Document:

EXHIBIT 10.22

                            THE NEPTUNE SOCIETY, INC.

                    DEBENTURE AND WARRANT PURCHASE AGREEMENT

     This Debenture and Warrant Purchase Agreement (this "Agreement") is entered
into as of November  24,  1999,  by and between The  Neptune  Society,  Inc.,  a
Florida corporation (the "Company"), CapEx, L.P., a Delaware limited partnership
("CapEx"),  and D.H. Blair  Investment  Banking  Corp.,  a New York  corporation
("DHB") (together with CapEx, the "Purchasers").

     In consideration of 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 Section 2 below),  the Company hereby agrees to issue and
sell to the Purchasers,  and the Purchasers  agree to purchase from the Company,
the following convertible secured debentures (the "Debentures") due February 24,
2004, in the respective  principal  amounts set out opposite the name of each of
the Purchasers below, each Debenture to be in the form of the Debenture attached
hereto as Exhibit A and to be  convertible  (subject to  adjustment  and therein
provided)  into the  number  of  shares of the  Company's  Common  Stock set out
opposite the name of each of the Purchasers  below in accordance  with the terms
thereof:

    Purchaser                Principal Amount           Shares Convertible Into
    ---------                ----------------           -----------------------
    CapEx                    $3,000,000                          600,000

    DHB                      $2,000,000                          400,000

     1.2  Sale of  Warrant.  In  connection  with and in  consideration  for the
offering of the  Debentures  (the  "Offering"),  the  Company  will issue to the
Purchasers  four warrants (the  "Warrants")  exercisable for five years from the
date of issue to  purchase  from the  Company  the number of shares  (subject to
adjustment as therein  provided) of the Company's  Common Stock set out opposite
the name of each of the Purchasers below, at the respective  exercise prices set
out below  opposite the name of such  Purchaser,  each such Warrant to be in the
form of the Warrant attached hereto as Exhibit B:

     Purchaser              Shares Purchasable          Exercise Price per Share
     ---------              ------------------          ------------------------
     CapEx                     120,000                         $5.21
     DHB                        80,000                         $5.21
     CapEx                     120,000                         $6.25
     DHB                        80,000                         $6.25

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2.   CLOSING, DELIVERY AND PAYMENT

     2.1 The closing of the sale and purchase of the Debentures and the Warrants
under this Agreement (the "Closing")  shall take place at 10:00 a.m. on December
24, 1999, at the offices of Moye, Giles, O'Keefe,  Vermeire & Gorrell, LLP, 1225
Seventeenth Street, Suite 2900, Denver, Colorado 80202, or at such other time or
place as the  Company and the  Purchasers  may  mutually  agree (such date being
hereinafter  referred to as the "Closing Date"). At the Closing,  the Purchasers
shall pay to the Company,  by certified  check or wire  transfer of  immediately
available  funds,  the Purchase  Price,  and the Company shall,  at the Closing,
deliver  to the  Purchasers  the  Debentures  and the  Warrants,  each dated the
Closing Date.

     2.2 At the Closing,  upon and in  consideration  of the  completion  of the
Offering,  the  Company  shall pay to CapEx,  on  behalf  of the  Purchasers,  a
non-refundable fee of $100,000.

3.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company  hereby  represents  and warrants to each of the  Purchasers as
follows:

     3.1 Organization,  Subsidiaries, Good Standing, Qualification and Power and
Authority. The Company is a corporation duly organized,  validly existing and in
good  standing  under the laws of the State of Florida.  The Company is the sole
registered  and  beneficial  owner of all  classes of  capital  stock of each of
Neptune  Society of America,  Inc., a California  corporation  ("Neptune  USA").
Neptune  USA is the sole  registered  and  beneficial  owner of all  classes  of
capital  stock of each of Neptune  Management  Corp.,  a California  corporation
("Neptune  Management"),  Neptune Pre-Need Plan, Inc.  ("Neptune  Pre-Need"),  a
California corporation and Heritage Alternatives, Inc. ("Heritage", and together
with Neptune USA and Neptune  Management,  the  "Subsidiaries").  Neptune USA is
also the sole registered and beneficial owner of all classes of capital stock of
Neptune  Pre-Need Plan, Inc.  ("Neptune  Pre-Need"),  a California  corporation.
Neptune Pre-Need is an inactive company, with no significant assets, liabilities
or  business  operations.  The  Company and each  Subsidiary  has all  requisite
corporate  power and authority to own and operate its  properties and assets and
to carry on its business as presently  conducted and as presently proposed to be
conducted,  and is duly  qualified to do business  and is in good  standing as a
foreign  corporation  in each  jurisdiction  in which the  failure to so qualify
would have a material adverse effect on its business,  properties,  prospects or
financial condition. The Company and each Subsidiary has all requisite corporate
power and authority (a) to execute and deliver this  Agreement,  the Debentures,
the Warrants, the Right of First Refusal Agreement the form of which is attached
hereto as  Exhibit  C (the  "Right of First  Refusal  Agreement")  and the other
agreements,  instruments and documents contemplated to be executed and delivered
by it pursuant to this Agreement (this Agreement, the Debentures,  the Warrants,
the Right of First Refusal  Agreement and such other agreements  instruments and
documents being herein sometime  collectively  referred to as, the  "Transaction
Documents"), (b) to issue and sell the Debentures and to issue the shares of the
Company's   Common  Stock  issuable  upon  conversion  of  the  Debentures  (the
"Conversion Shares"), (c) to issue and sell the Warrants and to issue the shares
of the  Company's  Common Stock  issuable  upon  exercise of the  Warrants  (the
"Warrant Shares"),  and (d) to carry out the other provisions of the Transaction
Documents.  The  Company  has no  subsidiaries  or  affiliates  other  than  the
Subsidiaries and Neptune Pre-Need and does not, directly or indirectly,  own any
interest in or control any  corporation,  partnership,  joint venture,  or other
business entity.

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     3.2  Capitalization.  All issued and outstanding shares of the common stock
of the Company  ("Common  Stock") and all issued and  outstanding  shares of the
common  stock of the each of the  Subsidiaries  have  been duly  authorized  and
validly issued and are fully paid and nonassessable.  The issued and outstanding
capital  stock of the  Company  and the  Subsidiaries  immediately  prior to the
Closing will be as set forth on Schedule 3.2 attached hereto and incorporated by
reference herein.  Except as set forth on Schedule 3.2, there are no outstanding
(or deemed outstanding)  options,  warrants or other rights to purchase from the
Company or any of the  Subsidiaries  any of its  securities.  To the best of the
Company's  knowledge,  the only persons who beneficially own more than 4% of the
Company's  issued and outstanding  stock is, through various  entities,  Emanuel
Weintraub and members of his family.

     3.3 Authorization; Binding Obligations. All corporate action on the part of
the  Company and each  Subsidiary,  its  officers,  directors  and  shareholders
necessary for the authorization of the Transaction Documents and the performance
of all of its obl igations thereunder and for the authorization,  sale, issuance
and delivery of the  Debentures,  the Warrants,  the  Conversion  Shares and the
Warrant  Shares  has  been  taken or will be taken  prior  to the  Closing.  The
Conversion  Shares and the Warrant Shares have been or will prior to the Closing
be duly and validly  reserved for issuance and,  when issued upon  conversion of
the Debentures or upon the exercise of the Warrants, as the case may be, will be
validly issued,  fully paid and  nonassessable.  The Company shall 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 and the
Warrant  Shares.  This  Agreement has been duly  authorized  and executed by the
Company. This Agreement constitutes, and the Debentures, the Warrants, the Right
of First  Refusal  Agreement  and the  other  Transaction  Documents  will  once
executed constitute,  valid, legal and binding obligations of the Company 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.

     3.4 No Real  Property.  Neither the Company nor any  Subsidiary  or Neptune
Pre-Need owns or has any interest in any real estate.

     3.5 Consents and  Approvals.  Except as required by the  Securities  Act of
1933, as amended,  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 Company or any Subsidiary in connection with the consummation of the
transactions contemplated hereby.

     3.6 No  Violations.  The  execution  and  delivery of this  Agreement,  the
Debentures,  the Warrants or the other Transaction Documents and the performance
by the Company and the Subsidiaries party thereto of their obligations hereunder
and thereunder (a) do not and will not conflict with or violate any provision of
the Company's or such Subsidiary's  Certificate 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 Company
or such  Subsidiary  pursuant to, (iv) give any third party the right to modify,
terminate or accelerate any obligation  under,  (v) result in a violation of, or
(vi) require any autho rization, consent, approval, exemption or other action by
or

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<PAGE>

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  Company or such  Subsidiary  is
subject or by which any of its assets are bound except for such  consents  which
have been obtained by the Company or such Subsidiary.

     3.7 Compliance  with Laws. The business of the Company 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  Company  or such  Subsidiary.  Neither  the real or  personal
properties  owned,  leased,   operated  or  occupied  by  the  Company  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.

     3.8 Licenses;  Permits; Related Approvals.  Except for Neptune Management's
funeral  establishment  licenses  and  Heritage's  crematory  license  which are
pending  transfer from their  previous  owners by the State of  California,  the
Company and each of the Subsidiaries possesses 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  Company  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
Company's and the Subsidiaries'  business). 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.

     3.9 Title to Assets.  Except as set forth on Schedule 3.9  attached  hereto
and incorporated by reference  herein,  each of the Company and the Subsidiaries
has good and  marketable  title to its property and assets free and clear of all
mortgages,  security  interests,  liens,  claims, and other  encumbrances.  With
respect to the property and assets it leases, the Company 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.  As at the Closing Date, the Company and the Subsidiaries will not
have tangible  assets having an aggregate book value in excess of $250,000,  nor
the chief executive  office of any of them,  located in any  jurisdiction  other
than the States of Florida and California.

     3.10 Vendor  Note.  As of the date  hereof,  Neptune USA is indebted to the
holders of a  promissory  note dated  March 31,  1999 in the  initial  principal
amount  of  $19,000,000  (the  "Vendor  Note"),   in  the  principal  amount  of
$14,874,215.82. Neither the Company nor any of the Subsidiaries is in default of
any of its obligations  owed to the holders of the Vendor Note, as amended by an
amendment  agreement  between  Neptune USA and certain of the holders  dated for
reference  the 1st of  August,  1999,  the  Security  Agreement  in favor of the
holders of the Vendor Note entered into by Neptune  USA,  the  Subsidiaries  and
Neptune  Pre-Need,  Management  and  Heritage  dated as of March 31,  1999,  the
Guarantee of the Company of Neptune USA's  obligations under the Vendor Note, or
any other agreements, instruments or documents relating to the Vendor Note, such
Security  Agreement,  such Guarantee or such other  agreements,  instruments and
documents.  Without  limiting

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the  generality  of the  foregoing,  Neptune USA has fully  performed all of its
obligations under each of the Acquisition  Documents (as such term is defined in
the Vendor Note).

     3.11 Defaults.  The Company 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 Company's or such Subsidiary's business, prospects, properties, condition
(financial or other), results of operations or net worth.

     3.12 Intellectual  Property.  Except as set forth on Schedule 3.12 attached
hereto and  incorporated  by reference  herein,  the  following  statements  are
correct,  other than such  exceptions  that  would not have a  material  adverse
effect on the Company or Subsidiaries.  The Company and each of the Subsidiaries
owns or has a license to use all  intellectual  property  used in its  business.
Neither the Company nor any Subsidiary has infringed, and is now infringing,  on
any  proprietary  right  belonging to any other  person,  firm,  or entity.  The
Company 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 Company 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.  The  Company  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  Company or such  Subsidiary  has taken all
reasonable security measures to protect the secrecy, confidentiality,  and value
of these trade secrets. Any of the Company's and the Subsidiaries' employees and
any other  persons  who,  either  alone or in concert  with  others,  developed,
invented,  discovered,  derived,  programmed,  or designed these secrets, or who
have knowledge of or access to information  relating to them,  have assigned and
transferred their rights to such trade secrets to the Company or such Subsidiary
and each such person has been put on notice and, if necessary,  has entered into
agreements  that these secrets are proprietary to the Company or each Subsidiary
and  are  not  to  be  divulged  or  misused.  All  of  the  Company's  and  the
Subsidiaries'  intellectual  property of a proprietary nature is presently valid
and protectible, and is not part of the public knowledge or literature.

     3.13  Proprietary  Rights.  Neither  the  Company  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 Company or any Subsidiary aware of any basis for the foregoing.

     3.14 No  Litigation.  Except as set forth on Schedule 3.14 attached  hereto
and  incorporated by reference  herein,  there is no action,  suit or proceeding
pending or, to the knowledge of the Company, threatened against or affecting the
Company, 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  Company 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.

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     3.15 Financial  Statements;  Undisclosed  Liabilities.  Attached  hereto as
Schedule 3.15 and  incorporated by reference  herein are copies of the Company's
audited  combined  balance  sheet as of December  31,  1998,  and its  unaudited
consolidated  balance  sheet as of September  30, 1999,  the  Company's  audited
combined  statement of  operations  and  retained  earnings for the period ended
December 31, 1998 and its unaudited  consolidated  statement of  operations  and
retained  earnings for the period ended  September  30, 1999,  and the Company's
audited combined statement of changes in financial position for the period ended
December 31, 1998 and its unaudited  combined  statement of changes in financial
position  for the period  ended  September  30, 1999  (hereinafter  collectively
referred to as the  "Financial  Statements").  The Financial  Statements  are in
accordance  with the books and  records of the  Company,  are true,  correct and
complete and accurately present the Company's financial position as of the dates
set forth therein and the results of the Company's operations and changes in the
Company's  financial position for the periods then ended, all in conformity with
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
Company's and the  Subsidiaries'  business,  nei ther the Company nor any of the
Subsidiaries  has any liabilities or obligations of any nature or kind, known or
unknown, whether accrued, absolute,  contingent, or otherwise. There is no basis
for  assertion  against the Company or any of the  Subsidiaries  of any material
claim,  liability or obligation not fully disclosed in the Financial  Statements
or in this Agreement.

