EXHIBIT 10.20
Exhibit A
SUBSCRIPTION AGREEMENT
THE NEPTUNE SOCIETY, INC.
COMMON SHARES
The undersigned purchaser ("Purchaser") hereby irrevocably subscribes for and
agrees to purchase the number of common shares (the "Common Shares") of The
Neptune Society, Inc., a Florida corporation ("Company"), indicated on the
signature page hereto in consideration of US$____ per share ("Purchase Price")
at the closings of the transactions contemplated hereby ("Transaction").
The execution by the Purchaser of this Subscription Agreement ("Subscription
Agreement") will constitute an offer by the Purchaser to the Company to
subscribe for the Common Shares. The Company's acceptance of such offer, as
evidenced by the signature of its authorized officer below, will constitute an
agreement between the Purchaser and the Company for the Purchaser to purchase
from the Company, and for the Company to issue and sell to the Purchaser, the
Common Shares upon the terms and conditions contained herein.
In connection with such subscription. Purchaser hereby agrees, represents and
warrants as follows:
1. Agreement to Purchase; Calculation of Number of Common Shares.
1.1 Subscription to Purchase.
Purchaser hereby subscribes for and purchases that number of Common Shares
set forth on the signature page hereto, at the times set forth therein, pursuant
to the terms of this Subscription Agreement.
Simultaneously with the execution of this Subscription Agreement, the
Purchaser shall pay to the Company the Purchase Price for the number of Common
Shares subscribed for in "Payment 1" by check payable to "The Neptune Society,
Inc." which shall be applied to payment for the Common Shares subscribed for
herein. Thereafter, the Purchaser shall pay to the Company the Purchase Price
for the Common Shares subscribed for in each succeeding tranche no later than
two days after the Company provides the Purchaser notice of a Closing (as that
term is defined herein).
The Company may accept or reject any subscription in whole or in part or
may elect to allot to any prospective investor less than the number of Common
Shares applied for by such investor.
1.2 Reset Rights Adjustments
The number of shares purchased pursuant to this Subscription Agreement
shall be subject to reset rights. The Company agrees to issue additional shares
to the Purchaser based an adjustment to the Purchase Price (" Reset Price") in
accordance with the formula set forth below:
<TABLE>
<S> <C>
Number of Common Shares Purchased x [($_____ x 125%)-Reset Price] = Total Reset Shares
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Reset Price
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For the purposes of calculating the Total Reset Shares, the Reset Price shall be
the average closing bid price of the Company's common shares during the period
from the 1st to the 90th day following the effective date of the Company's
resale registration statement (as provided for in Section 3 below), but in any
event will not be less than US$3.00 per common share. If the Total Reset Shares
as calculated using the above formula is negative, it shall be deemed to be
zero.
2. Delivery of Common Shares.
Payment of the purchase price for the Common Shares purchased hereby will
take place in three tranches. Subject to such earlier or later date as may be
agreed to between the Company and the Purchaser, "Payment 1" must be made to the
Agent no later than ______________; "Payment 2" must be made to the Agent no
later than ____________, 1999; and "Payment 3" must be made to the Agent no
later than ____________, 2000.
Upon receipt of each payment, the Company shall deliver to each Purchaser a
certificate (or certificates, if requested in writing by Purchaser representing
the number of Common Shares purchased, registered in the name of the Purchaser.
The Company and the Purchaser also hereby agree to execute and deliver at
Closing such other documents as may be necessary or appropriate.
3. Resale Registration.
The Purchaser and the Company undertake and agree to the terms and
conditions of the Registration Rights Agreement related to the Common Shares as
set forth on Schedule 1 attached to this Subscription Agreement.
4. Information Concerning the Company.
Purchaser acknowledges that he, she or it has received all such information
as Purchaser deems necessary and appropriate to enable him, her or it to
evaluate the financial risk inherent in making an investment in the Common
Shares and Reset Shares, if any, including but not limited to the Company's
Confidential Offering Memorandum, and the documents and materials included
therewith ("Disclosure Documents"). Purchaser further acknowledges that
Purchaser has received satisfactory and complete information concerning the
business and financial condition of the Company in response to all inquiries in
respect thereof.
