ex10_2.htm


    


    
      

      

    

    Exhibit 10.2

    

       

      THIRD
        AMENDED AND RESTATED

      CHANGE
        OF CONTROL AGREEMENT

       

      This
        Third Amended and Restated Change of Control Agreement (this “Agreement”) is
        made effective as of November 13, 2007 by and between Primal Solutions, Inc.,
        a
        Delaware corporation, and Joseph R. Simrell (the “Executive”).

       

      Recitals

       

      A.           The
        Executive has made and is expected to make a major contribution to the
        profitability, growth and financial strength of the Company and its
        affiliates.

       

      B.           The
        Company considers the continued availability of the Executive’s services,
        managerial skills and business experience to be in the best interest of the
        Company and its stockholders and desires to assure the continued services
        of the
        Executive on behalf of the Company without the distraction of the Executive
        occasioned by the possibility of an abrupt change in control of the
        Company.

       

      C.           The
        Executive is willing to remain in the employ of the Company, particularly
        in the
        event of a threat or the occurrence of a change in control of the Company,
        upon
        the understanding that the Company will provide him with income security
        and
        certain other benefits in accordance with the terms and conditions contained
        in
        this Agreement in the event of a change in control of the Company.

       

      D.           The
        Company and the Executive previously entered into a Second Amended and Restated
        Change of Control Agreement effective as of December 16, 2005 (the “Prior
        Agreement”).  This Agreement amends, restates and supersedes the Prior
        Agreement.  The Company and the Executive are also concurrently
        entering into a Third Amended and Restated Employment Agreement dated as
        of the
        date hereof (the “Employment Agreement”) which amends, restates and supersedes
        the Second Amended and Restated Employment Agreement effective December 16,
        2005.

       

      E.           For
        purposes of this Agreement, defined terms in this Agreement shall have the
        meaning specified or referred to in Section 3.

       

      Agreement

       

      In
        consideration of the foregoing premises and the mutual covenants herein
        contained, and for other good and valuable consideration, the receipt and
        adequacy of which are hereby acknowledged, the parties agree as
        follows:

       

      1.  Effective
        Date; Term

       

      1.1           This
        Agreement shall become effective on the date hereof and shall continue in
        effect
        until one (1) day after the termination of the Executive’s employment with the
        Company for any reason; provided, however, this Agreement shall
        expire no later than December 31, 2008.  

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      No
        termination of this Agreement shall limit, alter or
        otherwise affect the Executive’s rights hereunder with respect to a Change of
        Control which has occurred prior to, or within three months after, such
        employment termination, including without limitation the Executive’s rights to
        receive the various benefits hereunder; provided, however, this
        Agreement shall expire no later than December 31, 2008.

       

      2.  Change
        of Control Payment Upon A Change of Control

       

      2.1           Events
        Giving Rise to Change of Control Payment.

       

      The
        Company shall pay or cause to be paid to the Executive the Change of Control
        Payment specified in Section 2.2 and the other benefits specified in this
        Agreement if:

       

      (i)           there
        is a Change of Control; or

       

      (ii)           the
        Executive’s employment by the Company is terminated by the Company within three
        months prior to the Change of Control, and such termination arose in connection
        with or in anticipation of the Change of Control (for purposes of this
        Agreement, meaning that at the time of such termination, the Company had
        entered
        into an agreement, the consummation of which would result in a Change of
        Control, or the termination of the Executive’s employment was at the request of
        a third party who has taken steps to effect a Change of Control), or the
        Executive voluntarily terminates his employment for Good Reason during such
        three-month period, and in each case, such Change of Control is consummated,
        or
        the Board adopts a resolution to the effect that a potential Change of Control
        for purposes of this Agreement has occurred.

