Document:

EXHIBIT 10.87
                              AMENDED AND RESTATED
                             1999 STOCK OPTION PLAN
                                       OF
                             WHERIFY WIRELESS, INC.

      1.    PURPOSES OF THE PLAN

            The purposes of this Amended and Restated 1999 Stock Option Plan
(the "Plan") of Wherify Wireless, Inc., a California corporation (the
"Company"), are to:

            (a) Encourage selected employees, directors and consultants to
improve operations and increase profits of the Company;

            (b) Encourage selected employees, directors and consultants to
accept or continue employment or association with the Company or its Affiliates;
and

            (c) Increase the interest of selected employees, directors and
consultants in the Company's welfare through participation in the growth in
value of the common stock of the Company (the "Common Stock").

            Options granted under this Plan ("Options") may be "incentive stock
options" ("ISOs") intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or "nonqualified
options" ("NQOs").

      2.    ELIGIBLE PERSONS

            Every person who at the date of grant of an Option is an employee of
the Company or of any Affiliate (as defined below) of the Company is eligible to
receive NQOs or ISOs under this Plan. Every person who at the date of grant is a
consultant to, or nonemployee director of, the Company or any Affiliate (as
defined below) of the Company is eligible to receive NQOs under this Plan. The
term "Affiliate" as used in the Plan means a parent or subsidiary corporation as
defined in the applicable provisions (currently Sections 424(e) and (f),
respectively) of the Code. The term "employee" includes an officer or director
who is an employee of the Company. The term "consultant" includes persons
employed by, or otherwise affiliated with, a consultant.

      3.    STOCK SUBJECT TO THIS PLAN

            Subject to the provisions of Section 6.1.1 of the Plan, the total
number of shares of stock which may be issued under options granted pursuant to
this Plan and the total number of shares provided for issuance under this Plan
shall be 1,150,000 shares of Common Stock and shall at no time exceed the
applicable percentage as calculated in accordance with Section 260.140.45 of
Chapter 3 of Title 10 of the California Code of Regulations. The shares covered
by the portion of any grant under the Plan which expires unexercised shall
become available again for grants under the Plan.

<PAGE>

      4.    ADMINISTRATION

            4.1 General. This Plan shall be administered by the Board of
Directors of the Company (the "Board") or, either in its entirety or only
insofar as required pursuant to Section 4.2 hereof, by a committee (the
"Committee") of at least two Board members to which administration of the Plan,
or of part of the Plan, is delegated (in either case, the "Administrator").

            4.2 Public Company. From and after such time as the Company
registers a class of equity securities under Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Committee shall
consist of Board members who are "Non-Employee Directors" as defined under Rule
16b-3 promulgated by the Securities and Exchange Commission ("Rule 16b-3"), or
any successor rule thereto.

            4.3 Authority of Administrator. Subject to the other provisions of
this Plan, the Administrator shall have the authority, in its discretion: (i) to
grant Options; (ii) to determine the fair market value of the Common Stock
subject to Options; (iii) to determine the exercise price of Options granted;
(iv) to determine the persons (each an "Optionee") to whom, and the time or
times at which, Options shall be granted, and the number of shares subject to
each Option; (v) to interpret this Plan; (vi) to prescribe, amend, and rescind
rules and regulations relating to this Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical), including but
not limited to, the time or times at which Options shall be exercisable; (viii)
with the consent of the Optionee, to modify or amend any Option; (ix) to defer
(with the consent of the Optionee) the exercise date of any Option; (x) to
authorize any person to execute on behalf of the Company any instrument
evidencing the grant of an Option; and (xi) to make all other determinations
deemed necessary or advisable for the administration of this Plan. The
Administrator may delegate nondiscretionary administrative duties to such
employees of the Company as it deems proper.

            4.4 Interpretation by Administrator. All questions of
interpretation, implementation, and application of this Plan shall be determined
by the Administrator. Such determinations shall be final and binding on all
persons.

            4.5 Rule 16b-3. With respect to persons subject to Section 16 of the
Exchange Act, if any, transactions under this Plan are intended to comply with
the applicable conditions of Rule 16b-3, or any successor rule thereto. To the
extent any provision of this Plan or action by the Administrator fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Administrator. Notwithstanding the above, it shall be
the responsibility of such persons, not of the Company or the Administrator, to
comply with the requirements of Section 16 of the Exchange Act; and neither the
Company nor the Administrator shall be liable if this Plan or any transaction
under this Plan fails to comply with the applicable conditions of Rule 16b-3 or
any successor rule thereto, or if any such person incurs any liability under
Section 16 of the Exchange Act.

                                      -2-
<PAGE>

      5.    GRANTING OF OPTIONS; OPTION AGREEMENT

            5.1 Termination of Plan. No options shall be granted under this Plan
after ten years from the date of adoption of this Plan by the Board.

            5.2 Stock Option Agreement. Each Option shall be evidenced by a
written stock option agreement (the "Option Agreement"), in form satisfactory to
the Company, executed by the Company and the person to whom such Option is
granted; provided, however, that the failure by the Company, the Optionee, or
both, to execute the Option Agreement shall not invalidate the granting of an
Option, although the exercise of each option shall be subject to Section 6.1.3.

            5.3 Type of Option. The Option Agreement shall specify whether each
Option it evidences is an NQO or an ISO.

            5.4 Early Approval of Grants. The Administrator may approve the
grant of Options under this Plan to persons who are expected to become
employees, directors or consultants of the Company, but are not employees,
directors or consultants at the date of approval, with such grant to specify
whether it is effective immediately or effective only on such person becoming an
employee, director or consultant.

      6.    TERMS AND CONDITIONS OF OPTIONS

            Each Option granted under this Plan shall be subject to the terms
and conditions set forth in Section 6.1. NQOs shall be also subject to the terms
and conditions set forth in Section 6.2, but not those set forth in Section 6.3.
ISOs shall also be subject to the terms and conditions set forth in Section 6.3,
but not those set forth in Section 6.2.

            6.1 Terms and Conditions to Which All Options Are Subject. Options
granted under this Plan shall be subject to the following terms and conditions:

                  6.1.1 Changes in Capital Structure. Subject to Section 6.1.2,
if the stock of the Company is changed by reason of a stock split, reverse stock
split, stock dividend, or recapitalization, combination or reclassification,
appropriate adjustments shall be made by the Board in (a) the number and class
of shares of stock subject to this Plan and each Option outstanding under this
Plan, and (b) the exercise price of each outstanding Option; provided, however,
that the Company shall not be required to issue fractional shares as a result of
any such adjustments. Each such adjustment shall be subject to approval by the
Board in its absolute discretion.

