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                                                                   Exhibit 10.8

THIS SECURED CONVERTIBLE DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933), AS AMENDED (THE "ACT"). NO SALE OR DISPOSITION MAY BE EFFECTED
EXCEPT IN COMPLIANCE WITH RULE 144 UNDER THE ACT OR AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR UPON RECEIPT OF AN OPINION OF COUNSEL FOR HOLDER,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION.

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE ACTING COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.

                          SECURED CONVERTIBLE DEBENTURE

$1,500,000                                                     February 15, 2000
                                                           Palo Alto, California

         FOR VALUE RECEIVED, HEURISTIC PHYSICS LABORATORIES, INC., a California
corporation (the "COMPANY"), unconditionally and without set-off or counterclaim
promises to pay to APPLIED MATERIALS, INC. (the "HOLDER"), or its assigns, the
principal sum of One Million Five Hundred Thousand Dollars ($1,500,000),
together with interest from the date of this Secured Convertible Debenture (this
"DEBENTURE") on the unpaid principal balance at a rate equal to eight percent
(8.0%) per annum, computed on the basis of the actual number of days elapsed and
a year of 360 days. All unpaid principal, together with any then unpaid and
accrued interest and other amounts payable hereunder. shall be due and payable
on the "MATURITY DATE" which date shall be the earlier of (i) February 15, 2005,
or (ii) when such amounts are declared due and payable by the Holder or made
automatically due and payable upon or after the occurrence of an Event of
Default (as defined below). The Company agrees it shall use the proceeds of the
purchase of this Debenture for working capital purposes only.

1. DEFINITIONS. As used in this Debenture. the following capitalized terms have
the following meanings:

         1.1 "AFFILIATE" means, with respect to any Person, any Person that owns
or controls directly or indirectly such Person, any Person that controls or is
controlled by or is under common control with such Person, and each of such
Person's senior executive

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officers, directors, partners and, for any Person that is a limited liability
company, such Persons, managers and members.

         1.2 "CAPITAL LEASE" means a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

         1.3 "CAPITAL LEASE OBLIGATION" means. with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.

         1.4 "CERTIFICATE" shall mean the Articles of Incorporation of the
Company as in effect as of the Initial Closing.

         1.5 "CHANGE OF CONTROL" means the occurrence after the date hereof of
(a) any Person, or two or more Persons acting in concert, acquiring beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended), directly or
indirectly, or entering into a contract or arrangement which, upon consummation,
will result in their acquisition or control, of or over Equity Securities of the
Company representing thirty percent (30%) or more of the combined voting power
of all Equity Securities of the Company entitled to vote in the election of
directors; (b) during any twenty-four month (24) period, individuals who were
directors of the Company on the first day of such period shall, together with
such directors as are approved by the directors who were directors at the
beginning of such period, cease to constitute a majority of the board of
directors of the Company; or (c) the sale of all or substantially all of the
assets.

         1.6 "COMMON STOCK " means the common stock of the Company.

         1.7 "THE COMPANY" includes the corporation initially executing this
Debenture and any Person which shall succeed to or assume the obligations of the
Company under this Debenture.

         1.8 "EQUITY SECURITIES" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, or other equity interests in and of
such Person (regardless of how designated and whether or not voting or
non-voting) and (b) all warrants, options and other rights to acquire any of the
foregoing.

         1.9 "EVENT OF DEFAULT" has the meaning given in Section 6 hereof.

         1.10 "FINANCIAL STATEMENTS" shall mean, with respect to any accounting
period for any Person, statements of operations, retained earnings and cash
flows of such Person for such period, and balance sheets of such Person as of
the end of such period, setting

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forth in each case in comparative form figures for the corresponding period in
the preceding fiscal year if such period is less than a full fiscal year or, if
such period is a full fiscal year, corresponding figures from the preceding
fiscal year, all prepared in reasonable detail and in accordance with generally
accepted accounting principles. Unless otherwise indicated, each reference to
Financial Statements of any Person shall be deemed to refer to Financial
Statements prepared on a consolidated basis.

         1.11 "FUNDAMENTAL CHANGE" means with respect to the Company (a) a
merger or consolidation, direct or indirect, whether by operation of law or
otherwise, (b) any liquidation, winding up or dissolution, or (c) any sale of
all or substantially all of the assets of the Company.

         1.12 "GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.

         1.13 "HOLDER" shall mean the Person specified in the introductory
paragraph of this Debenture or any Person who shall at the time be the holder of
this Debenture.

         1.14 "INDEBTEDNESS" shall mean and include the aggregate amount of,
without duplication: (a) all obligations for borrowed money; (b) all obligations
evidenced by bonds, debentures, notes or other similar instruments; (c) all
obligations to pay the deferred purchase price of property or services (other
than accounts payable and current liabilities incurred in the ordinary course of
business determined in accordance with generally accepted accounting
principals); (d) all obligations with respect to capital leases; (e) all
guaranty obligations; (f) all obligations created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person; or (g) all reimbursement and other payment obligations,
contingent or otherwise, in respect of letters of credit.

