Employment Agreement - Pixar and John Lasseter


                              EMPLOYMENT AGREEMENT


         This Employment Agreement made and entered into by and between PIXAR, a
California corporation (the 'Company') and JOHN LASSETER ('Employee') effective
as of February 24, 1997.

         Reference is made to that certain executed Employment Agreement ('Prior
Agreement') made and entered into by and between Pixar, a California corporation
Company and John Lasseter dated as of August 1, 1991.

         As an inducement for Pixar to enter into this Employment Agreement, the
parties agree that notwithstanding anything to the contrary contained in the
Prior Agreement, the Term of the Prior Agreement shall expire on February 23,
1997 and no bonus shall be payable to Employee other than as set forth in this
Employment Agreement.

         1.       ENGAGEMENT:

                  1.1      Guaranteed Employment Term.

                           (a) The Company agrees to employ Employee and
Employee agrees to accept such employment, for a guaranteed period commencing on
February 24, 1997 ('Start Date') and ending on February 23, 2004. Company may
terminate this Employment Agreement prior to the expiration of the Term in
accordance with Company's Termination Rights under 6.5 below or in the event of
Employee's death, Incapacity or Default or an event of Force Majeure as more
fully set forth in paragraph 6.8 below. Employee may not terminate Employee's
services hereunder prior to the expiration of the Term except as more fully set
forth in paragraphs 6.7 and 6.8 below.

                  1.2      Duties and Responsibilities.

                           (a) During the Term and any extensions thereof,
Employee shall be employed by the Company as a director of animated motion
pictures and as 'Vice President - Creative' of the Company (which corporate
officer position has been approved by Company's Board of Directors), reporting
directly to the CEO of Company or the Office of the President, as the CEO of
Company may from time to time designate. Company and Employee acknowledge that
Employee's first priority shall be the directing or supervision of feature
length animated motion pictures ('Picture(s)') and serving, at Company's
direction, as Company's representative to Walt Disney Pictures ('Disney') in the
exercise of Company's creative control rights and obligations and that
Employee's other duties for Company shall not materially interfere with such
priority services. Employee agrees that during the Term he will render exclusive
services to Company and devote his full time, effort and energies during
business hours to his responsibilities for the Company, and that he shall
faithfully and to the best of his ability discharge those duties.

                           (b) During the Term, Company and Employee shall have
the following creative control rights with respect to the development,
pre-production, production and post-production of the

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Pictures, made for home video productions and short subject motion pictures
(collectively, the 'Productions'): (i) with respect to Productions for which
Employee renders executive producing services (but not directing services) [*],
provided that in the event of [*], the [*]; and (ii) with respect to Productions
directed by Employee, [*], provided that each party shall [*] and so not to [*].
The parties acknowledge that  [*].

                  1.3 Location. Company agrees that Employee's services for
Company will be based within a thirty (30) mile radius of Company's current
headquarters in Richmond, California unless otherwise approved by Employee.
Employee hereby approves the intended location of a new facility in Emeryville,
California.

         2.       COMPENSATION:

                  2.1 Salary. Subject to the full and complete performance by
Employee of all of Employee's material obligations hereunder, Company shall pay
to Employee the following:

                           (a) Signing Bonus. Company shall pay to Employee the
sum of $1,250,000 within ten (10) business days after the execution of this
Employment Agreement.

                           (b) Salary. Company shall pay to Employee the annual
salary of $700,000, with eight percent (8%) cumulative annual increases at each
anniversary date of the Start Date. Employee's salary shall be payable in
accordance with Company's customary payroll practices. All payments made to
Employee as salary, signing bonus, theatrical motion picture bonus or otherwise
shall be subject to such deductions, withholdings and limitations as shall from
time to time be required by law, governmental regulations or orders, and any
agreements between Company and Employee.

