Document:

EX-10.1

FIRST AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

This FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT, dated as of August 6, 2007 (the
“Amendment”), by and among Kirkland’s, Inc., a Tennessee corporation (the
“Parent”), Kirkland’s Stores, Inc., a Tennessee corporation (“Kirkland’s”) and
kirklands.com, inc., a Tennessee corporation (“kirklands.com”, and together with the Parent and
Kirkland’s, individually, a “Borrower” and collectively, the “Borrowers”), the financial
institutions from time to time party thereto (individually, a “Lender” and collectively,
the “Lenders”) and Bank of America, N.A., as successor in interest to Fleet Retail Group,
Inc., as agent for the Lenders (in such capacity, the “Agent”), amends that certain Loan
and Security Agreement dated as of October 4, 2004, by and among the Borrowers, the Lenders, and
Fleet Retail Group, Inc., as agent (as amended from time to time, the “Loan Agreement”).
All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the
Loan Agreement.

In consideration of the foregoing and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, each of the undersigned hereby agrees as follows:

1. Amended Definitions. The following definitions contained in Section 1 of the Loan
Agreement are hereby amended and restated in their entirety to read as follows:

“Agent” shall mean Bank of America N.A., in its capacity as agent on behalf of the Lenders
pursuant to the terms hereof and any replacement or successor agent hereunder.

“Applicable Libor Margin” shall mean (i) in respect of Revolving Loans other than FILO Loans,
initially, one and one quarter percent (1.25%), provided, that, for each fiscal quarter in which
Excess Availability is at any time less than $15,000,000, then the outstanding principal amount of
the Revolving Loans shall bear interest for any month at a per annum rate equal to one and one half
percent (1.5%) per annum in excess of the Adjusted Libordollar Rate, and (ii) in respect of FILO
Loans, initially, two and one quarter percent (2.25%), provided, that, for each fiscal quarter in
which Excess Availability is at any time less than $15,000,000, then the outstanding principal
amount of FILO Loans shall bear interest for any month at a per annum rate equal to two and one
half percent (2.5%) per annum in excess of the Adjusted Libordollar Rate. In the event that any
Borrowing Base from which the Applicable Libor Margin is determined is shown to be inaccurate
(regardless of whether this Agreement is in effect when such inaccuracy is discovered), and such
inaccuracy, if corrected, would have led to the application of a higher rate pursuant to this
definition for any period (an “Applicable Period”) than the rate applied for such Applicable
Period, then (i) the Borrowers shall immediately deliver to the Agent a correct Borrowing Base for
such Applicable Period and (ii) the Borrower shall immediately pay to the Agent, for the benefit of
the Lenders, the accrued additional interest owing as a result of such increased rate for such
Applicable Period. This paragraph shall not limit the rights of the Agent and Lenders with respect
to Section 10.1. Except in the event of fraud by or on behalf of the Borrowers in the preparation
of its Borrowing Base, this paragraph shall be of no further force or effect following the
repayment in full in cash of the Obligations (other than contingent indemnification obligations
with respect to which no claim has been made) and termination of the Commitments.

“Borrowing Base” shall mean, at any time, the amount equal to:

(a) the lesser of:

(i) the amount equal to: (x) the Inventory Advance Rate multiplied by the Net Recovery
Percentage of Inventory multiplied by the Cost of Eligible Inventory and the Cost of Eligible
Letter of Credit Inventory, plus (y) the FILO Inventory Advance Rate multiplied by the Net Recovery
Percentage of Inventory multiplied by the Cost of Eligible Inventory and the Cost of Eligible
Letter of Credit Inventory, up to an amount not to exceed the FILO Loan Limit; provided,
that the sum of clauses (x) and (y) shall not exceed 95% multiplied by the Net Recovery
Percentage of Inventory multiplied by the Cost of Eligible Inventory and the Cost of Eligible
Letter of Credit Inventory, plus (z) eighty five percent (85%) of the face amount of Eligible
Credit Card Accounts; or

(ii) the Revolving Loan Limit;

minus

(b) any and all Reserves.

