may administer the Plan in
compliance with the rules under Rule 16b-3 promulgated under the Exchange Act
or any successor thereto ("Rule 16b-3") relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made, or (B) a
Committee designated by the Board to administer the Plan, which Committee shall
be constituted to comply with the rules under Rule 16b-3 relating to the
disinterested administration of employee benefit plans under which Section
16(b) exempt discretionary grants and awards of equity securities are to be
made. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made.

                           (iii)    Administration With Respect to Other
Employees and Consultants . With respect to grants of Options and Stock
Purchase Rights to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a Committee designated by the Board, which committee shall be constituted in
such a manner as to satisfy Applicable Laws. Once appointed, such Committee
shall continue to serve in its designated capacity until otherwise directed by
the Board. From time to time the Board may increase the size of the Committee
and appoint additional members thereof, remove members (with or without cause)
and appoint new members in substitution therefor, fill vacancies, however
caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.

                                 Exhibit 4.3.3

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                  (c)      Powers of the Administrator. Subject to the
provisions of the Plan and, in the case of a Committee, the specific duties
delegated by the Board to such Committee, and subject to the approval of any
relevant authorities, including the approval, if required, of any stock
exchange upon which the Common Stock is listed, the Administrator shall have
the authority in its discretion:

                           (i)      to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(m) of the Plan;

                           (ii)     to select the Consultants and Employees to
whom Options and Stock Purchase Rights may from time to time be granted
hereunder;

                           (iii)    to determine whether and to what extent
Options and Stock Purchase Rights or any combination thereof are granted
hereunder;

                           (iv)     to determine the number of Shares to be
covered by each such award granted hereunder;

                           (v)      to approve forms of agreement for use under
the Plan;

                           (vi)     to determine the terms and conditions of
any award granted hereunder;

                           (vii)    to determine whether and under what
circumstances an Option may be settled in cash under subsection 9(f) instead of
Common Stock;

                           (viii)   to reduce the exercise price of any Option
to the then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option has declined since the date the Option was
granted; and

                           (ix)     to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan.

                  (d)      Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options or Stock Purchase
Rights.

         5.       Eligibility.

                  (a)      Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Employees and Consultants. Incentive Stock Options may be
granted only to Employees. An Employee or Consultant who has been granted an
Option or Stock Purchase Right may, if otherwise eligible, be granted
additional Options or Stock Purchase Rights.

                  (b)      Each Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Optionee during any calendar
year (under all plans of the Company and any Parent or Subsidiary) exceeds
$100,000, such Options shall be treated as Nonstatutory Stock Options. For
purposes of this Section 5(b), Incentive Stock Options shall be taken into
account in the order in which they were granted. The Fair Market Value of the
Shares shall be determined as of the time the Option with respect to such
Shares is granted.

                  (c)      Neither the Plan nor any Option or Stock Purchase
Right shall confer upon any Optionee any right with respect to continuation of
his or her employment or consulting relationship with the Company, nor shall it
interfere in any way with his or her right or the Company's right to terminate
his or her employment or consulting relationship at any time, with or without
cause.

                  (d)      Upon the Company or a successor corporation issuing
any class of common equity securities required to be registered under Section
12 of the Exchange Act or upon the Plan being assumed by a corporation having a

                                 Exhibit 4.3.4

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class of common equity securities required to be registered under Section 12 of
the Exchange Act, the following limitations shall apply to grants of Options
and Stock Purchase Rights to Employees:

                           (i)      The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization
as described in Section 12.

                           (ii)     If an Option or Stock Purchase Right is
cancelled in the same fiscal year of the Company in which it was granted (other
than in connection with a transaction described in Section 12), the cancelled
Option or Stock Purchase Right shall be counted against the limit set forth in
subsection (i) above. For this purpose, if the exercise price of an Option or
Stock Purchase Right is reduced, such reduction will be treated as a
cancellation of the Option or Stock Purchase Right and the grant of a new
Option or Stock Purchase Right.

         6.       Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval by
the shareholders of the Company, as described in Section 18 of the Plan. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 14 of the Plan.

         7.       Term of Option. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof. In the case of an
Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.

         8.       Option Exercise Price and Consideration.

                  (a)      The per share exercise price for the Shares to be
issued upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:

                           (i)      In the case of an Incentive Stock Option

                                    (A)      granted to an Employee who, at the
time of grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.

                                    (B)      granted to any other Employee, the
per Share exercise price shall be no less than 100% of the Fair Market Value
per Share on the date of grant.

                           (ii)     In the case of a Nonstatutory Stock Option

                                    (A)      granted to a person who, at the
time of grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of the grant.

                                    (B)      granted to any other person, the
per Share exercise price shall be no less than 85% of the Fair Market Value per
Share on the date of grant.

                  (b)      The consideration to be paid for the Shares to be
issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant). Such consideration may consist of
(1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the
case of Shares acquired upon exercise of an Option, have been owned by the
Optionee for more than six months on the date of surrender, and (y) have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which such Option shall be exercised, (5) delivery of a
properly executed exercise notice together with such other documentation as the
Administrator and a broker, if applicable, shall require to effect an exercise
of the

                                 Exhibit 4.3.5

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Option and delivery to the Company of the sale or loan proceeds required to pay
the exercise price, or (6) any combination of the foregoing methods of payment.
In making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.

