Document:

ex10_1.htm

    

    
      

      

    

    Exhibit 10.1

    

    

    THIRD
      AMENDED AND RESTATED

    EMPLOYMENT
      AGREEMENT

     

    This
      Third Amended and Restated Employment Agreement (this “Agreement”) is made
      effective as of November 13, 2007 by and between 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 Employer and the Executive previously entered into a
      Second Amended and Restated Employment Agreement effective as of December 16,
      2005 (the “Prior Agreement”).  This Agreement amends, restates and
      supersedes the Prior Agreement.

     

    The
      Executive and the Employer previously entered into a Second Amended and Restated
      Change of Control Agreement effective as of December 16, 2005 (“Prior Change of
      Control Agreement”).  Concurrently with this Agreement, the parties
      are entering into a Third Amended and Restated Change of Control Agreement
      dated
      as of the date hereof (the “Change of Control Agreement”) which amends,
      restates and supersedes the Prior Change of 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

            

    

     

    The
      term
      of the Executive’s employment under this Agreement will commence on the
      Effective Date and continue until December 31, 2008, unless earlier terminated
      as provided in Section 5 of this Agreement.

     

    No
      later
      than October 31, 2008, the Board of Directors will commence negotiations with
      Executive in good faith over the terms of a new employment agreement which
      shall
      contain a clause providing for at least twelve (12) months’ severance and
      benefits continuation.  If the Board of Directors negotiates in good
      faith and offers a new employment agreement containing 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    such
      a
      severance clause, but the Employer and the Executive are unable to reach
      agreement on a new employment agreement, this Agreement shall expire on December
      31, 2008, and the Executive shall receive no severance compensation but shall
      be
      paid his final compensation as provided for in Section 5.5(b) of this
      Agreement, except that the Executive shall receive his Incentive Compensation
      for the then-current Fiscal Year prorated through December 31,
      2008.  If the Board of Directors does not negotiate in good faith or
      if the employment agreement offered does not include a clause providing for
      at
      least twelve (12) months’ severance and benefits continuation, this
      Agreement will expire on December 31, 2008, and the Executive will be paid
      the
      severance benefits provided for in Sections 5.5(a) and (e) of this
      Agreement.

     

    
      	
               

            	
              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 serve as Chairman of the Board,
      Chief Executive Officer and President of the Employer.  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.  The Executive will fulfill his duties as
      a director of the Employer or officer of any of Employer’s affiliates without
      additional compensation as long as the Executive’s employment by the Employer
      continues under this Agreement.

     

    
      	
              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 

     

    
      
        
        

      

      
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    respect
      to each Fiscal Year during the Employment Period (including Fiscal Year 2007),
      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 each Fiscal Year and will be communicated to the Executive
      in writing within 30 days of being so established.  Incentive
      Compensation will be paid to Executive no later than 2-1/2 months following
      the
      close of the calendar year in which the Incentive Compensation was earned;
      provided, however, 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 of the calendar
      year
      following the calendar year in which the Incentive Compensation was
      earned.

     

    
      	
              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
      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.  The Executive agrees to arrange
      his vacation time with due regard for the circumstances and needs of the
      Employer and to minimize disturbance of the Employer’s
      operations.  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 or in the Change of Control
      Agreement):

     

    (i)           upon
      the death of the Executive;

     

    
      
        
        

      

      
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    (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;

     

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

     

    (vi)           upon
      the expiration of the Employment Period as provided in
      Section 1.2.

     

    (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) an intentional act which materially injures the Employer;
      (b) an intentional refusal or failure to follow lawful and reasonable
      directions of the Board of Directors or an individual to whom the Executive
      reports (as appropriate); (c) a willful or habitual neglect of duties; or
      (d) the conviction of, or the entering of a guilty plea or plea of no
      contest by the Executive with respect to, a felony involving an act of moral
      turpitude.

     

    
      	
               

            	
              5.4

            	
              DEFINITION
                OF “GOOD REASON”

            

    

     

    “Good
      Reason” means the occurrence of any of the following without the consent of the
      Executive: (a) a material diminution of the Executive’s Salary; (b) a
      material diminution in the Executive’s authority, duties or responsibilities
      (including, without limitation, a requirement that the Executive report to
      a
      corporate officer rather than directly to the Board of Directors); (c) a
      material change in the geographic location at which the Executive works;
      provided that for purposes of this Agreement, a “material change” is defined to
      mean a change in the geographic location at which the Executive works which
      increases the distance from his residence to such 

     

    
      
        
        

      

      
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    location
      by more than fifty (50) miles; or (d) a material breach of this Agreement
      by the Employer; provided, however, that in no event shall a
      termination by the Executive be deemed to have been for “Good Reason” if
      (i) such termination occurs later than two years after the initial
      existence of Good Reason; (ii) the Executive fails to give the Employer
      written notice of the applicable Good Reason event within 90 days after such
      event first occurs or (iii) the Employer corrects such event in all
      material respects within 30 days following its receipt of such written notice
      from the Executive.

     

    
      	
               

            	
              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 in connection with any
      termination of his employment which occurs with respect to the Change of Control
      or within three (3) months of the occurrence of the Change of Control; provided
      that for any termination of his employment occurring on or after the three
      (3)-month anniversary of the Change of Control, the Executive shall be entitled
      to such compensation as is provided in this Section 5.5.  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 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;
      provided, however, that the Executive’s Salary and vacation
      accrued through the date termination is effective shall be paid in accordance
      with California law.

