November 13, 1996




Dear [Name]:

         Sun  Microsystems,  Inc. (the "Company")  considers it essential to the
best interests of its  stockholders  to attract top executives and to foster the
continuous employment of key management personnel. In this connection, the Board
of Directors of the Company (the "Board")  recognizes  that the possibility of a
change of control may exist and that such  possibility,  and the uncertainty and
questions  which it may raise among  management,  may result in the departure or
distraction  of  management  personnel  to the  detriment of the Company and its
stockholders.

         The Board has  determined  that  appropriate  steps  should be taken to
ensure the  continuity of management  and to foster  objectivity  in the face of
potentially disturbing circumstances arising from the possibility of a change of
control of the Company, although no such change is now contemplated.

         In order to induce  you to remain in the employ of the  Company  and in
consideration of your further  services to the Company,  the Company agrees that
you shall  receive the  severance  benefits  set forth in this letter  agreement
("Agreement")  in  the  event  your  employment  with  the  Company   terminates
subsequent  to a "Change of Control" of the Company (as defined in  subparagraph
2(c) hereof) under the circumstances described below.

         1. Term of Agreement.  This Agreement shall commence on the date hereof
and  shall  continue  in  effect  until  your  employment  with the  Company  is
terminated  other than after a Change of Control  unless  sooner  terminated  by
written agreement of the Company and you.

         2.       Definitions.  As used in this Agreement:

                  (a) "Annual  Compensation"  means the total of (i) one year of
base  salary,  at the highest base salary rate that you were paid by the Company
in the 12-month period prior to the date of your  termination of employment (the
"Look-Back  Period"),  (ii) 100% of the  greatest  "On Target"  annual bonus for
which you were  eligible  within  the  Look-Back  Period,  and (iii) 100% of the
greatest "On Target" Commission for which you were eligible within the Look-Back
Period.

                  (b) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General  Rules and  Regulations  under the  Securities
Exchange Act of 1934, as amended (the "Exchange Act").



<PAGE>



                  (c) "Change of Control" of the Company means and includes each
and all of the following occurrences:

                           (i) The  stockholders of the Company approve a merger
                  or  consolidation  of the Company with any other  corporation,
                  other than a merger or consolidation which would result in the
                  voting securities of the Company outstanding immediately prior
                  thereto   continuing   to   represent   (either  by  remaining
                  outstanding or by being  converted  into voting  securities of
                  the  surviving  entity) at least  fifty  percent  (50%) of the
                  total voting power represented by the voting securities of the
                  Company or such surviving entity outstanding immediately after
                  such  merger  or  consolidation,  or the  stockholders  of the
                  Company approve a plan of complete  liquidation of the Company
                  or an agreement for the sale or  disposition by the Company of
                  all or substantially all the Company's assets.

                           (ii) The  acquisition  by any  Person  as  Beneficial
                  Owner,  directly or  indirectly,  of securities of the Company
                  representing  fifty  percent (50%) or more of the total voting
                  power  represented  by the Company's then  outstanding  voting
                  securities except pursuant to a negotiated  agreement with the
                  Company and pursuant to which such  securities  are  purchased
                  for the Company.

                           (iii) A  majority  of the Board of  Directors  of the
                  Company  in office at the  beginning  of any  thirty-six  (36)
                  month period is replaced  during the course of such thirty-six
                  (36) month  period  (other than by  voluntary  resignation  of
                  individual  directors in the ordinary  course of business) and
                  such  placement was not initiated by the Board of Directors of
                  the Company as constituted at the beginning of such thirty-six
                  (36) month period.

                           Any other provision of this Section  notwithstanding,
                  the term "Change in Control"  shall not include  either of the
                  following events undertaken at the election of the Company:

                                    (x) Any  transaction,  the sole  purpose  of
                           which  is  to  change  the  state  of  the  Company's
                           incorporation;

                                    (y) A transaction, the result of which is to
                           sell all or  substantially  all of the  assets of the
                           Company  to  another   corporation   (the  "surviving
                           corporation");    provided    that   the    surviving
                           corporation  is owned  directly or  indirectly by the
                           stockholders  of the  Company  immediately  following
                           such   transaction   in   substantially    the   same
                           proportions  as  their  ownership  of  the  Company's
                           Common Stock immediately  preceding such transaction;
                           and provided, further, that the surviving corporation
                           expressly assumes this Agreement.




