Exhibit
10.4


August 9, 2006


Mr.  Sam Gilson

159 Barberry Lane

Ponte Vedra Beach, FL 32082


Re:          Option Vesting on Change of Control


Dear Sam:


This letter agreement confirms
our agreement regarding option vesting upon the occurrence of certain events or
conditions.


As discussed, to the
extent permitted under applicable law, upon the occurrence of (i) a Change of
Control (as defined below), (ii) you are terminated without Cause (as defined
below), or (iii) you terminate your employment for Good Reason (as defined
below), all outstanding unvested stock options granted to you by Primal
Solutions, Inc. (“Primal”) shall accelerate and vest and be exercisable.


“Change of Control”
shall mean in a transaction or series of related transactions, (i) the sale of
all or substantially all of the assets of the Company, (ii) the acquisition by
any person, entity or group within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (“Exchange Act”) or any comparable
successor provisions of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act, or comparable successor rules) of
more than 50% of the outstanding capital stock of Primal, or (iii) the merger,
consolidation or other reorganization of Primal; provided, however,
that any such merger, consolidation or other reorganization of Primal whereby
securityholders of the Company immediately prior to such transaction continue
to own not less than 50% of the capital stock in the surviving company
following such transaction shall not be deemed to be a Change of Control.  Additionally, a Change of Control shall be
deemed to have occurred upon (i) Primal entering into a “going private”
transaction, (ii) the deregistration of Primal’s securities under the
Exchange Act, or (iii) Primal otherwise no longer being subject to the
reporting requirements under the Exchange Act and no longer filing periodic
reports under such Act.


“Good Reason”
shall mean any of the following: (a) a material breach by Primal of any
agreement between you and Primal concerning your employment with Primal; provided,
however, that Primal shall have ten (10) days to remedy the breach after
receipt of written notice from you that the breach has occurred if the breach
is susceptible of cure; (b) the assignment without your express and voluntary
written consent to a title, status, overall position, responsibilities, duties,
reporting relationship, or general working environment of a materially lesser
status or degree of responsibility than your title, status, overall position,
responsibilities, duties, reporting relationship, and general working
environment at the effective date of this letter agreement; (c) the requirement
by Primal that you relocate your personal residence outside the metropolitan
Orange County, California area; (d) the relocation by Primal of your office
more 











than 50 miles from its location as of the effective
date of this letter agreement; (e) any failure by Primal to obtain the
assumption of any material written agreement between you and Primal concerning
your employment by any successor of Primal or assignee of substantially all of
the business of Primal; or (f) any material change by Primal in the benefits or
incentive compensation offered to you from those in which you are participating
on the effective date of this letter agreement, or the taking of any action by
Primal which would materially and adversely affect your participation in or
reduce your benefits under any of the benefits or incentive compensation plans
of Primal or deprive you of any fringe benefit then enjoyed by you; provided,
however, that nothing contained in this subparagraph (f) shall be deemed
to permit termination by you for Good Reason if Primal offers a range of
benefit plans and programs to you which, taken as a whole, are at least
comparable to the benefits and incentive compensation in which you are
participating on the effective date of this letter agreement.


“Cause”
shall mean (a) your failure to perform (other than by reason of disability)
your duties and responsibilities to Primal in any material respect in the good
faith determination of the Board of Directors and, after receiving written
notice to such effect from Primal, you fail to cure the problem within ten (10)
days of receipt of such written notice; (b) your gross negligence or willful
misconduct in the performance of your duties and responsibilities to Primal,
such duties and responsibilities not to be unreasonably imposed; (c) your
appropriation (or attempted appropriation) of a material business opportunity
of Primal’s, including attempting to secure or securing any personal profit in
connection with any transaction entered into on behalf of Primal; (d) your
misappropriation (or attempted misappropriation) of any of Primal’s funds or
property; or (e) the conviction of, or the entering of a guilty plea or plea of
no contest by you with respect to, a felony.


If this arrangement is
acceptable to you, please sign the enclosed copy of this letter and return it
to me at your earliest convenience.


Very truly yours,


	
  

  	
   

  
	
  Joseph R.
  Simrell

  	
   

  
	
  Chief Executive
  Officer

  



 


I agree to the terms described
above:


	
  

  	
   

  	
   

  
	
  Signature

  	
  Date

  	
   

  



 


cc:           Personnel File