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Exhibit 10.13  

 
 

EMPLOYMENT TRANSITION AGREEMENT AND GENERAL RELEASE    
  

        This Employment Transition Agreement and General Release ("Agreement") is made as of January 27, 2003 by Primal Solutions, Inc. (the "Employer") and
William Salway (the "Executive"). The Employer and the Executive are collectively called the "Parties." 

RECITALS  

        The Executive has been employed by the Employer in the position of President and Chief Executive Officer, and has served as a member of the Employer's Board of
Directors and as the Chairman of the Board of Directors. The Executive has resigned as President, Chief Executive Officer, Chairman of the Board, and as a Director of the Employer, each effective
January 31, 2003. 

        The
Executive and the Employer were parties to an Employment Agreement dated December 5, 2001, attached hereto, (the "Employment Agreement") and a Change in Control Agreement
dated December 5, 2001 (the "Change in Control Agreement"). The Parties acknowledge that, except as otherwise provided in this Agreement, the Employment Agreement expired on its own terms on
December 31, 2002. The Parties further acknowledge that the purpose for the Change in Control Agreement no longer exists because of the Executive's resignation, and agree that the Change in
Control Agreement is superseded and effectively terminated by this Agreement. 

        The
Employer will deliver to the Executive a check in the amount of $30,745.90, less applicable withholdings, representing the Executive's salary earned and the Executive's unused
vacation accrued through January 31, 2003. 

        The
Executive and the Employer have voluntarily entered into this Agreement in view of its mutual benefits, including the provision of transition services by the Executive, the payment
of valuable consideration by the Employer and the release of any claims related to the Executive's employment with the Employer or transition to part-time employment. 

AGREEMENT  

        The Parties, intending to be legally bound, agree as follows: 

1.    EMPLOYMENT TERMS AND DUTIES  

        1.1.    Resignation.    Effective January 31, 2003 ("Resignation Date"), the Executive voluntarily resigns as
President, Chief Executive Officer, Chairman of the Board, and Member of the Board of Directors of Employer. Effective the Resignation Date, the Executive is relieved of all his duties as an employee
and member of the Board of Directors of the Employer, except as expressly provided otherwise in this Agreement. 

        1.2.    Transition Employment.    Effective January 31, 2003, the Executive shall be employed as a
part-time employee of the Employer for a transition period that shall terminate on July 31, 2003 (the "Transition Period"). 

        1.3.    Duties.    During the initial 30 days of the Transition Period (the "Initial Transition Period"), the
Executive will work with the Employer, as reasonably requested and as directed by Employer, to: 

        (a)  Provide
and foster effective and helpful communication between the Employer and its employees, customers, "partners", and stockholders with respect to (i) the
resignation of the Executive as President, Chief Executive Officer, Chairman of the Board, and Member of the 

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Board of Directors of the Employer, and (ii) the transition of responsibilities from the Executive to a person(s) designated by the Employer; 

        (b)  Effectively
and successfully transition the Executive's responsibilities to a person(s) designated by the Employer; and 

        (c)  Provide
reasonable assistance and support with respect to the Metrocall account and with respect to all merger and acquisition activities; 

in
an effort to preserve the business organization of the Employer and its subsidiaries intact and to keep available the services of its present employees and agents and to preserve the good will of
customers, "partners", suppliers, employees, agents, and others having business relations with Employer and its subsidiaries. 

        1.4.    Location of Work.    The Executive will work primarily from his home office in the State of Maryland. The
Executive agrees to travel to perform services at other locations, including the Employer's corporate office in Irvine, California, as mutually acceptable between the Employer and the Executive. 

2.    COMPENSATION  

        2.1.    Basic Compensation    

        (a)    Salary.    During the Transition Period, the Executive will be paid a monthly salary of $16,667 per month,
payable in equal periodic installments according to the Employer's customary payroll practices, subject to applicable withholdings (including such withholdings as may be required by the State of
Maryland). 

        (b)    Benefits.    During the Transition Period, the Employer will provide the Executive with paid medical and life
insurance benefits equivalent to the coverage the Employer currently provides to the Executive. 

        2.2.    Vacation.    During the Transition Period, the Executive shall  not accrue vacation pay nor be eligible to take paid
vacation. The Executive acknowledges and agrees that he has been paid for all accrued, unused
vacation he has earned while an employee of the Employer. 

        2.3.    Unpaid Incentive Compensation.    The Executive shall be paid earned but unpaid 2002 Incentive Compensation in
accordance with section 2.2 of the Executive's Employment Agreement. 

        2.4.    Business Expenses.    During the Initial Transition Period, the Employer shall reimburse the Executive for
reasonable expenses necessarily incurred by the Executive in the performance of his duties under this Agreement, including cellular phone, pager and DSL charges. Business expense reimbursement will be
made in accordance with the Employer's regular policies and practices provided the Executive submits appropriate documentation supporting such expenses. All travel and entertainment expenses exceeding
$500.00 must be approved in advance by the senior executive management of the Employer. Automobile mileage expenses incurred by the Executive will be reimbursed at the rate established by the Internal
Revenue Service. 

        2.5.    Employer Equipment.    During the Initial Transition Period, the Executive may continue to use the computer
and related peripheral equipment currently assigned to his use. Upon the termination of the Initial Transition Period, the Executive will return all physical property of any kind of the Employer in
the Executive's possession, including, without limitation, directories, documents, lists of any kind, including lists of prices, personnel, addresses, vendors, suppliers or existing or potential
customers, rolodexes, plans, files, software, programs, tapes, materials, manuals, keys, access cards, credit cards and equipment. 

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        2.6.    Apartment Lease Payments and Moving Allowance.    The Employer will reimburse the Executive for apartment
lease payments for an apartment maintained by the Executive in the vicinity of Irvine, California in an amount not to exceed $1,800 per month through not later than March 31, 2003. The Employer
will reimburse the Executive up to a maximum of $1,500 for moving expenses incurred by the Executive in relocating his household goods from said apartment. The Executive must file expense reports with
respect to these expenses in accordance with the Employer's policies. 

3.    EXTENSION OF MEDICAL COVERAGE  

        3.1.    Extension of Medical Coverage.    As of the Termination Date (as that term is defined hereinafter), the
Executive's rights, if any, regarding continuation of group health insurance coverage will be governed by the provisions of the Consolidated Omnibus Reconciliation Act of 1986 ("COBRA"). Under
separate cover, the Executive will receive COBRA information which will include the notice of the Executive's rights to elect continuation coverage under COBRA for group health insurance. The
Executive shall be solely responsible for the full cost of COBRA coverage and responsible for making all COBRA payments. 

4.    TERMINATION  

        4.1.    Termination.    The Executive's employment and his right to compensation and benefits under this Agreement
shall terminate on the date specified in section 1.2 as the end of the Transition Period (the "Termination Date"). 