                  6.1.2 Corporate Transactions.

                        (a) Dissolution or Liquidation. In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify each Optionee at least 30 days prior to such proposed action. To the
extent not previously exercised, all Options will terminate immediately prior to
the consummation of such proposed action.

                                      -3-
<PAGE>

                        (b) Merger or Asset Sale. In the event of a merger of
the Company with or into another corporation, or the sale of substantially all
of the assets of the Company:

                              (i) Options. Each Option shall be assumed or an
equivalent option substituted by the successor corporation (including as a
"successor" any purchaser of substantially all of the assets of the Company) or
a parent or subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Option, the
Optionee shall have the right to exercise the Option as to all of the shares of
Common Stock covered by the Option, including Shares as to which it would not
otherwise be exercisable. If an Option is exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option shall be fully exercisable for a period of
15 days from the date of such notice, and the Option shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger or sale of assets, the option
confers the right to purchase or receive, for each share of Common Stock subject
to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares); provided, however, that if such consideration received
in the merger or sale of assets was not solely common stock of the successor
corporation or its parent entity, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Common Stock subject to the Option, to
be solely common stock of the successor corporation or its parent entity equal
in fair market value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.

                              (ii) Shares Subject to Right of Repurchase. Any
Shares subject to a Right of Repurchase of the Company shall be exchanged for
the consideration (whether stock, cash, or other securities or property)
received in the merger or asset sale by the holders of Common Stock for each
share held on the effective date of the transaction, as described in the
preceding paragraph. If in such exchange the Optionee receives shares of stock
of the successor corporation or a parent or subsidiary of such successor
corporation, and if the successor corporation has agreed to assume or substitute
for Options as provided in the preceding paragraph, such exchanged shares shall
continue to be subject to a Right of Repurchase as provided in the Optionee's
Stock Option Plan stock purchase agreement. If, as provided in the preceding
paragraph, the Optionee shall have the right to exercise an Option as to all of
the shares of Common Stock covered thereby, all Shares that are subject to a
Right of Repurchase of the Company shall be released from such Right of
Repurchase and shall be fully vested.

                  6.1.3 Time of Option Exercise. Subject to Section 5 and
Section 6.3.4, Options granted under this Plan shall be exercisable (a)
immediately as of the effective date of the Option Agreement granting the
Option, or (b) in accordance with a schedule related to the date of the grant of
the Option, the date of first employment, or such other date as may be set by
the Administrator (in any case, the "Vesting Base Date") and specified in the
Option Agreement relating to such Option; provided, however, that with respect
to Options granted to employees who are not officers or directors, the right to

                                      -4-
<PAGE>

exercise an Option must vest at the rate of at least 20% per year over five
years from the date the Option was granted. Options granted to officers,
directors or consultants may become fully exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period
established by the Board of the Administrator in accordance with this Plan. In
any case, no Option shall be exercisable until a written Option Agreement in
form satisfactory to the Company is executed by the Company and the Optionee,
and the person exercising the option executes an appropriate stock purchase
agreement with the Company. Further, if at any time the Company is an "S
corporation" under Section 1361 of the Code, the Company may, if the
Administrator determines that the exercise of an option would cause the Company
to cease to qualify as an "S corporation," either defer the exercise of such
option until such time as the exercise would no longer cause the Company to
cease to so qualify or permit the exercise of such option with the stock to be
acquired to be subject to simultaneous repurchase by the Company at its fair
market value, so that the Optionee never has rights as a shareholder of the
Company.

                  6.1.4 Option Grant Date. Except in the case of grants
contingent on the beginning of employment or other service, as described in
Section 5.4, the date of grant of an Option under this Plan shall be the date as
of which the Administrator approves the grant.

                  6.1.5 Nonassignability of Option Rights. Except as otherwise
determined by the Administrator and expressly set forth in the Option Agreement,
no Option granted under this Plan shall be assignable or otherwise transferable
by the Optionee except by will or by the laws of descent and distribution.
During the life of the Optionee, except as otherwise determined by the
Administrator and expressly set forth in the Option Agreement, an Option shall
be exercisable only by the Optionee.

                  6.1.6 Payment. Except as provided below, payment in full, in
cash, shall be made for all stock purchased at the time written notice of
exercise of an Option is given to the Company, and proceeds of any payment shall
constitute general funds of the Company. At the time an Option is granted or
exercised, the Administrator, in the exercise of its absolute discretion after
considering any tax or accounting consequences, may authorize any one or more of
the following additional methods of payment:

                        (a) Acceptance of the Optionee's full recourse
promissory note for all or part of the Option price, payable on such terms and
bearing such interest rate as determined by the Administrator (but in no event
less than the minimum interest rate specified under the Code at which no
additional interest would be imputed and in no event more than the maximum
interest rate allowed under applicable usury laws), which promissory note may be
either secured or unsecured in such manner as the Administrator shall approve
(including, without limitation, by a security interest in the shares of the
Company); and

                        (b) Delivery (actual or constructive) by the Optionee of
Common Stock already owned by the Optionee for all or part of the Option price,
provided the value (determined as set forth in Section 6.1.11) of such Common
Stock is equal on the date of exercise to the Option price, or such portion
thereof as the Optionee is authorized to pay by delivery of such stock;
provided, however, that if an Optionee has exercised any portion of any Option
granted by the Company by delivery of Common Stock, the Optionee may not, within
six months following such exercise, exercise any Option granted under this Plan
by delivery of Common Stock without the consent of the Administrator.

                                        5
<PAGE>

                  6.1.7 Termination of Employment.

                        (a) If, for any reason other than death, disability or
termination for "cause" (as defined below), an Optionee ceases to be employed by
the Company or any of its Affiliates (such event being called a "Termination"),
Options held at the date of Termination (to the extent then exercisable) may be
exercised in whole or in part at any time within three months of the date of
such Termination, or such other period of not less than 30 days after the date
of such Termination as is specified in the Option Agreement (but in no event
after the Expiration Date); provided, that if such exercise of the Option would
result in liability for the Optionee under Section 16(b) of the Exchange Act,
then such 90-day period automatically shall be extended until the tenth day
following the last date upon which Optionee has any liability under Section
16(b) (but in no event after the Expiration Date, as defined below).

                        (b) If an Optionee dies while employed by the Company or
an Affiliate or within the period that the Option remains exercisable after
Termination, Options then held (to the extent then exercisable) may be
exercised, in whole or in part, by the Optionee, by the Optionee's personal
representative, or by the person to whom the Option is transferred by devise or
the laws of descent and distribution, at any time within 12 months after the
death of the Optionee, or such other period of not less than six months from the
date of Termination as is specified in the Option Agreement (but in no event
after the Expiration Date).