“Financing Agreements” shall mean, collectively, this Agreement, the Notes, the Fee Letter,
the Collateral Access Agreements, the Subordination Agreement, the Security Documents, the Guaranty
Agreements, the First Amendment, the First Amendment Fee Letter, and all other notes, guarantees,
security agreements, deposit account control agreements, investment property control agreements,
intercreditor agreements, and all other agreements, documents, and instruments now or at any time
hereafter executed and/or delivered by any Borrower or any other Obligor in connection with this
Agreement or the First Amendment.

“Interest Rate” shall mean,

(a) Subject to clause (b) of this definition below as to any Loan, (i) with respect to Prime
Rate Loans, the Prime Rate plus the Applicable Prime Margin; and (ii) with respect to Libordollar
Rate Loans, the Adjusted Libordollar Rate plus the Applicable Libor Margin;

(b) Notwithstanding anything to the contrary contained in clause (a) of this definition, the
Interest Rate shall mean (i) the rate of two percent (2%) per annum in excess of the Prime Rate
plus the Applicable Prime Margin as to Prime Rate Loans and the rate of two percent (2%) per annum
in excess of the Adjusted Libordollar Rate plus the Applicable Libor Margin as to Libordollar Rate
Loans, at Agent’s option, in each case without notice, (A) either (I) for the period on and after
the date of termination or non-renewal hereof until such time as all Obligations are indefeasibly
paid and satisfied in full in immediately available funds, or (II) for the period from and after
the date of the occurrence of any Event of Default, and for so long as such Event of Default is
continuing as determined by the Agent and (B) on the Revolving Loans at any time outstanding in
excess of the Borrowing Base or the Revolving Loan Limit (whether or not such excess(es) arise or
are made with or without Agent’s or any Lender’s knowledge or consent and whether made before or
after an Event of Default).

“Inventory Advance Rate” shall mean ninety percent (90%).

“Revolving Loan Limit” shall mean, at any time, the amount equal to $43,000,000, plus the FILO
Loan Limit. At the election of the Borrower Agent upon thirty (30) days prior written notice to
the Agent, the Borrowers may reduce the Revolving Loan Limit by up to $15,000,000, to not less than
$28,000,000 plus the FILO Loan Limit; provided, that (x) an Event of Default does not exist at the
time of such election and would not exist after giving effect to such election and (y) each such
decrease is in increments of $5,000,000.

2. New Definitions. The following definitions shall be added to Section 1 of the Loan
Agreement as follows:

“First Amendment Fee Letter” shall mean that fee letter executed and delivered by the
Borrowers in favor of the Agent in connection with the First Amendment to Loan and Security
Agreement dated as of August 6, 2007.

“Applicable Prime Margin” shall mean zero percent (0%).

“FILO Loans” shall mean those Revolving Loans made by the Lenders based upon the FILO
Inventory Advance Rate on a “first in” basis pursuant to Section 2.1 of this Agreement and on a
“last out” basis pursuant to Section 6.11(a) of this Agreement.

“FILO Loan Limit” shall mean, at any time, an amount equal to $2,000,000.

“FILO Inventory Advance Rate” shall mean ninety-five percent (95%).

3. Revolving Loans. Section 2.1(a) shall be deleted in its entirety and the following
shall be substituted therefor: “(a) Subject to and upon the terms and conditions contained
herein, each Revolving Lender severally (and not jointly) agrees to fund its Pro Rata Share of
Revolving Loans to Borrowers from time to time in amounts requested by any Borrower up to the
amount outstanding at any time equal to the lesser of: (i) the Borrowing Base at such time or (ii)
the Revolving Loan Limit, provided, that FILO Loans shall be deemed to be made on a ‘first in’
basis.”

4. Application of Payments. Section 6.11 of the Loan Agreement is hereby amended to
delete paragraph (a) thereof in its entirety and to substitute the following therefor: “(a)
Except to the extent otherwise expressly provided with respect to Defaulting Lenders under SECTION
6.9, all monies to be applied to the Obligations shall be allocated among the Agent and such of the
Lenders as are entitled thereto (and, with respect to monies allocated to Lenders, on a Pro Rata
Share basis, unless otherwise provided herein):

first, to pay any fees or expense reimbursement (including any Extraordinary Expenses) then
due and payable by Borrowers to Agent under the Financing Agreements and to pay any Indemnified
Amount then due and payable by Borrowers to Agent under the Financing Agreements;

second, to pay any fees, expense reimbursements (including any Extraordinary Expenses) and any
Indemnified Amount then due and payable by Borrowers to Lenders under the Financing Agreements;

