EXHIBIT 10.4

THE STOCK OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF SUCH OPTION MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER SAID ACT WHERE
THE HOLDER HAS FURNISHED TO THE COMPANY AN OPINION OF ITS COUNSEL THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

THE TRANSFER OR EXCHANGE OF THIS STOCK OPTION IS RESTRICTED IN ACCORDANCE WITH
THE TERMS HEREOF.


                  INSTRUMENT OF GRANT OF INCENTIVE STOCK OPTION
                  ---------------------------------------------

     INSTRUMENT OF GRANT dated as of the 11th day of October, 2005 from The
Sagemark Companies Ltd., a New York corporation with offices at 1285 Avenue of
the Americas, 35th Floor, New York, New York 10019 (the "Company") to George W.
Mahoney, an individual residing at 21082 Sweetwater Lane North, Boca Raton,
Florida 33428 ("Optionee").

                              W I T N E S S E T H:
                              - - - - - - - - - -

     WHEREAS, the Board of Directors of the Company has granted Optionee an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") to purchase from the Company shares of the
Company's common stock, par value $.01 per share (the "Common Stock") pursuant
to the Company's 1999 Long-Term Incentive Plan (the "Plan"), subject to the
terms and conditions of this Stock Option and the Plan;

     WHEREFORE, the Company does hereby grant to Optionee the following stock
option:

     (1) Stock Option. Subject to the terms and conditions set forth in this
Instrument of Grant and the terms and conditions of the Plan, the Company hereby
grants to Optionee an incentive stock option (the "Option") to purchase from the
Company up to 45,000 (Forty Five Thousand) shares (the "Optioned Shares") of
Common Stock at an exercise price of $1.60 (One Dollar and Sixty Cents) per
share (the "Exercise Price"), being the closing price of the publicly traded
shares of the Common Sock on the date of grant of this Option. The number of
Optioned Shares being exercised hereunder at any particular time multiplied by
the Exercise Price shall be hereinafter referred to as the "Purchase Price."

     (2) Exercise Period; Vesting. This Option is fully vested and exercisable
in whole or in part at any time during the five (5) year period commencing on
the date of this Option and ending at 5:00 P.M. New York City time on October


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10, 2010. The maximum number of shares of Common Stock which shall be subject to
exercise under this Option shall be 45,000 (Forty Five Thousand) shares.

     3. Termination.

          (a) This Option shall terminate, and Optionee shall have no further
rights under this Option with respect to any of the Optioned Shares which have
not vested on the date of any such termination, if at any time Optionee ceases
to be an employee of the Company (or any subsidiary of the Company), except as
provided in subparagraph (b) of this Section in the event of Optionee's death or
a termination of the Optionee's employment for a disability. Notwithstading the
foregoing, in the event that Optionee's employment with the Company (or any
subsidiary of the Company) is terminated as a result of any breach or default by
the Company of the terms of any employment agreement between Optionee and the
Company, this Option will continue for the then remainder of the Exercise
Period.

          (b) In the event of Optionee's death or a termination of Optionee's
employment as a result of a disability during the Exercise Period and while
Optionee is still employed by the Company (or any subsidiary of the Company),
this Option may be exercised, to the extent exercisable on the date of
Optionee's death or the date of any such termination of employment, by
Optionee's legal representatives or Optionee, as applicable, during the twelve
month period following the date of death or the date of such termination, but
not subsequent to the expiration of the Exercise Period.

     4. Manner of Exercise.

          (a) This Option shall be exercised by written notice of exercise in
the form of exhibit A to this Instrument of Grant addressed to the Company and
signed by Optionee (or Optionee's legal representative, if applicable) and
delivered to the Company along with the original of this Instrument of Grant and
payment in full of the Purchase Price of the Optioned Shares as to which this
Option is being exercised. If this Option is exercised in part only, the Company
will either issue a new Instrument of Grant with respect to the unexercised
portion of this Option or shall make a notation on this Instrument of Grant
reflecting the partial exercise and provide Optionee with a copy of such new
Instrument of Grant or noted document, as the case may be.

