8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 21, 2006

PubliCARD, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	0-29794	23-0991870
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

One Rockefeller Plaza, 14th Floor,
New York, NY	10020
(Address of Principal Executive Offices)	(Zip Code)

Registrant's telephone number, including area code (212) 651-3102

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

On July 21, 2006, PubliCARD, Inc. (the “Company”) entered into an Engagement Agreement (as amended, the “Agreement”) with Joseph Sarachek. Pursuant to the Agreement, Mr. Sarachek was appointed to the Company’s Board of Directors on July 21, 2006. Also pursuant to the Agreement, Mr. Sarachek was appointed as the Company’s Chief Executive Officer, effective July 31, 2006. Mr. Sarachek will receive compensation at the rate of $15,000 per month during the term of the Agreement and additional compensation described in the following paragraph. The Agreement may be terminated by the Company or Mr. Sarachek with 30 days’ prior written notice.

Pursuant to the Agreement, Mr. Sarachek has been granted options (the “Initial Options”) to purchase 2,837,075 shares of the Company’s common stock at an exercise price of $0.0279 per share. 1,793,650 of the Initial Options were granted under the Company’s 1999 Long Term Incentive Plan (the “Plan”), and 1,043,425 of the Initial Options were granted pursuant to a Non-Plan Stock Option Agreement between Mr. Sarachek and the Company, dated as of July 21, 2006. All of the Initial Options will vest upon the consummation of a sale of the Company or other restructuring or similar transaction involving the Company, as defined in the Agreement. Following the consummation of any such transaction, Mr. Sarachek will be granted additional options to purchase shares of the Company’s common stock, which options will be exercisable into shares of the Company’s common stock representing (when taken together with the Initial Options) 10% of the Company’s outstanding common stock, calculated on a fully-diluted basis. Such options will be exercisable when granted. The Agreement also provides that, upon consummation of any such transaction, Mr. Sarachek will be entitled to receive a cash transaction fee in an amount equal to a percentage of the aggregate value of such transaction received by the Company or its shareholders ranging from 4% to 7%.

In connection with the Initial Options, Mr. Sarachek and the Company entered into the Non-Plan Stock Option Agreement described above and a Stock Option Agreement, dated as of July 21, 2006 (collectively, the “Stock Option Agreements”). Pursuant to the Stock Option Agreements, the Initial Options have a term of 10 years. If Mr. Sarachek’s engagement by the Company is terminated for cause, or if Mr. Sarachek voluntarily terminates such engagement, if the Initial Options are not then vested, they will terminate. If such engagement is terminated for any other reason, if the Initial Options are then vested, then the Initial Options will be exercisable for the shorter of 90 days following termination and the remainder of their term.

The Agreement further provides that Mr. Sarachek will be entitled to be reimbursed by the Company for his reasonable fees and expenses, and that the Company will indemnify Mr. Sarachek to the maximum extent permitted by law. In connection with the foregoing, Mr. Sarachek and the Company entered into an Indemnification Agreement.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

Antonio L. DeLise has resigned from the Company’s Board of Directors. Mr. DeLise will resign as President, Chief Executive Officer, Chief Financial Officer and Corporate Secretary of the Company, as well as all positions held at the Company’s subsidiaries, effective July 30, 2006. Mr. DeLise is leaving the Company to pursue other opportunities.

On July 21, 2006, Mr. Sarachek was appointed to the Company’s Board of Directors. Pursuant to the Agreement, Mr. Sarachek will be the Company’s Chief Executive Officer effective July 31, 2006. See Item 1.01 above. Mr. Sarachek, 44, has been the Managing Partner and founder of Triax Capital Advisors, LLC, a restructuring advisory firm (“Triax”), since January 2003. Prior to founding Triax, Mr. Sarachek was a Managing Director of Balfour Capital Advisors, the predecessor to Triax, from September 2001 until January 2003. From July 2001 until September 2001, Mr. Sarachek was a Managing Director of Amroc Capital Advisors, a restructuring advisory group. Mr. Sarachek, an attorney, formerly practiced corporate and bankruptcy law at McDermott, Will & Emery and Kelley Drye & Warren. From 1998 through January 2000, Mr. Sarachek acted as a consultant to the Company, but has not transacted any business with the Company since that time.

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There are no arrangements or understandings between Mr. Sarachek and any other person pursuant to which he was selected as an officer. Mr. Sarachek has no family relations with any directors or executive officers of the Company. For a period of time until September 30, 2002, Harry Freund, the Chairman of the Board of Directors of the Company and Jay Goldsmith, the Vice Chairman of the Board of Directors of the Company, had a minority interest in Balfour Capital Advisors.