                  2.2 Theatrical Motion Picture Bonus.

                           (a) If Employee is entitled to receive a 'directed
by' credit on the Picture and Employee fully performs all directing services
requested by Company in accordance with this Agreement and material obligations
requested by Company in accordance with the terms of this Agreement in
connection with the applicable Picture, Employee shall be entitled to receive
contingent bonuses (which bonuses are cumulative at each box office benchmark)
based upon the domestic theatrical box office gross receipts of such Picture as
reported in the Daily Variety (or if Daily Variety discontinues such service,
the parties shall mutually determine an appropriate replacement, but in the
event of a disagreement relating to such replacement, the decision of Company
shall govern), as follows, payable within 30 days after such milestone is
reported in Daily Variety: [*]

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    separately with the Commission. Confidential treatment has
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                           (b) Vesting. If Employee's services are terminated
(including, but not limited to, termination as a result of expiration of the
Term of this Agreement) as director in connection with a Picture by any reason
other than Employee's breach or default of a material term or condition
hereunder, the contingent compensation set forth in Section 2.2(a) above with
regard to such Picture shall vest each month that Employee performs services on
such Picture as to a percentage equal to the quotient obtained when one is
divided by the total number of months of scheduled pre-production, production
and post-production of such Picture, but in no event shall the total number of
scheduled pre-production, production and post-production months exceed
forty-eight (48) months. As an example only, if production, pre-production and
post-production for a Picture are scheduled for a total of four years (i.e.,
forty-eight (48) months), then vesting shall be 1/48th or 2.083% for each month
of Employee's services on such Picture. Notwithstanding the foregoing, if
Employee's services are terminated for any reason other than Default under
Section 6.8 below, then if Employee has completed services for seventy-five
percent (75%) or more of the total schedule as computed above, then the
contingent compensation set forth in Section 2.2(a) above shall be deemed fully
vested.

                  2.3 Stock Options. Company shall grant to Employee 125,000
additional non qualified options for the purchase of Company's common stock
pursuant to the terms and conditions of Company's Stock Option Plan and a new
Employee Stock Option Agreement consistent with the terms of Company's Stock
Option Plan and the terms of this Agreement. Company agrees that the exercise
price for said stock options shall be the price of Company's common stock at the
close of business on Friday, February 21, 1997. Company agrees that such plan
will provide for a vesting of the stock options over a four year period, with
the first 25% vesting on the first anniversary date of this Agreement, and the
balance vesting on an equal monthly basis over the remaining three (3) years,
provided, that if Company exercises its Termination Rights under Section 6.5
below, Employee's stock options will be deemed fully vested.

                  2.4 Fringe Benefits. Employee shall be eligible to
participate, in accordance with their terms, in all medical and health plans,
life insurance and pension plans and such other employment benefits or programs
(other than executive bonus plans) as are maintained by Company for its
employees provided that Company shall at all times be free to modify or amend
such plans on a Company wide basis in accordance with the provisions thereof.
Notwithstanding the foregoing, in no event shall such fringe

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    separately with the Commission. Confidential treatment has
    been requested with respect to the omitted portions.

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benefits (other than executive bonus plans) be less favorable to Employee under
those accorded to any other employee of Company other than Steve Jobs.

                  2.5 Paid Vacations. Employee shall be entitled to paid
vacation in accordance with the vacation policy of Company, but in no event less
than four (4) weeks per annum. Notwithstanding the foregoing, Employee shall not
be entitled to accrue any vacation time in any contract year in which Employee
is [*]. Employee may use up to two (2) weeks of previously accrued
vacation time in a contract year in which Employee [*], but in no
event more than four (4) consecutive days at any one time during said contract
year.

                  2.6 [*]. Company shall allow Employee [*] on each 
Picture which Employee directs under this Agreement. Company and Employee shall
mutually determine the [*], which shall be no later than [*] from the initial
theatrical release of the Picture directed by Employee, unless Employee
otherwise agrees. Employee agrees to [*] no less [*] than [*]. During each [*],
(i) Employee shall be entitled to [*] (ii) all terms and conditions of this
Agreement (including, without limitation, exclusivity and vesting) shall remain
in effect.

