EXHIBIT 10.4
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HYPERCOM CORPORATION
2851 West Kathleen Road
Phoenix, Arizona 85053
Phone: 602.504.5000
Fax: 602.504.4655
December 20, 2007
Mr. Philippe Tartavull
3550 Surfwood Road
Malibu, California 90265
                    Re: Employment with Hypercom Corporation
Dear Philippe:
     Upon execution by you and Hypercom, this Agreement will, except as
expressly provided herein, amend and restate in its entirety the letter
agreement between you and Hypercom Corporation (“Hypercom” or the “Company”)
with respect to the terms of your employment with the Company, dated January 16,
2007 (the “Original Agreement”), and will constitute your employment agreement
(the “Agreement”) with the Company. A copy of the Original Agreement is attached
hereto as Exhibit A.

1.   Position with the Company. Hypercom is pleased to offer you the position of
Chief Executive Officer (CEO) of the Company, based at the Company’s
headquarters in Phoenix, Arizona. You may be called upon to serve in additional
or other capacities from time-to-time during your tenure with the Company. You
will faithfully and diligently perform all lawful duties commensurate with these
positions, including those duties directed by the Board of Directors of the
Company (the “Board”). In addition, effective as of the date of this Agreement,
you shall be nominated to serve as a member of the Board and if elected, so long
as you remain an employee of the Company, you will continue to serve on the
Board.       You will continue to work out of the Company’s headquarters Monday
through Friday which shall be your primary place of employment except when your
work necessitates business travel. You agree that if you are employed by the
Company at the time your children graduate from high school, you will promptly
relocate your primary residence to a location within the greater Phoenix
metropolitan area with such relocation to occur within one (1) year of the
graduation of the youngest child.   2.   Term. Your employment by the Company in
your role as CEO will be effective as of 12:01 a.m. on December 20, 2007 and
will terminate on December 20, 2009 (the “Term”), unless you and the Company
agree to renew your employment relationship. Notwithstanding the above, as of

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    December 20, 2008, you and the Company will review the employment
relationship and at that time the Company may, in its sole discretion, extend
the Term of this Agreement until December 20, 2010.

3.   Compensation. You will receive the following compensation for your services
pursuant to this Agreement:

  (a)   You will receive a base salary of $450,000.00 per year, which may be
adjusted upward from time-to-time (the “Base Salary”) at the discretion of the
Board or downward in the event of a Company-wide downward compensation
adjustment. The Base Salary will be paid in equal installments in accordance
with the Company’s salary payment policies in effect from time-to-time, and such
salary payments will be subject to the usual withholding for income tax and
other customary deductions.     (b)   Your target annual bonus compensation
shall be one hundred percent (100%) of your then-current Base Salary for each
year during the term of this Agreement, if the Company achieves the annual
Performance Goals, as defined below, and as determined by the Board; provided
that you may be entitled to receive annual bonus compensation in an aggregate
amount up to one hundred and fifty percent (150%) of your then-current base
salary for each year during the term of this Agreement if the Board deems it
consistent with the achievement of the Performance Goals for such year. The
Performance Goals, and the percentage of bonus compensation tied to each, will
be specifically defined by the Board in its discretion, but will likely include
some or all of the following: revenue growth, gross margin, earnings per share,
market share growth and development of the organization (the “Performance
Goals”). The determination as to whether the Company has achieved the
Performance Goals will be made by the Board in its discretion, and the bonus
will be paid to you within five (5) business days following such determination,
but in any event no later than the 15th day of the third month following the
applicable bonus year.     (c)   In accordance with Paragraph 3(c) of the
Original Agreement, the Board granted to you thirty-five thousand (35,000)
shares of restricted common stock pursuant to the Company’s Long-Term Incentive
Plan and subject to the terms set forth in the Company’s form of restricted
stock agreement. Such shares will remain subject to Paragraph 3(c) of the
Original Agreement, the provisions of which are incorporated herein.     (d)  
In accordance with Paragraph 3(d) of the Original Agreement, the Board granted
to you fifty thousand (50,000) shares of restricted common stock of the Company
pursuant to the Long-Term Incentive Plan (and the Company’s form of restricted
stock agreement) restricted by achievement of the Performance Goals established
or to be established by the Board for fiscal years 2007 and 2008. Such shares
will remain subject to Paragraph 3(d) of the Original Agreement, the provisions
of which are incorporated herein.     (e)   In accordance with Paragraph 3(e) of
the Original Agreement, the Board granted to you an option to purchase
one-hundred thousand (100,000) shares of common stock of the Company pursuant to
the Company’s Long-Term Incentive Plan (and the Company’s form of option