         9.       Exercise of Option.

                  (a)      Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan.

                           An Option may not be exercised for a fraction of a
Share.

                           An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance
with the terms of the Option by the person entitled to exercise the Option and
full payment for the Shares with respect to which the Option is exercised has
been received by the Company. Full payment may, as authorized by the
Administrator, consist of any consideration and method of payment allowable
under Section 8(b) hereof. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote,
receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment shall be made for a dividend or other
right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 12 hereof.

                           Exercise of an Option in any manner shall result in
a decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.

                  (b)      Termination of Employment or Consulting
Relationship. In the event of termination of an Optionee's Continuous Status as
an Employee or Consultant (but not in the event of an Optionee's change of
status from Employee to Consultant (in which case an Employee's Incentive Stock
Option shall automatically convert to a Nonstatutory Stock Option on the date
three (3) months and one day following such change of status) or from
Consultant to Employee), such Optionee may, but only within such period of time
as is determined by the Administrator, of at least thirty (30) days, with such
determination in the case of an Incentive Stock Option not exceeding three (3)
months after the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that the Optionee was
entitled to exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

                  (c)      Disability of Optionee. In the event of termination
of an Optionee's Continuous Status as an Employee or Consultant as a result of
his or her disability, the Optionee may, but only within twelve (12) months
from the date of such termination (and in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), exercise
the Option to the extent otherwise entitled to exercise it at the date of such
termination. If such disability is not a "disability" as such term is defined
in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Nonstatutory Stock
Option on the day three months and one day following such termination. To the
extent that the Optionee was not entitled to exercise the Option at the date of
termination, or if the Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

                  (d)      Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant) by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent that the Optionee was entitled to
exercise the Option on the date of

                                 Exhibit 4.3.6

<PAGE>   7

death. If, at the time of death, the Optionee was not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable portion of the
Option shall immediately revert to the Plan. If, after the Optionee's death,
the Optionee's estate or a person who acquires the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

                  (e)      Rule 16b-3. Options granted to persons subject to
Section 16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain
such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

                  (f)      Buyout Provisions. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.

         10.      Non-Transferability of Options and Stock Purchase Rights.
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

         11.      Stock Purchase Rights.

                  (a)      Rights to Purchase. Stock Purchase Rights may be
issued either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing of the terms, conditions and
restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid, and the time within
which such person must accept such offer, which shall in no event exceed thirty
(30) days from the date upon which the Administrator makes the determination to
grant the Stock Purchase Right. The offer shall be accepted by execution of a
Restricted Stock purchase agreement in the form determined by the
Administrator. Shares purchased pursuant to the grant of a Stock Purchase Right
shall be referred to herein as "Restricted Stock."

                  (b)      Repurchase Option. Unless the Administrator
determines otherwise, the Restricted Stock purchase agreement shall grant the
Company a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment with the Company for any reason
(including death or disability). The purchase price for Shares repurchased
pursuant to the Restricted Stock purchase agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of
the purchaser to the Company. The repurchase option shall lapse at such rate as
the Administrator may determine, but in no case at a rate of less than 20% per
year over five years from the date of purchase.

                  (c)      Other Provisions. The Restricted Stock purchase
agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in its
sole discretion. In addition, the provisions of Restricted Stock purchase
agreements need not be the same with respect to each purchaser.

                  (d)      Rights as a Shareholder. Once the Stock Purchase
Right is exercised, the purchaser shall have rights equivalent to those of a
shareholder and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the Stock Purchase Right is exercised, except as provided in
Section 12 of the Plan.

         12.      Adjustments Upon Changes in Capitalization or Merger.

                  (a)      Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option or Stock Purchase Right, and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Options or Stock Purchase Rights have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option or Stock Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock

                                 Exhibit 4.3.7

<PAGE>   8

resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Stock Purchase Right.

                  (b)      Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify the Optionee at least fifteen (15) days prior to such proposed action.
To the extent it has not been previously exercised, the Option or Stock
Purchase Right shall terminate immediately prior to the consummation of such
proposed action.

                  (c)      Merger. In the event of a merger of the Company with
or into another corporation, each outstanding Option or Stock Purchase Right
may be assumed or an equivalent option or right may be substituted by such
successor corporation or a parent or subsidiary of such successor corporation.
If, in such event, an Option or Stock Purchase Right is not assumed or
substituted, the Option or Stock Purchase Right shall terminate as of the date
of the closing of the merger. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger, the
Option or Stock Purchase Right confers the right to purchase or receive, for
each Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger, the consideration (whether stock, cash, or
other securities or property) received in the merger by holders of Common Stock
for each Share held on the effective date of the transaction (and if the
holders are offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding Shares). If such consideration
received in the merger is not solely common stock of the successor corporation
or its Parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of
the Option or Stock Purchase Right, for each Share of Optioned Stock subject to
the Option or Stock Purchase Right, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger.