5. Economic Risk and Suitability.
Purchaser represents and warrants as follows:
(a) Purchaser realizes that Purchaser's purchase of the Common Shares and
Reset Shares, if any, involves a high degree of risk and will be a
speculative investment, and that he, she or it is able, without
impairing Purchaser's financial condition, to hold the Common Shares
and Reset Shares, if any, for an indefinite period of time.
(b) Purchaser recognizes that there is no assurance of future profitable
operations and that investment in the Company involves substantial
risks, and that the Purchaser has taken full
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cognizance of and understands all of the risks factors related to the
purchase of the Common Shares and Reset Shares, if any.
(c) Purchaser has carefully considered and has, to the extent Purchaser
believes such discussion necessary, discussed with Purchaser's
professional legal, tax and financial advisors the suitability of an
investment in the Company for the particular tax and financial
situation of Purchaser and that Purchaser and/or Purchaser's advisors
have determined that the Common Shares and the Reset Shares, if any,
are a suitable investment for Purchaser.
(d) The financial condition and investment of Purchaser are such that he,
she or it is in a financial position to hold the Common Shares and the
Reset Shares, if any, for an indefinite period of time and to bear the
economic risk of, and withstand a complete loss of, the Purchase
Price.
(e) Purchaser alone, or with the assistance of professional advisors, has
such knowledge and experience in financial and business matters that
the undersigned is capable of evaluating the merits and risks of
Purchaser's purchase of the Common Shares and the Reset Shares, if
any, or has a pre-existing personal or business relationship with the
Company or any of its officers, directors, or controlling persons of a
duration and nature that enables the undersigned to be aware of the
character, business acumen and general business and financial
circumstances of the Company or such other person.
(f) Purchaser has carefully read the Disclosure Documents and the Company
has made available to Purchaser or Purchaser's advisors all
information and documents requested by Purchaser relating to
investment in the Common Shares, and has provided answers to
Purchaser's satisfaction to all of Purchaser's questions concerning
the Company and the Offering.
(g) Purchaser has relied solely upon the Disclosure Documents, advice of
his or her representatives, if any, and independent investigations
made by the Purchaser and/or his or her purchaser representatives, if
any, in making the decision to purchase the Common Shares subscribed
for herein and acknowledges that no representations or agreements
other than those set forth in the Disclosure Documents have been made
to the Purchaser in respect thereto.
(h) All information which the Purchaser has provided concerning Purchaser
himself, herself or itself is correct and complete as of the date set
forth below, and if there should be any material change in such
information prior to the acceptance of this subscription for the
Common Shares, he, she or it will immediately provide such information
to the Company.
(i) Purchaser confirms that Purchaser has received no general solicitation
or general advertisement and has attended no seminar or meeting (whose
attendees have been invited by any general solicitation or general
advertisement) and has received no advertisement in any newspaper,
magazine, or similar media, broadcast on television or radio regarding
the offering of the Common Shares.
(j) Purchaser is at least 21 years of age and resides at the address
indicated below.
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6. Restricted Securities.
Purchaser acknowledges that the Company has hereby disclosed to Purchaser
in writing:
(a) The Common Shares and the Reset Shares, if any, have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), or the securities laws of any state of the United States, and
such securities must be held indefinitely unless a transfer of them is
subsequently registered under the 1933 Act, or such securities are
sold pursuant to Regulation S under the 1933 Act or pursuant to an
exemption from registration under the 1933 Act; and
(b) The Company will make a notation in its records of the above-described
restrictions on transfer and of the legend described below.