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      agreement). Such option will remain subject to Paragraph 3(e) of the
Original Agreement, the provisions of which are incorporated herein.

  (f)   The Compensation Committee of the Board will grant to you, effective
January 15, 2008, an option to purchase three-hundred thousand (300,000) shares
of common stock of the Company (the “Option”) pursuant to the Company’s
Long-Term Incentive Plan (and the Company’s form of option agreement) with a per
share exercise price equal to the fair market value of the per share price of
the common stock on the effective date of grant. The Option shall vest and be
fully exercisable on the first anniversary of the date of grant of the Option
with respect to thirty-three and one-third percent (33.33%) of the total number
of shares subject to the Option. The remaining sixty-six and two-thirds percent
(66.67%) of the Option shall vest in equal monthly installments over a period of
twenty-four (24) months thereafter. The Option is intended to be treated as an
“incentive stock option” to the maximum extent permitted under the Internal
Revenue Code of 1986, as amended (the “Code”).     (g)   You will be eligible,
but not entitled, to receive additional grants of stock options and restricted
capital stock of the Company in such quantities and subject to such conditions
as the Board may determine in its sole and absolute discretion.     (h)   The
Company will provide you with housing reimbursement in connection with your
business travel to the Company’s headquarters in Phoenix in a reasonable amount
to be determined by the Board, provided, however, that such reimbursement will
be in an amount comparable to the cost of a standard room at the Sheraton
Crescent Hotel located in Phoenix, Arizona and shall only apply to housing costs
incurred while residing in Phoenix, Arizona on business.     (i)   For each week
during the term of this Agreement, the Company will provide you with a
reasonable allowance for one round-trip airline ticket between Los Angeles,
California and Phoenix, Arizona (or comparable destinations), consistent with
the terms of the Company’s travel policies then in effect for executive
officers. Upon presentation of receipts, the Company also will reimburse you for
all reasonable expenses incurred by you in connection with your transportation
to and from the airport in Phoenix and to and from the airport in Los Angeles
(consistent with the terms of the Company’s travel policies then in effect for
executive officers).     (j)   In the event that you determine to move to
Phoenix, Arizona from your current residence, the Company will provide you with
a moving package as set forth in a separate letter provided to you. If you
resign for any reason, except as a result of a Change of Control as defined in
the Definitions section, attached hereto, within twelve (12) months of the date
of reimbursement for the move, you must reimburse the Company the full amount of
the moving package granted pursuant to this paragraph.     (k)   You may
participate in any pension or profit sharing plan, stock purchase plan, group
benefit plan, medical plan, and/or other benefit plans, either currently in
effect or as may be established from time to time by the Board, for which you as
an officer of the Company are,