     

    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, 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 an additional 12-month period,
      (ii) 100% of the Executive’s Incentive Compensation for the Fiscal Year
      during which the termination is effective and calculated assuming that 100%
      of
      the targets 

     

    
      
        
        

      

      
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    under
      such bonus plans are achieved, (iii) accrued vacation through the date of
      termination, and (iv) Incentive Compensation accrued and unpaid from the
      previous Fiscal Year, if any.  In no event will payments under (i) and
      (ii), above extend beyond 2-1/2 months following the close of the calendar
      year
      in which termination under this paragraph occurs, and payments will be
      accelerated, if necessary, to prevent such 2-1/2 month period to be
      exceeded.

     

    (b)           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 and the then-current Fiscal Year, but the Executive
      will only be entitled to Incentive Compensation for the Fiscal Year during
      which
      such termination occurs to the extent it has been earned (i.e. targets
      have been achieved) prior to such employment termination.

     

    (c)           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(f), (ii) accrued vacation through the date of
      termination, (iii) accrued and unpaid Incentive Compensation, if any, from
      the previous Fiscal Year, and (iv) his Salary through the date such
      termination is effective, subject to an offset for any Salary payments made
      or
      disability insurance benefits received pursuant to
      Section 6.1.  Payments under (i) above will be made no later than
      2-1/2 months following the close of the calendar year in which termination
      under
      this paragraph occurs, and payments will be accelerated, if necessary, to
      prevent such 2-1/2 month period to be exceeded.

     

    (d)           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(f), and calculated assuming
      that 100% of the targets under such bonus plans are achieved.

     

    (e)           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 dependents 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 

     

    
      
        
        

      

      
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    through
      other employment, or for a period of 12 months after such employment
      termination, whichever is less.

     

    (ii)           If
      the Executive’s employment hereunder is terminated by death or disability, 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.

     

    (iii)           Except
      as set forth in this Section 5.5(e), 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.

     

    (f)           Incentive
      Compensation.  That portion of the Executive’s Incentive
      Compensation to be paid pursuant to subsections (c)(i) or
      (d)(iv) above shall be paid only if the Employer Performance Goal is met
      for the Fiscal Year during which the termination is effective.  If
      such Employer Performance Goal is met during such Fiscal Year, then the amount
      due shall be paid no later than March 15 of the following Fiscal
      Year.  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 of
      the Fiscal Year following the Fiscal Year in which the Incentive Compensation
      was earned; provided, however, that payments to the Executive may
      only be deferred if and 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(f), then on or before March 15 of the Fiscal Year following the
      Fiscal Year in which the Incentive Compensation was earned, 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.

     

    (g)           Acceleration
      of Vesting of Options.  If the Executive’s employment
      hereunder is terminated by the Employer without cause or by the Executive for
      Good Reason, upon the occurrence of such employment termination all outstanding
      unvested stock options and all previously granted unvested restricted stock
      awards granted to the Executive by the Employer shall accelerate and
      vest.

     

    
      
        
        

      

      
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              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 from the date the disability is deemed
      to have occurred, 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 from the date the disability is deemed to have occurred, 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.  Payments under this Section 6.1
      will be made no later than 2-1/2 months following the close of the calendar
      year
      in which the disability is deemed to have occurred, and payments will be
      accelerated, if necessary, to prevent such 2-1/2 month period to be
      exceeded.

     

    
      	
              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.

     

    
      	
               

            	
              7.2

            	
              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 

     

    
      
        
        

      

      
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    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

     

    (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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    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 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    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 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.

     

    
      	
              9.

            	
              DEFINITIONS

            

    

     

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

     

    “Agreement”--as
      defined in the opening paragraph of this Agreement.

     

    “Arbitrator”--as
      defined in Section 10.9(d).

     

    “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
      of Control” --as defined in the Change of Control
      Agreement.

     

    “Change
      of 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.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    “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

     

    (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 successors.

     

    “Executive”
      --as defined in the opening paragraph of this Agreement.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    “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.

     

    “Prior
      Agreement”--as defined in the Recitals to this Agreement.

     

    “Prior
      Change of Control Agreement”--as defined in the Recitals to this
      Agreement.

     

    “Proprietary
      Items”--as defined in Section 7.2(a)(4).

     

    “Salary”--as
      defined in Section 2.1(a).

     

    
      	
              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 of 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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    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 is terminated for any reason, 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 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.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	
               

            	
              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) 713-0821

     

    If
      to the
      Employer:

     

    Primal
      Solutions, Inc.

    19732
      MacArthur Boulevard, Suite 100

    Irvine,
      California 92612

    Attention:  Chairman
      of the Compensation Committee

    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 (including, without
      limitation, the Prior Agreement and the Prior Change of Control
      Agreement).  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, or the
      termination of the Executive’s employment relationship with the
      Employer.  This mutual agreement to arbitrate includes any Claim by
      the Executive 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.  It also includes any claim against the Executive by the
      Employer, or any parent, subsidiary or affiliated entity of the
      Employer.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (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; any Claim for personal, emotional,
      physical, economic or other injury; and any claim for misappropriation of
      confidential information or trade secrets or business torts.

     

    (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
      the 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.,
      including Code of Civil Procedure Section 1283.05 regarding discovery,
      except as modified in this Agreement.  The Arbitrator shall apply the
      substantive federal, state, or local law and statute of limitations governing
      any Claim submitted to arbitration.  In ruling on any Claim submitted
      to arbitration, the Arbitrator shall have the authority to award only such
      remedies or forms of relief as are provided for under the substantive law
      governing such Claim.  The Arbitrator shall issue a written decision
      revealing the essential findings and conclusions on which the decision is
      based.  Judgment on the Arbitrator’s decision may be entered in any
      court of competent jurisdiction.

