-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SJADrE9v3hAOiigerBMKnpT2o7fwBGtYRizCDW7LFMQvQH0Eph90X+zXWMIoUcMJ H6VNWOCclQT7W6p+HaoGsw== 0000950136-04-003348.txt : 20041012 0000950136-04-003348.hdr.sgml : 20041011 20041012095302 ACCESSION NUMBER: 0000950136-04-003348 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20041012 DATE AS OF CHANGE: 20041012 GROUP MEMBERS: BROOKLYN HOLDINGS GROUP MEMBERS: ROBERT GENOVESE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NEPTUNE SOCIETY INC/FL CENTRAL INDEX KEY: 0001098532 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200] IRS NUMBER: 592492929 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-61997 FILM NUMBER: 041073577 BUSINESS ADDRESS: STREET 1: 100 N FIRST ST STREET 2: STE 205 CITY: SBURBANK STATE: CA ZIP: 91502 BUSINESS PHONE: 8189539995 MAIL ADDRESS: STREET 1: 100 NORTH FIRST STREET STREET 2: SUITE 205 CITY: BURBANK STATE: CA ZIP: 91502 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BG Capital Group, Ltd. CENTRAL INDEX KEY: 0001290770 IRS NUMBER: 000000000 STATE OF INCORPORATION: C5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: SLOT #2000 STREET 2: A.P. 59223 CITY: NASSAU STATE: C5 ZIP: 00000 BUSINESS PHONE: 5613677979 MAIL ADDRESS: STREET 1: SLOT #2000 STREET 2: A.P. 59223 CITY: NASSAU STATE: C5 ZIP: 00000 SC 13D/A 1 file001.htm SCHEDULE 13D/A 



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549




                                  SCHEDULE 13D

                    UNDER THE SECURITIES EXCHANGE ACT OF 1934
                               (AMENDMENT NO. 1)*




                            The Neptune Society, Inc.
- --------------------------------------------------------------------------------
                                (Name of Issuer)


                    Common Stock, par value $0.001 per share
- --------------------------------------------------------------------------------
                         (Title of Class of Securities)

                                   640776 30 8
                     -------------------------------------
                                 (CUSIP Number)


                               Morris Orens, Esq.
                      Swidler Berlin Shereff Friedman, LLP
                              405 Lexington Avenue
                            New York, New York 10174
                                 (212) 973-0111
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
                                Communications)

                                  June 18, 2004
- --------------------------------------------------------------------------------
             (Date of Event which Requires Filing of this Statement)


If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]

NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).


                    Page 1 of 10 sequentially numbered pages







                                  SCHEDULE 13D

- ----------------------------                         ---------------------------
CUSIP NO. 640776 30 8                                         PAGE 2 OF 10 PAGES
- --------------------------------------------------------------------------------
    1     NAME OF REPORTING PERSONS
          I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)

          BG CAPITAL GROUP LTD.

- --------------------------------------------------------------------------------
    2     CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP               (a) [X]
          (See Instructions)                                             (b) [ ]
- --------------------------------------------------------------------------------
    3     SEC USE ONLY

- --------------------------------------------------------------------------------
    4     SOURCE OF FUNDS (See Instructions)

          WC
- --------------------------------------------------------------------------------
    5     CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
          PURSUANT TO ITEMS 2(d) or 2(e)                                     [ ]

- --------------------------------------------------------------------------------
    6     CITIZENSHIP OR PLACE OF ORGANIZATION

          BAHAMAS
- --------------------------------------------------------------------------------
                             7    SOLE VOTING POWER                   4,355,291

                            ----------------------------------------------------
     Number of Shares        8    SHARED VOTING POWER                 N/A
  Beneficially Owned by
      Each Reporting        ----------------------------------------------------
       Person with           9    SOLE DISPOSITIVE POWER              4,355,291

                            ----------------------------------------------------
                            10    SHARED DISPOSITIVE POWER            N/A

- --------------------------------------------------------------------------------
   11     AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
                                                               4,355,291
- --------------------------------------------------------------------------------
   12     CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
          SHARES (See Instructions)                                          [ ]

- --------------------------------------------------------------------------------
   13     PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                                                                  62.09%
- --------------------------------------------------------------------------------
   14     TYPE OF REPORTING PERSON (See Instructions)
                                                                   CO
- --------------------------------------------------------------------------------








                                  SCHEDULE 13D

- ----------------------------                         ---------------------------
CUSIP NO. 640776 30 8                                         PAGE 3 OF 10 PAGES
- --------------------------------------------------------------------------------
    1     NAME OF REPORTING PERSONS
          I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)

          BROOKLYN HOLDINGS LLC

- --------------------------------------------------------------------------------
    2     CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP               (a) [X]
          (See Instructions)                                             (b) [ ]
- --------------------------------------------------------------------------------
    3     SEC USE ONLY

- --------------------------------------------------------------------------------
    4     SOURCE OF FUNDS (See Instructions)

          WC
- --------------------------------------------------------------------------------
    5     CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
          PURSUANT TO ITEMS 2(d) or 2(e)                                     [ ]

- --------------------------------------------------------------------------------
    6     CITIZENSHIP OR PLACE OF ORGANIZATION

          NEVIS
- --------------------------------------------------------------------------------
                             7    SOLE VOTING POWER                   250,000

                            ----------------------------------------------------
     Number of Shares        8    SHARED VOTING POWER                 N/A
  Beneficially Owned by
      Each Reporting        ----------------------------------------------------
       Person with           9    SOLE DISPOSITIVE POWER              250,000

                            ----------------------------------------------------
                            10    SHARED DISPOSITIVE POWER            N/A

- --------------------------------------------------------------------------------
   11     AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
                                                               250,000
- --------------------------------------------------------------------------------
   12     CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
          SHARES (See Instructions)                                          [ ]

- --------------------------------------------------------------------------------
   13     PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                                                                  3.56%
- --------------------------------------------------------------------------------
   14     TYPE OF REPORTING PERSON (See Instructions)
                                                                   OO
- --------------------------------------------------------------------------------








                                  SCHEDULE 13D

- ----------------------------                         ---------------------------
CUSIP NO. 640776 30 8                                         PAGE 4 OF 10 PAGES
- --------------------------------------------------------------------------------
    1     NAME OF REPORTING PERSONS
          I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)

          ROBERT GENOVESE

- --------------------------------------------------------------------------------
    2     CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP               (a) [X]
          (See Instructions)                                             (b) [ ]
- --------------------------------------------------------------------------------
    3     SEC USE ONLY

- --------------------------------------------------------------------------------
    4     SOURCE OF FUNDS (See Instructions)

          PF
- --------------------------------------------------------------------------------
    5     CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
          PURSUANT TO ITEMS 2(d) or 2(e)                                     [ ]

- --------------------------------------------------------------------------------
    6     CITIZENSHIP OR PLACE OF ORGANIZATION

          CANADA
- --------------------------------------------------------------------------------
                             7    SOLE VOTING POWER                   4,605,291

                            ----------------------------------------------------
     Number of Shares        8    SHARED VOTING POWER                 N/A
  Beneficially Owned by
      Each Reporting        ----------------------------------------------------
       Person with           9    SOLE DISPOSITIVE POWER              4,605,291

                            ----------------------------------------------------
                            10    SHARED DISPOSITIVE POWER            N/A

- --------------------------------------------------------------------------------
   11     AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
                                                               4,605,291
- --------------------------------------------------------------------------------
   12     CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
          SHARES (See Instructions)                                          [ ]

- --------------------------------------------------------------------------------
   13     PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                                                                  65.65%
- --------------------------------------------------------------------------------
   14     TYPE OF REPORTING PERSON (See Instructions)
                                                                   IN
- --------------------------------------------------------------------------------




          INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
       (INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION.







         This Amendment No. 1 to the Statement on Schedule 13D (as defined
below) amends and restates the Statement on Schedule 13D relating to the event
date of April 27, 2004 (the "Original Schedule 13D") reported by BG Capital
Group Ltd., a Bahamas corporation ("BG Capital"). The Original Schedule 13D and
this Amendment No. 1 to the Statement on Schedule 13D are collectively referred
to herein as the "Schedule 13D". The Schedule 13D is filed by BG Capital,
Brooklyn Holdings LLC, a Nevis limited liability company ("Brooklyn Holdings"),
and Robert Genovese ("Genovese" and together with BG Capital and Brooklyn
Holdings, the "Reporting Persons").


ITEM 1.      SECURITY AND ISSUER

             Securities: Common Stock, par value $0.001 per share

             Issuer:     The Neptune Society, Inc.
                         4312 Woodman Ave., 3rd Floor
                         Sherman Oaks, CA 91423


ITEM 2.      IDENTITY AND BACKGROUND.



    (a),(b)  BG Capital Group Ltd.    Brooklyn Holdings LLC    Robert Genovese
             Slot #2000 A.P. 59223    P.O. Box 556             c/o BG Capital Group
             Nassau, Bahamas          Charlestown, Nevis       Ltd.
                                                               Slot #2000 A.P. 59223
                                                               Nassau, Bahamas


         (c) Genovese's principal occupation is to act as a private investor. As
the sole stockholder of BG Capital, Genovese has sole voting and dispositive
power over shares of Common Stock owned by BG Capital. As the sole member of
Brooklyn Holdings, Genovese has sole voting and dispositive power over shares of
Common Stock owned by Brooklyn Holdings.

         (d), (e) During the last five years, the Reporting Persons (i) have not
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); and (ii) have not been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding were or are subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.

         (f) BG Capital is a Bahamian corporation. Brooklyn Holdings is a Nevis
limited liability company. Genovese is a Canadian citizen.







ITEM 3.  SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

         The additional shares being reported were acquired through privately
negotiated transactions. The sources of the funds used to effect such purchases
were Genovese's personal funds and BG Capital's working capital.

