Document:

Exhibit 10.1

 

 

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Proposed

2005 Executive Incentive

Compensation Plan

 

For the 12 months ended December 31,
2005

 

Compensation Committee Meeting

 

February 2, 2005

 

[LOGO]

 

Company Confidential

 

Key 2005 IC Elements

 

•                       Purpose:

•                       Encourage a “sense of urgency” in 2005
performance

•                       Increase importance of semi-annual financial
performance

•                       Increase importance of team performance over
individual performance

 

•                       Structure:

•                       Bonus-based Incentive Comp as % of Base
Salary

•                       Award split between corporate and individual
objectives

•                       Objectives set for Jan-Jun and Jul-Dec
periods

•                       Measurement and payout for Jan-Jun and
Jul-Dec periods

•                       75% minimum CPO achievement required in each
period for any payout

 

2

2005 IPO Process

 

•                       IPOs set semi-annually to focus on short-term
goal achievement and adaptability to changing business conditions

 

•                       IPOs set through mutual agreement between
executive and CEO based on critical tasks required in period to support
achievement of corporate objectives for the period

 

•                       Individual IPOs are weighted according to a
mutual agreement between executive and CEO regarding priority and value to the
organization’s objectives

 

•                       IPOs include both quantitative and
qualitative characteristics

 

3Exhibit 10.2

 

 

Primal Solutions

Executive Incentive Plan

FY2005

 

	
  Name:

  	
   

  	
  2005 Base Salary:

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  2005 Incentive Target:

  

 

Purpose

The purpose of the Primal Solutions Executive Incentive Plan (“EIP”) is
to increase shareholder value and the success of the company by motivating the
Company’s key executives to: 1) achieve the Company’s objectives and 2) perform
to the best of their abilities in support of those objectives.  The plan is designed to provide financial
incentives for those key executives who, by virtue of their position, have a
significant impact on the success and financial performance of the Company.

 

Eligibility 

Eligible participants include the members of the Executive Management
Team, defined as those individuals who report directly to the CEO and have a
title of Vice President or above.  Final
approval of eligible executives is made by the Board of Directors Compensation
Committee. Eligibility to participate in the Executive Incentive Plan does not
imply employment for any specified period of time, nor does it constitute a
contract of employment, nor does it guarantee continued participation in future
plans or any amount of award.

 

To be eligible to be paid a bonus under the EIP, the participant must
be employed by Primal for three full months of the semi-annual Performance
Period for which the bonus is paid and on the last day of the Performance
Period. Any length of service less than six months for the semi-annual
Performance Period will be pro-rated accordingly.  Bonus amounts for each Performance Period are
earned independently of other Performance Periods.

 

Plan Overview

The amount of each participant’s total targeted bonus is determined by
the CEO with approval of the Compensation Committee, based on specific position
descriptions and responsibilities.  The
Semi-Annual Bonus has two components:  (i) Corporate
Performance Objectives (CPOs) and (ii) Individual Performance Objectives
(IPOs).

 

Corporate Performance Objectives

Corporate Performance Objectives (CPOS) are established at the start of
each fiscal year by the Executive Team and are approved by the Board of
Directors.  These objectives are designed
to be achievable with effort and to move the company forward in its long-term
strategy, while maintaining fiscal responsibility and creating shareholder
value. Corporate Performance Objectives

 

 

must be achieved at a minimum of 75% for any payments to be made under
the EIP. 
Corporate Performance Objectives for FY2005 are attached as “Exhibit A.”

 

Individual
Performance Objectives

At the beginning of each Performance Period, the Participant will
submit a draft of Individual Performance Objectives (IPOs) to the CEO for
review and approval, using the form attached as “Exhibit B.”  Objectives set should be SMART—specific,
measurable, attainable, results-oriented and time-specific.  IPOs should also be tied directly to Primal’s
business plan.  The Participant and the
CEO will mutually agree on a minimum of three and a maximum of five objectives
for the Performance Period.  Different
weights may be assigned to each objective. 
For example, a total of three objectives may be weighted 50%, 30% and
20% instead of 33 1/3% each.

 

The weight given to each of the EIP components for you in 2005 is as
follows:

 

	
  <Insert Name>

  	
   

  	
  January 1-June 30

  Performance Period

  	
   

  	
  July 1-December 31

  Performance Period

  	
   

  
	
   

  	
   

  	
  Percentage

  	
   

  	
  Dollar Amount

  	
   

  	
  Percentage

  	
   

  	
  Dollar Amount

  	
   

  
	
  IPO

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CPO

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
										

 

Assessing Performance Against
Objectives/Targets

 

Individual Performance Objectives

The participant and the CEO will meet and mutually agree upon the level
of attainment of his/her Individual Performance Objectives for the Performance
Period being measured within 30 days of the end of the Performance Period.  This assessment, (expressed as a percentage)
is provided to the Finance Department for payment.  The overall evaluation of IPOs must be at a
minimum of 50% or greater to qualify for bonus payments.

 

Corporate
Performance Objectives

Following the end of the Performance Period, the Finance Department
will determine the level of attainment of corporate financial goals and provide
it to the CEO and Compensation Committee for approval.  The approved calculations will be provided to
plan participants on or before the date that Primal releases its results for
the period being measured.   The overall
evaluation of Corporate Performance Objectives must be at a minimum of 75% or
greater to qualify for bonus payments.