     

    (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 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      	
              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 affected 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 reasonable attorneys’ fees and
      disbursements as determined by the court or arbitrator.

     

    [Signature
      Page Follows]

     

     

     

    

    
      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    

    

    
       

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

       

       

      
        	 	THE
                EXECUTIVE 	 
	 	 	 
	 	                                            
                 	 
	 	 Joseph
                R. Simrell                	 
	 	 	 
	 	 	 
	 	THE
                COMPANY	 
	 	 	 
	 	PRIMAL
                SOLUTIONS, INC.,
                a
                  Delaware corporation

              	 
	 	 	 
	 	By:
                	 
	 	 	 
	 	Name:    	 
	 	 	 
	 	Title:	 

      

      

 

    

    
      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

    

    

    

     

    Exhibit
      A

     

    Job
      Description

     

    Chairman
      of the Board/Chief Executive Officer/President

     

    [See
      attached]

    

    
      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

    

    

    Exhibit
      A

     

    Job
      Description

     

    Chairman
      of the Board/Chief Executive Officer/President

     

     

    
      	 	Job
              Title: 	Chairman
              of the Board, 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 the 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, stockholders, the financial
                community, and the public.ex10_2.htm

    

    
      

      

    

    Exhibit 10.2

    

       

      THIRD
        AMENDED AND RESTATED

      CHANGE
        OF CONTROL AGREEMENT

       

      This
        Third Amended and Restated Change of Control Agreement (this “Agreement”) is
        made effective as of November 13, 2007 by and between Primal Solutions, Inc.,
        a
        Delaware corporation, and Joseph R. Simrell (the “Executive”).

       

      Recitals

       

      A.           The
        Executive has made and is expected to make a major contribution to the
        profitability, growth and financial strength of the Company and its
        affiliates.

       

      B.           The
        Company considers the continued availability of the Executive’s services,
        managerial skills and business experience to be in the best interest of the
        Company and its stockholders and desires to assure the continued services
        of the
        Executive on behalf of the Company without the distraction of the Executive
        occasioned by the possibility of an abrupt change in control of the
        Company.

       

      C.           The
        Executive is willing to remain in the employ of the Company, particularly
        in the
        event of a threat or the occurrence of a change in control of the Company,
        upon
        the understanding that the Company will provide him with income security
        and
        certain other benefits in accordance with the terms and conditions contained
        in
        this Agreement in the event of a change in control of the Company.

       

      D.           The
        Company and the Executive previously entered into a Second Amended and Restated
        Change of Control Agreement effective as of December 16, 2005 (the “Prior
        Agreement”).  This Agreement amends, restates and supersedes the Prior
        Agreement.  The Company and the Executive are also concurrently
        entering into a Third Amended and Restated Employment Agreement dated as
        of the
        date hereof (the “Employment Agreement”) which amends, restates and supersedes
        the Second Amended and Restated Employment Agreement effective December 16,
        2005.

       

      E.           For
        purposes of this Agreement, defined terms in this Agreement shall have the
        meaning specified or referred to in Section 3.

       

      Agreement

       

      In
        consideration of the foregoing premises and the mutual covenants herein
        contained, and for other good and valuable consideration, the receipt and
        adequacy of which are hereby acknowledged, the parties agree as
        follows:

       

      1.  Effective
        Date; Term

       

      1.1           This
        Agreement shall become effective on the date hereof and shall continue in
        effect
        until one (1) day after the termination of the Executive’s employment with the
        Company for any reason; provided, however, this Agreement shall
        expire no later than December 31, 2008.  

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      No
        termination of this Agreement shall limit, alter or
        otherwise affect the Executive’s rights hereunder with respect to a Change of
        Control which has occurred prior to, or within three months after, such
        employment termination, including without limitation the Executive’s rights to
        receive the various benefits hereunder; provided, however, this
        Agreement shall expire no later than December 31, 2008.

       

      2.  Change
        of Control Payment Upon A Change of Control

       

      2.1           Events
        Giving Rise to Change of Control Payment.

       

      The
        Company shall pay or cause to be paid to the Executive the Change of Control
        Payment specified in Section 2.2 and the other benefits specified in this
        Agreement if:

       

      (i)           there
        is a Change of Control; or

       

      (ii)           the
        Executive’s employment by the Company is terminated by the Company within three
        months prior to the Change of Control, and such termination arose in connection
        with or in anticipation of the Change of Control (for purposes of this
        Agreement, meaning that at the time of such termination, the Company had
        entered
        into an agreement, the consummation of which would result in a Change of
        Control, or the termination of the Executive’s employment was at the request of
        a third party who has taken steps to effect a Change of Control), or the
        Executive voluntarily terminates his employment for Good Reason during such
        three-month period, and in each case, such Change of Control is consummated,
        or
        the Board adopts a resolution to the effect that a potential Change of Control
        for purposes of this Agreement has occurred.

       

      2.2           Change
        of Control Payment Upon Change of Control.

       

      (a)           If
        the Executive is entitled to benefits pursuant to Section 2.1, the Company
        shall pay or provide to the Executive as a change of control payment (the
        “Change of Control Payment”), the following:

       

      (i)           A
        single lump sum cash payment equal to the sum of:

       

      (A)           any
        accrued and unpaid portion of the Executive’s Incentive Compensation and other
        bonuses for the prior fiscal year;

       

      (B)           an
        amount equal to 150% of the Executive’s then current annual Salary;
        and

       

      (C)           an
        amount equal to 150% of the amount that would be payable to the Executive
        under
        the Incentive Compensation and other bonus plans, if any, in which the Executive
        is then participating for the fiscal year in progress, calculated assuming
        that
        100% of the targets under such bonus plans are achieved (by way of
        clarification, in the event that the Executive continues to be employed by
        the
        Company following the Change of Control, he shall receive the payment provided
        in this clause (C) and also shall continue to be eligible to earn the Incentive
        Compensation and other bonus, if any, in which the Executive is
        then

       

      
        
          
          

        

        
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        participating
          for the fiscal year in which the Change of Control occurs, based upon actual
          performance for such fiscal year).