         13.      Time of Granting Options and Stock Purchase Rights. The date
of grant of an Option or Stock Purchase Right shall, for all purposes, be the
date on which the Administrator makes the determination granting such Option or
Stock Purchase Right, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option or Stock Purchase Right is so granted within a reasonable time
after the date of such grant.

         14.      Amendment and Termination of the Plan.

                  (a)      Amendment and Termination. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other applicable law
or regulation, including the requirements of the NASD or an established stock
exchange), the Company shall obtain shareholder approval of any Plan amendment
in such a manner and to such a degree as required.

                  (b)      Effect of Amendment or Termination. Any such
amendment or termination of the Plan shall not affect Options or Stock Purchase
Rights already granted, and such Options and Stock Purchase Rights shall remain
in full force and effect as if this Plan had not been amended or terminated,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.

         15.      Conditions Upon Issuance of Shares. Shares shall not be
issued pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock

                                 Exhibit 4.3.8

<PAGE>   9

exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.

                  As a condition to the exercise of an Option or Stock Purchase
Right, the Company may require the person exercising such Option or Stock
Purchase Right to represent and warrant at the time of any such exercise that
the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.

         16.      Reservation of Shares. The Company, during the term of this
Plan, shall at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

                  The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have been obtained.

         17.      Agreements. Options and Stock Purchase Rights shall be
evidenced by written agreements in such form as the Administrator shall approve
from time to time.

         18.      Shareholder Approval. Continuance of the Plan shall be
subject to approval by the shareholders of the Company within twelve (12)
months before or after the date the Plan is adopted. Such shareholder approval
shall be obtained in the degree and manner required under Applicable Laws and
the rules of any stock exchange upon which the Common Stock is listed.

         19.      Information to Optionees and Purchasers. The Company shall
provide to each Optionee and to each individual who acquires Shares pursuant to
the Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquires Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.

                                 Exhibit 4.3.9<PAGE>   1
                                                                   EXHIBIT 10.77

                              EMPLOYMENT AGREEMENT

     This Employment Agreement is made and entered into as of this 1st day of
April, 2000, by and among THE HARVEY ENTERTAINMENT COMPANY, a California
corporation ("Parent"), PM Entertainment, Inc., a California corporation
("Company"), and GEORGE SHAMIEH ("Employee").

     Whereas, concurrent with the execution of this Agreement, Parent is
acquiring all of the issued and outstanding shares of capital stock of Company;

     Whereas, Roger Burlage ("Burlage") is currently Chairman of the Board and
Chief Executive Officer of Parent and will also serve as Chairman of the Board
of Company; and

     Whereas, Company and Parent desire to engage the services of Employee,
whose experience, knowledge and abilities are extremely valuable to Company and
Parent, and Employee desires to enter the employ of Company,

     Now, therefore, the Parties hereto agree as follows:

     1. Position and Duties: Reporting.

          (a) Company and Parent hereby employ Employee, and Employee hereby
accepts employment, reporting directly to Burlage and serving as President of
Company during the Term hereof as specified in Paragraph 6 below, with powers
and duties consistent with such position, including but not limited to, the
responsibility for the operations of Company. All decisions involving major
expenditures and matters that could have a material adverse impact on Company
will be subject to the approval of Burlage. All employees and independent
contractors of Company will report to Employee. Employee will have the sole
authority to retain and terminate employees and independent contractors of
Company, subject to review and discussion with Burlage, except that all
department heads of Finance, Human Resources, MIS and Legal shall have dual
reporting lines to Employee and the appropriate executive at Parent, and any
personnel decisions involving these department heads will be subject to review
between Employee and the appropriate Parent executive. Employee shall perform
such additional, different and/or incidental duties, and accept the election or
appointment to such other offices as Burlage reasonably designates, consistent
with Employee's position as President of the Company. Employee shall perform
such duties and responsibilities incidental to his employment as may from
time-to-time be reasonably designated by Burlage, consistent with Employee's
position, stature and experience, and shall faithfully observe Company's written
policies and procedures consistent with the provisions hereof (which policies
and procedures will be those of Parent as well). The provisions of this
Paragraph 1(a) shall be subject to the terms of Paragraph 6 hereof.

<PAGE>   2

          (b) Except as set forth below in Paragraph 10(b), or if for any
reason, Employee ceases to be employed by Company, Employee shall devote his
full working time to the promotion of Company's business and welfare in
accordance with this Agreement and Paragraph 1(b)(ii), below, and as such his
services in the entertainment industry shall be exclusive to Company hereunder
during the Term. Notwithstanding any contrary provisions hereof, Employee may
engage in other business activities with Company's prior written consent
provided the same shall not adversely affect the performance of Employee's
services hereunder and; provided, further, during the Term hereunder, Employee
shall not, except as allowed pursuant to Paragraph 10(b) or if for any reason
Employee ceases to be employed by the Company, directly or indirectly:

               (i) Engage in any business for his own account which is
competitive with the businesses of Company or Company's subsidiaries
(collectively, "Competitive Business") so long as Company or Company's
subsidiaries (as the case may be) continue to engage in such business;

               (ii) Enter the employ of, or render any services to, any person
engaged in a Competitive Business; or

               (iii) Become interested in a Competitive Business in any capacity
including, without limitation, as an individual, partner, shareholder, officer,
director, principal, agent, trustee or consultant.