third, to pay interest then due and payable in respect of all Special Agent Advances for which
Agent has not been reimbursed;

fourth, to pay interest then due and payable in respect of all Settlement Loans;

fifth, to pay the outstanding principal amount of Special Agent Advances;

sixth, to pay the outstanding principal amount of any Settlement Loans;

seventh, so long as no Event of Default has occurred and is continuing, at the Agent’s
election, to pay any Obligations due and payable in respect of Priority Bank Products, until paid
in full;

eighth, to pay interest then due and payable in respect of the Loans (including interest
payable in respect of the Revolving Loans but excluding Settlement Loans and Special Agent
Advances);

ninth, to pay the outstanding principal amount of the Revolving Loans (other than FILO Loans,
Settlement Loans and Special Agent Advances) and cash collateralize Letter of Credit Accommodations
with a funded reserve of up to 110% of the aggregate stated amount of all Letter of Credit
Accommodations;

tenth, to pay the outstanding principal amount of FILO Loans;

eleventh, if an Event of Default has occurred and is continuing, at the Agent’s discretion, to
pay to cash collateralize any Obligations in respect of Bank Products in an amount up to the amount
of the amount of the Bank Products Reserve established prior to the occurrence of, and not in
contemplation of, the subject Event of Default until the Borrowers’ and their Subsidiaries’
Obligations in respect of the then extant Bank Products have been paid in full or the cash
collateral amount has been exhausted;

twelfth, to pay any other Obligations (including Obligations in respect of Bank Products) then
due and payable by Borrowers to Agent or any Lender; and

thirteenth, to the Borrowers.”

5. Inventory Appraisals. Section 7.3 of the Loan Agreement shall be amended by
deleting clause (d) thereof and substituting the following new clause (d) therefor: “(d) upon
Agent’s request, Borrowers shall, at their expense, no more than one time in any twelve (12) month
period, but (i) upon Agent’s request at Borrowers’ expense, no more than two times in any twelve
(12) month period at any time during which Excess Availability is less than or equal to
$15,000,000, or (ii) at any time or times as Agent may request at Agent’s expense, or (iii) at any
time or times as Agent may request at Borrowers’ expense on or after an Event of Default or at any
time during which Excess Availability is less than or equal to $5,000,000, deliver or cause to be
delivered to Agent written reports or appraisals or appraisal updates as to the Inventory in form,
scope and methodology acceptable to Agent and by an appraiser acceptable to Agent, addressed to
Agent and upon which Agent is expressly permitted to rely;”

6. Financial Covenant: Minimum Excess Availability. Section 9.17 of the Loan Agreement
shall be deleted in its entirety and the following shall be substituted therefor: “The Borrowers
shall, at all times tested, maintain Excess Availability as follows (a) At least three million
dollars ($3,000,000) of Excess Availability at all times during which the Borrowing Base is less
than thirty five million dollars ($35,000,000), (b) at least three million five hundred thousand
dollars ($3,500,000) of Excess Availability at all times during which the Borrowing Base is greater
than or equal to thirty five million dollars ($35,000,000) and less than forty million dollars
($40,000,000), (c) at least four million dollars ($4,000,000) of Excess Availability at all times
during which the Borrowing Base is greater than or equal to forty million dollars ($40,000,000) and
less than forty five million dollars ($45,000,000), and (d) at all times during which the Borrowing
Base is greater than or equal to forty million dollars ($40,000,000), Excess Availability of at
least four million dollars ($4,000,000) plus five hundred thousand dollars ($500,000) for each
incremental five million dollars ($5,000,000) of Borrowing Base value in excess of forty million
dollars ($40,000,000).

7. Term. Section 13.1 of the Loan Agreement shall be amended by deleting the first
sentence thereof and substituting therefor the following sentence: “This Agreement and the other
Financing Agreements shall become effective on the date first set forth on the first page hereof
and shall continue in full force and effect for a term ending on the date seven (7) years from the
date hereof (the “Term”), unless sooner terminated pursuant to the terms hereof.”