       

      2.2           Change
        of Control Payment Upon Change of Control.

       

      (a)           If
        the Executive is entitled to benefits pursuant to Section 2.1, the Company
        shall pay or provide to the Executive as a change of control payment (the
        “Change of Control Payment”), the following:

       

      (i)           A
        single lump sum cash payment equal to the sum of:

       

      (A)           any
        accrued and unpaid portion of the Executive’s Incentive Compensation and other
        bonuses for the prior fiscal year;

       

      (B)           an
        amount equal to 150% of the Executive’s then current annual Salary;
        and

       

      (C)           an
        amount equal to 150% of the amount that would be payable to the Executive
        under
        the Incentive Compensation and other bonus plans, if any, in which the Executive
        is then participating for the fiscal year in progress, calculated assuming
        that
        100% of the targets under such bonus plans are achieved (by way of
        clarification, in the event that the Executive continues to be employed by
        the
        Company following the Change of Control, he shall receive the payment provided
        in this clause (C) and also shall continue to be eligible to earn the Incentive
        Compensation and other bonus, if any, in which the Executive is
        then

       

      
        
          
          

        

        
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        participating
          for the fiscal year in which the Change of Control occurs, based upon actual
          performance for such fiscal year).

         

      

      (ii)           And,
        if the Executive’s employment is terminated prior to the Change of Control in
        accordance with Section 2.1(ii) or at the time of the Change of Control by
        the
        Company for any reason other than Cause, death, Disability or the Executive
        reaching the mandatory retirement age established by the Company or by the
        Executive for Good Reason, in lieu of any further compensation or other amounts
        (except as provided in Section 2.2(a)(i)), and in settlement and complete
        release of all claims the Executive may have against the Company (except
        as
        provided in Section 2.2(a)(i)):  (A) any accrued and unpaid portion of
        the Executive’s Salary and vacation through the Termination Date; and (B)
        continuation, on the same terms as in effect on the Termination Date, including
        general premium increases, of all medical, dental, life and disability Benefits
        for the Executive for 18 months commencing on the Termination Date (the “payment
        period”), including equivalent coverage for the Executive’s spouse and dependent
        children, if such coverage was provided immediately prior to the Termination
        Date.  In the event that the Executive is ineligible under the terms
        of such insurance to continue to be so covered, the Company shall provide
        the
        Executive with a lump sum payment equal to the cost to the Executive of
        obtaining substantially similar coverage for the payment period, which lump
        sum
        payment shall be paid within ten days of the Change of Control.  If
        the Executive, prior to the Termination Date, was receiving any cash-in-lieu
        payments designed to enable the Executive to obtain insurance coverage of
        his
        choosing, the Company shall, in addition to any other benefits to be provided
        under this Section 2.2(a)(ii), provide the Executive with
        continued payments of such in-lieu payments that the Executive would have
        been
        entitled to receive over the payment period.  Any such in-lieu
        payments shall be paid within ten days of the Change of Control.  The
        Company’s obligation hereunder with respect to the foregoing Benefits shall be
        limited to the extent that the Executive obtains any such benefits pursuant
        to a
        subsequent employer’s benefit plans, in which case the Company may reduce the
        coverage of any Benefits it is required to provide the Executive hereunder
        so
        long as the aggregate coverage and benefits of the combined benefit plans
        are no
        less favorable to the Executive than the Benefits required to be provided
        hereunder; provided that in the event the Company has already provided the
        Executive with a lump sum payment in lieu of such Benefits, the Executive
        shall
        promptly repay to the Company a pro rata amount of such lump sum payment
        (calculated based upon the portion of the payment period remaining at the
        time
        the Executive obtains such comparable benefits).

       

      (b)           If
        the Executive is entitled to benefits pursuant to Section 2.1, the lump sum
        payment payable to the Executive under Section 2.2(a)(i) shall be paid within
        ten days of the Change of Control.  Notwithstanding anything in the
        foregoing to the contrary, in the event that the Executive’s employment with the
        Company has been terminated and he is entitled to a Change of Control Payment
        pursuant to Section 2.1(ii) and the Executive has received severance
        compensation and benefits pursuant to Section 5.5(a) of the Employment Agreement
        in connection with such termination and prior to the determination that the
        Executive is entitled to any compensation or Benefits hereunder, the amount
        due
        and payable under this Agreement shall be reduced dollar-for-dollar by any
        amounts paid to the Executive under Section 5.5(a) of the Employment
        Agreement.

       

      
        
          
          

        

        
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      (c)           Except
        as set forth herein, in the event the Executive’s employment is terminated prior
        to or at the time of the Change of Control, the Executive’s compensation by the
        Company and its affiliates and accrual of, or participation in all benefit,
        bonus, incentive and other plans or programs of the Company and its affiliates,
        will cease on the Termination Date.