Item 9.01. Financial Statements and Exhibits.

(a) Not applicable

(b) Not applicable

(c) Not applicable

(d) Exhibits

10.1 Engagement Agreement, dated as of July 21, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.

10.2 Addendum to Engagement Agreement, dated as of July 26, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.

10.3 Indemnification Agreement, dated as of July 21, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.

10.4 Stock Option Agreement, dated as of July 21, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.

10.5 Non-Plan Stock Option Agreement, dated as of July 21, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.

99.1 Press release issued by PubliCARD, Inc. on July 26, 2006.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PubliCARD, Inc.
	Registrant
Date: July 27, 2006	/s/ Antonio L. DeLise
	Antonio L. DeLise, President andChief Financial Officer

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EXHIBIT INDEX

Exhibit Number	Description
10.1	Engagement Agreement, dated as of July 21, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.
10.2	Addendum to Engagement Agreement, dated as of July 26, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.
10.3	Indemnification Agreement, dated as of July 21, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.
10.4	Stock Option Agreement, dated as of July 21, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.
10.5	Non-Plan Stock Option Agreement, dated as of July 21, 2006, between PubliCARD, Inc. and Joseph E. Sarachek.
99.1	Press release issued by PubliCARD, Inc. on July 26, 2006.

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EX-10.1

EXHIBIT 10.1

July 21, 2006

Joseph E. Sarachek

22 Harvest Drive

Scarsdale, NY 10583

Re: Engagement as Chief Executive Officer and Member of the Board of Directors

Dear Mr. Sarachek :

This letter agreement (this “Agreement”) confirms the terms pursuant to which PubliCARD, Inc. (the “Company”) engages Joseph E. Sarachek (“Sarachek”) to serve as Chief Executive Officer of the Company. In connection with his service as Chief Executive Officer, Sarachek will provide financial and restructuring advisory services on behalf of the Company which may include serving as the senior operations officer of the Company, overseeing the Company’s operations, analyzing, assisting and developing a financial restructuring plan involving the Company, assisting the Company in developing and negotiating a prospective plan of reorganization with its creditors, selling the Company through a merger or otherwise, selling the Company’s assets, purchasing assets or companies, and/or raising additional debt/equity capital for the Company (each, a “Transaction”), and such other tasks that may be reasonably requested by the Company’s Board of Directors. The Company will take such actions within its authority to cause Sarachek to be elected as a member of the Company’s Board of Directors (and to retain such status) during the term of this Agreement.

Sarachek shall have control of the manner and means by which his services are performed under this Agreement and shall report to, and be subject to the general direction of, the Company’s Board of Directors. Sarachek shall be treated as an independent contractor for all employment and tax law purposes. Sarachek agrees to devote such time and effort as he reasonably determines is necessary to perform the services required of him under this Agreement. The Company acknowledges that Sarachek’s engagement as an independent contractor under this Agreement shall not require him to devote his full attention and business time to the Company. During the term of this Agreement, Sarachek may engage in, provide services to or possess an interest in any other business ventures of any nature or description, independently or with others, to the extent such actions do not breach Sarachek’s fiduciary duties as an officer and director of the Company.

This Agreement shall become effective as of the date hereof upon the execution by both the Company and Sarachek and may be terminated on 30 days’ prior written notice by the Company or Sarachek. The termination of this Agreement shall not affect: a) any compensation earned by Sarachek up to the date of termination; b) any compensation which Sarachek may otherwise become entitled to hereunder; c) the reimbursement of expenses incurred by Sarachek up to the date of termination; or d) Sarachek’s rights to indemnification in accordance with this Agreement and the attached indemnification provisions, which are incorporated herein, all of which shall remain in full force and effect.

Compensation of Services

I. The Company shall pay Sarachek a monthly fee of $15,000 (“Monthly Fee”). The initial Monthly Fee shall be paid upon the execution of this Agreement and each subsequent Monthly Fee shall be paid on the 21st of each month thereafter.

