Vice President, Finance Employment Agreement

EXHIBIT 10.14


AMENDED AND RESTATED EMPLOYMENT AGREEMENT


THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is entered into as of October 4, 2000 by and between ARTISAN ENTERTAINMENT INC., a Delaware Corporation (the "Company") and GREGORY ARVESEN ("Executive").


WITNESSETH:


WHEREAS, Executive is possessed of certain experience and expertise that qualify him to perform the duties associated with the management of the Company; and,


WHEREAS, subject to the terms and conditions hereinafter set forth, Company desires to employ Executive as Senior Vice President, Finance of Company for a specified period and Executive desires to accept such employment; and,


WHEREAS, the Company and executive desire to initiate a new employment relationship based on these material alterations, and to dissolve the prior employment relationship through mutual agreement; and


WHEREAS, the Company and Executive contemplate and agree that the employment relationship between them will terminate simultaneously with the ending date of this Agreement.


NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties agree as follows:


1. TERM.


(a) The Company agrees to employ Executive and Executive hereby accepts such employment, in accordance with the terms of this Agreement, commencing October 4, 2000 and ending October 3, 2002, unless this Agreement is earlier terminated as provided herein. Executive's employment with the Company will cease upon termination of this Agreement.


(b) The Company may, at its discretion, extend the term of this Agreement for a third year, commencing October 4, 2002 and ending October 3, 2003, by giving notice to Executive of its election to extend this Agreement by July 4, 2002.


2. SERVICES AND EXCLUSIVITY OF SERVICES.


So long as this Agreement shall continue in effect, Executive shall devote Executive's full business time, energy and ability exclusively to the business, affairs and


- ----- ------ GA ARTISAN interests of the Company and matters related thereto, shall use Executive's best efforts and abilities to promote the Company's interests and shall perform the services contemplated by this Agreement in accordance with policies established by and under the direction of the Company's Operating Committee.


During the term of this Agreement and of Executive's employment by Company (the "Restricted Period"), Executive shall not, directly or indirectly, (i) engage in any business for his own account which is competitive with the businesses of the Company or the Company's affiliates (collectively, "Competitive Business") so long as the Company or the Company's affiliates (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; (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; or (iv) induce any customer or supplier of the Company's affiliates to terminate its relationship with the Company or the Company's affiliates (as the case may be). Notwithstanding anything to the contrary, Executive may acquire and/or retain, solely as an investment, and take customary actions to maintain and preserve Executive's ownership of:


(a) securities of any corporation which are registered under Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and which are publicly traded, as long as Executive is not part of any control group of such corporation; and


(b) any securities of a partnership, trust, corporation or other person so long as Executive 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 the Company or its affiliates. In addition, Executive will be permitted to pursue personal outside interests and sit on boards of directors provided there is no conflict of interest with Company as determined by the Company. Executive's outside interests shall not materially interfere with Executive's duties and obligations to Company as defined in this Agreement.


Executive represents to the Company that Executive has no other outstanding commitments inconsistent with any of the terms of this Agreement or the services to be rendered hereunder.


3. DUTIES AND RESPONSIBILITIES.


Executive shall serve as "Senior Vice President, Finance" of the Company for the duration of this Agreement. In the performance of Executive's duties, Executive shall report directly to the Operating Committee, or its designee, and shall be subject to the direction of the Operating Committee (or its designee, currently Jim Keegan) and to such limits on Executive's authority as the Operating Committee may from time to time impose.


The primary responsibility of Executive shall be to manage the finance,


- ----- ------ GA ARTISAN accounting, tax, and participations functions of the Company.


Executive agrees to observe and comply with the rules and regulations of the Company as adopted by the Operating Committee respecting the performance of Executive's duties and agrees to carry out and perform orders, directions and policies of the Company as they may be, from time to time, stated either orally or in writing. The Company agrees that the duties which may be assigned to Executive shall be usual and customary duties of Senior Vice President, Finance of the Company. Executive shall have such corporate power and authority as shall reasonably be required to enable Executive to perform the duties required of Senior Vice President, Finance of the Company.


