TRANSITION AGREEMENT
AGREEMENT made as of the 20th day of November, 2000 by and among THE
SAGEMARK COMPANIES, LTD., a New York corporation with offices at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("SAGEMARK"), ▇▇▇▇▇ ▇▇▇▇▇▇, an
individual with an address at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual with an address at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("YOUNG") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual residing
at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (in his individual capacity and
on behalf of certain other shareholders of Sagemark (the "REPRESENTATIVE").
W I T N E S S E T H :
WHEREAS, in April 1999, Technology Acquisitions, Ltd. ("TAL") purchased
shares of Sagemark's common stock and acquired an option from certain Sagemark
shareholders to purchase additional shares of Sagemark's common stock (THE
"OPTION"); and
WHEREAS, in furtherance of TAL's purchase of such shares and in
anticipation of its exercise of the Option, Messrs. ▇▇▇▇▇▇ and Young were
designated by TAL as and became officers and directors of Sagemark; and
WHEREAS, the Option was not exercised and expired in April 2000; and
WHEREAS, subsequent to the expiration of the Option, the
Representative, individually and on behalf of certain shareholders of Sagemark,
informed Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ that he did or could represent shareholders
owning in excess of fifty percent (50%) of Sagemark's outstanding shares of
common stock who or which desired a change in management of Sagemark and
continuity of the management of Sagemark Management LLC, the general partner of
Sagemark Capital LP., a small business investment company, which is more than
60% owned by Sagemark; and
WHEREAS, the parties have mutually agreed upon a change in management
of Sagemark, together with a continuity of the management of Sagemark Management
LLC, all on and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned do hereby agree as follows:
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1. TERMINATION OF EMPLOYMENT AGREEMENTS.
1.1. The Employment Agreements between Sagemark and Messrs. ▇▇▇▇▇▇
and Young dated April 21, 1999 (EACH AN "EMPLOYMENT AGREEMENT" AND COLLECTIVELY,
THE "EMPLOYMENT AGREEMENTS"), inclusive of all stock options issued by Sagemark
to them pursuant thereto, are hereby terminated, effective as of the date
hereof. Notwithstanding the foregoing, the indemnification provisions of the
Employment Agreements will survive such termination. In consideration of the
termination of the Employment Agreement of Young, as aforesaid, Sagemark will
pay to Young on the date hereof, the sum of $60,000 as severance compensation
therefor.
1.2. Sagemark hereby engages Young, for a period of ninety (90)
days from the date hereof, to render consulting services to Sagemark with
respect to Sagemark's activities as reasonably requested by Sagemark in
consideration of a consulting fee of $60,000 therefor (THE "CONSULTING FEE").
Sagemark hereby pays Young the Consulting Fee, the receipt of which is hereby
acknowledged by Young. Young will devote such of his time to the performance of
such consulting services as reasonably requested of him by Sagemark but in no
event ▇▇▇▇ ▇▇▇▇▇ be required to provide more than eighty (80) hours of
consulting services in each of the 30-day periods during which he will render
such services. Sagemark hereby agrees to provide Young with reasonable advance
notice of its request(s) for such services.
1.3. Sagemark hereby engages ▇▇▇▇▇▇, for a period of sixty (60)
days from the date hereof, to render consulting services to Sagemark with
respect to Sagemark's activities as reasonably requested by Sagemark. ▇▇▇▇▇▇
will provide such services without compensation from Sagemark. ▇▇▇▇▇▇ will
devote such of his time to the performance of such consulting services as
reasonably requested of him by Sagemark, but in no event will ▇▇▇▇▇▇ be required
to provide more than twenty (20) hours of consulting services in each of the
30-day periods during which he will render such services. Sagemark hereby agrees
to provide ▇▇▇▇▇▇ with reasonable advance notice of its request(s) for such
services.
1.4. Sagemark will reimburse Messrs. ▇▇▇▇▇▇ and Young for all out
of pocket expenses incurred by them in the performance of the consulting
services referred to in Sections 1.2 and 1.3 above upon presentation of
supporting documentation therefor, PROVIDED THAT any single expense in excess of
$100 is approved, in advance, by Sagemark.
1.5. ▇▇▇▇▇▇ hereby represents and warrants to Sagemark that he is
the sole owner of all options of Sagemark previously issued to him, that such
options are free and clear of all liens, claims, encumbrances and rights of any
third party and that any and all of such options previously assigned or
transferred by him to third parties have been returned by such third parties,
none of whom have any further rights with respect thereto. ▇▇▇▇▇▇ will obtain
and deliver to Sagemark within thirty (30) days after the date hereof, written
confirmation of the foregoing from each such assignee or transferee. In
consideration of the foregoing, Sagemark hereby issues to ▇▇▇▇▇▇ 24,000
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unregistered shares of its common stock (which ▇▇▇▇▇▇ acknowledges he is
acquiring for investment purposes only and not with any intent to distribute the
same).
2. TERMINATION OF EXPENSE SHARING AGREEMENT. The June 10, 1999
agreement between Sagemark and Benchmark Equity Group, Inc. ("BENCHMARK") is
hereby terminated. Benchmark hereby represents and warrants to Sagemark that
there are no other agreements between it and Sagemark and it has duly authorized
such termination and the foregoing provisions of this Section constitute a
binding obligation of Benchmark.
3. RESIGNATIONS.
3.1. Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇") hereby
resign, effective as of the date hereof, as officers and directors of Sagemark
and all of its subsidiary corporations and confirm that, immediately prior to
such resignation, they appointed ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to
Sagemark's Board of Directors to fill the vacancies created by such
resignations. Messrs. ▇▇▇▇▇▇, Young and ▇▇▇▇▇ will execute and deliver to
Sagemark on the date hereof, the Unanimous Consent in Lieu of Meeting of
Sagemark's Board of Directors in the form attached hereto as Exhibit A
approving, prior to such appointments of Messrs. Bright and ▇▇▇▇▇▇▇, Sagemark's
execution and delivery of this Agreement and the transactions contemplated
hereby and confirming the appointment of Messrs. Bright and ▇▇▇▇▇▇▇ to
Sagemark's Board of Directors, as aforesaid.
3.2. Sagemark will deliver to Messrs. ▇▇▇▇▇▇ and Young on the date
hereof a Unanimous Consent in Lieu of Meeting of Sagemark's Board of Directors
comprised of Messrs. Bright and ▇▇▇▇▇▇▇ in the form annexed hereto as Exhibit B
ratifying this Agreement and the transactions contemplated hereby, which consent
was executed immediately following the actions referred to in Section 3.1 above.
4. RELEASES AND INDEMNIFICATION.
4.1. On the date hereof, Sagemark and its subsidiary corporations,
as releasors, shall execute and deliver to Messrs. ▇▇▇▇▇▇ and Young, as
releasees, general releases and covenants not to ▇▇▇ with respect to all claims
and causes of action (except to the extent specified therein) relating to all
transactions and activities of or in connection with Sagemark from the beginning
of the world through the date hereof, in the form annexed hereto as Exhibit C.
Such release and covenant not to ▇▇▇ shall also include, as releasees
thereunder, Benchmark, Benchmark Merchant Partners, L.P., Technology
Acquisitions, Ltd., Sagemark Management, LLC ("SML"), ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
St. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ (COLLECTIVELY, THE "AFFILIATES").