II. In addition to the Monthly Fee, promptly after the date hereof Sarachek shall be granted options (the “Initial Grant”) priced at the market price of the Company’s common stock at the date of grant for 10% of the fully diluted shares of the Company, which shall become vested and immediately exercisable upon the consummation of the Initial Transaction (as defined below) and shall include such other terms and conditions, including registration rights, as provided in the stock option agreement attached hereto as Appendix B (the “Stock Option Agreement”). The Initial Grant shall be made, to the extent shares are available, under the Company’s stock incentive plans, and any additional shares shall be outside of such plans. In connection with the consummation of the first Transaction after the date hereof (the “Initial Transaction”), Sarachek shall be granted, in the amount provided below, additional options (“Additional Options”) to purchase shares of the Company’s common stock (or any successor company) priced at the market price of the Company’s common stock at the date of grant which shall be immediately vested and exercisable and shall otherwise be on the same terms and conditions, including registration rights, as the Initial Grant. The amount of Additional Options to be granted shall equal such number of shares as shall provide Sarachek with options to purchase 10% of the fully diluted shares of the Company (or any successor company) after giving effect to the Initial Transaction and taking into consideration the Initial Grant.

III. In addition to the Monthly Fee, during the term of this Agreement, the Company shall pay Sarachek a cash Transaction Fee (the “Transaction Fee”), subject to V below, upon consummation of each Transaction based on the aggregate value thereof received by the Company or its stockholders, including the gross proceeds of any financing (whether in cash, securities or other-in-kind consideration, including assumption of debt ) as follows:

Aggregate Transaction Value	Cumulative Transaction Fee
From 0 to $1,000,000	4%, plus
From $1,000,000 to $5,000,000	5% of the incremental, plus
From $5,000,000 to $10,000,000	6% of the incremental, plus,
Over $10,000,000	7% of any amount over $10,000,000

IV. Sarachek shall be reimbursed for all reasonable out-of-pocket expenses incurred in carrying out the terms of this Agreement, including telephone, travel, facsimile, courier, computer time charges and attorneys’ fees (to the extent necessary), food, messenger services, postage and copying.

V. The Transaction Fee and any other fees that are unpaid, shall be paid out of the proceeds of any Transaction. Sarachek shall be entitled to payment in full of his Monthly Fees and expenses, regardless of whether any Transaction is successfully completed.

Payment of all fees and expenses incurred under this Agreement, are solely the responsibility of the Company. The Company shall reimburse Sarachek up to $7,000 for the legal fees of Kronish Lieb Weiner & Hellman LLP incurred in connection with the preparation and negotiation of this Agreement. For a period of one year following termination of this Agreement by the Company without cause, Sarachek shall be entitled to receive Transaction Fees in connection with each Transaction the Company or its successors consummates with any party (or its affiliates) with whom Sarachek or the Company have contacted during the term of this Agreement.

Indemnification/Insurance

The Company shall indemnify (including advancement of expenses) and hold harmless Sarachek to maximum extent permitted by law and shall execute the Indemnification Agreement attached hereto as Appendix A, the terms and conditions of which are hereby incorporated herein by reference.

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If at any time after the termination of this Agreement, Sarachek is called upon by the Company or is legally required to render services directly or indirectly relating to the subject matter of this Agreement beyond the services contemplated herein (including, but not limited to, producing of documents, answering interrogatories, giving depositions, giving expert or other testimony, whether by agreement, subpoena or otherwise), the Company shall pay Sarachek’s then current hourly rates for the time expended in rendering such services, including, but not limited to, time for meetings, conferences, preparation and travel, and all related costs and expenses, including the reasonable legal fees and expenses of Sarachek’s counsel.

During the term of this Agreement, the Company shall not amend, repeal or otherwise modify its articles of incorporation or by-laws, each as amended (together, the “Charter Documents”), in a manner that would adversely affect Sarachek’s rights to indemnification and exculpation thereunder. For a period of six years following the termination of this Agreement, the Company shall indemnify (including advancement of expenses) and hold harmless Sarachek to maximum extent permitted by law and, in addition, to the same extent as he will be indemnified by the Company as an officer and director of the Company or in connection with any other capacities indemnifiable thereunder pursuant to the Company’s Charter Documents immediately prior to the termination of this Agreement for acts or omissions which occurred at or prior to such termination.

During the term of this Agreement, the Company shall use reasonable efforts to maintain officers’ and directors’ liability insurance with at least as favorable terms and coverage amounts as it currently has in place, which policy shall cover Sarachek in his capacity as an officer and director of the Company and in connection with any other capacities coverable thereunder.

If the Company or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of the Company or its assets shall assume the obligations set forth in this Agreement.

Disclosure

All non-public information provided by the Company to Sarachek will be considered as confidential information and shall be maintained as such by Sarachek, except as required by law or as required to enable Sarachek to perform his services pursuant to this Agreement, until the same becomes known to the public without release thereof by Sarachek.