                  2.7 Expenses. Company recognizes that in connection with
Employee's performance of Employee's duties and obligations hereunder Employee
will incur certain ordinary and necessary expenses of a business character
including, without limitation, travel and expenses relating to the Pictures.
Company shall reimburse Employee for all such reasonable business expenses upon
presentation of itemized statements of such expenses and appropriate
substantiation thereof, in each case in accordance with Company's standard
policies. With respect to business travel, Employee shall be treated no less
favorably in class of travel (with respect to commercial airlines, but excluding
private airplane transportation) and expenses than (i) other executives of
Company or (ii) any individual on the same business trip as Employee. All such
expenses shall be subject to the pre-approval of Company.

         3.       WRITING SERVICES:

                  3.1 Services. At Company's request, Employee shall render
writing services and supervisory services to create stories, treatments and
screenplays for the Pictures hereunder.

                  3.2 Credits. In the event Employee creates the applicable
story and renders writing services in connection with any Picture, Employee
shall receive a 'story by' credit, in first position, on screen in the end
titles, or the main titles if any other person receives credit in the main
titles of the Picture, (which credit may be shared with no more than three (3)
other writers). The Size (as hereinafter defined) of said credit shall be not
less than 50% of the Size of the regular title and no less than that accorded to
any other individual (other than principal cast members) receiving credit in
connection with the Picture. Additionally, Employee shall receive credit in the
billing block portion of paid advertising issued and controlled by Company or
the distributor (subject to the distributors customary exclusions and


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    been requested with respect to the omitted portions.



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restrictions for animated pictures) in a Size not less than 35% of the regular
title. Notwithstanding the foregoing, Employee shall receive credit in excluded
advertising whenever a writer, producer, director, technical director or
executive producer receive credit in said billing block (other than award or
congratulatory ads). 'Size' shall mean height, width and thickness. All other
characteristics of Employee's credit shall be at Company's sole discretion.
Notwithstanding the foregoing, the parties acknowledge that Employee will
receive a shared 'Story By' writing credit on 'Bugs' in third position behind
Andrew Stanton and Joe Ranft.

         4.       EXECUTIVE PRODUCING SERVICES:

                  4.1 Services. Employee shall tender executive producing
services on a non-exclusive first priority basis on all Productions produced by
Company during the Term, other than with respect to those Productions which
Employee directs. Employee agrees to render all such services as required by
Company in accordance with this Agreement and customarily rendered by executive
producers of first class productions in the entertainment industry and to comply
with all reasonable instructions, requests, rules and regulations of Company in
connection therewith, whether or not the same involve matters of artistic taste
and judgment during the development, production and post production of the
Productions.

                  4.2 Credits. As to each Production for which at least seventy
five percent (75%) of the actual production schedule was completed during the
Term and subject to Employee's full performance of all material executive
producing services and material obligations in connection therewith, and further
subject to the distributor's standard exclusions and exceptions as customarily
negotiated for deals of this nature, Company shall accord Employee the following
credit, on screen: Executive Producer, on a card which may be shared, which
credit shall be in first position of all other executive producer credits, and
which credit may be in the main titles (or end titles of the film if all other
individual credits are in the end titles). Said credit shall be no less than 50%
of the regular title and in Size of type of the title and no less than the Size
of type accorded to any other individual (other than the principal cast members)
of the Picture. In addition, Employee shall be entitled to receive credit in the
billing block portion of paid advertising issued or controlled by Company or the
distributor (subject to distributor's standard exceptions and exclusions as
customarily negotiated for deals of this nature) in a Size of type not less than
35% of the Size of type of the regular title of the Picture. Employee shall also
receive credit in excluded advertising in which a writer, producer, director,
technical director or executive producer receive credit in said billing block
(other than award or congratulatory ads). All other characteristics of the
foregoing credit shall be subject to Company's sole discretion. Notwithstanding
the foregoing, Employee shall not be entitled to an executive producer credit on
those Productions on which Employee receives a 'directed by' credit.

