<PAGE>

                                   CREDIT AGREEMENT

     THIS AGREEMENT is entered into as of July 1, 1997, by and between PEREGRINE
SYSTEMS, INC., a Delaware corporation ("Borrower"), and WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Bank").


                                       RECITAL

     Borrower has requested from Bank the credit accommodations described below
(each, a "Credit" and collectively, the "Credits"), and Bank has agreed to
provide the Credits to Borrower on the terms and conditions contained herein.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Bank and Borrower hereby agree as follows:


                                      ARTICLE I
                                     THE CREDITS

     SECTION 1.1.   LINE OF CREDIT.

     (a)  LINE OF CREDIT.  Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including July 31, 1998, not to exceed at any time the aggregate
principal amount of Five Million  Dollars ($5,000,000.00) ("Line of Credit"),
the proceeds of which shall be used for working capital purposes.  Borrower's
obligation to repay advances under the Line of Credit shall be evidenced by a
promissory note substantially in the form of Exhibit A attached hereto ("Line of
Credit Note"), all terms of which are incorporated herein by this reference.

     (b)  LETTER OF CREDIT SUBFEATURE.  As a subfeature under the Line of
Credit, Bank agrees from time to time during the term thereof to issue Standby
letters of credit for the account of Borrower to finance inventory purchases
(each, a "Letter of Credit" and collectively, "Letters of Credit"); provided
however, that the form and substance of each Letter of Credit shall be subject
to approval by Bank, in its sole discretion; and provided further, that the
aggregate undrawn amount of all outstanding Letters of Credit shall not at any
time exceed Five Hundred Thousand Dollars ($500,000.00).  Each Letter of Credit
shall be issued for a term not to exceed three hundred sixty-five (365) days, as
designated by Borrower; provided however, that no Letter of Credit shall have an
expiration date subsequent to the maturity date of the Line of Credit.  The
undrawn amount of all Letters of Credit shall be reserved under the Line of
Credit and shall not be available for borrowings thereunder.  Each Letter of

<PAGE>

Credit shall be subject to the additional terms and conditions of the Letter of
Credit Agreement and related documents, if any, required by Bank in connection
with the issuance thereof (each, a "Letter of Credit Agreement" and
collectively, "Letter of Credit Agreements").  Each draft paid by Bank under a
Letter of Credit shall be deemed an advance under the Line of Credit and shall
be repaid by Borrower in accordance with the terms and conditions of this
Agreement applicable to such advances; provided however, that if advances under
the Line of Credit are not available, for any reason, at the time any draft is
paid by Bank, then Borrower shall immediately pay to Bank the full amount of
such draft, together with interest thereon from the date such amount is paid by
Bank to the date such amount is fully repaid by Borrower, at the rate of
interest applicable to advances under the Line of Credit.  In such event
Borrower agrees that Bank, in its sole discretion, may debit any demand deposit
account maintained by Borrower with Bank for the amount of any such draft.

     (c)  BORROWING AND REPAYMENT.  Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above.

     SECTION 1.2.   FOREIGN EXCHANGE FACILITY.

     (a)  FOREIGN EXCHANGE FACILITY.  Subject to the terms and conditions of
this Agreement, Bank hereby agrees to make available to Borrower a facility (the
"Foreign Exchange Facility") under which Bank, from time to time up to and
including June 30, 1998, will enter into foreign exchange contracts for the
account of Borrower for the purchase and/or sale by Borrower in United States
dollars of Two Million; provided however, that the maximum amount of all
outstanding foreign exchange contracts shall not at any time exceed an aggregate
of Ten Million United States Dollars (US$10,000,000.00).  No foreign exchange
contract shall be executed for a term in excess of twelve  (12) months or for a
term which extends beyond July 31, 1998.  Borrower shall have a "Delivery Limit"
under the Foreign Exchange Facility not to exceed at any time the aggregate
principal amount of Two Million United States Dollars (US$2,000,000.00), which
Delivery Limit reflects the maximum principal amount of Borrower's foreign
exchange contracts which may mature during any two (2) day period.  All foreign
exchange transactions shall be subject to the additional terms of a Foreign
Exchange Agreement, substantially in the form of Exhibit B attached hereto
("Foreign Exchange Agreement"), all terms of which are incorporated herein by
this reference.