ITEM 4.  PURPOSE OF TRANSACTION

         This item is amended by the following transactions:

         On June 18, 2004 Brooklyn Holdings entered into a Debenture Purchase
Agreement with the Issuer. Brooklyn Holdings received 250,000 shares of Common
Stock as a commitment fee. Brooklyn Holdings also has the right at any time from
June 18, 2009 until June 18, 2014 to convert the then existing unpaid Principal
Amount of the Debenture, in whole or in part, into that number of shares of
Common Stock that equals the amount of the then existing unpaid Principal Amount
of the Debenture divided by 1.65, which equals a conversion price of $1.65 per
share of Common Stock (subject to adjustment as set forth in Sections 5.4 and
5.5 of the Debenture). The Issuer has the right to prevent such a conversion by
Brooklyn Holdings by repaying the applicable unpaid Principal Amount of the
Debenture to Brooklyn Holdings within thirty (30) days of receipt by the Issuer
of notice from Brooklyn Holdings that it is exercising a conversion right.

         A copy of the Debenture Purchase Agreement is attached as Exhibit 10.63
to the Current Report on Form 10-QSB filed by the Issuer with the Securities and
Exchange Commission on August 13, 2004 and is incorporated herein by reference.
A copy of the Debenture is attached as Exhibit 10.64 to the Current Report on
Form 10-QSB filed by the Issuer with the Securities and Exchange Commission on
August 13, 2004 and is incorporated herein by reference.

         The Reporting Persons from time to time have effected open market
purchases of shares of Common Stock. The sources of the funds used to effect
such open market purchases were Genovese's personal funds and BG Capital's
working capital.

         The Reporting Persons may from time to time: (i) acquire additional
shares of Common Stock in the open market, in privately negotiated transactions
or otherwise, (ii) maintain their holdings at current levels, and/or (iii) sell
all or a portion of their holdings in the open market, in privately negotiated
transactions or otherwise, in each case subject to applicable federal securities
laws. Any such actions will depend upon, among others, the availability of
Issuer securities for purchase at satisfactory price levels; the continuing
evaluation of the Issuer's business, financial condition, operations and
prospects; general market, economic and other conditions; the relative
attractiveness of alternative business and investment opportunities; the
availability of financing; the actions of the management and other future
developments.

ITEM 5.  INTEREST IN SECURITIES OF THE ISSUER.

         (a) and (b) Based on the Issuer's Quarterly Report on Form 10-QSB filed
with the Securities and Exchange Commission on August 13, 2004, there were
7,014,637 shares of Common Stock issued and outstanding as of August 10, 2004.
The Reporting Persons own an






aggregate of 4,605,291 shares of Common Stock or approximately 65.65% of the
outstanding shares of Common Stock. Genovese, as the sole stockholder of BG
Capital and the sole member of Brooklyn Holdings, has the sole power to vote or
direct the disposition of such shares.

         (c) The following is a listing of transactions in shares of Common
Stock during the past 60 days. All of the following transactions were effected
by BG Capital.

              Transaction      Type of       Number of      Price per
                 Date        Transaction       Shares         Share
                 ----        -----------       ------         -----
              7/6/04             Buy            8,000        1.139375
              7/7/04             Buy           26,500        1.13
              7/22/04            Buy           10,000        1.24
              7/30/04            Buy            6,000        1.24

         BG Capital has also effected purchases of Common Stock of the Issuer
aggregating 1,506,927 shares of Common Stock of which 673,594 shares were
purchased for $1.8477529 and 833,333 shares were purchased for $1.0 million.

         (d) Not applicable.

         (e) Not applicable.

ITEM 6.  CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
         TO SECURITIES OF THE ISSUER.

         The information contained in Items 3 and 4, including the exhibits
referenced therein, are incorporated herein by reference in this Item 6.

ITEM 7.  MATERIAL TO BE FILED AS EXHIBITS.

         A. Agreement of Joint Filing, by and between BG Capital, Brooklyn
Holdings, and Robert Genovese.

         B. Debenture Purchase Agreement, dated June 18, 2004, by and between
the Issuer and Brooklyn Holdings (incorporated herein by reference to Exhibit
10.63 to the Current Report on Form 10QSB filed by the Issuer with the
Securities and Exchange Commission on August 13, 2004).

         C. Debenture, dated June 18, 2004, issued by the Issuer to Brooklyn
Holdings (incorporated herein by reference to Exhibit 10.64 to the Current
Report on Form 10QSB filed by the Issuer with the Securities and Exchange
Commission on August 13, 2004).






                                    SIGNATURE

         After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certify that the information set forth in this Statement is
true, complete and correct.


Dated:  October 8, 2004             BG CAPITAL GROUP LTD.

                                    By: /s/ Robert Genovese
                                        -------------------------
                                        Robert Genovese, President


                                    BROOKLYN HOLDINGS LLC

                                    By: /s/ Robert Genovese
                                        -------------------------
                                        Robert Genovese, Sole Member




                                    /s/ Robert Genovese
                                    -----------------------------
                                    ROBERT GENOVESE








                                    EXHIBIT A


                            AGREEMENT OF JOINT FILING

         In accordance with Rule 13d-1(k) under the Securities Exchange Act of
1934, as amended, the undersigned hereby agree to the joint filing with all
other persons signatory below of a statement on Schedule 13D or any amendments
thereto, with respect to the common stock of The Neptune Society, Inc., and that
this Agreement be included as an attachment to such filing.

         This Agreement may be executed in any number of counterparts each of
which shall be deemed an original and all of which together shall be deemed to
constitute one and the same Agreement.

         IN WITNESS WHEREOF, the undersigned hereby execute this Agreement on
October 8, 2004.




                                    BG CAPITAL GROUP LTD.

                                    By: /s/ Robert Genovese
                                        -------------------------
                                        Robert Genovese, President


                                    BROOKLYN HOLDINGS LLC

                                    By: /s/ Robert Genovese
                                        -------------------------
                                        Robert Genovese, Sole Member


                                    /s/ Robert Genovese
                                    -----------------------------
                                    ROBERT GENOVESE
EX-10.63 2 file002.htm DEBENTURE PURCHASE AGREEMENT 


                                                                   EXHIBIT 10.63


                            THE NEPTUNE SOCIETY, INC.

                          DEBENTURE PURCHASE AGREEMENT

     This Debenture Purchase Agreement (this "Agreement") is dated June 18, 2004
by and between The Neptune Society, Inc., a Florida corporation (the
"Corporation") and Brooklyn Holdings LLC, a Nevis limited liability company
("Holder"). The Corporation and Holder are collectively referred to herein as
the "parties" and each a "party."

     NOW, THEREFORE, in consideration of the above and the mutual promises
hereinafter set forth, the parties hereto agree as follows:

1. AGREEMENT TO SELL AND PURCHASE

     1.1 Sale and Purchase. Subject to the terms and conditions hereof, at the
Closing (as defined in Article 3 below), the Corporation hereby agrees to issue
and sell to Holder, and Holder agrees to purchase from the Corporation, a
convertible secured debenture (the "Debenture"), due June 18, 2014, in the
principal amount of Six Million Dollars ($6,000,000) (the "Principal Amount").

     1.2 Debenture. The purchase price for the Debenture shall be equal to 100%
of the Principal Amount (the "Purchase Price"). The Debenture to be in the form
of the Debenture attached hereto as Exhibit A and to be convertible (subject to
terms, conditions and adjustments set forth therein) into shares of common stock
of the Corporation ("Common Stock") as set forth therein.

2. COMMITMENT FEE

     2.1 Fee. At Closing, the Corporation will issue to the Holder, as a
commitment fee in consideration of entering into this Agreement and agreeing to
the terms and conditions set forth the Debentures, a total of two hundred and
fifty thousand (250,000) shares of Common Stock (the "Consideration Shares").

     2.2 Registration of Consideration Shares. Within sixty (60) days of
Closing, the Corporation, at the Corporation's sole expense, shall use
commercially reasonable efforts to file with the United States Securities and
Exchange Commission (the "SEC") a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), on Form S-1 or, if available,
Form SB-2 or Form S-3, or any similar or successor form, to register the resale
of the Consideration Shares, which are not then registered under the Securities
Act or are not otherwise tradable without restriction under Rule 144(k) of the
Securities Act; provided however that the Holder may waive the requirement that
the Corporation file a registration statement with respect to the Consideration
Shares within sixty (60) days of Closing and thereafter shall have the right to
cause the Corporation to file such a registration statement upon thirty (30)
days notice to the Corporation. The Corporation shall use reasonable commercial
efforts to cause such registration statement to be declared effective within
ninety (90) days of filing a registration statement under this Section 2.2,
unless the Chief Executive Officer of the Corporation provides Holder with a
certificate certifying that the reason(s) the registration statement was not
effective was due to factors reasonably beyond the Corporation's control. The
Corporation shall use its best efforts to

                                        1



keep the Registration Statement continuously effective until the date on which
all Consideration Shares covered by such Registration Statement have been sold
or may be sold under Rule 144 or another applicable exemption under the
Securities Act. In connection with the foregoing, the Corporation shall promptly
file with the SEC such amendments to a registration statement as may be
necessary to keep such registration statement effective. The Corporation shall
bear all reasonable expenses incurred in connection with the registration of
Consideration Shares pursuant to this Section 2.2., including all printing,
legal and accounting expenses incurred by the Corporation and all registration
and filing fees. It shall be a condition precedent to the obligations of the
Corporation to take any action pursuant to this Section 2.2 that the Holder
shall furnish to the Corporation such information regarding themselves, the
Consideration Shares held by them and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of their
Consideration Shares and to execute such documents in connection with such
registration as the Corporation may reasonably request. The Holder shall be
responsible for its legal and accounting expenses and all brokerage commissions
and taxes of any kind (including, without limitation, transfer taxes) with
respect to any disposition, sale or transfer of Consideration Shares.

3. CLOSING; CONDITIONS TO CLOSING

     3.1 The closing of the transactions contemplated under this Agreement (the
"Closing") shall take place at such place as the Corporation and Holder may
mutually agree on June 18, 2004 or such other date as the Corporation and Holder
may mutually agree (the "Closing Date").