                                       -2-

<PAGE>



                  (d) "COBRA" means Title X of the  Consolidated  Omnibus Budget
Reconciliation Act of 1985, as amended.

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

                  (f)  "Company"  means  Sun  Microsystems,   Inc.,  a  Delaware
corporation, and any successor as provided in Article VII hereof.

                  (g) "Person"  shall have the meaning  ascribed to such term in
Section  3(a)(9) of the  Exchange  Act and as used in  Sections  13(d) and 14(d)
thereof,  including a "group" as defined in Sections  13(d) of the  Exchange Act
but  excluding  the Company and any  subsidiary  and any  employee  benefit plan
sponsored or maintained by the Company or any subsidiary  (including any trustee
of such plan acting as Trustee).

                  (h)  "Severance   Payment"  means  the  payment  of  severance
compensation as provided in Section 3 of this Agreement.

         3.  Compensation  Upon Termination of Employment  Following a Change of
Control.  Subject to Sections 7 and 8 below, if your employment with the Company
is terminated within twelve (12) months after a Change in Control,

                  (a) you will be entitled  to a Severance  Payment in an amount
computed as follows:

                           (i) an amount equal to two and one-half (2 1/2) times
                           Annual Compensation ("Termination Payment"); plus

                           (ii) the same percentage of  Company-paid  health and
                           group-term  life insurance  benefits as were provided
                           to you and your family  under plans of the Company as
                           of the Change of Control  for a total of  twenty-four
                           (24) months.

                  (b) the Company  agrees  that in  addition to the  Termination
Payment,  all  outstanding  stock  options  previously  granted to you under the
Company's  Stock Option Plan  (including any options issued in  substitution  or
assumption of such options as a result of a Change in Control),  whether  vested
or  unvested,  shall  immediately  have  their  vesting  accelerated  upon  such
termination,  and all such  outstanding  non-statutory  stock  options  shall be
exercisable for a period of three (3) months after such termination.


                                       -3-

<PAGE>



                  (c) Any cash payment to you under  subparagraph  3(a) shall be
made within 30 calendar days of your termination of employment.

                  (d) Notwithstanding  anything contained in subsections (a) and
(b) above, the Company shall have no obligation to make any payment or offer any
benefits to you under this Section 3 if your employment is terminated prior to a
Change in Control or if your employment is terminated  after a Change in Control
for Cause (as defined in Section 4),  death,  Disability  (as defined in Section
5),  retirement or resignation other than for Good Reason (as defined in Section
6).

                  (e) For purposes of COBRA,  the date of a  "qualifying  event"
for you and your  covered  dependents  shall be the date upon which the coverage
provided under Section 3(a)(ii) above terminates.

         Furthermore, for purposes of this Agreement, if it is determined by the
Company's  independent public accountants (the  "Accountants") that acceleration
of  vesting of shares  would  preclude  accounting  for the  acquisition  of the
Company as a pooling of  interests,  and it is a condition to the closing of the
Change of Control transaction that the transaction be accounted for as a pooling
of interests,  then the Company shall not accelerate the vesting of your options
under this Section 3.

         4. Cause.  For purposes of this  Agreement,  "Cause" means (i) theft or
damage of  Company  property;  (ii) use,  possession,  sale or  distribution  of
illegal  drugs,  (iii) being under the  influence of alcohol or drugs (except to
the extent  medically  prescribed)  while on duty or on Company  premises,  (iv)
involvement  in  activities  representing  conflicts of  interest,  (v) improper
disclosure of confidential information,  (vi) conduct endangering,  or likely to
endanger,  the  health or safety of  another  employee;  (vii)  conviction  of a
felony, or (viii) falsifying or misrepresenting information on Company records.

         5. Disability. For purposes of this Agreement, "Disability" means that,
at the time your  employment is terminated,  you have been unable to perform the
duties of your position for a period of six (6) consecutive months as the result
of your incapability due to physical or mental illness.