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4.2. On the date hereof, Messrs. ▇▇▇▇▇▇ and Young and the
Affiliates, as releasors, shall execute and deliver to Sagemark, SIS Capital
Corp., ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ as releasees, general releases and covenants
not to ▇▇▇ with respect to all claims and causes of action (except to the extent
specified therein) relating to all transactions and activities of or in
connection with Sagemark from the beginning of the world through the date
hereof, in the form annexed hereto as Exhibit D.
4.3. Sagemark hereby agrees to indemnify and hold harmless each of
Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇ (THE "INDEMNITEES") from all losses, claims,
causes of action, damages, liabilities, costs and expenses (including legal fees
and expenses) (THE "LOSSES") which may be hereafter asserted against or incurred
by them and which relate, directly or indirectly, to their prior services as
officers and/or directors of Sagemark and/or its subsidiary corporations and to
their consulting services as provided in Sections 1.2 and 1.3 hereof (exclusive
of all Losses arising from any non-performance of the consulting services of
Messrs. ▇▇▇▇▇▇ and Young thereunder), to the fullest extent permitted by
Sections 722, 723 and 725 of the Business Corporation Law of the State of New
York, Sagemark's Certificate of Incorporation and By-Laws and the applicable
provisions of the Employment Agreements. It is hereby agreed that with respect
to the foregoing as it relates to indemnification for consulting services, such
indemnification shall be provided to Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ pursuant to such
statute and governing instruments of Sagemark as if such individuals were
officers of Sagemark. Such indemnification shall include the advancement and
reimbursement by Sagemark of all legal fees and expenses of the Indemnitees
relating to such matters if and to the extent permitted by applicable law. The
indemnification provided for in this Section shall not be an exclusive remedy
for the Indemnitees with respect to any of the matters to which Messrs. ▇▇▇▇▇▇,
Young and ▇▇▇▇▇ are entitled to indemnification hereunder. In addition, Messrs.
▇▇▇▇▇▇, Young and/or ▇▇▇▇▇ shall have the right to approve any counsel selected
by Sagemark with respect to matters to which Sagemark provides indemnification
to them hereunder, which approval shall not be unreasonably withheld,
conditioned or delayed.
4.4. Sagemark hereby agrees that it will maintain in force and
effect at its cost, for a period of two years after the date hereof,
professional liability insurance coverage in the face amount of not less than
$2,000,000 providing for continued coverage thereunder for Messrs. ▇▇▇▇▇▇, Young
and ▇▇▇▇▇ with respect to their services as officers and/or directors of
Sagemark and its subsidiary corporations prior to the date hereof, PROVIDED THAT
such insurance continues to be available to Sagemark at commercially reasonable
rates. Upon request, Sagemark will provide evidence of such insurance to Messrs.
▇▇▇▇▇▇, Young and/or ▇▇▇▇▇. Sagemark will provide thirty (30) days prior notice
of cancellation of such insurance to Messrs. ▇▇▇▇▇▇, Young and ▇▇▇▇▇ and, if the
policy for such insurance does not so provide, will use its best efforts to
request the insurance carrier to amend such insurance policy to provide for
thirty (30) days prior notice of cancellation to Messrs. ▇▇▇▇▇▇, Young and
▇▇▇▇▇.
5. ESCROW ACCOUNT. All of the proceeds received by Sagemark prior to
the date hereof from the payment to it of the previously
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outstanding indebtedness to it of Arc Networks, Inc. and the sale by Sagemark of
certain common stock purchase warrants of InfoHighway Communications Corp.
("INFOHIGHWAY"), which proceeds are presently held by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. in
his attorney's escrow account (net of all disbursements made from such escrow
account), shall be released to Sagemark and deposited in such bank account of
Sagemark as and when Messrs. Bright and ▇▇▇▇▇▇▇ shall direct, in writing, on or
after the date hereof.
6. REPRESENTATIONS AND WARRANTIES OF MESSRS. ▇▇▇▇▇▇ AND YOUNG. In
order to induce Sagemark to enter into this Agreement and consummate the
transactions provided for herein and contemplated hereby, Messrs. ▇▇▇▇▇▇ and
▇▇▇▇▇ represent and warrant to Sagemark as follows:
6.1. Each of Messrs. ▇▇▇▇▇▇ and Young have all requisite power and
authority necessary for, and have taken all action required with respect to, the
authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, and this Agreement, when
executed and delivered by Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇, ▇▇▇▇ constitute the valid
and legally binding obligation of Messrs. ▇▇▇▇▇▇ and Young, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
6.2. Neither of Messrs. ▇▇▇▇▇▇ or ▇▇▇▇▇ is in violation or default
of any judgment, order, writ, decree, instrument, mortgage, document or other
agreement relating to the business of Sagemark or Sagemark Capital, LP (THE
"PARTNERSHIP") to which either of them is a party or by which either of them are
bound (THE "DOCUMENTS") or, to the best of Messrs. ▇▇▇▇▇▇ and Young's knowledge,
of any Federal, state, or local law, rule or regulation relating to the business
of Sagemark or the Partnership applicable to Sagemark or the Partnership, the
violation or default of which would materially adversely affect the transactions
contemplated by this Agreement. The authorization, execution, delivery and
performance of this Agreement by Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ and the consummation
of the transactions contemplated hereby by them will not result in any violation
of or be in conflict with or constitute, with or without the passage of time or
giving of notice, either a default under any of the Documents or an event which
will create rights of acceleration, termination, cancellation, default or loss
of rights thereunder, or result in the creation of any lien, claim, charge or
encumbrance upon any property of Messrs. ▇▇▇▇▇▇ and Young.
6.3. There is no claim, action, suit, proceeding or investigation
pending or, to the best knowledge of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇, threatened
against either of them which may materially adversely affect the transactions
contemplated by this Agreement. Neither of Messrs. ▇▇▇▇▇▇ or Young are parties
or subject to the provisions of any order, writ, injunction, judgment, or decree
of any court or Federal, state, local or other governmental agency, authority or
regulatory body which may materially adversely affect the transactions
contemplated by this Agreement. There is no claim, action, suit, proceeding or
investigation by Messrs. ▇▇▇▇▇▇ or ▇▇▇▇▇, currently pending or which either of
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them intends to initiate which may materially adversely affect the transactions
contemplated by this Agreement.
6.4. By virtue of the appointment of ▇▇▇▇▇ to Sagemark's Board of
Directors and his execution of the Unanimous Consent referred to in Section 3.1
hereof prior to the date hereof, this Agreement has been properly authorized
pursuant to the applicable provisions of Section 713 of the New York Business
Corporation Law.
6.5. To the best of ▇▇▇▇▇▇ and ▇▇▇▇▇'▇ knowledge, Sagemark is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York and is qualified to do business as a foreign
corporation and is in good standing in the State of Texas.
6.6. With respect to the period subsequent to April 28, ▇▇▇▇,
▇▇▇▇▇▇▇▇ does not own or control (directly or indirectly) any stock, partnership
interest, joint venture interest, equity participation, or other security or
other interest in any other entity, other than as disclosed in the reports filed
by Sagemark with the Securities and Exchange Commission (THE "COMMISSION")
pursuant to the Securities Exchange Act of 1934, as amended (THE "EXCHANGE
ACT").
6.7. Subsequent to April 28, 1999 and through the date hereof,
Sagemark has made all filings required under the Exchange Act and other
applicable Federal securities laws, if any, and such filings with the Commission
and all amendments or supplements thereto, if any, contain all statements which
are required to be stated therein in accordance with the Federal securities laws
and the rules and regulations promulgated thereunder and in all material
respects conform to the requirements thereof and do not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein which are necessary to make the statements therein not materially
misleading.