       

      (d)           The
        Executive shall not be required to mitigate the amount of any Change of Control
        Payment provided for in this Agreement by seeking other employment or otherwise
        and no such payment shall be offset or reduced by the amount of any compensation
        or benefits provided to the Executive in any subsequent employment, except
        as
        provided in Section 2.2(a)(ii).  Notwithstanding the foregoing,
        to the extent permitted by applicable law, the Change of Control Payment
        provided for in this Section 2 shall be reduced by the amount of any other
        severance or termination pay to which the Executive may be entitled by operation
        of any applicable law or under any agreement with the Company, any of its
        affiliates or any successors of such entities; provided that the Change of
        Control Payment shall not be reduced by the amount of any other severance
        or
        termination pay to which the Executive may be entitled under the terms of
        the
        Employment Agreement or any other agreement between the Executive and the
        Company if the triggering termination of employment occurs on or after the
        three
        (3)-month anniversary of the Change of Control.

       

      (e)           If
        the Executive’s employment with the Company is terminated prior to or at the
        time of the Change of Control, the Company may, as a condition to the Executive
        receiving any Change of Control Payment or Benefits under this Agreement,
        require the Executive to execute a release of all claims the Executive may
        have
        against the Company or its affiliates arising from the Executive’s employment
        with the Company or its affiliates or any successors, and the termination
        thereof, in a form reasonably satisfactory to the Company.

       

      (f)           The
        obligations of the Company hereunder, including its obligation to pay the
        Change
        of Control Payment provided for herein, are contingent upon the Executive’s
        performance of the Executive’s obligations hereunder, including under Section
        2.6.  If the Executive breaches any of the material terms and
        provisions of this Agreement, in addition to any other remedies that the
        Company
        may have for any such breach, the Company may immediately terminate providing
        any Change of Control Payment then being made.

       

      (g)           Amounts
        which are vested benefits or which the Executive is otherwise entitled to
        receive under any plan or program of the Company shall be payable in accordance
        with such plan or program, except as explicitly modified by this
        Agreement.

       

      2.3           Notice
        of Termination.  Any termination of the Executive’s employment by
        the Company or by the Executive (other than termination based on the Executive’s
        death) following or in connection with a Change of Control shall be communicated
        by the terminating party in a Notice of Termination to the other party
        hereto.

       

      2.4           Withholding
        Taxes.  Any payments provided for hereunder shall be paid net of
        any applicable withholding required under federal, state or local
        law.

       

      
        
          
          

        

        
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      2.5           Affiliates.  Nothing
        contained herein shall prohibit any affiliates of the Company from fulfilling
        any obligation of the Company to the Executive hereunder and for such purposes
        will be deemed the act of the Company.

       

      2.6           Covenants
        of the Executive.  Payment of the Change of Control Payment under
        this Agreement shall be contingent upon the Executive complying with the
        covenants of the Executive set forth in Sections 7 and 8 of the Employment
        Agreement through the payment period.  The parties acknowledge that
        the Executive’s agreement to comply with these covenants is an essential element
        of this Agreement, and without which the Company would not have entered into
        this Agreement.

       

      2.7.           Indemnification
        for Excise Tax.

       

      (a)           In
        the event that (i) the Executive becomes entitled to the Change of Control
        Payment in accordance with this Section 2, and (ii) such Change of Control
        Payment and any other benefits or payments (including transfers of property)
        that the Executive receives, or is to receive, pursuant to this Agreement
        or any
        other agreement, plan or arrangement with the Company in connection with
        a
        Change of Control (“Other Benefits”) shall be subject to the tax imposed
        pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended
        (the
“Code”) (or any successor thereto) or any comparable provision of state law
        (collectively, the “Excise Tax”), then the Company or its successor shall pay to
        the Executive within 30 days after payment of the Change of Control Payment,
        an
        additional amount (the “Gross-Up Payment”) determined in accordance with the
        following provisions.  The Gross-Up Payment shall be equal to the
        amount necessary so that the net amount retained by the Executive, after
        subtracting the Excise Tax and after also subtracting all federal, state
        or
        local income tax, FICA tax and Excise Tax on the Gross-Up Payment, shall
        be
        equal to the net amount the Executive would have retained if no Excise Tax
        had
        been imposed and no Gross-Up Payment had been made.  It is intended
        that the Executive shall not suffer any loss or expense resulting from the
        assessment of any Excise Tax or the Company’s reimbursement of the Executive for
        any such Excise Tax.

