Exhibit
10.2


NON-STATUTORY
STOCK OPTION AGREEMENT


PRIMAL SOLUTIONS,
INC.

2006 STOCK OPTION PLAN


THIS NON-STATUTORY STOCK OPTION AGREEMENT (the “Agreement”)
is effective this        day of                   ,
      , between PRIMAL SOLUTIONS, INC., a Delaware
corporation (the “Company”), and                                                             ,
an employee of the Company or one or more of its Subsidiaries (“Optionee”).  All capitalized terms not otherwise defined
herein shall have the meaning set forth in the Primal Solutions, Inc. 2006 Stock
Option Plan (the “Plan”).


WITNESSETH:


WHEREAS, the Company desires to carry out the purposes
of the Plan by affording Optionee the opportunity to purchase shares of the
Company’s common stock, par value $0.01 per share (“Common Stock”);


NOW THEREFORE, in consideration of the mutual
covenants hereinafter set forth and for other good and valuable consideration,
the parties hereto agree as follows:


1.             Grant
of Option.  The Company hereby grants
to Optionee the right and option (the “Option”) to purchase an aggregate
of up to                         
shares (the “Shares”) of Common Stock, such Shares being subject to
adjustment as provided in Paragraph 7 hereof, on the terms and
conditions herein set forth.  The Option
is a Non-Statutory Stock Option and is not intended to be an Incentive Stock
Option.


2.             Purchase
Price.  The purchase price of the
Shares shall be $                  
per Share.


3.             Exercise
of Option.  Unless expired as
provided in Paragraph 5 below, this Option may be exercised from time to
time after the date first set forth above (the “Date of Grant”) to the
extent of Shares that have vested in accordance with the appropriate vesting
schedule applicable to Optionee as set forth below.  Optionee’s right to exercise the Option
accrues only in accordance with the vesting schedule set forth below that is
applicable to Optionee and, except as otherwise provided herein, only to the
extent that Optionee remains in the continuous employ or service of the Company
or a Subsidiary as specified in the Plan:


(a)           In the event of a Liquidity Event (as
defined herein), this Option shall become fully vested and immediately
exercisable.  No other condition or event
shall cause the vesting of this Option.


(b)           “Liquidity Event” means, 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 the Company, or (iii) the merger,
consolidation or other reorganization of the Company; provided, however,
that any such merger, consolidation or other reorganization of the Company
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 Liquidity Event.  Additionally, a Liquidity Event shall be
deemed to have occurred upon (i) the Company entering into a “going
private” transaction, (ii) the deregistration of the Company’s securities
Exchange Act, or (iii) the Company otherwise no longer being subject to
the reporting requirements under the Exchange Act and no longer filing periodic
reports under such Act.


In the event of a Liquidity Event, the Company
promptly shall give notice to the Optionee of the occurrence of such Liquidity
Event.


4.             Manner
of Exercise, Payment of Purchase Price.


(a)           Subject to the terms and conditions
of this Agreement, the Option shall be exercised by written notice to the
Company at its principal office.  Such
notice shall state the election to exercise the Option and specify the number
of Shares to be purchased.  Such notice
of exercise shall be signed by Optionee and shall be irrevocable when given.


(b)           The notice of exercise shall be
accompanied by full payment of the purchase price for the Shares to be
purchased.  The purchase price may be
paid in any form permitted by the Plan. 
In the event Optionee wishes to pay all or any portion of the purchase
price in any form other than cash or certified funds, Optionee shall, prior to
the date of exercise, termination or expiration of this Option, give written
notice to the Secretary of the Company requesting approval of such payment method,
setting forth the particulars of the proposed payment method.  The Committee shall approve, disapprove or
modify the proposed payment method within fourteen (14) days of its receipt of
the request.  Nothing is this
Section 4(b) shall be deemed to extend the term of this Option.


