Document:

exv10w1

 

Exhibit 10.1

INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (“Agreement”) is made as of ___, 200___ by and between
Hypercom Corporation, a Delaware corporation (the “Company”), and ___ (“Indemnitee”).

RECITALS

     WHEREAS, highly competent persons have become more reluctant to serve publicly-held
corporations as directors, officers or in other capacities unless they are provided with adequate
protection through insurance or adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to and activities on behalf of the corporation;

     WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in order to
attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis,
at its sole expense, liability insurance to protect persons serving the Company and its
subsidiaries from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and other business
enterprises, the Company believes that, given current market conditions and trends, such insurance
may be available to it in the future only at higher premiums and with more exclusions. At the same
time, directors, officers, and other persons in service to corporations or business enterprises are
being increasingly subjected to expensive and time-consuming litigation relating to, among other
things, matters that traditionally would have been brought only against the Company or business
enterprise itself. The Certificate of Incorporation of the Company require indemnification of the
officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant
to the Delaware General Corporation Law (“DGCL”). The Certificate of Incorporation and the DGCL
expressly provide that the indemnification provisions set forth therein are not exclusive, and
thereby contemplate that contracts may be entered into between the Company and members of the board
of directors, officers and other persons with respect to indemnification;

     WHEREAS, the uncertainties relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons;

     WHEREAS, the Board has determined that the increased difficulty in attracting and retaining
such persons is detrimental to the best interests of the Company’s stockholders and that the
Company should act to assure such persons that there will be increased certainty of such protection
in the future;

     WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the Company free from
undue concern that they will not be so indemnified;

 

 

     WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate of
Incorporation of the Company and any resolutions adopted pursuant thereto, and shall not be deemed
a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

     WHEREAS, Indemnitee does not regard the protection available under the Company’s Certificate
of Incorporation and insurance as adequate in the present circumstances, and may not be willing to
serve or continue to serve as an officer or director without adequate protection, and the Company
desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve
and to take on additional service for or on behalf of the Company on the condition that he be so
indemnified; and

     NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:

     Section 1. Services to the Company. Indemnitee agrees to serve or continue to serve
[as a [director] [officer] [employee] [agent] of the Company] [,at the request of the Company, as a
[director] [officer] [employee] [agent] [fiduciary] of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise]. Indemnitee may at any time and for any
reason resign from such position (subject to any other contractual obligation or any obligation
imposed by operation of law), in which event the Company shall have no obligation under this
Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an
employment contract between the Company (or any of its subsidiaries or any Enterprise) and
Indemnitee. Indemnitee specifically acknowledges that Indemnitee’s employment with the Company (or
any of its subsidiaries or any Enterprise), if any, is at will, and the Indemnitee may be
discharged at any time for any reason, with or without cause, except as may be otherwise provided
in any written employment contract between Indemnitee and the Company (or any of its subsidiaries
or any Enterprise), other applicable formal severance policies duly adopted by the Board, or, with
respect to service as a director or officer of the Company, by the Company’s Certificate of
Incorporation, the Company’s By-laws, and the DGCL. The foregoing notwithstanding, this Agreement
shall continue in force after Indemnitee has ceased to serve as an [officer] [director] [agent]
[employee] of the Company.

     Section 2. Definitions. As used in this Agreement:

          (a) “Access Period” mean the period commencing on the date Indemnitee first became a member of
the Board of the Company and ending on the date this Agreement is terminated in accordance with
Section 16 hereof.

          (b) “Board Papers” means all materials provided to Indenmitee specifically in connection with
any meeting of the Board or any committee of the Board, whether in documentary form or some other
form, including, but not limited to, board papers, submissions, minutes, memoranda, legal opinions,
financial statements and subcommittee papers during the Relevant Period.

          (c) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date
of this Agreement of any of the following events:

               i. Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes
the Beneficial Owner (as defined below), directly or indirectly, of

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securities of the Company representing twenty percent (20%) or more of the combined voting
power of the Company’s then outstanding securities;

               ii. Change in Board of Directors. During any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who at the beginning of
such period constitute the Board, and any new director (other than a director designated by a
person who has entered into an agreement with the Company to effect a transaction described in
Sections 2(c)(i), 2(c)(iii) or 2(c)(iv)) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to constitute a least a
majority of the members of the Board;

               iii. Corporate Transactions. The effective date of a merger or consolidation of the
Company with any other entity, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 51% of the combined voting power of the voting
securities of the surviving entity outstanding immediately after such merger or consolidation and
with the power to elect at least a majority of the board of directors or other governing body of
such surviving entity;

               iv. Liquidation. The approval by the stockholders of the Company of a complete
liquidation of the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets; and

               v. Other Events. There occurs any other event of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any
similar item on any similar schedule or form) promulgated under the Exchange Act (as defined
below), whether or not the Company is then subject to such reporting requirement.