                        (c) If an Optionee ceases to be employed by the Company
as a result of his or her disability, the Optionee may, but only within six
months after the date of Termination (and in no event after the Expiration
Date), exercise the Option to the extent otherwise entitled to exercise it at
the date of Termination; provided, however, that if such disability is not a
"disability" as such term is defined in Section 22(e)(3) of the Code, in the
case of an ISO such ISO shall automatically convert to an NQO on the day three
months and one day following such Termination. To the extent that the Optionee
was not entitled to exercise the Option at the date of Termination or if the
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

                        (d) If an Optionee is terminated for "cause" all Options
then held by such Optionee shall terminate and no longer be exercisable 30 days
after the date of Termination.

                        (e) For purposes of this Section 6.1.7, "employment"
includes service as an employee, a director or as a consultant.

                        (f) For purposes of this Section 6.1.7, an Optionee's
employment shall not be deemed to terminate by reason of sick leave, military
leave or other leave of absence approved by the Administrator, if the period of
any such leave does not exceed three months or, if longer, if the Optionee's
right to reemployment by the Company or any Affiliate is guaranteed either
contractually or by statute.

                                       6
<PAGE>

                        (g) For purposes of this Section 6.1.7, "cause" shall
mean Termination (i) by reason of Optionee's commission of a felony, misdemeanor
or other illegal conduct involving dishonesty, fraud or other matters of moral
turpitude, (ii) by reason of Optionee's dishonesty towards, fraud upon, or
deliberate injury or attempted injury to the Company or any of its Affiliates,
or (iii) by reason of Optionee's willfully engaging in misconduct which is
materially and demonstrably injurious to the Company or any of its Affiliates.

                  6.1.8 Repurchase of Stock. At the option of the Administrator,
the stock to be delivered pursuant to the exercise of any Option granted to an
employee, director or consultant under this Plan may be subject to a right of
repurchase in favor of the Company with respect to any employee, or director or
consultant whose employment, or director or consulting relationship with the
Company is terminated. Such right of repurchase shall be exercisable as the
Administrator may determine in the grant of Option, either or both:

                        (a) at the Option exercise price and (i) shall lapse at
the rate of at least 20% per year over five years from the date the Option is
granted (without regard to the date it was exercised or becomes exercisable),
and must be exercised for cash or cancellation of purchase money indebtedness
within three months of such termination and (ii) if the right is assignable by
the Company, the assignee must pay the Company upon assignment of the right
(unless the assignee is a 100% owned subsidiary of the Company or is an
Affiliate) cash equal to the difference between the Option exercise price and
the value (determined as set forth in Section 6.1.11) of the stock to be
purchased if the Option exercise price is less than such value; and

                        (b) at the higher of the Option exercise price or the
value (determined as set forth in Section 6.1.11) of the stock being purchased
on the date of termination, and must be exercised for cash or cancellation of
purchase money indebtedness within three months of termination of employment (or
in the case of securities issued upon exercise of options after the date of
termination, within three months after the date of exercise), and such right
shall terminate when the Company's securities become publicly traded.

                        In addition to the restrictions set forth in
subparagraphs (a) and (b) above, the shares held by an officer, director or
consultant of the issuer or by an affiliate of the issuer may be subject to
additional or greater restrictions, in the absolute discretion of the
Administrator.

                        Determination of the number of shares subject to any
such right of repurchase shall be made as of the date the employee's employment
by, director's director relationship with, or consultant's consulting
relationship with, the Company terminates, not as of the date that any Option
granted to such employee, director or consultant is thereafter exercised.

                  6.1.9 Withholding and Employment Taxes. At the time of
exercise of an Option or at such other time or times as the amount of such
obligations become determinable (the "Tax Date"), the Optionee shall remit to

                                       7
<PAGE>

the Company in cash all applicable federal and state withholding and employment
taxes due by reason of the exercise of an Option, the disposition of Common
Stock acquired through exercise of an Option, or the lapse of rights to
repurchase Common Stock. The Administrator may, in its absolute discretion after
considering any tax or accounting consequences, permit an Optionee to (i)
deliver a full recourse promissory note on such terms as the Administrator deems
appropriate, (ii) tender to the Company previously owned shares of Stock or
other securities of the Company, or (iii) have shares of Common Stock which are
acquired upon exercise of the Option withheld by the Company to pay some or all
of the amount of tax that is required by law to be withheld by the Company as a
result of the exercise of such Option, the disposition of Common Stock acquired
through exercise of an Option, or the lapse of rights to repurchase Common
Stock, subject to the following limitations:

                        (a) Any election pursuant to clause (ii) above, where
the Optionee is tendering Common Stock issued pursuant to the exercise of an
Option, shall require that such shares be held at least six months prior to the
Tax Date.

                        (b) Any of the foregoing limitations may be waived (or
additional limitations may be imposed) by the Administrator, in its absolute
discretion, if the Administrator determines that such foregoing limitations are
not required (or that such additional limitations are required) in order that
the transaction shall be exempt from Section 16(b) of the Exchange Act pursuant
to Rule 16b-3, or any successor rule thereto. In addition, any of the foregoing
limitations may be waived by the Administrator, in its sole discretion, if the
Administrator determines that Rule 16b-3, or any successor rule thereto, is not
applicable to the exercise of the Option by the Optionee or for any other
reason.

                        (c) Any securities tendered or withheld in accordance
with this Section 6.1.9 shall be valued by the Company as of the Tax Date.

                  6.1.10 Other Provisions. Each Option granted under this Plan
may contain such other terms, provisions, and conditions not inconsistent with
this Plan as may be determined by the Administrator, and each ISO granted under
this Plan shall include such provisions and conditions as are necessary to
qualify the Option as an "incentive stock option" within the meaning of Section
422 of the Code. If Options provide for a right of first refusal in favor of the
Company with respect to stock acquired by employees, directors or consultants,
such Options shall provide that the right of first refusal shall terminate upon
the closing of the Company's initial registered public offering to the public
generally.

                  6.1.11 Determination of Value. For purposes of the Plan, the
value of Common Stock or other securities of the Company shall be determined as
follows:

                        (a) If the stock of the Company is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation System, its fair market value shall be the
closing sales price for such stock or the closing bid if no sales were reported,
as quoted on such system or exchange (or the largest such exchange) for the date
the value is to be determined (or if there are no sales for such date, then for
the last preceding business day on which there were sales), as reported in the
Wall Street Journal or similar publication.

