Carlton Companies, Inc. (fka CTNO)

[fredman]

FORM OF DEBENTURE

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SUCH LAWS. THE SECURITIES ARE SUBJECT
TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS
PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR
HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED
THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE
OFFERING MATERIALS. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.

AMOUNT $200,000
DEBENTURE NUMBER August-2008-101
ISSUANCE DATE August 29, 2008
MATURITY DATE August 28, 2010

FOR VALUE RECEIVED, TheraBiogen, Inc., a Nevada corporation (the
Company), hereby promises to pay LEADDOG CAPITAL, L.P. (the Holder) on
August 28, 2010, (the Maturity Date), the principal amount of Two Hundred
Thousand Dollars ($200,000) U.S., and to pay interest on the principal
amount hereof, in such amounts, at such times and on such terms
and conditions as are specified herein.

Article 1 Interest

The Company shall pay interest on the unpaid principal amount of this
Debenture (the ?Debenture?) at the time of each conversion until the
principal
amount hereof is paid in full or has been converted. The Debentures shall pay
twelve percent (12%) cumulative interest, in cash or in shares of common
stock,
par value $.0001 per share, of the Company (Common Stock), at the Companys
option, at the time of each conversion. The closing shall be deemed to have
occurred on the date the funds are received by the Company (the Closing
Date).
If the interest is to be paid in cash, the Company shall notify Investor on
the date of conversion, and make such payment on the next business day
following the date of conversion. If the interest is to be paid in Common
Stock, said Common Stock shall be delivered to the Holder, or per Holder?s
instructions, within three (3) business days of the date of conversion. The
Debentures are subject to automatic conversion at the end of two (2) years
from the date of issuance at which time this Debenture will be automatically
convert based upon the formula set forth in Section 3.2

Article 2 Method of Payment; Redemption

This Debenture must be surrendered to the Company in order for the
Holder
to receive payment of the principal amount hereof. The Company shall have
the
option of paying the interest on this Debenture in United States dollars or
in
Common Stock upon conversion pursuant to Article 1 hereof. The Company may
draw a check for the payment of interest to the order of the Holder of this
Debenture and mail it to the Holder?s address as shown on the Register (as
defined in Section 8.2 below). Interest and principal payments shall be
subject to withholding under applicable United States Federal Internal
Revenue
Service Regulations.

The Company may redeem this Debenture in whole or in part by giving the
Holder at least ten (10) business days? written notice of its intent to
redeem.
In the event the Company redeems any portion of this Debenture, the Company
shall issue the Holder a Warrant to purchase 600,000 shares of the Common
Stock of the Company (pro-rata based on the amount of principal being
redeemed). The Warrant will have a three year term and the exercise price
will be 75% of the lowest closing bid price for the Common Stock during the
20 trading days prior to the date the Holder receives the cash redemption.
The Warrant will contain a cashless exercise provision, but such cashless
provision may only be made by the Holder in the sole discretion of the
Company. The Warrant shall also have piggy-back registration rights.

Article 3 Conversion

Section 3.1 Conversion Privilege

(a) The Holder of this Debenture shall have the right to
convert
it into shares of Common Stock at any time following the Closing Date and
which is before the close of business on the Maturity Date, except as set
forth in Section 3.2(k) below. The number of shares of Common Stock issuable
upon the conversion of this Debenture is determined pursuant to Section
3.2 and rounding the result to the nearest whole share.

(b) This Debenture may not be converted, whether in whole or
in part, except in accordance with Article 3.

(c) In the event all or any portion of this Debenture remains
outstanding on the Maturity Date, the unconverted portion of such Debenture
will automatically be converted into shares of Common Stock on such date in
the manner set forth in Section 3.2.

Section 3.2 Conversion Procedure.

(a) Conversion Procedures. The face amount of this Debenture
may be converted, in whole or in part, any time following the Closing Date.
Such conversion shall be effectuated by surrendering to the Company, or its
attorney, this Debenture to be converted together with a facsimile or
original of the signed Notice of Conversion which evidences Holder?s
intention to convert the Debenture indicated. The date on which the Notice
of Conversion is effective (?Conversion Date?) shall be deemed to be the
date on which the Holder has delivered to the Company a facsimile or
original of the signed Notice of Conversion, as long as the original
Debenture(s) to be converted are received by the Company within five (5)
business days thereafter. At such time that the original Debenture has
been submitted to the Company, the Holder can elect to whether a
reissuance of the debenture is warranted, or whether the Company can retain
the Debenture as to a continual conversion by Holder. Notwithstanding the
above, any Notice of Conversion received by 4:00 P.M. EST, shall be deemed
to have been received the previous business day. Receipt being via a
confirmation of time of facsimile of the Holder.