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      and remain, eligible to participate. (You acknowledge that you will not be
entitled to any benefits under any discretionary plan unless actually provided
to you in accordance with such plan.)     (l)   You covenant and agree that, as
soon as practicable but in no event more than three (3) years from the date of
the Original Agreement, you will beneficially own, hold and retain shares of
common stock of the Company equal in value to your Base Salary for such given
year (the “Minimum Ownership”); provided, however, that this covenant shall not
be construed to require or encourage you to purchase shares of the Company’s
common stock on the open market for the sole purpose of achieving the Minimum
Ownership, as such purposes are governed by the Company’s insider trader policy.
You also covenant and agree that you will not sell or dispose of, or cause
anyone else to sell or dispose of, any common stock of the Company that you have
received (i) as a result of this Agreement or (ii) pursuant to any other Company
compensation, until and unless you have achieved (and will continue to maintain
following such sale or disposition) the Minimum Ownership.     (m)   You will be
eligible for, but not entitled to, receive such other compensation as may from
time to time be granted to you by the Board in its sole and absolute discretion,
including additional bonuses approved by the Board or the Board’s Compensation
Committee.     (n)   You will be permitted to take vacations and sick leave, in
accordance with the Company’s policies and procedures as in effect for officers
of the Company.     (o)   The Company will pay for or reimburse you for your
annual fee for membership in the Young Presidents’ Organization.

4.   Benefits and Employment Matters. The Company offers a comprehensive array
of employee benefit programs. Currently, those programs include paid time off
(“PTO”), medical, dental and vision care, paid holidays, disability insurance,
life insurance, travel accident insurance, 401(k) Plan, Hypercom Employee Stock
Purchase Plan, and tuition reimbursement. Details of these programs will be
provided to you. Eligibility for Company benefit programs may vary by employee
status, length of service, and by the specific benefit program. Hypercom
reserves the right to modify, suspend or terminate its benefit programs in its
sole discretion.

5.   Business Expenses. The Company will pay or reimburse you for all ordinary
and necessary business expenses incurred or paid by you in furtherance of the
Company’s business, in accordance with the Company’s policies and procedures,
including, without limitation, those expenses referred to in subparagraphs (h),
(i), (j) and (o) of Paragraph 3. Any reimbursement of an expense you are
entitled to receive pursuant to this Agreement will (a) be paid no later than
the last day of your tax year following the tax year in which you incurred the
expense, (b) not be affected by any other expenses that are eligible for
reimbursement in any tax year and (c) not be subject to liquidation or exchange
for another benefit.

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6.   Termination for Cause or by Voluntary Resignation.

  (a)   The Company may terminate you for Cause, as defined below. Upon any
termination for Cause, or in the event that you voluntarily resign from the
Company, you will be entitled to receive only that compensation due you through
the date of termination or resignation, as the case may be. Your right to
exercise any vested options shall be in accordance with the provisions of the
Company’s applicable Long Term Incentive Plan and option agreement.     (b)  
For purposes of this Agreement, “Cause” means if the Board, in its reasonable
and good faith discretion, determines that you (i) have developed or pursued
interests substantially adverse to the Company, (ii) have materially breached
any employment or confidentiality agreement, (iii) have not devoted a majority
of your business time, effort and attention to the affairs of the Company (or
such lesser amount as has been agreed to in writing by the Company), (iv) are
charged by any governmental entity with any felony (excluding traffic
violations) that is reasonably determined by the Board to be true and to
adversely reflect upon the Company’s standing in the community, or (v) have
engaged in gross misconduct or other material omissions that are significantly
detrimental to the well-being of the Company.

