THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION
THEREOF
UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH
ACT, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL AND FROM ATTORNEYS
REASONABLY
ACCEPTABLE TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION
IS NOT
REQUIRED.
CONVERTIBLE PROMISSORY NOTE
November 15, 2006
$220,000.00
Two Hundred Twenty Thousand Dollars
15% NOTE
FOR VALUE
RECEIVED, HEALTHRENU MEDICAL, INC., a Nevada corporation (the
"Company") hereby promises to pay to the order of PAUL CARTMELL
(the "Holder"),
or his registered assigns, the principal sum of TWO HUNDRED TWENTY
THOUSAND
DOLLARS AND 00/100 ($220,000.00), and to pay interest from the date
hereof on
the outstanding principal sum at the rate of 15% per annum based on
a 360-day
year, such interest to accrue from the date hereof (the "Closing
Date"). The
principal and accrued but unpaid interest shall be paid in full on
or before
January 15, 2007 (the "Maturity Date").
All
payments shall be paid in lawful money of the United States of
America
at the principal office of the Holder or at such other place as the
Holder may
designate from time to time in writing to the Company.
1.
CONVERSION RIGHTS.
The Holder
shall have the following conversion rights with respect to this
Note (the "Conversion Rights"):
A.
Conversion. The Holder is entitled, at its option, to convert, and
sell
on the same day, at any time and from time to time commencing on
the date hereof
until the Maturity Date, all or any part of the principal amount of
the Note
plus accrued interest, into shares (the "Conversion Shares") of the
Company's
Common Stock, at the price per share equal to the greater of (i)
$0.03 per share
or (ii) 80% of the average of the closing bid price for the
Company's Common
Stock for the 10 days preceding the notice of conversion, as
reported by the
exchange on which the Company's Common Stock is then traded (the
"Conversion
Price"). No fraction of shares or scrip representing fractions of
shares will be
issued on conversion, but the number of shares issuable shall be
rounded to the
nearest whole share. To convert this Note, the Holder hereof shall
deliver
written notice thereof, substantially in the form of Exhibit "A" to
this Note,
with appropriate insertions (the "Conversion Notice"), to the
Company at its
address as set forth herein. The date upon which the conversion
shall be
effective (the "Conversion Date") shall be deemed to be the date
set forth in
the Conversion Notice.
<PAGE>
B.
Reservation of Common Stock. The Company shall reserve and keep
available out of its authorized but unissued shares of 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
such conversion,
based upon the Conversion Price. If at any time the Company does
not have a
sufficient number of Conversion Shares authorized and available,
then the
Company shall call and hold a special meeting of its stockholders
within thirty
(30) days of that time for the sole purpose of increasing the
number of
authorized shares of Common Stock.
2.
PREPAYMENTS. The Company may prepay and redeem the Note, at the
election of the Company, upon not less than 10 days' notice, at any
time as a
whole only and not in part, at a price equal to the outstanding
principal of the
Note together with accrued interest to the Maturity Date, along
with any other
sums due hereunder.
3.
ADDITIONAL CONSIDERATION. As additional consideration for making
the
loan described herein, the Company agrees to issue to the Holder a
warrant to
purchase a total of 1,600,000 shares of the Company's common stock
which shall
have an exercise price of $0.05 per share (the "$0.05 Warrants")
and shall be
exercisable for a period of five years. In addition, if the
principal and
interest on the Note have not been repaid within thirty (30) days
of the
Maturity Date, then the Company shall issue to the Holder an
additional 100,000
$0.05 Warrants with an exercise price of $0.05 per share on the one
month
anniversary of the Maturity Date and at the end of each monthly
period
thereafter that the Note remains unpaid (the "Penalty Warrants").
The total
number of Penalty Warrants that may be issued pursuant to this
provision shall
not exceed 1,000,000. The shares issuable upon conversion of the
$0.05 Warrants
and the Penalty Warrants shall be referred to collectively as the
"Warrant
Shares". The Company agrees to include the Warrant Shares and
Conversion Shares
in the Company's pre-effective amendment to its Registration
Statement on Form
SB-2 as filed by the Company on April 12, 2006 with the SEC and to
use its best
efforts to cause such registration to be declared effective b