         5.       DIRECTING SERVICES:

                  5.1      Services.

                           (a) Employee shall render services in the capacity of
the director for three (3) Pictures during the Term, it being understood that
Employee's services for the third Picture are subject to subparagraph (b) below.
The parties acknowledge that the first Picture is 'Bugs'. Employee agrees

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to render all such services as required by Company and customarily rendered by
directors of first-class feature length animated motion pictures in the motion
picture industry and to comply with all reasonable directions, requests, rules
and regulations of Company in connection therewith, whether or not the same
involve matters of artistic taste and judgment. If Company and Employee desire
to engage a co-director in connection with any Picture directed by Employee,
said co-director shall be subject to the approval of Employee, which approval
shall be exercised in Employee's sole discretion. Notwithstanding the foregoing,
if Company elects to proceed to production of a Picture during the Term and it
is reasonably anticipated by Company that the Term shall expire prior to
completion of Employee's directing services in connection therewith and Employee
and Company have not concluded an agreement for Employee's post term directing
services under subparagraph (b) below, then Company will have the right to
engage the services of a co-director in consultation with Employee. In any
event, such co-director will be subject to Employee's creative direction during
Employee's services as the director.

                           (b) Notwithstanding anything to the contrary
contained herein, if Company elects to proceed to production of a Picture during
the Term and it is reasonably anticipated by Company that the Term shall expire
prior to the completion of Employee's directing services in connection therewith
(Company and Employee specifically acknowledge that the third Picture may fall
under this category), either Company or Employee may initiate good faith
negotiations for post term directing services in connection with the applicable
Picture (with the salary and theatrical motion picture bonus set forth herein as
a floor for such directing services). If the parties are unable to reach an
agreement after a period of thirty (30) days from commencement of said
negotiations ('Negotiation Period'), Employee shall have the right by written
notice to Company within five (5) business days after expiration of the
Negotiation Period to extend the Term for up to six (6) months at then current
salary level. If Employee fails to submit such notice, the Term of this
Agreement shall be extended on a week-to-week basis until either party
terminates upon seven (7) days written notice.

                  5.2 Credits. As to each Picture produced for which Employee
renders directing services, and subject to Employee's full performance of all
material directing services requested by Company in accordance with this
Agreement and material obligations in connection therewith, and further subject
to the distributor's standard exclusions and exceptions as customarily
negotiated for deals of this nature Company shall accord Employee the following
sole credit, on screen, on a separate card, in the end titles or in the main
titles if any other individual receives credit in the main titles: 'Directed by
John Lasseter', which shall be the last card in the main titles or the first
card of individual credits in the end titles, subject to industry wide
collective bargaining agreements. Said credit shall be no less than 50% of the
regular title and in a Size of type not less than the Size of type accorded to
any other individual (other than the cast members) of the Picture. In addition,
Employee shall be entitled to receive credit in the billing block portion of
paid advertising (including packaging of video devices) issued or controlled by
Company or the distributors (subject to the distributor's standard exceptions
and exclusions and subject to the distributor's customary restrictions as
customarily negotiated for deals of this nature) in a Size of type not less than
35% of the Size of type of the regular title of the Picture and 20% of the
artwork title of the Picture. Employee shall also receive credit outside of the
billing block or in excluded advertising in which any individual (other than
principal cast members) receives credit in said excluded ads or outside the
billing block (other than award or congratulatory ads). All other
characteristics of the foregoing credit shall be subject to Company's sole
discretion.

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                  5.3 Delivery. With respect to each of the Pictures which
Employee directs, Employee, to the extent within Employee's control, shall
comply with the delivery and picture specification requirements of the
distributor of the Picture, of which Employee is informed in writing.

                  5.4 Sequels/Remakes. If within twelve (12) years after the
initial release (if any) of the applicable Picture directed by Employee, Company
(or its successor and assigns) elects in its sole discretion to produce a
theatrical sequel, theatrical remake, television motion picture, mini-series or
series, or 'made for video production' based on any of the Pictures directed by
Employee ('Subsequent Productions') then provided that the applicable Picture
was completed at a final negative cost not exceeding 110% of the approved budget
excluding the contingency (excluding excess cost incurred due to Force Majeure
events and other causes beyond Employee's control, changes pre-approved by
Company, net insurance recoveries and retroactive increases to scale personnel
under any collective bargaining agreement which are not reasonably anticipated),
that Employee is not in Default hereunder and provided further that Employee is
available when reasonably required by Company, then Employee shall have the
first opportunity to be the director for the Subsequent Production which, if
after the Term shall be upon terms to be negotiated in good faith within
Company's standard parameters. If Company and Employee fail to agree on the
terms for Employee's engagement on the Subsequent Productions within thirty (30)
days following commencement of the negotiations, or if Employee is unavailable
or elects not to direct, then Company shall have no further obligation to
Employee under this paragraph 5.4.