         1.15 "INTELLECTUAL PROPERTY" shall mean all of the Company's right,
title and interest in and to patents, patent rights (and applications therefor),
trademarks and service marks (and applications and registrations therefor),
inventions, copyrights, mask works (and applications and registrations
therefor), trade names, trade styles, software and computer programs, trade
secrets, methods, processes, know how, drawings, specifications, descriptions,
and all memoranda, notes, and records with respect to any research and
development, all whether now owned or subsequently acquired or developed by the
Company.

         1.16 "LIEN" shall mean, with respect to any property, any security
interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom, including, without limitation, the
interest of a vendor or lessor under a conditional sale agreement, capital lease
or other title retention agreement, or any agreement to provide any of the
foregoing and the filing of any financing statement or

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similar instrument under the Uniform Commercial Code or comparable law of any
jurisdiction.

         1.17 "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on:
(a) the business, assets, operations, or financial condition of the Company; or
(b) the ability of the Company to repay the Indebtedness under this Debenture or
any of the other Transaction Documents.

         1.18 "OBLIGATIONS" shall mean and include all loans, advances, debts,
liabilities and obligations, however arising, owed by the Company to the Holder
of every kind and description (whether or not evidenced by any note or
instrument and whether or not for the payment of money), now existing or
hereafter arising under or pursuant to the terms of this Debenture or any of the
other Transaction Documents, including, all interest, fees, charges, expenses,
attorneys' fees and costs and accountants' fees and costs chargeable to and
payable by the Company hereunder and thereunder, in each case, whether direct or
indirect, absolute or contingent, due or to become due, and whether or not
arising after the commencement of a proceeding under Title II of the United
States Code (11 U.S.C. Section 101 et seq.), as amended from time to time
(including post-petition interest) and whether or not allowed or allowable as a
claim in any such proceeding.

         1.19 "PERMITTED LIENS" shall mean and include:

                  (a) liens and security interests existing as of this date and
disclosed in the Schedule attached hereto and incorporated herein by this
reference;

                  (b) liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings;

                  (c) liens securing claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like persons or entities
imposed without action of such parties, provided that the payment thereof is not
yet required;

                  (d) liens incurred or deposits made in the ordinary course of
the Company's business in connection with worker's compensation, unemployment
insurance, social security and other like laws;

                  (e) liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;

                  (f) easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances affecting real property not interfering in any material respect
with the ordinary conduct of the Company's business;

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                  (g) liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection with the
importation of goods;

                  (h) liens which constitute rights of set-off of a customary
nature; and

                  (i) any interest or title of a lessor in equipment subject to
any capitalized lease otherwise permitted hereunder.

         1.20 "PERSON" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a governmental authority.

         1.21 "SECURITY AGREEMENT" shall mean that certain Security Agreement
dated the date hereof, by and between the Company and Holder.

         1.22 "SUBSIDIARY" shall mean: (a) any corporation of which more than
50% of the issued and outstanding Equity Securities having ordinary voting power
to elect a majority of the Board of Directors of such corporation is at the time
directly or indirectly owned or controlled by Company; (b) any partnership,
joint venture, or other association of which more than 50% of the equity
interest having the power to vote, direct or control the management of such
partnership, joint venture or other association is at the time directly or
indirectly owned and controlled by Company; or (c) any other entity included in
the financial statements of Company on a consolidated basis.

         1.23 "TRANSACTION DOCUMENTS" shall mean (a) this Debenture; (b) the
Security Agreement; and (c) amendments, exhibits, and schedules to the
foregoing.

2.       INTEREST AND PLACE OF PAYMENT.

         Interest on the outstanding principal balance on this Debenture shall
be payable in arrears not later than the first Business Day of each calendar
year for the preceding calendar year from the date hereof through the Maturity
Date. All amounts payable hereunder shall be payable at the any address
designated by the Holder.

3.       PREPAYMENT.

         3.1 PREPAYMENT. No prepayment of this Debenture in whole or in part is
permitted except that, at the option of the Holder, the Company shall repay, in
whole or in part, this Debenture, upon the occurrence of any of the following:
(a) a Change of Control, (b) a Fundamental Change, (c) the date on which the
Company secures equity investments in one or more closings after the date hereof
equal to or greater than $5,000,000 in the aggregate, (d) the date on which the
Company secures debt financing equal to or greater than $5,000,000, or (e) joint
venture, liquidation or similar transaction of the Company that affects a
material portion of the assets, business lines of the

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Company or the ability of the Company to continue as a viable business (each a
"MANDATORY PREPAYMENT EVENT").