For purposes of this Section 2(c) and Section 2(i) of this Agreement, the following terms shall
have the following meanings:

     (A) “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended.

     (B) “Person” shall have the meaning as set forth in Sections
13(d) and 14(d) of the Exchange Act; provided, however, that Person
shall exclude (i) the Company, (ii) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
and (iii) any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company.

     (C) “Beneficial Owner” shall have the meaning given to such
term in Rule 13d-3 under the Exchange Act; provided, however, that
Beneficial Owner shall exclude any Person

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otherwise becoming a Beneficial Owner by reason of the
stockholders of the Company approving a merger of the Company with
another entity.

          (d) “Corporate Status” describes the status of a person who is or was a director, officer,
employee or agent of the Company or of any other corporation, limited liability company,
partnership or joint venture, trust, employee benefit plan or other enterprise which such person is
or was serving at the request of the Company.

          (e) “Director Indemnitee” means, for purposes of Section 14(f) of this Agreement, an
Indemnitee who is or was a director of the Company as of the date of this Agreement or who
hereafter becomes a director of the Company prior to the termination of this Agreement.

          (f) “Disinterested Director” means a director of the Company who is not and was not a party to
the Proceeding in respect of which indemnification is sought by Indemnitee.

          (g) “Enterprise” shall mean the Company and any other corporation, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is
or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

          (h) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees, and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding. Expenses also shall include Expenses incurred in connection with
any appeal resulting from any Proceeding, including without limitation the premium, security for,
and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its
equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the
amount of judgments or fines against Indemnitee.

          (i) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in
matters of corporation law and neither presently is, nor in the past five years has been, retained
to represent: (i) the Company or Indemnitee in any matter material to either such party (other
than with respect to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in representing either the
Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The
Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above
and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages
arising out of or relating to this Agreement or its engagement pursuant hereto.

          (j) A “Potential Change in Control” shall be deemed to occur upon the earliest to occur after
the date of this Agreement of any of the following events:

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               i. Agreement Relating to Change in Control. The Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;

               ii. Public Announcement Relating to Change in Control. Any Person (including the
Company) publicly announces an intention to take or to consider taking actions which if consummated
would constitute a Change in Control;

               iii. Acquisition of Stock by Third Party. Any Person (other than (i) the Company or
any of its subsidiaries, or (ii) any pension, profit sharing, employee stock ownership or other
employee benefit plan of the Company or any of its subsidiaries or any trustee of or fiduciary with
respect to any such plan when acting in such capacity) who is or becomes the Beneficial Owner of
ten percent (10%) or more of the combined voting power of the Company’s then outstanding
securities, increases his, her or its Beneficial Ownership of such combined voting power by five
percent (5%) or more over the percentage so owned by such Person on the date hereof; or

               iv. Board Declaration. The Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.

          (k) The term “Proceeding” shall include any threatened, pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing
or any other actual, threatened or completed proceeding, whether brought in the right of the
Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in
which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that
Indemnitee is or was a director or officer of the Company, by reason of any action taken by him or
of any action on his part while acting as director or officer of the Company, or by reason of the
fact that he is or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, limited liability company, partnership, joint venture, trust or other
enterprise, in each case whether or not serving in such capacity at the time any liability or
expense is incurred for which indemnification, reimbursement, or advancement of expenses can be
provided under this Agreement; except one initiated by a Indemnitee to enforce his rights under
this Agreement.

          (l) “Relevant Period” means the period commencing on the date that Indemnitee first became a
member of the Board of the Company and ending on the date Indemnitee ceases to serve as a member of
the Board.

          (m) Reference to “other enterprise” shall include employee benefit plans; references to
“fines” shall include any excise tax assessed with respect to any employee benefit plan; references
to “serving at the request of the Company” shall include any service as a director, officer,
employee or agent of the Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in
the best interests of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in
this Agreement.

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     Section 3. Indemnity in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened
to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee
shall be indemnified to the fullest extent permitted by applicable law against all Expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or
on his behalf in connection with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company and, in the case of a criminal proceeding had no reasonable cause
to believe that his conduct was unlawful.

     Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company
shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or
is threatened to be made, a party to or a participant in any Proceeding by or in the right of the
Company to procure a judgment in its favor. Pursuant to this Section 4, Indemnitee shall be
indemnified to the fullest extent permitted by applicable law against all Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue
or matter therein, if Indemnitee acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Company. No indemnification for Expenses shall be
made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall
have been finally adjudged by a court to be liable to the Company, unless and only to the extent
that the Delaware Court of Chancery or any court in which the Proceeding was brought shall
determine upon application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.

     Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by
applicable law and to the extent that Indemnitee is a party to (or a participant in) and is
successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or
matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by him or on his behalf in connection with
each successfully resolved claim, issue or matter. If the Indemnitee is not wholly successful in
such Proceeding, the Company also shall indemnify Indemnitee against all Expenses reasonably
incurred in connection with a claim, issue or matter related to any claim, issue, or matter on
which the Indemnitee was successful. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal, with or without
prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

     Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the fullest extent permitted by applicable law and to the extent
that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which
Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.

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     Section 7. Additional Indemnification.

          (a) Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall indemnify
Indemnitee to the fullest extent permitted by applicable law if Indemnitee is a party to or
threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the
Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by Indemnitee in connection with the Proceeding.

          (b) For purposes of Section 7(a), the meaning of the phrase “to the fullest extent permitted
by applicable law” shall include, but not be limited to:

               i. to the fullest extent permitted by the provision of the DGCL that authorizes or
contemplates additional indemnification by agreement, or the corresponding provision of any
amendment to or replacement of the DGCL, and

               ii. to the fullest extent authorized or permitted by any amendments to or replacements of the
DGCL adopted after the date of this Agreement that increase the extent to which a corporation may
indemnify its officers and directors.

     Section 8. Exclusions. Notwithstanding any provision in this Agreement, the Company
shall not be obligated under this Agreement to make any indemnity in connection with any claim made
against Indemnitee:

          (a) for which payment has actually been made to or on behalf of Indemnitee under any insurance
policy or other indemnity provision, provided that the Company shall remain obligated in accordance
with the terms hereof to provide indemnity for any excess beyond the amount paid under any
insurance policy or other indemnity provision; or

          (b) for an accounting of profits made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or

          (c) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee,
including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the
Company or its directors, officers, employees or other indemnitees, unless (i) the Board of
Directors of the Company authorized the Proceeding (or any part of any Proceeding) prior to its
initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to
the powers vested in the Company under applicable law.

     Section 9. Advances of Expenses. In accordance with the pre-existing requirement of
Article 9 of the Certificate of Incorporation of the Company, and notwithstanding any
provision of this Agreement to the contrary, the Company shall advance, to the extent not
prohibited by law, the expenses incurred by Indemnitee in connection with any Proceeding, and such
advancement shall be made within ten (10) days after the receipt by the Company of a statement or
statements requesting such advances from time to time, whether prior to or after final disposition
of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without
regard to Indemnitee’s ability to repay the expenses and without regard to

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Indemnitee’s ultimate entitlement to indemnification under the other provisions of this
Agreement. Advances shall include any and all reasonable Expenses incurred pursuing an action to
enforce this right of advancement, including Expenses incurred preparing and forwarding statements
to the Company to support the advances claimed. The Indemnitee shall qualify for advances upon the
execution and delivery to the Company of this Agreement which shall constitute an undertaking
providing that the Indemnitee undertakes to repay the advance to the extent that it is ultimately
determined that Indemnitee is not entitled to be indemnified by the Company. This Section 9 shall
not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 8.

     Section 10. Procedure for Notification and Defense of Claim.

          (a) To obtain indemnification under this Agreement or to cause the establishment of a Trust in
favor of Indemnitee in accordance with the provisions of Section 14(f) of this Agreement,
Indemnitee shall submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is reasonably necessary
to determine whether and to what extent Indemnitee is entitled to indemnification following the
final disposition of such action, suit or proceeding. The Secretary of the Company shall, promptly
upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has
requested indemnification.

          (b) The Company will be entitled to participate in the Proceeding at its own expense.

     Section 11. Procedure Upon Application for Indemnification.

          (a) Upon written request by Indemnitee for indemnification pursuant to the first sentence of
Section 10(a), a determination, if required by applicable law, with respect to Indemnitee’s
entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have
occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which
shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a
majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) if
there are no such Disinterested Directors or, if such Disinterested Directors so direct, by
Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to
Indemnitee or (C) by the stockholders of the Company; and, if it is so determined that Indemnitee
is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such
determination. Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to Indemnitee’s entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any documentation or information
which is not privileged or otherwise protected from disclosure and which is reasonably available to
Indemnitee and reasonably necessary to such determination. Any costs or expenses (including
attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person,
persons or entity making such determination shall be borne by the Company (irrespective of the
determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies
and agrees to hold Indemnitee harmless therefrom.

