exv10w4



 





EXHIBIT 10.4









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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