6.8. On or prior to the date hereof, Messrs. ▇▇▇▇▇▇ and Young have
caused Sagemark to sign Sagemark's Form 10-Q for the quarter ended September 30,
2000. To the best of Messrs. ▇▇▇▇▇▇'▇ and ▇▇▇▇▇'▇ knowledge, Sagemark's Form
10-Q for the quarter ended September 30, 2000 is accurate and complete as of the
date hereof. Subsequent to September 30, 2000, to the best of ▇▇▇▇▇▇'▇ and
Young's knowledge: (i) there has been no material adverse change in the
financial condition of Sagemark; (ii) Sagemark has not entered into or canceled
any material agreement, issued any shares of its capital stock or entered into
any agreement to do so (except as provided in Section 1.5 hereof); or (iii)
incurred any material liabilities which would have required disclosure in any
report required to be filed by Sagemark with the Commission under the Exchange
Act.
6.9. Except for this Agreement and the Stock Purchase Agreement of
even date herewith between Sagemark and Gemini VII, Inc. (THE "STOCK PURCHASE
AGREEMENT"), there are no agreements, arrangements or transactions between
Sagemark and Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇, or any entity owned or controlled by
either of them or members of their family, or any affiliate (as such term is
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defined in the Exchange Act), or any of the Releasees (as such term is defined
in Exhibit C hereto), which have not been disclosed in any report filed by
Sagemark with the Commission under the Exchange Act.
6.10. Upon the execution of this Agreement, there will be no
amounts, benefits, or other compensation due by Sagemark to any person who was
employed by Sagemark subsequent to April 28, 1999, including ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
St. ▇▇▇▇▇▇ and ▇▇▇▇▇ (other than base salaries payable to them for services
rendered through the date hereof); ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ St. ▇▇▇▇▇▇ and ▇▇▇▇▇ are
the only employees of Sagemark as of the date hereof, other than Messrs. ▇▇▇▇▇▇
and Young, and there are no written or oral obligations or commitments for the
payment of severance, benefits or other compensation to any of such employees
upon the termination of their services to Sagemark (other than base salaries
payable to them for services rendered through the date of any such termination),
except as set forth on Schedule 6.11 hereto. Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ hereby
also represent and warrant that all shares of capital stock of Sagemark and
options to purchase such shares that were previously issued to them and ▇▇▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇ St. ▇▇▇▇▇▇ have been returned to Sagemark and canceled.
6.11. All of the investments made by the Partnership are set forth
on Exhibit E hereto, none of which are in default except as set forth on
Schedule 6.11 hereof.
6.12. Sagemark owns 100,000 shares of the Series C Preferred Stock
of ▇▇▇▇▇▇▇▇.▇▇▇, Inc. ("GAVELNET") and 137,500 shares of the common stock of
JewelersEdge, Inc. ("JEWELERSEDGE"), free and clear of all liens, claims and
encumbrances whatsoever; such shares are the only shares of capital stock of
Gavelnet and JewelersEdge owned by Sagemark and none of such shares of Gavelnet
have been converted into shares of Gavelnet's common stock.
6.13. There is no claim, action, suit, proceeding or investigation
pending or, to the best knowledge of Messrs. ▇▇▇▇▇▇ and Young, threatened
against Sagemark which may materially adversely affect the transactions
contemplated by this Agreement. Sagemark is not a party or subject to the
provisions of any order, writ, injunction, judgment, or decree of any court or
Federal, state, local or other governmental agency, authority or regulatory body
which may materially adversely affect the transactions contemplated by this
Agreement. There is no claim, action, suit, proceeding or investigation by
Sagemark currently pending or which Sagemark intends to initiate which may
materially adversely affect the transactions contemplated by this Agreement.
6.14. The $1,147,500 wire transfer received by Sagemark on or
about October 30, 2000 was sent in error by InfoHighway and was returned by
Sagemark thereafter.
6.15. None of the representations or warranties of Messrs. ▇▇▇▇▇▇
or ▇▇▇▇▇ contained in this Section 6 is false or misleading in any material
respect or omits to state a fact necessary to make the statements herein not
misleading in any material respect. All of such representations and warranties
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are true and correct on the date hereof and will survive the execution and
delivery of this Agreement for a period of eighteen (18) months from the date
hereof. Except for the representations and warranties of Sagemark in Section 7
hereof and the Representative in Section 8 hereof, there have been no other
representations or warranties made by or on behalf of Sagemark or the
Representative to Messrs. ▇▇▇▇▇▇ and Young with respect to the matters covered
by this Agreement upon which either of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ has relied in
connection with the negotiation, execution and delivery of this Agreement or
with respect to the transactions contemplated hereby.
7. REPRESENTATIONS AND WARRANTIES OF SAGEMARK. In order to induce
Messrs. ▇▇▇▇▇▇ and Young to enter into this Agreement and consummate the
transactions provided for herein and contemplated hereby, based in part upon the
representations and warranties of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ contained in Sections
6.4 and 6.5 hereof, Sagemark represents and warrants to Messrs. ▇▇▇▇▇▇ and Young
as follows:
7.1. Sagemark has all requisite power and authority necessary for,
and has taken all required corporate action with respect to, the authorization,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby and this Agreement, when executed and
delivered by Sagemark, will constitute a valid and legally binding obligation of
Sagemark, enforceable in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other laws
affecting generally the enforcement of creditors' rights and by general
principles of equity.
7.2. None of the representations or warranties of Sagemark
contained in this Section 7 is false or misleading in any material respect or
omits to state a fact necessary to make the statements herein not misleading in
any material respect. All of the foregoing representations and warranties of
Sagemark are true and correct on the date hereof and will survive the execution
and delivery of this Agreement for a period of eighteen (18) months from the
date hereof. Except for the representations and warranties of Messrs. ▇▇▇▇▇▇ and
▇▇▇▇▇ in Section 6 hereof, there have been no other representations or
warranties made to Sagemark by or on behalf of Messrs. ▇▇▇▇▇▇ and Young with
respect to the matters covered by this Agreement upon which Sagemark has relied
in connection with the negotiation, execution and delivery of this Agreement or
with respect to the transactions contemplated hereby.
8. REPRESENTATIONS AND WARRANTIES OF THE REPRESENTATIVE. In order to
induce Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ to enter into this Agreement and consummate the
transactions provided for herein and contemplated hereby, the Representative
hereby represents and warrants to Messrs. ▇▇▇▇▇▇ and Young as follows:
8.1. The Representative has all requisite power and authority
necessary for, and has taken all action required of him with respect to, the
authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, and this Agreement, when
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executed and delivered by him, will constitute the valid and legally binding
obligation of the Representative, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other laws affecting generally the enforcement of creditors'
rights and by general principles of equity.
8.2. The Representative is not in violation or default of any
judgment, order, writ, decree, instrument, mortgage, document or other agreement
to which he is a party or by which he is bound (THE "REPRESENTATIVE DOCUMENTS")
or, to the best of his knowledge, of any Federal, state, or local law, rule or
regulation applicable to him, the violation or default of which would materially
adversely affect the transactions contemplated by this Agreement. The
authorization, execution, delivery and performance of this Agreement by the
Representative and the consummation of the transactions contemplated hereby by
him will not result in any violation of or be in conflict with or constitute,
with or without the passage of time or giving of notice, either a default under
any of the Representative Documents or an event which will create rights of
acceleration, termination, cancellation, default or loss of rights thereunder,
or result in the creation of any lien, claim, charge or encumbrance upon any
property of the Representative.