5.    RELEASE OF CLAIMS  

        5.1.    Release of Claims.    The Executive on his own behalf, and on behalf of his successors and assigns, releases
the Employer and its officers, directors, employees, agents and attorneys and any parent, subsidiary, affiliated or related companies and their respective successors and assigns ("Released Parties")
from all claims, demands, actions or other legal responsibilities of any kind which the Executive may have based on, or pertaining to the Executive's employment with the Employer or his transition to
part-time employment. This Release includes, but is not limited to, any claims the Executive may have for wages, bonuses or other compensation due, claims under the Age Discrimination in
Employment Act arising on or before the date the Executive signs this Agreement, Title VII of the Civil Rights Act, as amended, which prohibits discrimination in employment based on race, color, sex,
religion or national origin, the Americans with Disabilities Act, the Family and Medical Leave Act, or any other federal, state or local law or regulation affecting employment rights or prohibiting
employment discrimination. This Release also includes any claim for intentional or negligent infliction of emotional distress, wrongful discharge, violation of any public policy or statute, breach of
any implied or express contract between the Employer and the Executive, including without limitation the Employment Agreement and Change of Control Agreement, any policy of the Employer or any remedy
for any such claim or breach. 

        5.2.    Unknown Claims.    The Executive understands that the release of claims set forth in section 5.1 above
covers claims which the Executive knows about and those the Executive may not know about. The Executive expressly waives all rights under Section 1542 of the California Civil Code, which
Section the Executive has read and understands, and which provides as follows: 

SECTION 1542. A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. 

        5.3.    Agreement not to Sue; Warranty of Non-Assignment.    The Executive promises never to file a
lawsuit asserting any claims that are released in section 5.1 above. The Executive warrants that the 

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Executive has not assigned to any other person or entity the claims which are the subject of section 5.1 above. 

        5.4.    Executive's Right to Review and Revoke Agreement.    The Executive has been given a period of
twenty-one (21) days within which to consider whether to sign this Agreement and has freely elected to sign this Agreement on the date set forth below. The Executive has been
encouraged to consult with an attorney before signing this Agreement, and has done so to the extent he so desires. This Agreement may be revoked by the Executive for seven (7) days after the
Executive signs this Agreement. In order to revoke this Agreement, the Executive must deliver written notice of revocation to: 

Primal
Solutions, Inc.
 Attention: Chairman of the Board of Directors

18881 Von Karman Avenue, Suite 500

Irvine, California 92612. 

With
a copy to (which will not constitute notice):

Bryan Cave LLP
 Attention: Brett J. Souza, Esq.

2020 Main Street, Suite 600

Irvine, CA 92614 

6.    GENERAL PROVISIONS  

        6.1.    Obligations Contingent on Performance.    The obligations of the Employer hereunder, including its obligation
to pay the compensation provided for herein, are contingent upon the Executive's performance of the Executive's obligations hereunder. 

        6.2.    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. 

        6.3.    Binding Effect; Delegation of Duties Prohibited.    This Agreement shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors, assigns, heirs, and legal representatives, including any entity with which the Employer may merge or consolidate or to which all or
substantially all of its assets may be transferred. The duties and covenants of the Executive under this Agreement, being personal may not be delegated. 

        6.4.    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 or receipt), provided that
a copy is mailed by registered mail, return receipt requested, 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 

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facsimile number as a party may designate by the notice to the other party pursuant to the terms of this section 6.4: 

If
to the Executive: William Salway, 5147 Harpers Farm Road, Columbia, MD 21044, Facsimile No.:                        . 

If
to the Employer: Primal Solutions, Inc., 18881 Von Karman Avenue, Suite 500, Irvine, California 92624; Attn: Chief Financial Officer; Facsimile No.: (949) 221-8590. 

        6.5.    Prior Agreements.    Nothing in this Agreement shall be deemed to relieve the Executive of any of the
Executive's obligations as set forth in: 

        (a)  Sections 7
and 8 of the Employment Agreement. The Parties acknowledge and agree that sections 9 and 10 survive the termination of the Employment Agreement
to the extent required to interpret or enforce Sections 7 and 8. For the purposes of this Section 6.5(a), the Parties understand and acknowledge that the term "Employment Period"
referenced in Sections 7 and 8 of the Employment Agreement includes the Transition Period, and that the "Post Employment Period" shall commence on the Termination Date. 

        (b)  The
Statement of Company Policy on Securities Trades by Company Personnel. 

        6.6.    Entire Agreement; Amendments.    This Agreement contains the entire agreement between the parties with respect
to the subject matter hereof. Except has specifically provided in section 6.5, this Agreement supersedes all prior agreements and understandings, oral or written, between the parties hereto
with respect to the subject matter hereof, including without limitation, the Employment Agreement and the Change of Control Agreement. This Agreement may not be amended orally, but only by an
agreement in writing signed by the Parties. 

        6.7.    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. 

        6.8.    Severability.    If any provision of this Agreement is held invalid or unenforceable by any court of competent
jurisdiction or Arbitrator, then 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 and unenforceable only in part or degree will remain in full force and effect to the extent not held
invalid or unenforceable. 

        6.9.    Counterparts.    This Agreement may be executed in one or more 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. 

        6.10.    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State
of California. If any legal action is necessary to enforce the terms and conditions of this Agreement, the prevailing party shall be entitled to recover all costs of suit and reasonable attorneys'
fees as determined by the court or arbitrator. 

        6.11.    Derogatory Information.    Executive shall not, for a period of twenty-four (24) calendar
months following the Termination Date, publish or disseminate information derogatory to Employer's business, senior executives or directors whether acquired by Executive during or after his employment
by Employer. 

        6.12.    Future Employment.    The Executive agrees not to apply for future employment with any of the Released
Parties and waives the right to be employed by any of the Released Parties. 

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        6.13.    No Admission.    The Executive acknowledges that the Employer is entering into this Agreement only for the
reasons stated in the final Recital, and that by doing so, the Employer does not admit any liability to the Executive or any breach of any legal or contractual obligation. 

7.    ARBITRATION OF DISPUTES  

        7.1.    Exclusive Remedy.    Except as set forth in section 7.3, 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 the Executive's employment relationship with the Employer, or the
termination of the Executive's employment relationship with the Employer, including any Claim against any parent, subsidiary or affiliated entity of the Employer, or any director, officer, general or
limited partner, employee or agent of the Employer or of any such parent, subsidiary or affiliated entity. 

        7.2.    Claims Subject to Arbitration.    This agreement to arbitrate specifically includes (without limitation) any
Claim for breach of this Agreement; any Claim under or relating to any federal, state or local law or regulation prohibiting discrimination, harassment or retaliation based on race, color, religion,
national origin, sex, age, disability or any other condition or characteristic protected by law; demotion, discipline, termination or other adverse action in violation of any contact, law or public
policy; entitlement to wages or other economic compensation; and any Claim for personal, emotional, physical, economic or other injury. 