(b) Common Stock to be Issued. Upon the conversion of any
Debentures and upon receipt by the Company or its attorney of a facsimile or
original of Holder?s signed Notice of Conversion the Company shall instruct
its transfer agent to issue stock certificates without restrictive legend
or stop transfer instructions, if at that time the Registration Statement has
been declared effective (or with proper restrictive legend if the
Registration Statement has not as yet been declared effective), in such
denominations to be specified at conversion representing the number of shares
of Common Stock issuable upon such conversion, as applicable. The Company
shall act as Registrar and shall maintain an appropriate ledger containing
the necessary information with respect to each Debenture. The Company
warrants that no instructions, other than these instructions, have been given
or will be given to the transfer agent and that the Common Stock shall
otherwise be freely resold, except as may be set forth herein.

(b) Conversion Rate. Holder is entitled to convert the face
amount of this Debenture, plus accrued interest, anytime twenty (20) trading
days following the date the Company?s Common Stock first begins publicly
trading, at seventy-five percent (75%) of the lowest closing bid price for
the Company?s Common Stock during the prior twenty (20) trading days
(?Conversion Price?), but in no event shall the Conversion Price be less than
$.01 or more than $.10 per share. No fractional shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded up or down, as the case may be, to the nearest
whole
share.

(c) Nothing contained in this Debenture shall be deemed to
establish or require the payment of interest to the Holder at a rate in
excess
of the maximum rate permitted by governing law. In the event that the rate
of
interest required to be paid exceeds the maximum rate permitted by governing
law, the rate of interest required to be paid thereunder shall be
automatically reduced to the maximum rate permitted under the governing law
and such excess shall be returned with reasonable promptness by the Holder
to the Company.

(d) It shall be the Company?s responsibility to take all
necessary actions and to bear all such costs to issue the Common Stock as
provided herein, including the responsibility and cost for delivery of an
opinion letter to the transfer agent, if so required. The person in
whose name the certificate of Common Stock is to be registered shall be
treated as a shareholder of record on and after the conversion date. Upon
surrender of any Debentures that are to be converted in part, the Company
shall issue to the Holder a new Debenture equal to the unconverted amount,
if so requested in writing by Holder.

(e) Within three (3) business days after receipt of the
documentation referred to above in Section 3.2(a), the Company shall deliver
a certificate, in accordance with Section 3.2(c) for the number of shares of
Common Stock issuable upon the conversion. In the event the Company does not
make delivery of the Common Stock, as instructed by Holder, within three
(3) business days after the Conversion Date, then in such event the Company
shall pay to Holder one percent (1%) in cash, of the dollar value of the
Debentures being converted, compounded daily, per each day after the third
(3rd) business day following the Conversion Date that the Common Stock is
not delivered to the Purchaser.

The Company acknowledges that its failure to deliver the
Common Stock within three (3) business days after the Conversion Date will
cause the Holder to suffer damages in an amount that will be difficult to
ascertain. Accordingly, the parties agree that it is appropriate to include
in this Debenture a provision for liquidated damages. The parties
acknowledge
and agree that the liquidated damages provision set forth in this section
represents the parties? good faith effort to quantify such damages and, as
such, agree that the form and amount of such liquidated damages are
reasonable
and will not constitute a penalty. The payment of liquidated damages shall
not relieve the Company from its obligations to deliver the Common Stock
pursuant to the terms of this Debenture.

To the extent that the failure of the Company to issue the
Common Stock pursuant to this Section 3.2(f) is due to the unavailability of
authorized but unissued shares of Common Stock, the provisions of this
Section 3.2(f) shall not apply but instead the provisions of Section 3.2(g)
shall apply.