8. Representations and Warranties. In addition to the continuing representations,
warranties and covenants heretofore and hereafter made by the Borrowers to the Agent and Lenders
pursuant to the Finance Agreements, or otherwise, and not in limitation thereof, the Borrowers
hereby represent, warrant and covenant to the Agent and Lenders the following (which shall survive
the execution and delivery of this Amendment:

(a) upon the effectiveness of this Amendment, there are no Defaults or Events of Default, or
events existing which, with the passage of time or the giving of notice, or both, would constitute
an Event of Default under the terms of the Financing Agreements;

(b) each Borrower has the corporate power and authority to execute, deliver and perform this
Amendment and has taken all necessary corporate or other action to authorize the execution,
delivery and performance of this Amendment, and this Amendment constitutes the legal, valid and
binding agreement of such party, enforceable against such party in accordance with its terms except
as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors’ rights generally and by general principles
of equity; and

(c) the execution, delivery and performance of this Amendment and any other agreement or
document executed or to be executed by the Borrowers in connection herewith will not result in (i)
a violation of or a conflict with any provision of the certificate or articles of incorporation,
by-laws, or any other organizational or governing document of any Borrower, (ii) a breach of, or a
default under, any term or provision of any contract, agreement, indebtedness, lease, encumbrance,
commitment, license, franchise, permit, authorization or concession to which any Borrower is a
party or by which it or any of its property is bound, the result of which, individually or in the
aggregate, would be reasonably likely to result in a Material Adverse Effect, or (iii) a violation
by any Borrower of any law, rule or regulation or order, judgment, decree or other determination by
any court or any other governmental body, in each case applicable to it or any of its property or
to which it or any of its property is subject, the result of which, individually or in the
aggregate, would be reasonably likely to result in a Material Adverse Effect.

9. Conditions to Effectiveness. This Amendment shall be effective upon satisfaction
of each of the following conditions precedent:

(a) This Amendment shall have been executed and delivered by all of the Borrowers and the
Agent;

(b) The First Amendment Fee Letter shall have been executed and delivered by all of the
Borrowers and the Agent;

(c) All fees and expenses of the Agent and Lenders, including, without limitation, the
Amendment Fee reference in the First Amendment Fee Letter and reasonable attorney’s fees, incurred
by the Agent and Lenders in connection with the negotiation and documentation of this Amendment and
other documents executed concurrently herewith shall be paid by the Borrowers; and

(d) The representations and warranties contained herein shall be true and correct in all
respects as of the date hereof.

10. Release. To the extent not otherwise set forth herein, the Borrowers hereby
remise, release, acquit, and forever discharge the Agent and each Lender, its agents, employees,
affiliates, officers, directors, predecessors, attorneys and all others acting or purporting to act
on behalf of or at the direction of each Lender (collectively, “Releasees”), of and from
any and all manner of actions, causes of action, suits, debts, accounts, covenants, contracts,
controversies, agreements, variances, damages, judgments, claims and demands whatsoever, in law or
in equity, arising prior to the date hereof, that the Borrowers may have on the date hereof against
any Releasee, for, upon or by reason of any matter, cause or thing whatsoever relating to or
arising out of the Loan Agreement or the other Financing Agreements through the date hereof.
Without limiting the generality of the foregoing, the Borrowers waive and affirmatively agree not
to allege or otherwise pursue any defenses (other than the defense of payment), affirmative
defenses, counterclaims, claims, causes of action, setoffs or other rights they do, shall or, to
the extent arising from or in connection with any act, omission or state of facts taken or existing
on or prior to the date hereof, may have as of the date hereof, including, but not limited to, the
rights to contest: (a) the right of the Agent to exercise its rights and remedies described in the
Loan Agreement or other Financing Agreement; (b) any provision of this Amendment or the Financing
Agreements; or (c) any conduct of the any of the Releasees relating to or arising out of the Loan
Agreement or the other Financing Agreements.

11. Miscellaneous.

(a) Accuracy of Recitals. The recitals to this Amendment are true and correct

(b) Integration. This Amendment sets forth in full the terms of agreement between the
parties and is intended as the full, complete and exclusive contract governing the relationship
between the parties with respect to the transactions contemplated herein, superseding all other
discussions, promises, representations, warranties, agreements and understandings, whether written
or oral, between the parties with respect thereto.

(c) No Amendment or Waiver. No term of this Amendment may be waived, modified or
amended except in a writing signed by Borrowers and the Agent.