(c)           Upon receipt of the purchase price,
and subject to the terms of Paragraph 10, the certificate or
certificates representing the Shares purchased shall be registered in the stock
records of the Company in the name of the person or persons so exercising the
Option.  If the Option shall be exercised
by Optionee and, if Optionee shall so request in the notice exercising the
Option, the Shares shall be registered in the name of Optionee and another
person as joint tenants with right of survivorship, and shall be delivered as
provided above to or upon the written order of the person or persons exercising
the Option.  All Shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully
paid and nonassessable.


5.             Expiration
of Option.  The Option shall expire
and become null and void upon the first to occur of the following: (a) the
expiration of three (3) months after Optionee ceases to be employed by or
retained in the service of the Company or any of its Subsidiaries for any reason




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other than termination
for Cause or due to death or total disability, as specified in the Plan; (b) a
period of one (1) year shall have elapsed since Optionee’s death or total
disability, as specified in the Plan; (c) a period of                   
years shall have elapsed since the Date of Grant; (d) Optionee’s employment or
service shall have been terminated for cause; or (e) thirty (30) days following
the Company giving notice to the Optionee of a Liquidity Event.


6.             Investment
Purpose.  Optionee
hereby represents and warrants that (i) the Option is being and the Shares
issuable on exercise of the Option will be acquired by Optionee in good faith
for his or her own account, for investment purposes only, and not with a view to
the distribution, resale, or other disposition thereof; and that, if he or she
exercises the Option, Optionee will do so without any then-present intent to
sell or otherwise dispose of all or any part of the Shares acquired thereby;
and (ii) he or she (A) has (1) a preexisting personal or business relationship
with the Company or one or more of its officers, directors, or control persons
or (2) by reason of his or her business or financial experience, or by
reason of the business or financial experience of his or her financial advisor
who is unaffiliated with and who is not compensated, directly or indirectly, by
the Company or any affiliate or selling agent of the Company, Optionee is
capable of evaluating the risks and merits of this investment and of protecting
his or her own interests in connection with this investment; (B) has received
and reviewed all information that Optionee considers necessary or appropriate
for deciding whether to make this investment. 
Optionee further represents that he or she has had the opportunity to
ask questions and receive answers from the Company and its officers and
employees regarding the terms and conditions of this investment, and regarding
the business, financial affairs and other aspects of the Company and has further
had the opportunity to obtain any information (to the extent the Company
possesses or can acquire such information without unreasonable effort or
expense) that Optionee deems necessary to evaluate this investment and to
verify the accuracy of information otherwise provided to Optionee;
(C) acknowledges that the Option and the Shares have not been registered
under the Securities Act of 1933, as amended (the ”Act”), or qualified
under the California Corporate Securities Law of 1968, as amended, or any other
applicable blue sky laws in reliance, in part, on the representations and
warranties herein.  No other person will
have any direct or indirect beneficial interest in the Option or the Shares;
and (D) understands that the Option and the Shares are and will be “restricted
securities” under the federal securities laws in that such Option and Shares
will be acquired in a transaction not involving a public offering, and that
under such laws and applicable regulations, such securities may be resold
without registration under the Act only in certain limited circumstances and
that otherwise the securities must be held indefinitely.


7.             Adjustments
of Shares Subject to Option.  The
Shares subject to the Option shall be adjusted from time to time as set forth
in the Plan.  The determination of any
such adjustment by the Committee shall be final, binding and conclusive.


8.             No
Contract.  This Agreement does not
constitute a contract for employment or service and shall not affect the right
of the Company to terminate Optionee’s employment or service for any reason or
no reason whatsoever.


9.             Rights
as Stockholder.  This Option shall
not entitle Optionee to any rights of a stockholder of the Company or to any
notice of proceedings of the Company with respect to any Shares issuable upon
exercise of this Option unless and until the Option has been exercised for 



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such Shares and such
Shares have been registered in Optionee’s name upon the stock records of the
Company.