Sarachek will not be responsible for independently verifying the accuracy of any information provided to Sarachek by the Company or its agents (the “Information”) and he shall not be liable for inaccuracies in any Information provided to Sarachek by or at the direction of the Company.

Entire Agreement, Governing Laws and Jurisdiction, Etc.

This Agreement, the Stock Option Agreement and the Indemnification Agreement set forth the entire understanding of the parties relating to the subject matter hereof and supersede and cancel any prior communications, understandings and agreements between the parties with respect to the subject matter hereof. This Agreement cannot be terminated or changed, nor can any of its provisions be waived, except by written agreement signed by the Company and Sarachek. This Agreement shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company and Sarachek.

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This Agreement shall be governed by and construed to be in accordance with the laws of the State of New York applicable to contracts made and to be performed solely in such state by citizens thereof. Any dispute arising out of this Agreement shall be adjudicated by the American Arbitration Association.

Acceptance

Please confirm that the foregoing is in accordance with your understanding by signing in the space indicated below and returning an executed copy of this Agreement to the Company. A telecopy of a signed original of this Agreement shall be sufficient to bind the parties whose signatures appear hereon.

Very truly yours,

PubliCARD, Inc.

By: /s/ Antonio L. DeLise

ACCEPTED AND AGREED TO:

By: /s/ Joseph E. Sarachek

Joseph E. Sarachek

Date: July 21, 2006

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EX-10.2

EXHIBIT 10.2

July 26, 2006

Joseph E. Sarachek

22 Harvest Drive

Scarsdale, New York 10583

Dear Mr. Sarachek:

Reference is made to the retention agreement, dated July 21, 2006, between PubliCARD, Inc. (the “Company”) and you (the “Retention Agreement”). Notwithstanding anything to the contrary in the Retention Agreement, you and the Company hereby acknowledge and agree that the effective date of your appointment as Chief Executive Officer of the Company shall be July 31, 2006.

Except to the extent modified hereby, the Retention Agreement shall continue in full force and effect.

Very truly yours,

PubliCARD, Inc.

By: /s/ Antonio L. DeLise

Acknowledged and Agreed:

/s/ Joseph E. Sarachek

Joseph E. Sarachek

EX-10.3

EXHIBIT 10.3

APPENDIX A

INDEMNIFICATION AGREEMENT

Appendix A to Letter Engagement Agreement (the “Agreement”), dated July 25, 2006 by and between PubliCARD, Inc. and its subsidiaries, affiliates and related entities (the “Company”) and Joseph E. Sarachek (“Sarachek”).

The Company agrees to indemnify and hold Sarachek and his agents (each an “Indemnified Person”) harmless from and against all losses, claims, damages, liabilities, costs or expenses, including those resulting from any threatened or pending investigation, action, proceeding or dispute whether or not Sarachek or any such other Indemnified Person is a party to such investigation, action, proceeding or dispute, arising out of Sarachek’s entering into or performing services under this Agreement (directly or through his agents), or arising out of any matter referred to in this Agreement. This indemnity shall also include Sarachek’s and/or any such other Indemnified Person’s reasonable attorneys’ and accountants’ fees and out-of-pocket expenses incurred in, and the cost of Sarachek’s personnel whose time is spent in connection with, such investigations, actions, proceedings or disputes, which fees, expenses and costs shall be periodically reimbursed to Sarachek and/or to any such other Indemnified Person by the Company as they are incurred; provided, however, that in no event shall Sarachek and agents be indemnified for fees and expenses relating to matters arising from the bad faith, willful misconduct or gross negligence of any Indemnified Person. A court of competent jurisdiction shall make such a determination, (but pending any such final determination, the indemnification and reimbursement provisions hereinabove set forth shall apply and the Company shall perform its obligations hereunder to reimburse Sarachek and/or each such other Indemnified Person as described herein). In no event shall Sarachek or agents be indemnified if the Company asserts a claim for, and a court determines by final, non-appealable order that such claim arose out of any Indemnified Person’s bad faith, gross negligence or willful misconduct.

The Company also agree that no Indemnified Person shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with any act or omission to act as a result of its engagement under the Agreement except for any such liability for losses, claims, damages, liabilities or expenses incurred by the Company that is found in a final, non-appealable determination by a court of competent jurisdiction to have resulted from any Indemnified Person’s bad faith, gross negligence or willful misconduct.

