Document:

Exhibit 10.27

 

AMENDED AND
RESTATED

CHANGE OF CONTROL AGREEMENT

 

This Amended and Restated Change of Control Agreement (this
“Agreement”) is made as of May 17, 2004 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 his
employment is terminated in connection with a change in control of the Company.

 

D.                                     The Company and the Executive previously
entered into a Change of Control Agreement as of December 2001 (the “Prior
Agreement”). This Agreement amends, restates and supersedes the Prior
Agreement. The Company and the Executive are also concurrently entering into an
Amended and Restated Employment Agreement dated as of the date hereof (the
“Employment Agreement”).

 

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. 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.

 

2.  SEVERANCE PAYMENTS UPON A CHANGE OF CONTROL

 

2.1                                 Events Giving Rise
to Severance Payments.

 

The Company shall pay or cause to be paid to
the Executive the Severance Payments specified in Section 2.2  and the other benefits specified in this
Agreement if:

 

(i)                                     there
is a Change of Control, and within 12 months after the Change of Control, (A)
the Company or any successor to the Company terminates the employment of the
Executive for any reason other than Cause, death, Disability or the Executive
reaching the mandatory retirement age established by the Company, if any, or
(b) the Executive voluntarily terminates his employment for Good Reason; 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                                 Severance Payments
Upon Termination of Employment.

 

(a)                                  If the Executive is
entitled to benefits pursuant to Section 2.1, the Company shall pay or
provide to the Executive as a severance payment (the “Severance Payment”), in
lieu of any further compensation or other amounts and in settlement and
complete release of all claims the Executive may have against the Company, the
following:

 

(i)                                     A
single lump sum payment, payable in cash within ten days of the Termination
Date, or if applicable, the effective date of any release executed by the
Executive in connection with termination of his employment with the Company
(provided that any portion thereof may be paid earlier if required by
applicable law), equal to the sum of:

 

(A)                              any
accrued and unpaid portion of the Executive’s Salary and vacation through the
Termination Date and 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

 

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(C)                                an amount equal to 150% of the amount that
would otherwise be payable to the Executive, if the Executive remained employed
by the Company, 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.

 

(ii)                                  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. 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. 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.

 

(b)                                 Except as set forth herein, 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.

 

(c)                                  The Executive shall not be required to
mitigate the amount of any Severance 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
Severance 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.

 

(d)                                 The Company may, as a condition to the
Executive receiving any 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.

 

(e)                                  The obligations of the Company hereunder,
including its obligation to pay the Severance Payment provided for herein, are
contingent upon the Executive’s performance of the

 

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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 Severance Payment then
being made.

 

(f)                                    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.

 

2.5                                  Affiliates.  Nothing contained herein
shall prohibit any affiliates of the Company 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 Severance 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 Severance Payments in accordance with this Section 2, and
(ii) such Severance 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 the termination
of the Executive’s employment with the Company or its successor, 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.

 

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(b)                                 For purposes of determining whether any of
the Severance Payments 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)(l) 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),

 

(ii) the amount of the Severance Payments 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 Severance Payments and Other
Benefits or (B) the amount of excess parachute payments within the meaning of
Sections 280G(b)(l) 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 termination of the Executive’s employment,
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 Executive’s termination
of employment entitling him to Severance Payments (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

 

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(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.

 

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

 

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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.

 

(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.

 

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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.

 

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

 

8

 

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.

 

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.

18881 Von Karman Avenue, Suite 500

Irvine, California 92624

Attention: Chairman of the Compensation Committee

Facsimile No. (949) 260-1515

 

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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. 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.

 

(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 et  seq.,
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

 

10

 

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.

 

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.

 

11

 

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

 

	
   

  	
  THE
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Joseph
  R. Simrell

  
	
   

  	
  Joseph
  R. Simrell

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  COMPANY

  
	
   

  	
   

  
	
   

  	
  PRIMAL
  SOLUTIONS, INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Louis A. Delmonico

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Louis
  A. Delmonico

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Director
  and Chairman Compensation Committee

  

 

12Exhibit 10.28

 

PROMISSORY NOTE

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call / Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  	
   

  
	
  $

  	
  100,000.00

  	
   

  	
  04-08-2002

  	
   

  	
  04-30-2004

  	
   

  	
  0100961001

  	
   

  	
  02

  	
   

  	
  103369

  	
   

  	
  232

  	
   

  	
  /s/ SK

  NR

  	
   

  
																	

 

References in the shaded area are for Lender’s use only and do not limit
the applicability of this document to any particular loan or item.