        7.3.    Claims Not Subject to Arbitration.    This section 7 does not preclude either party from making an
application to a court of competent jurisdiction for: (a) provisional remedies (e.g., a temporary restraining order or preliminary injunction) pursuant to California Code of Civil Procedure
section 1281.8; or (b) a temporary restraining order or an injunction under California Code of Civil Procedure section 527.8 in order to obtain protection against employee
violence or threats of violence. This section 7 also does not apply to any claims by Executive: (i) for workers' compensation benefits; (ii) for unemployment insurance benefits;
(iii) under a benefit plan where the plan specifies a separate arbitration procedure; (iv) filed with an administrative agency which are not legally subject to arbitration under this
Agreement; or (v) which are otherwise expressly prohibited by law from being subject to arbitration under this Agreement. 

        7.4.    Procedure.    The 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 the arbitration shall be conducted
in accordance with California Code of Civil Procedure sections 1280 et seq., except as modified by 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 such 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. 

        7.5.    Costs.    The Employer shall be responsible for paying the fees and costs incurred in the arbitration (e.g.,
filing fees, transcript costs and Arbitrator's fees). The parties shall be responsible for their own attorneys' fees and costs, except that the Arbitrator shall have the authority to award attorneys'
fees and costs to the prevailing party in accordance with the applicable law governing the dispute. Notwithstanding any term herein to the contrary, if the Executive violates his promises contained in
this Agreement, the Executive will pay for all costs incurred by any of the Released Parties, including reasonable attorneys' fees, in defending against Executive's claims or enforcing 

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Executive's promises. In addition, Employer's obligations to provide any payments under this Agreement shall terminate upon such violation. 

        7.6.    Interpretation of Arbitrability.    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 be bring an action in any court of competent jurisdiction to compel arbitration in accordance with the terms of this Agreement. 

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

	EXECUTIVE	 	PRIMAL SOLUTIONS, INC.
	

/s/  WILLIAM SALWAY      
 William Salway	
 	

By:	

/s/  JOSEPH R. SIMRELL      

	

Dated: 1/27/03	
 	

Name:	

Joseph R. Simrell
	 	 	Title:	CFO

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Exhibit 10.14  

 
 

EMPLOYMENT AGREEMENT    
  

        This Employment Agreement (this "Agreement") is made as of January 28, 2003 by Primal Solutions, Inc., a Delaware corporation (the "Employer"), and
Joseph R. Simrell, an individual resident in Coto de Caza, California (the "Executive"). 

RECITALS  

        The Employer desires to employ the Executive, and the Executive wishes to accept such employment, upon the terms and conditions set forth in this Agreement. 

        The
Executive and the Employer are parties to a Change in Control Agreement dated December 5, 2001 (the "Change in Control Agreement"). 

        For
the purposes of this Agreement, the terms defined in Section 9 of this Agreement have the meanings specified or referred to in such Section 9. 

AGREEMENT  

        The parties, intending to be legally bound, agree as follows: 

1.    EMPLOYMENT TERMS AND DUTIES  

 1.1    EMPLOYMENT  

        The Employer hereby employs the Executive, and the Executive hereby accepts employment by the Employer, upon the terms and conditions set forth in this Agreement. 

 1.2    TERM  

        Subject to the provisions of Section 5, the term of the Executive's employment under this Agreement will commence on the Effective Date and end on
December 31, 2003; provided, however, that this Agreement will be extended automatically for a
period of 30 days commencing on January 1, 2004 and the first day of each month thereafter until the Employer hires a replacement Chief Executive Officer/President if the Employer has
not hired a Chief Executive Officer/President to replace the Executive before December 31, 2003. 

 1.3    DUTIES  

        The Executive will have such duties as are assigned or delegated to the Executive in writing by the Board of Directors, and will initially serve as Chief
Executive Officer, President, Chief Financial Officer, and Vice President of Finance and Administration of the Employer (and shall serve as the Employer's Secretary). The Executive's job duties shall
include those responsibilities set forth in Exhibit A. The Executive will devote his entire business time, attention, skill, and energy to the business of the Employer, will use his best
efforts to promote the success of the Employer's business, and will cooperate fully with the Board of Directors in the advancement of the best interests of the Employer. Nothing in this
Section 1.3, however, will prevent the Executive from engaging in additional activities in connection with personal investments and community affairs that are not inconsistent with the
Executive's duties under this Agreement. If the Executive is elected as a director of the Employer or as a director or officer of any of its affiliates, the Executive will fulfill his duties as such
director or officer without additional compensation. 

 

2.    COMPENSATION  

 2.1    BASIC COMPENSATION  

        (a)    Salary.    The Executive will be paid an annual salary of
$200,000 (the "Salary"), subject to adjustment as provided below, which will be payable in equal periodic installments according to the Employer's customary payroll practices, but no less frequently
than monthly. The Salary will be reviewed by the Board of Directors not less frequently than annually, and may be adjusted upward in the sole discretion of the Board of Directors. 

        (b)    Benefits.    The Executive will, during the Employment Period,
be permitted to participate in such stock option, restricted stock, pension, profit sharing, bonus, life insurance, hospitalization, major medical, tuition reimbursement, medical flexible spending
accounts and other employee benefit plans provided by the Employer that may be in effect from time to time, at levels made available to other similarly situated executives of the Employer, and to the
extent the Executive is eligible under the terms of those plans (collectively, the "Benefits"). The Benefits shall include life insurance on the Executive's life in an amount not less than the
Executive's Salary. 

2.2    INCENTIVE COMPENSATION.  

        As additional compensation (the "Incentive Compensation") for the services to be rendered by the Executive pursuant to this Agreement, the Employer will pay the
Executive with respect to Fiscal Year 2003, commencing on January 1, 2003, an amount not less than fifty percent (50%) of the Executive's Salary (the "Compensation Plan"), if, and only if, the
Employer meets or exceeds the performance goals for the Employer established by the Board of Directors (the "Employer Performance Goal"). The Compensation Plan and Employer Performance Goal will be
established by the Board of Directors within 60 days from the beginning of Fiscal Year 2003 and will be communicated to the Executive in writing within 30 days of being so established.
Except as set forth in this Agreement, (i) the Employer shall pay the Executive the Incentive Compensation for Fiscal Year 2003 if (A) the Executive is continually employed by the
Employer from the Effective Date until December 31, 2003, and (B) the Employer Performance Goal is met, and (ii) in such event the payment shall be made no later than
April 15, 2004. 

2.3 Effect of Hiring a Replacement Chief Executive Officer/President.  

        Executive understands and agrees that if the Employer hires a replacement Chief Executive Officer/President, and the Executive does not resign for Good Reason as
provided in Section 5.4, the Executive's Salary shall be reduced from $200,000 to $150,000 on the date the Executive is replaced as Chief Executive Officer/President. The rate of the
Executive's Compensation Plan shall be reduced from fifty percent (50%) of the Executive's Salary to thirty-three (33%) on that same date, and Incentive Compensation paid for Fiscal Year 2003 will be
a weighted average between the higher and lower Compensation Plans. 