         3.2 NOTICE.

                  (a) In the event that any Mandatory Prepayment Event shall
occur or the Company shall have knowledge of any proposed Mandatory Prepayment
Event, the Company will give written notice (the "COMPANY NOTICE") of such fact
in the manner provided in Section 3.2(a) hereof to the Holder. The Company
Notice shall be delivered promptly upon receipt of such knowledge by the Company
and in any event no later than ten (10) Business Days following the occurrence
of any Mandatory Prepayment Event. The Company Notice shall (i) describe the
facts and circumstances of such Mandatory Prepayment Event in reasonable detail,
(ii) make reference to this Section 3.2(a) and the right of the Holder to
require prepayment, in whole or in part, of the Debenture on the terms and
conditions provided for in this Section 3.2(a), (111) offer in writing to prepay
the outstanding Debenture, together with accrued interest to the date of
prepayment, and (iv) specify a date for such prepayment (the "MANDATORY
PREPAYMENT EVENT PREPAYMENT DATE"), which Mandatory Prepayment Event Prepayment
Date shall be not more than 90 days nor less than 30 days following the date of
such the Company Notice. The Holder shall have the right to accept such offer
and require prepayment of the Debenture by written notice to the Company (a
"DEBENTURE HOLDER NOTICE") given not later than 20 days after receipt of the
Company Notice. The Company shall on the Mandatory Prepayment Event Prepayment
Date prepay the Debenture if the Holder has so accepted such offer of
prepayment. The prepayment price of the Debenture payable upon the occurrence of
any Mandatory Prepayment Event shall be an amount equal to the outstanding
principal amount of the Debenture and accrued interest thereon to the date of
such prepayment.

                  (b) Without limiting the foregoing, notwithstanding any
failure on the part of the Company to give the Company Notice herein required as
a result of the occurrence of a Mandatory Prepayment Event, the Holder shall
have the right on the occurrence of a Mandatory Prepayment Event, by delivery of
written notice to the Company, to require the Company to prepay, in whole or in
part, the Debenture together with accrued interest thereon to the date of
prepayment. Notice of any required prepayment pursuant to this Section 3.2(b)
shall be delivered by the Holder, if it did not receive such Company Notice, to
the Company, after the Holder has actual knowledge of such Mandatory Prepayment
Event. On the date designated in the Holder's notice (which shall be not more
than 90 days nor less than 30 days following the date of the Holder's notice),
the Company shall prepay the Debenture, together with accrued interest thereon
to the date of prepayment.

         3.3 MATURITY; SURRENDER, ETC. In the case of complete prepayment of the
Debenture pursuant to this Section 3, the principal amount of the Debenture to
be prepaid

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shall mature and become due and payable on the date fixed for such prepayment,
together with interest on such principal amount accrued to such date. From and
after such date, unless the Company shall fall to pay such principal amount when
so due and payable, together with the interest, interest on such principal
amount shall cease to accrue. Once the Debenture is prepaid in full it shall be
surrendered to the Company and cancelled and shall not be reissued, and no
Debenture shall be issued in lieu of any prepaid principal amount of the
Debenture.

         3.4 AFFILIATES. The Company will not and will not permit any affiliate
to purchase, redeem, prepay or otherwise acquire, directly or indirectly, the
outstanding Debenture except upon the payment or prepayment of the Debenture in
accordance with the terms of this Debenture.

4.       AFFIRMATIVE COVENANTS.

         While any amount is outstanding under this Debenture, the Company
covenants that it will do the following:

         4.1 COMPLIANCE AND MAINTENANCE OF CORPORATE EXISTENCE. Maintain its
corporate existence and observe and comply in all material respects with all
applicable laws and valid requirements of any governmental authorities relative
to its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets, and shall maintain and keep in full
force and effect all licenses and permits necessary in any material respect to
the proper conduct of its business.

         4.2 PROPERTY MAINTENANCE AND INSURANCE. Maintain its properties in good
repair, working order and condition as required for the normal conduct of its
business and shall at all times maintain liability and casualty insurance with
financially sound and reputable insurers in such amounts and on such terms as
are customary in businesses similar to the Company's. The Company shall furnish
to the Holder certificates or other evidence satisfactory to the Holder of
compliance with the foregoing insurance provisions.

         4.3 TAX. The Company shall pay or cause to be paid all taxes,
assessments or governmental charges on or against it or its properties on or
prior to the time when they become due; provided that this covenant shall not
apply to any tax, assessment or charge that is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
established and are being maintained in accordance with generally accepted
accounting principles if no Lien shall have been filed to secure such tax,
assessment or charge.

         4.4 MAINTENANCE OF BOOKS AND RECORDS. The Company shall keep adequate
books and records of account, in which true and complete entries will be made
reflecting

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all of its business and financial transactions, and such entries will be made in
accordance with generally accepted accounting principles consistently applied
and applicable law. The Holder shall have the right from time to time hereafter
to audit the Company's books and records of account at the Company's sole
expense; provided. that such audits shall be conducted no more often than every
twelve (12) months unless an Event of Default has occurred and is continuing.