Any item above containing “***” has been omitted due to text length
limitations.

 

	
  Borrower:

  	
   

  	
  primal solutions,
  inc.

  	
   

  	
  Lender:

  	
   

  	
  sunwest bank

  
	
   

  	
   

  	
  WIRELESS BILLING SYSTEMS

  	
   

  	
   

  	
   

  	
  Commercial Banking Department

  
	
   

  	
   

  	
  18881 VON KARMAN, SUITE 450

  	
   

  	
   

  	
   

  	
  17542 EAST 17th STREET

  
	
   

  	
   

  	
  IRVINE, CA 92612

  	
   

  	
   

  	
   

  	
  TUSTIN, CA 92780

  

 

	
  Principal Amount: $100,000.00

  	
   

  	
  Initial Rate:  6.750%

  	
   

  	
  Date of Note: April 8, 2002

  

 

PROMISE TO PAY. PRIMAL SOLUTIONS, INC.; and WIRELESS
BILLING SYSTEMS (“Borrower”) jointly and severally promise to pay to SUNWEST
BANK (“Lender”), or order, in lawful money of the United States of America, the
principal amount of One Hundred Thousand & 00/100 Dollars ($100,000.00) or
so much as may be outstanding, together with interest on the unpaid outstanding
principal balance of each advance. Interest shall be calculated from the date
of each advance until repayment of each advance.

 

PAYMENT. Borrower will pay this loan in one payment of
all outstanding principal plus all accrued unpaid interest on April 30, 2004.
In addition, Borrower will pay regular monthly payments of all accrued unpaid
interest due as of each payment date, beginning April 30, 2002, with all
subsequent interest payments to be due on the same day of each month after
that. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges. The annual interest
rate for this Note is computed on a 365/360 basis; that is, by applying the
ratio of the annual interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding. Borrower will pay Lender at Lender’s address
shown above or at such other place as Lender may designate in writing.

 

VARIABLE INTEREST RATE. The interest rate on this Note is subject to
change from time to time based on changes in an independent index which is the WALL STREET JOURNAL PRIME RATE, which is
the lowest Prime Rate as published in the Money Rate Column of the Western
Edition of The Wall Street Journal (the “Index”). The Index is not necessarily
the lowest rate charged by Lender on its loans. If the Index becomes
unavailable during the term of this loan, Lender may designate a substitute
index after notice to Borrower. Lender will tell Borrower the current index
rate upon Borrower’s request. The interest rate change will not occur more
often than each DAY. Borrower
understands that Lender may make loans based on other rates as well. The index currently is 4.750%. The interest rate to be
applied to the unpaid principal balance of this Note will be at a rate of 2.000
percentage points over the index, resulting in an initial rate of 6.750%.
Notwithstanding the foregoing, the variable interest rate or rates provided for
in this Note will be subject to the following minimum and maximum rates.
NOTICE: Under no circumstances will the interest rate on this Note be less than
6.500% or more than the maximum rate allowed by applicable law.

 

PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and other
prepaid finance charges are earned fully as of the date of the loan and will
not be subject to refund upon early payment (whether voluntary or as a result
of default), except as otherwise required by law. In any event, even upon full
prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $100.00. Other
than Borrower’s obligation to pay any minimum interest charge, Borrower may pay
without penalty all or a portion of the amount owed earlier than it is due.
Early payments will not, unless agreed to by Lender in writing, relieve Borrower
of Borrower’s obligation to continue to make payments of accrued unpaid
interest. Rather, early payments will reduce the principal balance due.
Borrower agrees not to send Lender payments marked “paid in full”, “without
recourse”, or similar language. If Borrower sends such a payment, Lender may
accept it without losing any of Lender’s rights under this Note, and Borrower
will remain obligated to pay any further amount owed to Lender. All written
communications concerning disputed amounts, including any check or other
payment instrument that indicates that the payment constitutes “payment in
full” of the amount owed or that is tendered with other conditions or
limitations or as full satisfaction of a disputed amount must be mailed or
delivered to: SUNWEST BANK, Note Department, P.O. BOX 1028 TUSTIN, CA
92781–1028.

 

LATE CHARGE. If a payment is 10 days or more late, Borrower
will be charged 5.000% of the unpaid portion
of the regularly scheduled payment or $5.00, whichever is greater.

 

INTEREST AFTER DEFAULT.  Upon
Borrower’s failure to pay all amounts declared due pursuant to this section,
including failure to pay upon final maturity, Lender, at its option, may, if
permitted under applicable law, increase the variable interest rate on this
Note to 7.000 percentage points over the Index.