<PAGE>

     (b)  SETTLEMENT.  Each foreign exchange contract under the Foreign Exchange
Facility shall be settled on its maturity date by Bank's debit to any demand
deposit account maintained by Borrower with Bank.

     SECTION 1.3.   INTEREST/FEES.

     (a)  INTEREST.  The outstanding principal balance of the Line of Credit
shall bear interest at the rate of interest set forth in the Line of Credit
Note.

     (b)  COMPUTATION AND PAYMENT.  Interest shall be computed on the basis of a
360-day year, actual days elapsed.  Interest shall be payable at the times and
place set forth in the Line of Credit Note.

     (c)  COMMITMENT FEE.  Borrower shall pay to Bank a non-refundable
commitment fee for the Line of Credit equal to Five Thousand Dollars
($5,000.00), which fee shall be due and payable in full upon the execution of
this Agreement.

     (d)  LETTER OF CREDIT FEES.  Borrower shall pay to Bank (i) fees upon the
issuance of each Letter of Credit equal to one percent (1%) per annum (computed
on the basis of a 360-day year, actual days elapsed) of the face amount thereof,
and (ii) fees upon the payment or negotiation by Bank of each draft under any
Letter of Credit and fees upon the occurrence of any other activity with respect
to any Letter of Credit (including without limitation, the transfer, amendment
or cancellation of any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.


     SECTION 1.4.   COLLECTION OF PAYMENTS.  Borrower authorizes Bank to collect
all interest and fees due under each Credit by charging Borrower's demand
deposit account number 4905-015277 with Bank, or any other demand deposit
account maintained by Borrower with Bank, for the full amount thereof.  Should
there be insufficient funds in any such demand deposit account to pay all such
sums when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.

     SECTION 1.5.   COLLATERAL.

     As security for all indebtedness of Borrower to Bank Borrower hereby grants
to Bank security interests of first priority in all Borrower's accounts
receivable and other rights to payment [other than accounts sold to Sanwa
Business Credit pursuant to Purchase Agreement dated June 27, 1997, (the
"Purchase Agreement") with recourse to Borrower limited to warranty claims -
"Sold Accounts"], general intangibles, inventory and equipment.

<PAGE>

     All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds of trust and other documents as
Bank shall reasonably require, all in form and substance satisfactory to Bank.
Borrower shall reimburse Bank immediately upon demand for all costs and expenses
incurred by Bank in connection with any of the foregoing security, including
without limitation, filing and recording fees and costs of audits.  Bank shall,
on the date of execution of this Agreement, provide Borrower with a written
estimate of all such costs and expenses incurred up to the date of execution of
this Agreement.


                                      ARTICLE II
                            REPRESENTATIONS AND WARRANTIES

     Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.

     SECTION 2.1.   LEGAL STATUS.  Borrower is a corporation, duly organized and
existing and in good standing under the laws of the state of Delaware, and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.

     SECTION 2.2.   AUTHORIZATION AND VALIDITY.  This Agreement, the Notes, and
each other document, contract and instrument required hereby or at any time
hereafter delivered to Bank in connection herewith (collectively, the "Loan
Documents") have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which executes the same,
enforceable in accordance with their respective terms.

     SECTION 2.3.   NO VIOLATION.  The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in any breach of or default under any contract,
obligation, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound.

     SECTION 2.4.   LITIGATION.  There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any

<PAGE>

governmental authority, arbitrator, court or administrative agency which could
have a material adverse effect on the financial condition or operation of
Borrower other than those disclosed by Borrower to Bank in writing prior to the
date hereof.

     SECTION 2.5.   CORRECTNESS OF FINANCIAL STATEMENT.  The financial statement
of Borrower dated March 31, 1997, a true copy of which has been delivered by
Borrower to Bank prior to the date hereof, (a) is complete and correct and
presents fairly the financial condition of Borrower, (b) discloses all
liabilities of Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied.  Since the date
of such financial statement there has been no material adverse change in the
financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a
security interest in or otherwise encumbered any of its assets or properties
except in favor of Bank, as otherwise permitted by Bank in writing; or as
otherwise permitted under this Agreement.

     SECTION 2.6.   INCOME TAX RETURNS.  Borrower has no knowledge of any
pending assessments or adjustments of its income tax payable with respect to any
year.

     SECTION 2.7.   NO SUBORDINATION.  There is no agreement, indenture,
contract or instrument to which Borrower is a party or by which Borrower may be
bound that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.