8.3. There is no claim, action, suit, proceeding or investigation
pending or, to the best knowledge of the Representative, threatened against him
which may materially adversely affect the transactions contemplated by this
Agreement. The Representative is not a party or subject to the provisions of any
order, writ, injunction, judgment, or decree of any court or Federal, state,
local or other governmental agency, authority or regulatory body which may
materially adversely affect the transactions contemplated by this Agreement.
There is no claim, action, suit, proceeding or investigation by the
Representative, currently pending or which he intends to initiate which may
materially adversely affect the transactions contemplated by this Agreement.
8.4. The Representative owns, directly and indirectly, an
aggregate of 27,269 shares of the common stock of Sagemark.
8.5. None of the representations or warranties of the
Representative contained in this Section 8 is false or misleading in any
material respect or omits to state a fact necessary to make the statements
herein not misleading in any material respect. All of such representations and
warranties are true and correct on the date hereof and will survive the
execution and delivery of this Agreement for a period of one year from the date
hereof. Except for the representations and warranties of Messrs. ▇▇▇▇▇▇ and
▇▇▇▇▇ in Section 6 hereof, there have been no other representations or
warranties made by or on behalf of Messrs. ▇▇▇▇▇▇ and Young to the
Representative with respect to the matters covered by this Agreement upon which
the Representative has relied in connection with the negotiation, execution and
delivery of this Agreement or with respect to the transactions contemplated
hereby.
9
9. LEGAL FEES; NON-DISCLOSURE.
9.1. Sagemark will, on the date hereof, pay $30,138.97 to
DeMartino, Finkelstein, ▇▇▇▇▇ and ▇▇▇▇▇, $56,250 to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. (for
services rendered through October 31, 2000) and $12,430.75 to ▇▇▇▇▇ & ▇▇▇▇▇▇▇,
counsel to Sagemark, in full payment for their respective invoices for
professional services rendered to Sagemark in connection with this Agreement and
the Stock Purchase Agreement and the transactions contemplated hereby and
thereby for the period September 12, 2000 through the date hereof, and the
outstanding invoice of Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ dated
July 15, 2000 in the amount of $12,131.25 for professional services rendered to
Sagemark (with respect to which Messrs. ▇▇▇▇▇▇ and Young represent does not
include any charges for services rendered to the Partnership).
9.2. Sagemark will not make any public disclosure of this
Agreement or the Stock Purchase Agreement or the transactions contemplated
hereby or thereby, if such disclosure contains references to Messrs. ▇▇▇▇▇▇ or
▇▇▇▇▇ in the absence of their prior written consent, which consent will not be
unreasonably withheld, conditioned or delayed, except that in the event that
Sagemark is required, under applicable law, to file any report with the
Commission which will contain any such disclosure, Sagemark shall be permitted
to do so without such consent, PROVIDED THAT any such disclosure and any such
report filed by Sagemark is consistent with the disclosures contained in
Sagemark's Form 10-Q for the quarter ended September 30, 2000 and in any such
instance, Sagemark will use its best efforts to provide Messrs. ▇▇▇▇▇▇ and Young
with a copy of the text of any such proposed disclosure at least three (3)
business days before the filing thereof with the Commission. Neither ▇▇▇▇▇▇ nor
▇▇▇▇▇ will make any public disclosure of this Agreement or the Stock Purchase
Agreement or the transactions contemplated hereby or thereby in the absence of
the prior written consent of Sagemark, which consent shall not be unreasonably
withheld, conditioned or delayed.
10. COVENANTS. Messrs. ▇▇▇▇▇▇ and Young will, (i) as soon as practical
after the date hereof, cancel or terminate all telephone, utility, credit card
or other credit arrangements, and other third party service and equipment and
other lease agreements, if any, which are in the name of Sagemark (unless
otherwise agreed to in writing by the Representative) and provide evidence of
same to the Representative, and (ii) upon the written request of Sagemark on or
after the date hereof, cause all books and records of Sagemark (including all
checkbooks, bank statements, minute books and files) to be delivered to Sagemark
at such address(es) or location(s) as may be requested in writing by Sagemark
after the date hereof. Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ hereby agree that Sagemark shall
not be responsible for any such bills or invoices covering services or other
charges incurred after the date hereof.
11. MISCELLANEOUS.
11.1. This Agreement constitutes the sole and entire agreement
among the parties hereto with respect to the subject matter hereof and
10
supersedes all prior agreements, representations, warranties, statements,
promises, arrangements and understandings, whether oral or written, express or
implied, among the parties hereto with respect to the subject matter hereof and
may not be changed or modified except by an instrument in writing signed by the
party or parties to be bound thereby. This Agreement has been subject to the
mutual consultation, negotiation and agreement of the parties hereto and shall
not be construed for or against any party hereto on the basis of such party
having drafted this Agreement.
11.2. All notices, consents, requests, demands and other
communications required or permitted to be given under this Agreement (THE
"NOTICES"), shall be in writing and delivered personally or by a nationally
recognized overnight courier service, receipt acknowledged, or mailed by
registered or certified mail, postage prepaid, return receipt requested (or,
with respect to communications under Section 9.2, by facsimile transmission),
addressed to the parties hereto as follows (or to such other address or
facsimile number, if applicable, as any of the parties hereto shall specify by
notice given in accordance with this provision):
(a) If to Sagemark:
The Sagemark Companies Ltd.
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Berlack, Israels & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
(b) If to ▇▇▇▇▇▇:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
11
(c) If to Young:
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(d) If to the Representative:
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Berlack, Israels & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
All such Notices shall be deemed given when personally delivered as aforesaid,
or, if mailed as aforesaid, on the third business day after the mailing thereof
or on the day actually received, if earlier, except for a notice of a change of
address which shall be effective and deemed to have been given only upon
receipt.
11.3. None of the parties hereto may assign this Agreement or its
or their respective rights, benefits or obligations hereunder without the
written consent of the other parties hereto.
11.4. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors, heirs, personal
representatives, administrators, executors and permitted assigns. Nothing
contained in this Agreement is intended to confer upon any person or entity,
other than the parties hereto, or their respective successors, heirs, personal
12
representatives, administrators, executors or permitted assigns, any rights,
benefits, obligations, remedies or liabilities under or by reason of this
Agreement.
11.5. No waiver of any provision of this Agreement or of any
breach thereof shall be effective unless in writing and signed by the party to
be bound thereby. The waiver by any party hereto of a breach of any provision of
this Agreement, or of any representation, warranty, obligation or covenant in
this Agreement by any other party hereto, shall not be construed as a waiver of
any subsequent breach of the same or of any other provision, representation,
warranty, obligation or covenant of such other party, unless the instrument of
waiver expressly so provides.
11.6. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York with respect to contracts made
and to be fully performed therein without regard to the conflicts of laws
principles thereof. The parties hereto hereby agree that any suit or proceeding
arising under or as a result of this Agreement or the consummation of the
transactions contemplated hereby, shall be brought solely in a Federal or state
court located in the County of New York, State of New York. By their execution
hereof, the parties hereto irrevocably consent and submit to the IN PERSONAM
jurisdiction of the Federal and state courts located in the County of New York,
State of New York and agree that any process in any suit or proceeding commenced
in such courts under this Agreement may be served upon them personally or by
certified or registered mail, return receipt requested, to them at their
respective addresses set forth in Section 11.2 hereof, or by a nationally
recognized overnight courier service which provides evidence of delivery, with
the same force and effect as if personally served upon them in such County and
State. The parties hereto each waive any claim that any such jurisdiction is not
a convenient forum, or that there is another more convenient forum, for any such
suit or proceeding and any defense of lack of IN PERSONAM jurisdiction with
respect thereto.