                                       8
<PAGE>

                        (b) If the stock of the Company is regularly quoted by a
recognized securities dealer but selling prices are not reported, its fair
market value shall be the mean between the high bid and low asked prices for the
stock on the date the value is to be determined (or if there are no quoted
prices for the date of grant, then for the last preceding business day on which
there were quoted prices).

                        (c) In the absence of an established market for the
stock, the fair market value thereof shall be determined in good faith by the
Administrator, by consideration of such factors as the Administrator in its
discretion deems appropriate among the recent issue price of other securities of
the Company, the Company's net worth, prospective earning power, dividend-paying
capacity, and other relevant factors, including the goodwill of the Company, the
economic outlook in the Company's industry, the Company's position in the
industry and its management, and the values of stock of other corporations in
the same or a similar line of business.

                  6.1.12 Option Term. Subject to Section 6.3.5, no Option shall
be exercisable more than ten years after the date of grant, or such lesser
period of time as is set forth in the Option Agreement (the end of the maximum
exercise period stated in the stock option agreement is referred to in this Plan
as the "Expiration Date").

                  6.1.13 Exercise Price. The exercise price of any Option
granted to any person who owns, directly or by attribution under Section 424(d)
of the Code, stock possessing more than ten percent of the total combined voting
power of all classes of stock of the Company or of any Affiliate (a "Ten Percent
Shareholder") shall in no event be less than 110% of the fair market value
(determined in accordance with Section 6.1.11) of the stock covered by the
Option at the time the Option is granted.

                  6.1.14 Limits on Grants for Qualified Incentive-Based
Compensation. The Company may not issue Options with a fair market value
exercise price as of the date of grant covering in the aggregate more than
407,750 shares of Common Stock to any one participant in any calendar year.

            6.2 Exercise Price of NQOs. Except as set forth in Section 6.1.13,
the exercise price of any NQO granted under this Plan shall be not less than 85%
of the fair market value (determined in accordance with Section 6.1.11) of the
stock subject to the Option on the date of grant.

            6.3 Terms and Conditions to Which Only ISOs Are Subject. Options
granted under this Plan which are designated as ISOs shall be subject to the
following terms and conditions:

                                       9
<PAGE>

                  6.3.1 Exercise Price. Except as set forth in Section 6.1.13,
the exercise price of an ISO shall be determined in accordance with the
applicable provisions of the Code and shall in no event be less than the fair
market value (determined in accordance with Section 6.1.11) of the stock covered
by the Option at the time the Option is granted or deemed granted under Section
6.3.3.

                  6.3.2 Disqualifying Dispositions. If stock acquired by
exercise of an ISO granted pursuant to this Plan is disposed of in a
"disqualifying disposition" within the meaning of Section 422 of the Code, the
holder of the stock immediately before the disposition shall promptly notify the
Company in writing of the date and terms of the disposition and shall provide
such other information regarding the Option as the Company may reasonably
require.

                  6.3.3 Grant Date. If an ISO is granted in anticipation of
employment as provided in Section 5.4, the Option shall be deemed granted,
without further approval, on the date the grantee assumes the employment
relationship forming the basis for such grant, and, in addition, satisfies all
requirements of this Plan for Options granted on that date.

                  6.3.4 Vesting. Notwithstanding any other provision of this
Plan, ISOs granted under all incentive stock option plans of the Company and its
subsidiaries may not "vest" for more than $100,000 in fair market value of stock
(measured on the grant dates(s)) in any calendar year. For purposes of the
preceding sentence, an option "vests" when it first becomes exercisable. If, by
their terms, such ISOs taken together would vest to a greater extent in a
calendar year, including vesting resulting from a change in control of the
Company, such ISOs shall be treated as NQOs to the extent such $100,000 limit is
exceeded. In no event shall more than $100,000 in fair market value of stock
(measured on the grant date(s)) vest in any calendar year with respect to the
ISOs. Additionally, in no event, will the operation of this Section 6.3.4 cause
an ISO to vest before its terms or, having vested, cease to be vested.

                  6.3.5 Term. Notwithstanding Section 6.1.12, no ISO granted to
any Ten Percent Shareholder shall be exercisable more than five years after the
date of grant.

      7.    MANNER OF EXERCISE

            7.1 Written Notice; Payment. An Optionee wishing to exercise an
Option shall give written notice to the Company at its principal executive
office, to the attention of the officer of the Company designated by the
Administrator, accompanied by payment of the exercise price as provided in
Section 6.1.6. The date the Company receives written notice of an exercise
hereunder accompanied by payment of the exercise price will be considered as the
date such Option was exercised.

            7.2 Delivery of Stock. Promptly after receipt of written notice of
exercise of an Option, the Company shall, without stock issue or stock transfer
taxes to the Optionee or other person entitled to exercise the Option, deliver
to the Optionee or such other person a certificate or certificates for the
requisite number of shares of stock or register such Optionee as a shareholder
by book entry. An Optionee or permitted transferee of an Optionee shall not have
any privileges as a shareholder with respect to any shares of stock covered by
the Option until the date of issuance (as evidenced by the appropriate entry on
the books of the Company or a duly authorized transfer agent) of such shares.

                                       10
<PAGE>

      8.    EMPLOYMENT OR CONSULTING RELATIONSHIP

            Nothing in this Plan or any Option granted thereunder shall
interfere with or limit in any way the right of the Company or of any of its
Affiliates to terminate any Optionee's employment or consulting at any time, nor
confer upon any Optionee any right to continue in the employ of, or consult
with, the Company or any of its Affiliates, nor interfere in any way with
provisions in the Company's charter documents or applicable law relating to the
election, appointment, terms of office, and removal of members of the Board.

      9.    FINANCIAL INFORMATION

            The Company shall provide to each Optionee during the period such
Optionee holds an outstanding Option, and to each holder of Common Stock
acquired upon exercise of Options granted under the Plan for so long as such
person is a holder of such Common Stock, annual financial statements of the
Company as prepared either by the Company or independent certified public
accountants of the Company. Such financial statements shall include, at a
minimum, a balance sheet and an income statement, and shall be delivered as soon
as practicable following the end of the Company's fiscal year. The provisions of
this Section 9 shall not apply with respect to Optionees who are key employees
of the Company whose duties in connection with the Company assures them access
to information equivalent to the information provided in the financial
statements.

      10.   CONDITIONS UPON ISSUANCE OF SHARES

            Shares of Common Stock shall not be issued pursuant to the exercise
of an Option unless the exercise of such Option and the issuance and delivery of
such shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended (the
"Securities Act").