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          (b) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 11(a) hereof, the Independent Counsel shall be selected as
provided in this Section 11(b). If a Change in Control shall not have occurred, the Independent
Counsel shall be selected by the Board of Directors, and the Company shall give written notice to
Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in
Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless
Indemnitee shall request that such selection be made by the Board of Directors, in which event the
preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising
it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the
Company, as the case may be, may, within 10 days after such written notice of selection shall have
been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to
such selection; provided, however, that such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the requirements of “Independent
Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and timely objection, the
person so selected shall act as Independent Counsel. If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and
until such objection is withdrawn or a court has determined that such objection is without merit.
If, within 20 days after the later of submission by Indemnitee of a written request for
indemnification pursuant to Section 10(a) hereof and the final disposition of the Proceeding, no
Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee
may petition a court of competent jurisdiction for resolution of any objection which shall have
been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for
the appointment as Independent Counsel of a person selected by the Court or by such other person as
the Court shall designate, and the person with respect to whom all objections are so resolved or
the person so appointed shall act as Independent Counsel under Section 11(a) hereof. Upon the due
commencement of any judicial proceeding or arbitration pursuant to Section 13(a) of this Agreement,
Independent Counsel shall be discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then prevailing).

     Section 12. Presumptions and Effect of Certain Proceedings.

          (a) In making a determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 10(a) of this Agreement, and the Company shall have the burden of proof to
overcome that presumption in connection with the making by any person, persons or entity of any
determination contrary to that presumption. Neither the failure of the Company (including by its
directors or independent legal counsel) to have made a determination prior to the commencement of
any action pursuant to this Agreement that indemnification is proper in the circumstances because
Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company
(including by its directors or independent legal counsel) that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct.

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          (b) Subject to Section 13(e), if the person, persons or entity empowered or selected under
Section 11 of this Agreement to determine whether Indemnitee is entitled to indemnification shall
not have made a determination within sixty (60) days after receipt by the Company of the request
therefor, the requisite determination of entitlement to indemnification shall be deemed to have
been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law; provided, however, that such 60-day
period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the
person, persons or entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of documentation and/or
information relating thereto; and provided, further, that the foregoing provisions of this Section
12(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by
the stockholders pursuant to Section 11(a) of this Agreement and if (A) within fifteen (15) days
after receipt by the Company of the request for such determination the Board of Directors has
resolved to submit such determination to the stockholders for their consideration at an annual
meeting thereof to be held within seventy five (75) days after such receipt and such determination
is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after
such receipt for the purpose of making such determination, such meeting is held for such purpose
within sixty (60) days after having been so called and such determination is made thereat, or (ii)
if the determination of entitlement to indemnification is to be made by Independent Counsel
pursuant to Section 11(a) of this Agreement.

          (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself create a
presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the Company or, with respect to any criminal
Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

          (d) Reliance as Safe Harbor. For purposes of any determination of good faith,
Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the
records or books of account of the Enterprise, including financial statements, or on information
supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the
advice of legal counsel for the Enterprise or on information or records given or reports made to
the Enterprise by an independent certified public accountant or by an appraiser or other expert
selected with the reasonable care by the Enterprise. The provisions of this Section 12(d) shall
not be deemed to be exclusive or to limit in any way the other circumstances in which the
Indemnitee may be deemed to have met the applicable standard of conduct set forth in this
Agreement.

          (e) Actions of Others. The knowledge and/or actions, or failure to act, of any
director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for
purposes of determining the right to indemnification under this Agreement.

     Section 13. Remedies of Indemnitee.

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          (a) Subject to Section 13(e), in the event that (i) a determination is made pursuant to
Section 11 of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 of this Agreement,
(iii) no determination of entitlement to indemnification shall have been made pursuant to Section
11(a) of this Agreement within 90 days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made pursuant to Section 5 or 6 or the last
sentence of Section 11(a) of this Agreement within ten (10) days after receipt by the Company of a
written request therefor, or (v) payment of indemnification pursuant to Section 3, 4 or 7 of this
Agreement is not made within ten (10) days after a determination has been made that Indemnitee is
entitled to indemnification, Indemnitee shall be entitled to an adjudication by a court of his
entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his
option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the
Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence
such proceeding seeking an adjudication or an award in arbitration within 180 days following the
date on which Indemnitee first has the right to commence such proceeding pursuant to this Section
13(a); provided, however, that the foregoing clause shall not apply in respect of a
proceeding brought by Indemnitee to enforce his rights under Section 5 of this Agreement. The
Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

          (b) In the event that a determination shall have been made pursuant to Section 11(a) of this
Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a
de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced
by reason of that adverse determination. In any judicial proceeding or arbitration commenced
pursuant to this Section 13 the Company shall have the burden of proving Indemnitee is not entitled
to indemnification or advancement of Expenses, as the case may be.

