SEVERANCE AGREEMENT

This SEVERANCE AGREEMENT (this “Agreement”) is made and entered into freely and
voluntarily, by and between JOHN W. SMOLAK (hereinafter referred to as
“Officer”) and HYPERCOM CORPORATION (hereinafter referred to collectively with
all of its subsidiaries and controlled affiliates as the "Company”).

WHEREAS, the parties mutually wish to memorialize the terms and conditions of
the termination of Officer’s employment with the Company.

NOW, THEREFORE, in consideration of the acts, payments, covenants and mutual
agreements herein described and agreed to be performed, Officer and the Company
agree as follows:

1. Resignation. Officer hereby resigns from all positions with the Company
(including as an officer of Hypercom and an officer or director of various
subsidiaries), effective as of 3:00 p.m., Phoenix time, March 21, 2005 (the
“Effective Date”).

2. Economic Terms. The Company agrees that, in consideration for Officer’s
covenants herein, Officer will be entitled to receive, through the one (1) year
anniversary of the Effective Date, continued payments aggregating $330,000,
payable equally over the severance payment term, in accordance with the
Company’s normal payroll practices provided, however, that the first of such
payments shall be applied (net of tax withholding) to offset the overpayment of
a bonus to Officer relating to 2004 in the amount of $10,000. Officer
acknowledges that he will not be paid any bonus, vacation, sick or other pay
during his severance payment period. In addition, Officer and the Company
acknowledge and agree that the Stock Option Agreements between them dated
April 22, 2002 and July 26, 2002 (the “Options”), shall remain in effect, and
ultimately terminate, in accordance with their respective terms. For purposes of
this Agreement and the Options, Officer shall be deemed terminated without
“cause”.

3. Release and Covenant Not to Sue.

(a) Each party hereby forever releases, discharges, cancels, waives, and acquits
the other party and its or his representatives (which shall include, as
applicable, spouse, heirs, executors, administrators, successors, assigns,
affiliates, subsidiaries, corporate parents, agents, directors, officers,
owners, attorneys) of and from any and all rights, claims, demands, causes of
action, obligations, damages, penalties, fees, costs, expenses, and liability of
any nature whatsoever, whether in law or equity, which a party has, had or may
hereafter have against it arising out of, or by reason of, any cause or matter,
existing as of the date of execution of this Agreement, WHETHER KNOWN TO THE
PARTY AT THE TIME OF EXECUTION OF THIS AGREEMENT OR NOT, other than for breach
of this Agreement.

(b) This FULL WAIVER OF ALL CLAIMS includes, without limitation, attorney’s
fees, any claims, demands, or causes of action arising out of, or relating in
any manner whatsoever to, the employment and/or termination of the employment of
Officer by the Company, such as, BUT NOT LIMITED TO, any charge, claim, lawsuit
or other proceeding arising under the Civil Rights Act of 1866, 1964, 1991,
Title VII as amended by the Civil Rights Act of 1991, the Americans with
Disabilities Act, the Age Discrimination in Employment Act (ADEA), the Labor
Management Relations Act (LMRA), the Employee Retirement Income Security Act
(ERISA), the Consolidated Omnibus Budget Reconciliation Act, the Fair Labor
Standards Act (FLSA), the Equal Pay Act, the Rehabilitation Act of 1973, and the
Family and Medical Leave Act of 1993, worker’s compensation laws, or any other
federal, state, or local statute, or any contract, agreement, plan or policy.

(c) Each party further covenants and agrees not to institute, nor cause to be
instituted, any legal proceeding, including filing any claim or complaint with
any government agency alleging any violation of law or public policy or seeking
worker’s compensation, against the Company (or any of its representatives)
premised upon any legal theory or claim whatsoever, including without
limitation, contract, tort, wrongful discharge, personal injury, interference
with contract, breach of contract, defamation, negligence, infliction of
emotional distress, fraud, or deceit, except to enforce the terms of this
Agreement.

