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Exhibit 10.7

FIRST AMENDMENT TO THE
HYPERCOM CORPORATION
LONG-TERM INCENTIVE PLAN
(EFFECTIVE JANUARY 1, 2009)

WHEREAS, Hypercom Corporation (the “Company”) has adopted and currently
maintains the Hypercom Corporation Long-Term Incentive Plan (the “Plan”) on
behalf of its eligible employees, directors, consultants and advisors;

WHEREAS, Section 15.1 of the Plan provides that the Board of Directors of the
Company may amend the Plan at any time;

WHEREAS, Section 409A of the Internal Revenue Code (the “Code”), which became
effective as of January 1, 2005, applies to the Plan and certain awards granted
pursuant to the Plan;

WHEREAS, the Plan has been and shall continue to be administered in good faith
compliance with the requirements of Section 409A of the Code from January 1,
2005 through December 31, 2008; and

WHEREAS, the purpose of this First Amendment is to satisfy the documentation
requirements of Section 409A of the Code which are effective as of January 1,
2009.

NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 2009, as
set forth below:

1.             Section 3.1(e) of the Plan is hereby amended by adding the
following sentence to the end thereof:

The Award Agreement for any Award subject to the requirements of Section 409A of
the Code may prescribe a different definition of Change of Control that will
apply for purposes of that Award Agreement and that complies with the
requirements of Section 409A of the Code.

2.             Section 3.1(i) of the Plan is hereby amended by adding the
following sentence to the end thereof:

The Award Agreement for any Award subject to the requirements of Section 409A of
the Code may prescribe a different definition of the term Disability that will
apply for purposes of that Award Agreement and that complies with the
requirements of Section 409A of the Code.

3.             Section 3.1(k)(ii) of the Plan is hereby amended and restated in
its entirety to read as follows

 (ii)  the price as determined by such methods and procedures as may be
established from time to time by the Board in compliance with Section 409A of
the Code and regulations promulgated thereunder.

4.             Section 3.1 of the Plan is hereby amended by adding the following
new paragraphs to the end thereof:

(w)             “Specified Employee” means certain officers and highly
compensated employees of the Company as defined in Treas. Reg. §
1.409A-1(i).  The identification date for determining whether any employee is a
Specified Employee during any calendar year shall be the September 1 preceding
the commencement of such calendar year.

 

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(x)              “Termination of Employment” means a “Separation from Service”
solely for the purpose of any Award that is subject to the requirements of
Section 409A of the Code.  With respect to a Participant who is an employee of
the Company, the term “Separation from Service” means either (i) the termination
of a Participant’s employment with the Company and all Affiliates due to death,
retirement or other reasons, or (ii) a permanent reduction in the level of bona
fide services the Participant provides to the Company and all Affiliates to an
amount that is 20% or less of the average level of bona fide services the
Participant provided to the Company and all Affiliates in the immediately
preceding 36 months, with the level of bona fide service calculated in
accordance with Treas. Reg. § 1.409A-1(h)(1)(ii).  For this purpose, the term
“Affiliate” has the meaning set forth in Treas. Reg. § 1.409A-1(h)(3) (which
generally requires at least 50% common ownership).

A Participant’s employment relationship is treated as continuing while the
Participant is on military leave, sick leave, or other bona fide leave of
absence (if the period of such leave does not exceed six months, or if longer,
so long as the Participant’s right to reemployment with the Company or an
Affiliate is provided either by statute or contract).  If the Participant’s
period of leave exceeds six months and the Participant’s right to reemployment
is not provided either by statute or by contract, the employment relationship is
deemed to terminate on the first day immediately following the expiration of
such six-month period.  Whether a Termination of Employment has occurred will be
determined based on all of the facts and circumstances and in accordance with
regulations issued by the United States Treasury Department pursuant to Code
Section 409A.

With respect to a Participant who is a non-employee independent contractor or
consultant providing services to Company, the term “Separation from Service”
means a termination of the individual’s services to the Company due to the
expiration of the contract, and if there is more than one contract, all
contracts under which the individual performs services, as long as the
expiration is a good faith and complete termination of the contractual
relationship.  With respect to a Participant who is a non-employee member of the
Board, the term “Separation from Service” means that he or she has ceased to be
a member of the Board.