     3.2 At, or prior to the Closing, upon and in consideration of the
transactions contemplated under this Agreement, the Parties agree as follows:

         (a) The Corporation shall have furnished to Holder, in form
satisfactory to Holder, a payoff statement executed by CapEx, L.P. ("CapEx") and
Bow River Capital Partners, LLC ("Bow River") (i) setting forth the full amount
necessary to pay off any and all debts owing to CapEx and Bow River as of the
Closing Date (the "CapEx Obligation"); and (ii) containing a full release of any
and all liens and other security interests CapEx and Bow River may have in any
of the assets, including real and personal property, of the Corporation and
Neptune Society of America, Inc., a California corporation, Neptune Management
Corp., a California corporation, Heritage Alternatives, Inc., a California
corporation and Trident Society, Inc., a California corporation (collectively,
the "Subsidiaries"), and any and all other claims on or interests in the
Corporation and the Subsidiaries which CapEx and Bow River may have as a result
of or in connection with the CapEx Obligation or other obligations, excepting
CapEx's and Bow River's equity interests in common shares of the Corporation;

         (b) the Corporation will have repaid in full the CapEx Obligation;

         (c) the Corporation will execute and deliver to Holder the Debenture;

         (d) (i) the Corporation and the Subsidiaries will execute and deliver
to Holder the Security Agreements (as defined in the Debenture and hereinafter
referred to as the "Security

                                        2


Agreements") and (i) the Subsidiaries will execute and deliver to Holder the
Guarantees (as defined in the Debenture and hereinafter referred to as the
"Guarantees");

         (e) Holder shall wire the amount of Six Million Dollars (US $6,000,000)
less the Corporation's reimbursement of Holder's legal fees and costs incurred
in connection with this transaction in accordance with the provisions of Article
8 below (the "Escrow Funds") into escrow to be held by Brent Lokash Law
Corporation, as escrow agent (the "Escrow Agent") and shall have instructed
Escrow Agent to release the Escrow Funds to the Corporation upon the Closing,
such funds to represent Holder's funding of the Principal Amount;

         (f) The Corporation shall have complied with all of its covenants and
agreements contained in this Agreement and all representations and warranties of
the Corporation contained in this Agreement shall be true;

         (g) The Corporation shall have furnished to Holder in form satisfactory
to Holder executed authorizations by the Board of Directors of the Corporation
and the Subsidiaries approving and authorizing the transactions contemplated by
this Agreement;

         (h) The Corporation shall have furnished to Holder in form satisfactory
to Holder executed officers' certificates of the Corporation and the
Subsidiaries in connection with the transactions contemplated by this Agreement;
and

         (i) Holder shall have received an opinion of counsel for the
Corporation and the Subsidiaries in form and substance reasonably acceptable to
the Holder in connection with the transactions contemplated by this Agreement.

4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

     The Corporation hereby represents and warrants to Holder, subject to such
exceptions as are specifically disclosed in writing in the disclosure letter
supplied by Corporation to Holder dated as of the date hereof (the "Disclosure
Schedule", it being acknowledged that disclosure in the Disclosure Schedule with
respect to any particular Section of this Agreement shall be deemed disclosure
with respect to each other Section of this Agreement if the applicability of
such disclosure to the subject matter of such other Section is reasonably clear
on its face), as of the Closing Date:

     4.1 Organization, Subsidiaries, Good Standing, Qualification and Power and
Authority. The Corporation is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida. The Corporation and
each of the Subsidiaries have all requisite corporate power and authority to (a)
execute and deliver this Agreement, the Debenture, the Guarantees, the Security
Agreements and the other agreements, instruments and documents contemplated to
be executed and delivered by them pursuant to this Agreement (this Agreement,
the Debenture, the Guarantees, the Security Agreements and such other agreements
instruments and documents hereinafter collectively referred to as the
"Transaction Documents"); (b) issue the Consideration Shares; (c) issue the
Conversion Shares; and (d) to carry out the other provisions of the Transaction
Documents.

                                        3


     4.2 Capitalization. All issued and outstanding shares of the Common Stock
have been duly authorized and validly issued and are fully paid and
non-assessable. The issued and outstanding capital stock of the Corporation and
the Subsidiaries immediately prior to the Closing are as set forth in section
4.2 of the Disclosure Schedule. Except as set forth in section 4.2 of the
Disclosure Schedule, there are no outstanding (or deemed outstanding) options,
warrants, convertible debentures, convertible instruments, agreements or other
rights to purchase or otherwise acquire upon conversion, exchange or otherwise
from the Corporation or any of the Subsidiaries any of their securities. The
Consideration Shares, when issued at the Closing, and the Conversion Shares when
issued upon conversion of the Debenture, will be duly authorized, validly issued
and fully paid and non-assessable and are not subject to any statutory,
contractual or other first rights of refusal or other preferential rights.

     4.3 Authorization; Binding Obligations. All corporate action on the part of
the Corporation and each Subsidiary, their officers, directors and shareholders
necessary for the authorization of the Transaction Documents and the performance
of all of its obligations thereunder and for the authorization, sale, issuance
and delivery of the Debenture, the Consideration Shares and the Conversion
Shares have been taken or will be taken prior to the Closing. The Conversion
Shares have been or will be, prior to the Closing, duly and validly reserved for
issuance and, when issued upon conversion of the Debenture will be validly
issued, fully paid and non-assessable. The Corporation has taken or will take
all such action as may be necessary to assure that an adequate number of shares
of Common Stock is authorized and reserved for issuance of the Conversion
Shares. The Transaction Documents will, once executed, constitute, valid, legal
and binding obligations of the Corporation or the Subsidiary party thereto, as
the case may be, enforceable in accordance with their terms, except to such
limitations as may result from any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
enforcement of creditors' rights generally.

     4.4 No Real Property. Neither the Corporation nor any Subsidiary owns any
interest in real estate, except properties leased or rented by the Corporation
and its subsidiaries in the ordinary course of its business.

     4.5 Consents and Approvals. Except as required by the Securities Act, or
any state securities laws, no filings with, notices to, or approvals of any
governmental or regulatory body are required to be obtained or made by the
Corporation or any Subsidiary in connection with the consummation of the
transactions contemplated hereby.

     4.6 No Violations. The execution and delivery of the Transaction Documents
and the performance by the Corporation and the Subsidiary party thereto of their
obligations hereunder and thereunder (a) do not and will not conflict with or
violate any provision of the Corporation's or such Subsidiary's Articles of
Incorporation or bylaws; and (b) do not and will not (i) conflict with or result
in a breach of the terms, conditions or provisions of; (ii) constitute a default
under; (iii) result in the creation of any encumbrance upon the capital stock or
assets of the Corporation or such Subsidiary pursuant to; (iv) result in a
violation of; or (iv) require any authorization, consent, approval, exemption or
other action by or notice to any court or administrative or governmental body or
other third party pursuant to, any law, statute, rule or regulation or any
agreement or instrument or any order, judgment or decree to which the
Corporation or such

                                        4


Subsidiary is subject or by which any of its assets are bound, except in each
case where (A) the Corporation or such Subsidiary has filed an applicable
notice; (B) the Corporation or such Subsidiary has obtained an appropriate
waiver, consent or other authorization; or (C) such conflict, violation, breach
or default, or failure to obtain a consent or waiver, or failure to provide
notice may not reasonably be expected to have a material adverse effect on the
business, operations, financial condition or prospects of the Corporation or
such Subsidiary.

     4.7 Compliance with Laws. Except as disclosed in one or more of the
Corporation's reports previously filed with the SEC (each, an "SEC Report"), the
business of the Corporation and each Subsidiary has been conducted in compliance
with all applicable laws and regulations of governmental authorities, except for
such violations that have been cured or that, individually or in the aggregate,
may not reasonably be expected to have a material adverse effect on the
business, operations, financial condition or prospects of the Corporation or
such Subsidiary. Neither the real or personal properties owned, leased, operated
or occupied by the Corporation or such Subsidiary, nor the use, operation or
maintenance thereof (i) violates any applicable laws, or regulations of any
government or governmental authorities, or (ii) violates any restrictive or
similar covenant, agreement, commitment, understanding or arrangement, except
where such violation may not reasonably be expected to have a material adverse
effect on the business, operations, financial condition or prospects of the
Corporation or such Subsidiary.

     4.8 Licenses; Permits; Related Approvals. The Corporation and each of the
Subsidiaries possess all licenses, permits, consents, approvals, authorizations,
qualifications, and orders (hereinafter collectively referred to as "Permits")
of all governments and governmental authorities legally required to enable the
Corporation or such Subsidiary to conduct its business in all jurisdictions in
which such business is conducted (including without limitation all federal,
state and local Permits relating to the operation of funeral homes, crematoriums
and related operations included in the Corporation's and the Subsidiaries'
business). Except as disclosed in one or more of the SEC reports, all of the
Permits are in full force and effect, and no suspension, modification or
cancellation of any of the Permits is pending or threatened, which may
reasonably be expected to have a material adverse effect on the business,
operations, financial condition or prospects of the Corporation or such
Subsidiary.

     4.9 Title to Assets. Immediately following the Closing, the Corporation and
each of the Subsidiaries have good and marketable title to its property and
assets free and clear of all mortgages, security interests, liens, claims, and
other encumbrances, except for Permitted Encumbrances. With respect to the
property and assets it leases, the Corporation and each Subsidiary is in
material compliance with such leases and, to its knowledge, holds a valid
leasehold interest free of any security interests, liens, claims, or other
encumbrances, except Permitted Encumbrances. "Permitted Encumbrances" means (a)
encumbrances for taxes, governmental charges, assessments or levies, provided,
that such taxes, governmental charges, assessments or levies are not yet due or
are being contested in good faith by appropriate proceedings; (b) deposits,
encumbrances or pledges to secure payments of workmen's compensation, public
liability, unemployment and other similar insurance; (c) mechanics', workmen's,
materialmen's, repairmen's, warehousemen's, vendors' or carriers' encumbrances,
or other similar encumbrances arising in the ordinary course of business
consistent with past practices and securing sums that are not past due or are
being contested in good faith by appropriate proceedings; (d) restrictions on
transfers of securities imposed by United States

                                        5


federal, state or territorial securities laws; (e) any encumbrance, right, lien,
obligation or claim against any trust, insurance policy, account, deposit, asset
or other property held for the benefit or on behalf of any purchaser or holder
of rights under any contract, arrangement or similar obligation of the
Corporation or any Subsidiary for cremation services or merchandise; and (f)
other imperfections of title or encumbrances, if any, which imperfections of
title or other encumbrances do not materially impair the use of the assets to
which they relate in the business of the Corporation or the Subsidiaries, as
applicable.