(d) Each party acknowledges that the considerations afforded the party under
this Agreement are in full and complete satisfaction of any claims a party may
have or had to the date hereof, including any arising out of Officer’s
employment with the Company or the termination thereof.

(e) The foregoing shall not apply to any conduct that constituted fraud,
involved an intentional or reckless misstatement or omission, or was not
performed in good faith and in (or at least not opposed to) the best interests
of the Company.

(f) Nothing herein shall limit or modify the Company’s obligations to indemnify
you and advance expenses to you, as more fully provided in the Company’s
certificate of incorporation and bylaws.

4. Non-Competition; Non-Solicitation.

(a) For a period of one (1) year from the date hereof, Officer will not,
directly or indirectly, either as an officer, partner, owner, lender, director,
adviser or consultant or in any other capacity or through any entity:

(i) engage in the design, manufacture or sale of electronic payment solutions,
including point of sale/point of transaction terminals, peripheral devices,
transaction networking devices, transaction management systems and application
software, and related support and services (collectively, the “Competitive
Activities”), within the Protected Territory (as defined below); provided, that
Officer may own stock in the Company and less than 1% of any other publicly
traded company engaged in any or all of the Competitive Activities.

(ii) solicit for hire, or hire, any person who is, or within the one (1) year
period preceding the date of such activity was, an employee of or consultant to
the Company (other than as a result of a general solicitation for employment);
or

(iii) solicit any customer or supplier of the Company or otherwise attempt to
induce any such customer or supplier to discontinue or materially modify its
relationship with the Company.

As used herein, the term “Protected Territory” means the entire world; provided,
however, that if (and only if) required by a final court or arbitrator’s order
in order for the provisions of this Agreement to remain valid and enforceable
against Officer, “Protected Territory” shall mean any country in which the
Company does any business as of the Effective Date; provided, further, that if
(and only if) such reduced territory is not sufficient in the determination of
the court or arbitrator issuing such order, “Protected Territory” shall mean the
United States, Canada, Brazil, Chile, Argentina, Colombia, Venezuela, Mexico,
European Community (including the United Kingdom), China, Hong Kong, Taiwan,
Japan, Turkey, Singapore, Russia, South Korea, Australia and Puerto Rico.

(b) Officer represents to the Company that he is willing and able to engage in
businesses that are not competing businesses hereunder and that enforcement of
the restrictions set forth in this Section 4 would not be unduly burdensome to
Officer. Officer hereby agrees that the period of time provided for in this
Section 4 and other provisions and restrictions set forth herein are reasonable
and necessary to protect the Company and its successors and assigns in the use
and employment of the goodwill of the business conducted by Officer. Officer
further agrees that damages cannot compensate the Company in the event of a
violation of this Section 4 and that, if such violation should occur, injunctive
relief shall be essential for the protection of the Company and its successors
and assigns. Accordingly, Officer hereby covenants and agrees that, in the event
any of the provisions of this Section 4 shall be violated or breached, the
Company shall be entitled to obtain injunctive relief against the party or
parties violating such covenants without bond but upon due notice, in addition
to such further or other relief as may be available at equity or law. An
injunction by the Company shall not be considered an election of remedies or a
waiver of any right to assert any other remedies which the Company has at law or
in equity. No waiver of any breach or violation hereof shall be implied from
forbearance or failure by the Company to take action thereof. The prevailing
party in any litigation, arbitration or similar dispute resolution proceeding to
enforce this provision will recover any and all reasonable costs and expenses,
including attorneys’ fees. Officer agrees that the period of time in which this
Section 4 is in effect shall be extended for a period equal to the duration of
any breach of this Section 4 by Officer.

(c) Officer shall take appropriate steps to ensure that his employer is aware of
the restrictions in this Section 4, and Officer expressly permits the Company to
notify his employer of such restrictions.