11.7. The parties hereto hereby agree that, at any time and from
time to time after the date hereof, upon the reasonable request of any party
hereto and at no cost to the party to which any such request is made, they shall
do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, such further acts, deeds, assignments, transfers,
conveyances, and assurances as may be reasonably required to more effectively
consummate this Agreement and the transactions contemplated thereby or to
confirm or otherwise effectuate the provisions of this Agreement.
11.8. Each party hereto (and Benchmark) represents and warrants to
the other that he or it has been represented by independent counsel of his or
its own choosing in connection with the negotiation, execution, delivery and
consummation of this Agreement and the Stock Purchase Agreement (and the
Non-Negotiable Promissory Note and Guaranty relating thereto). This Agreement
represents the joint product and effort of each of the parties hereto after
fully informed and arms-length discussion and negotiation, and no presumption
may be drawn against any party hereto as the putative drafter of this Agreement.
13
11.9. Each of the parties hereto shall bear all of their
respective costs and expenses incurred in connection with the negotiation,
preparation, execution, consummation, performance and/or enforcement of this
Agreement, including, without limitation, the fees and disbursements of their
respective counsel, financial advisors and accountants. Notwithstanding the
foregoing, in the event of any action or proceeding instituted by any party
hereto to enforce the provisions of this Agreement, the court may, in its
discretion, award the party prevailing therein reimbursement by the other party
of the reasonable legal costs and expenses incurred by such prevailing party in
connection therewith.
11.10. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which when taken together,
shall constitute one and the same instrument.
11.11. The Section headings used in this Agreement have been used
for convenience of reference only and are not to be considered in construing or
interpreting this Agreement.
11.12. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision(s) shall be excluded from
this Agreement and the balance of this Agreement shall remain in full force and
effect.
14
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals as of the day and year first above written.
WITNESS: THE SAGEMARK COMPANIES LTD.
By:
-------------------- --------------------------------
-------------------- -----------------------------------
Print Name Print Name and Title
WITNESS:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------- ----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
Print Name
WITNESS:
▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------- ----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------
Print Name
WITNESS: THE REPRESENTATIVE
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Print Name
15
AGREED TO SOLELY AS TO SECTIONS 2
AND 11 HEREOF:
WITNESS: BENCHMARK EQUITY GROUP, INC.
By:
-------------------- --------------------------------
-------------------- -----------------------------------
Print Name Print Name and Title
16
STATE OF ________ )
:SS.:
COUNTY OF ________ )
On November __, 2000, before me personally came _____________ to me
known, and known to me to be, and who, by me duly sworn, did depose and say that
deponent is the ___________________ of THE SAGEMARK COMPANIES LTD., the
corporation described in and which executed the foregoing Transition Agreement
and that deponent acknowledged to me that his signature was affixed to the
Transition Agreement by order of the board of directors of such corporation.
-------------------------
Notary Public
STATE OF ________ )
:SS.:
COUNTY OF ________ )
On November __, 2000, before me personally came ▇▇▇▇▇ ▇▇▇▇▇▇, to me
known, and known to me to be, the individual described in and who executed the
foregoing Transition Agreement and duly acknowledged to me that he executed the
same.
-------------------------
Notary Public
STATE OF ________ )
:SS.:
COUNTY OF ________ )
On November __, 2000, before me personally came ▇▇▇▇▇▇▇ ▇▇▇▇▇ to me
known, and known to me to be, the individual described in and who executed the
foregoing Transition Agreement and duly acknowledged to me that he executed the
same.
-------------------------
Notary Public
17
STATE OF ________ )
:SS.:
COUNTY OF ________ )
On November __, 2000, before me personally came ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, to me
known, and known to me to be, the individual described in and who executed the
foregoing Transition Agreement and duly acknowledged to me that he executed the
same.
-------------------------
Notary Public
STATE OF ________ )
:SS.:
COUNTY OF ________ )
On November __, 2000, before me personally came _____________ to me
known, and known to me to be, and who, by me duly sworn, did depose and say that
deponent is the ___________________ of BENCHMARK EQUITY GROUP, INC., the
corporation described in and which executed the foregoing Transition Agreement
and that deponent acknowledged to me that his signature was affixed to the
Transition Agreement by order of the board of directors of such corporation.
-------------------------
Notary Public
18
EXHIBITS
EXHIBIT DESCRIPTION SECTION
A Form of Unanimous Board Consent of
Sagemark's Board of Directors 3.1
B Form of Unanimous Board Consent of
Sagemark's Board of Directors 3.2
C Form of Release and Covenant not to
▇▇▇ of Sagemark 4.1
D Form of Release and Covenant not to
▇▇▇ of Messrs. ▇▇▇▇▇▇ and Young 4.2
E Partnership Investments 6.11
SCHEDULES
6.10 Severance Compensation 6.10
6.11 Partnership Investment Defaults 6.11
19
EXHIBIT A
FORM OF
UNANIMOUS WRITTEN CONSENT TO ACTION
IN LIEU OF A
MEETING OF THE BOARD OF DIRECTORS
OF
THE SAGEMARK COMPANIES, LTD.
The undersigned, being all of the directors of The Sagemark Companies,
Ltd., a New York corporation (the "CORPORATION"), pursuant to Section 708 of the
New York Business Corporation Law, do hereby waive any and all notice and the
holding of a meeting of the directors of the Corporation and do hereby consent
to the adoption of the following Resolutions and the taking of all actions
required or permitted thereby:
WHEREAS, in April 1999, Technology Acquisitions, Ltd. ("TAL") purchased
shares of the Corporation's common stock and acquired an option from certain
shareholders of the Corporation to purchase additional shares of the
Corporation's common stock (the "OPTION"); and
WHEREAS, in furtherance of TAL's purchase of such shares and in
anticipation of its exercise of the Option, Messrs. ▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and
▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇") were designated by TAL as and became officers and
directors of the Corporation; and
WHEREAS, the Option was not exercised and expired in April, 2000; and
WHEREAS, subsequent to the expiration of the Option, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
individually and on behalf of certain shareholders of the Corporation
("BRIGHT"), informed Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ that he did or could represent
shareholders owning in excess of fifty percent (50%) of the Corporation's
outstanding shares of common stock who or which desired a change in management
of the Corporation and continuation of the management of Sagemark Management
LLC; and
WHEREAS, the Corporation and Messrs. ▇▇▇▇▇▇ and Young mutually agreed
upon a change in management of the Corporation, together with a continuity of
the management of Sagemark Management LLC; and
WHEREAS, the board of directors has determined that such change of
management, on the terms and conditions presented to and reviewed by it, is fair
to and in the best interest of the Corporation;
NOW, THEREFORE, BE IT
20
RESOLVED, that the Corporation enter into an agreement (the
"TRANSITION AGREEMENT") with ▇▇▇▇▇▇, an officer and director of
the Corporation, Young, an officer and director of the
Corporation, and Bright, individually and on behalf of certain
shareholders of the Corporation, pursuant to the terms and
conditions of which, among other things, the existing Employment
Agreements of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ dated April 28, 1999 will
be terminated, the Expense Sharing Agreement dated June 10, 1999
between the Corporation and Benchmark Equity Group, Inc. will be
terminated, Messrs. ▇▇▇▇▇▇, Young and ▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇") will
resign as officers and directors of the Corporation and all of its
subsidiaries, the Corporation and its subsidiaries will execute
and deliver General Releases and Covenants Not to ▇▇▇ to Messrs.