     SECTION 2.8.   PERMITS, FRANCHISES.  Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance with applicable law.

     SECTION 2.9.   ERISA.  Borrower is in compliance in all material respects
with all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"); Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no
Reportable Event as defined in ERISA has occurred and is continuing with respect
to any Plan initiated by Borrower; Borrower has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the

<PAGE>

Plan documents and under generally accepted accounting principles.

     SECTION 2.10.  OTHER OBLIGATIONS.  Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.

     SECTION 2.11.  ENVIRONMENTAL MATTERS.  Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower is in compliance in all
material respects with all applicable federal or state environmental, hazardous
waste, health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time.  None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.


                                     ARTICLE III
                                      CONDITIONS

     SECTION 3.1.   CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The obligation
of Bank to grant any of the Credits is subject to the fulfillment to Bank's
satisfaction of all of the following conditions:

     (a)  APPROVAL OF BANK COUNSEL.  All legal matters incidental to the
granting of each of the Credits shall be satisfactory to Bank's counsel.

     (b)  DOCUMENTATION.  Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed:

    (i)        This Agreement and the Notes.
    (ii)       Secretary's Certificate.
    (iii)      Certificate of Incumbency.
    (iv)       Articles of Incorporation.
    (v)        Foreign Exchange Agreement.
    (vi)       Security Agreement: Equipment.

<PAGE>

    (vii)      Continuing Security Agreement: Rights to Payment and
               Inventory.
    (viii)     UCC Financing Statement.
    (ix)       Such other documents as Bank may require under any
               other Section of this Agreement.

    (c)  FINANCIAL CONDITION.  There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower or any guarantor hereunder, nor any material decline, as determined by
Bank, in the market value of any collateral required hereunder or a substantial
or material portion of the assets of Borrower or any such guarantor.

    (d)  INSURANCE.  Borrower shall have delivered to Bank evidence of
insurance coverage on all Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank, and where required
by Bank, with Bank named as additional insured.

    SECTION 3.2.   CONDITIONS OF EACH EXTENSION OF CREDIT.  The obligation of
Bank to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:

     (a)  COMPLIANCE.  The representations and warranties contained herein and
in each of the other Loan Documents shall be true on and as of the date of the
signing of this Agreement and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
Event of Default as defined herein, and no condition, event or act which with
the giving of notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall exist.

     (b)  DOCUMENTATION.  Bank shall have received all additional documents
which may be required in connection with such extension of credit.


                                      ARTICLE IV
                                AFFIRMATIVE COVENANTS

     Borrower covenants that so long as Bank remains committed to extend credit
to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

<PAGE>

     SECTION 4.1.   PUNCTUAL PAYMENTS.  Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein.

     SECTION 4.2.   ACCOUNTING RECORDS.  Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representative of Bank, at any reasonable time, to inspect, audit
and examine such books and records, to make copies of the same, and to inspect
the properties of Borrower.

     SECTION 4.3.   FINANCIAL STATEMENTS.  Provide to Bank all of the following,
in form and detail satisfactory to Bank:

     (a)  not later than 90 days after and as of the end of each fiscal year, a
an audited financial statement of Borrower, prepared by a certified public
accountant acceptable to Bank, to include a balance sheet, income statement,
statement of cash flow, together with all supporting schedules and footnotes;

     (b)  not later than 45 days after and as of the end of each fiscal quarter,
a financial statement of Borrower, prepared by Borrower, to include a balance
sheet and income statement;

     (c)  not later than 30 days prior to fiscal year end, company prepared
financial budgets;

     (d)  not later than fifteen (15) days after the end of each month, a
report, signed by Borrower's controller, disclosing all sales of Sold Accounts
under the Purchase Agreement, the gross amount of Sold Accounts and the net
sales proceeds received by Borrower (or the fact that there were no sales)
during the month just ended;

     (e) not later than fifteen (15) days after and as of the end of each month,
a "flash" report of the company's total sales for the month then ended;

     (f) from time to time such other information as Bank may reasonably
request.

     SECTION 4.4.   COMPLIANCE.  Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower and/or its business.

<PAGE>

     SECTION 4.5.   INSURANCE.  Maintain and keep in force insurance of the
types and in amounts customarily carried in lines of business similar to that of
Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank's request schedules setting forth all
insurance then in effect.

     SECTION 4.6.   FACILITIES.  Keep all properties useful or necessary to
Borrower's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.