(d) WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(e) Notices. For the purposes hereof, the notice address of each party hereto shall
be as currently set forth in the Loan Agreement. Any notice or other communication herein required
or permitted to be given shall be in writing and delivered in accordance with the notice provisions
of the Loan Agreement.

(f) Severability. Wherever possible, each provision of this Amendment shall be
interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Amendment shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Amendment

(g) Section Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment for any other
purposes.

(h) GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE COMMONWEALTH OF
MASSACHUSETTS.

(i) Successors and Assigns; No Third Party Beneficiaries. This Amendment shall be
binding on and shall inure to the benefit of the parties hereto and their respective successors and
assigns, except as otherwise provided herein. The terms and provisions of this Amendment are for
the purpose of defining the relative rights and obligations of the parties hereto with respect to
the transactions contemplated hereby and no Person shall be a third party beneficiary of any of the
terms and provisions of this Amendment.

(j) Default. Any default by any Borrower of the covenants, representation and
warranties hereunder shall constitute an Event of Default pursuant to the terms of the Loan
Agreement.

12. Counterparts.   This Amendment may be executed in any number of counterparts,
each of which shall be deemed to be an original hereof and submissible into evidence and all of
which together shall be deemed to be a single instrument. In making proof of this Amendment, it
shall not be necessary to produce or account for more than one counterpart thereof signed by each
of the parties hereto. Delivery of an executed counterpart of this Amendment by telefacsimile or
other electronic method of transmission shall have the same force and effect as delivery of an
original executed counterpart of this Amendment.

1

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their authorized officers as of the day and year first above written.

BANK OF AMERICA, N.A.

(Agent and Lender)

	 	 	 
	By:

	 	/s/ Christine Scott
	
 
	 	 
	
 
	 	Name: Christine Scott

Title:  Director

2

Signature Page to First Amendment

WELLS FARGO RETAIL FINANCE, LLC

(Lender)

	 	 	 	 	 
	
 
	 	By:
	 	/s/ Adam Davis
	
 
	 	 	 	 
	
 
	 	 	 	Name: Adam Davis

Title:  AVP
	BORROWERS:

	 	

	 	

	KIRKLAND’S, INC.

	 	

	 	

	By: /s/ Robert E. Alderson

	 	

	 	

	 

	 	 
	 	

	Name: Robert E. Alderson

Title: Chief Executive Officer

	 	

	 	

	KIRKLAND’S STORES, INC.

	 	

	 	

	By: /s/ Robert E. Alderson

	 	

	 	

	 

	 	 
	 	

	Name: Robert E. Alderson

Title: Chief Executive Officer

	 	

	 	

	kirklands.com, inc.

	 	

	 	

	By: /s/ Robert E. Alderson

	 	

	 	

	 

	 	 
	 	

	Name: Robert E. Alderson

Title: Chief Executive Officer

	 	

	 	

# 1438351 v1 — ANTOSZPJ — 023595/0012

8069/00001-001 Current/9874377v2

3EX-10.1

Exhibit 10.1

SEVERANCE AGREEMENT

This SEVERANCE AGREEMENT (this “Agreement”) is made and entered into freely and voluntarily,
by and between O.B. RAWLS IV (hereinafter referred to as “Employee”) 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 Employee’s employment with the Company.

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

1. Resignation. Employee hereby resigns from all positions with the Company
(including as an officer and employee of Hypercom Corporation and of each Company subsidiary of
which he is an officer or employee), effective as of 5:00 p.m., Phoenix, Arizona time, August 10,
2007 (the “Effective Date”).

2. Economic Terms. The Company agrees that, in consideration for Employee’s covenants
herein, the parties agree as follows:

(a) As a severance benefit effective November 12, 2007, Employee will receive his current
base salary, less applicable tax and other withholding amounts, through May 12, 2008 (the
“Severance Amount”) payable in accordance with the Company’s bi-weekly payroll cycle, commencing
after the expiration of the cancellation period provided in Section 11; provided, however, that (i)
the Company shall not be obligated to make any such payments until after the expiration of the
cancellation period provided in Section 11, and (ii) the Company may deduct from such payments any
amounts owed to the Company by Employee, including, but not limited to, travel advances, guaranteed
credit card balances, loans, unreturned or damaged equipment and/or software, and any Company tax
or other liabilities resulting from the actions of Employee. The parties acknowledge and agree that
as a form of additional consideration for the Employee’s covenants herein, Employee will enter into
a 3 month consulting arrangement with the Company or a subsidiary thereof, to be executed between
the parties under separate terms and conditions. Employee agrees that Employee has submitted all
expense reports to the Company in accordance with the Company’s policies and procedures. The
Company will also pay Employee the cash equivalent of Employee’s paid time off accrued as of the
Effective Date. Employee acknowledges and agrees that the Company will not pay any severance,
bonus, incentive, allowance, vacation, paid time off, sick or other pay in addition to the
consideration provided herein.