       

      (b)           For
        purposes of determining whether any of the Change of Control Payment or Other
        Benefits will be subject to Excise Tax and the amount of such Excise
        Tax:

       

      (i)
        any
        payments or benefits received or to be received by the Executive in connection
        with a Change of Control (whether pursuant to the terms of this Agreement
        or any
        other plan, arrangement or agreement with the Company, any Person whose actions
        result in a Change of Control or any Person affiliated with the Company or
        such
        Person) shall be treated as “parachute payments” within the meaning of Section
        280G(b)(2) of the Code (or any successor thereto), and all “excess parachute
        payments” within the meaning of Section 280G(b)(1) of the Code (or any successor
        thereto) shall be treated as subject to Excise Tax, unless in the opinion
        of tax
        counsel selected by the Company’s independent auditors and acceptable to the
        Executive, (A) such other payments or benefits (in whole or in part) do not
        constitute such parachute payments or (B) such excess parachute payments
        (in
        whole or in part) represent reasonable compensation for services actually
        rendered within the meaning of Section 280(G)(b)(4) of the Code (or any
        successor thereto),

       

      
        
          
          

        

        
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      (ii) the
        amount of the Change of Control Payment and Other Benefits which shall be
        treated as subject to Excise Tax shall be equal to the lesser of (A) the
        total
        amount of the Change of Control Payment and Other Benefits or (B) the amount
        of
        excess parachute payments within the meaning of Sections 280G(b)(1) and (4)
        of
        the Code (or any successor or successors thereto) after applying clause (i)
        above, and

       

      (iii)
        the
        value of any non-cash benefits or any deferred payment or benefit shall be
        determined by the Company’s independent auditors in accordance with the
        principles of Sections 280(G)(d)(3) and (4) of the Code (or any successor
        or
        successors thereto).

       

      (c)           For
        purpose of determining the amount of the Gross-Up Payment, the Executive
        shall
        be deemed to pay (i) federal income taxes at the highest marginal rate of
        federal income taxation in the calendar year in which the Gross-Up Payment
        is to
        be made, and (ii) state and local income taxes at the highest marginal rates
        of
        taxation in the state and locality of the Executive’s residence on the date of
        the Change of Control, net of the maximum reduction in federal income taxes
        which could be obtained from deduction of such state and local
        taxes.

       

      (d)           In
        the event that the actual amount of Excise Tax (the “Actual Excise Tax”) is
        subsequently determined to be less than the amount taken into account hereunder
        at the time of the Change of Control entitling the Executive to the Change
        of
        Control Payment (the “Pre-determined Excise Tax”), the Executive shall repay to
        the Company, at the time that the amount of the Actual Excise Tax is finally
        determined, the portion of the Gross-Up Payment attributable to the amount
        by
        which the Pre-determined Excise Tax exceeds the Actual Excise Tax, plus interest
        on the amount of such repayment at the rate provided in Section 1274(b)(2)(B)
        of
        the Code (or any successor thereto) (the “Applicable Rate”).  In the
        event that the Actual Excise Tax is determined to exceed the amount of
        Pre-determined Excise Tax (including by reason of any payment the existence
        or
        amount of which cannot be determined at the time of the Gross-Up Payment),
        the
        Company shall make an additional Gross-Up Payment in respect of such excess
        (plus interest, determined at the Applicable Rate, payable with respect to
        such
        excess) at the time that the amount of the Actual Excise tax is finally
        determined.

       

      2.8           Acceleration
        of Vesting of Options.  Notwithstanding anything contained herein
        to the contrary, whether or not the Executive’s employment with the Company or
        its successor is terminated upon a Change of Control, to the extent permitted
        under applicable law, upon the occurrence of a Change of Control all outstanding
        unvested stock options and all previously granted unvested restricted stock
        awards granted to the Executive by the Company shall accelerate and
        vest.