In addition, during the Term and the one-year period following termination of
his employment hereunder, Employee shall not, directly or indirectly (x) induce
any customer or supplier of Company or Company's subsidiaries to terminate its
relationship with Company or Company's subsidiaries (as the case may be), or (y)
solicit or induce any of Parent's or Company's or any of their subsidiaries or
employees to terminate their employment with Company. Notwithstanding anything
to the contrary (including without limitation Paragraph 2(b)(iii) or the
introduction to this paragraph), without the consent of Company, Employee may
acquire and/or retain, solely as an investment, and take customary actions to
maintain and preserve Employee's ownership of:

                    (A) securities of any issuer which are registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and
which are publicly traded, as long as Employee is not part of any control group
of such issuer (except in a passive capacity); and

                    (B) any securities of a partnership, trust, corporation or
other person, the ownership of income-producing real estate or other passive
investments, so long as Employee remains a passive investor in that entity and
does not become part of any control group thereof (except in a passive capacity)
and so long as such entity is not, directly or indirectly, in competition with
Company or its subsidiaries.

                                      -2-
<PAGE>   3

     2. Compensation.

          (a) Annual Guaranteed Salary. During the Term, Company shall pay to
Employee a salary, in equal installments not less frequently than monthly, at
the rate of $450,000 per year for each year of the Term.

          (b) Incentive Compensation. Employee shall be eligible for
consideration to receive an annual performance bonus based on Company's
performance, which bonus (if any) shall be at the greater of an amount
determined by Parent's Board of Directors in its sole discretion or the amount
set forth under the following schedule, taking into consideration the pre-tax
earnings of Company before interest, depreciation and amortization ("EBITDA") as
determined according to generally accepted accounting principles, consistently
applied ("GAAP"), and Employee's then current annual salary:

<TABLE>
<CAPTION>

         Pre-Tax EBITDA                                  Performance Bonus
         Above                  To and Including         Percentage of Salary
         --------------         ----------------         --------------------
         <S>                    <C>                      <C>
         0                      $2,000,000                     0%
         $2,000,000             $3,000,000                     5%
         $3,000,000             $5,000,000                     7%
         $5,000,000             $7,000,000                     9%
         $7,000,000             $10,000,000                    11%
         $10,000,000+                                          13%

</TABLE>

For example in the event, the EBITDA of Company for the first year of the Term
is $10,000,000, then Employee would be entitled to a minimum performance bonus
equal to eleven (11%) percent of his then annual salary.

          (c) Additionally, Employee shall be entitled to an additional Accounts
Receivable bonus based on the collection of the $15,095,775 in Accounts
Receivable attached on Exhibit A. This additional bonus shall be equal to $6.625
for every $100 of such Accounts Receivable collected each calendar quarter, pro
rated for any smaller amounts. This bonus shall be paid within forty-five (45)
days after the end of each calendar quarter based on the amount of Accounts
Receivable collected during the preceding quarter and shall survive termination
of the Term.

     3. Stock Options. Employee shall have the right to participate in all stock
option plans, stock appreciation rights plans, stock purchase plans and similar
plans from time to time made available to any other senior executive employee of
Parent and/or Company of equal or lesser level to Employee. With the exception
of the number of options, such participation shall be on terms no less favorable
than those provided to any other senior executive employee of equal or lesser
level to Employee in Company. Any such stock options, stock appreciation rights,
stock purchase rights and similar rights granted to Employee shall vest
immediately if Employee is terminated other than for Cause or resigns for Good
Reason (as defined below). The time Employee has to

                                      -3-
<PAGE>   4

exercise his options after such termination or resignation shall be governed by
Company's 1997 Stock Option Plan. On the Effective Date Company will grant
Employee options ("Options") to purchase eighty thousand (80,000) shares of
Common Stock of Parent at a price equal to the greater of the Common Stock
closing price on the Effective Date or $6.75 per share. The vesting period of
such Options will be made in accordance with the 1997 Stock Option Plan or as
determined by the Stock Option Committee, unless accelerated under Paragraph
6(b), below.

     4. Expenses. Company will reimburse or pay Employee for all usual,
reasonable and necessary expenses paid or incurred by Employee in the
performance of his duties hereunder, including without limitation business class
(or first class if no business class is offered) travel on all flights,
consistent with Company's expense reimbursement policies applicable to the most
senior executive officers and subject to receipt by Company of appropriate
documentary proof of all expenditures for which reimbursement is sought.

     5. Employee Benefits. Employee shall be entitled to participate to the full
extent of the participation by any other senior executive employee of Company or
Parent of comparable level or below to Employee in all other profit-sharing,
pension, vacation, health insurance, life insurance and disability or other
plans, benefits or policies available to the senior executive employees of
comparable level or below to Employee established by Parent and/or Company (in
its sole and absolute discretion) from time to time and not duplicative of those
provided herein. Employee shall be entitled to four weeks of vacation annually.