      11.   NONEXCLUSIVITY OF THE PLAN

            The adoption of the Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under the Plan.

      12.   MARKET STANDOFF

            Each Optionee, if so requested by the Company or any representative
of the underwriters in connection with any registration of the offering of any
securities of the Company under the Securities Act shall not sell or otherwise
transfer any shares of Common Stock acquired upon exercise of Options during the
180-day period following the effective date of a registration statement of the
company filed under the Securities Act; provided, however, that such restriction
shall apply only to the first two registration statements of the Company to
become effective under the Securities Act which includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restriction until the end of such
180-day period.

                                       11
<PAGE>

      13.   AMENDMENTS TO PLAN

            The Board may at any time amend, alter, suspend or discontinue this
Plan. Without the consent of an Optionee, no amendment, alteration, suspension
or discontinuance may adversely affect outstanding Options except to conform
this Plan and ISOs granted under this Plan to the requirements of federal or
other tax laws relating to incentive stock options. No amendment, alteration,
suspension or discontinuance shall require shareholder approval unless (a)
shareholder approval is required to preserve incentive stock option treatment
for federal income tax purposes, (b) shareholder approval is required to
preserve option grants as "qualified performance-based compensation" under
Section 162(m) of the Code, or (c) the Board otherwise concludes that
shareholder approval is advisable.

      14.   EFFECTIVE DATE OF PLAN

            This Plan shall become effective upon adoption by the Board
provided, however, that no Option shall be exercisable unless and until written
consent of the shareholders of the Company, or approval of shareholders of the
Company voting at a validly called shareholders' meeting, is obtained within 12
months after adoption by the Board. If such shareholder approval is not obtained
within such time, Options granted hereunder shall terminate and be of no force
and effect from and after expiration of such 12-month period. Options may be
granted and exercised under this Plan only after there has been compliance with
all applicable federal and state securities laws.

Plan adopted by the Board of Directors on:  June 1, 1999
Plan approved by Shareholders on:           June 1, 1999

Plan amended by the Board of Directors on:  March 8, 2002
Plan amended by Shareholders on:            March 8, 2002

Plan amended by the Board of Directors on:  August 16, 2004
Plan amended by Shareholders on:            August 16, 2004

                                       12THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM,
SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT.

                           UNSECURED CONVERTIBLE NOTE

Houston, Texas
____________ __, 2005                                             $_____________

FOR VALUE RECEIVED, HEALTHRENU MEDICAL, INC., a Nevada corporation (hereinafter
called the "Borrower"), hereby promises to pay to the order of
_________________________ or registered assigns (the "Holder") the sum of
___________________________________ Dollars ($___________), on ___________ __,
2009 (the "Maturity Date"), and to pay interest on the unpaid principal balance
hereof at the rate of eight percent (8%) per annum from ____________ __, 2005
(the "Issue Date") until the same becomes due and payable, whether at maturity
or upon acceleration or by prepayment or otherwise. Interest shall commence
accruing on the issue date, shall be computed on the basis of a 365-day year and
the actual number of days elapsed and shall be payable annually in shares of
common stock, $.001 per value per share, of the Borrower (the "Common Stock")
valued at the then applicable Conversion Price (as herein defined) on December
31 of each year beginning on December 31, 2005, or at the time of conversion of
the principal to which such interest relates in accordance with Article I below.

      All payments due hereunder (to the extent not converted into Common Stock
in accordance with the terms hereof) shall be made in shares of Common Stock of
the Borrower valued at the then applicable Conversion Price. All payments shall
be made at such address as the Holder shall hereafter give to the Borrower by
written notice made in accordance with the provisions of this Note.

      Whenever any amount expressed to be due by the terms of this Note is due
on any day which is not a business day, the same shall instead be due on the
next succeeding day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes
of determining the amount of interest due on such date. As used in this Note,
the term "business day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in the city of New York, New York are authorized
or required by law or executive order to remain closed. Each capitalized term
used herein, and not otherwise defined, shall have the meaning ascribed thereto
in that certain Subscription Agreement and the Borrower to which this Note
relates, as amended from time to time, pursuant to which the Holder subscribed
to purchase this Note (the "Subscription Agreement").

                                     - 1 -
<PAGE>

      This Note is free from all taxes, liens, claims and encumbrances with
respect to the issue thereof and shall not be subject to preemptive rights or
other similar rights of shareholders of the Borrower and will not impose
personal liability upon the Holder thereof.

      The following terms shall apply to this Note:

I.    CONVERSION RIGHTS

      The Holder shall have the following conversion rights with respect to this
Note (the "Conversion Rights"):

      A. Right to Convert. At any time on or after the date on the Note, the
Holder may, at such Holder's option, elect to convert (a "Voluntary Conversion")
all or any portion of this Note into a number of fully paid and nonassessable
shares of Common Stock equal to the quotient of (i) $1,000 divided by (ii) the
Conversion Price (as defined below) then in effect as of the date of the
delivery by the Holder of its notice of election to convert. In the event of a
liquidation, dissolution or winding up of the Company, the Conversion Rights
shall terminate at the close of business on the last full day preceding the date
fixed for the payment of any such amounts distributable on such event to any
security holder of the Company. In the event of such a liquidation, dissolution
or winding up, the Company shall provide to the Holder notice of such
liquidation, dissolution or winding up, which notice shall be sent at least
fifteen (15) days prior to the termination of the Conversion Rights.

      B. Mechanics of Voluntary Conversion. The Voluntary Conversion of this
Note shall be conducted in the following manner:

            1. Holder's Delivery Requirements. To convert this Note into full
shares of Common Stock on any date (the "Voluntary Conversion Date"), the Holder
thereof shall (A) transmit by facsimile (or otherwise deliver), for receipt on
or prior to 5:00 p.m., New York time on such date, a copy of a fully executed
notice of conversion in the form attached hereto as Exhibit I (the "Conversion
Notice"), to the Company, and (B) surrender to a common carrier for delivery to
the Company as soon as practicable following such Voluntary Conversion Date but
in no event later than three (3) business days after such date this Note and the
originally executed Conversion Notice.

            2. Company's Response. Upon receipt by the Company of a copy of the
fully executed Conversion Notice, the Company or its designated transfer agent
(the "Transfer Agent"), as applicable, shall, within three (3) business days
following the date of receipt by the Company of the fully executed Conversion
Notice (so long as this Note and original Conversion Notice are received by the
Company on or before such third business day), issue and deliver to the Holder
as specified in the Conversion Notice, registered in the name of the Holder or
its designee, the number of shares of Common Stock to which the Holder shall be
entitled.