     4.10 Security Interests. Upon repayment of the CapEx Obligation, Holder
will have a valid and perfected first lien on the assets of the Corporation and
each Subsidiary, except for Permitted Encumbrances.

     4.11 Defaults. The Corporation and each of the Subsidiaries is not in
default in the performance, observance or fulfillment of any obligation,
agreement, covenant, or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which it is a party
or by which it or any of its properties may be bound, other than such violations
or defaults that would not individually or in the aggregate have a material
adverse effect on the Corporation's or such Subsidiary's business, prospects,
properties, condition (financial or other), results of operations or net worth.

     4.12 Intellectual Property. The Corporation and each of the Subsidiaries
owns or has a license to use all intellectual property used in its business. To
the knowledge of the Corporation, neither the Corporation nor any Subsidiary is
infringing on any proprietary right belonging to any other person, firm, or
entity. The Corporation and each of the Subsidiaries has the exclusive right and
authority to use all of its creations and inventions, trade secrets, processes,
models, designs, software and formulas as are necessary to enable the
Corporation or such Subsidiary to conduct and to continue to conduct all phases
of its business in the manner presently conducted by it and in accordance with
the its business plan. To the knowledge of the Corporation, the Corporation and
each Subsidiary is the sole owner of the its trade secrets, free and clear of
any liens, encumbrances, restrictions, or legal or equitable claims of others
and the Corporation or such Subsidiary has taken all reasonable security
measures to protect the secrecy, confidentiality, and value of these trade
secrets. To the knowledge of the Corporation, the Corporation's and the
Subsidiaries' intellectual property of a proprietary nature is presently valid
and protectible.

     4.13 Proprietary Rights. Except as otherwise disclosed in one or more SEC
Reports, neither the Corporation nor any Subsidiary has received any
communications alleging that it has violated or, by conducting its business as
proposed would violate, any proprietary rights of any other person, nor is the
Corporation or any Subsidiary aware of any basis for the foregoing.

     4.14 No Litigation. There is no action, suit or proceeding pending or, to
the knowledge of the Corporation, threatened against or affecting the
Corporation, any of the Subsidiaries or any of their properties or rights before
any court or by or before any governmental body or arbitration board or
tribunal, and the Corporation and the Subsidiaries are not in default with
respect to any final judgment, writ, injunction, decree, rule or regulation of
any court or federal, state, local or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.

                                        6


     4.15 Financial Projections. The Corporation has set forth under section
4.15 of the Disclosure Schedule a true and correct copy of the Corporation's
financial projections and budgets for the five (5) year period commencing
January 1, 2004 (the "Financial Projections"). The Financial Projections were
prepared by management in a manner consistent with the Corporation's internal
books and records and financial projections prepared and used by management. To
the best of the Corporation's knowledge, as of the date of this Agreement, the
Financial Projections accurately present and reflect the Corporation's estimated
financial projections and anticipated results of operation for the periods
covered in such Financial Projections based on reasonable assumptions and
estimates of management.

     4.16 Financial Statements; Undisclosed Liabilities. The Corporation has
filed a true and correct copies of (a) its audited combined balance sheet as of
December 31, 2003 and audited combined statement of operations and retained
earnings and combined statements of changes in financial position for the year
ended December 31, 2003 with its annual SEC Report on Form 10-KSB for the year
ended December 31, 2003 and (b) its unaudited consolidated balance sheet as of
March 31, 2004, and unaudited consolidated statement of operations and retained
earnings and combined statement of changes in financial position for the three
month period ended March 31, 2004 with its quarterly SEC Report on Form 10-QSB
for the quarter ended March 31, 2004 (hereinafter collectively referred to as
the "Financial Statements"). The Financial Statements are in accordance with the
books and records of the Corporation, are true, correct and complete and
accurately present the Corporation's financial position as of the dates set
forth therein and the results of the Corporation's operations and changes in the
Corporation's financial position for the periods then ended, all in conformity
with United States generally accepted accounting principles applied on a
consistent basis during each period and on a basis consistent with that of prior
periods. Except (i) as disclosed in the Financial Statements; (ii) as disclosed
in this Agreement; and (iii) as are incurred in the ordinary course of the
routine daily affairs of the Corporation's and the Subsidiaries' business,
neither the Corporation nor any of the Subsidiaries has any liabilities or
obligations of any nature or kind, known or unknown, whether accrued, absolute,
contingent, or otherwise. To the knowledge of the Corporation, there is no basis
for assertion against the Corporation or any of the Subsidiaries of any material
claim, liability or obligation not fully disclosed in the Financial Statements
or in this Agreement.

     4.17 Tax Matters. The Corporation and each of the Subsidiaries has duly and
timely filed, or obtained extensions of time for filing, all material tax
returns required by federal, state and local authorities (the "Returns"). All
information reported on the Returns is true, accurate, and complete. The
Corporation is not a party to, and is not aware of, any pending or threatened
action, suit, proceeding, or assessment against it for the collection of taxes
by any government. The Corporation and each of the Subsidiaries has paid in full
all taxes, interest, penalties, assessments and deficiencies owed by it to all
taxing authorities.

     4.18 Full Disclosures. All factual information heretofore or herewith
furnished by or on behalf of the Corporation to the Purchaser for purposes of or
in connection with this Agreement or any transaction contemplated hereby
(including the Corporation's business plan) is and all statements made by
representatives of the Corporation in connection with the negotiation of this
Agreement do not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements contained herein not
misleading. There is no fact known to the Corporation which materially adversely
affects the accuracy of the representations

                                        7


and warranties contained in this Agreement or the financial condition,
operations, business, earnings, assets, or liabilities of the Corporation or any
of the Subsidiaries.

5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDER

     Holder hereby represents, warrants and covenants to the Corporation as of
the Closing Date:

     5.1 Requisite Power and Authority. Holder has all necessary power and
authority to execute and deliver the Transaction Documents and to carry out
their provisions. All actions on Holder's part required for the lawful execution
and delivery of the Transaction Documents for which it has executed and
delivered have been or will be effectively taken prior to the Closing.

     5.2 Investment Representations. Holder understands that none of the
Debenture, the Consideration Shares and the Conversion Shares to be acquired by
Holder have yet been registered under the Securities Act. Holder also
understands that the Debenture, the Consideration Shares and the Conversion
Shares to be acquired by Holder are being offered and sold pursuant to an
exemption from registration contained in regulations under the Securities Act
based in part upon Holder's representations contained in this Agreement.

         (a) Acquisition for Own Account. Holder is acquiring the Debenture, the
Consideration Shares and/or the Conversion Shares to be acquired by Holder for
its own account for investment only, and not with a view towards distribution in
violation of applicable securities laws.

         (b) Accredited Investor. Holder represents that it is an "accredited
investor" within the meaning of Rule 501(a) of Regulation D as promulgated under
the Securities Act.

         (c) Non-Foreign Status. Holder is a nonresident alien for purposes of
income taxation (as such term is defined in the Internal Revenue Code of 1986,
as amended, and Income Tax Regulations).

         (d) Financial Experience. Holder has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment the Debenture, the Consideration Shares and/or the
Conversion Shares to be acquired by Holder (collectively, the "Securities") and
it is able to bear the economic risk of loss of its entire investment.

         (e) Information. The Corporation has provided to Holder the opportunity
to ask questions and receive answers concerning the terms and conditions of the
transactions contemplated in this Agreement and it has had access to such
information concerning the Corporation as it has considered necessary or
appropriate in connection with its investment decision to acquire the
Securities.

         (f) Transfer Restrictions. Holder agrees that if it decides to offer,
sell or otherwise transfer any of the Securities, it will not offer, sell or
otherwise transfer any of such Securities directly or indirectly, unless:

                                        8


               (1) the sale is made pursuant to registration under the
Securities Act;

               (2) the sale is made pursuant to the exemption from the
registration requirements under the Securities Act provided by Rule 144
thereunder and in accordance with any applicable state securities or "Blue Sky"
laws; or

               (3) the Securities are sold in a transaction that does not
require registration under the Securities Act or any applicable state laws and
regulations governing the offer and sale of securities, and it has prior to such
sale furnished to the Corporation an opinion of counsel reasonably satisfactory
to the Corporation.

         (g) Legends. Holder understands and agrees that the certificates
representing the Securities will bear a legend stating that such shares have not
been registered under the Securities Act or the securities laws of any state of
the United States and may not be offered for sale or sold unless registered
under the Securities Act and the securities laws of all applicable states of the
United States or an exemption from such registration requirements is available.

         (h) Notations. Holder consents to the Corporation making a notation on
its records or giving instructions to any transfer agent of the Corporation in
order to implement the restrictions on transfer set forth and described herein.
Each Debenture certificate will bear a legend to the following effect:


          "THE SECURITIES REPRESENTED BY THIS DEBENTURE HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE
          SECURITIES LAWS (THE "STATE ACTS"), AND SHALL NOT BE SOLD, PLEDGED,
          HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
          CONSIDERATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE
          CORPORATION OF A FAVORABLE OPINION OF HOLDER'S COUNSEL OR SUBMISSION
          TO THE CORPORATION OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO
          COUNSEL FOR THE CORPORATION, TO THE EFFECT THAT ANY SUCH TRANSFER
          SHALL NOT BE IN VIOLATION OF THE ACT AND THE STATE ACTS. HEDGING
          TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE
          CONDUCTED UNLESS IN COMPLIANCE WITH U.S. SECURITIES LAWS."


         Each certificate representing Consideration Shares or Conversion Shares
will bear a legend to the following effect:

          "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
          SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS
          OF ANY STATE OF THE UNITED STATES AND SHALL NOT BE SOLD, PLEDGED,
          HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
          CONSIDERATION) BY THE HOLDER UNLESS REGISTERED UNDER THE ACT OR EXCEPT
          UPON THE ISSUANCE TO THE CORPORATION OF A

                                        9


          FAVORABLE OPINION OF HOLDER'S COUNSEL OR SUBMISSION TO THE CORPORATION
          OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL FOR THE
          CORPORATION, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN
          VIOLATION OF THE ACT AND THE STATE ACTS. HEDGING TRANSACTIONS
          INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED
          UNLESS IN COMPLIANCE WITH U.S. SECURITIES LAWS."