                  5.5 Videocassette. If any Picture is produced and Employee
performs his services hereunder, Employee shall be entitled to receive one (1)
videocassette copy and one (1) laser disc copy of the Picture if and when
commercially available for release to the public.

                  5.6 Premieres. Employee and his spouse shall be invited to all
major celebrity premieres of the Picture (if any) in the United States which he
directs and shall be entitled to payment of first class transportation and
expenses.

                  5.7 No Union. The parties acknowledge that Company is not a
signatory to the DGA Basic Agreement and that the DGA Basic Agreement does not
currently apply to the Pictures.

                  5.8 E&O Insurance. Company shall include Employee as an
additional insured on Company's errors and omissions insurance policy consistent
with custom and practice in the industry.

         6.       GENERAL TERMS:

                  6.1 Right to Insure. Company shall have the right to secure in
its own name, or otherwise, and at its own expense, life, health, accident or
other insurance covering Employee and Employee shall have no right, title or
interest in and to such insurance. Employee shall assist Company in procuring
such insurance by submitting to examinations and by signing such applications
and other instruments as may be required by the insurance carriers to which
application is made for any such insurance. If Company is unable to obtain such
insurance at customary rates and deductibles, Company shall have the right which
must be exercised if at all within sixty (60) days from the date of this
Agreement to terminate this Agreement.

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                  6.2      Noncompetitive Employment.

                           (a) Employee acknowledges that the nature of the
services furnished by Company to its clients requires that Employee at all times
perform Employee's services under this Agreement without divided loyalties or
obligations to any other person including, without limitation, to any person who
may become an employer of Employee following the end of the Term. Accordingly,
and without limiting the generality of the principle set forth in the preceding
sentence, it shall be a breach of this Agreement for Employee, without prior
written notice to and prior written consent of Company, to accept employment
with any business, individual, partnership, corporation, trust, joint venture,
unincorporated association or other entity or person other than the Company at
any time during the Term of this Agreement. During the Term, Employee may not
discuss, seek, solicit or accept future post Term employment.

                           (b) During the Term of this Agreement Employee shall
not become financially interested in (other than as a stockholder owning less
than one percent (1%) of the outstanding capital stock of any publicly traded
corporation) or directly associated with any other business or Person engaged in
a business that is involved in (i) developing, producing, distributing or
exploiting motion pictures, home videos, television programs, interactive
products or other audio visual works; (ii) the development, sale, licensing or
use of computer software for the creation or production of motion pictures, home
videos, television programs, interactive products or other audio visual works or
(iii) any other business that is competitive with the Company's business or
activities without the prior written consent of Company.

                           (c) After the expiration or termination of the Term
for any reason whatsoever, Employee shall not either alone or jointly with or on
behalf of others, either directly or indirectly, whether as principal, partner,
agent, shareholder, director, employee, consultant or otherwise, at any time
during the period of two (2) years following the expiration or termination of
the Term, offer employment to, or solicit the employment or engagement of, or
otherwise entice away from the employment of Company or Disney or any affiliated
entity, either for Employee's own account or for any other person, firm or
company, any person who is then employed by Company or Disney or any such
affiliated entity, whether or not such person would commit any breach of said
person's contract by reason of leaving the service of Company, Disney or any
affiliated entity.

                  6.3 Nondisclosure Agreement. Employee acknowledges and
confirms his continuing obligations under the Non-Disclosure Agreement
previously executed by Company and Employee regarding confidentiality and
inventions (the 'Confidentiality Agreement'). Employee further acknowledges that
said Confidentiality Agreement applies to the terms and conditions of the
co-production agreement between Company and Disney to the extent Employee has
knowledge of the terms and conditions thereof. To the extent of any
inconsistency between this Agreement and the Confidentiality Agreement, this
Agreement shall govern.