                                     - 2 -
<PAGE>

            3. Dispute Resolution. In the case of a dispute as to the arithmetic
calculation of the number of shares of Common Stock to be issued upon
conversion, the Company shall cause its Transfer Agent to promptly issue to the
Holder the number of shares of Common Stock that is not disputed and shall
submit the arithmetic calculations to the Holder via facsimile as soon as
possible, but in no event later than two (2) business days after receipt of such
Holder's Conversion Notice. If such Holder and the Company are unable to agree
upon the arithmetic calculation of the number of shares of Common Stock to be
issued upon such conversion within one (1) business day of such disputed
arithmetic calculation being submitted to the Holder, then the Company shall
within one (1) business day submit via facsimile the disputed arithmetic
calculation of the number of shares of Common Stock to be issued upon such
conversion to the Company's independent, outside accountant. The Company shall
cause the accountant to perform the calculations and notify the Company and the
Holder of the results no later than seventy-two (72) hours from the time it
receives the disputed calculations. Such accountant's calculation shall be
binding upon all parties absent manifest error. The reasonable expenses of such
accountant in making such determination shall be paid by the Company, in the
event the Holder's calculation was correct, or by the Holder, in the event the
Company's calculation was correct, or equally by the Company and the Holder in
the event that neither the Company's or the Holder's calculation was correct.
The period of time in which the Company is required to effect conversions under
this Certificate of Designation shall be tolled with respect to the subject
conversion pending resolution of any dispute by the Company made in good faith
and in accordance with this Section.

            4. Record Holder. The person or persons entitled to receive the
shares of Common Stock issuable upon a conversion of this Note shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
on the Conversion Date.

      C. Mandatory Conversion.

            1. If this Note is outstanding in whole or in part on the Mandatory
Conversion Date it shall automatically and without any action on the part of the
Holder, convert into a number of fully paid and nonassessable shares of Common
Stock equal to the quotient of (i) $1,000 divided by (ii) the Conversion Price
in effect on the Mandatory Conversion Date.

            2. As used herein, "Mandatory Conversion Date" shall be the date
that is three years after the date of issuance of this Note. The Mandatory
Conversion Date and the Voluntary Conversion Date collectively are referred to
herein as the "Conversion Date."

            3. On the Mandatory Conversion Date, any amounts outstanding under
this Note shall be converted automatically without any further action by the
Holder and whether or not this Note surrendered to the Company or its Transfer
Agent; provided, however, that the Company shall not be obligated to issue the
shares of Common Stock issuable upon conversion of this Note unless this Note is
either delivered to the Company or the Holder notifies the Company that such
Note has been lost, stolen, or destroyed, and executes an agreement satisfactory
to the Company to indemnify the Company from any loss incurred by it in
connection therewith. Upon the occurrence of the automatic conversion of this
Note pursuant to this Section, the Holder shall surrender this Note to the
Company and the Company shall cause its Transfer Agent to deliver the shares of
Common Stock issuable upon such conversion (in the same manner set forth in
Section I C.2.) to the Holder within three (3) business days of the Holder's
delivery of this Note.

                                     - 3 -
<PAGE>

      D. Conversion Price. The term "Conversion Price" shall mean the Variable
Conversion Price (as defined herein) (subject to adjustments as set forth
herein). The "Variable Conversion Price" shall mean the Applicable Percentage
(as defined herein) multiplied by the Market Price (as defined herein). "Market
Price" means the average of the average Trading Prices (as defined below) for
the Common Stock during the ten (10) Trading Day (as defined below) period
ending one Trading Day prior to the date the Conversion Notice is sent by the
Holder to the Company via facsimile (the "Conversion Date"). "Trading Price"
means, for any security as of any date, the intraday trading price on the
Over-the-Counter Bulletin Board (the "OTCBB") as reported by a reliable
reporting service mutually acceptable to and hereafter designated by holders of
a majority the Notes and the Company or, if the OTCBB is not the principal
trading market for such shares of Common Stock, the intraday trading price of
such security on the principal securities exchange or trading market where such
security is listed or traded or, if no intraday trading price of such security
is available in any of the foregoing manners, the average of the intraday
trading prices of any market makers for such security that are listed in the
"pink sheets" by the National Quotation Bureau, Inc. If the Trading Price cannot
be calculated for such security on such date in the manner provided above, the
Trading Price shall be the fair market value as mutually determined by the
Company and the holders of a majority of the shares of Notes being converted for
which the calculation of the Trading Price is required in order to determine the
Conversion Price of such Notes. "Trading Day" shall mean any day on which the
Common Stock is traded for any period on the OTCBB, or on the principal
securities exchange or other securities market on which the Common Stock is then
being traded. "Applicable Percentage" shall mean 85.0%.

      E. Adjustments of Conversion Price.

            1. Adjustment for Certain Dividends and Distributions. If the
Company shall at any time or from time to time after the date of this Note, make
or issue or set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, then, and in each event, an
appropriate revision to the applicable Conversion Price shall be made and
provision shall be made (by adjustments of the Conversion Price or otherwise) so
that the holder of this Note shall receive upon conversions thereof, in addition
to the number of shares of Common Stock receivable thereon, the number of
securities of the Company which they would have received had their Note been
converted into Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the Conversion Date,
retained such Note (together with any distributions payable thereon during such
period), giving application to all adjustments called for during such period
under this Section with respect to the rights of the Holder of this Note;
provided, however, that if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price shall be adjusted pursuant to this
paragraph as of the time of actual payment of such dividends or distributions;
and provided further, however, that no such adjustment shall be made if the
Holder of this Note simultaneously receives a dividend or other distribution of
shares of Common Stock in a number equal to the number of shares of Common Stock
as the Holder would have received if this Note had been converted into Common
Stock on the date of such event.

                                     - 4 -
<PAGE>

            2. Adjustments for Reclassification, Exchange or Substitution. If
the Common Stock issuable upon conversion of this Note at any time or from time
to time after the date of this Note shall be changed to the same or different
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of stock dividends
provided for herein, or a reorganization, merger, consolidation, or sale of
assets provided for herein), then, and in each event, an appropriate revision to
the Conversion Price shall be made and provisions shall be made (by adjustments
of the Conversion Price or otherwise) so that the Holder of this Note shall have
the right thereafter to convert this Note into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Note might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.