     SECTION 4.7.   TAXES AND OTHER LIABILITIES.  Pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction, for eventual payment thereof in the
event Borrower is obligated to make such payment.

     SECTION 4.8.   LITIGATION.  Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower which could have a material
adverse effect on the financial condition or operations of Borrower.

     SECTION 4.9.   FINANCIAL CONDITION.  Maintain Borrower's financial
condition as follows using generally accepted accounting principles consistently
applied and used consistently with prior practices (except to the extent
modified by the definitions herein):

     (a)  Tangible Net Worth not at any time less than $15,000,000.00, plus 100%
of net income in each fiscal quarter, with a deduction for expensed research and
development costs acquired in connection with mergers and acquisitions,
commencing with fiscal quarter ending September 30, 1997 (with no deduction for
losses), with "Tangible Net Worth" defined as equity less treasury stock and
less intangibles.  For purposes of defining Tangible Net Worth, intangibles
shall include deferred tax benefits and shall exclude acquired capitalized
research and development costs arising as a result of mergers or acquisitions.

     (b)  Total Liabilities divided by Tangible Net Worth not at any time
greater than 1.5 to 1.0, with "Total Liabilities" defined as the aggregate of
current liabilities and non-current liabilities less subordinated debt, and with
"Tangible Net Worth" as defined above.

<PAGE>

     (c)  Quick Ratio not at any time less than 1.25 to 1.0, with "Quick Ratio"
defined as the aggregate of unrestricted cash, unrestricted marketable
securities and receivables convertible into cash divided by total current
liabilities.

     (d)  Net income after taxes not less than $1.00 on an annual basis,
determined as of each fiscal year end, and pre-tax profit not less than $1.00 on
a quarterly basis, determined as of each fiscal quarter end.

     (e)  Total Funded Debt to trailing four quarters EBITDA of not greater than
1.0 to 1.0, determined as of each fiscal quarter end, with "Funded Debt" defined
as the aggregate amount of all outstanding indebtedness of Borrower, excluding
accruals and trade payables and current liabilities incurred in the ordinary
course of business, and with "EBITDA" defined as net profit, plus interest,
income taxes, depreciation and amortization.


     SECTION 4.10.  NOTICE TO BANK.  Promptly (but in no event more than five
(5) days after the occurrence of each such event or matter) give written notice
to Bank in reasonable detail of:  (a) the occurrence of any Event of Default, or
any condition, event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default; (b) any change in the name or
the organizational structure of Borrower; (c) the occurrence and nature of any
Reportable Event or Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain, or
any uninsured or partially uninsured loss through liability or property damage,
or through fire, theft or any other cause affecting Borrower's property.


                                      ARTICLE V
                                  NEGATIVE COVENANTS

     Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's prior written
consent:

     SECTION 5.1.   USE OF FUNDS.  Use any of the proceeds of any of the Credits
except for the purposes stated in Article I hereof.

     SECTION 5.2.   CAPITAL EXPENDITURES.  Make any additional investment in
fixed assets in any fiscal year in excess of an aggregate of $2,000,000.00.

<PAGE>

     SECTION 5.3.   LEASE EXPENDITURES.  Incur new operating lease expense in
any fiscal year in excess of an aggregate of $1,000,000.00.

     SECTION 5.4.   OTHER INDEBTEDNESS.  Create, incur, assume or permit to
exist any indebtedness or liabilities resulting from borrowings, loans or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
(b) any other liabilities of Borrower existing as of, and disclosed to Bank
prior to, the date hereof, (c) to the extent not included in clause (b),
indebtedness incurred in the ordinary course of business for the purpose of
purchasing equipment and/or real estate not to exceed $2,000,000.00 outstanding
at any time,  (d) subordinated indebtedness pursuant to subordination agreements
in form and content acceptable to Bank,  (e) indebtedness assumed in connection
with mergers and consolidations permitted  under Section 5.5, provided that
Borrower retire or refinance with Bank such indebtedness within 90 days of any
such merger or consolidation, and (f) extensions, modifications, refinancings
and refundings of the foregoing (subject to the restriction set forth in clause
(e)), so long as the maximum principal amount is not increased.