3.    FACILITIES AND EXPENSES  

        The Employer will furnish the Executive office space, equipment, supplies, and such other facilities and personnel as the Employer deems necessary or appropriate
for the performance of the Executive's duties under this Agreement. The Employer will pay the Executive's dues in such professional societies and organizations as the Board of Directors deems
appropriate, and will pay on behalf of the Executive (or reimburse the Executive for) reasonable expenses incurred by the Executive at the request of, or on behalf of, the Employer in the performance
of the Executive's duties pursuant to this Agreement, and in accordance with the Employer's employment policies, including reasonable expenses incurred by the Executive in attending conventions,
seminars, and other business meetings, in appropriate business 

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entertainment activities, and for promotional expenses. The Executive must file expense reports with respect to such expenses in accordance with the Employer's policies. 

4.    VACATIONS AND HOLIDAYS  

        The Executive will be entitled to four weeks' paid vacation each calendar year in accordance with the vacation policies of the Employer in effect for its
executive officers from time to time. Vacation must be taken by the Executive at such time or times as approved by the Board of Directors. The Executive will also be entitled to the paid holidays set
forth in the Employer's policies. Any unused vacation days may be carried over to the subsequent calendar year. 

5.    TERMINATION  

 5.1    EVENTS OF TERMINATION  

        (a)    Termination.    The Employment Period, the Executive's Basic
Compensation and Incentive Compensation, and any and all other rights of the Executive under this Agreement or otherwise as an employee of the Employer will terminate (except as otherwise provided in
this Section 5): 

          (i)  upon
the death of the Executive; 

        (ii)  upon
the disability of the Executive (as defined in Section 5.2) for 120 consecutive days, or 180 days during any twelve-month period, immediately upon
notice from either party to the other; 

        (iii)  for
cause (as defined in Section 5.3), immediately upon notice from the Employer to the Executive, or at such later time as such notice may specify; 

        (iv)  for
Good Reason (as defined in Section 5.4) upon not less than thirty days' prior notice from the Executive to the Employer; or 

        (v)  without
cause immediately upon notice from either party to the other. 

        (b)    Notice of Termination.    Any termination of the Executive's
employment by the Employer (or its successor) or by the Executive (other than termination based on the Executive's death), pursuant to this Agreement, shall be communicated by the terminating party in
a written notice to the other party hereto. Such written notice shall (i) set forth the specific termination provision in this Agreement relied upon, if applicable, (ii) set 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 (iii) set forth the date the
Executive's employment with the Employer shall terminate. 

 5.2    DEFINITION OF DISABILITY  

        The Executive will be deemed to have a "disability" if, for physical or mental reasons, the Executive is unable to perform the essential functions of the
Executive's duties under this Agreement, with or without reasonable accommodation. The Executive shall be provided with short term and long term disability benefits in accordance with the terms of the
Employer's plans then in effect. 

 5.3    DEFINITION OF "CAUSE"  

        "Cause" means: (a) the Executive's material breach of this Agreement; provided,  however, that the Executive shall have thirty (30) days to remedy the breach after receipt of written notice from the Employer that the breach
has occurred if the breach is susceptible of cure; (b) the Executive's failure to perform (other than by reason of disability) his duties hereunder in any material respect in the good 

3

 

faith determination of the Board of Directors and, after receiving written notice to such effect from the Employer, fails to cure the problem within ten (10) days of receipt of such written
notice; (c) the Executive's gross negligence or willful misconduct in the performance of his duties and responsibilities to the Employer, such duties and responsibilities not to be unreasonably
imposed; (d) the Executive's appropriation (or attempted appropriation) of a material business opportunity of the Employer, including attempting to secure or securing any personal profit in
connection with any transaction entered into on behalf of the Employer; (e) the Executive's misappropriation (or attempted misappropriation) of any of the Employer's funds or property; or
(f) the conviction of, or the entering of a guilty plea or plea of no contest by the Executive with respect to, a felony. 

 5.4    DEFINITION OF "GOOD REASON"  

        "Good Reason" means any of the following: (a) the Employer's material breach of this Agreement or any other agreement between Executive and Employer
concerning Executive's employment with the Employer; (b) the assignment of the Executive without his express and voluntary written consent to a title, status, overall position,
responsibilities, or duties, reporting relationship, and general working environment of a materially lesser status or degree of responsibility than his title, status, overall position,
responsibilities, or duties, reporting relationship, and general working environment at the Effective Date; provided,  however, that the Employer's
reassignment of the Executive's duties as Chief Executive Officer/President to a replacement Chief Executive
Officer/President shall not constitute Good Reason under this Section 5.4(b); (c) the requirement by the Employer that the Executive relocate the Executive's personal residence outside
the metropolitan Orange County, California area; (d) the relocation by the Employer of the Executive's office more than 50 miles from its location as of the Effective Date; (e) any
failure by the Employer to obtain the assumption of any material agreement between the Executive and the Employer concerning Executive's employment by any successor of the
Employer or assignee of substantially all of the business of the Employer; or (f) except as set forth in Section 2.3 herein, any material change by the Employer in the Benefits or
Incentive Compensation offered to the Executive from those in which the Executive is participating on the Effective Date, or the taking of any action by the Employer which would materially and
adversely affect the Executive's participation in or reduce the Executive's benefits under any of the Benefits or Incentive Compensation plans or deprive the Executive of any fringe benefit then
enjoyed by the Executive, provided, however, that nothing contained herein shall be deemed to permit
termination by the Executive for Good Reason if the Employer offers a range of benefit plans and programs to the Executive which, taken as a whole, are at least comparable to the Benefits and
Incentive Compensation in which the Executive is participating on the Effective Date. For the purposes of this Agreement, the Employer's reassignment of the Executive's duties as Chief Executive
Officer/President to a replacement Chief Executive Officer/President shall constitute Good Reason under this Section 5.4; provided,  however, that such
reassignment shall not constitute Good Reason for any other agreement between the Employer and the Executive, including the Change in
Control Agreement. 

 5.5    TERMINATION PAY  

        Effective upon the termination of the Executive's employment, the Employer will be obligated to pay the Executive (or, in the event of his death, his designated
beneficiary as defined below) only such compensation as is provided in this Section 5.5, or, if applicable, as provided in the Change of Control Agreement, and in lieu of all other amounts and
in settlement and complete release of all claims the Executive may have against the Employer. If the Executive receives payments under the Change of Control Agreement, then he will not also receive
payments under this Agreement. The Employer may, as a condition to the Executive receiving any unvested pay or benefits under this Section 5.5, require the Executive to execute a release of all
claims the Executive may have against the Employer or its affiliates arising from the Executive's employment with the Employer or the termination thereof in a form reasonably satisfactory to the
Employer. Except as set forth herein, all amounts to be paid under 

4

 

this Section 5.5 shall be paid in equal periodic installments according to the Employer's customary payroll practices, including without limitation any payments of Incentive Compensation. 

        For
purposes of this Section 5.5, the Executive's designated beneficiary will be such individual beneficiary or trust, located at such address, as the Executive may designate by
notice to the Employer from time to time or, if the Executive fails to give notice to the Employer of such a beneficiary, the Executive's estate. Notwithstanding the preceding sentence, the Employer
will have no duty, in any circumstances, to attempt to open an estate on behalf of the Executive, to determine whether any beneficiary designated by the Executive is alive or to ascertain the address
of any such beneficiary, to determine the existence of any trust, to determine whether any person or entity purporting to act as the Executive's personal representative (or the trustee of a trust
established by the Executive) is duly authorized to act in that capacity, or to locate or attempt to locate any beneficiary, personal representative, or trustee. 