            3. Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the date of this Note there
shall be a capital reorganization of the Company (other than by way of stock
dividends or distributions provided for herein, or a reclassification, exchange
or substitution of shares provided for herein), or a merger or consolidation of
the Company with or into another corporation where the holders of outstanding
voting securities prior to such merger or consolidation do not own over 50% of
the outstanding voting securities of the merged or consolidated entity,
immediately after such merger or consolidation, or the sale of all or
substantially all of the Company's properties or assets to any other person (an
"Organic Change"), then as a part of such Organic Change an appropriate revision
to the Conversion Price shall be made if necessary and provision shall be made
if necessary (by adjustments of the Conversion Price or otherwise) so that the
Holder of this Note shall have the right thereafter to convert this Note into
the kind and amount of shares of stock and other securities or property of the
Company or any successor corporation resulting from Organic Change. In any such
case, appropriate adjustment shall be made in the application of the provisions
of this Section with respect to the rights of the Holder of this Note after the
Organic Change to the end that the provisions of this Section (including any
adjustment in the Conversion Price then in effect and the number of shares of
stock or other securities deliverable upon conversion of this Note) shall be
applied after that event in as nearly an equivalent manner as may be
practicable.

            4. Consideration for Stock. In case any shares of Common Stock or
Convertible Securities other than this Note, or any rights or warrants or
options to purchase any such Common Stock or convertible securities, shall be
issued or sold:

                                     - 5 -
<PAGE>

                  (1) in connection with any merger or consolidation in which
the Company is the surviving corporation (other than any consolidation or merger
in which the previously outstanding shares of Common Stock of the Company shall
be changed to or exchanged for the stock or other securities of another
corporation), the amount of consideration therefore shall be, deemed to be the
fair value, as determined reasonably and in good faith by the Board of Directors
of the Company, of such portion of the assets and business of the nonsurviving
corporation as such Board may determine to be attributable to such shares of
Common Stock, convertible securities, rights or warrants or options, as the case
may be; or

                  (2) in the event of any consolidation or merger of the Company
in which the Company is not the surviving corporation or in which the previously
outstanding shares of Common Stock of the Company shall be changed into or
exchanged for the stock or other securities of another corporation, or in the
event of any sale of all or substantially all of the assets of the Company for
stock or other securities of any corporation, the Company shall be deemed to
have issued a number of shares of its Common Stock for stock or securities or
other property of the other corporation computed on the basis of the actual
exchange ratio on which the transaction was predicated, and for a consideration
equal to the fair market value on the date of such transaction of all such stock
or securities or other property of the other corporation. If any such
calculation results in adjustment of the applicable Conversion Price, or the
number of shares of Common Stock issuable upon conversion of this Note, the
determination of the applicable Conversion Price or the number of shares of
Common Stock issuable upon conversion of this Note immediately prior to such
merger, consolidation or sale, shall be made after giving effect to such
adjustment of the number of shares of Common Stock issuable upon conversion of
this Note. In the event any consideration received by the Company for any
securities consists of property other than cash, the fair market value thereof
at the time of issuance or as otherwise applicable shall be as determined in
good faith by the Board of Directors of the Company. In the event Common Stock
is issued with other shares or securities or other assets of the Company for
consideration which covers both, the consideration computed as provided in this
Section shall be allocated among such securities and assets as determined in
good faith by the Board of Directors of the Company.

      F. No Impairment. The Company shall not, 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, but will at all times in good faith, assist in the carrying out of all
the provisions of this Note and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
Holders of this Note against impairment. and the proceeds of which shall be
payable to such holder in the event it obtains judgment.

      G. Certificates as to Adjustments. Upon occurrence of each adjustment or
readjustment of the Conversion Price or number of shares of Common Stock
issuable upon conversion of this Note, the Company at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to the Holder of this Note a certificate setting forth such adjustment
and readjustment, showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request of the Holder, at
any time, furnish or cause to be furnished to such Holder a like certificate
setting forth such adjustments and readjustments, the Conversion Price in effect
at the time, and the number of shares of Common Stock and the amount, if any, of
other securities or property which at the time would be received upon the
conversion of this Note. Notwithstanding the foregoing, the Company shall not be
obligated to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent of such adjusted amount.

                                     - 6 -
<PAGE>

      H. Issue Taxes. The Company shall pay any and all issue and other taxes,
excluding federal, state or local income taxes, that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of this Note
pursuant thereto; provided, however, that the Company shall not be obligated to
pay any transfer taxes resulting from any transfer requested by any holder in
connection with any such conversion.

      I. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile or
three (3) business days following being mailed by certified or registered mail,
postage prepaid, return-receipt requested, addressed to the Holder of record at
its address appearing on the books of the Company. The Company will give written
notice to the Holder at least twenty (20) days prior to the date on which the
Company closes its books or takes a record with respect to any dividend or
distribution upon the Common Stock and in no event shall such notice be provided
to such Holder prior to such information being made known to the public. The
Company will also give written notice to the Holder at least twenty (20) days
prior to the date on which any Organic Change, dissolution, liquidation or
winding-up will take place and in no event shall such notice be provided to such
Holder prior to such information being made known to the public.

      J. Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of this Note. In lieu of any fractional shares to which the
Holder would otherwise be entitled, the Company shall pay cash equal to the
product of such fraction multiplied by the average of the Closing Bid Prices of
the Common Stock for the five (5) consecutive trading immediately preceding the
Voluntary Conversion Date or Mandatory Conversion Date, as applicable, or the
Company, at the Company's option, shall round up the shares of Common Stock to
be issued to the next whole share.

      K. Reservation of Common Stock. The Company shall, so long as this Note is
outstanding, reserve and keep available out of its authorized and unissued
Common Stock, solely for the purpose of effecting the conversion of this Note,
such number of shares of Common Stock as shall from time to time be sufficient
to effect the conversion of all of this Note then outstanding.

      L. Regulatory Compliance. If any shares of Common Stock to be reserved for
the purpose of conversion of this Note require registration or listing with or
approval of any governmental authority, stock exchange or other regulatory body
under any federal or state law or regulation or otherwise before such shares may
be validly issued or delivered upon conversion, the Company shall, at its sole
cost and expense, in good faith and as expeditiously as possible, endeavor to
secure such registration, listing or approval, as the case may be.