7.   Death or Disability.

  (a)   Except as provided in this subsection 7(a), no salary or benefits shall
be payable under this Agreement following the date of your death. In the event
of your death, any Base Salary earned by you up to the date of your death, as
well as any unreimbursed expenses or Gross-up Payment, shall be paid to your
estate or named beneficiary within ninety (90) days following your death. In
addition, the title to (i) such restricted common stock granted pursuant to
subsection 3(c) hereof, and (ii) any other restricted common stock not governed
by a conflicting agreement or performance requirements (including the restricted
stock granted pursuant to subsection 3(d) hereof), the vesting of which is
contingent upon continued employment with the Company, shall immediately pass to
your estate or named beneficiary.     (b)   If during the term of your
employment, you become so disabled or incapacitated by reason of any physical or
mental illness or any substance or chemical dependency which renders you unable
to perform the services required of you pursuant to your employment for a
continuous period of three (3) months, then, at the option of the Board, your
employment will terminate at the end of such three (3) month period, provided
that (i) the Board exercises reasonable efforts to accommodate such disability
in accordance with the American with Disabilities Act, and (ii) during such
period of disability, incapacity or incapacity, you will be paid your Base
Salary and expenses otherwise payable to you.     (c)   In the event of your
death, for a period of twelve (12) months from the date of death the Company
will pay for COBRA benefits (or the equivalent) for your surviving spouse and
dependents covered by the Company’s group health plan at the time of your death.
In the event of your termination on account of disability, for a period of
twelve (12) months from the date of termination the Company will pay for COBRA
benefits or the equivalent for you,

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      your spouse, and your dependents covered by the Company’s group health
plan at the time of termination.

8.   Termination by Reason of Company Non-Renewal of the Term. In the event that
the Company does not offer to renew or extend the initial Term as provided in
Paragraph 2 on or before its expiration and, as a result, your employment with
the Company terminates upon the expiration of the initial Term, then, in
addition to the compensation due you through the date of your termination of
employment, you will be entitled to immediate vesting of all your options to
purchase common stock of the Company, the exercise price of which is less than
the then fair market value of such common stock upon the date of termination,
and such options shall remain exercisable until their original expiration date,
provided that the release contemplated by Paragraph 19 below becomes effective
in accordance with its terms on or before the thirtieth (30th) day following the
date of your termination of employment.

9.   Termination by the Company Other than for Cause or by You for Good Reason.
In the event that you are involuntarily terminated by the Company without Cause
(other than as a result of your death or disability or the Company’s non-renewal
of the Term, as described in Paragraph 8) or you terminate your employment for
Good Reason, and provided that the release contemplated by Paragraph 19 below
becomes effective in accordance with its terms on or before the thirtieth (30th)
day following the date of your termination of employment, you be will be
entitled to:

  (a)   an amount equal to the greater of (A) one (1) year of Base Salary at the
rate then in effect or (B) the aggregate amount of Base Salary at the rate then
in effect that would be paid for the period from the date of your termination of
employment to the end of the Term had you remained employed throughout such
period, which amount will be paid in a lump sum on the thirtieth (30th) day
following that date of your termination of employment; and     (b)   immediate
vesting of all of your shares of restricted stock and all of your options to
purchase common stock of the Company, the exercise price of which is less than
the then fair market value of such common stock upon the date of termination,
and such options shall remain exercisable until the expiration date of their
original terms; and     (c)   payment by the Company for a period of twelve
(12) months from the date of your termination of employment for the COBRA
benefits available to you, your spouse and your dependents covered by the
Company’s group health plan at the time of your termination of employment.

    Notwithstanding the foregoing, this Paragraph 9 shall not apply to a
termination of your employment to which Paragraph 10 applies.   10.  
Termination for Other than Cause or by You for Good Reason Following Change of
Control. If, within a period of twelve (12) months following a Change of
Control, as defined in the Definition section, attached hereto, you are
involuntarily terminated by the Company without Cause (other than as a result of
your death or disability or the Company’s non-renewal of the Term, as described
in Paragraph 8) or you terminate your employment for Good Reason, and provided
that the release

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    contemplated by Paragraph 19 below becomes effective in accordance with its
terms on or before the thirtieth (30th) day following the date of your
termination of employment, you will be entitled to:

  (a)   an amount equal to the greater of (i) eighteen (18) months of Base
Salary at the rate then in effect or (ii) the aggregate amount of Base Salary at
the rate then in effect that would be paid for the period from the date of your
termination of employment to the end of the Term had you remained employed
throughout such period, which amount will be paid in a lump sum on the thirtieth
(30th) day following the date of your termination of employment; and     (b)  
immediate vesting of all of your shares of restricted stock and all of your
options to purchase common stock of the Company (or its successor), the exercise
price of which is less than the then fair market value of such common stock upon
the date of termination, and such options shall remain exercisable until the
expiration date of their original terms; and     (c)   payment by the Company
for a period of eighteen (18) months from the date of your termination of
employment for the COBRA benefits available to you, your spouse and your
dependents covered by the Company’s group health plan at the time of your
termination of employment; and     (d)   reimbursement by the Company of your
reasonable moving expenses to relocate your residence from Phoenix, Arizona to
Malibu, California, provided that you have previously relocated your residence
from Malibu, California to Phoenix, Arizona, and, within a period of six
(6) months following your termination of employment covered by this
Paragraph 10, you relocate your residence from Phoenix, Arizona to Malibu,
California but such relocation is not at the expense of a new employer.

11.   Post-Employment Obligations. Your continuing employment is subject to the
Hypercom Confidentiality, Non-Solicitation, & Non-Compete Agreement which you
have previously executed and delivered to the Company, a copy of which is
attached hereto as Exhibit B.

12.   Representations. You acknowledge that this offer of employment is based
on, and the Company is relying upon, your representation that: (i) you are not
prohibited from contacting the Company or entering into any employment
arrangement with the Company; (ii) you rightfully possess any and all
information that has been discussed or may be discussed with the Company in the
future; (iii) no other person or entity has any interest in such information,
arising out of any current or previous employment relationship or otherwise; and
(iv) you have the lawful right to disclose such information to the Company, that
such disclosure or any employment arrangement with the Company, will not violate
the terms of any employment, non-compete, non-solicitation, confidentiality or
non-disclosure agreement, or any other similar agreement, contract, law, code,
regulation, or other rights, obligations or prohibitions applicable to such
information, and that such information could not be considered in any way a
trade secret in any jurisdiction.

13.   Personal Rights and Obligations. This Agreement and all rights and
obligations hereunder are personal and will not be assignable by either you or
the Company except as provided in this Paragraph 13, and any purported
assignment in violation thereof will be null and void. Subject to

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    the provisions of Paragraph 10, any person, firm or corporation succeeding
to the business of the Company by merger, consolidation, purchase of assets or
otherwise will assume by contract or operation of law the obligations of the
Company hereunder and in such a case you will continue to honor the terms of
this Agreement with such business substituted for the Company as the employer.

14.   Board Service. You agree to not participate as a member of the board of
directors of any company other than Hypercom for the first twelve (12) months of
your employment by the Company. Thereafter, your service as a member of any
board of directors other than that of the Company will require the prior written
consent of a majority of the members of the Board of the Company. The Board
shall not unreasonably withhold its consent.

15.   Notices. Any notice, election or communication to be given hereunder will
be in writing and delivered in person or deposited, certified or registered, in
the United States mail, postage prepaid, addressed as follows:

       If to the Company:
       Hypercom Corporation
       2851 West Kathleen Road
       Phoenix, Arizona 85053
       Attn: General Counsel
       If to you:
       Philippe Tartavull
       3550 Surfwood Road
       Malibu, California 90265

  or to such other addresses as the Company or you may from time to time
designate by notice hereunder. Notices will be effective upon delivery in person
or upon receipt of any facsimile or e-mail, or at midnight on the fourth
business day after the date of mailing, if mailed.   16.   Entire Agreement.
Except for the provisions of the Original Agreement attached hereto as Exhibit A
and expressly incorporated into this Agreement, the Hypercom Employee
Confidentiality, Non-Solicitation & Non-Compete Agreement attached hereto as
Exhibit B, the Company’s Long-Term Incentive Plan or any other incentive plan
and related forms equity award agreement governing equity incentive awards
subject to this Agreement, and the Company’s policies and procedures to which
you are subject, this Agreement constitutes and embodies the full and complete
understanding and agreement of the Company and you with respect to your
employment by the Company and supersedes all prior understandings or agreements
whether oral or in writing. This Agreement may be amended only by a writing
signed by you and the Company. This Agreement may be executed in any number of
counterparts, each of which will be considered a duplicate original.   17.  
Arbitration. Any controversy relating to this Agreement or relating to the
breach hereof will be settled by arbitration conducted in Phoenix, Arizona in
accordance with the Commercial Arbitration