         

      

      (ii)           And,
        if the Executive’s employment is terminated prior to the Change of Control in
        accordance with Section 2.1(ii) or at the time of the Change of Control by
        the
        Company for any reason other than Cause, death, Disability or the Executive
        reaching the mandatory retirement age established by the Company or by the
        Executive for Good Reason, in lieu of any further compensation or other amounts
        (except as provided in Section 2.2(a)(i)), and in settlement and complete
        release of all claims the Executive may have against the Company (except
        as
        provided in Section 2.2(a)(i)):  (A) any accrued and unpaid portion of
        the Executive’s Salary and vacation through the Termination Date; and (B)
        continuation, on the same terms as in effect on the Termination Date, including
        general premium increases, of all medical, dental, life and disability Benefits
        for the Executive for 18 months commencing on the Termination Date (the “payment
        period”), including equivalent coverage for the Executive’s spouse and dependent
        children, if such coverage was provided immediately prior to the Termination
        Date.  In the event that the Executive is ineligible under the terms
        of such insurance to continue to be so covered, the Company shall provide
        the
        Executive with a lump sum payment equal to the cost to the Executive of
        obtaining substantially similar coverage for the payment period, which lump
        sum
        payment shall be paid within ten days of the Change of Control.  If
        the Executive, prior to the Termination Date, was receiving any cash-in-lieu
        payments designed to enable the Executive to obtain insurance coverage of
        his
        choosing, the Company shall, in addition to any other benefits to be provided
        under this Section 2.2(a)(ii), provide the Executive with
        continued payments of such in-lieu payments that the Executive would have
        been
        entitled to receive over the payment period.  Any such in-lieu
        payments shall be paid within ten days of the Change of Control.  The
        Company’s obligation hereunder with respect to the foregoing Benefits shall be
        limited to the extent that the Executive obtains any such benefits pursuant
        to a
        subsequent employer’s benefit plans, in which case the Company may reduce the
        coverage of any Benefits it is required to provide the Executive hereunder
        so
        long as the aggregate coverage and benefits of the combined benefit plans
        are no
        less favorable to the Executive than the Benefits required to be provided
        hereunder; provided that in the event the Company has already provided the
        Executive with a lump sum payment in lieu of such Benefits, the Executive
        shall
        promptly repay to the Company a pro rata amount of such lump sum payment
        (calculated based upon the portion of the payment period remaining at the
        time
        the Executive obtains such comparable benefits).

       

      (b)           If
        the Executive is entitled to benefits pursuant to Section 2.1, the lump sum
        payment payable to the Executive under Section 2.2(a)(i) shall be paid within
        ten days of the Change of Control.  Notwithstanding anything in the
        foregoing to the contrary, in the event that the Executive’s employment with the
        Company has been terminated and he is entitled to a Change of Control Payment
        pursuant to Section 2.1(ii) and the Executive has received severance
        compensation and benefits pursuant to Section 5.5(a) of the Employment Agreement
        in connection with such termination and prior to the determination that the
        Executive is entitled to any compensation or Benefits hereunder, the amount
        due
        and payable under this Agreement shall be reduced dollar-for-dollar by any
        amounts paid to the Executive under Section 5.5(a) of the Employment
        Agreement.

       

      
        
          
          

        

        
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      (c)           Except
        as set forth herein, in the event the Executive’s employment is terminated prior
        to or at the time of the Change of Control, the Executive’s compensation by the
        Company and its affiliates and accrual of, or participation in all benefit,
        bonus, incentive and other plans or programs of the Company and its affiliates,
        will cease on the Termination Date.

       

      (d)           The
        Executive shall not be required to mitigate the amount of any Change of Control
        Payment provided for in this Agreement by seeking other employment or otherwise
        and no such payment shall be offset or reduced by the amount of any compensation
        or benefits provided to the Executive in any subsequent employment, except
        as
        provided in Section 2.2(a)(ii).  Notwithstanding the foregoing,
        to the extent permitted by applicable law, the Change of Control Payment
        provided for in this Section 2 shall be reduced by the amount of any other
        severance or termination pay to which the Executive may be entitled by operation
        of any applicable law or under any agreement with the Company, any of its
        affiliates or any successors of such entities; provided that the Change of
        Control Payment shall not be reduced by the amount of any other severance
        or
        termination pay to which the Executive may be entitled under the terms of
        the
        Employment Agreement or any other agreement between the Executive and the
        Company if the triggering termination of employment occurs on or after the
        three
        (3)-month anniversary of the Change of Control.

       

      (e)           If
        the Executive’s employment with the Company is terminated prior to or at the
        time of the Change of Control, the Company may, as a condition to the Executive
        receiving any Change of Control Payment or Benefits under this Agreement,
        require the Executive to execute a release of all claims the Executive may
        have
        against the Company or its affiliates arising from the Executive’s employment
        with the Company or its affiliates or any successors, and the termination
        thereof, in a form reasonably satisfactory to the Company.

       

      (f)           The
        obligations of the Company hereunder, including its obligation to pay the
        Change
        of Control Payment provided for herein, are contingent upon the Executive’s
        performance of the Executive’s obligations hereunder, including under Section
        2.6.  If the Executive breaches any of the material terms and
        provisions of this Agreement, in addition to any other remedies that the
        Company
        may have for any such breach, the Company may immediately terminate providing
        any Change of Control Payment then being made.