 

DEFAULT. Each of the following shall constitute an event of default (“Event ofDefault”) under this Note:

 

Payment Default.  Borrower fails to make any
payment when due under this Note.

 

Other Defaults. 
Borrower fails to comply with or to perform any other term, obligation,
covenant or condition contained in this Note or in any of the related documents
or to comply with or to perform any term, obligation, covenant or condition
contained in any other agreement between Lender and Borrower.

 

Default in Favor of Third Parties. 
Borrower or any Grantor defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower’s property or Borrower’s ability to repay this Note or perform
Borrower’s obligations under this Note or any of the related documents.

 

False Statements.  Any
warranty, representation or statement made or furnished to Lender by Borrower
or on Borrower’s behalf under this Note or the related documents is false or
misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.

 

Insolvency.  The dissolution or termination
of Borrower’s existence as a going business, the insolvency of Borrower, the
appointment of a receiver for any part of Borrower’s property, any assignment
for the benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.

 

Creditor or Forfeiture Proceedings. 
Commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Borrower or by any governmental agency against any collateral
securing the loan. This includes a garnishment of any of Borrower’s accounts,
including deposit accounts, with Lender. However, this Event of Default shall
not apply if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Lender written notice of the creditor or
forfeiture proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in its
sole discretion, as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor.  Any of
the preceding events occurs with respect to any guarantor, endorser, surety, or
accommodation party of any of the indebtedness or any guarantor, endorser,
surety, or accommodation party dies or becomes incompetent, or revokes or
disputes the validity of, or liability under, any guaranty of the indebtedness
evidenced by this Note. In the event of a death, Lender, at its option, may,
but shall not be required to, permit the guarantor’s estate to assume
unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender, and, in doing so, cure any Event of Default.

 

Change in Ownership.  Any
change in ownership of twenty-five percent (25%) or more of the common stock of
Borrower.

 

Adverse Change.  A
material adverse change occurs in Borrower’s financial condition, or Lender
believes the prospect of payment or performance of this Note is impaired.

 

Insecurity.  Lender in good faith believes
itself insecure.

 

Cure Provisions.  If any
default, other than a default in payment is curable and if Borrower has not
been given a notice of a breach of the same provision of this Note within the
preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender
demanding cure of such default: (1) cures the default within fifteen (15) days;
or (2) if the cure requires more than fifteen (15) days, immediately initiates
steps which Lender deems in Lender’s sole discretion to be sufficient to cure
the default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.

 

LENDER’S RIGHTS.  Upon default, Lender may declare
the entire unpaid principal balance on this Note and all accrued unpaid
interest immediately due, and then Borrower will pay that amount.

 

ATTORNEYS’ FEES; EXPENSES.  Lender
may hire or pay someone else to help collect this Note if Borrower does not
pay. Borrower will pay Lender that amount. This includes, subject to any limits
under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses,
whether or not there is a lawsuit, including attorneys’ fees, expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), and appeals. Borrower also will pay any court costs, in
addition to all other sums provided by law.

 

JURY
WAIVER.  Lender and Borrower hereby waive
the right to any jury trial in
any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.  (Initial Here /s/ JRS)

 

GOVERNING
LAW.  This Note will be governed by,
construed and enforced in accordance with federal law and the laws of the State
of California. This Note has been accepted by Lender in the State of California.

 

 

CHOICE OF VENUE.  If there is a lawsuit, Borrower
agrees upon Lender’s request to submit to the jurisdiction of the courts of
ORANGE County, State of California.

 

DISHONORED ITEM FEE. 
Borrower will pay a fee to Lender of $26.00 if Borrower makes a payment
on Borrower’s loan and the check or preauthorized charge with which Borrower
pays is later dishonored.

 

RIGHT OF SETOFF.  to the extent permitted by applicable
law, Lender reserves a right of setoff in all Borrower’s accounts with Lender
(whether checking, savings, or some other account). This includes all accounts
Borrower holds jointly with someone else and all accounts Borrower may open in
the future. However, this does not include any IRA or Keogh accounts, or any
trust accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the indebtedness against any and all such accounts, and, at Lender’s
option, to administratively freeze all such accounts to allow Lender to protect
Lender’s charge and setoff rights provided in this paragraph.

 

COLLATERAL.  Borrower acknowledges this Note
is secured by a UCC1 filing and Security Agreement covering all business
assets.