        (a)    Termination Without Cause or By the Executive for Good
Reason.    If Employer terminates the Executive's employment without cause or the Executive terminates his employment for Good Reason (except for Good Reason caused
by the Employer's reassignment of the Executive's duties as Chief Executive Officer/President to a replacement Chief Executive Officer/President), the Employer will pay the Executive (i) the
Executive's Salary for the remainder, if any, of the calendar month in which such termination is effective, and for the remainder of this Agreement or six months, whichever is greater,
(ii) that portion of the Executive's Incentive Compensation, if any, for the Fiscal Year during which the termination is effective, prorated through the date of termination, as described in
Section 5.5(g), (iii) accrued vacation through the date of termination, and (iv) Incentive Compensation accrued and unpaid from the previous Fiscal Year, if any. 

        (b)    Termination by the Executive for Good Reason Due to the Hiring of a Replacement Chief Executive
Officer/President.    If the Executive terminates his employment for Good Reason because the Employer has hired a replacement Chief Executive Officer/President, the
Employer will pay the Executive (i) the Executive's Salary for the remainder, if any, of the calendar month in which the Executive gives notice of his intent to resign and for a period of six
months thereafter ("Six-Month Period"), (ii) that portion of the Executive's Incentive Compensation, if any, for the Fiscal Year during which the termination is effective, prorated
through the date of termination, as described in Section 5.5(g), (iii) accrued vacation through the date of termination, and (iv) Incentive Compensation accrued and unpaid from
the previous Fiscal Year, if any. During the Six-Month Period, the Executive will provide up to three (3) months of transition support services to the Employer. The Executive's
employment with the Employer will terminate on the earlier of the last day of this three (3) month period or the date on which the Employer notifies the Executive that his transition support
services will terminate. The Executive understands and agrees that if he resigns for Good Reason due to the hiring of a replacement Chief Executive Office/President, he will only receive the
compensation provided for in this Section 5.5(b) and will not be eligible to receive the severance payments provided for in Section 2.2 of the Change of Control Agreement. 

        (c)    Termination by the Employer for Cause or Voluntarily by the
Executive.    If the Employer terminates the Executive's employment for cause, or the Executive voluntarily terminates his employment other than for Good Reason or
disability, the Employer will pay the Executive (i) his Salary and accrued vacation through the date such termination is effective, and (ii) accrued and unpaid Incentive Compensation, if
any, from the previous Fiscal Year, but the Executive will not be entitled to any Incentive Compensation for the Fiscal Year during which such termination occurs. In addition, in the event that the
Employer terminates the Executive's employment for cause pursuant to Section 5.3(b), the Employer shall pay the Executive his Salary for a period of three months after the date of termination. 

5

 

        (d)    Termination upon Disability.    Upon the disability of the
Executive for 120 consecutive days, or 180 days during any twelve-month period, the Executive's employment may be terminated by either party, and upon such termination the Employer will pay the
Executive (i) that part of the Executive's Incentive Compensation, if any, for the Fiscal Year during which the disability occurs, prorated through the end of the calendar month during which
the disability is deemed to have occurred under Section 5.2, as described in Section 5.5(g), (ii) accrued vacation through the date of termination, (iii) accrued and unpaid
Incentive Compensation, if any, from the previous Fiscal Year, (iv) his Salary through the date such termination is effective, and (v) the payments set forth in Section 6.1. 

        (e)    Termination upon Death.    If Executive's employment is
terminated because of the Executive's death, the Employer will pay the Executive's designated beneficiary (i) the Executive's Salary through the end of the calendar month in which his death
occurs, (ii) accrued vacation through the date of termination, (iii) accrued and unpaid Incentive Compensation, if any, from the previous Fiscal Year, and (iv) that part of the
Executive's Incentive Compensation, if any, for the Fiscal Year during which his death occurs, prorated through the end of the calendar month during which his death occurs, as described in
Section 5.5(g). 

        (f)    Benefits.    

          (i)  If
the Executive's employment hereunder is terminated by the Employer without cause or by the Executive for Good Reason, then the Employer will provide and pay for
continued medical, dental, life, and disability insurance coverage for the Executive and the Executive's dependants on the same terms as in effect at the time of termination of the Executive's
employment, including general premium increases, for the period from the date of termination until the Executive obtains replacement coverage through other employment, or for a period consistent with
Section 5.5(a)(i) or Section 5.5(b)(i)(through the date of termination as described in Section 5.5(b)) as applicable, whichever is less. 

        (ii)  If
the Executive's employment hereunder is terminated (A) by death or disability, (B) because this Agreement expires by its terms and the Executive's
employment with the Employer is not continued, or (C) by the Employer for cause pursuant to Section 5.3(b), then the Employer will provide and pay for continued medical and dental
coverage for the Executive, if applicable, and the Executive's dependents, on the same terms as in effect at the time of termination of the Executive's employment, including general premium increases,
for a period of 90 days after the effective date of termination. If such coverage is pursuant to COBRA, the Employer's obligations hereunder will be contingent upon the Executive or his
dependents, as applicable, executing all documents required to obtain such coverage. 

6

  

        (iii)  Except
as set forth in this Section 5.5(f), the Executive's accrual of, or participation in plans providing for, the Benefits will cease at the effective date
of the termination of his employment, and the Executive will be entitled to accrued Benefits pursuant to such plans only as provided in such plans. 

        (g)    Incentive Compensation.    That portion of the Executive's
Incentive Compensation to be paid pursuant to subsections (a)(ii), (b)(ii), (d)(i), or (e)(iv) above, shall be paid only if the Employer meets the Employer Performance Goal for the Fiscal Year
during which the termination is effective. If such Employer Performance Goal is met, then the amount due shall be paid no later than April 15, 2004. Notwithstanding the foregoing, if the Board
of Directors in its discretion determines that the Employer does not have sufficient available cash to pay such amount on such date, the Board of Directors may defer, without interest, payment of any
or all of such amount, to not later than December 31, 2004, provided, however, that payments to the Executive may only be deferred to the extent
that payments to continuing employees of the Employer entitled to such payments are deferred. If the Executive is entitled to payment of Incentive Compensation pursuant to this Section 5.5(g),
then on or before March 15, 2004, the Employer shall provide the Executive with a written notice (i) setting forth financial data based on the audited financial statements of the
Employer sufficient for the Executive to determine if the Employer Performance Goal was met, and the amount of Incentive Compensation owed to the Executive, and (ii) if Incentive Compensation
is owed to the Executive, stating a good faith determination by the Board of Directors of the payment schedule for the amount owed. 