          (b) The Purchase Price is payable by certified or official bank check
or by personal check, subject to collection; provided, however, that if payment
is made by personal check, no Optioned Shares shall be issued to Optionee, and
Optionee shall have no rights as a shareholder of the Company, until such check
has cleared and been collected by the Company's bank. The Company shall deliver
to Optionee certificates for any of the Optioned Shares acquired by Optionee by
virtue of the exercise of this Option as soon as practical after the exercise of
this Option and payment of the Purchase Price.


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          (c) The Optioned Shares, when issued upon exercise of this Option,
will be duly and validly authorized and issued, fully paid and non-assessable.

          (d) In connection with any exercise of this Option, Optionee shall,
contemporaneously with the exercise of this Option, pay or provide for payment
of any withholding or other taxes due as a result of such exercise, if any.

          (e) If the exercise of this Option is accelerated as a result of the
change of control provisions of the Plan, any portion of this Option which is
not exercisable as an incentive stock option by reason of the One Hundred
Thousand Dollar ($100,000) limitation contained in Section 422(b) of the Code
shall be treated as a non-qualified stock option.

     5. Adjustment Provisions. The number of shares of Common Stock subject to
this Option and the Exercise Price shall be adjusted in accordance with
generally accepted accounting principles in the event of a stock dividend, stock
split, stock distribution, reverse split or other combination of shares,
recapitalization or otherwise, which affects the Common Stock.

     6. Transferability. This Option is not transferrable by Optionee except
that this Option may, in the event of Optionee's death or incompetence, be
exercised by Optionee's legal representative or by the persons to whom this
Option is transferred by will or the laws of descent and distribution.

     7. No Rights As a Shareholder. Optionee shall have no interest in and shall
not be entitled to any voting rights or any dividend or other rights or
privileges of a shareholder of the Company with respect to any shares of Common
Stock issuable upon exercise of this Option prior to the exercise of this Option
and payment of the Purchase Price of the Optioned Shares in accordance with the
provisions of this Option.

     8. No Rights to Continued Employment. Nothing in this Instrument of Grant
shall be construed as (a) an employment agreement or (b) a grant to Optionee of
any rights to continue as an employee, officer or director of the Company or of
any subsidiary or affiliate of the Company.

     9. Restricted Securities. Optionee acknowledges that, unless the Optioned
Shares are registered pursuant to the Securities Act of 1933, as amended, the
Optioned Shares, if and when issued, will be restricted securities as defined in
Rule 144 of the Securities and Exchange Commission pursuant to the Securities
Act and shall be subject to the resale conditions and limitations of such Rule.

     10. Legality. Anything in this Option to the contrary notwithstanding,
Optionee agrees that Optionee will not exercise this Option, and that the
Company will not be obligated to issue any shares of Common Stock pursuant to
this Option, if the exercise of this Option or the issuance of such shares shall
constitute a violation by Optionee or the Company of any provisions of any law
or of any regulation of any governmental authority or of any provision of the


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Plan. Any determination by either the Stock Option Committee of the Company's
Board of Directors or of the Board of Directors acting in lieu thereof, in this
connection, shall be final, binding and conclusive. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of this
Option or the issuance of shares pursuant thereto to comply with any such law or
regulation or provision of the Plan.

     11. Tax Status. In accepting this Option, Optionee understands that in
order to obtain the tax treatment provided for incentive stock options under
Section 422 of the Code, Optionee may not dispose of any shares issued upon
exercise of this Option until the expiration of the later of two years from the
date of grant or one year from the date of exercise. Optionee shall pay or
provide for payment of any withholding tax due as a result of a disposition of
the Optioned Shares in violation of Section 422(a)(1) of the Code.