       

      (g)           Amounts
        which are vested benefits or which the Executive is otherwise entitled to
        receive under any plan or program of the Company shall be payable in accordance
        with such plan or program, except as explicitly modified by this
        Agreement.

       

      2.3           Notice
        of Termination.  Any termination of the Executive’s employment by
        the Company or by the Executive (other than termination based on the Executive’s
        death) following or in connection with a Change of Control shall be communicated
        by the terminating party in a Notice of Termination to the other party
        hereto.

       

      2.4           Withholding
        Taxes.  Any payments provided for hereunder shall be paid net of
        any applicable withholding required under federal, state or local
        law.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      2.5           Affiliates.  Nothing
        contained herein shall prohibit any affiliates of the Company from fulfilling
        any obligation of the Company to the Executive hereunder and for such purposes
        will be deemed the act of the Company.

       

      2.6           Covenants
        of the Executive.  Payment of the Change of Control Payment under
        this Agreement shall be contingent upon the Executive complying with the
        covenants of the Executive set forth in Sections 7 and 8 of the Employment
        Agreement through the payment period.  The parties acknowledge that
        the Executive’s agreement to comply with these covenants is an essential element
        of this Agreement, and without which the Company would not have entered into
        this Agreement.

       

      2.7.           Indemnification
        for Excise Tax.

       

      (a)           In
        the event that (i) the Executive becomes entitled to the Change of Control
        Payment in accordance with this Section 2, and (ii) such Change of Control
        Payment and any other benefits or payments (including transfers of property)
        that the Executive receives, or is to receive, pursuant to this Agreement
        or any
        other agreement, plan or arrangement with the Company in connection with
        a
        Change of Control (“Other Benefits”) shall be subject to the tax imposed
        pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended
        (the
“Code”) (or any successor thereto) or any comparable provision of state law
        (collectively, the “Excise Tax”), then the Company or its successor shall pay to
        the Executive within 30 days after payment of the Change of Control Payment,
        an
        additional amount (the “Gross-Up Payment”) determined in accordance with the
        following provisions.  The Gross-Up Payment shall be equal to the
        amount necessary so that the net amount retained by the Executive, after
        subtracting the Excise Tax and after also subtracting all federal, state
        or
        local income tax, FICA tax and Excise Tax on the Gross-Up Payment, shall
        be
        equal to the net amount the Executive would have retained if no Excise Tax
        had
        been imposed and no Gross-Up Payment had been made.  It is intended
        that the Executive shall not suffer any loss or expense resulting from the
        assessment of any Excise Tax or the Company’s reimbursement of the Executive for
        any such Excise Tax.

       

      (b)           For
        purposes of determining whether any of the Change of Control Payment or Other
        Benefits will be subject to Excise Tax and the amount of such Excise
        Tax:

       

      (i)
        any
        payments or benefits received or to be received by the Executive in connection
        with a Change of Control (whether pursuant to the terms of this Agreement
        or any
        other plan, arrangement or agreement with the Company, any Person whose actions
        result in a Change of Control or any Person affiliated with the Company or
        such
        Person) shall be treated as “parachute payments” within the meaning of Section
        280G(b)(2) of the Code (or any successor thereto), and all “excess parachute
        payments” within the meaning of Section 280G(b)(1) of the Code (or any successor
        thereto) shall be treated as subject to Excise Tax, unless in the opinion
        of tax
        counsel selected by the Company’s independent auditors and acceptable to the
        Executive, (A) such other payments or benefits (in whole or in part) do not
        constitute such parachute payments or (B) such excess parachute payments
        (in
        whole or in part) represent reasonable compensation for services actually
        rendered within the meaning of Section 280(G)(b)(4) of the Code (or any
        successor thereto),

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (ii) the
        amount of the Change of Control Payment and Other Benefits which shall be
        treated as subject to Excise Tax shall be equal to the lesser of (A) the
        total
        amount of the Change of Control Payment and Other Benefits or (B) the amount
        of
        excess parachute payments within the meaning of Sections 280G(b)(1) and (4)
        of
        the Code (or any successor or successors thereto) after applying clause (i)
        above, and

       

      (iii)
        the
        value of any non-cash benefits or any deferred payment or benefit shall be
        determined by the Company’s independent auditors in accordance with the
        principles of Sections 280(G)(d)(3) and (4) of the Code (or any successor
        or
        successors thereto).

       

      (c)           For
        purpose of determining the amount of the Gross-Up Payment, the Executive
        shall
        be deemed to pay (i) federal income taxes at the highest marginal rate of
        federal income taxation in the calendar year in which the Gross-Up Payment
        is to
        be made, and (ii) state and local income taxes at the highest marginal rates
        of
        taxation in the state and locality of the Executive’s residence on the date of
        the Change of Control, net of the maximum reduction in federal income taxes
        which could be obtained from deduction of such state and local
        taxes.

       

      (d)           In
        the event that the actual amount of Excise Tax (the “Actual Excise Tax”) is
        subsequently determined to be less than the amount taken into account hereunder
        at the time of the Change of Control entitling the Executive to the Change
        of
        Control Payment (the “Pre-determined Excise Tax”), the Executive shall repay to
        the Company, at the time that the amount of the Actual Excise Tax is finally
        determined, the portion of the Gross-Up Payment attributable to the amount
        by
        which the Pre-determined Excise Tax exceeds the Actual Excise Tax, plus interest
        on the amount of such repayment at the rate provided in Section 1274(b)(2)(B)
        of
        the Code (or any successor thereto) (the “Applicable Rate”).  In the
        event that the Actual Excise Tax is determined to exceed the amount of
        Pre-determined Excise Tax (including by reason of any payment the existence
        or
        amount of which cannot be determined at the time of the Gross-Up Payment),
        the
        Company shall make an additional Gross-Up Payment in respect of such excess
        (plus interest, determined at the Applicable Rate, payable with respect to
        such
        excess) at the time that the amount of the Actual Excise tax is finally
        determined.