The Company shall make any payments incurred under this
Section 3.2(f) in immediately available funds within three (3) business days
from the date the Common Stock is fully delivered. Nothing herein shall
limit
a Holder?s right to pursue actual damages or cancel the conversion for the
Company?s failure to issue and deliver Common Stock to the Holder within
three (3) business days after the Conversion Date.

(f) The Company shall at all times reserve (or make alternative
written arrangements for reservation or contribution of shares) and have
available all Common Stock necessary to meet conversion of the Debentures by
all Holders of the entire amount of Debentures then outstanding. If, at any
time Holder submits a Notice of Conversion and the Company does not have
sufficient authorized but unissued shares of Common Stock (or alternative
shares of Common Stock as may be contributed by Stockholders) available to
effect, in full, a conversion of the Debentures (a ?Conversion Default?, the
date of such default being referred to herein as the ?Conversion Default
Date?), the Company shall issue to the Holder all of the shares of Common
Stock which are available, and the Notice of Conversion as to any Debentures
requested to be converted but not converted (the ?Unconverted Debentures?),
may be deemed null and void upon written notice sent by the Holder to the
Company. The Company shall provide notice of such Conversion Default
(?Notice of Conversion Default?) to all existing Holders of outstanding
Debentures, by facsimile, within three (3) business day of such default (with
the original delivered by overnight or two day courier), and the Holder shall
give notice to the Company by facsimile within five business days of receipt
of the original Notice of Conversion Default (with the original delivered by
overnight or two day courier) of its election to either nullify or confirm
the
Notice of Conversion.

The Company agrees to pay to all Holders of outstanding Debentures
payments for a Conversion Default (?Conversion Default Payments?) in the
amount
of (N/365) x (.24) x the initial issuance price of the outstanding and/or
tendered but not converted Debentures held by each Holder where N = the
number of days from the Conversion Default Date to the date (the
?Authorization Date?) that the Company authorizes a sufficient number of
shares of Common Stock to effect conversion of all remaining Debentures.
The Company shall send notice (?Authorization Notice?) to each Holder of
outstanding Debentures that additional shares of Common Stock have been
authorized, the Authorization Date and the amount of Holder?s accrued
Conversion Default Payments. The accrued Conversion Default shall be paid
in cash or shall be convertible into Common Stock at the Conversion Rate,
upon
written notice sent by the Holder to the Company, which Conversion Default
shall be payable as follows: (i) in the event Holder elects to take such
payment in cash, cash payments shall be made to such Holder of outstanding
Debentures by the fifth day of the following calendar month, or (ii) in the
event Holder elects to take such payment in stock, the Holder may convert
such payment amount into Common Stock at the conversion rate set forth in
Section 3.2(c) at any time after the 5th day of the calendar month following
the month in which the Authorization Notice was received, until
the expiration of the mandatory four (4) year conversion period.

The Company acknowledges that its failure to maintain a sufficient
number of authorized but unissued shares of Common Stock to effect in full a
conversion of the Debentures will cause the Holder to suffer damages in an
amount that will be difficult to ascertain. Accordingly, the parties agree
that it is appropriate to include in this Agreement a provision for
liquidated
damages. The parties acknowledge and agree that the liquidated damages
provision set forth in this section represents the parties? good faith effort
to quantify such damages and, as such, agree that the form and amount of such
liquidated damages are reasonable and will not constitute a penalty. The
payment of liquidated damages shall not relieve the Company from its
obligations to deliver the Common Stock pursuant to the terms of this
Debenture.
Nothing herein shall limit the Holder?s right to pursue actual damages for
the
Company?s failure to maintain a sufficient number of authorized shares of
Common Stock.