     3.16 Tax  Matters.  The Company 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 Company
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 Company and each of the Subsidiaries has paid in full all taxes,
interest,  penalties,  assessments  and  deficiencies  owed by it to all  taxing
authorities.

     3.17 Rule 144. The Company has maintained all reports and documents and has
taken all  actions as may be  necessary  or useful in order to allow a holder of
Registrable  Securities  (as  defined  in  Article  5  below)  to sell  any such
securities without registration in accordance with Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act").

     3.18 Full  Disclosures.  All  factual  information  heretofore  or herewith
furnished by or on behalf of the Company to the Purchasers for purposes of or in
connection with this Agreement or any transaction contemplated hereby (including
the Company's  business plan) is and all statements made by  representatives  of
the Company 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 Company which materially adversely affects the accuracy of the
representations  and  warranties  contained in this  Agreement or the  financial
condition, operations, business, earnings, assets, or liabilities of the Company
or any of the Subsidiaries.

     3.19 No Brokers or  Finders.  The  Company  has not  engaged  any broker or
finder and no claims for brokerage  commissions or finder's fees arranged by the
Company will arise in connection with the Company's execution of this Agreement.

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4.   REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

     The Purchasers each severally and not jointly hereby  represent and warrant
to the Company as follows:

     4.1 Requisite  Power and Authority.  Such Purchaser has all necessary power
and  authority  to  execute  and  deliver  this  Agreement  and to carry out its
provisions.  All  actions  on such  Purchaser's  part  required  for the  lawful
execution and delivery of this Agreement have been or will be effectively  taken
prior to the Closing.

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

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

     (b) Accredited Investor. Such Purchaser represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.

     (c)  Non-Foreign  Status.  Such  Purchaser  certifies  that  it  is  not  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) Such  Purchaser  has such  knowledge  and  experience  in financial and
business  matters  as to be  capable  of  evaluating  the merits and risks of an
investment in the Debenture,  the Warrants, the Debenture Shares and the Warrant
Shares (collectively, the "Securities") and it is able to bear the economic risk
of loss of its entire investment.

     (e) The  Company has  provided to such  Purchaser  the  opportunity  to ask
questions  and  receive  answers  concerning  the  terms and  conditions  of the
Offering and it has had access to such information  concerning the Company as it
has  considered  necessary or  appropriate  in  connection  with its  investment
decision to acquire the Securities.

     (f) Such  Purchaser  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:

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

          (ii)      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

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          (iii)     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  Company an opinion of counsel  reasonably
                    satisfactory to the Company.

     (g)  Such   Purchaser   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) Such Purchaser understands and agrees that the Warrants may not be sold
or transferred unless the Warrant Shares are registered under the Securities Act
and any  applicable  state  securities  laws or  unless an  exemption  from such
registration  requirements is available and that  certificates  representing the
Warrants will bear a legend to such effect.

     (i) Such Purchaser consents to the Company making a notation on its records
or  giving  instructions  to any  transfer  agent  of the  Company  in  order to
implement the restrictions on transfer set forth and described herein.

5.   REGISTRATION RIGHTS RELATING TO CONVERSION SHARES AND WARRANT SHARES

     5.1 Definitions.  As used in this Article 5, the following terms shall have
the following respective meanings:

     (a) "Equity Securities" means (i) any securities of the Company entitled to
participate  with the Common Stock in a distribution of the Company's  remaining
assets  (after  distribution  to all  holders  of  securities  entitled  to such
distribution in priority to the holders of Common Stock) and (ii) any securities
convertible  into or  exercisable  or  exchangeable  for  securities of the type
referred to in Section 5.1(a)(i).

     (b) "Exchange Act" shall mean the  Securities  Exchange Act of 1934 (or any
similar successor federal  statute),  as amended,  and the rules and regulations
thereunder, all as the same shall be in effect from time to time.

     (c) "Founders"  shall mean one or both, as the context  requires,  of Marco
Markin and Emanuel Weintraub.

     (d) "Public  Offering" shall mean an  underwritten  public offering (with a
nationally  recognized  underwriter)  of Common  Stock  pursuant to an effective
registration statement under the Securities Act.

     (e) "Public  Sale" means any sale of  Registrable  Securities to the public
pursuant to an offering  registered  under the  Securities  Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144.

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     (f)  "registers,"   "registered,"  and  "registration"  shall  refer  to  a
registration  effected  by  preparing  and filing a  registration  statement  in
compliance  with the  Securities  Act and the  declaration  or  ordering  of the
effectiveness of such registration statement by the SEC.

     (g) "Registrable Securities" shall mean (i) the Conversion Shares, (ii) the
Warrant Shares, and (iii) any shares of Common Stock or Equity Securities issued
as a dividend or other  distribution  with  respect to or in exchange  for or in
replacement  of the shares  referenced  in Sections  5.1(g)(i)  and  5.1(g)(ii),
provided, however, that Registrable Securities shall not include any such shares
or Equity  Securities that have previously been registered  under the Securities
Act or that have otherwise been sold to the public in an open-market transaction
under Rule 144.

     (h) "Registration  Expenses" shall mean all expenses incurred in connection
with effecting any registration  pursuant to this Agreement,  including  without
limitation all registration,  qualification and filing fees,  printing expenses,
escrow fees, fees and  disbursements  of counsel for the Company,  blue sky fees
and expenses,  expenses of any regular or special audits incident to or required
by any such  registration,  and the fees and  expenses  of one  counsel  for the
selling holders of Registrable Securities, but excluding Selling Expenses.

     (i) "Rule  144"  shall  mean Rule 144 as  promulgated  by the SEC under the
Securities  Act, as such Rule may be amended  from time to time,  or any similar
successor rule that may be promulgated by the SEC.

     (j) "SEC" shall mean the  Securities  and Exchange  Commission or any other
federal agency at the time administering the Securities Act.

     (k) "Securities  Act" shall mean the Securities Act of 1933 (or any similar
successor  federal  statute),   as  amended,   and  the  rules  and  regulations
thereunder, all as the same shall be in effect from time to time.

     (l) "Selling  Expenses" shall mean all stock transfer  taxes,  underwriting
discounts,  expenses for special  counsel of a selling  stockholder  and selling
commissions applicable to the sale of Registrable Securities.

     5.2 Demand Registration.

     (a) Request for Registration. Subject to Sections 5.2(b) and 5.2(e), at any
time after 8 months from the issue of the Debentures, when any of the Debentures
or any Registrable Securities are outstanding, Agent (as such term is defined in
Section 8) may, by notice (the "Demand Notice") given by Agent,  demand that the
Company effect one (1)  registration  under the Securities Act utilizing  either
(i) a  registration  on Form S-1 or any similar or successor form (provided that
such  registered  offering  represents  not fewer than 250,000  shares of Common
Stock),  or (ii) a registration on Form S-3 or any similar or successor form, if
available  (provided  that such  registered  offerings  represent not fewer than
250,000 shares of Common Stock) (either,  a "Demand  Registration").  Nothing in
this Article 5 shall permit Agent to demand or require the Company to effect any
registration  under the  Securities  Act in  respect  of the  Debentures  or the
Warrants,  but Agent shall be permitted to give the Demand  Notice in respect of
any Registrable  Securities  issuable upon a future conversion of the Debentures
or exercise of the Warrants,  prior to the issue of such Registrable Securities.
The number of shares  required for effecting a  registration  under this Section

                                       9
<PAGE>

5.2(a) shall be adjusted for stock  splits,  combinations,  stock  dividends and
distributions and similar events occurring after the date hereof.

     (b) Deferral of Demand Registration. The Company shall use its best efforts
to file a registration  statement with respect to a Demand Registration demanded
pursuant to Section  5.2(a) as soon as  practicable  and in any event  within 30
days after receipt of the Demand Notice; provided,  however, that if the Company
selects an underwriter to distribute the Registrable  Securities  covered by the
Demand  Regstration  and such  underwriter  determines  in good faith that,  and
provides  Agent with a certificate  (an  "Underwriter  Notice") of an officer of
such underwriter  certifying that in its view such Demand  Registration would be
materially  detrimental  to the  Company  or would  negatively  impact any other
material corporate transaction and concludes,  as a result, that it is advisable
to defer the  filing  of such  registration  statement  at such  time,  then the
Company  shall have the right to defer such filing for the period  during  which
such registration would be detrimental;  provided, however, that the Company may
not defer the filing for a period of more than 90 days following  receipt of the
Demand Notice. In addition,  and  notwithstanding the Demand Notice, the Company
shall not be  required to effect a  registration  statement  if,  within 10 days
after  receiving any Demand  Notice,  the Company  delivers a notice (a "Company
Registration  Notice") to Agent of its intent to file a  registration  statement
within the following 60 days and does so file such registration within such time
period.  In addition,  the Company may, not more than once in each calendar year
and provided  that in such  calendar  year neither an  Underwriter  Notice nor a
Company  Registration  Notice shall have been  previously  given,  and no Demand
Notice shall have been given at any time prior  thereto,  be entitled to provide
to Agent a written notice (a "Company Deferral Notice") stating that the Company
has determined  that it would be materially  detrimental to the Company or would
negatively impact on other material  corporate  transactions for Agent to give a
Demand Notice within the period of 60 days following the date of receipt of such
Company  Deferral Notice,  in which case,  Agent shall not be permitted,  during
such 60 day period, to give a Demand Notice.

     (c)  Underwriting.  If the Purchasers  intend to distribute the Registrable
Securities covered by a Demand  Registration by means of an underwriting,  Agent
shall so advise the  Company as a part of its Demand  Notice  made  pursuant  to
Section 5.2(a). Agent shall have the right to select the managing underwriter(s)
of recognized  national  reputation  for an  underwritten  Demand  Registration,
subject to the approval of the Company's  Board of Directors  (which will not be
unreasonably  withheld  or  delayed).  The right of any  holder  of  Registrable
Securities  to  participate  in an  underwritten  Demand  Registration  shall be
conditioned upon such holder's  participation in such underwriting in accordance
with the terms  and  conditions  thereof,  and Agent  shall be  responsible  for
ensuring that all holders enter into an underwriting agreement in customary form
with the underwriter and the Company.

     (d)  Priorities.  The holders of Registrable  Securities will have absolute
priority  over any other  securities  proposed to be  included  in a  registered
offering  pursuant to Section 5.2(a) hereof. If other securities are included in
any Demand  Registration that is not an underwritten  offering,  all Registrable
Securities  included in such offering  shall be sold prior to the sale of any of
such  other  securities.   If  other  securities  are  included  in  any  Demand
Registration that is an underwritten  offering, and the managing underwriter for
such  offering  advises the Company that in its opinion the amount of securities
to be  included  exceeds  the  amount  of  securities  which can be sold in such
offering without adversely  affecting the marketability  thereof  (including the
price at which such securities are to be sold), the Company will include in such
registration all Registrable Securities

                                       10
<PAGE>

requested to be included therein prior to the inclusion of any other securities.
If the  number  of  Registrable  Securities  requested  to be  included  in such
registration  exceeds  the  amount of  securities  which in the  opinion  of the
underwriter can be sold without  adversely  affecting the  marketability of such
offering,  such  Registrable  Securities  shall be  included  pro rata among the
holders thereof based on the percentage of the outstanding  Common Stock held by
each such holder  (assuming the complete  conversion of the Debent ures, and the
exercise in full of the  Warrants  and any other  options,  warrants and similar
rights held by such holders).

     (e) One Registration.  Where the Company has effected the Registration,  it
shall have no obligation to effect any further Demand  Registrations;  provided,
however,  that  where  at any  time  within  two (2)  years  after  such  Demand
Registration  was made  pursuant to Section  5.2(a)(ii)  the time period  within
which any issue or trade of Registrable  Securities is required to be made under
such  registration has passed or will in 30 days pass, the Purchasers shall have
the right to demand (by notice given by Agent on their  behalf) that the Company
effect a further  registration  (including a new Demand  Registration) as may be
required for registration of the Registrable Securities.

     5.3 Piggyback Registrations.

     (a) Request for  Inclusion.  At any time after the  completion  of a Public
Offering after the date hereof,  if the Company shall  determine to register any
of its  securities  for its own  account or for the  account  of other  security
holders of the  Company on any  registration  form  (other  than a  registration
relating to either Form S-4 or S-8) which permits the  inclusion of  Registrable
Securities  (a "Piggyback  Registration"),  the Company will promptly give Agent
written notice  thereof and,  subject to Section  5.3(c),  shall include in such
registration all of the Registrable  Securities requested to be included therein
pursuant to the written  request of Agent received within twenty (20) days after
delivery of the Company's notice.

     (b) Underwriting.  If the Piggyback Registration relates to an underwritten
public  offering,  the  Company  shall so advise  Agent as a part of the written
notice given pursuant to Section 5.3(a).  In such event, the right of any holder
of  Registrable   Securities  to  participate  in  such  registration  shall  be
conditioned upon such holder's  participation in such underwriting in accordance
with the terms and conditions thereof.  Agent shall be responsible for answering
that all  holders  of  Registrable  Securities  proposing  to  distribute  their
securities  through such  underwriting  enter into an underwriting  agreement in
customary form with the underwriter or underwriters  selected by the Company and
the Company.

     (c) Priorities.  If such proposed Piggyback Registration is an underwritten
offering and the managing underwriter for such offering advises the Company that
the amount of securities  requested to be included therein exceeds the amount of
securities that can be sold in such offering, or if the Company and the managing
underwriter  shall in good faith  determine to reduce the number of shares to be
offered by the Company pursuant to a reasonable assessment of market conditions,
(i) the  number of  Registrable  Securities  requested  to be  included  in such
Piggyback  Registration,  (ii)  the  number  of  securities  determined  by  the
directors of the Company in good faith to be sold by the Company,  and (iii) the
number of securities,  if any, to be sold by any other  security  holders of the
Company exercising Demand  Registration  rights in such offering,  shall each be
reduced  pro rata  among  the  holders  on the  basis of the  percentage  of the
outstanding Common Stock held by such

                                       11
<PAGE>

holders  (assuming the complete  conversion of the Debenture and the exercise in
full of the Warrant and any other  options,  warrants and similar rights held by
such holders).