     6. Term.

          (a) The period of Employee's employment by Company hereunder (the
"Term" shall commence on the Effective Date and shall terminate upon the first
to occur of the following events: (i) three (3) years from the Effective Date as
set forth in Paragraph 2(c) herein, (ii) the death of Employee, (iii) the
inability of Employee to perform his duties hereunder, by reason of physical
injury, mental incapacity or otherwise, for a period of four (4) consecutive
months or six (6) months in the aggregate, as certified by a physician selected
jointed by Employee and Company ("disability"), (iv) the discharge of Employee
for Cause or (v) the resignation of Employee for Good Reason. "Cause" shall
mean, and be limited to, (x) acts of deliberate dishonesty constituting either
the commission of a felony or the misappropriation of corporate assets for
personal benefit, (y) willful failure to observe or follow reasonable and
explicit instructions or directives of Company, (z) willful malfeasance or
willful failure to act to avoid material nonfeasance, if in either case such
malfeasance would have a material adverse effect on Company, or (aa) written
notice of a material violation of Parent's or Company's policies and procedures
which goes uncured for twenty (20) days or which, if not curable, will result in
a material adverse effect on Company.

                                      -4-
<PAGE>   5

     To terminate Employee for Cause, Company shall give Employee written notice
specifying the claimed Cause and, provided such Cause is curable, permit
Employee to correct the claimed Cause as soon as practical thereafter but no
later than seven (7) business days after receipt of the applicable notice. In no
event, however, shall Company be required to permit Employee to cure an
occurrence of Cause described in clause (x) of this Paragraph 6(a) . Upon the
termination of Employee's employment pursuant to clause (i), (ii), (iii) or (v)
of this Paragraph 6(a), Employee shall have no further liability to Company or
Parent under this Agreement except as provided in Paragraph 7 as to mitigation
and Paragraph 9 as to confidential information. Company shall have no further
liability to Employee under this Agreement, except as provided in Paragraph 6(b)
below and (1) under Section 2(b), (2) any salary or other benefits accrued or
earned by Employee to the date of termination but not paid shall be paid by
Company to Employee or his estate, (3) an Employee shall be entitled to such
benefits, if any, under Sections 4 and 5 hereof to which he has become entitled
prior to the date of his termination of employment and (4) as set forth in
Paragraph 6(b) below.

          (b) If Employee resigns for Good Reason (as defined herein), Employee
shall have the right to deem such resignation as a termination of his employment
by Company without Cause with the consequences provided in this Paragraph 6(b).
"Good Reason" shall mean (1) without Good Cause, Employee's responsibilities or
duties are materially altered or decreased from those described herein, or (2)
Employee is not paid any amount to which he is entitled, or (3) Employee's
benefits are substantially and adversely altered, or (4) if for any reason,
Burlage ceases to be Chairman of the Board or Chief Executive Officer of Parent,
or ceases to be the executive to whom Employee directly reports and within one
hundred twenty (120) days thereafter, Employee gives written notice of his
intention to resign. If Employee's employment is terminated by Company without
Cause, or Employee resigns for Good Reason, subject to Paragraph 7 below,
Company shall (A) pay Employee, until the ending date of the period of
employment hereunder (determined as provided in Paragraph 6(a) hereof) such
salary and benefits to which Employee would have been entitled had Employee not
been terminated without Cause or resigned without Good Reason before the third
anniversary of the Effective Date, (B) accelerate to immediate vesting of his
options, stock appreciation rights, stock purchase rights and similar rights as
provided under Paragraph 3 or 4 above, and (C) reimburse Employee for all
otherwise reimbursable expenses incurred or committed to be incurred by Employee
as of the date of such termination.

     7. Mitigation.

          (a) Subject to subparagraph (b) below, Employee shall use his best
efforts to mitigate the damages he may suffer in the event of termination by
Company without Cause or resignation by Employee for Good Reason; provided,
however, in no event shall Employee be required to accept employment (1) for
significantly less compensation than Employee is entitled to be paid hereunder,
(2) for a position outside the independent film production industry, or which
carries significantly fewer duties or

                                      -5-
<PAGE>   6

responsibilities than serving as President of Company, or (3) outside the Los
Angeles area, or (4) for a company whose reputation is not as good as Company's
reputation in the independent film production industry. If Employee furnishes
his services for other engagements or employment after such termination without
Cause or resignation by Employee for Good Reason, the total compensation
actually earned or received by Employee together with any welfare or other
benefits earned by Employee, shall reduce the amounts and benefits which Company
would otherwise be required to pay or provide to Employee over the same period
of time. Employee shall give written notice to Company (promptly after accepting
employment or furnishing his services after such termination of his employment
with Company) of any amounts earned or received by Employee and any benefits
provided to Employee pursuant to his new employment agreement.