7. Legend.
Purchaser agrees that all of the certificates representing the Common
Shares and the Reset Shares, if any, shall have endorsed thereon a legend in
substantially the following form:
THESE COMMON SHARES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") OR THE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES AND MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (I) TO THE COMPANY, (II) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT, (III) IN
COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED
BY RULE 144 THEREUNDER, OR (IV) IN COMPLIANCE WITH ANOTHER EXEMPTION FROM
REGISTRATION, IN EACH CASE AFTER PROVIDING EVIDENCE SATISFACTORY TO THE
COMPANY THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER THE 1933
ACT.
8. Further Limitations on Disposition.
Without in any way limiting its representations set forth above, Purchaser
further agrees that it shall in no event make any disposition of all or any
portion of the Common Shares or the Reset Shares unless:
(a) There is then in effect a registration statement under the 1933 Act
covering such proposed disposition and such disposition is made in
accordance with said registration statement; or
(b) (i) Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a reasonably
detailed statement of the circumstances surrounding the proposed
disposition; (ii) Purchaser shall have furnished the Company with an
opinion of his or her counsel to the effect that such disposition will
not require registration under the 1933 Act; and (iii) such opinion
shall be in form and substance reasonably acceptable to counsel for
the Company and the Company shall have advised Purchaser of such
acceptance.
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9. Offering Limited to Qualified Investors.
Purchaser hereby represents and warrants to the Company as follows:
(a) (i) the Purchaser is not a "U.S. Person," as such term is
defined by Rule 902 of Regulation S under the Act (the
definition of which includes, but is not limited to, an
individual resident in the United States and an estate or
trust of which any executor or administrator or trustee,
respectively, is a U.S. Person and any partnership or
corporation organized or incorporated under the laws of the
United States);
(ii) the Purchaser was outside the United States at the time of
execution and delivery of this Subscription Agreement;
(iii) no offers to sell the Common Shares or the Reset Shares, if
any, were made by any person to the Purchaser while the
Purchaser was in the United States;
(iv) the Common Shares and the Reset Shares, if any, are not
being acquired, directly or indirectly, for the account or
benefit of a U.S. Person or a person in the United States;
(v) the Purchaser agrees not to engage in hedging transactions
with regard to the Common Shares or the Reset Shares prior
to the expiration of the one-year distribution compliance
period set forth in Rule 903(b)(3) of Regulation S under the
1933 Act; and (vi) the Purchaser acknowledges and agrees
with the Company that the Company shall refuse to register
any transfer of the Common Shares or the Reset Shares not
made in accordance with the provisions of Regulation S,
pursuant to registration under the 1933 Act, or pursuant to
an available exemption from registration under the 1933 Act;
or,
(b) that the Purchaser satisfies one or more of the categories indicated
below (please place an "X" on the appropriate lines):
____ Category 1. An organization described in Section 501(c)(3)
of the United States Internal Revenue Code, a corporation, a
Massachusetts or similar business trust or partnership, not
formed for the specific purpose of acquiring the Securities,
with total assets in excess of US$5,000,000;
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____ Category 2. A natural person whose individual net worth, or
joint net worth with that person's spouse, at the date
hereof exceeds US$1,000,000;
____ Category 3. A natural person who had an individual income in
excess of US$200,000 in each of the two most recent years or
joint income with that person's spouse in excess of
US$300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year;
____ Category 4. A trust that (a) has total assets in excess of
US$5,000,000, (b) was not formed for the specific purpose of
acquiring the Securities and (c) is directed in its
purchases of securities by a person who has such knowledge
and experience in financial and business matters that he/she
is capable of evaluating the merits and risks of an
investment in the Common Shares and Reset Shares, if any;
____ Category 5. An investment company registered under the
Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act;
____ Category 6. A Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958;
____ Category 7. A private business development company as
defined in Section 202(a)(22) of the Investment Advisors
Acts of 1940; or
____ Category 8. An entity in which all of the equity owners
satisfy the requirements of one or more of the foregoing
categories.