     5.4 Expenses of  Registration.  Except as provided in this Section 5.4, the
Company shall bear all  Registration  Expenses  incurred in connection  with the
Demand  Registration  and any  Piggyback  Registrations.  All  Selling  Expenses
incurred  by the  Company  relating to  Registrable  Securities  included in any
Demand Registration or Piggyback Registration, shall be reimbursed by Agent.

     5.5 Registration  Procedures.  In the case of each registration effected by
the Company  pursuant to this Article 5, the Company will keep Agent  advised in
writing  as to the  initiation  of such  registration  and as to the  completion
thereof. The Company will use its reasonable efforts to:

     (a) cause such registration to be declared effective by the SEC and, in the
case of a Demand Registration,  keep such registration effective for a period of
two years or until the holders of Registrable  Securities  included therein have
completed the  distribution  described in the  registratio n statement  relating
thereto, whichever first occurs;

     (b) prepare and file with the SEC such  amendments and  supplements to such
registration   statement  and  the  prospectus  used  in  connection  with  such
registration statement (including post-effective amendments) as may be necessary
to comply with the  provisions of the  Securities  Act and the Exchange Act with
respect  to the  disposition  of all  securities  covered  by such  registration
statement;

     (c) obtain  appropriate  qualifications  of the securities  covered by such
registration  under state securities or "blue sky" laws in such jurisdictions as
may be requested by Agent;

     (d)  furnish  such  number of  prospectuses  and other  documents  incident
thereto,  including any amendment of or supplement to the  prospectus,  as Agent
from time to time may reasonably request;

     (e) notify Agent at any time when a prospectus relating thereto is required
to be delivered  under the  Securities  Act, of the  happening of any event as a
result of which the prospectus included in such registration  statement, as then
in effect,  includes an untrue  statement of a material fact or omits to state a
material fact required to be stated  therein or necessary to make the statements
therein not  misleading  or incomplete  in the light of the  circumstances  then
existing, and at the request of Agent, prepare and furnish to Agent a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that,  as  thereafter  delivered to the  purchasers of such shares,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated  therein or necessary to make the
statements   therein  not   misleading   or  incomplete  in  the  light  of  the
circumstances  then existing;  cause all Registrable  Securities covered by such
registration to be listed on each securities exchange or inter-dealer  quotation
system on which similar securities issued by the Company are then listed;

     (f) provide a transfer agent and registrar for all  Registrable  Securities
covered by such  registration  and, if  necessary,  a CUSIP  number for all such
Registrable  Securities,  in each case not later than the effective date of such
registration;

                                       12
<PAGE>

     (g) otherwise  comply with all applicable rules and regulations of the SEC,
and make available to its security holders,  as soon as reasonably  practicable,
an earnings  statement  covering the period of at least 12 months,  but not more
than 18 months,  beginning  with the first month after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and

     (h) in connection with any underwritten  Demand  Registration,  the Company
will enter  into an  underwriting  agreement  reasonably  satisfactory  to Agent
containing  customary  underwriting  provisions,  including  indemnification and
contribution provisions.

     5.6 Indemnification.

     (a) The Company will indemnify  each  Purchaser,  each of such  Purchaser's
officers and directors,  and each person  controlling  such Purchaser within the
meaning of Section 15 of the Securities Act, with respect to each  registration,
qualification  or compliance  effected  pursuant to this Article 5 or otherwise,
against all  expenses,  claims,  losses,  damages and  liabilities  (or actions,
proceedings or settlements  in respect  thereof)  arising out of or based on any
untrue  statement (or alleged untrue  statement) of a material fact contained in
any  prospectus,  offering  circular or other  document  (including  any related
registration  statement,   notification  or  the  like)  incident  to  any  such
registration,  qualification or compliance, or based on any omission (or alleged
omission)  to state  therein a material  fact  required to be stated  therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the  Securities  Act applicable to the Company and relating to action
or inaction  required of the Company in connection  with any such  registration,
qualification or compliance, and will reimburse each such indemnified person for
any  legal  and any  other  expenses  reasonably  incurred  in  connection  with
investigating and defending or settling any such claim, loss, damage,  liability
or action;  provided,  however,  that the Company will not be liable in any such
case to the extent that any such  claims,  loss,  damage,  liability  or expense
arises out of or is based on any untrue statement or omission based upon written
information  furnished  to the  Company  by  such  Purchaser  and  stated  to be
specifically  for  use  therein.  It is  agreed  that  the  indemnity  agreement
contained in this Section  5.6(a) shall not apply to amounts paid in  settlement
of any such loss,  claim,  damage,  liability  or action if such  settlement  is
effected  without  the  consent  of the  Company  (which  consent  has not  been
unreasonably withheld).

     (b) Each of the  Purchasers,  to the  extent it is a holder of  Registrable
Securities  included in any  registration  effected  pursuant to this Article 5,
shall indemnify the Company, each of its directors,  officers, agents, employees
and representatives, and each person who controls the Company within the meaning
of Section 15 of the Securities  Act,  against all claims,  losses,  damages and
liabilities  (or  actions in  respect  thereof)  arising  out of or based on any
untrue  statement (or alleged untrue  statement) of a material fact contained in
any  such  registration  statement,   prospectus,  offering  circular  or  other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated  therein or necessary to make the  statements  therein not
misleading,  and will  reimburse such  indemnified  persons for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss,  damage,  liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or  omission  (or  alleged  omission)  is made in such  registration  statement,
prospectus,  offering  circular or other document in reliance upon and in strict
conformity with written information  furnished to the Company by Agent on behalf
of such Purchaser; provided, however, that (x) such Purchaser shall

                                       13
<PAGE>

not be liable  hereunder for any amounts in excess of the net proceeds  received
by such Purchaser pursuant to such registration, and (y) the obligations of such
Purchaser  hereunder  shall not apply to amounts paid in  settlement of any such
claims,  losses,  damages or liabilities (or actions in respect thereof) if such
settlement is effected  without the consent of such Purchaser (which consent has
not been unreasonably withheld).

     (c) Each party  entitled  to  indemnification  under this  Section 5.6 (the
"Indemnified  Party")  shall  give  notice  to the  party  required  to  provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the  Indemnifying  Party to assume  the  defense of any such claim or any
litigation   resulting   therefrom,   provided  that  counsel  selected  by  the
Indemnifying  Party,  who  shall  conduct  the  defense  of  such  claim  or any
litigation  resulting  therefrom,  shall be  approved by the  Indemnified  Party
(whose approval shall not unreasonably be withheld),  and the Indemnified  Party
may participate in such defense at such party's  expense,  and provided  further
that the failure of any  Indemnified  Party to give  notice as  provided  herein
shall not relieve the Indemnifying  Party of its obligations  under this Section
5.6 to the extent such failure is not prejudicial.  No Indemnifying Party in the
defense of any such claim or litigation  shall,  except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include an unconditional  release of such Indemnified  Party from
all liability in respect to such claim or  litigation.  Each  Indemnified  Party
shall furnish such  information  regarding itself or the claim in question as an
Indemnifying  Party may reasonably request in writing and as shall be reasonably
required  in  connection  with  defense of such claim and  litigation  resulting
therefrom.

     (d) If the  indemnification  provided  for in this Section 5.6 is held by a
court of competent  jurisdiction to be unavailable to an Indemnified  Party with
respect to any loss,  liability,  claim,  damage or expense referred to therein,
then the  Indemnifying  Party, in lieu of indemnifying  such  Indemnified  Party
hereunder,  shall  contribute to the amount paid or payable by such  Indemnified
Party as a result of such  loss,  liability,  claim,  damage or  expense in such
proportion as is appropriate  to reflect the relative fault of the  Indemnifying
Party on the one hand and of the  Indemnified  Party on the other in  connection
with the statements or omissions which resulted in such loss, liability,  claim,
damage or expense as well as any other relevant  equitable  considerations.  The
relative fault of the Indemnifying  Party and of the Indemnified  Party shall be
determined by reference  to, among other  things,  whether the untrue or alleged
untrue  statement of a material  fact or the  omission to state a material  fact
relates to information  supplied by the Indemnifying Party or by the Indemnified
Party and the parties'  relative  intent,  knowledge,  access to information and
opportunity to correct or prevent such statement or omission.

     (e)  Notwithstanding  the  foregoing,  to the extent that the provisions on
indemnification and contribution  contained in an underwriting agreement entered
into in connection with an underwritten public offering are in conflict with the
foregoing  provisions,  the  provisions  in  the  underwriting  agreement  shall
control.

     5.7 Other  Obligations.  With a view to making  available  the  benefits of
certain rules and  regulations of the SEC which may effectuate the  registration
of Registrable  Securities or permit the sale of  Registrable  Securities to the
public without registration, the Company agrees to:

                                       14
<PAGE>

     (a) after its initial  registration under the Securities Act, exercise best
efforts to cause the Company to be eligible to utilize  Form S-3 (or any similar
form) for the registration of Registrable Securities;

     (b) at such time as any  Registrable  Securities  are eligible for transfer
under  Rule  144(k),  upon the  request of Agent on behalf of the holder of such
Registrable  Securities,   promptly  remove  any  restrictive  legend  from  the
certificates  evidencing  such  securities,  at no cost to Agent or such  holder
where  such  holder is a  Purchaser  hereunder,  and at the cost of Agent in any
other case;

     (c) make and keep available public information as defined in Rule 144 under
the  Securities Act at all times from and after its initial  registration  under
the Securities Act;

     (d) file with the SEC in a timely  manner all reports  and other  documents
required of the Company  under the  Securities  Act and the  Exchange Act at any
time after it has become subject to such reporting requirements; and

     (e) furnish Agent upon request a written statement by the Company as to its
compliance  with the reporting  requirements  of Rule 144 (at any time following
the  effective  date of the first  registration  statement  filed by the Company
under the  Securities  Act for an  offering  of its  securities  to the  general
public),  and of the  Securities  Act and the Exchange Act (at any time after it
has become  subject to such reporting  requirements),  a copy of the most recent
annual or quarterly report of the Company,  and such other reports and documents
as a holder of Registrable  Securities may reasonably request in availing itself
of any rule or regulation of the  Commission  (including  Rule 144A)  allowing a
holder  of  Registrable   Securities  to  sell  any  such   securities   without
registration.

     5.8  Termination  of  Registration  Rights.  The right of Agent to  request
inclusion of Registrable Securities in any registration pursuant to this Article
5 shall  terminate  at the date that is the  earlier  of: (a) that date that all
Registrable  Securities  have been  registered  under the  Securities Act has or
otherwise been sold to the public in an open-market  transaction under Rule 144;
and (b) the later of (i) the fifth anniversary of the Closing Date, and (ii) the
second anniversary of the date on which the last Conversion Shares obtainable by
either Purchaser have been obtained by conversion of such Purchaser's Debenture;
provided, however, that where a Company Deferral Notice has been given within 70
days prior to the date on which  termination would otherwise occur, it shall not
occur for 60 days  beyond  the end of the 60 day  period  during  which a Demand
Notice cannot be given pursuant to Section 5.2(b).

     5.9  Go-Along  Rights.  In the event that,  in  connection  with any Public
Offering by the Company,  any of the Founders or any other any Equity Securities
becomes  entitled  to  sell  some  or all of  such  Equity  Securities  (or  any
securities of the Company into which such Equity  Securities are  convertible or
for which such Equity  Securities are  exercisable or  exchangeable)  as part of
such Public Offering  (collectively,  the "Selling  Shareholders"),  the Company
will  promptly  give Agent  written  notice  thereof  and shall  include in such
registration  all the Registerable  Securities  requested to be included therein
pursuant  to the  written  request  of Agent on  behalf of the  holders  of such
Registerable  Securities  received within twenty (20) days after delivery of the
Company's notice; provided always, however, that such holders collectively shall
be entitled to sell no more than  twenty-five  percent (25%) of the aggregate of
all outstanding securities (including such Registerable  Securities) sold by the
Selling Shareholders and such holders of Registrable Securities electing to

                                       15
<PAGE>

sell  Registerable  Securities,  and to the extent that the aggregate  number of
Registerable Securities requested to be included in the Public Offering pursuant
to the written  request of Agent  received  within the aforesaid  period exceeds
such  entitlement,  the number of shares to be  included  by the holders of such
Registerable  Securities  in such  registration  shall be reduced pro rata among
such  holders on the basis of the number of shares  specified  to be included in
such written request of Agent for such holders respectively.