                  6.4 Ownership. The results and proceeds of Employee's services
hereunder including, but not limited to, creating, designing, sketching,
animation, writing and/or directing in connection with ideas, stories,
screenplays and the Pictures, Productions or any other Pixar production's or
works shall

                                       -8-


be deemed a work-made-for-hire specially ordered or commissioned by Company
('Results and Proceeds'). As between Employee and Company, Company shall
exclusively own all now known or hereafter existing rights of every kind
throughout the universe, in perpetuity and in all languages, pertaining to such
Results and Proceeds, and all elements therein, for all now known or hereafter
existing uses, media, and forms (including, without limitation, all copyrights
and renewals and extension thereof), motion picture, television, sequel, remake,
character and allied rights therein, and the foregoing is inclusive of a full
assignment to Company thereof. In addition, Company shall have the right,
throughout the world and in perpetuity, to use and reproduce, and license others
to use and reproduce, Employee's name, likeness and biographical data relating
to Employee in connection with the Picture and the advertising or exploitation
thereof (including without limitation, in promotional films and featurettes
relating to any Pictures or projects); provided that in no event shall Employee
be depicted as using or endorsing any product, commodity or service. The use of
Employee's credit in a billing block shall not be deemed a use or endorsement of
a product, commodity or service. Company shall have the right, but not the
obligation, to use, adapt, change or revise any work or product of Artist or any
part thereof or the title thereof and to combine the same with other material or
works and Employee hereby expressly waives any so-called 'moral rights' of
authors in the world.

                  6.5 Termination Without Cause. Company shall have the
unilateral right, at any time in the Company's sole and absolute discretion, to
terminate Employee'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
employees 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 Employee or a wrongful termination of Employee's employment by the Company,
(iii) a wrongful deprivation by the Company of Employee's office (or authority,
opportunities or other benefits relating thereto), or injury to reputation, or
(iv) the breach by the Company of any other duty or obligation, express or
implied, which the Company may owe to Employee pursuant to any principle or
provision of law (whether contract or tort), unless the Company's determination
to terminate Employee pursuant to this Section 6.5 shall constitute a violation
of any applicable federal, state or municipal statute, ordinance, rule or
regulation, respecting which the parties may not contact otherwise. If the
Company elects to terminate Employee's employment pursuant to this Section 6.5,
the Company shall have no obligation or liability to Employee pursuant to this
Agreement or otherwise, except to (a) pay to Employee within ten (10) business
days of the exercise of the Termination Right an amount equal to seventy-five
percent (75%) of the balance of the Salary due to Employee under Section 2.1(b)
through the remainder of the Term, and (b) pay to Employee the vested portion of
the Theatrical Motion Picture Bonus as and if due pursuant to the terms of
Section 2.2. Upon exercise of such Termination Right, Employee shall have no
further obligation to provide services to Company hereunder and Employee shall
be free to accept third party employment.

                  6.6 Equitable Relief for Breach. Employee acknowledges that
the services to be rendered by Employee under the terms of this Agreement, and
the rights and privileges granted to

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Company by Employee under its terms, are of a special, unique, unusual,
extraordinary and intellectual character, which gives them a peculiar value, the
loss of which cannot be reasonably or adequately compensated in damages in any
action at law, and that a material breach by Employee of any of the provisions
contained in this Agreement will cause Company great and irreparable injury and
damage. Employee acknowledges that Company shall be entitled, in addition to any
other remedies it may have at law, to seek the remedies of injunction, specific
performance, and other equitable relief for any breach of this Agreement by
Employee. This provision shall not, however, be construed as a waiver of any of
the rights which Company may have for damages, or otherwise.

                  6.7 Breach By Company. In the event of any breach of this
Agreement by Company, Employee shall give Company written notice thereof. If
Company does not cure such breach within thirty (30) days of receiving written
notice thereof, Employee's remedy shall be limited to an action at law for
damages and/or declaratory relief and Employee shall not be entitled to rescind
this Agreement or to injunctive relief or other equitable remedies; provided,
however, the foregoing shall not be deemed a waiver of Employee's statutory or
common law right to discontinue rendering services hereunder in the event of a
material breach by Company of this Agreement. No inadvertent failure to comply
with the provisions of paragraphs 3.2, 4.2 or 5.2 nor any failure by third
parties to comply with their agreement with Company shall constitute a breach of
this Agreement by Company. Upon written notice from Employee specifying the
precise nature of the failure to accord credit as herein provided, Company
agrees to use reasonable efforts to cure prospectively any such breach, but
Company shall not be obligated to recall any prints or advertising material.
Company shall use good faith business efforts to advise third party licensees of
the credit obligations to Employee under this Agreement. Notwithstanding the
foregoing, Company will contractually require Disney to comply with the credit
obligations hereunder.