▇▇▇▇▇▇, ▇▇▇▇▇ and certain other persons identified as their
Affiliates in the Transition Agreement, Messrs. ▇▇▇▇▇▇, Young and
such Affiliates will execute and deliver to the Corporation and
certain others named in the Transition Agreement, General Releases
and Covenants Not to ▇▇▇, the Corporation will indemnify Messrs.
▇▇▇▇▇▇, Young and ▇▇▇▇▇, as provided in the Transition Agreement,
and certain proceeds received by the Corporation in payment of
previously outstanding indebtedness of ARC Networks, Inc. and from
the sale by the Corporation of common stock purchase warrants of
InfoHighway Communications Corp., currently held in escrow, will
be released from escrow and deposited to a bank account of the
Corporation, a copy of which Transition Agreement has been
presented to and reviewed by the board of directors and is hereby
ordered to be attached to this Unanimous Written Consent and filed
with the Minutes and Consents to Action of the Corporation; and be
it
FURTHER RESOLVED, that the Corporation enter into a Stock Purchase
Agreement (the "STOCK PURCHASE AGREEMENT") with Gemini VII, Inc.,
a Delaware corporation ("GEMINI"), pursuant to which the
Corporation will sell to Gemini and Gemini will purchase from the
Corporation 100,000 shares of the Series C Preferred Stock, $.001
par value per share, of ▇▇▇▇▇▇▇▇.▇▇▇, Inc. and 137,500 shares of
the Common Stock of JewelersEdge, Inc., a Delaware corporation,
for an aggregate purchase price of $3,500,000 payable by delivery
at the closing of such purchase and sale of a non-interest bearing
Non-Negotiable Promissory Note of Gemini in such amount (the
"GEMINI NOTE") and Guaranty of the Gemini
21
Note by Messrs. ▇▇▇▇▇▇ and Young (the "GUARANTY"), copies of which
documents have been presented to and reviewed by the board of
directors and are hereby ordered to be attached to this Unanimous
Consent and filed with the Minutes and Consents to Action of the
Corporation; and be it
FURTHER RESOLVED, that the Corporation enter into a letter
agreement (the "SML LETTER AGREEMENT") with Sagemark Management
LLC ("SML") in its capacity as the General Partner of Sagemark
Capital LP (the "PARTNERSHIP") with respect to certain matters
concerning the Partnership including provisions relating to
payment by the limited partners of the Partnership of the unfunded
portion of their respective capital contributions, the appointment
of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to the Advisory Board of the Partnership,
the payment by SML of certain amounts due by it to the Partnership
and SML's monthly management fee, a copy of which SML Letter
Agreement has been presented to and reviewed by the board of
directors and is hereby ordered to be attached to this Unanimous
Written Consent and filed with the Minutes and Consents to Action
of the Corporation; and be it
FURTHER RESOLVED that, prior to discussion and approval by the
board of directors of the Transition Agreement, the Stock Purchase
Agreement, the Gemini Note, the Guaranty, the General Releases and
Covenants Not to ▇▇▇, the SML Letter Agreement, and all of the
transactions and other documents described and/or provided for
therein, Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ disclosed to the board of
directors pursuant to the requirements of Section 713 of the
Business Corporation Law of New York (the "BCL") that they are
"interested directors" as described in such Section and disclosed
and described to the Board of Directors all of their respective
material interests including, but not limited to, all substantial
financial interests, direct and indirect, in the Transition
Agreement, the Stock Purchase Agreement, the SML Letter Agreement
and all of the transactions and other documents described and/or
provided for therein; and be it
FURTHER RESOLVED that, taking cognizance of the aforesaid
disclosures of the "interested directors," the form, terms and
conditions of the aforesaid Transition Agreement, Stock Purchase
22
Agreement, Gemini Note, Guaranty, the General Releases and
Covenants Not to ▇▇▇ and the SML Letter Agreement substantially in
the form presented to and reviewed by the directors, are hereby in
all respects approved and adopted by the board of directors of the
Corporation and by the affirmative vote of a majority of the
disinterested directors thereof pursuant to Section 713 of the
BCL, and that such approval be conclusively evidenced by the
execution thereof by the proper officers of the Corporation; and
be it
FURTHER RESOLVED, that the Corporation and a majority of the
disinterested directors thereof deem the Transition Agreement, the
Stock Purchase Agreement, Gemini Note, Guaranty, General Releases
and Covenants Not to ▇▇▇, the SML Letter Agreement and the
transactions to be entered into by the Corporation pursuant
thereto to be fair as to the Corporation at the date of this
Resolution; and be it
FURTHER RESOLVED, that the officers of the Corporation, and each
one of them be, and hereby is, authorized, empowered and directed,
in the name and on behalf of the Corporation, to execute and
deliver for and on behalf of the Corporation the Transition
Agreement, the Stock Purchase Agreement, the Corporation's General
Release and Covenant Not to ▇▇▇, the Corporation's agreement to
and acknowledgment of the Guaranty and the SML Letter Agreement
and all other documents and instruments relating thereto
(including the authorization of ▇▇▇▇▇ to execute the Guaranty), in
the forms presented to and approved by the directors, with such
changes therein that any such signatory officer may deem necessary
and appropriate, such determination to be conclusively evidenced
by such officer's signature thereon, and to take all such further
action and to execute and deliver all such other documents and
instruments including, but not limited to, the shares of common
stock of the Corporation issuable pursuant to Section 1.5 of the
Transition Agreement, and where necessary or appropriate, prepare
and file or cause to be prepared and filed with appropriate
governmental authorities, all such certificates, documents,
reports, instruments or other papers, in the name and on behalf of
the Corporation, and to make all such payments, including the
payments specified in Section 9.1 and in all other applicable
provisions of the Transition Agreement, as in their exclusive
judgment or in the judgment of any of them, shall be necessary or
appropriate to carry out the transactions contemplated by the
Transition Agreement and Stock Purchase Agreement and the other
23
agreements relating thereto and the purposes and intent of the
foregoing Resolutions and the transactions contemplated thereby;
and be it
FURTHER RESOLVED that, upon the execution of the Transition
Agreement and the other agreements and documents relating thereto,
the resignations of Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇ as directors
and officers of the Corporation and all of its subsidiaries will
be deemed to be accepted; and be it
FURTHER RESOLVED that, following the actions referred to in the
foregoing Resolutions, Messrs. Bright and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ be,
and they hereby are, appointed to fill the vacancies which will be
created by the resignations of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ on the
execution date of the Transition Agreement and to serve as
directors of the Corporation and all of its subsidiaries until the
next annual meeting of the shareholders of the Corporation and
each of such subsidiaries and until their respective successors
are duly elected or appointed and have qualified.
IN WITNESS WHEREOF, the undersigned have signed this Unanimous Written
Consent as of the ____ day of November, 2000.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Director
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Director
/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Director
24
EXHIBIT B
FORM OF
UNANIMOUS WRITTEN CONSENT TO ACTION
IN LIEU OF A
MEETING OF THE BOARD OF DIRECTORS
OF
THE SAGEMARK COMPANIES, LTD.