         6. Good Reason.  The Company  will be  obligated  to make  payments and
provide  benefits  under Section 3 if you  terminate  your  employment  for Good
Reason  within  twelve  months  after a Change in Control.  For purposes of this
Agreement, "Good Reason" means

                  (i) a material reduction in salary or benefits,

                  (ii) a material change in job responsibilities,

                  (iii) a request to  relocate,  except  for office  relocations
         that would not increase your one-way commute by more than 50 miles, or

                  (iv) the  failure of the Company to obtain the  assumption  of
         the Agreement as stipulated in Section 11.

         7.  Parachute  Payments.  In the  event  that any  payment  or  benefit
received or to be  received  by you in  connection  with a  termination  of your
employment with the Company  (collectively,  the "Severance Payments") would (i)
constitute a "parachute  payment" within the meaning of section 280G of the Code
or any similar or  successor  provision to 280G and (ii) but for this Section 7,
be subject to the excise tax imposed by section  4999 of the Code or any similar
or successor  provision to section 4999 (the "Excise Tax"),  then such Severance
Payments (which Severance Payments shall collectively

                                       -4-

<PAGE>



be referred to herein as the "Severance Parachute Payments") shall be reduced to
the largest  amount which would result in no portion of the Severance  Parachute
Payments being subject to the Excise Tax. In the event any reduction of benefits
is required  pursuant to this  Agreement,  you shall be allowed to choose  which
benefits  hereunder  are  reduced  (e.g.,  reduction  first  from the  Severance
Payment, then from the vesting acceleration).  Any determination as to whether a
reduction  is  required  under  this  Agreement  and as to the  amount  of  such
reduction  shall be made in  writing by the  Accountants  prior to the Change of
Control,   whose  determinations  shall  be  conclusive  and  binding  upon  the
Participant  and the Company for all purposes.  If the Internal  Revenue Service
(the  "IRS")  determines  that a Severance  Parachute  Payment is subject to the
Excise  Tax,  then the Company or any related  corporation,  as their  exclusive
remedy,  shall  seek to  enforce  the  provisions  of  Section  8  hereof.  Such
enforcement  of  Section 8 hereof  shall be the only  remedy,  under any and all
applicable  state and federal laws or otherwise,  for your failure to reduce the
Severance Parachute Payments so that no portion thereof is subject to the Excise
Tax.  The Company or related  corporation  shall  reduce a  Severance  Parachute
Payment in accordance with Section 7 only upon written notice by the Accountants
indicating  the amount of such  reduction,  if any.  The Company  shall bear all
costs the Accountants may reasonably  incur in connection with any  calculations
contemplated by this Agreement.

         8. Remedy.  If,  notwithstanding  the reduction  described in Section 7
hereof, the IRS determines that you are liable for the Excise Tax as a result of
the receipt of a Severance  Parachute  Payment,  then you shall,  subject to the
provisions of this Agreement, be obligated to pay to the Company (the "Repayment
Obligation") an amount of money equal to the "Repayment  Amount".  The Repayment
Amount with respect to a Severance  Parachute Payment shall be the smallest such
amount,  if any, as shall be required to be paid to the Company so that your net
proceeds  with respect to any  Severance  Parachute  Payment  (after taking into
account  the  payment  of the Excise Tax  imposed  on such  Severance  Parachute
Payment) shall be maximized. Notwithstanding the foregoing, the Repayment Amount
with  respect to a  Severance  Parachute  Payment  shall be zero if a  Repayment
Amount of more than zero would not  eliminate  the  Excise  Tax  imposed on such
Severance  Parachute  Payment.  If the Excise Tax is not eliminated  through the
performance  of the  Repayment  Obligation,  you shall pay the Excise  Tax.  The
Repayment  Obligation  shall be  performed  within  30 days of  either  (i) your
entering into a binding  agreement  with the IRS as to the amount of your Excise
Tax  liability  or (ii) a  final  determination  by the IRS or a court  decision
requiring  you to pay the Excise Tax with respect to such a Severance  Parachute
Payment from which no appeal is available or is timely taken.

         9. Disputes. If you disagree with your allotment of benefits under this
Agreement,  you may file a written  appeal with the designated  Human  Resources
representative.  Any claim relating to this  Agreement  shall be subject to this
appeal process.  The written appeal must be filed within sixty (60) days of your
termination date.