 

LINE OF CREDIT.  This
Note evidences a revolving line of credit. Advances under this Note may be
requested either orally or in writing by Borrower or as provided in this
paragraph. Lender may, but need not, require that all oral requests be
confirmed in writing. All communications, instructions, or directions by
telephone or otherwise to Lender are to be directed to Lender’s office shown
above. The following persons currently are authorized to request advances and
authorize payments under the line of credit until Lender receives from
Borrower, at Lender’s address shown above, written notice of revocation of
their authority: JOSEPH R. SIMRELL; and TODD
R. TAYLOR.  Borrower agrees to
be liable for all sums either: (A) advanced in accordance with the instructions
of an authorized person or (B) credited to any of Borrower’s accounts with
Lender. The unpaid principal balance owing on this Note at any time may be
evidenced by endorsements on this Note or by Lender’s Internal records,
including daily computer print-outs. Lender will have no obligation to advance
funds under this Note if: (A) Borrower or any guarantor is in default under the
terms of this Note or any agreement that Borrower or any guarantor has with
Lender, including any agreement made in connection with the signing of this
Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor’s guarantee of this Note or any other loan with Lender; (D)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (E) Lender in good faith believes itself
insecure.

 

ARBITRATION. Borrower and Lender agree that all
disputes, claims and controversies between them whether individual, joint, or
class in nature, arising from this Note or otherwise, including without
limitation contract and tort disputes, shall be arbitrated pursuant to the
Rules of the American Arbitration Association in effect at the time the claim
is filed, upon request of either party. No act to take or dispose of any
collateral securing this Note shall constitute a waiver of this arbitration
agreement or be prohibited by this arbitration agreement. This includes,
without limitation, obtaining injunctive relief or a temporary restraining
order; invoking a power of sale under any deed of trust or mortgage; obtaining
a writ of attachment or imposition of a receiver; or exercising any rights
relating to personal property, including taking or disposing of such property
with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any right, concerning
any collateral securing this Note, including any claim to rescind, reform, or
otherwise modify any agreement relating to the collateral securing this Note,
shall also be arbitrated, provided however that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party. Borrower and
Lender agree that in the event of an action for judicial foreclosure pursuant to
California Code of Civil Procedure Section 726,or any similar provision in any other state, the commencement
of such an action will not constitute a waiver of the right to arbitrate and
the court shall refer to arbitration as much of such action, including
counterclaims, as lawfully may be referred to arbitration. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Note shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.

 

SUCCESSOR INTERESTS.  The
terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs,
personal representatives, successors and assigns, and shall inure to the
benefit of Lender and its successors and assigns.

 

GENERAL PROVISIONS.  Lender
may delay or forgo enforcing any of its rights or remedies under this Note
without losing them. Each Borrower understands and agrees that, with or without
notice to Borrower, Lender may with respect to any other Borrower (a) make one
or more additional secured or unsecured loans or otherwise extend additional
credit; (b) alter, compromise, renew, extend, accelerate, or otherwise change
one or more times the time for payment or other terms any indebtedness,
including increases and decreases of that rate of interest on the indebtedness;
(c) exchange, enforce, waive, subordinate, fail or decide not to perfect, and
release any security, with or without the substitution of new collateral; (d)
apply such security and direct the order or manner of sale thereof, including
without limitation, any non-judicial sale permitted by the terms of the
controlling security agreements, as Lender in its discretion may determine; (e)
release, substitute, agree not to sue, or deal with any one or more of
Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner
Lender may choose; and (f) determine how, when and what application of payments
and credits shall be made on any other indebtedness owing by such other
Borrower. Borrower and any other person who signs, guarantees or endorses this
Note, to the extent allowed by law, waive any applicable statute of
limitations, presentment, demand for payment, and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender’s security interest in the collateral;
and take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Note are joint and several.

 

PRIOR TO SIGNING THIS NOTE, EACH BORROWER READ AND
UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST
RATE PROVISIONS. EACH BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF
THIS PROMISSORY NOTE.

 

BORROWER:

 

 

	
  PRIMAL SOLUTIONS, INC.

  
	
   

  
	
  By:

  	
  /s/ Joseph R. Simrell

  	
   

  
	
   

  	
   JOSEPH R. SIMRELL, Vice President/CFO of

   PRIMAL SOLUTIONS, INC.

  	
   

  
	
   

  
	
   

  
	
  WIRELESS BILLING SYSTEMS

  
	
   

  
	
  By:

  	
  /s/ Joseph R. Simrell

  	
   

  
	
   

  	
   JOSEPH R. SIMRELL, Chief Financial Officer of

   WIRELESS BILLING SYSTEMS

  	
   

  

 

2

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