          (c) If a determination shall have been made pursuant to Section 11(a) of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 13, absent (i) a misstatement
by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.

          (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are
not valid, binding and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement. The Company shall
indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within
ten (10) days after receipt by the Company of a written request therefor) advance, to the extent
not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection
with any action brought by Indemnitee for indemnification or advance of Expenses from the Company
under this Agreement or under any directors’ and officers’ liability insurance policies maintained
by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advancement of Expenses or insurance recovery, as the case may be.

11

 

          (e) Notwithstanding anything in this Agreement to the contrary, no determination as to
entitlement to indemnification under this Agreement shall be required to be made prior to the final
disposition of the Proceeding.

     Section 14. Non-exclusivity; Survival of Rights; Insurance; Subrogation; Establishment of
Trust.

          (a) The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Company’s Certificate of Incorporation, the Company’s By-laws,
any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right
of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in
his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in
Delaware law, whether by statute or judicial decision, permits greater indemnification or
advancement of Expenses than would be afforded currently under the Company’s Certificate of
Incorporation and this Agreement, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein
conferred is intended to be exclusive of any other right or remedy, and every other right and
remedy shall be cumulative and in addition to every other right and remedy given hereunder or now
or hereafter existing at law or in equity or otherwise. The assertion or employment of any right
or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any
other right or remedy.

          (b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which
such person serves at the request of the Company, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms to the maximum extent of the coverage available for
any such director, officer, employee or agent under such policy or policies. If, at the time of
the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and
officer liability insurance in effect, the Company shall give prompt notice of the commencement of
such proceeding to the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies. Without limiting the foregoing, the Company will use
its reasonable best efforts to maintain director and officer liability insurance in respect of acts
or omissions occurring during the period of time that Indemnitee serves or served as an officer,
director, agent or employee of the Company covering Indemnitee on terms at least as favorable as
the coverage currently in effect on the date hereof, provided that in satisfying its obligation
under this Section 14(b), the Company shall not be obligated to pay premiums in excess of 200% of
the amount per annum the Company paid in its last full fiscal year prior to the date hereof, and if
the Company is unable to obtain the insurance required by this Section 14(b), it shall obtain as
much comparable insurance as possible for an annual premium equal to such maximum amount.

          (c) In the event of any payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee, who shall

12

 

execute all papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce such
rights.

          (d) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any insurance policy,
contract, agreement or otherwise.

          (e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is
or was serving at the request of the Company as a director, officer, employee or agent of any other
corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or
other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification
or advancement of expenses from such other corporation, limited liability company, partnership,
joint venture, trust, employee benefit plan or other enterprise.

          (f) In the event of a Potential Change in Control the Company shall, upon written request by a
Director Indemnitee containing the information required by Section 10(a) of this Agreement, create
a trust (the “Trust”) for the benefit of the Director Indemnitee and from time to time upon written
request of the Director Indemnitee shall fund the Trust in an amount sufficient to satisfy any and
all amounts for which the Director Indemnitee is entitled to indemnification or advancement of
Expenses hereunder that are actually paid or that the Director Indemnitee reasonably determines
from time to time may be payable by the Company under this Agreement; provided,
however, that the Company shall not be required to establish the Trust if, at the time a
written request by the Director Indemnitee is made pursuant to this Section 14(f), the Company
provides the Director Indemnitee with written evidence reasonably satisfactory to the Director
Indemnitee that the Company maintains director and officer liability insurance in respect of acts
or omissions occurring during the period of time that the Director Indemnitee serves or served as
an officer, director, agent or employee of the Company covering the Director Indemnitee on terms at
least as favorable as the coverage currently in effect on the date hereof, without taking into
account the limitation on premiums the Company is required to pay pursuant to Section 14(b) of this
Agreement. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding
obligation (or, if applicable, the adequacy of director and officer liability insurance maintained
by the Company pursuant to the proviso to the preceding sentence) shall be determined by the
applicable party specified in Section 11(a) of this Agreement. The terms of the Trust shall
provide that upon a Change in Control: (i) the Trust shall not be revoked or the principal thereof
invaded without the written consent of the Director Indemnitee; (ii) the trustee of the Trust shall
advance, within ten (10) days of a request by the Director Indemnitee, any and all Expenses to the
Director Indemnitee (and the Director Indemnitee hereby agrees to reimburse the Trust under the
circumstances under which the Director Indemnitee would be required to reimburse the Company under
Section 9 of this Agreement); (iii) the Company shall continue to fund the Trust from time to time
in accordance with the funding obligations set forth above; (iv) the trustee of the Trust shall
promptly pay to the Director Indemnitee all amounts and Expenses for which the Director Indemnitee
shall be entitled to indemnification pursuant to this Agreement; and (v) all unexpended funds in
the Trust shall revert to the Company upon a final determination by a court of competent
jurisdiction in a final decision from which there is no further right of appeal that the Director
Indemnitee has