The undersigned, being all of the directors of The Sagemark Companies,
Ltd., a New York corporation (the "CORPORATION"), pursuant to Section 708 of the
New York Business Corporation Law, do hereby waive any and all notice and the
holding of a meeting of the directors of the Corporation and do hereby consent
to the adoption of the following Resolutions and the taking of all actions
required or permitted thereby:
WHEREAS, on November ___, 2000, immediately prior hereto, the board of
directors of the Corporation approved the entry by the Corporation into an
agreement (the "TRANSITION AGREEMENT") with ▇▇▇▇▇ ▇▇▇▇▇▇, an officer and
director of the Corporation ("▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇, an officer and director
of the Corporation ("YOUNG"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, individually and on behalf
of certain shareholders of the Corporation ("BRIGHT"), pursuant to the terms and
conditions of which, among other things, the existing Employment Agreements of
Messrs. ▇▇▇▇▇▇ and Young dated April 28, 1999 would be terminated, the Expense
Sharing Agreement dated June 10, 1999 between the Corporation and Benchmark
Equity Group, Inc. would be terminated, Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇") would resign as officers and directors of the Corporation and all of
its subsidiaries, the Corporation and its subsidiaries would execute and deliver
General Releases and Covenants Not to ▇▇▇ to Messrs. ▇▇▇▇▇▇, ▇▇▇▇▇ and certain
other persons identified as their Affiliates in the Transition Agreement,
Messrs. ▇▇▇▇▇▇, Young and such Affiliates would execute and deliver to the
Corporation and certain others named in the Transition Agreement, General
Releases and Covenants Not to ▇▇▇, the Corporation would indemnify Messrs.
▇▇▇▇▇▇, Young and ▇▇▇▇▇, as provided in the Transition Agreement, and certain
proceeds received by the Corporation in payment of the previously outstanding
indebtedness of ARC Networks, Inc. and from the sale by the Corporation of
common stock purchase warrants of InfoHighway Communications Corp., then held in
escrow, would be released from escrow and deposited to a bank account of the
Corporation; and
WHEREAS, on such date, the then board of directors also approved the
entry by the Corporation into a Stock Purchase Agreement (the "STOCK PURCHASE
AGREEMENT") with Gemini VII, Inc. a Delaware corporation ("GEMINI"), pursuant to
which the Corporation would sell to Gemini and Gemini would purchase from the
Corporation 100,000 shares of the Series C Preferred Stock, $.001 par value per
share, of ▇▇▇▇▇▇▇▇.▇▇▇, Inc. and 137,500 shares of the Common Stock of
JewelersEdge, Inc., a Delaware corporation, for an aggregate purchase price of
$3,500,000 payable by delivery at the closing of such purchase and sale of a
non-interest bearing Non-Negotiable Promissory Note of Gemini in such amount
(the "GEMINI NOTE") and Guaranty of the Gemini Note by Messrs. ▇▇▇▇▇▇ and Young
(the "GUARANTY"); and
25
WHEREAS, on such date, the then board of directors also approved the
entry by the Corporation into a letter agreement (the "SML LETTER AGREEMENT")
between the Corporation and Sagemark Management LLC ("SML") in its capacity as
the General Partner of Sagemark Capital LP (the "PARTNERSHIP"), with respect to
certain matters concerning the Partnership including, among other things,
provisions relating to payment by the limited partners of the Partnership of
unfunded portions of their respective capital contributions, the appointment of
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to the Advisory Board of the Partnership, the payment by SML
of certain amounts due by it to the Partnership and SML's monthly management
fee; and
WHEREAS, on such date, the then board of directors of the Corporation
Resolved that, upon the execution of the Transition Agreement, the resignations
of Messrs. ▇▇▇▇▇▇, Young and ▇▇▇▇▇ as directors and officers of the Corporation
and all of its subsidiaries would be deemed to be accepted and that Messrs.
Bright and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ would be thereupon appointed to fill the
vacancies created by the resignations of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ on the
execution date of the Transition Agreement and to serve as directors of the
Corporation and all of its subsidiaries until the next annual meeting of the
shareholders of the Corporation and each of such subsidiaries and until their
respective successors are duly elected or appointed and have qualified; and
WHEREAS, on November __, 2000, the Transition Agreement, Stock Purchase
Agreement, Gemini Note, Guaranty, General Releases and Covenants Not to ▇▇▇ and
SML Letter Agreement were executed and delivered and the transactions
contemplated by such documents and agreements were consummated including, but
not limited to, Messrs. Bright and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ becoming directors of the
Corporation;
NOW, THEREFORE, BE IT
RESOLVED, that the undersigned do hereby confirm their acceptance
of their respective appointments to serve as directors of the
Corporation; and be it
FURTHER RESOLVED, that the execution and delivery of the
Transition Agreement (and related agreements) and the transactions
contemplated thereby are hereby ratified and confirmed.
IN WITNESS WHEREOF, the undersigned have signed this Unanimous Written
Consent as of the ____ day of November, 2000.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director
26
EXHIBIT C
RELEASE OF CLAIMS
AND COVENANT NOT TO ▇▇▇
This Release of Claims and Covenant Not to ▇▇▇ ("Release") is executed
as of the [__] day of November, 2000 by The Sagemark Companies, Ltd., a New York
corporation (referred to herein as "Sagemark" or "Releasor").
In consideration of the representations, warranties, covenants and
obligations set forth in the Transition Agreement, dated as of November [__],
2000 (the "Transition Agreement"), by and among Sagemark, ▇▇▇▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Bright"), and in the
Stock Purchase Agreement, dated as of November [__], 2000 (the "Purchase
Agreement"), by and between Sagemark and Gemini VII, Inc. ("Gemini"), and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Releasor, for itself and its subsidiaries,
successors-in-interest, representatives, agents and assigns, and its and their
respective officers, directors, shareholders, partners and employees, hereby
irrevocably and unconditionally releases and discharges each of DeLape, Young,
Sagemark Management LLC ("SML"), Benchmark Equity Group, Inc., Benchmark
Merchant Partners, L.P., Technology Acquisitions, Ltd., ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ St. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, together with their respective
officers, directors, shareholders, partners, employees, heirs, administrators,
executors, representatives, beneficiaries, attorneys and assigns acting as such
(collectively referred to herein as the "Releasees"), from any and all claims,
demands, causes of action, actions, judgments, liens, indebtedness, costs,
damages, obligations, attorneys' fees, losses and liability of whatever kind and
character, whether known or unknown, in law or equity, foreseen or unforeseen,
liquidated or unliquidated, whether asserted personally, derivatively or in any
other capacity, arising from the beginning of time to the date hereof in
connection with any activities and transactions relating to Sagemark and the
Partnership (all of the foregoing being collectively referred to herein as the
"Claims"); provided, that nothing contained herein shall release Releasees from:
(a) any claim of breach of any of their representations, warranties,
covenants and obligations under the Transition Agreement, Purchase Agreement or
the Exhibits thereto; and
(b) any claims against any of the Releasees which cannot be released
under applicable law; and
(c) any claim for fraud unknown as of the date hereof if the
underlying facts of such claim have not been disclosed, and such non-disclosure
constitutes a willful breach of any representation or warranty under the
Transition Agreement by Messrs. ▇▇▇▇▇▇ or Young;
27
(all of the foregoing collectively referred to herein as the "Release
Exceptions").
The Releasor covenants and agrees not to ▇▇▇ any of the Releasees with
respect to any claim (a) related in any way to the Claims, and/or (b) otherwise
released herein (subject to, in both such instances, the Release Exceptions).
The Releasor hereby represents and warrants to the Releasees that this
Release has been duly authorized by all required action of the Releasor.