If for any reason, the foregoing indemnification is unavailable to Sarachek or any such other Indemnified Person or insufficient to hold them harmless with respect to the matters it purports to cover, then the Company shall contribute to the amount paid or payable by Sarachek or any such other Indemnified Person as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the Company on the one hand and Sarachek or any such other Indemnified Person on the other hand, but also the relative fault of the Company and Sarachek or any such other Indemnified Person, as well as any relevant equitable considerations; provided that in no event will the aggregate contribution by Sarachek and any such other Indemnified Person hereunder exceed the amount of fees actually received by Sarachek pursuant to this Agreement. The reimbursement, indemnity and contribution obligations of the Company hereinabove set forth shall be in addition to any liability which the Company may otherwise have and these obligations and the other provisions hereinabove set forth shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, Sarachek and any other Indemnified Person.

The terms and conditions hereinabove set forth in this Appendix A. shall survive the termination and expiration of this Agreement and shall continue indefinitely thereafter.

PubliCARD, Inc.

By: /s/ Antonio L. DeLise

JOSEPH E. SARACHEK

By: /s/ Joseph E. Sarachek

Joseph E. Sarachek

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EX-10.4

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 10^th 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.

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

14^th 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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EX-10.5

EXHIBIT 10.5

APPENDIX B

NON-PLAN 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 Board of Directors of the Company (the “Board”) to receive a grant of stock options.

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 PubliCARD, Inc. 1999 Long Term Incentive Plan (the “Plan”).

Grant of Option.

Grant; Grant Date. Subject to the terms and conditions hereof, the Company hereby grants to the Optionee as of July 21, 2006 (the “Grant Date”) an option to purchase up to 1,043,425 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 Board 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 10^th 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 Board, 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.

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 Board 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 Board, 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 Board shall, in its sole discretion, deem necessary or advisable.

If the Board, 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 Board, 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.

Miscellaneous.

Administration. The Board 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 and this Agreement as are consistent herewith and therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Board shall be final and binding upon the Optionee, the Company, and all other interested persons.

No Right to Continued Engagement. Nothing in this Agreement 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 and the Retention Agreement 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

14^th 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.

Conflict with the Plan. The option evidenced by this Agreement is not issued pursuant to the Plan. However, the parties have agreed to incorporate the provisions of the Plan (other than the limitation as to the number of shares for which options may be granted) in this Agreement, and this Agreement shall be construed as if the option evidenced hereby were granted under 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/ Josesph E. Sarachek

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EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE	Contact:	Antonio L. DeLise
		President & Chief Financial Officer
		PubliCARD, Inc.
		(212) 651-3120

PubliCARD, INC. APPOINTS JOSEPH SARACHEK CHIEF EXECUTIVE OFFICER

NEW YORK - July 26, 2006 - PubliCARD, Inc. (OTC BB: CARD.OB) today announced that its Board of Directors has appointed Joseph Sarachek as its next Chief Executive Officer effective July 31, 2006. He succeeds Tony DeLise, who is leaving PubliCARD to pursue other opportunities. Mr. Sarachek has also been elected to the Company’s Board of Directors.

Mr. Sarachek, 44, is the Managing Director and founder of Triax Capital Advisors, LLC, a restructuring advisory firm. Mr. Sarachek is also an attorney and formerly practiced corporate and bankruptcy law at McDermott, Will & Emery and Kelley Drye & Warren.

As previously disclosed, it is unlikely that the Company will be able to continue as a going concern. See the attached Note for further information.

About PubliCARD, Inc.

Headquartered in New York, NY, PubliCARD, through its Infineer Ltd. subsidiary, designs smart card solutions for educational and corporate sites. More information about PubliCARD can be found on its web site www.publicard.com.

Special Note Regarding Forward-Looking Statements: Certain statements contained in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. Such factors include the Company’s inability to continue as a going concern and the inability to satisfy obligations to the Pension Benefit Guaranty Corporation. For more information on the potential factors which could affect financial results and the Company’s ability to continue as a going concern, refer to the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2005, and quarterly report on Form 10-Q for the quarter ended March 31, 2006, as filed with the Securities and Exchange Commission.

(see Note below)

Note--Liquidity and Going Concern Considerations

As a result of the factors described below, it is unlikely that the Company will be able to continue as a going concern. The independent auditors’ reports on the Company’s Consolidated Financial Statements for the years ended December 31, 2005, 2004, 2003 and 2002 contain emphasis paragraphs concerning substantial doubt about the Company’s ability to continue as a going concern.

