PROMISSORY NOTE SECURED BY DEED OF TRUST

$500,000.00                                   Mountain View, California
                                                    October 4, 1996

     In installments as stated in this Note, for value received,  Alan E. Baratz
and Raquel S. Baratz  (collectively,  "Borrower")  hereby  promise to pay to Sun
Microsystems,  Inc., a Delaware corporation ("Lender"), or order, at its offices
at 2550 Garcia  Avenue,  Mountain  View,  California,  or at such other place as
Lender may from time to time  designate in writing,  the  principal  sum of Five
Hundred  Thousand Dollars  ($500,000.00)  with interest on the unpaid balance of
principal  from the date of this Note  until  paid in full at the rate of 6.72%,
compounded annually, on the following terms:

1.   Payment of Principal: The principal due pursuant to this Note shall be paid
     in full on or before October 4, 2001.

2.   Payment of Interest:  Accrued  interest on the then  outstanding  principal
     balance  shall be due and  payable on October 4, 1997 and on the 4th day of
     October each year  thereafter  until  payment in full of the  principal and
     interest.

3.   General:  Principal  and  interest  shall be payable in lawful money of the
     United States.  Interest shall be calculated on the basis of a 360-day year
     consisting of 12 thirty day months.  Each payment shall be applied first to
     interest then due and the balance of said  installment  shall be applied to
     the principal sum. This Note may be prepaid at anytime.

4.   Security:  This Note is  secured  by a deed of trust of even date  herewith
     made by Borrower,  as trustor, to North American Title Company, as trustee,
     for Lender, as beneficiary (the "Deed of Trust"),  encumbering certain real
     property commonly known as 11801 Francemont  Drive, Los Altos Hills,  Santa
     Clara County, California (the "Property Security").

     Default and Acceleration:

     A.   Full  Acceleration:  Unless  otherwise  prohibited  by law,  upon  the
          occurrence  of any of the  following  events,  the Holder of this Note
          shall have the option, without demand or notice, to declare the entire
          balance of principal of this Note to be immediately due and payable:

          (i)      Borrower  defaults  in the  payment  of  principal  when  due
                   pursuant to the terms  hereof or defaults in the  performance
                   of any obligation of Borrower or other  agreement  (including
                   any amendment,  modification or extension  thereof) which may
                   hereafter be executed by Borrower for the purpose of securing
                   this Note;

          (ii)     Borrower,   without   prior   written   consent   of  Lender,
                   voluntarily or by operation of law sells,  conveys,  assigns,
                   or  otherwise  transfers,  all or  substantially  all, or any
                   portion of, or interest in the Property Security.

          (iii)    Sixty days  after (a) Lender is  notified  that  Borrower  is
                   terminating  his  employment  with  Lender,   or  (b)  Lender
                   terminates Borrower's employment for cause, as defined below.
 
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     B.   Partial Acceleration:

          (i)      In the event that  Borrower's  employment  is  terminated  by
                   Lender  other  than  for  cause  or if  Borrower  dies  or is
                   disabled for a period of more than six months,  principal due
                   hereunder  shall  be  accelerated  and  shall  be paid  fifty
                   percent (50%) of the principal in twelve (12) equal quarterly
                   installments,  with the first such  quarterly  payment due on
                   the  effective  date  of   termination   and  the  successive
                   quarterly  payments being due each three months thereafter on
                   the same day of each such months (i.e.,  if termination is on
                   February 3, payments are due on each succeeding May 3, August
                   3,  November 3 and February 3). The  remaining  fifty percent
                   (50%) of the principal  shall be due in a balloon  payment at
                   the end of the thirteenth  quarter following the date hereof.
                   Notwithstanding  the  foregoing,  in no  event  shall  such a
                   termination or the foregoing  payment schedule extend the due
                   date of this Note beyond October 4, 2001.

          (ii)     For  purposes  of this  Note,  the term  "cause"  shall  mean
                   Borrower's misfeasance, malfeasance or misconduct, dishonesty
                   or gross negligence in connection with his employment.

4.   Attorneys'  Fees:  In the  event any  default  hereunder,  Borrower  hereby
     promises to pay all costs of collection,  including  reasonable  attorneys'
     fees  incurred by Lender hereof on account of such  collection,  whether or
     not suit is filed hereon.

5.   Waiver:  The waiver by Lender  hereof of any breach of or default under any
     terms,  covenant or condition  contained herein or in any of the agreements
     referred to above shall not be deemed to be a waiver of such term, covenant
     or condition or any  subsequent  breach of or default under the same or any
     other such term, covenant or condition.

6.   General  Provisions:  This  Note  shall be  governed  by and  construed  in
     accordance with the laws of the State of California. The makers, guarantors
     and endorsers of this Note hereby severally waive  presentment for payment,
     protest and demand,  notice of protest,  demand and dishonor and nonpayment
     of this Note,  and  consent  that Lender may extend the time for payment or
     otherwise  modify the terms of payment or any part or the whole of the debt
     evidenced by this Note,  at the request of any person  liable  hereon,  and
     such  consent  shall not alter nor  diminish  the  liability of any person.
     Borrower  hereby  waives the defense of the statute of  limitations  in any
     action on this Note to the extent  permitted by law. The terms of this Note
     constitute the entire agreement and  understanding  between the parties and
     supersede  all  previous  communications,  representations  or  agreements,
     whether written or oral, with respect to the subject matter hereof.


                                  AS BORROWER:

                                       /s/ ALAN A. BARATZ

                                  ___________________________
                                        Alan E. Baratz


                                       /s/ RAQUEL S. BARATZ
 
                                  __________________________
                                  Raquel S. Baratz

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