5. Confidentiality.

(a) It is understood that in the course of Officer’s employment with Company,
Officer has become acquainted with Company Confidential Information (as defined
below). Officer recognizes that Company Confidential Information has been
developed or acquired at great expense, is proprietary to the Company, and is
and shall remain the exclusive property of the Company. Accordingly, Officer
agrees that he will not disclose to others, copy, make any use of, or remove
from Company’s premises any Company Confidential Information without the express
written consent of the Chairman of the Board of the Company, until such time as
Company Confidential Information becomes generally known, or readily
ascertainable by proper means by persons unrelated to the Company that are not
bound by an obligation of confidentiality.

(b) Officer shall deliver to the Company, no later than 6:00 p.m., Phoenix time,
on the Effective Date, the originals and all copies (including, but not limited
to, any electronic versions or copies) of any and all materials, documents,
notes, manuals, or lists containing or embodying Company Confidential
Information, or relating directly or indirectly to the business of the Company,
in the possession or control of Officer.

(c) "Company Confidential Information” shall mean confidential, proprietary
information or trade secrets of Company including without limitation the
following: (1) employee, customer and supplier lists and information as compiled
by Company; (2) Company’s internal practices and procedures; (3) Company’s
financial condition and financial results of operation; (4) strategic planning,
manufacturing, engineering, purchasing, finance, marketing, promotion,
distribution, and selling activities; (5) inventions, designs, developments,
devices, methods and processes related to the business of the Company (whether
or not patentable or reduced to practice); (6) except as required by law, the
terms and conditions of this agreement, as well as negotiations and
circumstances leading up to it; (7) all other information which Officer has a
reasonable basis to consider confidential or which is treated by Company as
confidential; and (8) all information having independent economic value to
Company that is not generally known to, and not readily ascertainable by proper
means by, persons who can obtain economic value from its disclosure or use.
Notwithstanding the foregoing provisions, the following shall not be considered
“Company Confidential Information”: (i) the general skills of the Officer as an
experienced senior management level employee; (ii) information generally known
by senior management officers within the electronic payment solutions industry;
and (iii) persons, entities, contacts or relationships of Officer that are also
generally known in the industry.

(d) Officer hereby agrees that the periods of time provided for in this
Section 5 and other provisions and restrictions set forth therein are necessary
to protect the Company and its successors and assigns in the use and employment
of the goodwill of the business conducted by Officer. Officer further agrees
that damages cannot compensate the Company in the event of a violation of this
Section 5 and that, if such violation should occur, injunctive relief shall be
essential for the protection of the Company and its successors and assigns.
Accordingly, Officer hereby covenants and agrees that, in the event any of the
provisions of this Section 5 shall be materially violated or breached, the
Company shall be entitled to seek to obtain injunctive relief against the party
or parties violating such covenants, without bond but upon due notice, in
addition to such further or other relief as may be available at equity or law.
An injunction by the Company shall not be considered an election of remedies or
a waiver of any right to assert any other remedies which the Company has at law
or in equity. No waiver of any breach or violation hereof shall be implied from
forbearance or failure by the Company to take action thereof. The prevailing
party in any litigation, arbitration or similar dispute resolution proceeding to
enforce this provision will recover any and all reasonable costs and expenses,
including attorneys’ fees.

6. No Disparagement/Confidentiality. Each party agrees that as part of the
consideration for this Agreement, they will not make disparaging or derogatory
remarks, whether oral or written, about the other party or, in the case of the
Company, its officers, directors, employees, agents, customers or suppliers.
Officer agrees to keep the existence and terms of this Agreement in strict
confidence; provided, however, that Officer may disclose the existence and terms
of this Agreement to his spouse, financial advisor, and attorney, and as
required by law. The Company agrees to keep the existence and terms of this
Agreement in strict confidence; provided, however, that the Company may discuss
or disclose the existence and terms of this Agreement on a need-to-know basis or
as required by law or regulation.