Infineer Ltd. (“Infineer”), the Company’s sole operating subsidiary, has continued to incur operating losses and negative cash flow. During 2003, 2004 and 2005, the Company contributed additional capital to Infineer of $70,000, $225,000 and $150,000, respectively. It is likely that Infineer will require additional capital and the Company does not have the financial resources to provide such support. Given the Company’s lack of available resources, continued operating losses and debt position, the Company has begun to consider various alternatives. In 2006, with the assistance of an investment banker, the Company commenced an assessment of the value of Infineer, developed an information memorandum and obtained offers for Infineer’s potential for sale. This process has recently concluded without a viable offer for the business. The Board of Directors has not decided whether to continue with the disposition effort. It is therefore uncertain whether an acceptable offer will materialize or whether any such sale will ultimately be consummated. Any such determination to dispose of Infineer would depend upon, among other things, the amount of potential proceeds of any such sale and satisfactory arrangements with the Pension Benefit Guaranty Corporation (the “PBGC”) regarding the use of those proceeds, pursuant to the Company’s obligations to the PBGC described below. In addition, any such sale would require the approval of the Company’s shareholders.

The Company sponsored a defined benefit pension plan (the “Plan”) that was frozen in 1993. In January 2003, the Company filed a notice with the PBGC seeking a “distress termination” of that Plan. Pursuant to the Agreement for Appointment of Trustee and Termination of Plan between the PBGC and the Company, effective September 30, 2004, the PBGC proceeded to terminate the Plan and was appointed as the Plan’s trustee. As a result, the PBGC has assumed responsibility for paying the obligations to Plan participants. As a result of the Plan termination, the Company’s 2003 and 2004 funding requirements due to the Plan amounting to $3.4 million through September 15, 2004 were eliminated.

Under the terms of the Settlement Agreement, effective September 23, 2004, between the PBGC and the Company (the “Settlement Agreement”), the Company is liable to the PBGC for the unfunded guaranteed benefit payable by the PBGC to Plan participants in the amount of $7.5 million. The Company satisfied this liability by issuing a non-interest bearing note (the “Note”), dated September 23, 2004, payable to the PBGC with a face amount of $7.5 million. Pursuant to the Security Agreement and Pledge Agreement, both dated September 23, 2004, the Note is secured by (a) all presently owned or hereafter acquired real or personal property and rights to property of the Company and (b) the common and preferred stock of Infineer and TecSec, Incorporated (“TecSec”) owned by the Company. The Company has an approximately 5% ownership interest in TecSec, on a fully diluted basis.

The Note matures on September 23, 2011. The first payment will be equal to $1.0 million and will become due 30 days after the Company has received a total of $4.0 million in Net Recoveries. “Net Recoveries,” as defined in the Settlement Agreement, means the net cash proceeds received by the Company with respect to transactions consummated after March 31, 2003 from (a) the sale of the Company’s interest in Infineer and TecSec, real property in Louisiana and any other real or personal property assets and (b) any recoveries from the Company’s historic insurance program. Thereafter, on each anniversary of the first payment, the Company is required to pay the PBGC an amount equal to 25% of the Net Recoveries in excess of $4.0 million (less the sum of all prior payments made in accordance with this sentence in prior years). As of March 31, 2006, Net Recoveries was approximately $3.6 million. The Company expects to realize additional Net Recoveries of approximately $255,000 in 2006 relating to the release of certain funds currently held in escrow. The Company believes the first payment to the PBGC equal to $1.0 million would become due if additional Net Recoveries from the possible disposition of Infineer or other qualifying source exceeds $135,000.

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If the Company defaults under the Settlement Agreement, the PBGC may declare the outstanding amount of the Note to be immediately due and payable, proceed with foreclosure of the liens granted in favor of the PBGC and exercise any other rights available under applicable law.

The Company has incurred operating losses, a substantial decline in working capital and negative cash flow from operations for a number of years. The Company has also experienced a substantial reduction in its cash and short term investments, which declined from $17.0 million at December 31, 2000 to $792,000 at March 31, 2006. The Company also had a shareholders’ deficiency of $7.6 million as of March 31, 2006.

Absent a sale of Infineer and satisfaction of any obligation to the PBGC created by such sale, management believes that existing cash and short-term investments will not be sufficient to permit the Company to continue operating past the third quarter of 2006 and the Company would likely cease operations. If a sale of Infineer is consummated, the Company will not thereafter have any ongoing business operations. In either case, the Company does not expect that any funds will be available for distribution to its shareholders.

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