     12. Action by Company. The existence of this Option shall not affect in any
way the right or power of the Company or its shareholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or consolidation
of the Company, or any issue of bonds, debentures, preferred or prior preference
stocks ahead of or affecting the Common Stock or the rights of the holders
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of the Company's assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

     13. Notices. All notices, consents, requests, demands and other
communications required or permitted to be given under this Option (the
"Notices") shall be in writing and delivered personally, receipt acknowledged,
or mailed by registered or certified mail, postage prepaid, return receipt
requested, addressed to the parties hereto at their respective addresses set
forth below (or to such other address as either the Company or Optionee shall
specify by notice given in accordance with this provision):

        (a) If to the Company:

            The Sagemark Companies Ltd.
            1285 Avenue of the Americas, 35th Floor
            New York, New York 10019

            -and-

            The Sagemark Companies Ltd.
            4710 NW Boca Raton Blvd., Suite 200
            Boca Raton, Florida 33431
            Attn: Chief Financial Officer


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        (b) If to Optionee:

            George W. Mahoney
            21082 Sweetwater Lane North
            Boca Raton, Florida 33428

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 only upon receipt.

     14. Governing Law. This Instrument of Grant shall be construed and governed
in accordance with the laws of the State of New York without applying its
conflict of laws principles.

     15. Interpretation. As a condition of the grant of this Option, Optionee
(and each person who succeeds to Optionee's rights hereunder) agrees that any
dispute or disagreement which may arise under or as a result of or pursuant to
this Option shall be determined by the Stock Option Committee of the Company's
Board of Directors, or the Board of Directors, acting in lieu thereof, in their
sole discretion and that any interpretation by such Committee or the Board,
acting in lieu thereof, of the terms of this Option shall be final, binding and
conclusive.

     16. Binding Effect. This Option shall be binding upon and inure to the
benefit of the Company and Optionee and their respective successors, heirs,
personal representatives, administrators, executors and permitted assigns.

     17. Waiver. No waiver of any provision of this Option or of any breach
thereof shall be effective unless in writing and signed by the party to be bound
thereby. The waiver by either the Company or Optionee, as the case may be, of a
breach of any provision of this Option shall not be construed as a waiver of any
subsequent breach or of any other provision of this Option, unless the
instrument of waiver expressly so provides.

     18. Partial Invalidity. If one or more provisions of this Option are held
to be unenforceable under applicable law, such provision(s) shall be excluded
from this Option and the balance of this Option shall remain in full force and
effect.

     19. The Plan. This Option is subject to the terms and conditions of the
Plan, the terms of which are incorporated by reference thereto. In the event of
any conflict or inconsistency between the discretionary terms and provisions of
the Plan and the provisions of this Option, this Option shall govern and
control. In all other instances, conflicts or inconsistencies, the terms and
provisions of the Plan shall govern and control. Optionee acknowledges receipt
of a copy of the Plan, represents that Optionee is familiar with the terms and
provisions thereof and hereby accepts this Option, subject to all of the terms
and provisions thereof.


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     IN WITNESS WHEREOF, the Company has executed this Instrument of Grant of
Incentive Stock Option as of the date first above written.

                                          THE SAGEMARK COMPANIES LTD.


                                          By: /s/ THEODORE B. SHAPIRO
                                              -------------------------------
                                              Theodore B. Shapiro, Chief
                                              Executive Officer


                                          OPTIONEE:


                                          /s/ GEORGE W. MAHONEY
                                          ----------------------
                                          George W. Mahoney


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                                    Exhibit A

                                      Date:



The Sagemark Companies Ltd.
1285 Avenue of the Americas, 35th Floor
New York, New York 10019

          Re:  Stock Option Exercise - Instrument of Grant of
               Incentive Stock Option Dated as of ______________

Gentlemen:

     I hereby exercise the above-referenced option to the extent of shares, and
I am tendering with this Notice full payment of the Purchase Price in the manner
provided in Section 4 of the Instrument of Grant of Incentive Stock Option with
respect to the Optioned Shares as to which this Option is being exercised. I
further represent and warrant to the Company that I am aware of the tax
consequences of my exercise of the option.

                                            Very truly yours,



                                            _____________________________
                                            Print Name


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