4. COMPENSATION.


The following compensation elements will be provided to Executive during the term of this Agreement:


(a) Base Salary. During the term of this Agreement, the Company agrees to pay Executive a base salary as follows:


October 4, 2000 to October 3, 2001-the rate of $170,000.00 per year
("base salary-year 1"), payable in accordance with the Company's
normal payroll practices in effect.


October 4, 2001 to October 3, 2002 - the rate of $190,000.00 per
year ("base salary-year 2"), payable in accordance with the
Company's normal payroll practices in effect.


In the event that this Agreement is extended to a third year
(October 4, 2002 to October 3, 2003) in accordance with Section 1
(b), Executive's compensation shall be at the rate of $200,000.00
per year ("base salary-year 3"), payable in accordance with the
Company's normal payroll practices in effect.


Nothing in this agreement shall limit the Company's right to modify its payroll practices as it deems necessary.


(b) Incentive and Bonus Compensation.


During the term of this Agreement, the Executive shall be entitled to receive a bonus of up to Fifty per cent (50%) of his base earned salary during the Term. The first 60% of this amount (30% of base salary) shall be paid according to a sliding scale based on the Company's performance as reflected in earnings before interest and taxes ("EBIT") in accordance with the following schedule based upon EBIT target for the 2000 calendar year. The EBIT target for the calendar year 2000 for the Company may be adjusted by the Board of Directors, after good faith consultation with Executive, consistent with the 2000 budget approved by the Board.


- ----- ------ GA ARTISAN
Percent of EBIT Met Percent of Base Salary
------------------- ----------------------
85% 15.0%
90% 22.5%
95% 27.0%
100% 30.0%


For each succeeding year during the term of this Agreement, the Operating Committee, in good faith consultation with Executive, will prepare a budget review by the Board. Once the budget is approved by the Board, the target contained in the budget shall determine Executive's bonus hereunder. The budget and target shall be approved and established not later than the last business day in March and any bonus payable to Executive hereunder shall be paid within thirty (30) days following the delivery to the Board of the audited financial statements for each fiscal year and in no event later than April 1 of the fiscal year following the previous fiscal year.


The second Forty per cent (40%) of this amount (20% of base salary) shall be within the Company's sole discretion based in part on pre-determined highly leveraged activities ("HLA") to be agreed upon in the context of the 2000 budget development with Amir Malin. The HLA will be split on two (2) parameters. The first will be a quantitative parameter which will be developed in the in the context of the budget and mutually agreed to. The second will be a qualitative parameter which will be within the sole discretion of the Operating Committee, or its designee, and will be based upon an assessment of Executive's ability to participate in a "team player" capacity, management skills and other criteria. Any bonus payable to the Executive hereunder shall be paid within thirty (30) days following the delivery to the Board of the audited financial statements for each fiscal year and in any event no later than April 1 of the fiscal year following the fiscal year in which the bonus accrued. In no event shall Executive be entitled to a bonus in excess of Fifty per cent (50%) of his annual base salary.


Payment of the discretionary bonus (20% of earned base salary) for calendar year 2000 shall be guaranteed to Executive and shall be paid to Executive not later than April 1, 2001.


(c) Vacations.


During the term hereof, the Executive shall be entitled to three (3) weeks of vacation per annum, to be taken at such times and intervals as shall be determined by the Executive, subject to the reasonable business needs of the Company. In the event that the Executive is terminated in accordance with Section 5(d) ("Without Cause"), the Executive will cease to accrue additional vacation benefits under this Agreement as of the last day worked.


(d) Other Benefits.


- ----- ------ GA ARTISAN
During the term hereof and subject to any contribution therefor generally required of executives of the Company, the Executive shall be entitled to participate (at the same level as other senior executive officers of the Company) in any and all Executive benefit plans from time to time in effect for senior executives of the Company generally, including retirement, welfare, fringe benefit and disability insurance plans, programs and arrangements. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable Company policies and (iii) the discretion of the Board or any administrative or other committee provided for in or contemplated by such plan. The Company may alter, modify, add to or delete its Executive benefit plans at ...