                  6.8      Suspension/Termination.

                           (a) In the event of Employee's death during the Term,
Company shall terminate Employee's services and pay pursuant to paragraph 6.8(f)
below.

                           (b) If Employee is prevented from fully performing
Employee's material obligations hereunder by reason of illness, accident or
mental or physical disability, or by reason of any law or authority (all of
which events are herein called 'Incapacity'), Company may suspend the services
and compensation of Employee during the period of such Incapacity and/or extend
the Term of Employee's services hereunder for a period of time equal to the
period of such suspension. In the event such Incapacity continues for a period
of fourteen (14) consecutive days or twenty-one (21) days in the aggregate while
Employee is rendering directing services during production of any Picture
hereunder or six (6) consecutive weeks or ten (10) weeks in the aggregate, at
any other time hereunder, Company may terminate the employment of Employee's
services by giving thirty (30) days prior written notice to Employee.

                           (c) The Company may terminate this Agreement
immediately upon written notice to Employee for an event of 'Default.' For
purposes of this Agreement, a termination for 'Default' occurs if Employee is
terminated for any of the following reasons:


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                                     (i)    Gross negligence by Employee of his 
duties pursuant to this Agreement.

                                    (ii)    Conviction of Employee of any felony
or any lesser crime or offense involving the property of Company.

                                    (iii)   Any material breach by Employee of 
any of the terms or covenants of this Agreement, it being understood that
Employee shall have a period of five (5) days from written notice from Company
to cure an alleged breach.

                           (d) The unearned salary provided for hereunder to
Employee may, at Company's option, be suspended during any interruption of
Company's business which prevents the performance of Employee's duties which has
been caused by an event of force majeure, including, but not limited to,
strikes, work stoppage or other labor dispute, acts of God, or other events of
force majeure ('Force Majeure'). If any such period of suspension hereunder
shall continue for a period of six (6) weeks or more, Company or Employee shall
have the right to elect to terminate this Agreement by written notice. In the
event Employee elects to submit a notice of termination, said election shall be
deemed null and void if Company elects to resume its payment obligations to
Employee with one (1) week of Company's receipt of said notice. If this
Agreement is terminated due to an event of Force Majeure and Company elects to
thereafter resume production of the applicable Picture within eighteen (18)
months, Employee shall have the first opportunity upon fifteen (15) business
days prior notice to the start date to be reinstated as the director under the
terms and conditions of this Agreement. During any suspension for an event of
Force Majeure, Employee's services to Company shall be on a non-exclusive basis.

                           (e) In the event of any such suspension or
suspensions hereunder, the Term of this Agreement shall be extended (unless
earlier terminated as provided above) for an additional period of time equal to
the period of such suspension or suspensions, and the dates for any increase in
salary provided for herein shall be correspondingly postponed.

                           (f) In the event of Employee's termination for death,
Incapacity, Default or Force Majeure pursuant to subsections (a), (b), (c) or
(d) above, Company shall be obligated to pay Employee only the specified salary,
bonuses, fringe benefits, expenses and vacation accrued through the date of
termination and any rights Employee may have under the Stock Option Plan shall
be determined under the terms thereof.

                  6.9 Assignment. Company may not assign its rights under this
contract unless to a company which acquires all or substantially all of
Company's assets or to a single purpose production entity which is formed by
Company for purposes of producing the Pictures (in which event Company may only
assign Employee's services and Company shall remain liable for all obligations
of said single purpose entity), without Employee's consent. This Agreement is
personal to Employee and Employee shall not have the right to assign Employee's
interest in this Agreement, any rights under this Agreement or any duties
imposed under this Agreement nor shall Employee have the right to pledge,
hypothecate or

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otherwise encumber Employee's right to receive compensation hereunder without
the prior written notice to Company.