6.   CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS

     The obligation of the Purchasers to purchase and pay for the Debentures and
the  Warrants  to be  delivered  to it at the  Closing  shall be  subject to the
satisfaction of the following conditions as of the Closing Date:

     6.1 the  representations  and  warranties of the Company  contained in this
Agreement,  the Debenture and the Warrant shall be true and correct on and as of
the Closing Date;

     6.2 prior to or concurrent with the Closing, the other parties (besides the
Purchasers)  thereto  shall  have  entered  into  the  Right  of  First  Refusal
Agreement;

     6.3 prior to or concurrent  with the Closing,  Mr. Emanuel  Weintraub,  the
Emanuel  Weintraub  Intervivos  Trust and Leo Robert  Dennis (the  "Notification
Holders"),   shall  have  entered  into  an  agreement  in  form  and  substance
satisfactory  to  Agent in  their  absolute  discretion  pursuant  to which  the
Notification  Holders  agree to give  certain  notices  to Agent  on  behalf  of
Purchasers and confirm certain matters to the Purchasers;

     6.4 prior to or  concurrent  with the Closing,  the holders of that certain
promissory note (the "Weintraub Note") dated March 31, 1999, executed by Neptune
USA (then called "Lari  Acquisition  Company,  Inc.") to and in favor of Emanuel
Weintraub  Inter  Vivos  Trust,  in the  principal  amount  of  $2,000,000,  the
Purchasers  and the Company  shall have entered into a  subordination  agreement
relating to the Weintraub Note whereby such holders  subordinate  payment of the
Weintraub  Note and all  security  held by them  therefor to and in favor of the
prior  payment  of the  Debentures  and  all  security  held  by  Agent  for the
Purchasers,  in  form  and  substance  satisfactory  to  Agent  in its  absolute
discretion;

     6.5  concurrent  with the  Closing,  Agent  shall  have  received  evidence
satisfactory to it that:

     (a) the  Guarantees of the  Subsidiaries  and the Security  Agreements  (as
defined in the Debentures) and any additional security  instruments or documents
required by the Purchasers  have been executed and delivered,  and all necessary
consents,  subordinations,  releases, discharges and other instruments have been
obtained as may be necessary,  for the security constituted thereby to enjoy the
priority thereby contemplated, subject only to the encumbrances permitted by the
Debentures;

     (b) the Company has a free cash balance  available to it, as of the Closing
Date,  of no less than  $2,500,000  (less any  amounts  used by the  Company and
disclosed in writing to the Purchasers  during the period from September 1, 1999
to the Closing Date for acquisitions or capital expenditures);

                                       16
<PAGE>

     (c) except as may be required by the  Securities  Act of 1933,  as amended,
and any applicable state securities laws, the Company and the Subsidiaries  have
obtained any and all  consents,  approvals  and  acknowledgments  of all persons
whose consents, approvals and acknowledgments may be required, including without
limitation all requisite corporate,  shareholder and governmental  consents,  as
are necessary for the consummation of the transactions hereby contemplated;

     6.6 concurrent  with the Closing,  the  Purchasers  shall have received the
opinions of counsel acceptable to Agent in the States of Florida and California,
in form and substance satisfactory to Agent; and

     6.7  prior to or  concurrent  with the  Closing,  the  Company  shall  have
delivered to Agent its Year 2000 business plan.

7.   COMPANY COVENANTS

     The Company covenants and agrees with the Purchasers that:

     7.1 Use of Proceeds.  The Company  shall use the proceeds  from the sale of
the  Debenture  solely for the purpose of paying down  principal and accrued but
unpaid  interest  owing under the Vendor Note.  Such proceeds shall be paid, and
escrow arrangements  mutually  acceptable to Agent and the Company,  pursuant to
the Company's  written  direction  directly on or after Closing to City National
Bank,  N.A.,  the escrow  agent  appointed  by the holders of the Vendor Note by
Joint Written Instructions to Escrow Agent dated April 22, 1999, as amended.

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

     7.3 Board  Meeting  Attendance.  Until  such time as either  (a) 75% of the
principal  amount of the Debenture has been converted into the Company's  Common
Stock,  or (b) the  Debenture  shall have been  repaid in full,  Agent  shall be
entitled to receive notice of and to have a  representative  attend all meetings
(including telephonic meetings) and all adjournments of meetings of the Board of
Directors  and any committee  thereof  (including  committees  comprised of both
directors and non-directors). Failure to provide notice (on the same basis as is
required for all board members and in any event on not less than three  business
days)  of  or to  permit  such  representative  to  attend  such  meeting  shall
constitute  a  material  breach  of  the  provisions  of  this  Agreement.  Such
representative  shall have no voting  rights at any such  meeting,  but shall be
entitled to participate fully in all discussions that take place thereat.

8.   CAPEX AS AGENT FOR THE PURCHASER

     8.1 Provisions  for the Benefit of Purchasers  Only. The provisions of this
Section 8 relate to the  rights and  obligations  of the  Purchasers  and Agent,
inter se, and shall be operative as between the  Purchasers  and Agent only, and
the Company  shall not have any rights or be  entitled to rely for any  purposes
upon such provisions, save as provided in section 8.2(b).

                                       17
<PAGE>

     8.2 Authorization and Action.

     (a) Each  Purchaser  appoints  CapEx,  L.P. as its agent (in such capacity,
"Agent"),  for the  purposes of  collecting  payments,  electing to exercise the
rights  of the  Purchasers  under  this  Agreement  and  the  other  Transaction
Documents  as herein and  therein  provided,  and holding  and  enforcing  those
security documents  referred to in the Debentures (and hereinafter  referred to)
as  the  "Security"  in  accordance  with  the  terms  of  this  Agreement,  and
distributing  any funds  received  either as  payments  from the  Company  or on
realization  of the  Security  in  accordance  with  this  Agreement.  For  such
purposes,  each Purchaser  authorizes  Agent on behalf of such Purchaser to take
such action and to exercise such rights, powers and discretions as are expressly
delegated to it under this Agreement and the other Transaction  Documents and on
the  terms  hereof or  thereof  together  with such  other  rights,  powers  and
discretions as are reasonably  incidental  thereto;  provided  always,  however,
that,  without the consent of both  Purchasers,  Agent shall not:  (i) effect or
agree to any  change in the  interest  rate,  payment  dates,  maturity  date or
conversion rights under the Debentures;  or (ii) fail to elect under Section 7.1
of the Debentures to accelerate  repayment of all indebtedness  owing thereunder
upon the  occurrence of a Default Event and proceed to enforce all security held
by Agent for such indebtedness. Agent may perform any of its duties hereunder or
thereunder by or through its agents,  officers or employees.  Agent shall not be
required to exercise any right, power or discretion or take any action as to any
matters not expressly  provided for by this  Agreement or the other  Transaction
Documents (including,  without limitation,  enforcement of the collection of any
amounts  owing to the  Purchasers  hereunder).  Agent  shall not be  required to
exercise any right,  power or  discretion  or to take any action  which  exposes
Agent to  personal  liability  or risk  thereof  or which  is  contrary  to this
Agreement,  the other  Transaction  Documents or  applicable  law. The duties of
Agent, as agent, shall be mechanical and  administrative in nature.  Agent shall
not have,  by reason of this  Agreement or the other  Transaction  Documents,  a
fiduciary relationship in respect of either Purchaser.

     (b) Agent  shall  only act on  behalf of the  Purchasers  in  dealings  and
communications  with the Company as set out in this Agreement,  and shall be the
only person to so act, except as may be otherwise  agreed in writing between the
parties  hereto.  The Company and the  Subsidiaries  may rely upon the grant and
delegation of authority  provided in this section 8 from each of the  Purchasers
to Agent without further inquiry.

     8.3 Exoneration.

     (a)  Agent and its  limited  and  general  partners,  and their  respective
directors, officers, managers, members, shareholders,  agents or employees shall
not be liable to any person,  company or firm  (including the Purchasers and the
Company)  for any action taken or omitted to be taken by any of them (other than
actions  taken or omitted to be taken by Agent in its  capacity as a  Purchaser,
including,   without   limitation,   actions  giving  rise  to   indemnification
obligations  pursuant  to  Section  5.6(b))  under or in  connection  with  this
Agreement or the other  Transaction  Documents  unless directly due to their own
gross negligence or wilful misconduct.

     (b) Without limiting the generality of the foregoing Section 8.3(a):

          (i) subject to sections 8.8 and 9, Agent may retain,  consult with and
          pay legal counsel,  independent accountants and other experts selected
          by it (provided that all

                                       18
<PAGE>

          reasonable  costs  and fees in  respect  thereof  shall be paid by the
          Company as  provided  for in Section 9) and Agent  shall not be liable
          for any  action  taken or  omitted  to be taken in good faith by it in
          accordance with the advice of such counsel, accountants or experts;

          (ii) Agent  shall not incur any  liability  by acting upon any notice,
          consent,  certificate or other  instrument or writing (which may be by
          telegram,  telecopy,  cable or telex) believed by it at the time to be
          genuine  or by  acting  upon any  representation  or  warranty  of the
          Company made hereunder;

          (iii) Agent may assume without inquiry or investigation  that no event
          of  default,  default,  or other  event  which is,  or which  with the
          passing of time or giving of notice or both  would  become an event of
          default under the Debentures or any other  Transaction  Document,  has
          occurred  unless it has received  from the Company or any  Purchaser a
          notice thereof  specifying the nature of the relevant event  whereupon
          Agent may assume that such event has occurred as therein described and
          that an default  hereunder or default or event of default  thereunder,
          as the case may be, has occurred; and

          (iv) Agent  shall not have any duty to  ascertain  or to inquire as to
          the  performance  or  observance  of any of the  terms,  covenants  or
          conditions of this  Agreement or any other  Transaction  Document,  to
          inspect the property (including the books and records) of the Company,
          the Subsidiaries or any of the other parties,  or to conduct any other
          inquiry  usual for a lender;  Agent  shall not be  responsible  to any
          Purchaser for the due execution,  legality, validity,  enforceability,
          genuineness,  sufficiency  or  value  of  this  Agreement,  any  other
          Transaction  Document or any security  provided by the Company and the
          Subsidiaries.

     8.4  Agent  as  Purchaser.  Agent,  which  is  also a  Purchaser  as to its
Debenture,  shall have the same rights and powers under this  Agreement  and the
other Transaction  Documents as any other Purchaser and may exercise the same as
though it were not  Agent;  and the terms  "Purchaser"  or  "Purchasers"  shall,
unless  otherwise  expressly  indicated,   include  Agent  in  its  capacity  as
Purchaser.  Subject to any restrictions on the Company herein,  Agent may accept
deposits from, lend money to, and generally  engage in any kind of business with
the Company and any other party,  all as if Agent were not agent  hereunder  and
without any duty to account therefor to either Purchaser.

     8.5 Credit  Decision.  Each Purchaser has entered into this Agreement after
its own  negotiations  with the  Company  and is and will  continue to be solely
responsible for its own  independent  appraisal of and  investigations  into the
financial condition, creditworthiness, affairs and nature of the Company and all
other  credit and  banking  matters  relative  to this  Agreement  and the other
Transaction Documents.  Each Purchaser confirms to Agent that it has not relied,
and will not hereafter rely, on Agent:

     (a) to check or  inquire  on its  behalf  into the  adequacy,  accuracy  or
completeness of any  information  provided by the Company under or in connection
with  this  Agreement  or the  transactions  herein  contemplated  and that each
Purchaser shall be responsible for obtaining directly

                                       19
<PAGE>

from the Company,  through  requests made by Agent to the Company on its behalf,
such  information,  documents  or  other  information  as each  Purchaser  deems
necessary from time to time; or

     (b) to assess or keep under review on its behalf the  financial  condition,
creditworthiness,  affairs or nature of the Company,  the  Subsidiaries or their
respective  properties or any other credit or banking  matters  relative to this
Agreement.

A copy of this  Agreement  including all Schedules  hereto has been, or prior to
such  Purchaser  entering into this  Agreement  will be, made  available to each
Purchaser for review by it and each Purchaser is, or will be, satisfied with the
form and substance of this Agreement  including all Schedules hereto;  and Agent
is not liable in any way to such  Purchaser in respect  thereof or in respect of
the accuracy or completeness of any information or data, financial or otherwise,
made  available to such  Purchaser in connection  with the  negotiation  of this
Agreement or for any statements,  warranties or representations  whether made in
writing or orally made in connection with the negotiation of this Agreement.

     8.6 Security.

     (a) Each of the Purchasers  hereby  acknowledges that the guarantees of the
Subsidiaries  and the  Security  Agreements,  and any  and all  security  now or
hereafter held to secure the aggregate of all indebtedness  owing by the Company
under the Debentures  (the  "Security") and the remedies  provided  hereunder or
thereunder are for the benefit of the Purchasers such that the Security and such
remedies  shall enure to benefit of all the Purchasers  until such  indebtedness
shall have been repaid in full.

     (b) Except as contemplated by section 8.6(c), no part of the Security shall
be discharged or otherwise  surrendered to the Company,  in whole or in part, by
Agent or any of the Purchasers without the consent of all of the Purchasers, but
none of the Purchasers or Agent shall be liable or responsible to the others for
any loss or damages  suffered  as a result of any action  taken or omitted to be
taken with respect to any of the Security, except as provided in this Agreement,
or any  invalidity  or  unenforceability  of any of the  Security for any reason
whatsoever,  including  without  limiting the generality of the  foregoing,  any
negligent omission to comply with any filing or registration  requirement or any
renewal filing or  registration  requirement or other  requirement  necessary to
perfect or maintain any security interest.

     (c) Each of the Purchasers agrees that its rights under the Security are to
be exercised not severally,  but  collectively,  by Agent in accordance with the
terms hereof or thereof. The Company hereby confirms that Agent may exercise the
rights of the Purchasers  under the Security  collectively  if the Purchasers so
require,  or severally for the benefit of the  Purchasers,  if the Purchasers so
require. Notwithstanding the foregoing, where, in the sole opinion of Agent, the
exigencies  of the  situation  warrant such action,  Agent may (but shall not be
required to do so) without notice to or the consent of the Purchasers  take such
action on behalf of the  Purchasers as it deems  appropriate or desirable in the
interests of the Purchasers. Each of the Purchasers covenants that upon any such
consent of the Purchasers  being given, it shall  co-operate fully with Agent to
the extent  requested by Agent in the  collective  realization  of the Security.
Each Purchaser agrees to do all acts and things and to make, execute and deliver
all  agreements  and other  instruments  so as to fully carry out and effect the
intent and purpose of this section 8.

                                       20
<PAGE>

     (d) No  representation  or  warranty  with  respect  to the  authorization,
execution,  delivery,  registration,  validity,  enforceability  or value of the
Security or of any other kind or character in relation  thereto shall be binding
on any of the  Purchasers  or  Agent  unless  expressly  made  in  writing.  The
Purchasers  acknowledge that Agent has not made any  representation  or warranty
whatsoever to the  Purchasers  with respect to any of the Security held or to be
held by it.