                                     - 7 -
<PAGE>

2.    EVENTS OF DEFAULT

      If any of the following events of default (each, an "Event of Default")
shall occur:

      A. Failure to Pay Principal or Interest.

      The Borrower fails to pay the principal hereof or interest thereon when
due on this Note, whether at maturity, upon acceleration or otherwise;

      B. Conversion and the Shares.

      The Borrower fails to issue shares of Common Stock to the Holder (or
announces or threatens that it will not honor its obligation to do so) upon
exercise by the Holder of the conversion rights of the Holder in accordance with
the terms of this Note, or fails to transfer or cause its transfer agent to
transfer (electronically or in certificated form) any certificate for shares of
Common Stock issued to the Holder upon conversion of or otherwise pursuant to
this Note as and when required by this Note, and any such failure shall continue
uncured (or any announcement, statement or threat not to honor its obligations
shall not be rescinded in writing) for ten (10) days after the Borrower shall
have been notified thereof in writing by the Holder;

      C. Receiver or Trustee.

      The Borrower or any subsidiary of the Borrower shall make an assignment
for the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business, or such a receiver or trustee shall otherwise be appointed;

      D. Bankruptcy.

      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings for relief under any bankruptcy law or any law for the relief of
debtors shall be instituted by or against the Borrower or any subsidiary of the
Borrower which remains unvacated, unbonded or unstayed for a period of thirty
(30) days;

then, upon the occurrence and during the continuation of any Event of Default
specified in Section 2.A or B, at the option of the Holders of a majority of the
aggregate principal amount of the outstanding Notes exercisable through the
delivery of written notice to the Borrower by such Holders (the "Default
Notice"), and upon the occurrence of an Event of Default specified in Section
2.C or D, the Notes shall become immediately due and payable and the Borrower
shall deliver to the Holder, in full satisfaction of its obligations hereunder,
shares of Common Stock of the Borrower in an amount equal to the then
outstanding principal amount of this Note for purposes of determining the lowest
applicable Conversion Price, multiplied by (b) the highest Closing Price for the
Common Stock during the period beginning on the date of first occurrence of the
Event of Default and ending one day prior to the Mandatory Prepayment Date (the
"Default Amount") and all other amounts payable hereunder shall immediately
become due and payable, all without demand, presentment or notice, all of which
hereby are expressly waived, together with all costs, including, without
limitation, legal fees and expenses, of collection, and the Holder shall be
entitled to exercise all other rights and remedies available at law or in
equity. If the Borrower fails to pay the Default Amount within five (5) business
days of written notice that such amount is due and payable, then the Holder
shall have the right at any time, so long as the Borrower remains in default
(and so long and to the extent that there are sufficient authorized shares), to
require the Borrower, upon written notice, to immediately issue, in lieu of the
Default Amount, the number of shares of Common Stock of the Borrower equal to
the Default Amount divided by the Conversion Price then in effect.

                                     - 8 -
<PAGE>

3.    MISCELLANEOUS

      A. Failure or Indulgence Not Waiver.

      No failure or delay on the part of the Holder in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privileges.
All rights and remedies existing hereunder are cumulative to, and not exclusive
of, any rights or remedies otherwise available.

      B. Notices.

      Any notice herein required or permitted to be given shall be in writing
and may be personally served or delivered by courier or sent by United States
mail and shall be deemed to have been given upon receipt if personally served
(which shall include telephone line facsimile transmission) or sent by courier
or three (3) days after being deposited in the United States mail, certified,
with postage pre-paid and properly addressed, if sent by mail. For the purposes
hereof, the address of the Holder shall be as shown on the records of the
Borrower; and the address of the Borrower shall be 12777 Jones Road, Suite 481,
Houston, TX 77070, facsimile number: 281-890-2587. Both the Holder and the
Borrower may change the address for service by service of written notice to the
other as herein provided.

      C. Amendments.

      This Note and any provision hereof may only be amended by an instrument in
writing signed by the Borrower and the Holder. The term "Note" and all reference
thereto, as used throughout this instrument, shall mean this instrument as
originally executed, or if later amended or supplemented, then as so amended or
supplemented.

      D. Assignability.

      This Note shall be binding upon the Borrower and its successors and
assigns, and shall inure to be the benefit of the Holder and its successors and
assigns. Each transferee of this Note must be an "accredited investor" (as
defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note
to the contrary, this Note may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement, subject to all applicable
federal and state securities laws.

                                     - 9 -
<PAGE>

      E. Governing Law.

      THIS NOTE SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICT OF LAWS. THE BORROWER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO
ANY DISPUTE ARISING UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO IN CONNECTION
HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES
IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON
A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN
SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
PREVAIL IN ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL FEES
AND EXPENSES, INCLUDING ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN
CONNECTION WITH SUCH DISPUTE.

      F. Denominations.

      At the request of the Holder, upon surrender of this Note, the Borrower
shall promptly issue new Notes in the aggregate outstanding principal amount
hereof, in the form hereof, in such denominations of at least $1,000 as the
Holder shall request.

      G. No Preemptive Rights.

      Except as provided in Section 2 hereof no Holder of this Note shall be
entitled to rights to subscribe for, purchase or receive any part of any new or
additional shares of any class, whether now or hereinafter authorized, or of
bonds or debentures, or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or additional shares of
any class, or any bond, debentures or other evidences of indebtedness
convertible into or exchangeable for shares, may be issued and disposed of by
the Board of Directors on such terms and for such consideration (to the extent
permitted by law), and to such person or persons as the Board of Directors in
their absolute discretion may deem advisable.

                                     - 10 -
<PAGE>

      IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name
by its duly authorized officer this ___ day of ____________, 2005.

                                HEALTHRENU MEDICAL, INC.

                                By:   ______________________________
                                      Name: Robert W. Prokos
                                      Title: President & Chief Executive Officer

                                     - 11 -
<PAGE>

                                    EXHIBIT A

                              NOTICE OF CONVERSION
                    (To be Executed by the Registered Holder
                         in order to Convert the Notes)

      The undersigned hereby irrevocably elects to convert $__________ principal
amount of the Note (defined below) into shares of common stock, par value $.001
per share ("Common Stock"), of HealthRenu Medical, Inc., a Nevada corporation
(the "Borrower") according to the conditions of the convertible Notes of the
Borrower dated as of __________ (the "Notes"), as of the date written below. If
securities are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates. No fee will be charged to the Holder for
any conversion, except for transfer taxes, if any. A copy of each Note is
attached hereto (or evidence of loss, theft or destruction thereof).

      The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon conversion of the
Notes shall be made pursuant to registration of the securities under the
Securities Act of 1933, as amended (the "Act"), or pursuant to an exemption from
registration under the Act.

                  Date of Conversion:___________________________
                  Applicable Conversion Price:____________________
                  Number of Shares of Common Stock to be Issued Pursuant to
                  Conversion of the Notes:______________
                  Signature:___________________________________
                  Name:______________________________________
                  Address:____________________________________

      The Borrower shall issue and deliver shares of Common Stock to an
overnight courier not later than three (3) business days following receipt of
the original Note(s) to be converted, and shall make any applicable payments
pursuant to the Notes for the number of business days such issuance and delivery
is late.

                                     - 12 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}]]