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    Rules of the American Arbitration Association then in effect. The award
rendered by the arbitrator(s) will be final and judgment upon the award rendered
by the arbitrator(s) may be entered upon it in any court having jurisdiction
thereof. The arbitrator(s) will possess the powers to issue mandatory orders and
restraining orders in connection with such arbitration. The expenses of the
arbitration will be borne by the losing party unless otherwise allocated by the
arbitrator(s). This agreement to arbitrate will be specifically enforceable
under the prevailing arbitration law. During the continuance of any arbitration
proceedings, the parties will continue to perform their respective obligations
under this Agreement. Nothing in this Agreement will preclude the Company or any
affiliate or successor from seeking equitable relief, including injunction or
specific performance, in any court having jurisdiction, in connection with any
obligations of confidentiality.   18.   Governing Law. This Agreement will be
governed by and interpreted in accordance with the laws of the State of Arizona.
  19.   Withholding and Release. You hereby acknowledge that you have carefully
reviewed the provisions of this Agreement and agree that the provisions are fair
and equitable, and that they are necessary and reasonable in order to protect
the Company and its affiliates in the conduct of their business. You acknowledge
and agree that payments made to you hereunder may be subject to withholding. You
further acknowledge and agree that payment of any compensation to be provided to
you following any termination of your employment is subject to your compliance
with any reasonable and lawful policies or procedures of the Company relating to
employee severances, including the execution and delivery by you of a release
reasonably satisfactory to the Company of any and all claims that you may have
against the Company or related persons, except for (i) any continuing
obligations required by law or provided herein, and (ii) for any continuing
obligations of indemnification due you as an officer (or a former officer).  
20.   Code Section 409A.

  (a)   Notwithstanding anything set forth in this Agreement to the contrary, no
amount payable pursuant to this Agreement on account of your termination of
employment with the Company which constitutes a “deferral of compensation”
within the meaning of the Treasury Regulations issued pursuant to Section 409A
of the Code (the “Section 409A Regulations”) shall be paid unless and until you
have incurred a “separation from service” within the meaning of the Section 409A
Regulations. Furthermore, to the extent that you are a “specified employee”
within the meaning of the Section 409A Regulations as of the date of your
separation from service, no amount that constitutes a deferral of compensation
which is payable on account of your separation from service will be paid to you
before the date (the “Delayed Payment Date”) which is first day of the seventh
month after the date of your separation from service or, if earlier, the date of
your death following such separation from service. All such amounts that would,
but for this paragraph, become payable prior to the Delayed Payment Date will be
accumulated and paid on the Delayed Payment Date.     (b)   The Company intends
that income provided to you pursuant to this Agreement will not be subject to
taxation under Section 409A of the Code. The provisions of this Agreement will

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      be interpreted and construed in favor of satisfying any applicable
requirements of Section 409A of the Code. However, the Company does not
guarantee any particular tax effect for income provided to you pursuant to this
Agreement. In any event, except for the Company’s responsibility to withhold
applicable income and employment taxes from compensation paid or provided to
you, the Company will not be responsible for the payment of any applicable taxes
on compensation paid or provided to you pursuant to this Agreement.

We look forward to continuing to work with you to fully enable your and our
shareholders’ mutual success.

          Sincerely,
      /s/ Daniel D. Diethelm      

          Accepted by:
      /s/ Philippe Tartavull       Philippe Tartavull     

          December 20, 2007
Date of Acceptance
                         

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