         4.5 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. The Company shall
deliver to the Holder: (a) as soon as available, but in any event within ninety
(90) days after the end of each quarter. a company prepared consolidated balance
sheet and income statement covering the Company's consolidated operations during
such period, in a form and certified by an officer of the Company reasonably
acceptable to the Holder; (b) as soon as available, but in any event within one
hundred and twenty (120) days after the end of the Company's fiscal year,
consolidated financial statements of the Company prepared in accordance with
GAAP, consistently applied, which financial statements may be Company-prepared,
provided that if any financial statements are prepared by an independent
certified public accounting firm, then the Holder shall be provided with a copy
of such financial statements; (c) promptly upon receipt of notice thereof, a
report of any legal actions pending or threatened against the Company or any
Subsidiary that could result in damages or costs to the Company or any
Subsidiary of One Hundred Thousand Dollars ($100,000) or more; (d) prompt notice
of any material change in the composition of the Intellectual Property,
including, but not limited to, any subsequent ownership right of the Company in
or to any copyright, patent or trademark not specified in any intellectual
property security agreement between the Company and the Holder or knowledge of
an event that materially adversely effects the value of the Intellectual
Property; and (e) such budgets, sales projections, operating plans or other
financial information as the Holder may reasonably request from time to time.

         4.6 BOARD OF DIRECTORS. The Company shall allow the Holder to appoint
one observer to the Company's Board of Directors.

         4.7 NO IMPAIRMENT. The Company will not, by amendment of its
Certificate or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company.

         4.8 FURTHER ASSURANCE. At any time and from time to time the Company
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by the Holder to effect the purposes of this
Debenture.

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5.       NEGATIVE COVENANTS.

         From the date hereof until all Obligations to the Holder are paid or
converted pursuant to their terms, without the prior written consent of the
Holder, neither the Company nor any of its Subsidiaries shall do the following:

         5.1 INDEBTEDNESS. Create, incur, assume or permit to exist any
Indebtedness except

                  (a) trade credit in the ordinary course of business; and

                  (b) Indebtedness related to any Permitted Liens.

         5.2 LIENS. Create, incur, assume or permit to exist any Lien on or with
respect to any of its assets or property of any character, whether now owned or
hereafter acquired, except for Permitted Liens.

         5.3 DIVIDENDS, REDEMPTIONS, ETC. Do any of the following in any fiscal
year: (a) pay dividends or make any distributions on its Equity Securities; (b)
purchase, redeem, retire, decease or otherwise acquire for value any of its
Equity Securities; (c) return any capital to any holder of its Equity
Securities; (d) make any distribution of assets, Equity Securities, obligations
or securities to any holder of its Equity Securities; or (e) set apart any sum
for any such purpose; PROVIDED, HOWEVER, that any Subsidiary may pay cash
dividends to the Company.

         5.4 CHANGE OF CONTROL; FUNDAMENTAL CHANGE. Permit to exist a Change of
Control or Fundamental Change.

         5.5 INDEBTEDNESS. (i) Prepay, redeem, purchase, defease or otherwise
satisfy in any manner prior to the scheduled repayment thereof any Indebtedness
for borrowed money (other than amounts due or permitted to be prepaid under this
Debenture) or lease obligations, (ii) amend, modify or otherwise change the
terms of any Indebtedness for borrowed money or lease obligations so as to
accelerate the scheduled repayment thereof or (iii) except as disclosed on
SCHEDULE 5.5 attached hereto and approved by Lender in its sole discretion,
repay any notes to officers, directors or shareholders.

         5.6 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of the Company
(other than any Subsidiary) except for transactions that are in the ordinary
course of the Company's business, upon fair and reasonable terms that are no
less favorable to the Company than would be obtained in an arm's length
transaction with a nonaffiliated Person.

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         5.7 TRANSACTIONS OUTSIDE THE ORDINARY COURSE OF BUSINESS. Directly or
indirectly enter into or permit to exist any material transaction outside the
ordinary course of business or inconsistent with past practices.

         5.8 ERISA. Permit any retirement plan maintained by it to: (a) engage
in any "prohibited transaction", (b) incur any "accumulated funding deficiency"
(as defined in Section 302 of ERISA) whether or not waived, or (c) terminate any
retirement plan in a manner that could result in the imposition of a Lien or
encumbrance on the assets of the Company or any of its Subsidiaries pursuant to
Section 4068 of ERISA.

         5.9 COMMON STOCK. Alter any of the rights, preferences or privileges of
the Common Stock as set forth as of the date of this Debenture in the
Certificate.