10. Understandings.
Purchaser understands, acknowledges and agrees with the Company as follows:
(a) Except as set forth in paragraph 1 above, the Purchaser hereby
acknowledges and agrees that the subscription hereunder is irrevocable
by the undersigned, that, except as required by law, the undersigned
is not entitled to cancel, terminate or revoke this Subscription
Agreement or any agreements of the undersigned hereunder and that this
Subscription Agreement and such other agreements shall survive the
death or disability of the undersigned and shall be binding upon and
inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and permitted
assigns. If the undersigned is more than one person, the obligations
of the undersigned hereunder shall be joint and several and the
agreements, representations, warranties and acknowledgments herein
contained shall be deemed to be made by and be binding upon each such
person and his/her heirs, executors, administrators, successors, legal
representatives and permitted assigns.
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(b) No federal or state agency has made any finding or determination as to
the accuracy or adequacy of the Disclosure Documents or as to the
fairness of the terms of this offering for investment nor any
recommendation or endorsement of the Common Shares or the Reset
Shares, if any.
(c) The representations, warranties and agreements of the undersigned
contained herein and in any other writing delivered in connection with
the transactions contemplated hereby shall be true and correct in all
respects on and as of the date of the sale of the Common Shares and
the Reset Shares, if any, as if made on and as of such date and shall
survive the execution and delivery of this Subscription Agreement and
the purchase of the Common Shares.
(d) THE COMMON SHARES AND THE RESET SHARES, IF ANY, MAY NOT BE
TRANSFERRED, RESOLD OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER
THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS SHOULD BE AWARE THAT
THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT
FOR AN INDEFINITE PERIOD OF TIME.
11. Miscellaneous.
(a) On or after the date of this Agreement, each of the parties shall, at
the request of the other, furnish, execute and deliver such documents
and instruments and take such other action as the requesting party
shall reasonably require as necessary or desirable to carry out the
transactions contemplated herein.
(b) This Agreement, including all matters of construction, validity and
performance, shall be governed by and construed and enforced in
accordance with the laws of the State of Washington, as applied to
contracts made, executed and to be fully performed in such state by
citizens of such state, without regard to its conflict of law rules.
The parties hereto agree that the exclusive jurisdiction and venue for
any action brought between the parties under this Agreement shall be
the state and federal courts sitting in King County, Washington, and
each of the parties hereby agrees and submits itself to the exclusive
jurisdiction and venue of such courts for such purpose.
(c) This Agreement comprises the entire agreement between the parties. It
may be changed only by further written agreement, signed by both
parties. It supersedes and merges within it all prior agreements or
understandings between the parties, whether written or oral. In
interpreting or construing this Agreement, the fact that one or the
other of the parties may have drafted this Agreement or any provision
shall not be given any weight or relevance.
(d) This Agreement may be executed in counterparts, each of which will be
deemed to be an original and all of which will constitute one
agreement. A facsimile copy is deemed to be effective delivery of this
Agreement.
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Date: ____________________, 1999.
-------------------------- $-------------------------------
Number of Common Shares purchased Aggregate Purchase Price
<TABLE>
Payment Number Number of Shares Price Per Share Purchase Price
-------------- ---------------- --------------- --------------
<S> <C> <C> <C>
Payment 1 $______
Payment 2 $______
Payment 3 $______
Totals
</TABLE>
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Signature Name - Typed or Printed
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Title (if applicable)
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Subscriber's Address
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Telephone Number Social Security Number, if any
Manner in Which Title is to be Held. State precisely the name or names in which
the Common Shares and the Reset Shares, if any, are to be registered and whether
the Common Shares and the Reset Shares, if any, are to be held as joint tenants
with right of survivorship, as tenants in common, individually or otherwise:
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ACCEPTANCE
The foregoing Subscription Agreement and the consideration reflected
therein are hereby accepted.
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DATE: __________________________, 1999.
THE NEPTUNE SOCIETY, INC.
By -------------------------------------
Its -----------------------------------
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