13

 

been fully indemnified under the terms of this Agreement. The trustee of the Trust shall be
chosen by the Director Indemnitee.

     Section 15. Access to Board Papers.

          (a) The Company agrees to maintain a complete set of Board Papers, in a systematic and
organized manner, in secure custody during the Access Period; provided, however,
that if the relevant Board Papers were created prior to the date of this Agreement, the Company
shall be deemed to have satisfied its obligations under this Section 15(a) if it uses all
reasonable efforts to collate and keep those Board Papers in the manner required hereby. Subject
to the foregoing proviso and the limitation in Sections 15(b) and 15(c), if Indemnitee asks to
inspect, or for a copy of, any Board Paper during the Access Period and the request is made in
connection with any Proceedings or the threat of any Proceedings, the Company must, within fourteen
(14) days after receiving that request: (i) allow Indemnitee (or a person nominated in writing by
Indemnitee) to inspect the Board Paper at the Company’s registered office (or any other place
agreed by the Company and Indemnitee), and (ii) provide Indemnitee a copy of the Board Paper
without charge.

          (b) Indemnitee hereby acknowledges that: (i) the Company remains the owner of all Board
Papers and the Company may request Indemnitee to provide the Company with reasons why Indemnitee
requires access to a document, (ii) as a condition to Indemnitee’s right to receive any Board
Papers, Indemnitee must, on written request by the Company, provide the Company with written
reasons why Indemnitee requires access to a document, and (iii) Indemnitee must return to the
Company or destroy all copies of any Board Paper obtained from the Company under this Section 15
within ten (10) days after the relevant Proceedings are finally resolved or the threat of such
Proceedings has ceased to materially exist.

          (c) If the Company has any right (including a right it has jointly or in common with
Indemnitee or with Indemnitee and others) to privilege, such as attorney-client privilege, with
respect to any document which Indemnitee inspects, copies or uses under this Agreement or the DGCL:
(i) that document is to be treated by Indemnitee as confidential, (ii) by permitting the
inspection, copying or use to Indemnitee or Indemnitee’s permitted nominee, the Company does not
waive any privilege, and (iii) in so inspecting, copying or using the document by himself or
herself or through Indemnitee’s permitted nominee, Indemnitee must use his or her best efforts to
ensure that so far as is practical the right to privilege is not lost or waived, whether by
Indemnitee or the Indemnitee’s nominee or otherwise and as a condition to providing any such
document to Indemnitee the Company may require Indemnitee to enter into a reasonable and customary
joint defense or other similar agreement for the protection of any such privilege. Nothing in this
Agreement shall be deemed to prevent or preclude the Company from relying on privilege in
proceedings between Indemnitee and the Company (including in respect of a document which the
Company has disclosed to Indemnitee outside those proceedings).

          (d) Nothing in this Section 15 shall be deemed to limit any right of access Indemnitee
otherwise has to Board Papers.

          (e) Indemnitee hereby agrees not disclose any confidential information contained in a Board
Paper to a third party unless: (i) the Company has given its prior written consent to such
disclosure, (ii) Indemnitee is required to do so by law, (iii) the disclosure is made

14

 

for the purpose of obtaining professional advice or in connection with the relevant
Proceedings or the threat of such Proceedings in relation to which Indemnitee was given access to
the Board Paper, or (iv) the disclosure is made on behalf of the Company and for Company purposes
in furtherance of Indemnitee’s duties as a director, officer, employee or agent of the Company at
the time such disclosure is made; provided, however, if Indemnitee is entitled to
disclose confidential information under this Section 15(e) and the Board Papers include any
information to which attorney-client privilege attaches for the benefit of the Company, or both the
Company and Indemnitee, Indemnitee must use his or her best efforts to avoid doing anything that
will cause that privilege to be waived, extinguished or lost by the Company in relation to third
parties.