         (i) Due Diligence. Holder has been solely responsible for its own "due
diligence" investigation of the Corporation, the Subsidiaries and their
respective management, business and financial condition, for its own analysis of
the merits and risks of this investment, and for its own analysis of the
fairness and desirability of the terms of the investment; (ii) in taking any
action or performing any role relative to the arranging of the proposed
investment, the Holder has acted solely in its own interest; and (iii) neither
the Holder nor any of its agents or employees has acted as an agent of the
Corporation, or as an issuer, underwriter, broker, dealer or investment adviser
relative to any security involved in this investment.

         (j) Tax Consequences. Holder understands and agrees that there may be
material tax consequences to the Holder of an acquisition or disposition of the
Debentures and/or the Consideration Shares. The Corporation gives no opinion and
makes no representation with respect to the tax consequences to the Holder under
United States, state, local or foreign tax law of the undersigned's acquisition
or disposition of such Debenture or Consideration Shares.

         (k) No Hedging. Holder will not, directly or indirectly, or through one
or more intermediaries, maintain any short position in or engage in hedging
transactions with regard to the Debenture, Consideration Shares or Conversion
Shares except in compliance with the provisions of the Securities Act and
applicable state securities laws.

6. CORPORATION COVENANTS

     The Corporation covenants and agrees with Holder that:

     6.1 Use of Proceeds. The Corporation shall use the proceeds from the sale
of the Debenture for the purposes of repaying in full the CapEx Obligation with
such proceeds being paid to CapEx and Bow River under escrow arrangements
mutually agreeable to Holder and the Corporation. The balance of the proceeds
from the sale of the Debenture are to be used for general corporate purposes.

     6.2 Reservation of Common Stock. The Corporation will reserve and keep
available that maximum number of its authorized but unissued Common Stock as may
be required for the issuance of the Conversion Shares.

7. HOLDER'S COVENANTS

     Holder covenants and agrees with the Corporation that upon Holder being
repaid in full the amount of Four Million Dollars ($4,000,000) owing under the
Debenture (as such terms of repayment are set forth in the Debenture), Holder
will subordinate its first lien on the assets of the Corporation and each
Subsidiary, granted to Holder under the Transaction Documents, to any

                                       10


entity from which the Corporation borrows money, provided, however, that the
Corporation first obtains the consent of Holder in accordance with Section 6.14
of the Debenture.

8. EXPENSE REIMBURSEMENTS

     The Corporation hereby agrees to reimburse Holder for all of its reasonable
and documented out-of-pocket expenses incurred in connection with the
transactions contemplated hereby, including all out-of-pocket expenses
(including filing fees and other third party charges) incurred in connection
with its third party due diligence costs, and the preparation and negotiation of
the Transaction Documents.

9. MISCELLANEOUS

     9.1 Currency. Except as may be otherwise expressly provided, all dollar
amounts herein are references to United States dollars.

     9.2 Governing Law. This Agreement shall be governed by the internal law,
and not the law of conflicts, of the State of California

     9.3 Further Assurances: Each party to this Agreement covenants and agrees
that, from time to time prior to or subsequent to the Closing Date, it will, at
the request and expense of the requesting party, execute and deliver all such
documents and do all such other acts and things as any other party to this
Agreement, acting reasonably, may from time to time request be executed or done
in order to better evidence or perfect or effectuate the transactions
contemplated in this Agreement.

     9.4 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by or on behalf of Holder and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Corporation pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Corporation hereunder solely as of the date of such certificate or instrument.

     9.5 Successors and Assigns. Holder shall not be entitled to assign its
rights under any of the Transaction Documents, without the consent of the
Corporation, which consent shall not be unreasonably withheld or delayed;
provided, however, that no such consent shall be required for Holder to assign
such rights to any person or group of persons controlling or owning the majority
of all beneficial interests of Holder, any other entity controlled by such
person or persons, or an entity controlled by Holder, provided that such entity
shall continue to be so controlled by such persons or Holder as applicable. The
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, permitted assigns, heirs, executors and administrators of the
parties hereto.

     9.6 Entire Agreement; Amendment and Waiver. The Transaction Documents
expressly delivered pursuant hereto or thereto supersede any other agreement,
whether written or oral, that may have been made or entered into by the parties
hereto relating to the matters contemplated hereby, and constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any

                                       11


other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth or incorporated by reference herein and
therein. Neither the Transaction Documents, nor any term thereof may be amended,
waived, discharged or terminated except by a written instrument signed by the
Corporation and Holder.

     9.7 Severability. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

     9.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) business day after
deposit with a nationally recognized overnight courier, special next day
delivery, with verification of receipt. All communications shall be sent:

               to the Corporation at:

               The Neptune Society, Inc.
               4312 Woodman Avenue, Third Floor
               Sherman Oaks, CA 91423
               facsimile (818) 953-9844
               Attention: Marco Markin, President
               with a copy to:

               Dorsey & Whitney, LLP
               1420 Fifth Avenue, Suite 3400
               Seattle, WA 98101
               facsimile (206) 903-8820
               Attention: Kenneth Sam


               to Holder, at:

               Brooklyn Holdings LLC
               P.O. Box 556
               Charlestown, Nevis


               with a copy to:

               Swidler Berlin Shereff Friedman, LLP
               The Chrysler Building
               405 Lexington Avenue
               New York, NY 10174
               facsimile: (212) 891-9598




                                       12


                             Attention: Morris Orens


or at such other address as the Corporation or Holder may designate by ten (10)
days advance written notice to the other parties hereto.

     9.9 Counterparts; Facsimile. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. This Agreement may be executed and delivered by
facsimile.

     9.10 Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.


THE NEPTUNE SOCIETY, INC.


THE NEPTUNE SOCIETY, INC.


By:
   ---------------------------------------------------
   Marco Markin
   Chief Executive Officer


BROOKLYN HOLDINGS LLC:

By:
   ---------------------------------------------------
   Authorized Representative:
   Name:


                                       13



                                    EXHIBIT A


                                    DEBENTURE
EX-10.64 3 file003.htm DEBENTURE 



                                                                   EXHIBIT 10.64




                            THE NEPTUNE SOCIETY, INC.
                              A FLORIDA CORPORATION

                                    DEBENTURE

THE SECURITIES REPRESENTED BY THIS DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE STATE SECURITIES LAWS (THE
"STATE ACTS"), AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED, OR
OTHERWISE TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER EXCEPT
UPON THE ISSUANCE TO THE CORPORATION OF A FAVORABLE OPINION OF ITS COUNSEL OR
SUBMISSION TO THE CORPORATION OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO
COUNSEL FOR THE CORPORATION, TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE
IN VIOLATION OF THE ACT AND THE STATE ACTS. HEDGING TRANSACTIONS INVOLVING THE
SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
U.S. SECURITIES LAWS.


                                            June 18, 2004

US$6,000,000

     THE NEPTUNE SOCIETY, INC., a Florida corporation (the "Corporation"), is
indebted and, for value received, promises to pay to or to the order of Brooklyn
Holdings LLC, a Nevis limited liability company (together with any successor
thereto and any other person who becomes a holder of this Debenture, "Holder"),
on June 18, 2014 (the "Due Date") (unless this Debenture shall have been repaid
sooner at the election of the Corporation or Holder or the amount owing
hereunder is accelerated upon the occurrence of a Default Event as hereinafter
provided), upon presentation of this Debenture, Six Million Dollars ($6,000,000)
(the "Principal Amount") and to pay simple interest on the Principal Amount at
the rate of eleven (11%) per annum as provided herein.

     The Corporation has issued this Debenture pursuant to and subject to the
terms and conditions of a Debenture Purchase Agreement dated as of June 18,
2004, among the Corporation and Brooklyn Holdings LLC (the "Debenture Purchase
Agreement").

     The Corporation covenants, promises and agrees as follows:

1. INTEREST

     1.1 Interest. Subject to Section 1.2, interest shall accrue on the
Principal Amount and shall be payable from July 15, 2004, until the Due Date, at
the simple rate of eleven percent (11%) per annum (such portion of interest
being hereinafter sometimes referred to as"Interest") in arrears in monthly
installments on the fifteenth (15th) day of each month in each and every
calendar year until the Principal Amount and all accrued and unpaid interest
shall have been paid in full as herein provided.



     1.2 Default Interest. In the event that a Default Event (as defined in
Section 8.1) shall occur, and for so long as such Default Event shall remain
unremedied and Holder shall not have waived the same, all amounts owing under
this Debenture, whether in respect of the Principal Amount, Interest or
otherwise, shall bear additional interest("Default Interest")at the rate of two
percent (2%) per month, compounded monthly (or, if such Default Interest rate
exceeds the maximum interest allowed by law, in which case the rate of Default
Interest shall be adjusted to the maximum permitted under applicable law during
the period or periods that the Default Interest rate otherwise provided herein
would exceed such rate), which Default Interest shall be payable on each
interest payment date on which Interest shall be payable, with Default Interest
accruing on any accrued and unpaid Interest.

     1.3 Payment of Interest. All payments of Interest shall be made to Holder
at the address provided in Section 9.4.

2. PAYMENT OF PRINCIPAL AND ALLOCATION OF PAYMENTS

     2.1 Payment of Principal. The Principal Amount shall be due and payable on
the Due Date. The Corporation shall not be required to make any payments on the
Principal Amount until the Due Date. All payments of Principal Amount shall be
made to Holder at the address provided in Section 9.4.

     2.2 Allocation of Payments. All payments shall be applied first to satisfy
costs and expenses of collection, then accrued and unpaid Default Interest and
Interest, then the Principal Amount.

     2.5 Currency. All payments shall be in lawful money of the United States of
America.

3. HOLDER'S CONVERSION

     3.1 Conversion Right of Holder. Holder shall have the right, subject to
Section 3.3, at Holder's option, at any time and from time to time during the
period from June 18, 2009 to the Due Date, to convert the Principal Amount, in
whole or in part, into that number of fully paid and non-assessable shares of
voting common stock of the Corporation (the "Common Stock") as shall be provided
in Section 3.4.