          (b) If Company fails to achieve EBITDA, as determined in accordance
with GAAP, of at least $1,500,000 during the second or third fiscal year of the
Term, ("Minimum Performance"), and Company terminates Employee without Cause or
Employee resigns for Good Reason, Employee shall use his best efforts to
mitigate any damages he may suffer as set forth above. If during the second or
third fiscal year of the Term, Company's EBITDA (determined according to GAAP)
exceeds $1,500,000, but is less than $2,000,000 and Company terminates Employee
without Cause, or Employee resigns for Good Reason, then Employee shall mitigate
any damages he may suffer as set forth above; however, regardless of the amount
of mitigation by Employee, Company will pay Employee no less than 50% of the
compensation and provide Employee with at least 50% of the benefits he would
have received had the Term extended until the third anniversary of the Effective
Date. If during the second or third fiscal year of the Term, Company's EBITDA
(determined according to GAAP) exceeds $2,000,000 and Company terminates
Employee's employment without Cause or Employee resigns for Good Reason, then
Employee shall not be required to mitigate any damages he may suffer.

     8. Nondisclosure of Confidential Information.

          (a) "Confidential Information" shall include, but not be limited to,
all of Company's, Parent's or any subsidiaries' performance, sales, financial,
pricing, cost, manufacturing, contractual and marketing information, ideas,
knowledge and data, and all processes, products, formulae, designs, practices,
techniques, trade secrets, research, know-how, merchandising agreements,
licensing agreements, distribution agreements, customer lists, technical
requirements of customers and identity and purchasing terms of suppliers, other
than information (i) generally available to the public other than as a result of
Employee's breach of this Section 8; (ii) known to Employee prior to the time
Employee began working for Company (regardless of whether pursuant to any
agreement); (iii) known to Employee as result of a disclosure not in breach of
any confidentiality obligation owed directly or indirectly to Company, Parent or
any subsidiary or affiliate of either, or relating to ACI or ACI Properties.

                                      -6-
<PAGE>   7

          (b) Employee agrees to assign all rights he might otherwise possess in
any Confidential Information to Company. Except as required in the performance
of his duties hereunder, Employee shall not at any time during or after the
Term, directly or indirectly use, communicate, disclose or disseminate, lecture
upon/publish articles or otherwise put in the public domain, any Confidential
Information except as required by law or legal process.

          (c) All documents, records, notebooks, notes, memoranda, computer
records and other repositories of or containing Confidential Information made or
compiled by Employee at any time or made available to Employee prior to or
during the Term including any and all copies thereof shall be the property of
Company, shall be held by Employee in trust solely for the benefit of Company,
and shall be delivered to Company by Employee on the termination of the Term or
at any other time on the request of Company.

     9. Warranties/Indemnities. Employee hereby represents and warrants that:
(i) neither his entering into this Agreement nor furnishing to Company all of
the services herein set forth will constitute the breach of any other Agreement
to which he is a party; (ii) he has no reason to believe he is not in good
health or that he suffers from any disability or other condition which will or
could interfere with the full performance of his obligations hereunder.

     10. Ownership of Properties.

          (a) Company, as employer, shall own, and Employee hereby transfers and
assigns to Company, all rights in and to any material and/or ideas written,
suggested or submitted by Employee during the Term and all other results and
proceeds of his services for Company pursuant to this Agreement, other than the
ACI Properties (as defined below) Employee's personal diary, journal, calendar
and memoirs ("Properties"). Company and its licensees and assigns shall have the
right to adapt, change, revise, delete from, add to and/or rearrange the
Properties or any part thereof written or submitted by Employee and to combine
the same with other works to any extent, and to change or substitute the title
thereof, and in this connection Employee hereby waives any so-called "moral
rights" of authors. Employee agrees to at Company's expense execute and deliver
to Company such assignments or other instruments as Company may require from
time to time to evidence its ownership of the Properties, failing which Company
shall have the irrevocable right to do so as Employee's attorney-in-fact.

          (b) (i) Employee is the sole owner of a company known as ACI, which
the Parties hereby agree and acknowledge is a Competitive Business. The parties
hereto agree that notwithstanding any other terms of this Agreement or
applicable law, Employee shall be allowed to continue to own, develop, produce,
cast, arrange financing for, film, market, distribute, license and otherwise
exploit all feature films which are currently in development by ACI as set forth
on the Schedules "A" and "B" attached hereto (collectively the "ACI
Properties"). Schedules "A" and "B" shall include the

                                      -7-
<PAGE>   8

following information on each project: working title, description of project,
legal status including rights received or granted. Neither Company, Parent nor
any affiliate or subsidiary of either shall have any rights in or to the ACI
Properties nor the proceeds therefrom except as set forth below. In
consideration for releasing Employee from his duties to the extent necessary to
complete such films and by allowing the use of Company assets to distribute such
films, including licensing such films, delivery, distribution, billing and
collection services and other distribution functions (including release in home
video), Company shall be entitled to a fee equal to (i) one third (1/3) of net
revenues earned and received by ACI before or during the Term from ACI
Properties set forth on Schedule "B" that are owned by ACI and (ii) one third
(1/3) of gross fees less non-recouped distribution expenses earned and received
by ACI before or during the Term from ACI Properties set forth on Schedule "B"
that are distributed but not owned by ACI (collectively, "Company's ACI share").
The Company shall not be entitled to any share of the fees earned by ACI from
the ACI Properties set forth on Schedule "A". Once the ACI Properties have been
completed, Employee agrees that he shall not be involved in the production of
any films not produced by Company or Parent without the express written consent
of Burlage. Employee understands and acknowledges that Burlage may withhold such
consent for any reason. ACI will provide the Company with customary accountings
on each of the ACI Properties set forth on Schedule "B" on a quarterly basis for
the first two years after the release of each such title and then no less than
annually thereafter. Employee agrees that he will reimburse the Company for any
out-of-pocket third party costs or expenses incurred by Company on behalf of the
ACI Properties.