       

      3.  Definitions

       

      For
        purposes of this Agreement:

       

      3.1           “Board”
        shall mean the Board of Directors of the Company.

       

      3.2           “Benefits” shall
        have the meaning set forth in Section 2.1(b) of the Employment Agreement,
        including without limitation life insurance and independent financial and
        tax
        consulting services.

       

      
        
          
          

        

        
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      3.3           “Beneficial
        Ownership” shall have the meaning in Rule 13d-3
        promulgated under the Exchange Act.

       

      3.4           “Cause”
        shall mean:  (a) an intentional act which materially injures the
        Employer; (b) an intentional refusal or failure to follow lawful and reasonable
        directions of the Board of Directors or an individual to whom the Executive
        reports (as appropriate); (c) a willful or habitual neglect of duties; or
        (d) the conviction of, or the entering of a guilty plea or plea of no
        contest by the Executive with respect to, a felony involving an act of moral
        turpitude.

       

      3.5           “Change
        of Control” shall mean, after the date hereof, any of the following
        events:

       

      (a)           An
        acquisition in one or a series of related transactions of any voting securities
        of the Company (“Voting Securities”), directly or indirectly by any Person,
        other than (1) the Company, (2) any wholly-owned subsidiary of the
        Company, (3) any employee benefit plan of the Company or any wholly-owned
        subsidiary of the Company (including an employee stock ownership plan), (4)
        any
        trustee or other fiduciary holding securities under any employee benefit
        plan
        adopted by the Company or any subsidiary of the Company, (5) any underwriter
        in
        connection with a firm commitment public offering of the Company’s capital
        stock, immediately after which such Person has beneficial ownership of 35%
        or
        more of the combined voting power of the Company’s then outstanding Voting
        Securities, or (6) a Person which includes the Executive.

       

      (b)           An
        acquisition in one or a series of related transactions of any voting securities
        of any material subsidiary of the Company (being defined for purposes hereof,
        as
        any subsidiary representing at least 50% of the Company’s combined revenue or
        assets), directly or indirectly by any Person, other than (1) the Company,
        (2) any wholly-owned subsidiary of the Company, (3) any employee
        benefit plan of the Company or any wholly-owned subsidiary of the Company
        (including an employee stock ownership plan), (4) any trustee or other fiduciary
        holding securities under any employee benefit plan adopted by the Company
        or any
        subsidiary of the Company, or (5) any underwriter in connection with a firm
        commitment public offering of such subsidiary’s capital stock, immediately after
        which such Person has beneficial ownership of 50% or more of the combined
        voting
        power of such subsidiary’s then outstanding voting securities.

       

      (c)           During
        any period of 12 consecutive months, the individuals who, as of the beginning
        of
        such period, are members of the Board (the “Incumbent Board”), cease for any
        reason to constitute at least a majority of the Board; provided,
        however, that if the election, or nomination for election by the Company’s
        stockholders, of any new director was approved by a vote of at least two-thirds
        of the then Incumbent Board (other than an election or nomination of an
        individual whose initial assumption of office is in connection with an actual
        or
        threatened election contest relating to the election of the members of the
        Board, as such terms are used in Rule 14A-11 of Regulation 14A promulgated
        under
        the Exchange Act), such new director shall, for purposes of this Agreement,
        be
        considered a member of the Incumbent Board.

       

      (d)           Approval
        by the Company’s stockholders of a complete liquidation or dissolution of the
        Company.

       

      
        
          
          

        

        
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      (e)           Consummation
        of a merger, consolidation or reorganization (or series of related transactions)
        involving the Company, unless the stockholders of the Company having the
        power
        to vote in the ordinary election of directors immediately before such merger,
        consolidation or reorganization, own, directly or indirectly, immediately
        following such merger, consolidation or reorganization, at least 50% of the
        combined voting power of the outstanding voting securities of the corporation
        resulting from such merger, consolidation or reorganization in substantially
        the
        same proportion as their ownership of the Voting Securities of the Company
        immediately before such merger, consolidation or reorganization (or series
        of
        related transactions).