7. Return of Company Property. Officer shall deliver to the Company no later
than 6:00 p.m., Phoenix time, on the Effective Date, Officer’s laptop computer,
cellular telephone, BlackBerry®, all access cards and keys, and any other
Company property in his possession or control. The foregoing notwithstanding,
the Company’s obligation to pay any amounts to Officer under any provision of
this Agreement shall be contingent upon Officer’s compliance with this
Section 7.

8. No Admission of Liability. Nothing contained in this Agreement shall be
construed in any manner as an admission by any party that they have violated any
statute, law or regulation, or breached any contract or agreement.

9. Reliance. Officer warrants and represents that: (a) he has relied on his own
judgment regarding the consideration for and language of this Agreement; (b) he
has been given a reasonable period of time to consider this Agreement, has been
advised to consult with counsel of his own choosing before signing this
Agreement, and has consulted with counsel or voluntarily elected not to consult
with independent counsel; (c) the Company has not in any way coerced or unduly
influenced him to execute this Agreement; and (d) this Agreement is written in a
manner that is understandable to him and he has read and understood all
paragraphs of this Agreement.

10. Nature of the Agreement. This Agreement and all provisions thereof,
including all representations and promises contained herein, are contractual and
not a mere recital and shall continue in permanent force and effect. This
Agreement and all attachments constitute the sole and entire agreement of the
parties with respect to the subject matter hereof, and there are no agreements
of any nature whatsoever between the parties hereto except as expressly stated
herein. Except for the Options, all prior agreements, commitments, or plans
relating to Officer, are hereby terminated. This Agreement may not be modified
or changed unless done so in writing, signed by both parties. In the event that
any portion of this Agreement is found to be unenforceable for any reason
whatsoever, the unenforceable provision shall be considered to be severable, and
the remainder of the Agreement shall continue to be in full force and effect.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Arizona without regard to choice of law principles. Officer hereby:
(a) irrevocably submits to the exclusive jurisdiction of the courts of the State
of Arizona located in the County of Maricopa over any suit, action or other
proceeding arising in connection with this Agreement or the subject matter
hereof, and (b) waives and agrees not to assert in any such suit, action or
proceeding, any claim that Officer is not subject to the jurisdiction of such
courts of competent jurisdiction.

11. Time Period of Considering or Canceling This Agreement. Officer acknowledges
that he has been offered a period of time of at least twenty-one (21) days to
consider whether to sign this Agreement, which he has waived, and the Company
agrees that Officer may cancel this Agreement at any time during the seven
(7) days following the date on which this Agreement has been signed by all
parties to this Agreement. In order to cancel or revoke this Agreement, Officer
must deliver to the Company c/o Hypercom Corporation, Attn: General Counsel,
2851 W. Kathleen Road, Phoenix, Arizona 85053, written notice stating that
Officer is canceling or revoking this Agreement. If this Agreement is timely
cancelled or revoked, none of the provisions of this Agreement shall be
effective or enforceable and the Company shall not be obligated to make the
payments to Officer or to provide Officer with the other benefits described in
this Agreement and all contracts and provisions modified or relinquished by the
Company shall be reinstated.

12. General Matters. This Agreement may not be assigned by one party without the
prior express written consent of the other party. This Agreement may be executed
by the parties in multiple counterparts, each of which shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument. The parties acknowledge that: (a) each and every provision of this
Agreement shall be construed as though both parties participated equally in the
drafting of same; and (b) any rule of construction that a document shall be
construed against the drafting party shall not be applicable to this Agreement.
The provisions of this Agreement shall survive so long as necessary to carry out
the intentions of the parties expressed in this Agreement.

[Signature Page Follows]

SIGNATURE PAGE TO SEVERANCE AGREEMENT

Dated this 4th day of April, 2005.

JOHN W. SMOLAK

By: /s/ John W. Smolak

      Officer

Dated this 4th day of April, 2005.

HYPERCOM CORPORATION

By: /s/ William Keiper

Its: Chairman and Interim CEO