               (ii) If the Term is terminated by the Company for any reason,
then no further fees shall be owed by ACI to the Company after the date of
termination. If the Term is terminated by the Employee for any reason allowed
under this Agreement, then ACI shall remain obligated to continue paying the
above fees to the Company on any fees earned prior to the date of termination
and received during the six (6) months immediately following such date.

          (c) If during the Term or the two years immediately following the end
of the Term (unless the Term is terminated by Company without Cause or Employee
resigns with Good Reason) and Employee intends to dispose of any of his rights
in the ACI Properties, he will afford Parent a right of First Negotiation and
Last Refusal for the acquisition of such rights. The right of First Negotiation
and Last Refusal shall apply on a property-by-property basis and shall be
exercised by the following procedure: Employee shall give Parent written notice
setting forth the rights available with respect to such ACI Property
("Negotiation Notice"), which Negotiation Notice shall set forth the essential
terms pursuant to which Employee desires effect such transfer of rights
("Transfer"). Parent shall respond to such Negotiation Notice within five (5)
business days following Parent's receipt thereof ("Response Period"). If Parent
fails to respond within such Response Period, or if Parent notifies Employee
during such Response Period that Parent does not desire to negotiate with
respect to such Transfer, Employee shall be free to negotiate and conclude
agreements with third parties regarding such Transfer

                                      -8-
<PAGE>   9

without further obligation to Parent in connection therewith. If Parent notifies
Employee during such Response Period that Parent desires to negotiate with
respect to such Transfer, then upon such notice Employee shall be obligated to
negotiate in good faith with Parent for a period of seven (7) business days
("Negotiation Period") for an agreement with respect to such Transfer. If an
agreement is not reached prior to the expiration of the Negotiation Period, then
upon said expiration, Employee shall be free to negotiate with third parties;
provided that before Employee enters into an agreement with any third party, it
must offer Parent the right to enter into a similar agreement on all of the same
material terms and conditions as the proposed third party, and Parent shall have
five (5) business days to accept or decline such terms. At all times with
respect to the exercise of Parent's rights described herein, Employee shall not
propose to Parent, and Parent shall not be obligated to accept, any terms which
cannot be met as easily by one person as by another, or which cannot be
liquidated.

          (d) Employee shall indemnify and hold harmless Parent, Company, their
subsidiaries, affiliates, successors, assigns, subdistributors and licensees,
and their respective officers, directors, agents and employees, from and against
any claim, loss, damage and expense (including legal fees and expenses)
("Claim") arising out of or in connection with ACI's production or exploitation
of the ACI Properties.

     11. Right to Injunction/Remedies. Employee acknowledges that Company's
remedies at law for a breach by him of the provisions of Paragraphs 1, 8 and 10
hereof may be inadequate. Accordingly, in the event of the breach or threatened
breach by Employee of any such provisions, Company shall be entitled to seek
injunctive relief in addition to any other remedy it may have. In the event of
any breach by Company of this Agreement, Employee shall be limited to his remedy
at law for damages, if any, and shall not have the right to enjoin the
production, distribution, advertising or other exploitation of any motion
pictures or other productions.

     12. Assignment. No party may assign, transfer or convey this Agreement or
any interest therein. Subject to Employee's right to terminate this Agreement
under Section 6(b), this Agreement and all of Company's rights and obligations
hereunder may be assigned or transferred by it (a) in connection with a direct
or indirect change of control of Company or (b) in connection with an internal
corporate restructuring of the Company. Such permitted transfer or assignment,
must be in whole but not in part, to and shall be binding upon and inure to the
benefit of any assignee or successor of Company, but any such assignment or
transfer shall not relieve Company of any of its obligations.

     13. Arbitration.

          (a) Without limiting Company's right to seek injunctive relief as
described in Paragraph 11, in the event of a disagreement or dispute between
Company and Employee related to this Agreement, the matter will be finally
settled in Los Angeles, California by arbitration by a single arbitrator (unless
the parties cannot agree on such

                                      -9-
<PAGE>   10

arbitrator in which case each party will select an arbitrator and the two
arbitrators so selected shall select the third arbitrator) in a proceeding
conducted under the rules of the American Arbitration Association or any similar
successor body, the arbitrator also apportioning the costs of the arbitration.
The decision of the arbitrator(s) in writing shall be final and binding upon the
parties and will not be subject to appeal. If either party fails to abide by
such decision, the other party may seek the order of any federal or state court
having jurisdiction thereof which shall enter judgment on the decision of the
arbitrator(s), and the party so failing to abide shall be responsible for the
payment of the expenses of the court proceeding and all resulting enforcement
expenses, including actual attorneys' fees. The parties agree to use their best
efforts to complete any arbitration hereunder expeditiously.