10.           Restriction
on Issuance of Shares.  The Company
shall not be required to issue or deliver any certificates for Shares purchased
upon the exercise of an Option prior to: (a) the obtaining of any approval from
any governmental agency that the Company shall, in its sole discretion,
determine to be necessary or advisable; (b) the completion of any registration
or other qualification of such Shares under any state or federal law or ruling
or regulation of any governmental body that the Company shall, in its sole
discretion, determine to be necessary or advisable; and (c) the determination
by the Committee that Optionee has tendered to the Company any federal, state
or local tax owed by Optionee as a result of exercising the Option when the
Company has a legal liability to satisfy such tax obligation.  In addition, if the Common Stock reserved for
issuance upon the exercise of Options shall not then be registered under the
Securities Act, the Company may upon Optionee’s exercise of an Option, require
Optionee or his permitted transferee to represent in writing that the Shares
being acquired are for investment and not with a view to distribution, and may
mark the certificate for the Shares with a legend restricting transfer and may
issue stop transfer orders relating to such certificate to the Company’s
transfer agent (if applicable).


11.           Lapse
of Option.  This Agreement shall be
null and void in the event Optionee shall fail to sign and return a counterpart
hereof to the Company within thirty (30) days of its delivery to Optionee.


12.           Binding
Effect.  This Agreement shall be
binding upon the heirs, executors, administrators, and successors of the
parties hereto.


13.           Governing
Instrument and Entire Agreement. 
This Option and any Shares issued hereunder shall in all respects be
governed by the terms and provisions of the Plan, which terms and definitions
are incorporated herein by reference.  In
the event of a conflict between the terms of this Agreement and the terms of
the Plan (a copy of which is attached), the terms of the Plan shall
control.  There are no oral agreements
between the parties relating to the subject matter hereof, and this Agreement
and the terms of the Plan constitute the entire agreement of the parties with
respect to the subject matter hereof. 
This Agreement may not be amended except by written agreement executed
by the Company and Optionee.


14.           Tax
Consequences.  OPTIONEE SHOULD
CONSULT A TAX ADVISER REGARDING THE TAX CONSEQUENCES OF THE EXERCISE OF THIS
OPTION AND DISPOSITION OF THE SHARES.


15.           Severability.  Any word, phrase, clause, sentence or other
provision herein that violates or is prohibited by any applicable law, court
decree or public policy shall be modified as necessary to avoid the violation
or prohibition and so as to make this Agreement enforceable as fully as
possible under applicable law, and if such cannot be so modified, the same
shall be ineffective to the extent of such violation or prohibition without
invalidating or affecting the remaining provisions herein.



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16.           Non-Waiver
of Rights.  The Company’s failure to
enforce at any time any of the provisions of this Agreement or to require at
any time performance by Optionee of any of the provisions hereof shall in no
way be construed to be a waiver of such provisions or to affect either the
validity of this Agreement, or any part hereof, or the right of the Company
thereafter to enforce each and every provision in accordance with the terms of
this Agreement.


17.           Headings.  The headings and captions of this Agreement
are inserted for convenience of reference only and shall not affect the
construction or interpretation of any provisions hereof.  As used
in this Agreement, the masculine, feminine or neuter gender, and the singular
or plural, shall be deemed to include the others whenever and wherever the
context so requires.  In addition, unless
the context requires otherwise, the word “or” is not exclusive.


18.           Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument.


19.           Governing
Law.  The Agreement and all
determinations made and actions taken thereunder, to the extent not otherwise
governed by the laws of the United States, shall be governed by the laws of the
State of Delaware (without regard to the principles of conflicts of laws which
might otherwise apply) and shall be construed accordingly.


[Signature Page Follows]



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IN WITNESS WHEREOF,
the Company has caused this Agreement to be executed on its behalf, and
Optionee has signed this Agreement to evidence its acceptance of the option
herein granted and of the terms hereof, all as of the date hereof.


	
  

  	
  PRIMAL SOLUTIONS, INC.

  
	
   

  	
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Accepted and Agreed:


	
  

  	
  OPTIONEE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
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