       

      (f)           Consummation
        of an agreement for the sale or other disposition of all or substantially
        all of
        the assets of the Company (evaluated on a consolidated basis, without regard
        to
        whether the sale or other disposition is effected via a sale or other
        disposition of assets of the Company, the sale or other disposition of the
        securities of one or more subsidiaries of the Company or the sale or other
        disposition of the assets of one or more subsidiaries of the Company) to
        any
        Person (other than a transfer to a subsidiary of the Company).

       

      (g)           The
        occurrence of any other event of a nature that would be required to be reported
        by the Company in response to Item 1 of a Current Report on Form 8-K (or
        any successor to such form) promulgated pursuant to the Exchange
        Act.

       

      3.6           “Company”
        shall mean Primal Solutions, Inc., a Delaware corporation or any successor
        of
        the Company.

       

      3.7           “Disability”
        shall have the meaning set forth in Section 5.2 of the Employment
        Agreement.

       

      3.8           “Exchange
        Act” shall mean the Securities Exchange Act of 1934, as
        amended.

       

      3.9           “Good
        Reason” shall have the meaning set forth in Section 5.4 of the
        Employment Agreement.

       

      3.10           “Incentive
        Compensation” shall have the meaning set forth in Section 2.2 of the
        Employment Agreement.

       

      3.11           “Notice
        of Termination” shall mean a written notice of termination of the
        Executive’s employment delivered by the Company to the Executive or by the
        Executive to the Company, as applicable, upon termination of the Executive’s
        employment with the Company which (a) sets forth the specific termination
        provision in this Agreement relied upon, (b) sets forth in reasonable
        detail the facts and circumstances claimed to provide a basis for termination
        of
        the Executive’s employment under the provision so indicated and (c)  sets
        forth the date the Executive’s employment with the Company shall
        terminate.

       

      3.12           “Person”
        shall have the meaning of “person” as used in Section 13(d) and
        14(d) of the Exchange Act, including a “group” as defined in such
        sections.

       

      3.13           “Salary”
        shall have the meaning set forth in Section 2.1(a) of the Employment
        Agreement.

       

      
        
          
          

        

        
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      3.14           “Termination
        Date” shall mean (a) in the case of the Executive’s death, his
        date of death, and (b) in all other cases, the date specified in the Notice
        of Termination.

       

      4.  Miscellaneous

       

      4.1.           Successors;
        Binding Agreement.

       

      (a)           This
        Agreement shall be binding upon and shall inure to the benefit of the Company,
        its successors (whether by purchase of assets, merger, consolidation or
        otherwise) to all or substantially all of the business and/or assets of the
        Company and its assigns, and the Company shall require any successors and
        assigns to expressly assume and agree to perform this Agreement in the same
        manner and to the same extent that the Company would be required to perform
        it
        if no such succession or assignment had taken place (including the obligation
        to
        cause any subsequent successor to also assume the obligations of this
        Agreement).  Neither this Agreement nor any right or interest
        hereunder shall be assignable or transferable by the Executive, his
        beneficiaries or legal representatives, except by will or by the laws of
        descent
        and distribution.  This Agreement shall inure to the benefit of and be
        enforceable by the Executive’s legal personal representative.  The
        duties and covenants of the Executive under this Agreement, being personal,
        may
        not be delegated.

       

      (b)           Nothing
        in this Section 4.1 is intended to require that a Person referred to in
        Section 3.5 as being the beneficial owner of shares of stock of the Company
        must assume the obligations under this Agreement as a result of such stock
        ownership.

       

      4.2           Non-Exclusivity
        of Rights; No Guaranteed Employment.

       

      (a)           Nothing
        in this Agreement shall prevent or limit the Executive’s continuing or future
        participation in any benefit, bonus, incentive or other plan or program provided
        by the Company and for which the Executive may qualify, nor shall anything
        herein limit or reduce such rights as the Executive may have under any other
        agreements with the Company, except as expressly stated therein.

       

      (b)           The
        Executive and the Company acknowledge that, except as may otherwise be provided
        under any other written agreement between the Executive and the Company,
        the
        employment of the Executive by the Company is “at will” and may be terminated by
        either the Executive or the Company at any time.