     Section 16. Duration of Agreement. This Agreement shall continue until and terminate
upon the later of: (a) 10 years after the date that Indemnitee shall have ceased to serve as a
[director] [officer] [agent] [employee] of the Company or (b) 1 year after the final termination of
any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or
advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section
13 of this Agreement relating thereto. This Agreement shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and
administrators.

     Section 17. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including without limitation,
each portion of any Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any
way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by
law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform
to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to
the fullest extent possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.

     Section 18. Enforcement.

          (a) The Company expressly confirms and agrees that it has entered into this Agreement and
assumed the obligations imposed on it hereby in order to induce Indemnitee to serve or continue to
serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is
relying upon this Agreement in serving as a director or officer of the Company.

          (b) This Agreement is a supplement to and in furtherance of the Certificate of Incorporation
of the Company, the By-laws of the Company and applicable law, and shall not be deemed a substitute
therefor, nor to diminish or abrogate any rights of Indemnitee thereunder or under any other prior
written agreement to which the Company or its predecessors, on the one hand, and Indemnitee and his
or her affiliates, on the other, are a party[; provided, however, that this Agreement shall be
deemed to supersede that certain Indemnification Agreement, dated as of ___ (the “Prior
Indemnification Agreement”), between ___ and Indemnitee,

15

 

which Prior Indemnification Agreement shall terminate and be of no further force or effect
upon the execution and delivery hereof by the Company and Indemnitee].

     Section 19. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions of this Agreement nor shall any waiver constitute a continuing waiver.

     Section 20. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in
writing upon being served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have to the Indemnitee under this
Agreement or otherwise.

     Section 21. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by
hand and receipted for by the party to whom said notice or other communication shall have been
directed, (b) mailed by certified or registered mail with postage prepaid, on the third business
day after the date on which it is so mailed, (c) mailed by reputable overnight courier and
receipted for by the party to whom said notice or other communication shall have been directed or
(d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has
been received:

          (a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or
such other address as Indemnitee shall provide to the Company.

          (b) If to the Company to

Hypercom Corporation

2851 West Kathleen Road

Phoenix, Arizona 85053

Attn: Corporate Secretary

Facsimile: (___) ___-____

or to any other address as may have been furnished to Indemnitee by the Company.

     Section 22. Contribution. To the fullest extent permissible under applicable law, if
the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to
be paid in settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in
light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits
received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving
cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors,
officers, employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).

16

 

     Section 23. Applicable Law and Consent to Jurisdiction. This Agreement and the legal
relations among the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws rules. Except with
respect to any arbitration commenced by Indemnitee pursuant to Section 13(a) of this Agreement, the
Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or
proceeding arising out of or in connection with this Agreement shall be brought only in the
Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or
federal court in the United States of America or any court in any other country, (ii) consent to
submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding
arising out of or in connection with this Agreement, (iii) appoint, to the extent such party is not
otherwise subject to service of process in the State of Delaware, irrevocably The Corporation Trust
Company of Delaware, 1209 Orange Street, Wilmington, Delaware 19801, as its agent in the State of Delaware as such party’s agent for
acceptance of legal process in connection with any such action or proceeding against such party
with the same legal force and validity as if served upon such party personally within the State of
Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the
Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or
proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

     Section 24. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence the existence of this
Agreement.

     Section 25. Miscellaneous. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof.

17

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year
first above written.

	 	 	 	 	 	 	 	 	 	 	 
	HYPERCOM CORPORATION	 	 	 	INDEMNITEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	
 

	 	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Address:
	 	2851 West Kathleen Road
	 	 	 	Address: 
	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Phoenix, Arizona 85053	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Attn: Corporate Secretary	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

18Exhibit 10.1

    THIS
      SECOND AMENDMENT AGREEMENT,
      dated
      as of May 26, 2006 (this “Second
      Amendment”)
      is by
      and between, National Australia Bank Limited, New York Branch (the ”Bank”),
      XL
      Capital Ltd, a company incorporated under the laws of the Cayman Islands, X.L.
      America, Inc., a Delaware corporation, XL Insurance (Bermuda) Ltd, a Bermuda
      limited company, and XL Re Ltd, a Bermuda limited liability company
      (collectively, the “Account
      Parties”
and
      each an “ Account
      Party”).