     3.2 Notice. Holder may exercise the conversion right provided in this
Article 3 by giving written notice (the "Holder's Conversion Notice") to the
Corporation of the exercise of such right, stating the amount of the unpaid
Principal Amount which Holder will convert (the "Holder's Conversion Principal")
and stating the address to which the stock certificate or stock certificates for
the shares of Common Stock to be issued (to be in the name of Holder) shall be
delivered. The Holder's Conversion Notice shall be accompanied by this
Debenture.

     3.3 Prevention of Conversion. The Corporation shall have the right, to be
exercised by written notice (the "Prevention Notice") no later than thirty (30)
days from the Corporation's receipt of the Holder's Conversion Notice (the
"Prevention Period"), to repay, in full or in part, the amount of the Holder's
Conversion Principal, including any and all accrued and unpaid Default Interest
and Interest, if any, on the Holder's Conversion Principal up to and including
the

                                        2


date of such repayment. If Holder receives repayment of the Holder's Conversion
Principal, in accordance with this Section 3.3, prior to the expiration of the
Prevention Period, then Holder's right to convert the Holder's Conversion
Principal under this Article 3 shall be extinguished to the extent of such
repayment.

     3.4 Conversion Ratio. The number of shares of Common Stock that shall be
issuable upon conversion of this Debenture under this Section 3 shall equal the
amount of the Holder's Conversion Principal divided by 1.65, which equals a
conversion price of $1.65 per share of Common Stock (subject to adjustment as
set forth in Sections 5.4 and 5.5).

     3.5 Conversion Effective. Subject to the Corporation's right to deliver a
Prevention Notice under Section 3.3, the conversion of the Holder's Conversion
Principal shall be deemed to have been effected on the date the Holder's
Conversion Notice is received by the Corporation (the "Holder's Conversion
Date") and the amount so converted shall be deemed to be repayment of the
Principal Amount in the amount of the Holder's Conversion Principal.

     3.6 Certificates. Within 10 business days after the expiration of the
Prevention Period, if the Corporation has not exercised its rights under Section
3.3, the Corporation shall issue and deliver by hand against a signed receipt
therefor or by United States registered mail, return receipt requested, to the
address designated by Holder in the Holder's Conversion Notice, a stock
certificate or stock certificates of the Corporation representing the number of
shares of Common Stock to which Holder is entitled and a check or cash in
payment of all Default Interest and Interest accrued and unpaid on the Debenture
up to and including the Holder's Conversion Date.

4. CORPORATION'S CONVERSION

     4.1 Conversion Right of Corporation. So long as no Default Event (as
defined in Section 8.1) shall remain unremedied or unwaived by the Holder, the
Corporation shall have the right, at the Corporation's option, at any time and
from time to time during the term of this Debenture, to convert the Principal
Amount, in whole or in part, into that number of fully paid and non-assessable
shares of voting Common Stock as shall be provided in Section 4.3.

     4.2 Notice. The Corporation may exercise the conversion right provided in
this Article 4 by giving written notice (the "Corporation's Conversion Notice")
to Holder of the exercise of such right, stating the amount of the unpaid
Principal Amount which the Corporation will convert (the "Corporation's
Conversion Principal") and requesting Holder to advise the Corporation in
writing of the address to which the stock certificate or stock certificates for
the shares of Common Stock to be issued (to be in the name of Holder) shall be
delivered. Promptly upon the receipt of the Corporation's Conversion Notice,
Holder shall deliver this Debenture to the Corporation.

     4.3 Conversion Ratio. The number of shares of Common Stock that shall be
issuable upon conversion of this Debenture under this Article 4 shall equal the
amount of the Corporation's Conversion Principal divided by 1.65, which equals a
conversion price of $1.65 per share of Common Stock (subject to adjustment as
set forth in Sections 5.4 and 5.5).

                                        3


     4.4 Conversion Effective. Conversion of the Corporation's Conversion
Principal shall be deemed to have been effected on the date the Corporation's
Conversion Notice is received by Holder (the "Corporation's Conversion Date")
and the amount so converted shall be deemed to be repayment of the Principal
Amount in the amount of the Corporation's Conversion Principal.

     4.5 Certificates. Within 10 business days after delivery of the
Corporation's Conversion Notice, the Corporation shall issue and deliver by hand
against a signed receipt therefor or by United States registered mail, return
receipt requested, to the address designated by Holder upon its receipt of the
Corporation's Conversion Notice (or if no designation is provided by Holder than
to the address of Holder provided in Section 9.4), a stock certificate or stock
certificates of the Corporation representing the number of shares of Common
Stock to which Holder is entitled and a check or cash in payment of all Default
Interest and Interest accrued and unpaid on the Debenture up to and including
the Corporation's Conversion Date.

5. GENERAL CONVERSION PROVISIONS

     5.1 Accrued Interest. For greater certainty, no conversion of the Holder's
Conversion Principal under Article 3 or the Corporation's Conversion Principal
under Article 4 shall extinguish or satisfy, or relieve the Corporation of its
obligation to pay, any Default Interest or Interest on the amount of the
Holder's Conversion Principal or the Corporation's Conversion Principal, as the
case may be, accruing prior to and subsequent to the relevant conversion date.

     5.2 New Debenture. In the event that any amounts of the Principal Amount
remain outstanding hereunder after the Holder's Conversion Date or the
Corporation's Conversion Date, the Corporation shall issue a new debenture, in
form identical to this debenture, except that it shall be equal in principal
amount to the amount of the Principal Amount less the amount of the Holder's
Conversion Principal or the amount of the Principal Amount less the amount of
the Corporation's Conversion Principal, as the case may be (each, a "New
Debenture Certificate"). In the event that Holder fails to deliver this
Debenture upon receipt of a Corporation's Conversion Notice, the Holder agrees
and acknowledges that this Debenture and the rights hereunder shall be null and
void upon delivery of a New Debenture Certificate by the Corporation to the
Holder at the address of Holder provided in Section 9.4 or as may otherwise be
provided pursuant to Section 4.5.

     5.3 No Fractional Shares. No fractional share or scrip representing a
fractional share shall be required to be issued upon the conversion of this
Debenture. If the conversion of this Debenture would otherwise result in a
fractional share equal or greater than one-half of one share of Common Stock,
the Corporation shall issue one whole in lieu of issuing such fractional share;
otherwise the Corporation shall not be required to issue any shares or pay any
consideration for fractional shares.

     5.4 Subdivisions and Combinations. In case issued and outstanding shares of
Common Stock shall be subdivided or split up into a greater number of shares of
the Common Stock, the conversion price set forth in Sections 3.4 and 4.3 in
effect at the opening of business on the business day immediately preceding the
date fixed for the determination of the stockholders whose shares of Common
Stock shall be subdivided or split up (the "Split Record

                                        4


Date") shall be proportionately increased, and in case issued and outstanding
shares of Common Stock shall be combined into a smaller number of shares of
Common Stock, the conversion price set forth in Sections 3.4 and 4.3 in effect
at the opening of business on the business day immediately preceding the date
fixed for the determination of the stockholders whose shares of Common Stock
shall be combined (the "Combination Record Date") shall be proportionately
decreased, such increase or decrease, as the case may be, becoming effective
immediately after the opening of business on the business day immediately after
the Split Record Date or the Combination Record Date, as the case may be.

     5.5 Reorganizations, Reclassifications, Mergers, Etc. In case of any
capital reorganization, any reclassification of the stock of the Corporation
(other than as a result of a stock dividend or subdivision, split up or
combination of shares), or the merger of the Corporation with or into another
person or entity (other than a merger in which the Corporation is the continuing
corporation and which does not result in any change in the Common Stock) or of
the sale, exchange, lease, transfer or other disposition of all or substantially
all of the properties and assets of the Corporation as an entirety or the
participation by the Corporation in share exchange as the corporation the stock
of which is to be acquired, this Debenture shall (effective on the opening of
business on the date after the effective date of such reorganization,
reclassification, merger, sale or exchange, lease, transfer or other disposition
or share exchange) be convertible into the kind and number of shares of stock or
other securities or property of the Corporation or of the corporation resulting
from surviving such merger or to which such properties and assets shall have
been sold, exchanged, leased, transferred or otherwise disposed or which was the
corporation whose securities were exchanged for those of the Corporation to
which the holder of the number of shares of Common Stock deliverable (at the
close of business on the date immediately preceding the effective date of such
reorganization, reclassification, merger, sale, exchange, lease, transfer or
other disposition or share exchange) upon conversion of this Debenture would
have been entitled upon such reorganization, reclassification, merger, sale,
exchange, lease, transfer or other disposition or share exchange. The provisions
of this Section 5.5 shall similarly apply to successive reorganizations,
reclassifications, mergers, sales, exchanges, leases, transfers or other
dispositions or other share exchanges.

     5.6 Notice of Adjustment. Whenever the conversion price shall be adjusted
as provided in this Article 5, the Corporation shall promptly prepare and send
to Holder a statement, signed by the chief financial officer or chief executive
officer of the Corporation, showing in detail the facts requiring such
adjustment and the conversion price that shall be in effect after such
adjustment.

     5.7 Taxes. The Corporation shall pay all documentary, stamp or other
transactional taxes and charges attributable to the issuance or delivery of
shares of stock of the Corporation upon conversion; provided, however, that the
Corporation shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
for such shares in a name other than that of the record holder of this
Debenture.

     5.8 Reservation of Shares. The Corporation shall at all times reserve and
keep available, free from preemptive rights, unissued or treasury shares of
Common Stock sufficient to effect the conversion of this Debenture.

                                        5


6. COVENANTS OF THE CORPORATION

     The Corporation hereby covenants and agrees with Holder that so long as any
of the Principal Amount or any Default Interest or Interest remains unpaid:

     6.1 To Pay Indebtedness. The Corporation will well, duly and punctually pay
or cause to be paid to Holder all indebtedness due hereunder at the dates and
places, in the currencies and in the manner mentioned herein.

     6.2 To Maintain Existence. The Corporation will, and will cause each of
Neptune Society of America, Inc., a California corporation, Neptune Management
Corp., a California corporation, Heritage Alternatives, Inc., a California
corporation and Trident Society, Inc., a California corporation (collectively,
the "Subsidiaries") to, at all times maintain its corporate existence.

     6.3 To Carry on Its Business. The Corporation will, and will cause each of
the Subsidiaries to, carry on its business in a proper and efficient manner, and
will keep or cause to be kept proper books of account and make or cause to be
made therein true and faithful entries of all material dealings and transactions
in relation to its business and will make available or cause to be made
available such books of account for inspection by Holder and its representatives
during normal business hours.