(g) If by the third (3rd) business day after the Conversion
Date
of any portion of the Debentures to be converted (the ?Delivery Date?), the
transfer agent fails for any reason to deliver the Common Stock upon
conversion
by the Holder and after such Delivery Date, the Holder purchases, in an open
market transaction or otherwise, shares of Common Stock (the "Covering
Shares")
solely in order to make delivery in satisfaction of a sale of Common Stock by
the Holder (the "Sold Shares"), which delivery such Holder anticipated to
make
using the Common Stock issuable upon conversion (a "Buy-In"), the Company
shall
pay to the Holder, in addition to any other amounts due to Holder pursuant to
this Debenture, and not in lieu thereof, the Buy-In Adjustment Amount (as
defined below). The "Buy In Adjustment Amount" is the amount equal to the ?
excess, if any, of (x) the Holder's total purchase price (including brokerage
commissions, if any) for the Covering Shares over (y) the net proceeds (after
brokerage commissions, if any) received by the Holder from the sale of the
Sold
Shares. The Company shall pay the Buy-In Adjustment Amount to the Holder in
immediately available funds within five (5) business days of written demand
by
the Holder. By way of illustration and not in limitation of the foregoing,
if
the Holder purchases shares of Common Stock having a total purchase price
(including brokerage commissions) of $11,000 to cover a Buy-In with respect
to
shares of Common Stock it sold for net proceeds of $10,000, the Buy-In
Adjustment Amount which the Company will be required to pay to the Holder
will
be $1,000.

(h) Prospectus and Other Documents. The Company shall furnish
to
Holder such number of prospectuses and other documents incidental to the
registration of the shares of Common Stock underlying the Debentures,
including any amendment of or supplements thereto.

(i) Limitation on Issuance of Shares. If the Company?s Common
Stock becomes listed on the Nasdaq SmallCap Market after the issuance of the
Debentures, the Company may be limited in the number of shares of Common
Stock it may issue by virtue of (X) the number of authorized shares or (Y)
the applicable rules and regulations of the principal securities market on
which the Common Stock is listed or traded, including, but not necessarily
limited to, NASDAQ Rule 4310(c)(25)(H)(i) or Rule 4460(i)(1), as may be
applicable (collectively, the ?Cap Regulations?). Without limiting the
other provisions thereof, (i) the Company will take all steps reasonably
necessary to be in a position to issue shares of Common Stock on conversion
of the Debentures without violating the Cap Regulations and (ii) if,
despite taking such steps, the Company still cannot issue such shares of
Common Stock without violating the Cap Regulations, the holder of a
Debenture which cannot be converted as result of the Cap Regulations (each
such Debenture, an ?Unconverted Debenture?) shall have the right to elect
either of the following remedies:

(x) if permitted by the Cap Regulations, require the Company to issue
shares of Common Stock in accordance with such holder's Notice of Conversion
at a conversion purchase price equal to the average of the closing bid price
per share of Common Stock for any five (5) consecutive trading days (subject
to certain equitable adjustments for certain events occurring during such
period) during the sixty (60) trading days immediately preceding the
Conversion Date; or

(y) require the Company to redeem each Unconverted Debenture for an
amount (the ?Redemption Amount?), payable in cash, equal to the sum of (i)
one hundred thirty-three percent (133%) of the principal of an Unconverted
Debenture, plus (ii) any accrued but unpaid interest thereon through and
including the date (the ?Redemption Date?) on which the Redemption Amount is
paid to the holder.

A holder of an Unconverted Debenture may elect one of the above
remedies with respect to a portion of such Unconverted Debenture and the
other remedy with respect to other portions of the Unconverted Debenture.
The Debentures shall contain provisions substantially consistent with the
above terms, with such additional provisions as may be consented to by the
Holder. The provisions of this section are not intended to limit the
scope of the provisions otherwise included in the Debentures.

(j) Limitation on Amount of Conversion and Ownership.
Notwithstanding anything to the contrary in this Debenture, in no event
shall the Holder be entitled to convert that amount of Debenture, and in no
event shall the Company permit that amount of conversion, into that number
of shares, which when added to the sum of the number of shares of Common
Stock beneficially owned, (as such term is defined under Section 13(d) and
Rule 13d-3 of the Securities Exchange Act of 1934, as may be amended, (the
?1934 Act?)), by the Holder, would exceed 4.99% of the number of shares of
Common Stock outstanding on the Conversion Date, as determined in accordance
with Rule 13d-1(j) of the 1934 Act. In the event that the number of shares
of Common Stock outstanding as determined in accordance with Section 13(d)
of the 1934 Act is different on any Conversion Date than it was on the
Closing Date, then the number of shares of Common Stock outstanding on such
Conversion Date shall govern for purposes of determining whether the Holder
would be acquiring beneficial ownership of more than 4.99% of the number of
shares of Common Stock outstanding on such Conversion Date.