6.       EVENTS OF DEFAULT.

         The occurrence and continuation of any of the following shall
constitute an "EVENT OF DEFAULT" under this Debenture and the other Transaction
Documents:

         6.1 FAILURE TO PAY. The Company shall fail to pay (a) any principal
payment within fifteen (15) days after written notice of the due date, or (b)
any interest or other payment required under the terms of this Debenture or any
other Transaction Document within five (5) days of the due date; or

         6.2 BREACHES OF CERTAIN COVENANTS. The Company or any of its
Subsidiaries shall fall to observe or perform any covenant, obligation,
condition or agreement set forth in SECTIONS 4 or 5 of this Debenture; or

         6.3 BREACHES OF OTHER COVENANTS. The Company or any of its Subsidiaries
shall fail to observe or perform any other covenant, obligation, condition or
agreement contained in this Debenture or the other Transaction Documents (other
than those specified in SECTIONS 6.1 and 6.2) and (a) such failure shall
continue for thirty (30) days following the Company's failure to perform, or (b)
if such failure is not curable within such thirty (30) day period, but is
reasonably capable of cure within sixty (60) days, either (i) such failure shall
continue for sixty (60) days or (ii) the Company or its Subsidiary shall not
have commenced a cure in a manner reasonably satisfactory to the Holder within
the initial thirty (30) day period; or

         6.4 REPRESENTATIONS AND WARRANTIES. Any representation, warranty,
certificate, or other statement (financial or otherwise) made or furnished by
the Company to the Holder in writing signed by an officer of the Company in
connection with this Debenture or any of the other Transaction Documents, or as
an inducement to the Holder to enter into this Debenture and the other
Transaction Documents, shall be false, incorrect, incomplete or misleading in
any material respect when made or furnished; or

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         6.5 OTHER PAYMENT OBLIGATIONS. The Company or any of its Subsidiaries
shall (a)(i) fall to make any payment when due under the terms of any bond,
debenture, note or other evidence of Indebtedness to be paid by such Person
(excluding this Debenture and the other Transaction Documents but including any
other evidence of Indebtedness of the Company or any of its Subsidiaries to the
Holder) and such failure shall continue beyond any grace period provided with
respect thereto, or (ii) default in the observance or performance of any other
agreement, term or condition contained in any such bond, debenture, note or
other evidence of Indebtedness, and (b) the effect of such failure or default is
to cause the holder or holders thereof to cause, Indebtedness in an aggregate
amount of Fifty Thousand Dollars ($50,000) or more to become due prior to its
stated date of maturity; or

         6.6 VOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. The Company or any
of its Subsidiaries shall (a) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a substantial
part of its property, (b) be unable, or admit in writing its inability, to pay
its debts generally as they mature, (c) make a general assignment for the
benefit of its or any of its creditors, (d) be dissolved or liquidated in full
or in pan, (e) become insolvent (as such term may be defined or interpreted
under any applicable statute), (f) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other
proceeding commenced against it, or (g) take any action for the purpose of
effecting any of the foregoing; or

         6.7 INVOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. Proceedings for
the appointment of a receiver, trustee, liquidator or custodian of the Company
or any of its Subsidiaries or of all or a substantial part of the property
thereof, or an involuntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to the Company or any of its
Subsidiaries or the debts thereof under any bankruptcy, insolvency or other
similar law now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged within
sixty (60) days of commencement; or

         6.8 JUDGMENTS. A final judgment or order for the payment of money in
excess of Fifty Thousand Dollars ($50,000) (exclusive of amounts covered by
insurance issued by an insurer not an affiliate of the Company) shall be
rendered against the Company or any of its Subsidiaries and the same shall
remain unpaid for a period of thirty (30) days during which execution shall not
be effectively stayed, or any judgment, writ, assessment, warrant of attachment,
or execution or similar process shall be issued or levied against a substantial
part of the property of the Company or any of its Subsidiaries and such

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judgment, writ, or similar process shall not be released, stayed, vacated or
otherwise dismissed within thirty (30) days after issue or levy.

7.       RIGHTS OF THE HOLDER UPON DEFAULT.

         Upon the occurrence or existence of any Event of Default (other than an
Event of Default referred to in SECTIONS 6.6 and 6.7) and at any time thereafter
during the continuance of such Event of Default, the Holder may, by written
notice to the Company. declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived. anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in SECTIONS 6.6 and 6.7, immediately and without notice, all
outstanding Obligations payable by the Company hereunder shall automatically
become immediately due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the other Transaction Documents to the contrary
notwithstanding. In addition to the foregoing remedies, upon the occurrence or
existence of any Event of Default, the Holder may exercise any other right,
power or remedy granted to it by the Transaction Documents or otherwise
permitted to it by law, either by suit in equity or by action at law, or both.