This Release shall be governed by and construed in accordance with the
laws of the State of New York, excluding its choice of law or conflicts of law
or other provisions which might result in the selection of the substantive law
of another jurisdiction. The Releasor hereby agrees that any claim or proceeding
arising under or as a result of this Release shall be brought solely in a
federal or state court located in the County of New York, State of New York. By
its execution hereof, the Releasor hereto irrevocably consents and submits to
the IN PERSONAM jurisdiction of the federal and state courts located in the
County of New York, State of New York and agrees that any process in any claim
or proceeding commenced in such courts under this Release may be served upon the
Releasor personally or by certified or registered mail, return receipt
requested, or by a nationally recognized overnight courier service which
provides evidence of delivery, with the same force and effect as if personally
served upon the Releasor in such County and State. The Releasor hereto waives
any claim that such jurisdiction is not a convenient forum, or that there is
another more convenient forum, for any such claim or proceeding and any defense
of lack IN PERSONAM jurisdiction with respect hereto.
No provision of this Release may be amended, modified or waived except
by a written instrument executed by the Releasor and the Releasees.
If any term or provision of this Release is held to be illegal or
invalid, such illegality shall not affect the remaining terms or provisions
hereof, and each term and provision of this Release shall be enforced to the
fullest extent permitted by law.
THE SAGEMARK COMPANIES, LTD.
By:
---------------------------------
------------------------------------
Print Name and Title
28
EXHIBIT D
RELEASE OF CLAIMS
AND COVENANT NOT TO SUE1
This Release of Claims and Covenant Not to ▇▇▇ ("Release") is executed
as of the [__] day of November, 2000 by [[_____], an individual resident of the
State of [_____]]2 [[_____], a [_____] corporation]3 ("Releasor").
In consideration of the covenants and agreements set forth in the
Transition Agreement, dated as of November [__], 2000 (the "Transition
Agreement"), by and among The Sagemark Companies, Ltd. ("Sagemark"), ▇▇▇▇▇
▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Bright"), and
in the Stock Purchase Agreement dated as of November [__], 2000 (the "Purchase
Agreement"), by and between Sagemark and Gemini VII, Inc. ("Gemini"), and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Releasor, for itself and its [subsidiaries,
successors-in-interest, representatives, agents and assigns,]4 [heirs,
administrators, executors, representatives, beneficiaries and assigns]5 hereby
irrevocably and unconditionally releases and discharges each of Sagemark, SIS
Capital Corporation, Bright and ▇▇▇ ▇▇▇▇▇▇▇, together with their respective
officers, directors, shareholders, partners, employees, heirs, administrators,
executors, representatives, beneficiaries, attorneys and assigns acting as such
(collectively, the "Releasees"), from any and all claims, demands, causes of
action, actions, judgments, liens, indebtedness, costs, damages, obligations,
attorneys' fees, losses and liability of whatever kind and character, whether
known or unknown, foreseen or unforeseen, in law or equity, liquidated or
unliquidated, whether asserted personally, derivatively or in any other
capacity, arising from the beginning of time to the date hereof in connection
with any activities and transactions relating to Sagemark and the Partnership
(all of the foregoing being collectively referred to herein as the "Claims");
provided, that nothing contained herein shall release the Releasees from:
(a) any claim of breach of any of their representations, warranties,
covenants and obligations under the Transition Agreement or the Exhibits
thereto; and
--------
(1) To be executed by ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Benchmark Equity
Group, Inc., Benchmark Merchant Partners, L.P., Technology
Acquisitions, Ltd., Sagemark Management, L.L.C., Naeem ▇▇▇▇▇▇,
▇▇▇▇▇ St. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
(2) To be inserted if Releasor is an individual.
(3) To be inserted if Releasor is a corporation.
(4) To be inserted if Releasor is a corporation.
(5) To be inserted if Releasor is an individual.
29
(b) any claims against any of the Releasees which cannot be released
under applicable law;
(all of the foregoing collectively referred to herein as the "Release
Exceptions").
The Releasor covenants and agrees not to ▇▇▇ any of the Releasees with
respect to any claim (a) related in any way to the Claims, and/or (b) otherwise
released herein (subject to, in both such instances, the Release Exceptions).
The Releasor hereby represents and warrants to the Releasees that this
Release has been duly authorized by all required action of the Releasor.
This Release shall be governed by and construed in accordance with the
laws of the State of New York, excluding its choice of law or conflicts of law
or other provisions which might result in the selection of the substantive law
of another jurisdiction. The Releasor hereby agrees that any claim or proceeding
arising under or as a result of this Release shall be brought solely in a
federal or state court located in the County of New York, State of New York. By
its execution hereof, the Releasor hereto irrevocably consents and submits to
the IN PERSONAM jurisdiction of the federal and state courts located in the
County of New York, State of New York and agrees that any process in any claim
or proceeding commenced in such courts under this Release may be served upon the
Releasor personally or by certified or registered mail, return receipt
requested, or by a nationally recognized overnight courier service which
provides evidence of delivery, with the same force and effect as if personally
served upon the Releasor in such County and State. The Releasor hereto waives
any claim that such jurisdiction is not a convenient forum, or that there is
another more convenient forum, for any such claim or proceeding and any defense
of lack IN PERSONAM jurisdiction with respect hereto.
No provision of this Release may be amended, modified or waived except
by a written instrument executed by the Releasor and the Releasees.
If any term or provision of this Release is held to be illegal or
invalid, such illegality shall not affect the remaining terms or provisions
hereof, and each term and provision of this Release shall be enforced to the
fullest extent permitted by law.
RELEASOR
By:
------------------------------
------------------------------
Print Name and Title
30
EXHIBIT E
PARTNERSHIP INVESTMENTS
Entotal
People Solutions
Futuremed Interventional
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
e-QCare
Bynari International
Rocket8 Global Networks, Inc.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
31
SCHEDULE 6.11
SEVERANCE COMPENSATION
▇▇▇▇▇▇▇ ▇▇▇▇▇ - $60,000
▇▇▇▇▇ ▇▇▇▇▇ - $37,500*
▇▇▇▇▇▇ ▇▇▇▇▇ - $ 3,334
▇▇▇▇▇ St. ▇▇▇▇▇▇ - $13,334
---------------
*$15,000 payable as compensation for services to be rendered to Sagemark for a
period of thirty (30) days following the date of this Transition Agreement in
accordance with the terms of the May 25, 2000 Employment and Retainer Agreement
between Sagemark, ▇▇▇▇▇ CFO Partners, LLP and ▇▇▇▇▇ and $22,500 representing an
incentive bonus due November 1, 2000 by the terms of such Agreement.
32
SCHEDULE 6.12
PARTNERSHIP INVESTMENT DEFAULTS
COMPANY SECTION DEFAULT STATUS
People Solutions 5.14 Borrower's cash interest coverage ratio was below 2. Waived through 12/31/00.
7.1(h) Borrower's indebtedness to Gardere and ▇▇▇▇ is in Waived through 12/31/00.
excess of $25,000 and is past due (SML subsequently
increased amount of indebtedness to amounts in excess
of $100,000).
EnTotal EnTotal did not use proceeds as detailed in the closing Entotal is currently seeking an
binder. The majority of the difference is due to additional $500k to fund the
unanticipated website cost overruns. This is not an expenditures anticipated in our
event of default; but is cause for concern. closing documents.
e-Qcare 6.9 Borrower's indebtedness to M&I Thunderbird Waived through September
for $14,318.87 1,2000
33