6.    DISABILITY  

 6.1    DISABILITY PAYMENTS  

        Upon the disability of the Executive, the Employer will pay the Executive (i) his Salary for the lesser of (A) 90 days and (B) the
date on which disability insurance benefits commence under the disability insurance coverage furnished by the Employer to the Executive or under any state disability program, and (ii) if the
Executive qualifies for such disability insurance benefits, for a period of up to 180 days, the difference between (A) the Executive's Salary at the time the disability is deemed to have
occurred under Section 5.2, and (B) the insurance benefits under such disability insurance coverage or state disability program, provided that the period in which the Employer is
required to make payments under subsections (i) and (ii) shall not in the aggregate exceed 180 days in any 12-month period. 

7.    NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS  

 7.1    ACKNOWLEDGMENTS BY THE EXECUTIVE  

        The Executive acknowledges that (a) during the Employment Period and as a part of his employment, the Executive will be afforded access to Confidential
Information; (b) public disclosure of such Confidential Information could have an adverse effect on the Employer and its business; (c) because the Executive possesses substantial
technical expertise and skill with respect to the Employer's business, the Employer desires to obtain exclusive ownership of each Employee Invention, and the Employer will be at a substantial
competitive disadvantage if it fails to acquire exclusive ownership of each Employee Invention; and (d) the provisions of this Section 7 are reasonable and necessary to prevent the
improper use or disclosure of Confidential Information and to provide the Employer with exclusive ownership of all Employee Inventions. 

7

 

 7.2    AGREEMENTS OF THE EXECUTIVE  

        In consideration of the compensation and benefits to be paid or provided to the Executive by the Employer under this Agreement, the Executive covenants as
follows: 

        (a)    Confidentiality.    

        (1)  During
and following the Employment Period, the Executive will hold in confidence the Confidential Information and will not use or disclose it to any person except with
the specific prior written consent of the Employer or except as otherwise expressly permitted by the terms of this Agreement. 

        (2)  Any
trade secrets of the Employer will be entitled to all of the protections and benefits under applicable state trade secret and any other applicable law. If any
information that the Employer deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Agreement, such information will, nevertheless, be
considered Confidential Information for purposes of this Agreement. 

        (3)  None
of the foregoing obligations and restrictions applies to any part of the Confidential Information that the Executive demonstrates was or became generally available
to the public other than as a result of a disclosure by the Executive. 

        (4)  The
Executive will not remove from the Employer's premises (except to the extent such removal is for purposes of the performance of the Executive's duties at home or
while traveling, or except as otherwise specifically authorized by the Employer) any Employer document, record, notebook, plan, model, component, device, or computer software or code, whether embodied
in a disk or in any other form (collectively, the "Proprietary Items"). The Executive recognizes that, as between the Employer and the Executive, all of the Proprietary Items, whether or not developed
by the Executive, are the exclusive property of the Employer. Upon termination of this Agreement by either party, or upon the request of the Employer during the Employment Period, the Executive will
return to the Employer all of the Proprietary Items in the Executive's possession or subject to the Executive's control, and the Executive shall not retain any copies, abstracts, sketches, or other
physical embodiment of any of the Proprietary Items. 

        (b)    Employee Inventions.    During the Employment Period every
Employee Invention will belong exclusively to the Employer, subject only to the exception set forth below. The Executive acknowledges that all of the Executive's written work product, works of
authorship, and other Employee Inventions are works made for hire and the property of the Employer, including any copyrights, patents, semiconductor mask protection, or other intellectual property
rights pertaining thereto. If it is determined that any such works are not works made for hire, the Executive hereby assigns to the Employer all of the Executive's right, title, and interest,
including all rights of copyright, patent, semiconductor mask protection, and other intellectual property rights, to or in such Employee Inventions. The Executive covenants that he will promptly: 

        (1)  disclose
to the Employer in writing any Employee Invention; 

        (2)  assign
to the Employer or to a party designated by the Employer, at the Employer's request and without additional compensation, all of the Executive's rights to the
Employee Invention for the United States and all foreign jurisdictions; 

        (3)  execute
and deliver to the Employer such applications, assignments, and other documents as the Employer may request in order to apply for and obtain patents or other
registrations with respect to any Employee Invention in the United States and any foreign jurisdictions; 

        (4)  sign
all other papers necessary to carry out the above obligations; and 

8

 

        (5)  give
testimony and render any other assistance (but without expense to the Executive) in support of the Employer's rights to any Employee Invention. 

This
Agreement shall not apply to any invention which qualifies fully under the provisions of Section 2870 of the California Labor Code, which includes inventions developed entirely on
Executive's own time without using the Employer's equipment, supplies, facilities or trade secret information, except for those ideas and inventions that either; (i) relate, at the time of
conception or reduction to practice of the invention, to the Employer's business, or actual or demonstrably anticipated research or development of the Employer, or (ii) result from any work
performed by the Executive for the Employer. 

 7.3    DISPUTES OR CONTROVERSIES  

        The Executive recognizes that should a dispute or controversy arising from or relating to this Agreement be submitted for adjudication to any court, arbitration
panel, or other third party, the preservation of the secrecy of Confidential Information may be jeopardized. To the extent allowed by law, all pleadings, documents, testimony, and records relating to
any such Confidential Information will be maintained in secrecy and will be available for inspection by the Employer, the Executive, and their respective attorneys and experts, who will agree, in
advance and in writing, to receive and maintain all such information in secrecy, except as may be limited by them in writing. 

8.    NON-INTERFERENCE  

 8.1    ACKNOWLEDGMENTS BY THE EXECUTIVE  

        The Executive acknowledges that: (a) the services to be performed by him under this Agreement are of a special, unique, unusual, extraordinary, and
intellectual character; (b) the Employer's business is national in scope and its products are marketed throughout the United States; (c) the Employer competes with other businesses that
are or could be located in any part of the United States; and (d) the provisions of this Section 8 are reasonable and necessary to protect the Employer's business. 

 8.2    COVENANTS OF THE EXECUTIVE  

        In consideration of the acknowledgments by the Executive, and in consideration of the compensation and benefits to be paid or provided to the Executive by the
Employer, the Executive covenants that he will not, directly or indirectly: 

        (a)  whether
for the Executive's own account or for the account of any other person, at any time during the Employment Period and the Post-Employment Period,
solicit business of the same or similar type being carried on by the Employer, from any person known by the Executive to be a customer of the Employer, whether or not the Executive had personal
contact with such person during and by reason of the Executive's employment with the Employer; or 

        (b)  whether
for the Executive's own account or the account of any other person (i) at any time during the Employment Period and the Post-Employment
Period, solicit as an employee, independent contractor, or otherwise, any person who is an employee of the Employer or in any manner induce or attempt to induce any employee of the Employer to
terminate his or her employment with the Employer; or (ii) at any time during the Employment Period and the Post-Employment Period, interfere with the Employer's relationship with
any person, including any person who at any time during the Employment Period was an employee, contractor, supplier, or customer of the Employer. 

        If
the Executive breaches any of the terms and provisions of this Section 8.2 during the Post-Employment Period, the Employer may, in addition to any other remedies
that the Employer may have for any such breach, immediately terminate the payment of any severance payments or benefits 

9

 

then being paid to the Executive pursuant to Section 5.5, other than payments vested prior to the date of termination of the Executive's employment. 