     6.4 To Pay Taxes. The Corporation will, and will cause each of the
Subsidiaries to, pay or cause to be paid all taxes, rates, government fees and
dues levied, assessed or imposed upon it and upon its property or any part
thereof, as and when the same become due and payable, save and except when and
so long as the validity of any such taxes, rates, fees, dues, levies,
assessments or imposts is in good faith by proper legal proceedings contested by
it in which event it shall satisfy Holder and if requested by Holder furnish
security satisfactory to Holder that such contestation will involve no
forfeiture of any of its property and to duly observe and conform to all valid
and material requirements of any governmental authority relative to any of its
property and all covenants, terms and conditions upon or under which such
property is held provided, however, that nothing herein contained shall require
it to observe any such requirements so long as it shall, in good faith, be
contesting its obligation to observe such requirements.

     6.5 Notice of Adjustment Events. In the event the Corporation shall propose
to take any action of the types described in Sections 5.4 and 5.5, the
Corporation shall give notice to Holder, which notice shall specify the record
date, if any, with respect to any such action and the date on which such action
is to take place. Such notice shall be given on or prior to the earlier of
thirty (30) days prior to the record date or the date which such action shall be
taken. Such notice shall also set forth such facts with respect thereto as shall
be reasonably necessary to indicate the effect of such action (to the extent
such effect may be known at the date of such notice) on the conversion price and
the number, kind or class of shares or other securities or property which shall
be deliverable or purchasable upon the occurrence of such action or deliverable
upon conversion of this Debenture. Failure to give notice in accordance with
this Section 6.5 shall not render such action ultra vires, illegal or invalid
but shall constitute default hereunder.

                                        6


     6.6 Notice of Share Issuance. In the event the Corporation shall propose to
issue any shares of Common Stock (or shares of any other class of securities of
the Corporation entitling the holder thereof to participate in any distribution
of the Corporation's remaining assets after payment to the holders of securities
entitled to a preferential distribution upon any dissolution, liquidation or
winding-up of the Corporation), including any options to purchase or rights to
subscribe for shares of Common Stock, securities by their terms convertible
into, or exchangeable for, shares of Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities, the
Corporation shall give notice to Holder, which notice shall specify the record
date, if any, with respect to any such action and the date on which such action
is to take place; provided, however, that no such notice shall be required in
respect of (a) the issuance of such shares to employees, officers or directors
of the Corporation pursuant to a employee stock option or share issuance plan
approved by Holder or existing as of the date of this Agreement or (b) the
issuance of up to 25,000 shares of Common Stock in one or more transactions in
any 12 month period. Such notice shall be given on or prior to the earlier of
ninety (90) days prior to the record date or the date which such action shall be
taken, unless the Holder consents to the earlier issuance, which consent shall
not be unreasonably withheld. Such notice shall also set forth such facts with
respect thereto as shall be reasonably necessary to indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the conversion price and the number, kind or class of shares or other securities
or property which shall be deliverable or purchasable upon the occurrence of
such action or deliverable upon conversion of this Debenture. Failure to give
notice in accordance with this Section 6.6 shall not render such action ultra
vires, illegal or invalid but shall constitute default hereunder.

     6.7 To Perform Obligations and to Renew. The Corporation will, and will
cause each of the Subsidiaries to, from time to time punctually observe and
perform all material obligations and pay and discharge all amounts payable under
or by virtue of, and defend, and ensure the enforceability of any exclusive
rights to, any patent, trademark, lease, license, concession, franchise or right
held by it so long as the same is of commercial value to it and during such time
will not suffer or permit any default for which any of the same may be
terminated so that its interest therein may at all times be preserved as
unimpaired; provided however that nothing herein contained shall require the
Corporation or any Subsidiary to make any such payments so long as it shall in
good faith contest its liability therefor.

     6.8 Not to Sell Assets, Issue Options, Mergers, Etc. The Corporation shall
not, and will cause each of the Subsidiaries not to:

         (a)   sell, lease or otherwise transfer the undertaking, property and
               assets of any of its operating divisions or subsidiaries as an
               entirety or substantially as an entirety in one or more
               transactions, or, sell, lease or otherwise dispose of its
               undertaking, property and assets as an entirety or substantially
               as an entirety or of its controlling interest in any subsidiary
               of the Corporation or any Subsidiary in one or more transactions;

         (b)   in the case of each Subsidiary, issue shares of any class of
               stock to any person other than the sole shareholder of all issued
               and outstanding stock prior thereto; or

                                        7


         (c)   amalgamate or merge with any other corporation or effect any
               corporate reorganization;

without the prior written consent of Holder, which consent shall not be
unreasonably be withheld.

     6.9 To Repair. The Corporation will, and will cause each of the
Subsidiaries to, at all times, repair and keep in repair and good order and
condition, or cause to be so repaired and kept in repair and good order and
condition, all buildings, erections, machinery, plant and equipment used in or
in connection with its business which are necessary for efficient operation up
to a modern standard of usage, and renew and replace or cause to be renewed and
replaced all and any of the same which may become worn, dilapidated,
unserviceable, inconvenient, obsolete or destroyed, even by a fortuitous event,
fire or other cause, and which are necessary for efficient operation, and, at
all reasonable times during normal business hours allow Holder or its duly
authorized Holder access to its premises in order to view the state and
condition of the same.

     6.10 To Insure.

         (a) Property Cover. The Corporation will, and will cause each of the
Subsidiaries to, insure at its own expense the assets of the Corporation or such
Subsidiary at all times during the term hereof to an amount equal to the
replacement value thereof with a company or companies that are nationally known
or are approved by Holder, against loss or damage by fire, lightening,
explosion, windstorm, aircraft or vehicles or other insurable hazards which are
now or may hereafter from time to time be insured against by the terms of a
standard fire extended coverage insurance or additional perils supplemental
contract of insurance including, if applicable, boiler and pressure vessel
insurance against loss or damage to property of a class or kind similar to the
property and assets of the Corporation. The Corporation shall, and will cause
each of the Subsidiaries to, also maintain such other insurance policies as
Holder shall reasonably require in connection with the Corporation and the
Subsidiaries and their business including, without restriction, business
interruption insurance and liability insurance.

         (b) Renewal Receipt. The Corporation shall, 15 days prior to the expiry
of any insurance policy required hereby, deliver or cause to be delivered to
Holder a renewal receipt, binder or new policy, or otherwise satisfy Holder that
such insurance has been renewed.

     6.11 Compliance with Laws. The Corporation shall, and will cause each of
the Subsidiaries to, carry on its business in material compliance with all
applicable laws, regulations, by-laws and orders including, without limitation,
all laws relating to environment protection, the maintenance and disposal of
hazardous materials and wastes, land use and occupational safety and health. The
Corporation shall give notice to Holder of any notice received by it or any
Subsidiary of any material violation of such laws, regulations, by-laws or
orders of any impending or threatened investigations or proceedings in
connection therewith or of any material proceedings commenced or threatened by
any other person in connection with environmental, health or safety matters.

     6.12 To Grant Security. To secure payment of its indebtedness, liabilities
and obligations under this Debenture (a) the Subsidiaries have each delivered
their guarantee

                                        8


agreements ("Guarantees") to Holder; and (b) the Corporation and the
Subsidiaries have each executed and delivered to Holder concurrently with this
Debenture security agreements (the "Security Agreements") granting to Holder a
security interest in all of the Corporation's and each such Subsidiary's
property now owned or hereafter acquired. At any and all times the Corporation
will, and will cause each of the Subsidiaries to, at its expense, do, execute,
acknowledge and deliver or will cause to be done, executed, acknowledged and
delivered all and every such further mortgages, security agreements or other
instruments, transfers and assurances as Holder shall reasonably require, for
the purpose of giving to Holder, and preserving in favor of Holder, a valid
mortgage or security interest of the nature specified in the Security
Agreements, upon all of the Corporation's and the Subsidiaries' real and
personal property. In particular, without restriction, the Corporation will, and
will cause each of the Subsidiaries to, upon request by Holder, deliver a
mortgage on any and all real property hereafter acquired by the Corporation or
any Subsidiary and, upon the acquisition by the Corporation or such Subsidiary
of any real property, subject only to encumbrances approved of in writing by
Holder and other encumbrances permitted by Section 6.13.

     6.13 Not to Permit Encumbrances. Subsection to Article 7 of the Debenture
Purchase Agreement, the Corporation shall not, and will cause each of the
Subsidiaries not to, create or permit to exist any security interest, mortgage,
charge, pledge, lien or other encumbrance upon its assets, subsequent to the
date of this Debenture, provided that the foregoing shall not apply to prevent,
and there shall be permitted:


         (a)   (i) liens for current property taxes not yet due and payable,
               (ii) liens imposed by law and incurred in the ordinary course of
               business for obligations not yet due to carriers, warehousemen,
               laborers, material men and the like, (iii) liens in respect of
               pledges or deposits under workers' compensation laws, (iv) liens
               voluntarily created in the ordinary course of business, (v)
               liens, encumbrances, right, lien, obligations or claims against
               any trust, insurance policy, account, deposit, asset or other
               property held for the benefit or on behalf of any purchaser or
               holder of rights under any contract, arrangement or similar
               obligation of the Corporation or any Subsidiary for cremation
               services or merchandise and (vi) any liens not to exceed $100,000
               that the Corporation shall cure within sixty (60) days upon
               receipt written notice of such lien; and

         (b)   Purchase Money Mortgages (as hereinafter defined) existing as of
               the date hereof or entered into after the date hereof under which
               the Corporation or a Subsidiary is the primary obligor, provided
               such Purchase Money Mortgages do not in the aggregate secure an
               amount in excess of $500,000. For the purposes hereof, "Purchase
               Money Mortgage" means any mortgage, security interest, title
               retention, lien or other encumbrance on property given, assumed
               or arising by operation of law to secure payment of, or to
               provide the obligor with funds to pay the whole or any part of,
               the consideration for the acquisition of such property (and for
               such purposes any capital or operating lease shall be deemed to
               be a Purchase Money Mortgage in the amount of the aggregate of
               all remaining lease payments required to be made thereunder,
               other than under extensions

                                        9


               exercisable only by the Corporation or the Subsidiary party
               thereto), or to secure any renewal, extension or refunding of
               such encumbrance and of the indebtedness represented thereby upon
               the same property provided that the indebtedness secured thereby
               and the security therefor are not increased thereby.