         The appeal must state the reasons  that you believe you are entitled to
different   benefits  under  the  Agreement.   A  designated   Human   Resources
representative  shall  review  the  claim.  If the claim is wholly or  partially
denied, the designated Human Resources  representative  shall provide you with a
written notice of the denial,  specifying the reasons the claim was denied. Such
notice  shall be provided  within  ninety (90) days of  receiving  your  written
appeal.

                  If your appeal is denied,  you shall have the right and option
to elect review of such denial by either a court of competent jurisdiction or by
arbitration.

                                       -5-

<PAGE>



         10.      No Mitigation.

                  (a) You shall not be required  to  mitigate  the amount of any
         payment provided for in Section 3 hereof by seeking other employment or
         otherwise, nor shall the amount of such payment be reduced by reason of
         compensation  or other income you receive for services  rendered  after
         your termination of employment with the Company.

                  (b) In addition to the Termination Payment payable pursuant to
         Section 3 hereof, you shall be entitled to receive all benefits payable
         to you under any benefit plan of the Company in which you participate.

         11.  Company's  Successors.  The Company  will  require  any  successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or  substantially  all of the  business  and/or  assets of the  Company,  to
expressly  assume and agree to perform the  obligations  under this Agreement in
the same manner and to the same  extent  that the  Company  would be required to
perform if no such  succession  had taken  place.  As used in this  Section  11,
"Company"  includes any  successor to its business or assets as aforesaid  which
executes and delivers this Agreement or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.

         12. Notice.  Notices and all other communications  provided for in this
Agreement  shall be in writing  and shall be deemed to have been duly given when
personally  delivered  or five (5) days after  deposit  with postal  authorities
transmitted  by United  States  registered  or certified  mail,  return  receipt
requested,  postage prepaid,  addressed to the respective addresses set forth on
the first or last page of this  Agreement,  or to such  other  address as either
party may have furnished to the other in writing in accordance herewith,  except
that notices of change address shall be effective only upon receipt.

         13.  Amendment  or  Waiver.  No  provisions  of this  Agreement  may be
modified, waived or discharged unless such waiver,  modification or discharge is
agreed to in writing by you and the  Company.  No waiver of either  party at any
time of the breach of, or lack of compliance  with, any conditions or provisions
of this  Agreement  shall be deemed a waiver  of the  provisions  or  conditions
hereof.

         14. Sole  Agreement.  This Agreement  represents  the entire  agreement
between you and the  Company  with  respect to the matters set forth  herein and
supersedes and replaces any prior agreements in their entirety. No agreements or
representations,  oral or  otherwise,  express or implied,  with  respect to the
subject  matter of this Agreement will be made by either party which are not set
forth expressly herein.

         15. Employee's Successors. This Agreement shall inure to the benefit of
and be  enforceable  by  your  personal  or  legal  representatives,  executors,
administrators,  successors, heirs, distributees,  devisees and legatees. If you
should  die while any  amounts  are still  payable  to you  hereunder,  all such
amounts,  unless otherwise provided herein, shall be paid in accordance with the
terms of the Agreement to your devisee,  legatee, or other designee or, if there
be no such designees, to your estate.

         16. Funding.  This Agreement shall be funded from the Company's general
assets.


                                       -6-

<PAGE>


         17.  Validity.  The invalidity or  unenforceabihty  of any provision of
this  Agreement  shall not affect the  validity or  enforceability  of any other
provisions of this Agreement, which shall remain in full force and effect.

         18. Applicable Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California.

         19. Counterparts.  This Agreement may be executed in counterparts, each
of which shall be deemed an original,  but all of which together will constitute
one and the same instrument.

         If the foregoing conforms with your understanding, please indicate your
agreement to the terms hereof by signing where indicated below and returning one
copy of this Agreement to the undersigned.

         IN WITNESS WHEREOF, this Agreement is executed effective as of the date
set forth above.

                                     Very truly yours,

                                     SUN MICROSYSTEMS, INC.


                                     -------------------------------------
                                     Michael H. Morris
                                     Vice President, General Counsel and
                                     Secretary


ACCEPTED AND AGREED TO AS OF
THE DATE FIRST SET FORTH ABOVE:


---------------------------------
[Name]


---------------------------------


---------------------------------
(Address)


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