(b) On November 12, 2007, Employee shall be eligible for 6 months of Company paid COBRA
health coverage. Thereafter, coverage under COBRA will continue at Employee’s own expense in
accordance with and subject to the limitations and requirements of COBRA.

(c) Employee waives any rights granted to or conferred upon Employee pursuant to the “Change
in Control” letter, dated March 1, 2007, and Employee acknowledges and agrees such Change in
Control arrangement with the Company is null and void.

(d) Employee agrees that the May 8, 2006 grant of an option for Employee to acquire 30,000
shares of Company stock at a price of $10.59 per share is hereby canceled.

(e) Employee shall retain any vested stock options granted to Employee, subject to the terms
and conditions thereof and of the applicable Company plans; provided, however, that Employee shall
forfeit all unvested options, other unvested awards of stock (including restricted stock), and any
and all other forms of incentive compensation, as of the Effective Date. For purposes of this
Agreement, the options and restricted stock, Employee shall be deemed terminated without “cause.”
The options, restricted stock and any other unvested awards, shall cease to vest as of the
Effective Date, and Employee shall have 90 days following the Effective Date to exercise any
options which were vested as of the Effective Date.

(f) Employee shall be entitled to retain his laptop computer and communication equipment
provided for his use as of August 10, 2007 by Company. Employee shall provide Company with a list
of such equipment on August 10, 2007. Employee shall submit such equipment to Company on, or as
soon as possible after the Effective Date to allow Company to delete any and all Company
information from the equipment.

(g) The Employee will be entitled to a lump sum payment of $75,000 at the end of the 9 month
period following the Effective Date, provided Employee complies with the terms and conditions of
Section 4 herein.

3. Release and Covenant Not to Sue. Each party hereby forever releases, discharges,
cancels, waives, and acquits the other party and its or Employee’s representatives (which shall
include, as applicable, spouse, heirs, executors, administrators, successors, assigns, affiliates,
subsidiaries, corporate parents, agents, directors, employees, 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 or Employee 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.

(a) 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 Employee 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), as amended by the Older Worker
Protection Act, 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.

(b) 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.

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

The foregoing provisions of this Section 3 shall not apply to any conduct that constituted fraud,
involved an intentional or reckless misstatement or omission, or a criminal act, or was not
performed in good faith and in (or at least not opposed to) the best interests of the Company.

4. Non-Competition; Non-Solicitation.

(a) Non-Competition. In further consideration of the consideration provided in Section 2 and
the other agreements and covenants of the Company contained herein, Employee agrees that during the
remainder of his employment and the 9 month period following the Effective Date, Employee will not,
directly or indirectly, either as an employee, partner, owner, lender, director, advisor or
consultant or in any other capacity or through any entity: engage in the design, manufacture,
marketing 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 currently offered, sold or under development
by the Company (collectively, the “Competitive Activities”), within the Protected Territory (as
defined below); provided, however, that (i) Employee 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; and (ii) Employee is not prohibited from working in credit card issuing or merchant
acquiring activities;

As used herein, the term “Protected Territory” means the United States and Canada.

(b) Non-Solicitation. Employee further covenants and agrees that during the remainder of his
employment and the 9 month period following the Effective Date, Employee will not, directly or
indirectly, either as an employee, partner, owner, lender, director, advisor or consultant or in
any other capacity or through any entity:

(i) solicit, accept business from, call upon, handle, deliver products or render services to
any customer or client of the Company with whom Employee, alone or in conjunction with others, has
corresponded, talked, solicited, provided services or products to, or otherwise entered into or
pursued a business relationship at the time of Employee’s separation or within the 9 month period
immediately preceding Employee’s separation, for the purpose of selling such customer or client the
same, similar, or related services or products that Employee provided on behalf of the Company;

(ii) solicit, encourage, induce, or convince any Business Associate (as defined below) to end,
reduce, or change his/her/its relationship with the Company; or

(iii) engage in any oral, written, electronic or other communication regarding the Company or
the Competitive Activities with any officer, director, employee, representative, agent or affiliate
of VeriFone Holdings, Inc., Ingenico S.A., Thales, and NCR Corporation’s electronic
payment provider business or division, SAGEM Monetal and Gemalto N.V.