For purposes of the Plan, if a Participant performs services in more than one
capacity, the Participant must have a Separation from Service in all capacities
as an employee, member of the Board, independent contractor or consultant to
have a Separation from Service.  Notwithstanding the foregoing, if a Participant
provides services both as an employee and a non-employee, (1) the services
provided as a non-employee are not taken into account in determining whether the
Participant has a Separation from Service as an employee under a nonqualified
deferred compensation plan in which the Participant participates as an employee
and that is not aggregated under Section 409A of the Code with any plan in which
the Participant participates as a non-employee, and (2) the services provided as
an employee are not taken into account in determining whether the Participant
has a Separation from Service as a non-employee under a nonqualified deferred
compensation plan in which the Participant participates as a non-employee and
that is not aggregated under Section 409A of the Code with any plan in which the
Participant participates as an employee.

If, at the time of a Participant’s Separation from Service, the Company has any
stock which is publicly traded on an established securities market or otherwise,
and if the Participant is considered to be a Specified Employee, to the extent
any payment for any Award is subject to the requirements of Section 409A of the
Code and is payable upon the Participant’s Separation from Service, such payment
shall not commence prior to the first business day following the date which is
six months after the Participant’s Separation from Service (or if earlier than
the end of the six-month period, the date of the Participant’s death).  Any
amounts that would have been distributed during such six-month period will be
distributed on the day following the expiration of the six-month period.

 
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5.             Section 7.1(a) of the Plan is hereby amended and restated in its
entirety to read as follows:

(a)  Exercise Price.  The exercise price per share of Stock under an Option
shall be determined by the Board and set forth in the Award Agreement; provided
that the exercise price for any Option may not be less than the Fair Market
Value of a share of Stock as of the date of grant.

6.             Section 8.1(a)(2) of the Plan is hereby amended and restated in
its entirety to read as follows:

(2)  The grant price of the Stock Appreciation Right as determined by the Board,
which shall not be less than the Fair Market Value of one share of Stock on the
date of grant.

7.             Section 8.1(b) of the Plan is hereby amended by adding the
following new paragraph to the end thereof:

As a general rule, the SARs granted under the Plan are intended to comply with
the so-called “stock rights” exception to Section 409A of the Code described in
Treas. Reg. § 1.409A-1(b)(5)(B).  The Board may in its discretion grant a SAR
Award pursuant to which a Participant can defer receipt of the cash or Stock
payable in exchange for such SARs.  Under these circumstances, the SAR Award
will be subject to Section 409A of the Code and the Award Agreement must include
any provisions needed to comply with the requirements of Section 409A of the
Code and regulations thereunder, or an exception to thereto.

8.             Section 9.3 of the Plan is hereby amended by adding the following
to the end thereof:

Payment for Performance Shares shall be made in the manner and at the time
designated by the Board in the Award Agreement and the Award Agreement shall
include any provisions needed to comply with the requirements of Section 409A of
the Code and the regulations thereunder, or an exception thereto.

9.             Section 11.1 of the Plan is hereby amended by adding the
following to the end thereof:

Notwithstanding the foregoing, to the extent the Board, in its discretion,
grants an award of dividend equivalents with respect to any Option or Stock
Appreciation Right, the Board shall not condition the right to receive dividend
equivalent amounts, directly or indirectly, upon the exercise of any such Option
or Stock Appreciation Right.  In addition, the Award Agreement for any grant of
dividend equivalents hereunder shall include any provisions needed to comply
with the requirements of Section 409A of the Code and the regulations
thereunder, or an exception thereto.

10.           Section 12.1 of the Plan is hereby amended by adding the following
to the end thereof:

The Award Agreement for any Award granted pursuant to this Section 12.1 that is
subject to the requirements of Section 409A of the Code shall include any
provisions needed to comply with the requirements of Section 409A of the Code
and the regulations thereunder, or an exception thereto.