     8.7 Sharing of Payments.  All Purchasers  shall share in payments  received
from or other  recoveries from the Company or any of the Subsidiaries in respect
of their indebtedness  (including amounts paid by the Company in accordance with
the Debentures and this Agreement, amounts received on any exercise of any right
of counterclaim,  set-off,  banker's lien or similar right and amounts recovered
on the  realization  of the Security)  pari passu,  equally and ratably on a pro
rata  basis  between  the  Purchasers,  based  upon the  respective  amounts  of
indebtedness owing under their Debentures.

     8.8 Indemnification. The Purchasers agree to indemnify Agent (to the extent
not reimbursed by the Company)  ratably  according to the respective  amounts of
indebtedness  owing  under  their  Debentures  from  and  against  any  and  all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or  disbursements of any nature or kind whatsoever which may be
imposed on,  incurred  by, or asserted  against  Agent in its  capacity as Agent
hereunder  in any way  relating to or arising out of this  Agreement,  any other
Transaction  Document  or any  action  taken  or  omitted  by Agent  under  this
Agreement or any other Transaction Document; provided that no Purchaser shall be
liable  for any  portion  of such  liabilities,  obligations,  losses,  damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from Agent's gross  negligence or wilful  misconduct.  Without  limitation  each
Purchaser  agrees to reimburse Agent promptly upon demand for its rateable share
as  above  described  of   out-of-pocket   expenses   (including  the  fees  and
disbursements of counsel) incurred by Agent in connection with the determination
or  preservation  of any  rights  of  Agent  or  the  Purchasers  under,  or the
enforcement of, or legal advice in respect of rights or responsibilities  under,
this Agreement or other Transaction  Documents,  to the extent that Agent is not
reimbursed for such expenses by the Company on demand.

     8.9 Selling  Expenses.  Agent shall be  entitled to be  reimbursed  for all
Selling  Expenses  incurred  by it  pursuant  to Section  5.4 by the  holders of
Registrable  Securities  included  in the  Registration  to which  such  Selling
Expenses relate, and may require payment of any holder's estimated share thereof
to it as a  precondition  to  including  such  Registrable  Securities  in  such
Registration.

     8.10 Exchange of  Information.  The Company  agrees that each Purchaser and
Agent may provide to the other Purchasers or Agent such  information  concerning
the  financial  position  and  property  and  operations  of the Company and the
Subsidiaries  as, in the opinion of such Purchaser or Agent,  is relevant to the
ability of the Company and the Subsidiaries to fulfil their obligations under or
in connection with this Agreement and the other Transaction Documents.

     8.11  Replacement of Agent.  Upon any dissolution of Agent,  Agent shall be
entitled to transfer to its limited  partners or to one or more  corporations or
limited partnerships,  the majority of the shareholders or partners of which are
limited and or general  partners of Agent,  all of its rights as Agent under the
Transaction  Documents.  In connection  with such  distribution,  Agent shall be

                                       21
<PAGE>

entitled to assign to its limited partners or such  corporations or partnerships
Agent's rights hereunder. In addition,  after the occurrence of a Default Event,
as  defined  in the  Debentures,  should  Agent  fail to take  any of the  steps
referred to in Section 8.2(a)(ii) forthwith after the occurrence of such Default
Event (or any subsequent Default Event), either Purchaser may immediately remove
Agent from its  position  and appoint a  successor  Agent in the stead of CapEx,
L.P. Upon the acceptance of any  appointment  as Agent  hereunder by a successor
Agent,  such successor Agent shall  thereupon  succeed to and become vested with
all the rights,  powers,  privileges and duties of the retiring  Agent,  and the
retiring Agent shall be then  discharged from its further duties and obligations
as Agent  under  this  Agreement  provided  that the Agent  shall  execute  such
documents  as may be  necessary or desirable to assign and transfer the retiring
Agent's  interest in this  Agreement,  the  Security  and the other  Transaction
Documents to the successor  Agent.  After any retiring  Agent's  resignation  or
removal  hereunder as Agent, the provisions of this Section 8 shall inure to its
benefit  as to any  actions  taken or  omitted to be taken by it while it was an
Agent under this Agreement.

9.   EXPENSE REIMBURSEMENT

     The Company  hereby agrees to reimburse  Agent on behalf of the  Purchasers
for  all  of  its  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,  the  preparation  and negotiation of
this  Agreement,  the  Debenture,  the  Security  Agreement  (as  defined in the
Debenture), the Warrant, and the Right of First Refusal Agreement, and all other
documents evidencing the transactions  contemplated herein (including reasonable
attorneys' fees). Agent acknowledges  receiving a $7,500.00 advance on or before
mutual  execution  of the term sheet dated  November 17, 1999 on account of such
expenses.

10.  MISCELLANEOUS

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

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

     10.3 Survival.  The representations,  warranties,  covenants and agreements
made  herein  shall  survive  any  investigation  made  by or on  behalf  of the
Purchasers  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  Company  pursuant  hereto  in
connection  with the  transactions  contemplated  hereby  shall be  deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.

     10.4  Successors and Assigns.  Except as provided in Section 8.11,  neither
Purchaser  shall be entitled to assign its rights under this Agreement or any of
the other  Transaction  Documents,  without  the consent of the  Company,  which
consent shall not be unreasonably withheld or delayed; provided always, however,
that no such  consent  shall be  required  for either  Purchaser  to assign such
rights to any person or group of persons  controlling  or owning the majority of
all beneficial interests in such Purchaser,  any other entity controlled by such
person or persons, or an entity controlled by such Purchaser, provided that such
entity shall  continue to be so controlled by such persons or such

                                       22
<PAGE>

Purchaser 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.

     10.5 Entire Agreement;  Amendment and Waiver. This Agreement, the Schedules
and Exhibits hereto and the other 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  other  in any  manner  by any
representations, warranties, covenants and agreements except as specifically set
forth or  incorporated by reference  herein and therein.  Neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated except by a
written instrument signed by the Company and the Purchasers.

     10.6  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.

     10.7  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) day after deposit
with a nationally recognized overnight courier,  special next day delivery, with
verification of receipt. All communications shall be sent:

to the Company at:

                  The Neptune Society Inc.
                  100 North First Street
                  Suite 205
                  Burbank, California
                  91502
                  Attention:  Marco Markin, President

                                       23
<PAGE>

to the Purchasers, prior to January 15, 2000, at:

                  c/o CapEx, L.P.
                  1670 Broadway Suite 3350
                  Denver, CO 80202
                  Telecopier No. (303) 869-4644
                  Telephone No. (303) 869-4700
                  Attention:  Evan Zucker, Managing Partner

                  and, thereafter, at:

                  c/o CapEx, L.P.
                  518 17th St., Suite 1700
                  Denver, CO  80202
                  Telecopier No. (303) 869-4644
                  Telephone No. (303) 869-4700
                  Attention:  Evan Zucker, Managing Partner

with a copy to:

                  Moye, Giles, O'Keefe, Vermeire & Gorrell LLP
                  1225 Seventeenth Street, 29th floor
                  Denver, Colorado 80202-5528
                  Telecopier No. (303) 292-4510
                  Telephone No. (303) 292-2900
                  Attention: Edward D. White III, Esq.

or at such other  address as the  Company or Agent on behalf of  Purchasers  may
designate by ten (10) days advance written notice to the other parties hereto.

     10.8 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.

                                       24
<PAGE>

     10.9  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 as of
the date set forth in the first paragraph hereof.

         COMPANY:

         THE NEPTUNE SOCIETY, INC.

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

         PURCHASERS:

CAPEX, L.P.                                  D.H. BLAIR INVESTMENT BANKING CORP.

By Its General Partner, RBP, LLC

By: ----------------------------------      By: --------------------------------
    Name:  Evan Zucker                          Name:  J. Morton Davis
    Title:  Managing Member                     Title:  Chairman

                                       25
<PAGE>

                                    Exhibit A

                              FORM OF THE DEBENTURE

                                       26
<PAGE>

                                    Exhibit B

                               FORM OF THE WARRANT

                                       27
<PAGE>

                                    Exhibit C

                    FORM OF RIGHT OF FIRST REFUSAL AGREEMENT

                                       28EXHIBIT 10.23

                            THE NEPTUNE SOCIETY, INC.          Debenture No. --

                              A Florida Corporation

                              CONVERTIBLE 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.

                                                               December 24, 1999

     THE NEPTUNE SOCIETY,  INC., a Florida corporation (the  "Corporation"),  is
indebted and, for value received, promises to pay to or to the order of [HOLDER]
(together  with any successor  thereto and any other person who becomes a holder
of this Debenture, "Holder"), on February 24, 2004 (the "Due Date") (unless this
Debenture  shall have been  sooner  called for  redemption  or the amount  owing
hereunder  accelerated  upon the  occurrence of a Default  Event as  hereinafter
provided),  upon presentation of this Debenture,  [DOLLARS]  ($-----------) (the
"Principal  Amount") and to pay interest on the Principal  Amount at the rate of
thirteen per cent (13%) per annum as provided herein.

     This Debenture is issued by the Corporation  pursuant to and subject to the
terms  and  conditions  of a  Debenture  and  Warrant  Purchase  Agreement  (the
"Debenture  Purchase  Agreement")  dated as of  November  24,  1999,  among  the
Corporation,  CapEx  L.P.,  a  Delaware  limited  partnership,  and D. H.  Blair
Investment Banking Corp., a New York corporation.  Pursuant to the provisions of
Section 8 of the Debenture Purchase Agreement,  CapEx L.P. has been appointed by
each  Purchaser  thereunder  of a Debenture  (including  this  Debenture) as its
agent, (in such capacity,  "Agent") for the purposes,  inter alia of electing to
exercise the rights of Holder under this Debenture, and in connection therewith,
the  Corporation  shall,  in  respect  of  all  of its  obligations  under  this
Debenture,  be entitled to rely upon the grant and  delegation  of  authority to
Agent provided for in Section 8 of the Debenture Purchase Agreement, and to deal
with Agent without further inquiry, with respect to all such obligations owed by
it under this Debenture to Holder (including  without limitation all obligations
of the  Corporation  to make  payments  on  account  of  principal  or  interest
hereunder).

     The Corporation covenants, promises and agrees as follows:

1.   Interest

     1.1 Current and Deferred  Interest.  Subject to Section 1.2, interest which
shall  accrue on the  Principal  Amount  shall be payable as to  one-half of the
amount  thereof or six and one-half  percent (6 1/2%) per annum (such portion of
interest  being  hereinafter  sometimes  referred to as "Current  Interest")  in
arrears in monthly installments on the first day of each month in each and

<PAGE>

every  calendar  year  until the  Principal  Amount and all  accrued  and unpaid
Current  Interest shall have been paid in full. The remaining  one-half,  or six
and one-half percent (6 1/2 %) per annum, of interest  accruing on the Principal
Amount (such  portion of interest  being  hereinafter  sometimes  referred to as
"Deferred Interest") shall accrue and be payable on the Due Date or such earlier
date on which the  Principal  Amount  shall  become  due and  payable  as herein
provided.  If this Debenture  shall be issued on a date other than the first day
of a calendar  month,  the Current  Interest and the Deferred  Interest  payable
shall be prorated for the number of days of such  calendar  month period  during
which  this  Debenture  shall  have been  issued and  outstanding.  Any  overdue
installment of Current  Interest shall bear interest (which shall be included in
and be deemed to be Current  Interest) at the aforesaid rate of thirteen percent
(13%),  compounded  monthly,  on each  interest  payment date,  until paid.  For
greater  certainty,  no Deferred  Interest shall bear interest  unless it is not
paid on the date when the same shall  become due, in which case all such overdue
Deferred  Interest  shall  from  such  date be  included  in and be deemed to be
Current Interest on which  additional  Current Interest at the aforesaid rate of
of thirteen percent (13%),  compounded  monthly,  on each interest payment date,
shall accrue and be payable  until all such overdue  Deferred  Interest is paid.
All accrued and unpaid Current  Interest and Deferred  Interest shall be payable
on the Due Date or such earlier date on which the Principal  Amount shall become
due and payable as herein provided.  The first payment of Current Interest shall
be made to Agent  on  January  1,  2000 at 1670  Broadway  Suite  3350,  Denver,
Colorado 80202.  All subsequent  payments of principal or interest shall be made
to Agent at 518 Seventeenth St., Suite 1700, Denver,  Colorado 80202, or at such
other place as may be designated by Agent.

     1.2  Default  Interest.  In the event that a Default  Event (as  defined in
Section  7.1) shall occur,  and for so long as such  Default  Event shall remain
unremedied  and Agent  shall not have waived the same,  all amounts  owing under
this Debenture,  whether in respect of the Principal  Amount,  Current Interest,
Deferred  Interest  or  otherwise,  shall  bear  additional  interest  ("Default
Interest") in addition to the interest  hereinbefore provided for at the rate of
two percent (2%) per annum,  compounded monthly, which Default Interest shall be
payable  on each  interest  payment  date on  which  Current  Interest  shall be
payable,  with  Default  Interest  accruing on any  accrued  and unpaid  Default
Interest.

2.   Conversion.

     2.1 Conversion  Right.  Holder shall have the right, at Holder's option, at
any time and from time to time during the period (the "Conversion  Period") from
nine (9) months  following  the date  hereof to the Due Date,  to  convert  this
Debenture,   in  whole  or  in  part,   into  such  number  of  fully  paid  and
non-assessable  shares of voting  Common Stock of the  Corporation  (the "Common
Stock") as shall be provided herein.