     6.14 Not to Incur Indebtedness for Borrowed Money; Non-Equity Securities.
Subject to Article 7 of the Debenture Purchase Agreement, the Corporation shall
not, and will cause each of the Subsidiaries not to, incur, guarantee or
otherwise become liable in respect of, any indebtedness for borrowed money
without the prior written consent of Holder, such consent not to be unreasonably
withheld, except for Purchase Money Mortgages in accordance with Section 6.13.

     6.15 To Pay Expenses. The Corporation shall pay all costs, charges and
expenses, including all attorney's fees and expenses, of or incurred by Holder
in connection with the enforcement of this Debenture, the Debenture Purchase
Agreement, the Security Agreements and any other security documents delivered to
Holder after the date hereof, including the enforcement of such security
provided thereunder.

     6.16 Reporting Requirements. Except as may be prohibited by law, the
Corporation shall provide and deliver Holder such information as may reasonably
be necessary or as Holder may reasonably request to determine whether the
Corporation is complying with its obligations under this Debenture, the
Debenture Purchase Agreement, the Security Agreements and any other security
documents delivered to Holder after the date hereof, or to determine the
financial condition of the Corporation.

     6.17 Registration of Conversion Shares. Within sixty (60) days of issuing
Common Stock pursuant to Section 3.1 or Section 4.1 (the "Conversion Shares"),
the Corporation, at the Corporation's sole expense, shall use commercially
reasonable efforts to file with the United States Securities and Exchange
Commission (the "SEC") a registration statement under the Securities Act of
1933, as amended (the "Securities Act"), on Form S-1 or, if available, Form SB-2
or Form S-3, or any similar or successor form, to register the resale of the
Conversion Shares, which are not then registered under the Securities Act or are
not otherwise tradable without restriction under Rule 144(k) of the Securities
Act; provided however that the Holder may waive the requirement that the
Corporation file a registration statement with respect to the Conversion Shares
within sixty (60) days of conversion date and thereafter shall have the right to
cause the Corporation to file such a registration statement upon sixty (60) days
notice to the Corporation . The Corporation shall use reasonable commercial
efforts to cause such registration statement to be declared effective within
ninety (90) days of filing a registration statement under this Section 6.16,
unless the Chief Executive Officer of the Corporation provides Holder with a
certificate certifying that the reason(s) the registration statement was not
effective was due to factors reasonably beyond the Corporation's control. The
Corporation shall use its best efforts to keep the Registration Statement
continuously effective until the date on which all Conversion Shares covered by
such Registration Statement have been sold or may be sold under Rule 144 or
another applicable exemption under the Securities Act. In connection with the
foregoing, the Corporation shall promptly file with the SEC such amendments to a
registration statement as may be necessary to keep such registration statement
effective. The Corporation shall bear all

                                       10


reasonable expenses incurred in connection with the registration of Conversion
Shares pursuant to this Section 6.16., including all printing, legal and
accounting expenses incurred by the Corporation and all registration and filing
fees. It shall be a condition precedent to the obligations of the Corporation to
take any action pursuant to this Section 6.16 that the Holder shall furnish to
the Corporation such information regarding themselves, the Conversion Shares
held by them and the intended method of disposition of such securities as shall
be reasonably required to effect the registration of their Conversion Shares and
to execute such documents in connection with such registration as the
Corporation may reasonably request. The Holder shall be responsible for its
legal and accounting expenses and all brokerage commissions and taxes of any
kind (including, without limitation, transfer taxes) with respect to any
disposition, sale or transfer of Conversion Shares.

     6.18 Holder Entitled to Perform Covenants. If the Corporation fails to
perform any covenant on its part herein contained, Holder may, in its
discretion, perform any such covenant capable of being performed by it and, if
any such covenant requires the payment or expenditure of money, Holder may make
payments or expenditures with its own funds, or with money borrowed by or
advanced to it for such purposes, but shall be under no obligation so to do; and
all sums so expended or advanced shall be at once payable by the Corporation on
demand and shall bear interest at the annual rate of fifteen percent (15%) until
paid, and shall be payable out of any funds coming into the possession of Holder
in priority to the other indebtedness hereunder, but no such performance or
payment shall be deemed to relieve the Corporation from any default hereunder
nor shall the right of Holder under this subsection impose any obligation upon
Holder to perform any covenant of the Corporation.

7. PREPAYMENT

     The Corporation shall have the right to prepay any portion of the Principal
Amount at any time without penalty, except that the Corporation's right to
prepay this Debenture shall be subject to the repayment provisions set forth in
Section 2.2 and the Corporation's obligations under Section 6.15. Except as
provided in Article 7, Holder shall have no right to require any portion of the
Principal Amount to be prepaid.

8. DEFAULT

     8.1 Default Events. The entire unpaid balance of the Principal Amount and
all Default Interest and Interest accrued and unpaid on this Debenture shall, at
the election of Holder, be and become immediately due and payable, and the
Security Agreements and any and all other security documents held by Holder
shall become immediately enforceable, upon the occurrence of any of the
following events, subsequent to the date of this Debenture (a "Default Event"):

         (a)   the non-payment by the Corporation when due of any other payment
               as provided in this Debenture, which is not cured within 30 days
               after written notice of default is delivered to the Corporation;

         (b)   default by the Corporation in the performance of or compliance
               with any term or any provision of the Debenture Purchase
               Agreement, which is not

                                       11


               cured within 30 days after written notice of default is delivered
               to the Corporation;

         (c)   default by the Corporation in the performance of or compliance
               with any term or provision of the Security Agreements, which is
               not cured within 30 days after written notice of default is
               delivered to the Corporation;

         (d)   the Corporation (i) applies for or consents to the appointment
               of, or if there shall be a taking of possession by, a receiver,
               custodian, trustee or liquidator for the Corporation or any of
               its property; (ii) becomes generally unable to pay its debts as
               they become due; (iii) makes a general assignment for the benefit
               of creditors or becomes insolvent; (iv) files or is served with
               any petition for relief under the Bankruptcy Code or any similar
               federal or state statute; (v) has any judgment entered against it
               in excess of $500,000 in any one instance or in the aggregate
               during any consecutive 12-month period or has any attachment or
               levy made to or against any of its property or assets; (vi)
               defaults with respect to any evidence of indebtedness or
               liability for borrowed money in excess of $250,000, or any such
               indebtedness in excess of $250,000 shall not be paid as and when
               due and payable; or (vii) has assessed or imposed against it, or
               if there shall exist, any general or specific lien for any
               federal, state or local taxes or charges against any of its
               property or assets in excess of $250,000; or

         (e)   any failure by the Corporation to issue and deliver shares of
               Common Stock as provided herein upon conversion of this
               Debenture, which is not cured within 30 days after written notice
               of default is delivered to the Corporation.

     8.2 Remedies Cumulative. Each right, power or remedy of Holder, upon the
occurrence of any Default Event as provided for in this Debenture or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy
provided for in this Debenture or now or hereafter existing at law or in equity
or by statute, and the exercise or beginning of the exercise by the holder or
transferee hereof of any one or more of such rights, powers or remedies shall
not preclude the simultaneous or later exercise by Holder, on behalf of Holder,
of any or all such other rights, powers or remedies.

9. GENERAL

     9.1 Failure to Act and Waiver. No failure or delay by Holder to insist upon
the strict performance of any term of this Debenture or to exercise any right,
power or remedy consequent upon a default hereunder shall constitute a waiver of
any such term or of any such breach, or preclude Holder from exercising any such
right, power or remedy at any later time or times. By accepting payment after
the due date of any amount payable under this Debenture, Holder shall not be
deemed to waive the right either to require payment when due of all other
amounts

                                       12


payable under this Debenture, or to declare a default for failure to effect such
payment of any such other amount.

     The failure of Holder to give notice of any failure or breach of the
Corporation under this Debenture shall not constitute a waiver of any right or
remedy in respect of such continuing failure or breach or any subsequent failure
or breach.

     9.2 Consent to Jurisdiction. The Corporation hereby agrees and consents
that any action, suit or proceeding arising out of this Debenture may be brought
in any appropriate court in the State of California, or in any other court
having jurisdiction over the subject matter, all at the sole election of Holder,
and by the issuance and execution of this Debenture the Corporation irrevocably
consents to the jurisdiction of each such court.

     9.3 Transfer. This Debenture may only be transferred in accordance with the
provisions of Section 5.2(f) and Section 9.5 of the Debenture Purchase Agreement
and the requirements set out in the legend on the first page hereof.

     9.4 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) business day after
deposit with a nationally recognized overnight courier, special next day
delivery, with verification of receipt. All communications shall be sent:


               to the Corporation at:

               The Neptune Society, Inc.
               4312 Woodman Avenue, Third Floor
               Sherman Oaks, CA 91423
               facsimile: (818) 953-9844
               Attention: Marco Markin, President


               with a copy to:

               Dorsey & Whitney, LLP
               1420 Fifth Avenue, Suite 3400
               Seattle, WA 98101
               facsimile: (206) 903-8820
               Attention: Kenneth Sam


               to Holder, at:

               Brooklyn Holdings LLC
               P.O. Box 556
               Charlestown, Nevis

                                       13


               with a copy to:

               Swidler Berlin Shereff Friedman, LLP
               The Chrysler Building
               405 Lexington Avenue
               New York, NY 10174
               Facsimile: (212) 891-9598
               Attention: Morris Orens

or at such other address as the Corporation or Holder may designate by ten (10)
days advance written notice to the other parties hereto.

     9.5 Governing Law. This Debenture shall be governed by and construed and
enforced in accordance with the laws of the State of California without regard
to conflicts of law principles, or, where applicable, the laws of the United
States.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.


THE NEPTUNE SOCIETY, INC.

By:
   ---------------------------------------------------
   Name:  Marco Markin
   Title: Chief Executive Officer


BROOKLYN HOLDINGS LLC:

By:
   ---------------------------------------------------
   Name:
   Title:




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