       

      2.8           Acceleration
        of Vesting of Options.  Notwithstanding anything contained herein
        to the contrary, whether or not the Executive’s employment with the Company or
        its successor is terminated upon a Change of Control, to the extent permitted
        under applicable law, upon the occurrence of a Change of Control all outstanding
        unvested stock options and all previously granted unvested restricted stock
        awards granted to the Executive by the Company shall accelerate and
        vest.

       

      3.  Definitions

       

      For
        purposes of this Agreement:

       

      3.1           “Board”
        shall mean the Board of Directors of the Company.

       

      3.2           “Benefits” shall
        have the meaning set forth in Section 2.1(b) of the Employment Agreement,
        including without limitation life insurance and independent financial and
        tax
        consulting services.

       

      
        
          
          

        

        
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      3.3           “Beneficial
        Ownership” shall have the meaning in Rule 13d-3
        promulgated under the Exchange Act.

       

      3.4           “Cause”
        shall mean:  (a) an intentional act which materially injures the
        Employer; (b) an intentional refusal or failure to follow lawful and reasonable
        directions of the Board of Directors or an individual to whom the Executive
        reports (as appropriate); (c) a willful or habitual neglect of duties; or
        (d) the conviction of, or the entering of a guilty plea or plea of no
        contest by the Executive with respect to, a felony involving an act of moral
        turpitude.

       

      3.5           “Change
        of Control” shall mean, after the date hereof, any of the following
        events:

       

      (a)           An
        acquisition in one or a series of related transactions of any voting securities
        of the Company (“Voting Securities”), directly or indirectly by any Person,
        other than (1) the Company, (2) any wholly-owned subsidiary of the
        Company, (3) any employee benefit plan of the Company or any wholly-owned
        subsidiary of the Company (including an employee stock ownership plan), (4)
        any
        trustee or other fiduciary holding securities under any employee benefit
        plan
        adopted by the Company or any subsidiary of the Company, (5) any underwriter
        in
        connection with a firm commitment public offering of the Company’s capital
        stock, immediately after which such Person has beneficial ownership of 35%
        or
        more of the combined voting power of the Company’s then outstanding Voting
        Securities, or (6) a Person which includes the Executive.

       

      (b)           An
        acquisition in one or a series of related transactions of any voting securities
        of any material subsidiary of the Company (being defined for purposes hereof,
        as
        any subsidiary representing at least 50% of the Company’s combined revenue or
        assets), directly or indirectly by any Person, other than (1) the Company,
        (2) any wholly-owned subsidiary of the Company, (3) any employee
        benefit plan of the Company or any wholly-owned subsidiary of the Company
        (including an employee stock ownership plan), (4) any trustee or other fiduciary
        holding securities under any employee benefit plan adopted by the Company
        or any
        subsidiary of the Company, or (5) any underwriter in connection with a firm
        commitment public offering of such subsidiary’s capital stock, immediately after
        which such Person has beneficial ownership of 50% or more of the combined
        voting
        power of such subsidiary’s then outstanding voting securities.

       

      (c)           During
        any period of 12 consecutive months, the individuals who, as of the beginning
        of
        such period, are members of the Board (the “Incumbent Board”), cease for any
        reason to constitute at least a majority of the Board; provided,
        however, that if the election, or nomination for election by the Company’s
        stockholders, of any new director was approved by a vote of at least two-thirds
        of the then Incumbent Board (other than an election or nomination of an
        individual whose initial assumption of office is in connection with an actual
        or
        threatened election contest relating to the election of the members of the
        Board, as such terms are used in Rule 14A-11 of Regulation 14A promulgated
        under
        the Exchange Act), such new director shall, for purposes of this Agreement,
        be
        considered a member of the Incumbent Board.

       

      (d)           Approval
        by the Company’s stockholders of a complete liquidation or dissolution of the
        Company.

       

      
        
          
          

        

        
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      (e)           Consummation
        of a merger, consolidation or reorganization (or series of related transactions)
        involving the Company, unless the stockholders of the Company having the
        power
        to vote in the ordinary election of directors immediately before such merger,
        consolidation or reorganization, own, directly or indirectly, immediately
        following such merger, consolidation or reorganization, at least 50% of the
        combined voting power of the outstanding voting securities of the corporation
        resulting from such merger, consolidation or reorganization in substantially
        the
        same proportion as their ownership of the Voting Securities of the Company
        immediately before such merger, consolidation or reorganization (or series
        of
        related transactions).

       

      (f)           Consummation
        of an agreement for the sale or other disposition of all or substantially
        all of
        the assets of the Company (evaluated on a consolidated basis, without regard
        to
        whether the sale or other disposition is effected via a sale or other
        disposition of assets of the Company, the sale or other disposition of the
        securities of one or more subsidiaries of the Company or the sale or other
        disposition of the assets of one or more subsidiaries of the Company) to
        any
        Person (other than a transfer to a subsidiary of the Company).

       

      (g)           The
        occurrence of any other event of a nature that would be required to be reported
        by the Company in response to Item 1 of a Current Report on Form 8-K (or
        any successor to such form) promulgated pursuant to the Exchange
        Act.

