EXHIBIT 10.4

APPENDIX B
STOCK OPTION AGREEMENT

THIS AGREEMENT, dated as of July 21, 2006, is made by and between PubliCARD,
Inc., a Pennsylvania corporation (the “Company”) and Joseph E. Sarachek (the
“Optionee”).

WHEREAS, pursuant to the letter agreement dated July 21, 2006 (the “Retention
Agreement”) between the Optionee and the Company, on the date hereof, the
Optionee has been selected by the Committee to receive a grant of stock options
under the PubliCARD, Inc. 1999 Long Term Incentive Plan (the “Plan”).

NOW, THEREFORE, the Company and the Optionee agree as follows:

Definitions.

Any capitalized term not defined herein shall have the meaning set forth in the
Plan.

Grant of Option.

Grant; Grant Date. Subject to the terms and conditions hereof, the Company
hereby grants under the Plan to the Optionee as of July 21, 2006 (the “Grant
Date”) an option to purchase up to 1,793,650 Shares at an exercise price of
$0.0279 per Share.

Adjustments in Option. In the event that the outstanding Shares subject to the
Option are changed into or exchanged for a different number or kind of shares or
securities of the Company, or of another corporation, by reason of
reorganization, merger or other subdivision, consolidation, recapitalization,
reclassification, stock split, issuance of warrants, stock dividend or
combination of shares or similar event, the Committee shall make an appropriate
and equitable adjustment in the Option so that the Optionee’s proportionate
interest shall be maintained as before the occurrence of such event.

Form of Option. The option is not intended to be an incentive stock option.

Term. The Option shall expire on the 10th anniversary of the Grant Date, unless
terminated earlier in accordance with this Agreement.

Vesting. The Option shall become vested and immediately exercisable upon the
consummation of the Initial Transaction (as defined in the Retention Agreement).

Exercise. The Optionee shall exercise an Option in whole or in part at any time
by delivering written notice of such exercise to the Secretary of the Company of
the number of Shares as to which the Option is being exercised, and enclosing
payment for the Shares with respect to which the Option is being exercised. Such
payment shall be in cash or by check, or if approved by the Committee, by the
delivery of Shares previously owned by the Optionee, duly endorsed for transfer
to the Company, with a Fair Market Value on the date of delivery equal to the
aggregate purchase price of the Shares with respect to which the Option is being
exercised, or any combination of the foregoing approved by the Committee, in its
sole discretion. Partial exercise shall be for whole Shares only and shall not
be for less than one hundred (100) Shares unless the number of Shares purchased
constitutes the total number of Shares then remaining subject to the Option or
the Committee permits such smaller exercise in its sole discretion.
 
 

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Exercise Following Termination of Engagement. Notwithstanding the provisions of
the Plan:

In the event the Optionee’s engagement by the Company is terminated for cause or
if the Optionee voluntarily terminates such engagement, if the Option shall not
be exercisable at such time, it shall be deemed to have terminated as of the day
preceding the date on which the Optionee’s engagement by the Company terminates.

In all other cases, the Option shall be exercisable for the shorter of ninety
(90) days following such termination of the Optionee’s engagement by the
Company, or the remainder of its original term, to the extent it had become or
becomes exercisable in accordance with Section 2(5).

Nontransferability. The Option shall not be transferable other than by will or
the laws of descent and distribution, and no transfer so effected shall be
effective to bind the Company unless the Company has been furnished with written
notice thereof and a copy of the will and/or such other evidence as the
Committee may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of the
Option, provided, however, that, in the discretion of the Committee, Options may
be transferred pursuant to a Qualified Domestic Relations Order (within the
meaning of the Code).

Conditions to Issuance of Stock Certificates.

The Shares deliverable upon the exercise of the Option, or any portion thereof,
may be either previously authorized but unissued Shares or issued Shares which
have been reacquired by the Company. Such Shares shall be fully paid and
non-assessable. The stock certificates evidencing the Shares shall bear such
legends restricting transferability as the Committee deems necessary or
advisable.

The Company shall not be required to issue or deliver any certificate or
certificates for Shares deliverable upon any exercise of the Option prior to
fulfillment of all of the following conditions:

The completion of any registration or other qualification of such Shares under
any state or federal law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory body, or the
obtaining of approval or other clearance from any state or federal governmental
agency which the Committee shall, in its sole discretion, deem necessary or
advisable.

If the Committee, in its sole discretion, deems it necessary or advisable, the
execution by the Optionee of a written representation and agreement, in a form
satisfactory to the Committee, in which the Optionee represents that the Shares
acquired by him upon exercise are being acquired for investment and not with a
view to distribution thereof.

Rights as Stockholder. The Optionee shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any Shares purchasable
upon the exercise of the Option unless and until certificates representing such
Shares have been issued by the Company.
 
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Miscellaneous.

Administration. The Committee shall have the power to interpret the Plan and
this Agreement, and to adopt such rules for the administration, interpretation
and application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Committee shall be final and binding upon the
Optionee, the Company, and all other interested persons.

No Right to Continued Engagement. Nothing in this Agreement or in the Plan shall
confer upon the Optionee any right to continue to be engaged by the Company or
shall interfere with or restrict in any way the rights of the Company, which are
hereby expressly reserved, to discharge the Optionee at any time for any reason
whatsoever, with or without cause.

Entire Agreement; Amendment. This Agreement, the Retention Agreement and the
Plan, constitute the entire agreement between the parties with respect to the
subject matter hereof, and supersede all prior agreements and understandings
between the parties with respect to such subject matter. Any term or provision
of this Agreement may be waived at any time by the party which is entitled to
the benefits thereof, and any term or provision of this Agreement may be amended
or supplemented at any time by the mutual consent of the parties hereto, except
that any waiver of any term or condition, or any amendment, of this Agreement
must be in writing.

Governing Law. The laws of the State of New York shall govern the
interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflict of
laws.

Successors. This Agreement shall be binding upon and inure to the benefit of the
successors, assigns and heirs of the respective parties.

Notices. All notices or other communications made or given in connection with
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by registered or certified mail, return receipt
requested, to those listed below at their following respective addresses or at
such other address as each may specify by notice to the others:

To the Optionee:
Joseph E. Sarachek
22 Harvest Drive
Scarsdale, NY 10583

To the Company:
PubliCARD, Inc.
One Rockefeller Plaza
14th Floor
New York, NY 10020
Attention: Corporate secretary

Waiver. The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver thereof or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
 
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Conflict with the Plan. In the event of any conflict or inconsistency between
the provisions of this Agreement and the Plan, except as otherwise provided in
this Agreement, the provisions of the Plan shall control.

 Titles; Construction. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of the Agreement. The
masculine pronoun shall include the feminine and neuter and the singular shall
include the plural, when the context so indicates.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

PubliCARD, Inc.

By   /s/Antonio L. DeLise
Name: Antonio L. DeLise
Title: President

OPTIONEE:

/s/Joseph E. Sarachek

 
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