       

      4.3           Waiver.  The
        rights and remedies of the parties to this Agreement are cumulative and not
        alternative.  Neither the failure nor any delay by either party in
        exercising any right, power, or privilege under this Agreement will operate
        as a
        waiver of such right, power, or privilege, and no single or partial exercise
        of
        any such right, power, or privilege will preclude any other or further exercise
        of such right, power, or privilege or the exercise of any other right, power,
        or
        privilege.  To the maximum extent permitted by applicable law,
        (a) no claim or right arising out of this Agreement can be discharged by
        one party, in whole or in part, by a waiver or renunciation of the claim
        or
        right unless in writing signed by the other party; (b) no waiver that may
        be given by a party will be applicable except in the specific instance for
        which
        it is given; and (c) no notice to or demand on one party will be deemed to
        be a waiver of any obligation of such party or of the right of the party
        giving
        such notice or demand to take further action without notice or demand as
        provided in this Agreement.

       

      
        
          
          

        

        
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      4.4           Notices.  All
        notices, consents, waivers, and other communications under this Agreement
        must
        be in writing and will be deemed to have been duly given when (a) delivered
        by hand (with written confirmation of receipt), (b) sent by facsimile (with
        written confirmation of receipt), provided that a copy is mailed by registered
        mail, return receipt requested, within 24 hours thereafter, or (c) when
        received by the addressee, if sent by a nationally recognized overnight delivery
        service (receipt requested), in each case to the appropriate address and
        facsimile number set forth below (or to such other address and facsimile
        number
        as a party may designate by notice to the other party pursuant to the terms
        of
        this Section 4.4):

      


      If
        to the
        Executive:

      


      Joseph
        R.
        Simrell

      15
        Rue
        Cezanne

      Coto
        de
        Caza, California  92679

      Facsimile
        No. (949) 709-3957

      


      If
        to the
        Company:

      


      Primal
        Solutions, Inc.

      19732
        MacArthur Boulevard, Suite 100

      Irvine,
        California 92612

      Attention:  Chairman
        of the Compensation Committee

      Facsimile
        No.  (949) 260-1515

       

      4.5           Entire
        Agreement; Amendments.  This Agreement contains the entire
        agreement between the parties with respect to the subject matter hereof and
        supersedes all prior agreements and understandings, oral or written, between
        the
        parties hereto with respect to the subject matter hereof (including, without
        limitation, the Prior Agreement).  The parties acknowledge that no
        agreement or representations, oral or otherwise, express or implied, with
        respect to the subject matter hereof have been made by either party which
        are
        not expressly set forth in this Agreement.  This Agreement may not be
        amended orally, but only by an agreement in writing signed by the parties
        hereto.

       

      4.6           Arbitration
        of Disputes.

       

      (a)           Except
        as set forth in Section 4.6(b), arbitration shall be the sole and exclusive
        remedy for any dispute, claim, or controversy of any kind or nature (a “Claim”)
        arising out of, related to, or connected with this Agreement or the termination
        of the Executive’s employment relationship with the Company as a result of or in
        connection with a Change of Control.  This mutual agreement to
        arbitrate includes any Claim by the Executive against any parent, subsidiary,
        or
        affiliated entity of the Company, or any director, officer, general or limited
        partner, employee or agent of the Company or of any such parent, subsidiary
        or
        affiliated entity.  It also includes any claim against the Executive
        by the Company, or any parent, subsidiary or affiliated entity of the
        Company.

       

      
        
          
          

        

        
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      (b)           This
        Section 4.6 does not apply to any claims by Executive:  (1) for
        workers’ compensation benefits; (2) for unemployment insurance benefits; (3)
        under a benefit plan where the plan specifies a separate arbitration procedure;
        (4) filed with an administrative agency which are not legally subject to
        arbitration under this Agreement; or (5) which are otherwise expressly
        prohibited by law from being subject to arbitration under this
        Agreement.