(k) Legend. The Holder acknowledges that each certificate
representing the Debentures and the Common Stock, unless registered shall be
stamped or otherwise imprinted with a legend substantially in the following
form:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) IF AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

(l) Prior to conversion of all the Debentures, if at any time
the
conversion of all the Debentures outstanding would result in an insufficient
number of authorized shares of Common Stock being available to cover all the
conversions, then in such event, the Company will move to call and hold a
shareholder?s meeting or have shareholder action with written consent of the
proper number of shareholders within thirty (30) days of such event, or such
greater period of time if statutorily required or reasonably necessary as
regards standard brokerage house and/or SEC requirements and/or procedures,
for the purpose of authorizing additional shares of Common Stock to
facilitate
the conversions. In such an event management of the Company shall recommend
to all shareholders to vote their shares in favor of increasing the
authorized
number of shares of Common Stock. Management of the Company shall vote all of
its shares of Common Stock in favor of increasing the number of shares of
authorized Common Stock. Company represents and warrants that under no
circumstances will it deny or prevent Holder?s right to convert the
Debentures
as permitted under the terms of this Debenture. Nothing in this Section
shall
limit the obligation of the Company to make the payments set forth in Section
3.2(g). The Holder may request the Company to authorize and issue additional
shares if the Holder feels it is necessary for conversions in the future. In
the event the Company?s shareholder?s meeting does not result in the
necessary
authorization, the Company shall redeem the outstanding Debentures for an
amount equal to (x) the sum of the principal of the outstanding Debentures
plus accrued interest thereon multiplied by (y) 133%.

Section 3.3 Fractional Shares. The Company shall not issue fractional
shares of Common Stock, or scrip representing fractions of such shares, upon
the conversion of this Debenture. Instead, the Company shall round up or
down, as the case may be, to the nearest whole share.

Section 3.4 Taxes on Conversion. The Company shall pay any
documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion of this Debenture. However, the Holder shall pay
any such tax which is due because the shares are issued in a name other than
its name.

Section 3.5 Company to Reserve Stock. The Company shall reserve the
number of shares of Common Stock required pursuant to and upon the terms set
forth in the Subscription Agreement to permit the conversion of this
Debenture.
All shares of Common Stock which may be issued upon the conversion hereof
shall upon issuance be validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issuance thereof.

Section 3.6 Restrictions on Sale. This Debenture has not been
registered under the Securities Act of 1933, as amended, (the ?Act?) and is
being issued under Section 4(2) of the Act and Rule 506 of Regulation D
promulgated under the Act. This Debenture and the Common Stock issuable upon
the conversion thereof may only be sold pursuant to registration under or an
exemption from the Act.

Section 3.7 Mergers, Etc. If the Company merges or consolidates with
another corporation or sells or transfers all or substantially all of its
assets to another person and the holders of the Common Stock are entitled to
receive stock, securities or property in respect of or in exchange for Common
Stock, then as a condition of such merger, consolidation, sale or transfer,
it
may thereafter be converted on the terms and subject to the conditions set
forth above into the kind and amount of stock, securities or property
receivable upon such merger, consolidation, sale or transfer by a holder of
the number of shares of Common Stock into which this Debenture might have
been
converted immediately before such merger, consolidation, sale or transfer,
subject to adjustments which shall be as nearly equivalent as may be
practicable to adjustments provided for in this Article 3.

Section 3.8 Piggy-Back Registration. The Holder shall be entitled to
?piggy-back? registration rights to have the shares underlying this Debenture
included on all registrations of the Company or on any demand registrations
of
any other shareholder that may be filed after the date of the issuance of
this
Debenture.

Article 4 Mergers
The Company shall not consolidate or merge into, or transfer all or
substantially all of its assets to, any person, unless such person assumes
in writing the obligations of the Company under this Debenture and
immediately
after such transaction no Event of Default exists. Any reference herein to
the Company shall refer to such surviving or transferee corporation and the
obligations of the Company shall terminate upon such written assumption.

Article 5 Reports
The Company will mail to the Holder hereof at its address as shown on
the Register a copy of any annual, quarterly or current report that it files
with the Securities and Exchange Commission promptly after the filing thereof
and a copy of any annual, quarterly or other report or proxy statement that
it gives to its shareholders generally at the time such report or statement
is sent to shareholders.