8.       CONVERSION.

         8.1 CONVERSION BY THE HOLDER. At any time prior to the Maturity Date,
the Holder shall have the right, at the Holder's option, to convert this
Debenture in accordance with the terms hereof, in whole or in part, into fully
paid and nonassessable shares of Common Stock. The number of shares of Common
Stock into which this Debenture may be convened shall be determined by dividing
the aggregate amount of this Debenture to be converted by the Conversion Price
(as defined below) in effect at the time of such conversion. The initial
"CONVERSION PRICE" shall be equal to $1.67 per share, which amount is based on a
post-money valuation of Twenty-Five Million Dollars ($25,000,000); PROVIDED,
HOWEVER, that, subject to SECTION 9.3, effective as of June 30, 2000, the
Conversion Price shall be adjusted based upon the Adjusted Post-Money Valuation
(defined below), using the same methodology that was used to calculate the
initial Conversion Price as set forth in EXHIBIT A hereto. Effective as of June
30, 2000, the post-money valuation shall be increased by an amount equal to two
(2) MULTIPLIED BY the amount of bookings recorded by the Company from the date
hereof through June 30. 2000, which increased post-money valuation shall in no
event exceed Forty Million Dollars ($40,000,000). The Conversion Price shall be
subject to adjustment from time to time pursuant to SECTION 9 hereof.

                                       12

<PAGE>

         8.2 CONVERSION PROCEDURE.

                  (a) CONVERSION PURSUANT TO SECTION 8.1. Before the Holder
shall be entitled to convert this Debenture into shares of Common Stock, it
shall surrender this Debenture, duly endorsed, at the office of the Company and
shall give written notice, postage prepaid, to the Company at its principal
corporate office, of the election to convert the same pursuant to SECTION 8.1,
and shall state therein the amount of the unpaid principal amount of this
Debenture to be converted and the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Company shall, as
soon as practicable thereafter (but in any event within ten (10) days
thereafter), issue and deliver to the Holder of this Debenture a certificate or
certificates for the number of shares of Common Stock to which the Holder shall
be entitled upon conversion (bearing such legends as are required by applicable
state and federal securities laws), together with a replacement Debenture (if
any principal amount is not converted) and any other securities and property to
which the Holder is entitled upon such conversion under the terms of this
Debenture. including a check payable to the Holder for any cash amounts payable
as described in SECTION 8.3. The conversion shall be deemed to have been made
immediately prior to the close of business on the date of the surrender of this
Debenture, and the Person or Persons entitled to receive the shares of Common
Stock upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock as of such date.

                  (b) FRACTIONAL SHARES; INTEREST; EFFECT OF CONVERSION. No
fractional shares shall be issued upon conversion of this Debenture. In lieu of
the Company issuing any fractional shares to the Holder upon the conversion of
this Debenture, the Company shall pay to the Holder an amount equal to the
product obtained by multiplying the Conversion Price by the fraction of a share
not issued pursuant to the previous sentence. In addition, the Company shall pay
to the Holder any interest accrued on the amount converted and on the amount to
be paid by the Company pursuant to the previous sentence.

9.       CONVERSION PRICE ADJUSTMENTS.

         9.1 ADJUSTMENTS FOR STOCK SPLITS AND SUBDIVISIONS. In the event the
Company at any time or from time to time after the date of issuance hereof fixes
a record date for the effectuation of a split or subdivision of the outstanding
shares of Common Stock or the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "COMMON STOCK EQUIVALENTS") without payment of
any consideration by such holder for the additional shares of Common Stock or
the Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such

                                       13
<PAGE>

record date (or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Price of this Debenture shall be
appropriately decreased so that the number of shares of Common Stock issuable
upon conversion of this Debenture shall be increased in proportion to such
increase of outstanding shares.

         9.2 ADJUSTMENTS FOR REVERSE STOCK SPLITS. If the number of shares of
Common Stock outstanding at any time after the date hereof is decreased by a
combination of the outstanding shares of Common Stock then following the record
date of such combination, the Conversion Price for this Debenture shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion hereof shall be decreased in proportion to such decrease in
outstanding shares.

         9.3 ADJUSTMENTS FOR DILUTING ISSUANCES. In the event the Company shall
issue any Equity Securities (other than the issuance of stock options and the
related underlying shares to employees in the ordinary course of business) at a
per share price (on a Common Stock equivalent basis) less than the Conversion
Price in effect immediately prior to such issuance, the Conversion Price shall
be reduced to the per share price (on a Common Stock equivalent basis) pid f at
or such Equity Securities.

         9.4 ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the
Common Stock issuable upon the conversion of this Debenture is changed upon the
approval of a majority of the holders of Common stock (on an as-if-converted
basis) into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification, or otherwise (other than a
subdivision or combination of shares of stock dividend of a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this
subsection), then, and in any such event, the Holder shall have the right
thereafter to convert this Debenture into the kind and amount of stock and other
securities and properly receivable upon such reorganization, reclassification,
or other change by holders of the number of shares of Common Stock into which
this Debenture would have been converted immediately prior to such
reorganization, reclassification, or change.

         9.5 NOTICES OF RECORD DATE, ETC. In the event of:

                  (a) Any taking by the Company of a record of the holders of
any class of securities of the Company for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend payable out of earned surplus at the same rate as that of the last such
cash dividend theretofore paid) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or

                  (b) Any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially

                                       14
<PAGE>

all of the assets of the Company to any other Person or any consolidation or
merger involving the Company; or

                  (c) Any voluntary or involuntary dissolution, liquidation or
winding-up of the Company (including any deemed liquidation pursuant to the
Certificate), the Company will mail to the Holder of this Debenture at least
twenty (20) days prior to the earliest date specified above, a notice specifying
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right; and (ii) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding-up is expected to become effective and the record date for determining
stockholders entitled to vote thereon.