       

      (c)           Any
        arbitration proceedings shall be conducted in Orange County,
        California.  Any Claim submitted to arbitration shall be decided by a
        single, neutral arbitrator (the “Arbitrator”).  The parties to the
        arbitration shall mutually select the Arbitrator not later than 45 days after
        service of the demand for arbitration.  If the parties for any reason
        do not mutually select the Arbitrator within the 45 day period, then any
        party
        may apply to any court of competent jurisdiction to appoint a retired judge
        as
        the Arbitrator.  The parties agree that arbitration shall be conducted
        in accordance with California Code of Civil Procedure sections 1280
etseq., including Code of Civil Procedure section 1283.05
        regarding discovery, except as modified in this Agreement.  The
        Arbitrator shall apply the substantive federal, state, or local law and statute
        of limitations governing any Claim submitted to arbitration.  In
        ruling on any Claim submitted to arbitration, the Arbitrator shall have the
        authority to award only such remedies or forms of relief as are provided
        for
        under the substantive law governing such Claim.  The Arbitrator shall
        issue a written decision revealing the essential findings and conclusions
        on
        which the decision is based.  Judgment on the Arbitrator’s decision
        may be entered in any court of competent jurisdiction.

       

      (d)           The
        Company shall be responsible for paying the fees and costs incurred in the
        arbitration (e.g., filing fees, transcript costs and Arbitrator’s
        fees).  The parties shall be responsible for their own attorneys’ fees
        and costs, except that the Arbitrator shall have the authority to award
        attorneys’ fees and costs to the prevailing party in accordance with the
        applicable law governing the dispute.

       

      (e)           The
        Arbitrator, and not any federal or state court, shall have the exclusive
        authority to resolve any issue relating to the interpretation, formation
        or
        enforceability of this Agreement, or any issue relating to whether a Claim
        is
        subject to arbitration under this Agreement, except that any party may bring
        an
        action in any court of competent jurisdiction to compel arbitration in
        accordance with the terms of this Agreement.

       

      4.7           ERISA.  This
        Agreement is an unfunded compensation arrangement for a member of a select
        group
        of the Company’s management or that of its subsidiaries and any exemptions under
        the Employee Retirement Income Security Act of 1974, as amended, as applicable
        to such an arrangement shall be applicable to this Agreement.

       

      4.8           Headings;
        Construction.  The headings in this Agreement are provided for
        convenience only and will not affect its construction or
        interpretation.  All references to “Section” or “Sections” refer to
        the corresponding Section or Sections of this Agreement unless otherwise
        specified.  All words used in this Agreement will be construed to be
        of such gender or number as the circumstances require. Unless otherwise
        expressly provided, the word “including” does not limit the preceding words or
        terms.

       

      
        
          
          

        

        
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      4.9           Severability.  If
        any provision of this Agreement is held invalid or unenforceable by any
        Arbitrator or court of competent jurisdiction, to the extent that the rights
        or
        obligations of the parties under this Agreement will not be materially and
        adversely effected thereby, the other provisions of this Agreement will remain
        in full force and effect.  Any provision of this Agreement held
        invalid or unenforceable only in part or degree will remain in full force
        and
        effect to the extent not held invalid or unenforceable.

       

      4.10.                      Counterparts.  This
        Agreement may be executed in counterparts, each of which will be deemed to
        be an
        original copy of this Agreement and all of which, when taken together, will
        be
        deemed to constitute one and the same agreement.

       

      4.11           Governing
        Law.  This Agreement shall be governed by and construed in
        accordance with the laws of the State of California applicable to contracts
        entered into and wholly to be performed within the State of
        California.

       

      4.12           Further
        Assurances.  Each party shall execute such further instruments as
        the other party may reasonably request in order to carry out the provisions
        of
        this Agreement.

       

       

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      IN
        WITNESS WHEREOF, the parties have executed and delivered this Agreement as
        of
        the date above first written above.

       

       

      
        	 	THE
                EXECUTIVE 	 
	 	 	 
	 	                                            
                 	 
	 	 Joseph
                R. Simrell                	 
	 	 	 
	 	 	 
	 	THE
                COMPANY	 
	 	 	 
	 	PRIMAL
                SOLUTIONS, INC.,
                a
                  Delaware corporation

              	 
	 	 	 
	 	By:
                	 
	 	 	 
	 	Name:    	 
	 	 	 
	 	Title:	 


      

      


       


      
        
          
          

        

        
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