Article 6 Defaults and Remedies

Section 6.1 Events of Default. An ?Event of Default? occurs if (a) the
Company does not make the payment of the principal of this Debenture by
conversion into Common Stock within ten (10) business days of the Maturity
Date, upon redemption or otherwise, (b) the Company does not make a payment,
other than a payment of principal, for a period of three (3) business days
thereafter, (c) any of the Company?s representations or warranties contained
in the Subscription Agreement or this Debenture were false when made or the
Company fails to comply with any of its other agreements in the Subscription
Agreement or this Debenture and such failure continues for the period and
after the notice specified below, (d) the Company pursuant to or within the
meaning of any Bankruptcy Law (as hereinafter defined): (i) commences a
voluntary case; (ii) consents to the entry of an order for relief against it
in an involuntary case; (iii) consents to the appointment of a Custodian (as
hereinafter defined) of it or for all or substantially all of its property
or (iv) makes a general assignment for the benefit of its creditors or (v) a
court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that: (A) is for relief against the Company in an involuntary
case; (B) appoints a Custodian of the Company or for all or substantially all
of its property or (C) orders the liquidation of the Company, and the order
or decree remains unstayed and in effect for sixty (60) calendar days, (e)
the
Company?s Common Stock is suspended or no longer listed on any recognized
exchange including electronic over-the-counter bulletin board for in excess
of
five (5) consecutive trading days. As used in this Section 7.1, the term
?Bankruptcy Law? means Title 11 of the United States Code or any similar
federal or state law for the relief of debtors. The term ?Custodian? means
any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law. A default under clause (c) above is not an Event of Default
until the holders of at least 25% of the aggregate principal amount of the
Debentures outstanding notify the Company of such default and the Company
does not cure it within thirty (30) business days after the receipt of such
notice, unless the Company commences to cure such default within such period,
which must specify the default, demand that it be remedied and state that it
is a ?Notice of Default?. Prior to the expiration of the time for curing a
default as set forth in the preceding sentence, the holders of a majority in
aggregate principal amount of the Debentures at the time outstanding
(exclusive of Debentures then owned by the Company or any subsidiary or
affiliate) may, on behalf of the holders of all of the Debentures, waive any
past Event of Default hereunder (or any past event which, with the lapse of
time or notice and lapse of time designated in subsection (a), would
constitute an Event of Default hereunder) and its consequences, except a
default in the payment of the principal of or interest on any of the
Debentures. In the case of any such waiver, such default or Event of Default
shall be deemed to have been cured for every purpose of this Debenture and
the Company and the holders of the Debentures shall be restored to their
former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any right
consequent thereon.

Section 6.2 Acceleration. If an Event of Default occurs and is
continuing, the Holder hereof by notice to the Company may declare the
remaining principal amount of this Debenture, together with all accrued
interest and any liquidated damages, to be due and payable. Upon such
declaration, the remaining principal amount shall be due and payable
immediately.

Section 6.3 Seniority, No indebtedness of the Company is senior to
this Debenture in right of payment, whether with respect to interest,
damages or upon liquidation or dissolution or otherwise.

Article 7 Registered Debentures

Section 7.1 Record Ownership. The Company, or its attorney, shall
maintain a register of the holders of the Debentures (the ?Register?)
showing their names and addresses and the serial numbers and principal
amounts of Debentures issued to them. The Register may be maintained
in electronic, magnetic or other computerized form. The Company may treat
the person named as the Holder of this Debenture in the Register as the
sole owner of this Debenture. The Holder of this Debenture is the person
exclusively entitled to receive payments of interest on this Debenture,
receive notifications with respect to this Debenture, convert it into
Common Stock and otherwise exercise all of the rights and powers as the
absolute owner hereof.

Section 7.2 Worn or Lost Debentures. If this Debenture becomes worn,
defaced or mutilated but is still substantially intact and recognizable, the
Company or its agent may issue a new Debenture in lieu hereof upon its
surrender. Where the Holder of this Debenture claims that the Debenture has
been lost, destroyed or wrongfully taken, the Company shall issue a new
Debenture in place of the original Debenture if the Holder so requests by
written notice to the Company actually received by the Company before it is
notified that the Debenture has been acquired by a bona fide purchaser and
the Holder has delivered to the Company an indemnity bond in such amount and
issued by such surety as the Company deems satisfactory together with
an affidavit of the Holder setting forth the facts concerning such loss,
destruction or wrongful taking and such other information in such form with
such proof or verification as the Company may request.