         9.6 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock solely for the purpose of effecting the conversion of this
Debenture into such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of the Debenture; and if at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of the entire outstanding principal amount
of this Debenture, without limitation of such other remedies as shall be
available to the holder of this Debenture, the Company will take such corporate
action as may, in the opinion of counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes.

10.      SUCCESSORS AND ASSIGNS.

         Neither this Debenture nor any of the rights, interests or obligations
hereunder may be assigned, in whole or in part, by the Company without the prior
written consent of the Holder. Subject to the foregoing, the rights and
obligations of the Company and the Holder shall be binding upon and benefit the
successors, assigns, heirs, administrators and transferees of the parties.

11.      WAIVER AND AMENDMENT.

         Any provision of this Debenture may be amended, waived or modified upon
the written consent of the Company and the Holder.

                                       15
<PAGE>

12.      NOTICES.

         Every notice, request, demand or direction (each, for the purposes of
this section, a "notice") to be given pursuant to this Debenture by either the
Company or the Holder to the other will be in writing and will be delivered as
follows:

         To the Holder at:

                           Applied Materials, Inc.
                           2881 Scott Boulevard,
                           MJS 2064
                           Santa Clara, CA 95050
                           Tel. No.: (408) 748-5420
                           Fax No.: (408) 563-4635
                           Attention: Mr. Joseph Sweeney, Vice President
                           Legal Affairs and Intellectual Property

         with a copy to:

                           Applied Materials, Inc.
                           2861 Scott Boulevard,
                           M/S 1954 Santa Clam CA 95050
                           Tel. No-: (408) 235-4442
                           Fax No.: (408) 986-7260
                           Attention: Alexander Meyer, Managing Director

         and with a copy to:

                           Cooley Godward LLP
                           30000 El Camino Real
                           5 Palo Alto Square
                           Palo Alto, CA 94306
                           Tel. No.: (650) 843-5000
                           Fax No.:  (650) 857-0663
                           Attention:  Keith Flaurn

         To the Company at:

                           Heuristic Physics Laboratories, Inc.
                           2033 Gateway Place
                           San Jose, California 95110
                           Tel. No.: (408) 501 9235
                           Fax No.:  (408) 501 9240
                           Attention:  David Lepejian, President

                                       16
<PAGE>

         or to such other address as is specified by the particular party by
notice to the other.

         Every notice shall be given by personal delivery, by electronic
facsimile communication or by registered or certified mail. A notice shall be
effective and shall be deemed delivered (i) if by personal delivery, on the date
of delivery if delivered during normal business hours, otherwise on the next
business day following delivery, (ii) if by electronic facsimile communication
on the date of delivery if delivered during normal business hours, otherwise on
the next business day following receipt of the communication, and (iii) if by
registered or certified mail, on the next business day after actual receipt.

13.      PAYMENT.

         Payment shall be made in lawful tender of the United States.

14.      USURY.

         Anything in this Debenture to the contrary notwithstanding, the Company
shall never be required to pay interest on this Debenture at a rate in excess of
the Highest Lawful Rate (as hereinafter defined), and if the effective rate of
interest which would otherwise be payable under this Debenture would exceed the
Highest Lawful Rate, or if the maturity of this Debenture is accelerated for an
reason before the Maturity Date or if the Holder shall otherwise receive any
unearned interest or shall receive monies that are deemed to constitute interest
which would increase the effective rate of interest payable under this Debenture
to a rate in excess of the Highest Lawful Rate, or in the event of conversion of
this Debenture prior to the Maturity Date, then (a) the amount of interest which
would otherwise be payable under this Debenture shall be reduced to the maximum
amount allowed under applicable law, and (b) any interest paid by the Company in
excess of the Highest Lawful Rate shall be credited to the principal of this
Debenture. It is further agreed that, without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged, or received by the
Holder under this Debenture that are made for the purpose of determining whether
such rate exceeds the Highest Lawful Rate, shall be made to the extent permitted
by applicable usury laws (now or hereafter enacted), by amortizing, prorating,
and spreading in equal parts during the period of the full stated term of this
Debenture all interest at any time contracted for, charged or received by the
Holder in connection herewith. The "HIGHEST LAWFUL RATE" shall mean the maximum
rate of interest which the Holder is permitted by applicable law to contract
for, charge, or receive and as to which the Company could not successfully
assert a claim or defense of usury.

                                       17
<PAGE>

15.      EXPENSES.

         The Company shall pay on demand all reasonable fees and expenses,
including reasonable attorneys' fees and expenses incurred by the Holder with
respect to the enforcement or attempted enforcement of any of the obligations of
the Company to the Holder under the Transaction Documents or in preserving any
of the Holder's rights and remedies (including, without limitation, all such
fees and expenses incurred in connection with any "workout" or restructuring
affecting the Transaction Documents or the obligations thereunder or any
bankruptcy or similar proceeding involving the Company or any of its
Subsidiaries).