          (b) The prevailing party in any arbitration shall be entitled to be
reimbursed for attorneys fees and costs in connection with the pursuit of such
arbitration.

     14. Indemnification. Employee shall be entitled to the benefit of
indemnification by Company to the fullest extent permitted by applicable law at
the time of assertion of any liability against Employee, and Company shall at
all times maintain the maximum reasonably priced directors and officers
liability insurance coverage.

     15. Notices. All notices hereunder shall be in writing and shall be given
either by personal delivery, telegram or telecopy (toll prepaid) or by
registered or certified mail (postage prepaid) to the appropriate party at the
address listed below, and the date of such personal delivery, mailing,
telegraphing or telecopying shall be the date of the giving of such notice.

      If to Company:                The Harvey Entertainment Company
                                    1999 Avenue of the Stars
                                    Suite 2050
                                    Los Angeles, California 90067
                                    Attention:  Chairman of the Board
                                    Facsimile:        (310) 444-4102
                                    Confirmation:     (310) 444-4100

      with a copy to:               The Harvey Entertainment Company
                                    1999 Avenue of the Stars
                                    Suite 2050
                                    Los Angeles, California 90067
                                    Attention:  Legal Department
                                    Facsimile:        (310) 444-4103
                                    Confirmation:     (310) 444-4100

      If to Employee:               George Shamieh
                                    c/o PM Entertainment
                                    9545 Wentworth Street

                                      -10-
<PAGE>   11

                                    Sunland, California 91040
                                    Facsimile:        (818) 951-4930
                                    Confirmation:     (818) 504-6332

      With a copy to:               Paul, Hastings, Janofsky & Walker LLP
                                    555 S. Figueroa St., 23rd Floor
                                    Los Angeles, California 90071
                                    Attention:  Roxanne E. Christ, Esq.
                                    Facsimile:        (213) 627-0705
                                    Confirmation:     (213) 683-6270

     16. Miscellaneous.

          (a) In the event there is any conflict between the provisions of this
Agreement and any statute, law or regulation, the latter shall prevail;
provided, however, that in such event the provision(s) of this Agreement so
affected shall be curtailed and limited only to the minimum extent necessary to
permit compliance with the minimum mandatory requirement(s) thereof, and no
other provision(s) of this Agreement shall be affected thereby, and all such
other provisions will continue in full force and effect.

          (b) This Agreement shall be governed by the laws of the State of
California applicable to agreements executed and to be wholly performed therein
and shall not be modified except by a written document executed by the parties
hereto.

          (c) This Agreement together with the Schedules hereto, expresses the
entire understanding of the parties hereto and replaces any and all former
agreements, negotiations or understandings, written or oral, relating to the
subject matter hereof.

          (d) The remedies herein provided are cumulative and the exercise of
one shall not preclude the exercise of any other.

          (e) No waiver by either party hereto of any failure by the other party
to keep or perform any covenant or condition of this Agreement shall be deemed a
waiver of any preceding, succeeding or continuing breach of the same, or any
other covenant or condition.

          (f) Paragraph headings are for the convenience of the parties only and
shall not be used in construing meaning.

          (g) This Agreement shall not be construed to create a joint venture or
partnership between the parties, and shall not be interpreted in favor of or
against either party on grounds that said party drafted this Agreement.

          (h) This Agreement shall be executed in a number of identical
counterparts, each of which shall be construed as an original for all purposes,
but all of which taken together shall constitute one and the same Agreement.

     17. This Employment Agreement shall become effective (the "Effective Date")
as of the start of business on the day after the close of the acquisition of PM
Entertainment Group, Incorporated by The Harvey Entertainment Company currently
expected to close during the first quarter of 2000.

                                      -11-
<PAGE>   12

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

EMPLOYEE:                                 THE HARVEY ENTERTAINMENT COMPANY

/s/ George Shamieh
-------------------------                 By: /s/ Roger A. Burlage
GEORGE SHAMIEH                                --------------------------------
                                          Title: Chairman of the Board
                                                 -----------------------------

                                          PM ENTERTAINMENT, INC.

                                          By: /s/ Roger A. Burlage
                                              -------------------------------
                                          Title: Chairman of the Board
                                                 ----------------------------

                                      -12-
<PAGE>   13

                                    Exhibits*

<TABLE>
<CAPTION>
Description                                                  Exhibit
-----------                                                  -------
<S>                                                          <C>
Accounts Receivable                                             A
</TABLE>

                                    Schedules

<TABLE>
<CAPTION>
Description*                                                Schedule
------------                                                --------
<S>                                                         <C>
ACI Projects                                                    A
ACI Projects                                                    B
</TABLE>

*The Schedules and Exhibits are omitted from this filing. The Company agrees to
furnish supplementally a copy of any Schedule or Exhibit to the Commission upon
request.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}]]