Article 8 Notice.

Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Debenture must be in writing
and will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided a
confirmation of transmission is mechanically or electronically generated
and kept on file by the sending party); or (iii) one (1) day after deposit
with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

If to the Company:

TheraBiogen, Inc.
P. O. Box 307
Cocoa, FL 32922-0307
Attention:
Telephone:
Facsimile:


If to the Holder:

Leaddog Capital L.P.
48 Wall Street, Suite 1100
New York, NY 10005
Attention: Chris Messalas
Telephone: [phone]
Facsimile: 646-349-2555


With a copy to:
Joseph B. LaRocco, Esq.
49 Locust Avenue, Suite 107
New Canaan, CT 06840
Telephone: [phone]
Facsimile: 203-966-0363

Each party shall provide five (5) business days prior notice to the
other party of any change in address, phone number or facsimile number.

Article 9 Time
Where this Debenture authorizes or requires the payment of money or
the performance of a condition or obligation on a Saturday or Sunday or a
public holiday, or authorizes or requires the payment of money or the
performance of a condition or obligation within, before or after a period of
time computed from a certain date, and such period of time ends on a Saturday
or a Sunday or a public holiday, such payment may be made or condition or
obligation performed on the next succeeding business day, and if the period
ends at a specified hour, such payment may be made or condition performed, at
or before the same hour of such next succeeding business day, with the same
force and effect as if made or performed in accordance with the terms of
this Debenture. A ?business day? shall mean a day on which the banks in New
York are not required or allowed to be closed.

Article 10 No Assignment
This Debenture shall be freely assignable.

Article 11 Rules of Construction.
In this Debenture, unless the context otherwise requires, words in the
singular number include the plural, and in the plural include the singular,
and words of the masculine gender include the feminine and the neuter, and
when the sense so indicates, words of the neuter gender may refer to any
gender. The numbers and titles of sections contained in the Debenture are
inserted for convenience of reference only, and they neither form a part of
this Debenture nor are they to be used in the construction or interpretation
hereof. Wherever, in this Debenture, a determination of the Company is
required or allowed, such determination shall be made by a majority of the
Board of Directors of the Company and if it is made in good faith, it shall
be conclusive and binding upon the Company and the Holder of this Debenture.

Article 12 Governing Law
The validity, terms, performance and enforcement of this Debenture
shall be governed and construed by the provisions hereof and in accordance
with the laws of the State of New York applicable to agreements that are
negotiated, executed, delivered and performed solely in the State of New
York.

Article 13 Litigation

a. All disputes arising under this agreement shall be governed by
and interpreted in accordance with the laws of the State of New York, without
regard to principles of conflict of laws. The parties to this agreement will
submit all disputes arising under this agreement to arbitration in New York,
New York before a single arbitrator of the American Arbitration Association
(?AAA?). The arbitrator shall be selected by application of the rules of the
AAA, or by mutual agreement of the parties, except that such arbitrator shall
be an attorney admitted to practice law in the State of New York. No party
to this agreement will challenge the jurisdiction or venue provisions as
provided in this section.

IN WITNESS WHEREOF, the Company has duly executed this Debenture as of
the date first written above.

TheraBiogen, Inc.

By

Name: Kelly T. Hickel
Title: CEO
















Exhibit A

NOTICE OF CONVERSION

(To be Executed by the Registered Owner in order to Convert Debenture)

The undersigned hereby irrevocably elects, as of ________________, to
convert $________________ of its convertible debenture (the ?Debenture?) into
Common Stock of TheraBiogen, Inc. (the ?Company?) according to the conditions
set forth in the Debenture issued by the Company.

Date of Conversion________________________________________________


Applicable Conversion Price________________________________________


Number of Debentures Issuable upon this Conversion_______________________


Name(Print)____________________________

Address_________________________________________


Phone__________________ Fax___________________





By:_______________________________________


Source: http://www.sec.gov/Archives/edgar/data/1140299/000114029908000002/r-ex42debenture.txt