16.      REPLACEMENT DEBENTURE.

         Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of the
Debenture and (a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it; or (b) in the case of mutilation, upon surrender
thereof, the Company, at its expense, will execute and deliver in lieu thereof a
new Debenture executed in the same manner as the Debenture being replaced, in
the same principal amount as the unpaid principal amount of the Debenture and
dated the date to which interest shall have been paid on such Note or, if no
interest shall have yet been so paid, dated the date of such Debenture.

17.      GOVERNING LAW; INTERPRETATION.

         This Debenture and all actions arising out of or in connection with
this Debenture shall be governed by and construed in accordance with the laws of
the State of California without regard to the conflicts of law provisions of the
State of California or of any other state. If any provision of this Debenture is
held to be invalid or unenforceable by a court of competent jurisdiction, the
other provisions of this Debenture shall remain in full force and effect.

18.      WAIVER, REPRESENTATION.

         Presentment for payment, demand, notice of dishonor, protest, notice of
protest, and stay of execution in connection with the delivery, acceptance,
performance, default or enforcement of the payment of this Debenture are hereby
waived by the Company and its successors and assigns. Neither extension nor
indulgence granted from time to time shall be construed as a novation of this
Debenture or as a reinstatement of the indebtedness evidenced hereby or as a
waiver of the rights of the Holder herein. The liability of the Company shall be
unconditional, without regard to the liability of any other party, and shall not
be in any manner affected by any forbearance, partial action or delay on the
part of the Holder in regard to the exercise of any right. power or remedy under
this Debenture.

                                       18
<PAGE>

19.      PRESS RELEASES.

         Neither party shall, without the prior written approval of the other
party, issue any press release, advertising, publicity or public statement or in
any way engage in any other form of public disclosure that indicates the
existence of or terms of this Debenture or the relationship of the party or that
implies any endorsement by either party of the other's products or services;
provided, that a party may disclose the terms and existence of the Debenture if
required to do so by applicable law based upon advice of legal counsel
reasonably concurred with by the non-disclosing party's legal counsel. Any
requests for approval under this section must be made in writing and submitted
for prior review and authorization to the attention of the parties identified in
SECTION 12.

20.      SECTION, HEADINGS.

         The headings of Sections shall not be taken into account in
interpreting the terms of this Debenture.

         IN WITNESS WHEREOF, the Company has caused this Debenture to be issued
as of the date first written above.

                                     HEURISTIC PHYSICS
                                     LABORATORIES, INC.,
                                     a California corporation

                                     By: /s/ DAVID Y. LEPEJIAN
                                         ---------------------------------------
                                     Name: David Y. Lepejian
                                           -------------------------------------
                                     Title: President
                                            ------------------------------------

                                     ADDRESS:

                                     2033 Gateway Place
                                     San Jose, California 95110


                                       19
<PAGE>

                                  SCHEDULE 5.5

                                 (SEE ATTACHED)


<PAGE>

                              EXISTING INDEBTEDNESS

         1. Promissory Note to pay Dr. Wilmer R. Bottoms, Jr. on or prior to
June 15, 2002 the principal sum of Two Hundred Thousand Dollars ($200,000).

         2. Promissory Note to pay Dr. Wilmer R. Bottoms, Jr. on or prior to
June 15, 2000 the principal sum of One Hundred Twenty Thousand Dollars
(S120,000).

         3. Straight Note to pay John Caywood on or prior to July 12, 1999 the
principal sum of Twenty Five Thousand Dollars ($25,000).

         4. Loan from Bank of America dated June 25, 1999 for an amount of One
Hundred Thousand Dollars ($100,000).

         5. Loan from Adam Kablanian dated June 11, 1999 for an amount of One
Hundred Fifty Thousand Dollars ($150,000).

         6. Company owes to Alan B. Helffrich, Y. David Lepejian and Larry Kraus
employee-shareholders back-pay in the amounts of One Hundred Thirty Thousand One
and 25/100 Dollars ($130,001.25), One Hundred Seventy Eight Thousand Five
Hundred Fifty Nine and 81/100 Dollars ($178,559.81) and Ninety Nine Thousand Two
Hundred Six and 66/100 Dollars ($99,206.66), respectively.


                                       21

<PAGE>

                                    EXHIBIT A

                   CALCULATION OF THE INITIAL CONVERSION PRICE

Total number of shares of capital stock currently outstanding = 11,417,760

Total number of stock options, warrants, & convertible securities currently
outstanding = 3,565,412

Post money valuation = $25,000,000

Calculation of the Initial Conversion Price

                             25,000,000
                      ------------------------  = $ 1.671 share
                      (11,417,760 + 3,565,412)


                                       22