 

Calculation of Semi-Annual Bonus Amounts

 

The following tables set forth the method for calculating payments
under the Individual Performance Objectives and Corporate Performance
Objectives components of the EIP:

 

2

 

	
  Measurement Against

  Objectives

  	
   

  	
  Payment (% of Target Bonus)

  
	
  Individual Performance

  (Total % earned on IPOs)

  
	
  Achievement > 50% of overall target

  	
   

  	
  Actual percentage

  
	
   

  	
   

  	
   

  
	
  Achievement <50% of overall target

  	
   

  	
  0%

  

 

	
  Measurement Against

  Objectives

  	
   

  	
  Payment (% of Target Bonus)

  
	
  Corporate
  Performance Objectives

  (Overall % Earned on Corporate Performance Objectives)

  
	
  Achievement > 101% of overall target

  	
   

  	
  100% + 2% for each whole % above target, to a maximum payment of 150%
  for this component

  
	
   

  	
   

  	
   

  
	
  Achievement > 75%, but < 100% of overall target

  	
   

  	
  Actual percentage

  
	
   

  	
   

  	
   

  
	
  Achievement < 75% of overall target

  	
   

  	
  0%

  

 

Payment

Following the end of each Performance Period, participants will meet
with the CEO to review performance against goals for individual
objectives.  Ratings of individual
objectives are subject to review and approval by the Compensation
Committee.  Bonus payments are also
subject to the Compensation Committee’s determination of the Company’s
satisfaction of its corporate goals. 
Eligible participants will receive payments under the EIP plan according
to the following schedule:

 

For the Performance Period of January 1-June 30, payments
will be made on the next scheduled payroll date following approval by the Board
of Directors of the Q2FY05 10Q filing, estimated to be in August 2005.

 

For the Performance Period of July1-December 31, payments will be
made on the next scheduled payroll date following the Board of Directors review
and approval of FY2005 year-end results, estimated to be in February 2006.

 

Payments under the EIP plan are subject to all federal, state and local
tax withholding requirements.

 

3

 

Administration, Amendment and Termination of
the Plan

 

The EIP will be administered by the Board of
Directors Compensation Committee, which is authorized to interpret the Plan, to
establish rules and regulations necessary to administer the Plan and to
take all other actions it determines are necessary for the proper
administration of the Plan.  All actions,
determinations, interpretations and decisions made by the Compensation
Committee and/or the Board will be final, conclusive and binding upon all other
parties concerned.  The Compensation
Committee and/or the Board reserve the right to amend, suspend, or terminate
the EIP and any award opportunities at any time in whole or in part, for any
reason, and without the consent of any participant or beneficiary.

 

Definitions

 

“BOARD” means the
Board of Directors of Primal.

 

“COMMITTEE” means the
Compensation Committee appointed by the Board.

 

“COMPANY” means
Primal Solutions, Inc., a Delaware corporation.

 

“FISCAL YEAR” means the
fiscal year of the company, January 1-December 31.

 

“OPERATING INCOME” means the
Company’s income from operations but excluding any unusual items, determined in
accordance with generally accepted accounting principles.

 

“PERFORMANCE PERIOD” shall mean a six-month period of time based upon the halves of the Company’s Fiscal Year, or such other time period as shall be determined by the Committee.
 
“REVENUE” means the Company’s net sales, determined in accordance with generally accepted accounting principles

 

	Acknowledgement:
	 

	 
	 

	 
	 

	 
	 
	 

	Insert name
	 
	Date

 

4

 

Exhibit A

Company Performance Objectives

January 1 - June 30, 2005

FY2005

 

5

 

Exhibit B

Individual Performance Objectives

<insert name>

FY2005

 

Each participant of the Executive Incentive Plan should complete this
worksheet at the start of each Performance Period.  All objectives and measurements should be
mutually agreed upon by the executive and the CEO, and approved by the
Compensation Committee. Please refer to the Executive Incentive Plan policy for
plan details.  There should be no fewer
than 3 and no more than 5 objectives set each semi-annual Performance Period.

 

	
  Name:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Dept:

  	
   

  	
   

  	
  Performance Period:

  	
  o
  January 1-June 30

  
	
   

  	
   

  	
  o
  July 1 - December 31

  
	
   

  	
   

  
	
  CEO Signature:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Executive Signature:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
															

 

PERFORMANCE OBJECTIVES

 

	
  Objectives and Measurements

  (Please complete Key Results form to Indicate how

  performance will be measured.)

  	
   

  	
  Weighting

  (A)

  	
   

  	
  Achievement

  (B)

  	
   

  	
  Results

  (C)

  	
   

  
	
  SMART: Specific, Measurable, Attainable, Results-Oriented, Time
  Specific

  	
   

  	
  Target

  	
   

  	
  Actual

  Results

  	
   

  	
  Total %

  Earned

  (A x B = C)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Objective I:

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Key Results:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Objective II: 

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Key Results:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

6

 

	
  Objective III:

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Key Results:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Objective IV:

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Key Results:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Objective V:

  	
   

  	
   

  	
  %

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Key Results:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL % FOR
  ALL OBJECTIVES

  	
   

  	
  100

  	
  %

  	
  TOTAL % EARNED=

  	
  %

  

 

	
  Final
  Evaluation Signatures

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Executive:

  	
   

  	
   

  	
  CEO:

  	
   

  	
   

  
									

 

7

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