    

    W
      I T N E S S E T H ;

    

    WHEREAS,
      the
      Account Parties each have requested that the Bank amend that certain Master
      Standby Letter of Credit and Reimbursement Agreement dated as of September
      30,
      2005 (as amended by that certain amendment agreement dated as of December 30,
      2005, the “Agreement”),
      effective as of the date hereof (the “Amendment
      Effective Date”)
      in
      order to conform the terms of the Agreement to the terms of the Syndicated
      Credit Agreement as amended by that certain Amendment No. 1 dated as of May
      5,
      2006; and

     

    WHEREAS,
      the
      Bank is willing, on the terms and conditions set forth below, to amend the
      Agreement as set forth below;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and mutual covenants herein contained, the parties
      hereto hereby agree as follows:

     

    SECTION
      1. Defined
      Terms.
      Capitalized
      terms used herein and not defined herein shall have the meanings specified
      in
      the Agreement.

     

    SECTION
      2. Amendments
      to the Agreement. Section
      5
      of the Agreement is hereby amended by adding the phrase “, as amended by that
      certain Amendment No. 1 dated as of May 5, 2006” following the words “that
      certain Credit Agreement dated as of June 22, 2005 among the Account Parties
      hereunder, as account parties and guarantors thereunder, various lenders parties
      thereto and JPMorgan Chase Bank, N.A., as administrative agent”.

     

    SECTION
      3. Conditions
      to Effectiveness.
      This
      Second Amendment shall become effective as of the Amendment Effective Date
      upon
      the due execution and delivery thereof by the parties hereto.

     

    SECTION
      4. Representations
      and Warranties.
      In
      order
      to induce the Bank to enter into this Second Amendment, each Account Party
      hereby represents and warrants to the Bank on behalf of itself: (i) the
      representations and warranties contained in the Agreement are true and correct
      on and as of the Amendment Effective Date as though made on and as of such
      date,
      except for changes which have occurred and which were not prohibited by the
      terms of the Agreement; (ii) no Event of Default or other event or condition
      which, with notice or the lapse of time or both, would give rise to an Event
      of
      Default has occurred and is continuing, or would result from the execution,
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    delivery
      and performance by such Account Party of this Second Amendment or the Agreement
      (as amended by this Second Amendment); (iii) that such Account Party has full
      power, right and legal authority to execute, deliver and perform its obligations
      under this Second Amendment; and (iv) that each of this Second Amendment and
      the
      Agreement as amended hereby constitutes a legal, valid and binding obligation
      of
      such Account Party enforceable against such Account Party in accordance with
      its
      terms, subject to the effect of any applicable bankruptcy, insolvency,
      reorganization or moratorium, or similar laws affecting the enforcement of
      rights of creditors generally, and by general equitable principles (whether
      enforcement is sought by proceedings in equity or at law).

     

    SECTION
      5. Reference
      to and Effect on the Documents.
      Each
      reference in the Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”
or words of like import, and each reference to the Agreement in documents
      related to the Agreement, shall mean and be a reference to the Agreement as
      amended hereby. Except as specifically amended hereby, the Agreement and all
      such related documents, and all other documents, agreements, instruments or
      writings entered into in connection therewith, shall remain in full force and
      effect and are hereby ratified, confirmed and acknowledged by each Account
      Party, severally on behalf of itself.

     

    SECTION
      6. Governing
      Law.
      This
      Second Amendment and the rights and obligations of the parties hereunder shall
      be governed by and construed and interpreted in accordance with the substantive
      laws of the State of New York, without regard to its conflict of laws
      principles.

     

    SECTION
      7. Counterparts.
      This
      Second Amendment may be executed in any number of counterparts, all of which
      taken together shall constitute one and the same instrument, and any party
      hereto may execute this Second Amendment by signing any such
      counterpart.

     

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

     

    NATIONAL
      AUSTRALIA BANK LIMITED

    (ABN
      12
      004 044 937), New York Branch

     

     

    
      By: 
        /s/ D W Mills            

      

              Name: 
        D W Mills          

      

             
        Title:    Director           

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

    

    
      	
              XL
                CAPITAL LTD

               

               

              By: 
                /s/
                Roderick Gray    

               

              Name: 
                Roderick
                Gray    

               

              Title:   
                Vice
                President    

            	
              XL
                INSURANCE (BERMUDA) LTD

               

               

              By: 
                /s/
                Don Baker    

               

              Name: 
                Don
                Baker    

               

              Title: 
                Executive
                Vice President

            
	 	 
	 	 
	
              X.L.
                AMERICA, INC.

               

               

              By: 
                /s/
                Gabriel Carino    

               

              Name: 
                Gabriel
                Carino    

               

              Title: 
                Senior
                Vice President and Treasurer (XLGS)

            	
              XL
                RE LTD

               

               

              By: 
                /s/
                Gregory Hendrick    

               

              Name: Gregory
                Hendrick    

               

              Title: 
                President,
                CEO and COO

            

    

    
 

     

     

    -3-

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