        For
purposes of this Section 8.2, the term "Post-Employment Period" means the one-year period beginning on the date of termination of the Executive's
employment with the Employer. 

        If
any covenant in this Section 8.2 is held to be unreasonable, arbitrary, or against public policy, such covenant will be considered to be divisible with respect to scope, time,
and geographic area, and such lesser scope, time, or geographic area, or all of them, as a court of competent jurisdiction may determine to be reasonable, not arbitrary, and not against public policy,
will be effective, binding, and enforceable against the Executive. 

        The
Executive will, while the covenant under this Section 8.2 is in effect, give notice to the Employer, within ten days after accepting any other employment, of the identity of
the Executive's employer. The Employer may notify such employer that the Executive is bound by this Agreement and, at the Employer's election, furnish such employer with a copy of this Agreement or
relevant portions thereof. 

        The
terms and provisions of this Section 8.2 shall not be applicable to the Executive if the Executive terminates his employment with the Employer for Good Reason or if the
Executive's employment with the Employer is terminated without cause. 

9.    DEFINITIONS  

        For the purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 9. 

        "Agreement"—this Employment Agreement. 

        "Arbitrator"—as defined in Section 10.9(b). 

        "Basic Compensation"—Salary and Benefits. 

        "Benefits"—as defined in Section 2.1(b). 

        "Board of Directors"—the board of directors of the Employer. 

        "Cause"—as defined in Section 5.3. 

        "Change in Control Agreement"—as defined in the Recitals to this Agreement. 

        "Claim"—as defined in Section 10.9(a). 

        "Compensation Plan"—as defined in Section 2.2. 

        "Confidential Information"—any and all: 

        (a)  trade
secrets concerning the business and affairs of the Employer and its affiliates, product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current, and planned research and development, current and planned manufacturing or distribution
methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source
code), computer software and database technologies, systems, structures, and architectures (and related formulae, compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information), and any other information of the Employer or its affiliates, however documented, that is a trade secret within the meaning of
applicable state trade secret law; and 

10

 

        (b)  information
concerning the business and affairs of the Employer and its affiliates (which includes historical financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training and techniques and materials), however documented; and 

        (c)  notes,
analysis, compilations, studies, summaries, and other material prepared by or for the Employer or its affiliates containing or based, in whole or in part, on any
information included in the foregoing. 

        "disability"—as defined in Section 5.2. 

        "Effective Date"—the date stated in the first paragraph of this Agreement. 

        "Employee Invention"—any idea, invention, technique, modification, process, or improvement (whether patentable or not), any
industrial design (whether registerable or not), any mask work, however fixed or encoded, that is suitable to be fixed, embedded or programmed in a semiconductor product (whether recordable or not),
and any work of authorship (whether or not copyright protection may be obtained for it), created, conceived, or developed by the Executive, either solely or in conjunction with others, during the
Employment Period, or a period that includes a portion of the Employment Period, that relates in any way to, or is useful in any manner in, the business then being conducted or proposed to be
conducted by the Employer or its affiliates, and any such item created by the Executive, either solely
or in conjunction with others, following termination of the Executive's employment with the Employer, that is based upon or uses Confidential Information. 

        "Employer"—as defined in the opening paragraph of this Agreement. 

        "Employer Performance Goal"—as defined in Section 2.2. 

        "Employment Period"—the term of the Executive's employment with the Employer or its affiliates. 

        "Executive"—as defined in the opening paragraph of this Agreement. 

        "Fiscal Year"—the Employer's fiscal year, as it exists on the Effective Date or as changed from time to time. 

        "Good Reason"—as defined in Section 5.4. 

        "Incentive Compensation"—as defined in Section 2.2. 

        "person"—any individual, corporation (including any non-profit corporation), general or limited partnership,
limited liability company, joint venture, estate, trust, association, organization, governmental body or other entity. 

        "Post-Employment Period"—as defined in Section 8.2. 

        "Proprietary Items"—as defined in Section 7.2(a)(4). 

        "Salary"—as defined in Section 2.1(a). 

        "Six-Month Period"—as defined in Section 5.5(b). 

11

  

10.  GENERAL PROVISIONS  

 10.1    INJUNCTIVE RELIEF AND ADDITIONAL REMEDY  

        The Executive acknowledges that the injury that would be suffered by the Employer as a result of a breach of the provisions of this Agreement (including any
provision of Sections 7 and 8) would be irreparable and that an award of monetary damages to the Employer for such a breach would be an inadequate remedy. Consequently, the Employer will have
the right, in addition to any other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Agreement,
and the Employer will not be obligated to post bond or other security in seeking such relief. Without limiting the Employer's rights under this Section 10 or any other remedies of the Employer,
if the Executive breaches any of the provisions of Section 7 or 8, the Employer will have the right to cease making any payments otherwise due to the Executive under this Agreement or the
Change in Control Agreement. 

 10.2    COVENANTS OF SECTIONS 7 AND 8 ARE ESSENTIAL AND INDEPENDENT COVENANTS  

        The covenants by the Executive in Sections 7 and 8 are essential elements of this Agreement, and without the Executive's agreement to comply with such covenants,
the Employer would not have entered into this Agreement or employed the Executive. The Employer and the Executive acknowledge that they have been advised of their right to independently consult with
their respective counsel concerning the reasonableness and propriety of such covenants, with specific regard to the nature of the business conducted by the Employer. 

        The
Executive's covenants in Sections 7 and 8 are independent covenants and the existence of any claim by the Executive against the Employer under this Agreement or otherwise will not
excuse the Executive's breach of any covenant in Section 7 or 8. 

        If
the Executive's employment hereunder expires or is terminated, this Agreement will continue in full force and effect as is necessary or appropriate to enforce the covenants and
agreements of the Executive in Sections 7 and 8. 

 10.3    REPRESENTATIONS AND WARRANTIES BY THE EXECUTIVE  

        The Executive represents and warrants to the Employer that the execution and delivery by the Executive of this Agreement do not, and the performance by the
Executive of the Executive's obligations hereunder will not, with or without the giving of notice or the passage of time, or both: (a) violate any judgment, writ, injunction, or order of any
court, arbitrator, or governmental agency applicable to the Executive; or (b) conflict with, result in the breach of any provisions of or the termination of, or constitute a default under, any
agreement to which the Executive is a party or by which the Executive is or may be bound. 

 10.4    OBLIGATIONS CONTINGENT ON PERFORMANCE  

        The obligations of the Employer hereunder, including its obligation to pay the compensation provided for herein, are contingent upon the Executive's performance
of the Executive's obligations hereunder. 

 10.5    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 

12

 

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. 

 10.6    BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED  

        This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns, heirs, and legal
representatives, including any entity with which the Employer may merge or consolidate or to which all or substantially all of its assets may be transferred. The duties and covenants of the Executive
under this Agreement, being personal, may not be delegated. 