       

      3.6           “Company”
        shall mean Primal Solutions, Inc., a Delaware corporation or any successor
        of
        the Company.

       

      3.7           “Disability”
        shall have the meaning set forth in Section 5.2 of the Employment
        Agreement.

       

      3.8           “Exchange
        Act” shall mean the Securities Exchange Act of 1934, as
        amended.

       

      3.9           “Good
        Reason” shall have the meaning set forth in Section 5.4 of the
        Employment Agreement.

       

      3.10           “Incentive
        Compensation” shall have the meaning set forth in Section 2.2 of the
        Employment Agreement.

       

      3.11           “Notice
        of Termination” shall mean a written notice of termination of the
        Executive’s employment delivered by the Company to the Executive or by the
        Executive to the Company, as applicable, upon termination of the Executive’s
        employment with the Company which (a) sets forth the specific termination
        provision in this Agreement relied upon, (b) sets forth in reasonable
        detail the facts and circumstances claimed to provide a basis for termination
        of
        the Executive’s employment under the provision so indicated and (c)  sets
        forth the date the Executive’s employment with the Company shall
        terminate.

       

      3.12           “Person”
        shall have the meaning of “person” as used in Section 13(d) and
        14(d) of the Exchange Act, including a “group” as defined in such
        sections.

       

      3.13           “Salary”
        shall have the meaning set forth in Section 2.1(a) of the Employment
        Agreement.

       

      
        
          
          

        

        
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      3.14           “Termination
        Date” shall mean (a) in the case of the Executive’s death, his
        date of death, and (b) in all other cases, the date specified in the Notice
        of Termination.

       

      4.  Miscellaneous

       

      4.1.           Successors;
        Binding Agreement.

       

      (a)           This
        Agreement shall be binding upon and shall inure to the benefit of the Company,
        its successors (whether by purchase of assets, merger, consolidation or
        otherwise) to all or substantially all of the business and/or assets of the
        Company and its assigns, and the Company shall require any successors and
        assigns to expressly assume and agree to perform this Agreement in the same
        manner and to the same extent that the Company would be required to perform
        it
        if no such succession or assignment had taken place (including the obligation
        to
        cause any subsequent successor to also assume the obligations of this
        Agreement).  Neither this Agreement nor any right or interest
        hereunder shall be assignable or transferable by the Executive, his
        beneficiaries or legal representatives, except by will or by the laws of
        descent
        and distribution.  This Agreement shall inure to the benefit of and be
        enforceable by the Executive’s legal personal representative.  The
        duties and covenants of the Executive under this Agreement, being personal,
        may
        not be delegated.

       

      (b)           Nothing
        in this Section 4.1 is intended to require that a Person referred to in
        Section 3.5 as being the beneficial owner of shares of stock of the Company
        must assume the obligations under this Agreement as a result of such stock
        ownership.

       

      4.2           Non-Exclusivity
        of Rights; No Guaranteed Employment.

       

      (a)           Nothing
        in this Agreement shall prevent or limit the Executive’s continuing or future
        participation in any benefit, bonus, incentive or other plan or program provided
        by the Company and for which the Executive may qualify, nor shall anything
        herein limit or reduce such rights as the Executive may have under any other
        agreements with the Company, except as expressly stated therein.

       

      (b)           The
        Executive and the Company acknowledge that, except as may otherwise be provided
        under any other written agreement between the Executive and the Company,
        the
        employment of the Executive by the Company is “at will” and may be terminated by
        either the Executive or the Company at any time.

       

      4.3           Waiver.  The
        rights and remedies of the parties to this Agreement are cumulative and not
        alternative.  Neither the failure nor any delay by either party in
        exercising any right, power, or privilege under this Agreement will operate
        as a
        waiver of such right, power, or privilege, and no single or partial exercise
        of
        any such right, power, or privilege will preclude any other or further exercise
        of such right, power, or privilege or the exercise of any other right, power,
        or
        privilege.  To the maximum extent permitted by applicable law,
        (a) no claim or right arising out of this Agreement can be discharged by
        one party, in whole or in part, by a waiver or renunciation of the claim
        or
        right unless in writing signed by the other party; (b) no waiver that may
        be given by a party will be applicable except in the specific instance for
        which
        it is given; and (c) no notice to or demand on one party will be deemed to
        be a waiver of any obligation of such party or of the right of the party
        giving
        such notice or demand to take further action without notice or demand as
        provided in this Agreement.

       

      
        
          
          

        

        
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      4.4           Notices.  All
        notices, consents, waivers, and other communications under this Agreement
        must
        be in writing and will be deemed to have been duly given when (a) delivered
        by hand (with written confirmation of receipt), (b) sent by facsimile (with
        written confirmation of receipt), provided that a copy is mailed by registered
        mail, return receipt requested, within 24 hours thereafter, or (c) when
        received by the addressee, if sent by a nationally recognized overnight delivery
        service (receipt requested), in each case to the appropriate address and
        facsimile number set forth below (or to such other address and facsimile
        number
        as a party may designate by notice to the other party pursuant to the terms
        of
        this Section 4.4):

      

      If
        to the
        Executive:

      

      Joseph
        R.
        Simrell

      15
        Rue
        Cezanne

      Coto
        de
        Caza, California  92679

      Facsimile
        No. (949) 709-3957

      

      If
        to the
        Company:

      

      Primal
        Solutions, Inc.