11.           Section 13.1 of the Plan is hereby amended by adding the following
to the end thereof:

Notwithstanding any provision of this Section 13.1 to the contrary, the Board
will not take any action pursuant to this Section that would result in an
impermissible acceleration or further deferral of any Award that is subject to
the requirements of Section 409A of the Code or that would otherwise cause such
Award to be subject to additional tax under Section 409A of the Code.

 
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12.           Section 13.2 of the Plan is hereby amended by adding the following
to the end thereof:

Notwithstanding any provision of this Section 13.2 to the contrary, the Board
will not take any action pursuant to this Section that would result in an
impermissible acceleration or further deferral of any Award that is subject to
the requirements of Section 409A of the Code or that would otherwise cause such
Award to be subject to additional tax under Section 409A of the Code.

13.           Section 13.4 of the Plan is hereby amended by adding the following
to the end thereof:

The Award Agreement for any Award that is subject to the requirements of Section
409A of the Code shall include any provisions needed to comply with the
requirements of Section 409A of the Code and the regulations thereunder, or an
exception thereto.

14.           Section 13.9 of the Plan is hereby amended by adding the following
to the end thereof:

Notwithstanding any provision of this Section 13.9 to the contrary, the
provisions of this Section 13.9 shall not result in the acceleration of the time
or form of payment of any Award that is subject to the requirements of Section
409A of the Code, except to the extent permitted under Section 409A of the Code
and the regulations thereunder.  In addition, the Board will not take any action
pursuant to this Section that would cause any Award to be subject to additional
tax under Section 409A of the Code.

15.           Section 14.1 of the Plan is hereby amended by adding the following
to the end thereof:

Notwithstanding any provision to the contrary, any adjustment or substitution
made pursuant to this Section 14.1 shall be made in a manner consistent with the
requirements of Section 409A of the Code and regulations thereunder, to extent
they apply, and, in the case of Incentive Stock Options, in a manner consistent
with the requirements of Section 424(a) of the Code.

16.           Section 15.1 of the Plan is hereby amended by adding the following
sentence to the end thereof:

Additional rules relating to amendments to the Plan or any Award Agreement to
assure compliance with Section 409A of the Code are set forth in Section 16.14.

17.           Article 16 of the Plan is hereby amended by adding the following
new Section 16.14 as set out below:

16.14           COMPLIANCE WITH SECTION 409A OF THE CODE.  Some of the Awards
that may be granted pursuant to the Plan (including, but not necessarily limited
to Performance Share Awards, Dividend Equivalent Awards and Other Stock-Based
Awards) may be considered to be “non-qualified deferred compensation” subject to
Section 409A of the Code.  If an Award is subject to Section 409A of the Code,
the Award Agreement and this Plan are intended to comply fully with and meet all
of the requirements of Section 409A of the Code or an exception thereto and the
Award Agreement shall include such provisions, in addition to the provisions of
this Plan, as may be necessary to assure compliance with Section 409A of the
Code or an exception thereto.  An Award subject to Section 409A of the Code also
shall be administered in good faith compliance with the provisions of Section
409A of the Code as well as applicable guidance issued by the Internal Revenue
Service and the Department of Treasury.  To the extent necessary to comply with
Section 409A of the Code, any Award that is subject to Section 409A of the Code
may be modified, replaced or terminated in the discretion of the
Board.  Notwithstanding any provision of this Plan or Award Agreement to the
contrary, in the event that the Board determines that any Award is or may become
subject to Section 409A of the Code, the Company may adopt such amendments to
the Plan and the related Award Agreements, without the consent of the
Participant, or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effective dates), or take any other
action that the Board determines to be necessary or appropriate to either comply
with Section 409A of the Code or to exclude or exempt the Plan or any Award from
the requirements of Section 409A of the Code; provided, however, that the
Company makes no representations that any Award shall be exempt from or comply
with Section 409A of the Code and makes no undertaking to preclude Section 409A
of the Code from applying to Awards granted under the Plan.

 
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18.           This First Amendment shall amend only the provisions of the Plan
as set forth herein, and those provisions not expressly amended hereby shall be
considered in full force and effect.

IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed
by its authorized representative on the date set forth below.

Executed this 31st day of December, 2008.

 
Hypercom Corporation
           
By:
/s/ Robert Vreeland
       
Its:
Interim CFO

 
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