As used herein, the term “Business Associate” means any individual or entity doing business
with or rendering services to the Company at the time of Employee’s separation or within the 9
month period immediately preceding Employee’s separation, including customers or clients,
employees, investors, independent contractors, vendors, suppliers, or joint venture partners.

(c) Employee hereby acknowledges and agrees that the restrictions set forth in this Section
4 are reasonable in both scope and time, are agreed to in exchange for valuable consideration to
which he would otherwise not be entitled, and do not unduly restrict his ability to earn a living.
Employee further acknowledges and agrees that the 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 the Company.

5. Confidentiality.

(a) It is understood that in the course of Employee’s employment with Company, Employee has
become acquainted with Company Confidential Information (as defined below). Employee 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, Employee agrees that Employee 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 Chief Executive Officer 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) Employee shall deliver to the Company, no later than 5:00 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 Employee.

(c) “Company Confidential Information” shall mean confidential, proprietary information or
trade secrets of Company including without limitation the following: (1) employee, customer,
distributor and supplier lists and related information as compiled by or on behalf of the Company;
(2) Company’s internal practices and procedures; (3) Company’s financial condition and financial
results of operation; (4) strategic planning, merger and acquisition activities, manufacturing,
engineering, purchasing, finance, marketing, promotion, recruiting, human resources, distribution,
and selling activities; (5) inventions, designs, developments, devices, software, source code,
object code, firmware, 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 Employee 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 Employee as
an experienced management level employee; (ii) information generally known by management within the
electronic payment solutions industry; and (iii) persons, entities, contacts or relationships of
Employee that are also generally known in the industry.

(d) Employee 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 the
Company. Employee 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, Employee
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 thereon. 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/Confidential Agreement. 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. Employee agrees to keep the existence and terms of this
Agreement in strict confidence; provided, however, that Employee may disclose the existence and
terms of this Agreement to Employee’s spouse, financial advisor, 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. Employee shall deliver to the Company no later than
5:00 p.m., Phoenix time, on the Effective Date, all access cards and keys, and any other Company
property in Employee’s possession or control, expect as otherwise provided herein. The foregoing
notwithstanding, the Company’s obligation to pay any amounts to Employee under any provision of
this Agreement shall be contingent upon Employee’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. Employee warrants and represents that: (a) Employee has relied on
Employee’s own judgment regarding the consideration for and language of this Agreement; (b)
Employee 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 Employee to execute this Agreement; and (d) this Agreement is
written in a manner that is understandable to Employee and Employee has read and understood all
paragraphs of this Agreement.

10. Nature of the Agreement. This Agreement and all provisions hereof, 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 any previously executed confidentiality agreements that are still in effect, all prior
agreements, commitments, or plans relating to Employee’s employment by the Company, are hereby
terminated. In the event of any conflict between the confidentiality provisions of this Agreement
and any previously executed confidentiality agreement(s) between the parties, the provisions of
this Agreement shall govern. 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. Employee 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 Employee is not subject to the jurisdiction of such courts of competent jurisdiction.

11. Time Period For Considering or Canceling This Agreement. Employee has the right
to consult an attorney before signing this Agreement. Employee acknowledges that Employee has been
offered a period of time of at least 21 days to consider whether to sign this Agreement, which
Employee has waived, and the Company agrees that Employee may cancel this Agreement at any time
during the 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, Employee must deliver to the Company c/o
Hypercom Corporation, Attn: General Counsel, 2851 W. Kathleen Road, Phoenix, Arizona 85053, written
notice stating that Employee 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 Employee or to provide Employee 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.

Dated this 8th day of August, 2007.

O.B. RAWLS IV

/s/ O.B. Rawls IV

Employee

Dated this 8th day of August, 2007.

HYPERCOM CORPORATION

By: /s/ William Keiper  

	 	 	Name: William Keiper

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