                  6.10 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

                  6.11 Notices. Any notice, consent or other communication under
this Agreement shall be in writing and shall be considered given when mailed by
registered or certified mail, postage prepaid, to the parties at the addresses
set forth below (or at such other address as a party may specify by notice in
accordance with the provisions hereof to the other).

                           Company:

                           PIXAR
                           1001 W. Cutting Boulevard #200
                           Richmond, CA 94804-2452

                           With a copy to:

                           Ziffren, Brittenham, Branca & Fischer
                           2121 Avenue of the Stars
                           32nd Floor
                           Los Angeles, CA 90067
                           Attention: Sam Fischer, Esq.

                           John Lasseter
                           590 Daniel Young Dr.
                           Sonoma, CA 95476

                           With a copy to:

                           Crosby, Heafey, Roach & May
                           700 S. Flower
                           Suite 2200
                           Los Angeles, CA 90017
                           Attention: Nancy Newhouse Porter

                  6.12 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
(regardless of that jurisdiction or any other jurisdictions' choice of law
principles).

                  6.13 Complete Agreement, Modification and Termination. This
agreement, along with the Stock Option Plan, and the Confidentiality Agreement,
contains a complete statement of all the arrangements between the parties with
respect to Employee's employment by Company, supersedes all

                                      -12-


existing agreements, whether written or oral, between them concerning Employee's
employment, and may be changed only in a writing executed by all parties hereto.
In entering into this Agreement, neither party has relied upon any
representation, warranty, assurance or statement of intention not expressly set
forth herein.

                  6.14 Validity. If any one or more of the provisions (or any
part thereof) of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions (or any part thereof) shall not in any way be affected or
impaired thereby.

                  6.15 Waiver. The failure of a party to insist upon strict
adherence to any term, condition or other provision of this Agreement shall not
be considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term, condition or other
provision of this Agreement.

                  6.16 Commitment to Others. Employee shall not have any right
or authority to and shall not employ any person in any capacity nor contract or
purchase or rent any article or material, nor make any commitment, agreement or
obligation whereby Company shall be required to pay any monies or other
consideration without Company's prior consent in each instance.

                  6.17 I-9. All of Company's obligations under this Agreement
are expressly conditioned upon Employee's completion to Company's reasonable
satisfaction of an I-9 Form (Employee Eligibility Verification Form) and upon
Employee's submission to Company of original documents reasonably satisfactory
to Company to demonstrate Employee's employment eligibility.

                  6.18 Headings. The headings of this Agreement are solely for
convenience of reference and shall not affect its interpretation.

                  6.19 Arbitration. Any controversy or claim arising out of, or
relating to, this Agreement, or the making, performance or interpretation
thereof, shall be fully and finally settled by binding arbitration in San
Francisco, California, in accordance with the rules of the American Arbitration
Association the existing, and judgment on the arbitration award may be entered
in any court having jurisdiction over the subject matter of the controversy;
provided, however, that this arbitration provision shall not apply to any
dispute concerning any obligations arising under paragraphs 6.2, 6.3 and 6.4 of
this Agreement.

                  6.20 Indemnity. Company shall indemnify and hold harmless
Employee from and against any and all liability, costs, damages and expenses
(including reasonable attorneys' fees and court costs) which Employee may
sustain or suffer by reason of any third party claim resulting from the
development, production or distribution of the Picture and which is not caused
by a breach by Employee hereunder.


                                      -13-


                  6.21     EMPLOYEE ACKNOWLEDGES THAT HE HAS HAD THE OPPORTUNITY
TO CONSULT WITH THE ADVISOR OF HIS CHOICE AND THAT HE HAS FREELY AND
VOLUNTARILY ENTERED INTO THIS AGREEMENT.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of
February 23, 1997.


                                     PIXAR


                                     By /s/ Steve Jobs
                                        ----------------------------------------

                                     EMPLOYEE


                                     /s/ John Lasseter
                                     -------------------------------------------
                                     JOHN LASSETER




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