     2.2 Notice.  Holder may  exercise  the  conversion  right  provided in this
Section 2 by Agent giving written notice on its behalf (the "Conversion Notice")
to the  Corporation  of the  exercise  of such right 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  Conversion
Notice shall be  accompanied by this  Debenture.  The number of shares of Common
Stock that shall be issuable upon  conversion of this Debenture  shall equal Six
Hundred  Thousand  (600,000)  multiplied by the Conversion  Ratio as defined and
determined  in  accordance  with Section 3 in effect on the date the  Conversion
Notice is given; provided,  however, that in the event that this Debenture shall
have

                                       2
<PAGE>

been  partially  redeemed  or  converted  prior to the  date of such  Conversion
Notice,  shares of Common Stock shall be issued pro rata, rounded to the nearest
whole share.

     2.3  Certificates.  Conversion shall be deemed to have been effected on the
date the Conversion Notice is given (the "Conversion Date").  Within 10 business
days after receipt of the 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 Agent in the
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 Current Interest accrued and unpaid on the
Debenture up to and including the Conversion Date.

     2.4  Forgiveness  of Deferred  Interest.  Upon the conversion of all or any
portion of the Principal Amount hereof,  any and all Deferred Interest which has
accrued  prior to the  Conversion  Date (but,  for  greater  certainty,  not any
Default Interest accruing upon any overdue  installment of Deferred Interest) on
the portion of the Principal  Amount so converted  shall be absolutely  forgiven
and shall not after conversion be required to be paid .

     2.5 Accrued Interest.  For greater  certainty,  no conversion in part or in
whole of the  Principal  Amount  shall  extinguish  or  satisfy,  or relieve the
Corporation of its obligation to pay, any interest other than Deferred  Interest
on such Principal  Amount,  or interest on such interest,  accruing prior to the
effective date of such conversion.

     2.6 New  Debenture.  In the  event  that  any  amounts  remain  outstanding
hereunder after giving effect to such conversion,  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  outstanding
hereunder  immediately  following such  conversion,  and the number of shares of
Common Stock into which such debenture shall be convertible specified in Section
2.2 above shall be the number of such shares  remaining at the Conversion  Date,
after giving effect to such conversion.

     2.7 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,  the  Corporation  shall,  in lieu of issuing such fractional
share,  pay to Agent (on behalf of Holder)  an amount  equal to the fair  market
value of the fractional share based upon the then prevailing  market price for a
whole share.

3.   Conversion Ratio

     3.1 Initial  Conversion  Ratio.  On the date hereof,  the Conversion  Ratio
shall equal one (1.0),  provided,  however,  that the Conversion  Ratio shall be
subject to  adjustment  in  accordance  with and at the times  provided  in this
Section 3.

     3.2 Additional Common Stock.

     (a) If and whenever any shares of Additional  Common Stock (as  hereinafter
defined) shall be issued by the  Corporation (i) for a cash  consideration  less
than the amount per share

                                       3
<PAGE>

determined  by dividing (a) $5.00 by (b) the  Conversion  Ratio in effect at the
close of business on the  business  day  immediately  preceding  the day of such
issue (the "Initial Conversion Ratio"), or (ii) without  consideration,  then in
each such case, the Initial Conversion Ratio shall be increased  effective as of
the  opening of  business  on the date of such issue (the  "Issue  Date") to the
Conversion  Ratio  determined:  (1) by  multiplying  (A)  $5.00  times  (B)  the
aggregate  number of shares of Common Stock issued and  outstanding at the close
of business on the Issue Date (the "Issue Date  Shares") and (2) by dividing the
product thus  determined  by the sum of the  following  clauses (3) and (4): (3)
$5.00  divided  by (x)  the  Initial  Conversion  Ratio  and the  quotient  thus
determined  multiplied  by (y) the number of shares of Common  Stock  issued and
outstanding at the close of business on the business day  immediately  preceding
the Issue Date;  plus (4) the amount of the  consideration  (if any) received by
the  Corporation  for the shares of Additional  Common Stock issued on the Issue
Date.

     (b) In case of the  issuance  of shares of  Additional  Common  Stock for a
consideration  part or all of  which  shall  be  cash,  the  amount  of the cash
consideration  therefor shall be deemed to be the amount of the cash received by
the Corporation for such shares,  or, if such shares of Additional  Common Stock
are offered by the Corporation for subscription,  the subscription price, or, if
such shares of Additional  Common Stock shall be sold to underwriters or dealers
pursuant to a public  offering  other than by  subscription,  the initial public
offering price,  less any compensation or discount in the sale,  underwriting or
purchase  thereof  by  underwriters  or  dealers  or others  performing  similar
services or for any expenses incurred in connection therewith.

     (c) In case of the issuance of any shares of Additional  Common Stock for a
consideration  part or all of which shall be other than cash,  the amount of the
consideration  therefor  other than cash  shall be deemed to be the Fair  Market
Value for such  consideration  as  determined  in  accordance  with  Section 8.1
hereof.  In case of the  reclassification  of  securities  into shares of Common
Stock,  the  shares of Common  Stock  issued in such  reclassification  shall be
deemed to have been issued for a consideration other than cash immediately prior
to the  close  of  business  on the  date  fixed  for the  determination  of the
stockholders entitled to receive such shares of Common Stock.

     (d) Shares of  Additional  Common  Stock issued by way of dividend or other
distribution  on any class of stock of the  Corporation  shall be deemed to have
been issued without  consideration and shall be deemed to have been issued as of
the opening of business on the business day immediately following the date fixed
for the  determination of the stockholders  entitled to receive such dividend or
other distribution.

     (e) The term "Additional Common Stock" as used herein shall mean all 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)  issued by the  Corporation on or after November
24, 1999,  whether or not subsequently  reacquired or retired by the Corporation
other than:

          (i) shares of Common Stock issued upon the  conversion  of any of this
     Debenture;

                                       4
<PAGE>

          (ii) shares issued by way of dividend or other  distribution on shares
     of Common Stock  referred to in paragraph (i) of this Section  3.2(e) or on
     shares of Common Stock  resulting  from any  subdivision  or combination of
     Common Stock referred to in paragraph (i) of this Section 3.2(e); or

          (iii)  shares  ("Acquisition  Shares")  issued by the  Corporation  in
     connection with and as consideration for the acquisition by the Corporation
     or any Subsidiary of the assets or stock of another corporation pursuant to
     a bona fide purchase and sale  transaction  with one or more persons acting
     at arm's length from the Corporation, the Subsidiaries and their respective
     directors, officers and significant shareholders, provided such transaction
     is in good faith approved by the Board of Directors of the Corporation.

     (f) In case of the issuance of

          (i) options to purchase  or rights to  subscribe  for shares of Common
     Stock,

          (ii) securities by their terms  convertible into, or exchangeable for,
     shares of Common Stock, or

          (iii) options to purchase or rights to subscribe for such  convertible
     or exchangeable securities,

then in each such case, for all purposes of this Section 3.2 (including  without
limitation for the purpose of determining  the Issue Date Shares  referred to in
Section  3.2(a)(1)(B)  and the number of Common  Stock  issued  and  outstanding
immediately preceding the Issue Date referred to in Section 3.2(a)(2)(y)):

          (iv)  The  aggregate   maximum   number  of  shares  of  Common  Stock
     deliverable  upon  exercise  of such  options  to  purchase  or  rights  to
     subscribe for Common Stock shall be deemed to be Additional Common Stock at
     the time such options or rights were issued and for a  consideration  equal
     to the consideration  (determined in the manner provided in Sections 3.2(b)
     and 3.2(c)) if any,  received by the Corporation  upon the issuance of such
     options or rights plus the minimum  purchase price provided in such options
     or rights for the shares of Common Stock covered thereby.

          (v) The aggregate  number of shares of Common Stock  deliverable  upon
     conversion  of, or in exchange for, any such  convertible  or  exchangeable
     securities  or upon the  exercise  of  options  to  purchase  or  rights to
     subscribe for such  convertible or  exchangeable  securities and subsequent
     conversion  or exchange  thereof  shall be deemed to be  Additional  Common
     Stock at the time such  securities  were  issued or such  options or rights
     were issued and for a consideration equal to the consideration  received by
     the  Corporation  for any such  securities  or  related  options  or rights
     (excluding  any cash  received  on account of accrued  interest  or accrued
     distributions),  plus the additional consideration,  if any, to be received
     by the  Corporation  upon the conversion or exchange of such  securities

                                       5
<PAGE>

     or the exercise of any related options or rights (the consideration in each
     case to be  determined  in the  manner  provided  in  Sections  3.2(b)  and
     3.2(c)).

          (vi) In the  event of any  change  in the  number  of shares of Common
     Stock deliverable upon exercise of any such options or rights or securities
     other than a change resulting from the antidilution provisions thereof, the
     Conversion  Ratio  shall  be  readjusted  effective  as of the date of such
     change to the  Conversion  Ratio  which  would have been  obtained  had the
     adjustment  made upon the issuance of such options or rights or  securities
     not  converted  prior to such  change or  options  or rights or  securities
     related to such  securities not converted prior to such change been made on
     the basis of such change.

          (vii) On the expiration of any such options or rights, the termination
     of any such rights to convert or exchange or the  expiration of any options
     or rights  related to such  convertible  or  exchangeable  securities,  the
     Conversion  Ratio shall forthwith be readjusted to such Conversion Ratio as
     would have  obtained  had the  adjustment  made upon the  issuance  of such
     options, rights, securities or options or rights related to such securities
     been made upon the basis of the  issuance  of only the  number of shares of
     Common Stock  actually  issued upon the exercise of such options or rights,
     upon the conversion or exchange of such securities, or upon the exercise of
     the options or rights related to such securities and subsequent  conversion
     or exchange thereof.

     (g) The  provisions  of this  Section  3.2 shall  not  apply to any  Equity
Offering with respect to which the  provisions of Section  5.16(b) shall require
an adjustment to the Conversion Ratio.

     3.3 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  Ratio 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 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  Ratio 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. In the event of any
subdivision  or split up,  the  number of shares  of  Common  Stock  issued  and
outstanding immediately after such subdivision or split up, to the extent of the
excess thereof over the number of shares of Common Stock issued and  outstanding
immediately  before such  subdivision or split up,  exclusive of that portion of
such  excess  attributable  to the  subdivision  of  shares  excluded  from  the
definition of Additional  Common Stock,  shall be deemed to be Additional Common
Stock  and to have  been  issued  without  consideration  immediately  after the
opening of business on the business day immediately after the Split Record Date.

     3.4  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

                                       6
<PAGE>

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  3.4  shall  similarly  apply  to  successive
reorganizations, reclassifications, mergers, sales, exchanges, leases, transfers
or other dispositions or other share exchanges.

     3.5 Notice of Adjustment.  Whenever the Conversion  Ratio shall be adjusted
as provided in this Article 3, the Corporation  shall promptly  prepare and send
to Agent a statement,  signed by the chief financial officer of the Corporation,
showing in detail the facts requiring such  adjustment and the Conversion  Ratio
that shall be in effect after such adjustment.

     3.6 Notice of Adjustment Events. In the event the Corporation shall propose
to take any  action  of the  types  described  in this  Article  3  hereof,  the
Corporation  shall give notice to Agent,  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 10
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  Ratio 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 3.4 shall not render such action  ultra  vires,  illegal or invalid
but shall constitute default hereunder.

     3.7  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.

     3.8 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.

                                       7
<PAGE>

4.   Preemptive Rights

     4.1  Preemptive  Rights.  Except for the issuance of shares of Common Stock
described in either of Sections 3.2(e)(i) or (ii) and except for any public sale
of  Equity  Securities  (as  hereinafter  defined)  within  120 days of the date
hereof,  whenever the Board of Directors of the Corporation  shall authorize the
issuance  of (a)  shares  of  Common  Stock,  (b) any  other  securities  of the
corporation  entitled to participate  with the Common Stock in a distribution of
the  Corporation's  remaining  assets  (after  distribution  to all  holders  of
securities  entitled to such  distribution  in priority to the holders of Common
Stock), or (c) any rights, options or warrants to purchase, or securities of any
type whatsoever that are, or may become,  convertible into, or exchangeable for,
securities  of the  type  referred  to in  Section  4.1(a)  or (b)  (hereinafter
collectively  referred to as "Equity  Securities"),  the Equity Securities shall
first be offered ratably to the existing  holders of Equity  Securities and this
Debenture  on the date of the  authorization  by the Board of  Directors of such
issuance.  Holder and the holder of the other convertible debenture issued under
the Debenture  Purchase  Agreement (each, a "Preemptive  Rightholder")  shall be
entitled to exercise preemptive rights for that number of such Equity Securities
equal to the percentage of the total number of shares of Common Stock into which
this  Debenture  may be  converted  pursuant  to Section 2 hereof  (the  "Equity
Percentage").  For the  purposes  of  calculating  the Equity  Percentage,  each
Preemptive  Rightholder  shall be deemed to be the owner of the number of shares
of Common Stock into which its  debenture  may be  converted  and such shares of
Common  Stock  shall be deemed to be issued  and  outstanding.  Each  Preemptive
Rightholder  shall be entitled to exercise the preemptive rights provided herein
with respect to the whole of such proportionate  share or with respect to only a
part thereof.

     4.2 Consideration for Equity Securities. The preemptive rights provided for
in this Section 4 shall entitle Holder to subscribe for, purchase,  or otherwise
acquire any Equity  Securities  to be offered for sale, at a price or prices not
less  favorable  than the price or prices at which such  Equity  Securities  are
proposed  to be  offered  for  sale  to  others  (net  of any  expenses  of,  or
compensation  for,  underwriting  or  purchase  of  such  Equity  Securities  by
underwriters or dealers).  In the event that the  Corporation  proposes to offer
for sale to others any Equity  Securities for a  consideration  other than cash,
such  preemptive  rights shall be  exercisable by a Preemptive  Rightholder  for
cash, in an amount which shall equal the Fair Market Value of any  consideration
other than cash determined in accordance with Section 8.1.

     4.3 Issuance Notice.  The Corporation shall, on the 10th business day after
the date of authorization of the issuance of any Equity Securities,  give notice
to Agent (the "Issuance  Notice") of such  authorization,  which Issuance Notice
shall  specify the number of shares of Equity  Securities  to be issued,  a full
description of such class of Equity Securities and the offering price thereof.