 10.7    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, 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 10.7): 

	 	 	If to the Executive:
	

 	
 	

Joseph R. Simrell

15 Rue Cezanne

Coto de Caza, California 92679

Facsimile No. (949) 709-3957
	

 	
 	

If to the Employer:
	

 	
 	

Primal Solutions, Inc.

18881 Von Karman Avenue, Suite 500

Irvine, California 92624

Attention: Board of Directors

Facsimile No.: (949) 260-1515

 10.8    ENTIRE AGREEMENT; AMENDMENTS  

        This Agreement, along with the Change of Control 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. This Agreement may not be amended orally, but only by an
agreement in writing signed by the parties hereto. 

 10.9    ARBITRATION OF DISPUTES  

        (a)    Exclusive Remedy.    Except as set forth in
Section 10.9(c), 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 the
Executive's employment relationship with the Employer, 

13

 

or the termination of the Executive's employment relationship with the Employer, including any Claim against any parent, subsidiary, or affiliated entity of the Employer, or any director, officer,
general or limited partner, employee or agent of the Employer or of any such parent, subsidiary or affiliated entity. 

        (b)    Claims Subject to Arbitration.    This agreement to arbitrate
specifically includes (without limitation) any Claim for breach of this Agreement; any Claim under or relating to any federal, state or local law or regulation prohibiting discrimination, harassment
or retaliation based on race, color, religion, national origin, sex, age, disability or any other condition or characteristic protected by law; demotion, discipline, termination or other adverse
action in violation of any contract, law or public policy; entitlement to wages or other economic compensation; and any Claim for personal, emotional, physical, economic or other injury. 

        (c)    Claims Not Subject to Arbitration.    This Section 10.9
does not preclude either party from making an application to a court of competent jurisdiction for: (a) provisional remedies (e.g., temporary restraining order or preliminary injunction)
pursuant to California Code of Civil Procedure section 1281.8; or (b) a temporary restraining order or injunction under California Code of Civil Procedure section 527.8 in order
to obtain protection against employee violence or threats of violence. This Section 10.9 also does not apply to any claims by Executive: (i) for workers' compensation benefits;
(ii) for unemployment insurance benefits; (iii) under a benefit plan where the plan specifies a separate arbitration procedure; (iv) filed with an administrative agency which are
not legally subject to arbitration under this Agreement; or (v) which are otherwise expressly prohibited by law from being subject to arbitration under this Agreement. 

        (d)    Procedure.    The 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., 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. 

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

        (f)    Interpretation of Arbitrability.    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. 

14

 

 10.10    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. 

 10.11    SEVERABILITY  

        If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction or Arbitrator, then 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. 

 10.12    COUNTERPARTS  

        This Agreement may be executed in one or more 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. 

 10.13    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. If any legal action is necessary to enforce the terms and conditions of this Agreement, the prevailing party shall be entitled to recover all costs of suit
and reasonable attorneys' fees as determined by the court or arbitrator. 

 
 

[Remainder of Page Intentionally Left Blank]    

15

 

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

	 	 	EXECUTIVE
	

 	
 	

/s/ Joseph R. Simrell
 Joseph R. Simrell
	

 	
 	

EMPLOYER
	

 	
 	

PRIMAL SOLUTIONS, INC.,

a Delaware corporation
	

 	
 	

By:	
 	

/s/ John Faltys

	

 	
 	

Name:	
 	

John Faltys

	

 	
 	

Title:	
 	

Director

16

 
Exhibit A  

 Job Descriptions

Chief Executive Officer/President

Chief Financial Officer/Vice President, Finance  

17

 
Exhibit A  

 Job Description  

	Job Title:	 	Chief Executive Officer/President
	Department:	 	Executive
	Reports To:	 	Board of Directors
	Job Code:	 	TBD
	FLSA Status:	 	Exempt

        Summary:    Manages and directs the organization toward its primary objectives, based on profit and return on capital, by
performing the following duties personally or through subordinate managers. 

        Essential Duties and Responsibilities include the following. Other duties may be assigned. 

	•
	Plans,
coordinates, and controls the daily operation of the organization through the organization's managers.

	•
	Establishes
current and long range goals, objectives, plans and policies, subject to approval by the Board of Directors.

	•
	Dispenses
advice, guidance, direction, and authorization to carry out major plans, standards and procedures, consistent with established policies and Board
approval.

	•
	Meets
with organization's other executives to ensure that operations are being executed in accordance with the organization's policies.

	•
	Oversees
the adequacy and soundness of the organization's financial structure.

	•
	Reviews
operating results of the organization, compares them to established objectives, and takes steps to ensure that appropriate measures are taken to
correct unsatisfactory results.

	•
	Plans
and directs all investigations and negotiations pertaining to mergers, joint ventures, the acquisition of businesses, or the sale of major assets with
approval of the Board of Directors.

	•
	Establishes
and maintains an effective system of communications throughout the organization.

	•
	Represents
the organization with major customers, shareholders, the financial community, and the public. 

18

 

Exhibit A  

 Job Description  

	Job Title:	 	Chief Financial Officer/Vice President, Finance
	Department:	 	Finance & Administration
	Reports To:	 	President
	Job Code:	 	TBD
	FLSA Status:	 	Exempt

        Summary:    Directs the organization's financial planning, accounting and human resources practices as well as its relationship
with lending institutions, shareholders, and the financial community by performing the following duties personally or through subordinate managers. 

        Essential Duties and Responsibilities include the following. Other duties may be assigned. 

	•
	Oversees
and directs treasury, budgeting, audit, tax, accounting, purchasing, real estate, long range forecasting, and insurance activities for the
organization.

	•
	Directs
the controller in providing and directing procedures and computer application systems necessary to maintain proper records and to afford adequate
accounting controls and services.

	•
	Directs
the controller in activities such as custodian of funds, securities, and assets of the organization.

	•
	Appraises
the organization's financial position and issues periodic reports on organization's financial stability, liquidity, and growth.

	•
	Directs
and coordinates the establishment of budget programs.

	•
	Coordinates
tax reporting programs and investor relations activities.

	•
	Oversees
and directs the preparation and issuance of the corporation's regulatory filings with the S.E.C., federal, state and local agencies.

	•
	Analyzes,
consolidates, and directs all cost accounting procedures together with other statistical and routine reports.

	•
	Oversees
and directs the preparation and issuance of the corporation's annual report.

	•
	Directs
and analyzes studies of general economic, business, and financial conditions (including financial status of competitors and customers) and their
impact on the organization's policies and operations.

	•
	Analyzes
operational issues impacting functional groups and the whole institution, and determines their financial impact.

	•
	Conducts
financial and strategic assessments of potential joint ventures, marketing initiatives, mergers and /or acquisitions etc. and makes recommendations
to CEO and Board of Directors.

	•
	Establishes
and maintains contacts with stockholders, financial institutions, and the investment community.

	•
	Coordinates
efforts to obtain new or additional financing.

	•
	Oversees
company's Human Resources function and insures compliance with all federal, state and local laws and regulations.

	•
	Works
with customers and Sales to finalize contract arrangements. 

19

QuickLinks

EMPLOYMENT AGREEMENT

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