SPECTRA-PHYSICS SCANNING SYSTEMS, INC.
959 Terry Street
Eugene, OR  97402-9120

March ___, 1996



Dear_________:

         As you know, at the present  time,  Spectra-Physics  Scanning  Systems,
Inc. (the "Company") is considering  making an initial public offering of all or
a portion of its stock in a firm underwritten offering to the public (an "IPO").
Nevertheless, it is also possible that Spectra-Physics, Inc. ("Spectra-Physics")
could determine that it would be more appropriate to sell the Company to a third
party.  For the purposes of this letter,  a  "Transaction"  means the sale, in a
single transaction or a series of related  transactions,  by Spectra-Physics of:
(i) a majority of the then  outstanding  shares of the  Company's  common stock,
(ii) a majority of the combined voting power of the then outstanding  securities
of the  Company or (iii) a majority of the fair  market  value of the  Company's
assets. In the event that Spectra-Physics  determines to pursue a Transaction to
sell the  Company,  your  importance  to this  continued  success of the Company
becomes even more critical.  In recognition of the significant  extra work, time
and  effort  you would  expend  during a  Transaction  process  and to create an
additional incentive for you to ensure your continued commitment and support for
the Company  through the  completion  of a  Transaction,  the Company  wishes to
provide the severance  benefits  described in this Third Party Severance  Letter
Agreement. Accordingly, you and we agree as set forth below.

         If on or after the closing date of a Transaction  (the "Closing  Date")
and  prior  to the  date  that  is six  months  after  the  Closing  Date of the
Transaction (i) your  employment is terminated  without cause (as defined below)
by the Company,  or (ii) you terminate your employment with the Company for Good
Reason (as defined below), among other reasons,  then, except as provided below,
for a period of ___ months following such termination, the Company will continue
to pay to you an amount equal to ___% of your then  current  monthly base salary
and provide you with your then current health, dental, life and accidental death
and dismemberment insurance benefits.



<PAGE>


         If on or after the date that is six months  after the Closing  Date and
prior to the date that is 18 months after the Closing  Date (i) your  employment
is  terminated  without  Cause (as defined  below) by the  Company,  or (ii) you
terminate your  employment  with the Company for Good Reason (as defined below),
then,  except  as  provided  below,  for a period of 18  months  following  such
termination,  the Company will continue to pay to you an amount equal to ___% of
your then  current  monthly  base salary and provide you with your then  current
health, dental, life and accidental death and dismemberment insurance benefits.

         Notwithstanding the foregoing,  if any payment to you, whether pursuant
to this  letter  agreement  of  otherwise,  would be  subject  to the excise tax
imposed by Section 4999 of the Internal  Revenue Code of 1986, as amended,  then
payments  hereunder  will be reduced to avoid  imposition of such excise tax. In
the event of a dispute  between you and the Company  regarding  whether any such
payment  will be subject to such excise tax,  the dispute  will be resolved by a
"Big Six" accounting firm, not previously  engaged by either you or the Company,
mutually acceptable to you and the Company.

         At the end of either such  severance  period,  you shall be entitled to
exercise  your  COBRA  rights to  purchase  health,  dental  and  other  medical
insurance under the Company's  health insurance plan. In the event of your death
or permanent disability,  all remaining severance installment payments otherwise
payable to you hereunder will be  accelerated  and paid within 30 days to you or
your heirs and legal representatives.

         All payments  due to you  hereunder  will be subject to all  applicable
employment and withholding taxes.

         For the  purposes  of this  agreement,  "Good  Reason"  shall  mean the
occurrence or existence of any of the following with respect to you:

         (i) your  base  salary  plus  bonus at  target  is  reduced  from  that
currently  in  effect,  or your other  employee  benefits  are in the  aggregate
materially  reduced  from those  currently in effect  (unless such  reduction of
employee benefits applies to employees of the Company generally);

         (ii) your place of employment is moved more than 20 miles from its
current location; or

         (iii) you are  assigned  duties  that are  demeaning  or are  otherwise
materially inconsistent with the duties currently performed by you.

         Before you may  terminate  your  employment  for Good Reason,  you must
notify the Company in writing of your  intention  to  terminate  and the Company
shall have 15 days after  receiving such written notice to remedy the situation,
if possible.

         For purposes of this  agreement,  "Cause" shall mean the  occurrence or
existence of any of the  following  with respect to you, as  determined  in good
faith by the Board of Directors of the Company:

         (i) your conviction of a felony;

         (ii)  your  refusal  to  perform  such  services  as may be  reasonably
delegated  or assigned to you  consistent  with your  position,  by the Board of
Directors; or
<PAGE>

         (iii) your willful  misconduct or gross  negligence in connection  with
the  performance  of your duties as an employee of the Company  that  materially
adversely  affects  your  ability to  perform  your  duties  for the  Company or
materially adversely affects the Company.