     4.4 Acceptance or Decline of Offer. The preemptive  rights granted pursuant
to this  Section 4 with  respect  to any Equity  Securities  to be issued by the
Corporation  shall be exercised by the  Preemptive  Rightholder by the giving of
notice by Agent of such  exercise  within 10 business days after receipt by such
Holder of the Issuance Notice (the "Preemptive Rights Period"). In the event any
Preemptive Rightholder fails or declines to purchase his/her proportionate share
of the Equity  Securities  so offered (a  "Declining  Rightholder"),  the Equity
Securities not purchased by the Declining Rightholders shall be offered to those
Preemptive  Rightholders who shall have duly exercised their  preemptive  rights
with respect to that issue (the "Accepting Rightholders"). Each

                                       8
<PAGE>

Accepting  Rightholder  shall be entitled to purchase the Equity  Securities not
purchased by the Declining  Rightholders  (the  "Reoffered  Securities")  in the
proportion which the Equity  Percentage of the Accepting  Rightholders  bears to
the aggregate of the Equity Percentages of all Accepting Rightholders; provided,
however,  that each Accepting  Rightholder shall be entitled to exercise his/her
preemptive  rights to purchase  Reoffered  Securities  only with  respect to the
whole of such  proportionate  share  thereof and not with respect to only a part
thereof.  On the 10th business day after the expiration of the Preemptive Rights
Period, the Corporation shall give notice (the "Reoffer Notice") to Agent of the
amount of Reoffered Securities available for purchase.

     4.5 Acceptance or Decline of Reoffered  Securities.  The preemptive  rights
granted  with  respect to the  Reoffered  Securities  shall be  exercised by the
giving of notice by Agent on behalf of an Accepting Rightholder of such exercise
within 5 business days after receipt by the Agent of the Reoffer Notice.  In the
event that any  Accepting  Rightholder  fails or declines  to purchase  his/ her
proportionate  share  of  such  Reoffered  Securities,   then  such  unpurchased
Reoffered   Securities   shall  continue  to  be  offered  in  the  same  manner
proportionately  to those Accepting  Rightholders on whose behalf Agent properly
exercised  their  rights to purchase  the  Reoffered  Securities  most  recently
offered to them, until such time as all of the Securities to be issued have been
purchased  or all  Accepting  Rightholders  shall  have  failed or  declined  to
purchase any of the Reoffered Securities most recently offered to them, at which
time the  preemptive  rights granted by this Section 5 shall have been exhausted
with respect to that particular issue of Securities.

5.   Covenants of the Corporation

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

     5.1 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.

     5.2 To maintain  existence.  The  Corporation  will, and will cause each of
Neptune  Society of America,  Inc., a California  corporation  ("Neptune  USA"),
Neptune  Management  Corp.,  a California  corporation  ("Neptune  Management"),
Neptune Pre-Need Plan, Inc. ("Neptune Pre-Need"),  a California  corporation and
Heritage  Alternatives,  Inc.  ("Heritage",  and  together  with Neptune USA and
Neptune Management,  the "Subsidiaries") to, at all times maintain its corporate
existence.

     5.3 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.

     5.4 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

                                       9
<PAGE>

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 Agent and if
requested by Agent furnish security satisfactory to Agent 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.

     5.5 Not to Amend Articles or By-Laws.  The Corporation  shall not, and will
cause each of the  Subsidiaries  not to, without Agent's prior written  consent,
amend or restate its articles of  incorporation  nor amend,  repeal,  replace or
restate any of its by-laws or any unanimous  shareholders  agreement relating to
it.

     5.6 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.

     5.7 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) issue any Equity  Securities of the type  described in Section  4.1(c),
other than, in the case of the Corporation only, (i) stock options to employees,
officers or directors of the  Corporation  or a Subsidiary  pursuant to employee
stock  option  plans  approved  of by Agent and in any event not where the total
number of shares of Common  Stock  obtainable  under all such Equity  Securities
outstanding  (including  options and warrants existing as of the date hereof) is
greater  than 10% of the issued and  outstanding  shares of Common Stock at that
time, and (ii) Acquisition Shares; provided that, for greater certainty, nothing
herein shall  prohibit the  Corporation  from issuing  shares  issuable upon any
exercise of the 275,000 common share warrants of the Corporation  existing as of
the date hereof or issue  276,667  shares of Common Stock  pursuant to an agency
agreement between the Corporation and Standard Securities Capital Corporation;

                                       10
<PAGE>

     (c) 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

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

without the prior written consent of Agent.

     5.8  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 Agent or its duly
authorized agent access to its premises in order to view the state and condition
of the same.

     5.9 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 Agent, against loss or damage by fire, lightning,  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 Agent 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 Agent
a renewal receipt,  binder or new policy,  or otherwise  satisfy Agent that such
insurance has been renewed.

     5.10 Compliance With Laws. The  Corporation  shall,  and will cause each of
the  Subsidiaries  to, carry on its business in 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 Agent of any  notice  received  by it or any
Subsidiary of any violation of such laws, regulations,  by-laws or orders of any
impending or threatened investigations or proceedings in connection therewith or
of any  proceedings  commenced or  threatened  by any other person in connection
with environmental, health or safety matters.

                                       11
<PAGE>

     5.11 To Grant Security. To secure payment of its indebtedness,  liabilities
and obligations  under this Debenture (a) the  Subsidiaries  have each delivered
their guarantee agreements  ("Guarantees") to Agent; and (b) the Corporation and
the  Subsidiaries  have each executed and delivered to Agent  concurrently  with
this Debenture security agreements (the "Security Agreements") granting to Agent
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 Agent shall reasonably require, for the
purpose of giving to Agent,  and  preserving in favor of Agent, 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 Agent,  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  Agent  and  other
encumbrances  permitted by Section  5.12.  The  Corporation  shall not, and will
cause  each of the  Subsidiaries  not to, at any time  have its chief  executive
office or assets (other than  inventory and mobile  equipment  used to transport
inventory)  having an aggregate  recorded book value to it in excess of $250,000
located in  jurisdictions  in which the Agent has not been given  prior  written
notice and the opportunity to first record or register the Security Agreement or
other  security  in  favor of Agent in all  appropriate  public  offices  at the
Corporation's expense.

     5.12 Not to Permit Encumbrances.  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
provided  that the  foregoing  shall not apply to  prevent,  and there  shall be
permitted:

     (a) security on the assets of the  Corporation  or any Subsidiary to secure
Neptune USA's obligations under that certain promissory note (the "Vendor Note")
dated March 31, 1999,  executed by Neptune USA (then  called  "Lari  Acquisition
Company,  Inc.") to and in favor of certain holders,  in the principal amount of
$19,000,000.

     (b) security on the assets of the  Corporation  or any Subsidiary to secure
Neptune USA's  obligations  under that certain  Promissory  Note dated March 31,
1999, executed by Neptune USA (then called "Lari Acquisition Company,  Inc.") to
and in favor of Emanuel  Weintraub  Intervivos Trust, in the principal amount of
$2,000,000;  provided always that such security is consistent with the terms and
conditions of the  Inter-Creditor  Agreement of even date herewith between Agent
and the Emanuel Weintraub Intervivos Trust; and

     (c) 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 $350,000.  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

                                       12
<PAGE>

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  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.

     5.13 Not to Incur Indebtedness for Borrowed Money;  Non-Equity  Securities.
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 (including without limitation Purchase Money Mortgages), or issue
any class of shares or other securities other than Equity Securities, subsequent
to the date  hereof  without  the prior  written  consent  of Agent,  except for
Purchase Money Mortgages in accordance with Section 5.12.

     5.14 To Pay  Expenses.  The  Corporation  shall pay all costs,  charges and
expenses  (including legal fees and  disbursements)  of or incurred by Agent and
Holder in connection with this Debenture,  the Security Agreements and any other
security  documents  delivered after the date hereof to Agent, and all ancillary
documents or the enforcement hereof and of such security.

     5.15 Marco  Markin.  Mr.  Marco  Markin  shall be the  President  and Chief
Executive  Officer of the  Corporation  on the date hereof  and,  within 30 days
following the date hereof,  the Corporation  will obtain 10 year minimum,  level
premium, term life insurance on the life of Mr. Markin in the amount of at least
$5,000,000,  naming  Agent as  beneficiary,  and will  use its best  efforts  to
maintain  such  insurance  during  the term  thereof  and will pay all  premiums
thereunder.  In the  event  of Mr.  Markin's  death  while  any  portion  of the
Principal  Amount or any  interest  remains  outstanding  hereunder or under the
other  debenture  issued by the Corporation  pursuant to the Debenture  Purchase
Agreement,  the  proceeds  of such  life  insurance  shall be  deposited  into a
collateral  account  with a financial  institution  acceptable  to Agent,  which
account (and all rights  therein and proceeds  thereof) shall be assigned by the
Corporation  to Agent as additional  collateral  security for the  Corporation's
obligations  hereunder,  and shall be released to the Corporation  only upon the
conversion  of the  entire  Principal  Amount  of this  Debenture  or  upon  the
repayment  in full of the  Principal  Amount and all other  amounts  outstanding
hereunder.  At any time and from time to time prior to Mr.  Markin's death where
the Principal  Amount and the principal  amount owing under the other  debenture
issued by the  Corporation  pursuant to the Debenture  Purchase  Agreement  (the
"Total Debenture  Principal  Amount") is less than  $5,000,000,  the Corporation
shall be entitled,  by notice given to Agent,  but not  required,  to reduce the
amount of such insurance (or replace such insurance policy with a like policy in
such less  amount),  provided  that the new amount of insurance is not less than
the Total  Debenture  Principal  Amount at that time.  Upon the  satisfaction by
repayment,  redemption or conversion of the Total Debenture Principal Amount and
all other  indebtedness owing under this Debenture and under the other debenture
issued by the Corporation  pursuant to the Debenture Purchase  Agreement,  Agent
shall do all  things  necessary  to assign the  benefit  of such life  insurance
policy to the Corporation.  It is hereby expressly acknowledged by Agent and the
Purchasers that the proceeds of such life insurance  policy or policies shall be
payable to Agent solely as additional collateral security for the obligations of
the   Corporation   under  the  Debentures  and  the  Security,   and  under  no
circumstances shall Agent or either Purchaser be entitled to any portion of such
proceeds  in excess of such  obligations,  but shall be  required  to remit such
excess  to the  Corporation  after  the full  satisfaction  of such  obligations
forthwith upon request.

                                       13
<PAGE>

     5.16 Equity Offerings.

     (a) Qualified  Secondary  Offering.  The  Corporation  shall,  on or before
August 31,  2000,  complete a Qualified  Secondary  Offering.  For the  purposes
hereof,  "Qualified  Secondary  Offering" shall mean a sale to the public of the
Corporation's  shares of Common Stock as part of a single underwritten  offering
by a first-tier  or  second-tier  investment  bank  acceptable  to Holder acting
reasonably,  which provides to the Corporation net proceeds, after all costs and
expenses  associated  therewith  (including  without  limitation   underwriters'
commissions  and  issuance  expenses)  of not  less  than  ten  million  dollars
($10,000,000),  all of which net proceeds  shall be used to repay and retire all
remaining  indebtedness of the Corporation under the Vendor Note (or, where such
proceeds exceed such  indebtedness,  that portion of such proceeds equal to such
indebtedness shall be so used). In the event that a Qualified Secondary Offering
is not so completed on or before August 31, 2000, then, in addition to any other
rights and  remedies  Agent or Holder may have  hereunder,  then the  Conversion
Ratio shall  automatically  be  increased to that amount equal to the product of
the Conversion Ratio in effect immediately prior to such increase  multiplied by
5.00 and divided by 4.25.

     (b) Equity  Offerings.  Where, in any public offering or private  placement
(an "Equity  Offering") of Equity Securities the price per share of Common Stock
(or, in the case of Equity  Securities  other than Common  Stock,  the price for
such number of Equity  Securities  as are  equivalent  to,  convertible  into or
exchangeable  for a share of Common  Stock) (in each case net of the Fair Market
Value (determined under Section 8.1) of any warrants, options or other rights to
acquire Equity Securities  attaching to or offered concurrently with the offered
Equity Securities, and net of all brokerage fees and commissions) (the "Offering
Price") is less than $5.00 divided by the Conversion Ratio in effect immediately
prior to  completion  of such Equity  Offering,  the  Conversion  Ratio shall be
increased to the extent,  if any,  necessary  such that  immediately  after such
Equity   Offering  this  Debenture  shall  in  accordance  with  such  increased
Conversion Ratio be convertible into that number of shares of Common Stock which
is the greater of:

          (i) that  number of shares of Common  Stock into which this  Debenture
     would  otherwise be convertible  in accordance  with the provisions of this
     Debenture (other than this Section 5.16(b)); and

          (ii) that  number  obtained  by dividing  $3,000,000  by the  Offering
     Price, multiplying the quotient thereby obtained by the Conversion Ratio in
     effect  immediately  prior to completion of such Equity Offering,  and then
     subtracting  from the product so obtained the number of Conversion  Shares,
     if any, previously issued by the Corporation  pursuant to any conversion of
     a portion of the Principal Amount.

The provisions of this Section 5.16 shall apply to successive  Equity Offerings,
including without limitation any Qualified Secondary Offering.

     5.17  Reporting  Requirements.  Corporation  shall  provide and deliver the
following financial statements and other reports to Agent:

                                       14
<PAGE>

     (a) Balance Sheet and Income  Statement.  Within 60 days after the last day
of each fiscal  quarter of  Corporation,  a copy of  Corporation's  consolidated
balance sheet and income statement  prepared by Corporation as of the end of and
for such quarter and certified by Corporation to be true and correct and to have
been prepared in accordance with generally accepted  accounting  principles that
are  consistent  with those  previously  applied in  Corporation's  most  recent
financial statement.