      19732
        MacArthur Boulevard, Suite 100

      Irvine,
        California 92612

      Attention:  Chairman
        of the Compensation Committee

      Facsimile
        No.  (949) 260-1515

       

      4.5           Entire
        Agreement; Amendments.  This Agreement contains the entire
        agreement between the parties with respect to the subject matter hereof and
        supersedes all prior agreements and understandings, oral or written, between
        the
        parties hereto with respect to the subject matter hereof (including, without
        limitation, the Prior Agreement).  The parties acknowledge that no
        agreement or representations, oral or otherwise, express or implied, with
        respect to the subject matter hereof have been made by either party which
        are
        not expressly set forth in this Agreement.  This Agreement may not be
        amended orally, but only by an agreement in writing signed by the parties
        hereto.

       

      4.6           Arbitration
        of Disputes.

       

      (a)           Except
        as set forth in Section 4.6(b), arbitration shall be the sole and exclusive
        remedy for any dispute, claim, or controversy of any kind or nature (a “Claim”)
        arising out of, related to, or connected with this Agreement or the termination
        of the Executive’s employment relationship with the Company as a result of or in
        connection with a Change of Control.  This mutual agreement to
        arbitrate includes any Claim by the Executive against any parent, subsidiary,
        or
        affiliated entity of the Company, or any director, officer, general or limited
        partner, employee or agent of the Company or of any such parent, subsidiary
        or
        affiliated entity.  It also includes any claim against the Executive
        by the Company, or any parent, subsidiary or affiliated entity of the
        Company.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (b)           This
        Section 4.6 does not apply to any claims by Executive:  (1) for
        workers’ compensation benefits; (2) for unemployment insurance benefits; (3)
        under a benefit plan where the plan specifies a separate arbitration procedure;
        (4) filed with an administrative agency which are not legally subject to
        arbitration under this Agreement; or (5) which are otherwise expressly
        prohibited by law from being subject to arbitration under this
        Agreement.

       

      (c)           Any
        arbitration proceedings shall be conducted in Orange County,
        California.  Any Claim submitted to arbitration shall be decided by a
        single, neutral arbitrator (the “Arbitrator”).  The parties to the
        arbitration shall mutually select the Arbitrator not later than 45 days after
        service of the demand for arbitration.  If the parties for any reason
        do not mutually select the Arbitrator within the 45 day period, then any
        party
        may apply to any court of competent jurisdiction to appoint a retired judge
        as
        the Arbitrator.  The parties agree that arbitration shall be conducted
        in accordance with California Code of Civil Procedure sections 1280
etseq., including Code of Civil Procedure section 1283.05
        regarding discovery, except as modified in this Agreement.  The
        Arbitrator shall apply the substantive federal, state, or local law and statute
        of limitations governing any Claim submitted to arbitration.  In
        ruling on any Claim submitted to arbitration, the Arbitrator shall have the
        authority to award only such remedies or forms of relief as are provided
        for
        under the substantive law governing such Claim.  The Arbitrator shall
        issue a written decision revealing the essential findings and conclusions
        on
        which the decision is based.  Judgment on the Arbitrator’s decision
        may be entered in any court of competent jurisdiction.

       

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

       

      (e)           The
        Arbitrator, and not any federal or state court, shall have the exclusive
        authority to resolve any issue relating to the interpretation, formation
        or
        enforceability of this Agreement, or any issue relating to whether a Claim
        is
        subject to arbitration under this Agreement, except that any party may bring
        an
        action in any court of competent jurisdiction to compel arbitration in
        accordance with the terms of this Agreement.

       

      4.7           ERISA.  This
        Agreement is an unfunded compensation arrangement for a member of a select
        group
        of the Company’s management or that of its subsidiaries and any exemptions under
        the Employee Retirement Income Security Act of 1974, as amended, as applicable
        to such an arrangement shall be applicable to this Agreement.

       

      4.8           Headings;
        Construction.  The headings in this Agreement are provided for
        convenience only and will not affect its construction or
        interpretation.  All references to “Section” or “Sections” refer to
        the corresponding Section or Sections of this Agreement unless otherwise
        specified.  All words used in this Agreement will be construed to be
        of such gender or number as the circumstances require. Unless otherwise
        expressly provided, the word “including” does not limit the preceding words or
        terms.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      4.9           Severability.  If
        any provision of this Agreement is held invalid or unenforceable by any
        Arbitrator or court of competent jurisdiction, to the extent that the rights
        or
        obligations of the parties under this Agreement will not be materially and
        adversely effected thereby, the other provisions of this Agreement will remain
        in full force and effect.  Any provision of this Agreement held
        invalid or unenforceable only in part or degree will remain in full force
        and
        effect to the extent not held invalid or unenforceable.

       

      4.10.                      Counterparts.  This
        Agreement may be executed in counterparts, each of which will be deemed to
        be an
        original copy of this Agreement and all of which, when taken together, will
        be
        deemed to constitute one and the same agreement.

       

      4.11           Governing
        Law.  This Agreement shall be governed by and construed in
        accordance with the laws of the State of California applicable to contracts
        entered into and wholly to be performed within the State of
        California.

       

      4.12           Further
        Assurances.  Each party shall execute such further instruments as
        the other party may reasonably request in order to carry out the provisions
        of
        this Agreement.

       

       

      [Remainder
        of This Page Intentionally Left Blank]

      
        
          
          

        

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

       

       

      
        	 	THE
                EXECUTIVE 	 
	 	 	 
	 	                                            
                 	 
	 	 Joseph
                R. Simrell                	 
	 	 	 
	 	 	 
	 	THE
                COMPANY	 
	 	 	 
	 	PRIMAL
                SOLUTIONS, INC.,
                a
                  Delaware corporation

              	 
	 	 	 
	 	By:
                	 
	 	 	 
	 	Name:    	 
	 	 	 
	 	Title:	 

      

      

       

      
        
          
          

        

        
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