         If the sale of the  Company  occurs by means of a sale of the assets of
the  Company,  the term  "Company"  herein  shall  thereafter  be deemed to be a
reference to the  purchaser of such assets and if you are offered  employment by
such  purchaser or an affiliate  of such  purchaser in a comparable  position to
your current  position with the Company with  comparable  duties and authorities
and on terms and conditions  substantially similar to those currently in effect,
and  you do not  accept  such  offer,  your  employment  with  the  Company  may
thereafter  be  terminated  by the  Company  and you  shall  be  deemed  to have
voluntarily terminated your employment without Good Reason.

         Nothing in this letter  agreement  shall be construed as giving you any
right to remain in the employ of the Company and you hereby acknowledge that you
are and will  remain an  employee-at-will  of the  Company,  terminable  with or
without Cause.

         This letter agreement contains the entire understanding between you and
the Company and its  affiliates  with respect to the matters  covered hereby and
supersedes any prior written or oral agreement or understanding  with respect to
the matters  covered  hereby,  but shall not affect  certain  letter  agreements
between  you and the  Company  or its  affiliates,  dated the date  hereof.  Any
payments due to you under this letter agreement will be in lieu of any severance
benefits or  severance  payments  to which you may be  entitled  under any other
agreement  between you and the Company or under the  Company's  policies  (other
than payments of accrued vacation or expense  reimbursements) and in lieu of any
incentive payments under the Company's  incentive  compensation  programs.  This
letter  agreement  may be amended or modified  only by an  agreement  in writing
executed by you and by the Company.

         This letter agreement shall be construed and interpreted under the laws
of the State of Oregon. Because it is agreed that time will be of the essence in
determining whether any payments are due to you under this Third Party Severance
Letter  Agreement,  any disputes arising hereunder shall be submitted to binding
arbitration in Eugene, Oregon, or such other place as the parties may agree. The
parties agree that the arbitration  award shall be the sole and exclusive remedy
between them regarding any and all claims arising hereunder.

         The arbitration shall be conducted  pursuant to the commercial rules of
the American Arbitration Association, subject to the following provisions:

         (i) the arbitration hearing shall be held within seven days (or as soon
thereafter as possible) after the selection of the arbitrator, no continuance of
said hearing shall be allowed without the mutual consent of the parties, absence
from or  nonparticipation  at the hearing by either  party shall not prevent the
issuance of an award,  hearing procedures which will expedite the hearing may be
ordered at the arbitrator's discretion, and the arbitrator may close the hearing
in his or her  sole  discretion  when  he or she  decides  he or she  has  heard
sufficient evidence to satisfy issuance of an award;

         (ii) the  arbitrator's  award  shall be rendered  as  expeditiously  as
possible and the parties will  request that the  arbitrator  render the award no
later than one week after the close of the hearing,  the award of the arbitrator
shall be final and binding  upon the  parties,  the award may be enforced in any
appropriate  court as soon as possible  after its  rendition and if an action is
brought to confirm the award,  both parties  agree that no appeal shall be taken
by either party from any decision rendered in such action; and
<PAGE>

         (iii) the prevailing  party,  as determined by the  arbitrator,  in any
such  arbitration  proceeding  shall be awarded  reasonable costs and attorneys'
fees.

         If  prior to the  Closing  Date of a  Transaction  your  employment  is
terminated  by the Company  without  Cause at the request or  suggestion  of the
proposed  purchaser of the Company with the intention of attempting to avoid its
obligations under this letter agreement, then you shall nevertheless be entitled
to all the  benefits  afforded  to you under  this  letter  agreement  as if you
employment was terminated by the Company without Cause immediately following the
Closing Date of such Transaction.

         This  agreement  shall  terminate  and be of no further force or effect
upon the completion of an IPO or if a definitive agreement for a Transaction has
not been signed by August 31,  1996 or such later date as the  Company  notifies
you in writing; provided that if such definitive agreement is terminated without
the closing of a Transaction occurring  thereunder,  this letter agreement shall
also  terminate.   Notwithstanding  the  definition  of  transaction   contained
elsewhere herein, any business combination transaction with a particular company
(the identity of which we have previously agreed upon) in which  Spectra-Physics
retains,  directly or indirectly, a majority ownership interest or a majority of
the voting  power in the  surviving  entity,  but does not or is not entitled to
elect a  majority  of the  board of  directors  thereof,  will be  considered  a
Transaction hereunder.

         This agreement shall insure to the benefit of your heirs,  assigns, and
legal  representatives.  Additionally,  this agreement shall be binding upon the
parties hereto, and their respective successors and assigns.

                                  Very truly yours,


                                  SPECTRA-PHYSICS SCANNING
                                  SYSTEMS, INC.

                                     By: /s/
                                     Title:

Agreed and Accepted

                           , 1996