     (b) Financial Statements. Upon preparation, but in any event within 90 days
after  the  last  day of each  fiscal  year of the  Corporation,  the  financial
statements of the  Corporation as of the end of and for such fiscal year setting
forth in comparative form the correspondence figures of the financial statements
showing the balance sheet,  the income  statement and the source and application
of funds statement as of the end of the preceding fiscal year, all in reasonable
detail and  certified  by a firm of  independent  certified  public  accountants
acceptable to Holder.

     (c) Additional  Information.  Such further information as may reasonably be
necessary  or  as  Holder  may  reasonably  request  to  determine  whether  the
Corporation is complying with its obligations  under this  Agreement,  the Notes
and the security  documents,  or to  determine  the  financial  condition of the
Corporation.

     5.18 Financial Covenant.  The Corporation shall at all times maintain (on a
consolidated  basis) Fixed Charge  Coverage Ratio of at least  1.6:1.0.  For the
purposes hereof:

     (a) "Cash Flow" means, for any period, the sum without duplication,  of (i)
net income and (ii) to the extent net income has been reduced  thereby,  (a) all
income taxes of the Corporation  accrued in accordance  with generally  accepted
accounting  principles  ("GAAP")  for  such  period  (other  than  income  taxes
attributable to  extraordinary  or non recurring gains or losses),  (b) interest
expense,  (c)  non-cash  charges,  and (d)  the  amount  of any  and  all  lease
obligations,  including  but not limited to equipment  leases and real  property
leases,  of the Corporation  paid,  accrued,  or scheduled to be paid or accrued
during such period, all determined in accordance with GAAP;

     (b) "Fixed Charges" means, for any period, the sum without duplication,  of
(i) the interest expense, calculated in accordance with GAAP, of the Corporation
for such period, (ii) the interest expense,  calculated in accordance with GAAP,
of the Corporation that was capitalized during such period,  (iii) the amount of
all cash  dividend  payments  paid,  accrued or  scheduled to be paid or accrued
during such period,  (iv) principal payments due on all outstanding notes of the
Corporation  during such period (with the exception of the Vendor Note), and (v)
the  amount of any and all  lease  obligations,  including  but not  limited  to
equipment leases and real property leases, of the Corporation paid,  accrued, or
scheduled to be paid or accrued,  during such period, by the Corporation and the
Subsidiaries.

     (c) "Fixed Charge  Coverage  Ratio" means, in accordance with GAAP, for the
full fiscal quarter ending on or prior to the date of  determination,  the ratio
of Cash Flow of the  Corporation  for such  period to the Fixed  Charges  of the
Corporation for such period.

     5.19 Employment  Agreement.  The Corporation  shall use its best efforts to
enter into a one-year employment agreement,  renewable by the Corporation for at
least one further term of one

                                       15
<PAGE>

year, with Mr. Marco Markin  forthwith and in any event within 60 days after the
date hereof, and shall provide Agent with a copy thereof.

     5.20 Agent Entitled to Perform Covenants.  If the Corporation shall fail to
perform any covenant on its part herein contained, Agent 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,  Agent 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 Agent 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 Agent under this  subsection  impose any  obligation  upon Agent to
perform any covenant of the Corporation.

6.   Redemption and Prepayment

     6.1  Generally.  Except as provided in this  Article 6 and in Section  7.1,
Holder shall have no right to require any portion of the Principal  Amount to be
repaid,  and the  Corporation  shall have no right to prepay any  portion of the
Principal Amount, prior to the Due Date.

     6.2  Redemption  By Holder.  Holder  shall have the right,  exercisable  by
written notice given by Agent (a "Retraction  Notice") given to the  Corporation
at any time after the fifth anniversary of the date of this Debenture and before
the Due Date to require the  Corporation  to redeem this  Debenture in full (but
not in part), and to pay on such date (the "Retraction Date") as is specified in
such Retraction  Notice and is not less than ten (10) days following the date of
receipt by the  Corporation  of the  Retraction  Notice  the  entire  unpaid and
unredeemed  balance of the Principal  Amount and all accrued and unpaid interest
on the Debenture up to and  including the  Retraction  Date  (including  Current
Interest, Deferred Interest and Default Interest).

     6.3 By Corporation Upon Qualified Secondary Offering.  In the event that at
any time:

     (a) during the Conversion Period;

     (b) at which the Corporation shall not be in default hereunder;

     (c) the  Corporation  shall  propose  to  complete  a  Qualified  Secondary
Offering (as hereinbefore  defined) and shall not less that 30 days prior to the
date of closing of such Qualified  Secondary  Offering give Agent written notice
of such Qualified Secondary Offering and the terms thereof (and attaching a copy
of  the  executed  term  sheet  or  other  document  from  the   underwriter  or
underwriters underwriting such Qualified Secondary Offering); and

     (d) during the period  from  receipt of such notice to such  closing  Agent
shall have the  opportunity  to convert  this  Debenture  on behalf of Holder in
whole or in part;

                                       16
<PAGE>

then the remaining  Principal  Amount of this Debenture  shall become subject to
redemption  at  the  option  of the  Corporation  in  whole  (but  not in  part)
concurrently  with the  closing of such  Qualified  Secondary  Offering  without
penalty or premium.

     6.4 By Corporation. In the event that at any time:

     (a) during the Conversion Period;

     (b) after the second anniversary of the date hereof;

     (c) at which the Corporation shall not be in default hereunder;

     (d) the closing  price per share of Common Stock (if such shares are listed
on a national securities  exchange) or the closing bid per share of Common Stock
(if such shares are quoted on the  Over-The-Counter  Exchange)  (in either case,
the  "Closing  Price/Bid")  is at or  above  $7.50  (adjusted  for  any  and all
subdivisions  or  combinations  of the  Common  Stock  occurring  after the date
hereof) for each of 30 consecutive trading days after such second anniversary;

     (e) the Corporation  shall,  within 10 days following the expiry of such 30
trading day period,  give Agent  written  notice of its intention to redeem this
Debenture pursuant to this Section 6.4; and

     (f) during the period of 10 days  after  receipt of such  notice,  Agent on
behalf of Holder shall have the  opportunity  to convert this Debenture in whole
or in part;

then the remaining  Principal  Amount of this Debenture  shall become subject to
redemption  at the option of the  Corporation  in whole (but not in part) at any
time during the period of one  hundred and eighty  (180) days after the last day
of such 30 trading day period without penalty or premium.

     6.5  Extension of Time. In the event that Holder shall be precluded for any
reason  (including  without  limitation  any  applicable  securities  laws) from
converting  this  Debenture  in whole or in part and  provided  Agent shall have
given the Corporation  notice of such reason within such 10 day period, the time
periods  set out above  shall be  extended  by the  number of days  Holder is so
precluded. No interest hereunder (including, for greater certainty,  interest on
overdue interest) shall accrue,  however,  during such period that conversion is
precluded,  except where the reason for such  preclusion is the direct result of
actions or omissions by the Corporation or any Subsidiary.

     6.6 Notice.  Subject to Section 6.7, the Corporation may exercise its right
to redeem this  Debenture  prior to the Due Date  pursuant to either of Sections
6.3 and 6.4 by giving notice (the "Redemption  Notice") thereof to Agent,  which
notice shall specify the terms of redemption (including the place at which Agent
may obtain payment),  the principal amount of this Debenture to be redeemed (the
"Redemption  Amount")  and  shall  fix a date for  redemption  (the  "Redemption
Date"),  which  date  shall not be less than 10 days nor more than 30 days after
the date of the Redemption Notice.

                                       17
<PAGE>

     6.7  Priority  of  Notices.  Notwithstanding  any other  provision  of this
Debenture,  the Corporation shall not be permitted to redeem any portion of this
Debenture in respect of which the  Corporation  shall have received prior to the
Redemption Date either a Retraction Notice or a Conversion Notice.

     6.8 Convenant By Holder.  By its  acceptance  hereof,  Holder agrees not to
sell to a  member  of the  public  any of the  Conversion  Shares  or any of the
Warrant  Shares (as defined in the  Debenture  and Warrant  Purchase  Agreement)
during any period (up to twenty-five (25) consecutive trading days provided that
each previous  consecutive trading day meets the $7.50 test described in Section
6.4(d))  following a period of five  consecutive  trading  days during which the
Corporation met such test.

7.   Default

     7.1  Default  Events.  The  entire  unpaid  and  unredeemed  balance of the
Principal  Amount  and all  Current  Interest,  Deferred  Interest  and  Default
Interest  accrued and unpaid on this Debenture  shall, at the election of Agent,
be and become  immediately due and payable,  and the Security  Agreement and any
and  all  other  security  documents  held by  Agent  shall  become  immediately
enforceable,  upon the  occurrence  of any of the  following  events (a "Default
Event"):

     (a) the non-payment by the  Corporation  when due of principal and interest
or of any other  payment as provided in this  Debenture  or with  respect to any
other indebtedness owed by the Corporation;

     (b) default by the Corporation in the performance of or compliance with any
term  in any of  Sections  5.16,  or any  provision  of the  Debenture  Purchase
Agreement;

     (c) default by the Corporation in the performance of or compliance with any
other term or provision of this Debenture or the Security Agreement,  where such
default  is  not  remedied  within  thirty  (30)  days  after  Agent  gives  the
Corporation written notice thereof;

     (d) the occurrence of a breach by Mr. Marco Markin of his obligations under
Section 7 of the Right of First Refusal  Agreement of even date herewith between
him, the Corporation,  Holder and the holder of the other debenture issued under
the Debenture Purchase Agreement;

     (e) the  occurrence  of a material  breach by Mr.  Marco  Markin  under his
employment  agreement  to be entered  into  pursuant  to  Section  5.19 (as such
agreement is constituted on the date entered into and as the same may be amended
with the  written  consent  of Agent and  without  consideration  of any  waiver
thereof by the Corporation);

     (f) Mr.  Marco Markin  ceasing to hold the offices of  President  and Chief
Executive Officer of the Corporation;

     (g) 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

                                       18
<PAGE>

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
$250,000 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, or any such  indebtedness  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; or

     (h) any failure by the  Corporation  to issue and deliver  shares of Common
Stock as provided herein upon conversion of this Debenture.

     7.2 Payment of Prior Ranking Indebtedness. Upon the occurrence of a Default
Event, in addition to (and not in substitution  for,  exclusive of nor dependent
on) any other remedies  contained herein,  in the Security  Agreements or in any
existing or future  security  document  granted by the Corporation or any of the
Subsidiaries to Agent, and to all other remedies existing at law or in equity or
by statute,  Agent,  shall be permitted to make payments to parties having prior
charges or encumbrances  on properties  owned by the Company or on properties on
which the Company may hold charges or encumbrances (including without limitation
payments on amounts  owing under the Vendor  Note),  and the full amount of such
payments  shall be due and payable  upon demand by Agent,  and shall be added to
and shall form part of the Principal Amount of this Debenture, on which interest
shall accrue and be payable as  hereinbefore  provided,  and in respect of which
the Security shall secure the due and prompt repayment thereof;  provided always
however  that no portion of such  payments  shall be  subject to  conversion  in
accordance with Section 2.

     7.3 Remedies Cumulative. Each right, power or remedy of Agent, on behalf 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 Agent,  on
behalf of Holder, of any or all such other rights, powers or remedies.

8.   General

     8.1 Fair Market Value. The term Fair Market Value as used in this Debenture
with  respect to assets or  property  received by the  Corporation  or any other
person  shall be the fair  market  value,  regardless  of any  prior  accounting
treatment, of such assets or property,  determined in good faith by agreement of
Agent and the Board of Directors of the  Corporation.  If Agent and the Board of
Directors shall be unable to agree as to such fair market value, the fair market
value shall be determined by the independent certified public accountant at that
time  retained  by the  Corporation  to  audit  its  books  and  records,  and a
determination  by such independent  certified public  accountant shall be final,
conclusive and binding or, if there be none, or if such accountant  shall refuse
or be unable to make such a  determination  then the sole  issue of fair  market
value  shall be  submitted  to and  settled  by  binding  arbitration  under and
pursuant to the Colorado  Uniform  Arbitration Act and

                                       19
<PAGE>

the rules and  regulations  of the  American  Arbitration  Association,  and the
decision or award of the arbitrator or arbitrators in such arbitration  shall be
final, conclusive and binding and a final judgment may be entered thereon by any
court of competent jurisdiction.

     8.2 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 Agent 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,  Agent  shall not be
deemed to waive  the  right  either  to  require  payment  when due of all other
amounts  payable  under this  Debenture,  or to declare a default for failure to
effect such payment of any such other amount.

     The  failure  of Agent 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.

     8.3 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 Colorado,  including the United States
District  Court for the  District  of  Colorado,  or in any other  court  having
jurisdiction over the subject matter,  all at the sole election of Agent, and by
the  issuance  and  execution  of this  Debenture  the  Corporation  irrevocably
consents to the jurisdiction of each such court.

     8.4 Transfer. This Debenture may only be transferred in accordance with the
provisions  of  Section  10.4  of  the  Debenture  Purchase  Agreement  and  the
requirements set out in the legend on the first page hereof.

     8.5  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.
                  100 North First Street
                  Suite 205
                  Burbank, California
                  91502
                  Attn:  Marco Markin, President

                                       20
<PAGE>

     to Agent, on behalf of Holder, prior to January 15, 2000, at:

                  [HOLDER]
                  [ADDRESS]

     and, thereafter, at:

                  [HOLDER]
                  [ADDRESS]

with a copy to:

                  [HOLDER CONTACT]
                  [ADDRESS]

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

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

         IN WITNESS  WHEREOF,  the  Corporation  has caused this Debenture to be
duly executed under its corporate seal.

WITNESS:                                     THE NEPTUNE SOCIETY, INC.

                                             By:
--------------------------------                 -------------------------------
                                                 Marco Markin, President

                                       21

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