     SECTION 5.5.   MERGER, CONSOLIDATION.  Merge into or consolidate with any
other entity unless (i) Borrower is the surviving entity, and (ii) no violation
of this Agreement exists at the time of or would exist after such merger or
consolidation; make any substantial change in the nature of Borrower's business
as conducted as of the date hereof; acquire all or substantially all of the
assets of any other entity except to the extent set forth in the last sentence
of this Section. Borrower shall not pay more than an aggregate of $10,000,000.00
during the term of the Line of Credit (in addition to payment in the form of its
equity securities) for all mergers with and acquisitions of stock in and/or all
or substantially all of the assets of other entities during such term.

     SECTION 5.6.   LOANS, ADVANCES, INVESTMENTS.  Make any loans or advances to
or investments in any person or entity, except (a) any of the foregoing existing
as of, and disclosed to Bank prior to, the date hereof, (b) to the extent not
included in clause (a), loans or advances in amounts not to exceed an aggregate
of $100,000.00 outstanding at any one time, and (c) investments by means
of acquisitions of stock of other entities, subject to the last sentence of
Section 5.5 hereof.

     SECTION 5.7    TRANSFER OF ASSETS. Not sell, lease, transfer or otherwise
dispose of all or a substantial or material portion of Borrower's assets except
in the ordinary course of its business, and except for sales under the Purchase
Agreement at such time(s) that no Event of Default exists under this

<PAGE>

Agreement, each of which sale shall not exceed 25% of Borrower's total accoounts
at the time of such sale.


                                      ARTICLE VI
                                  EVENTS OF DEFAULT

     SECTION 6.1.   The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:

     (a)  Borrower shall fail to pay when due any principal, interest, fees or
other amounts payable under any of the Loan Documents.

     (b)  Any financial statement or certificate furnished to Bank in connection
with, or any representation or warranty made by Borrower or any other party
under this Agreement or any other Loan Document shall prove to be incorrect,
false or misleading in any material respect when furnished or made.

     (c)  Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those referred to in subsections (a) and (b) above), and with
respect to any such default which by its nature can be cured, such default shall
continue for a period of twenty (20) days from its occurrence.

     (d)  Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract or instrument (other
than any of the Loan Documents) pursuant to which Borrower has incurred any debt
or other liability to any person or entity, including Bank.

     (e)  The filing of a notice of judgment lien against Borrower; or the
recording of any abstract of judgment against Borrower in any county in which
Borrower has an interest in real property; or the service of a notice of levy
and/or of a writ of attachment or execution, or other like process, against the
assets of Borrower; or the entry of a judgment against Borrower.

     (f)  Borrower shall become insolvent, or shall suffer or consent to or
apply for the appointment of a receiver, trustee, custodian or liquidator of
itself or any of its property, or shall generally fail to pay its debts as they
become due, or shall make a general assignment for the benefit of creditors;
Borrower shall file a voluntary petition in bankruptcy, or seeking
reorganization, in order to effect a plan or other arrangement with creditors or
any other relief under the Bankruptcy Reform Act, Title 11 of the United States
Code, as amended or recodified from time to time ("Bankruptcy Code"), or under
any state or federal law granting relief to debtors, whether now or hereafter in
effect; or any involuntary petition or proceeding pursuant to the Bankruptcy
Code or any other

<PAGE>

applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower, or Borrower shall
file an answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition; or Borrower shall be adjudicated a
bankrupt, or an order for relief shall be entered against Borrower by any court
of competent jurisdiction under the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or other relief for
debtors.

     (g)  There shall exist or occur any event or condition which Bank in good
faith believes impairs, or is substantially likely to impair, the prospect of
payment or performance by Borrower of its obligations under any of the Loan
Documents.

     (h)  The dissolution or liquidation of Borrower; or any of its directors,
stockholders or members, shall take action seeking to effect the dissolution or
liquidation of Borrower.

     SECTION 6.2.   REMEDIES.  Upon the occurrence of any Event of Default:
(a) all indebtedness of Borrower under each of the Loan Documents, any term
thereof to the contrary notwithstanding, shall at Bank's option and, without
notice in case of an Event of Default under Section 6.1(f), and upon 5 calendar
days' prior written notice in all other cases, become immediately due and
payable without presentment, demand, protest or notice of dishonor, all of which
are hereby expressly waived by each Borrower; (b) the obligation, if any, of
Bank to extend any further credit under any of the Loan Documents shall
immediately cease and terminate; and (c) Bank shall have all rights, powers and
remedies available under each of the Loan Documents, or accorded by law,
including without limitation the right to resort to any or all security for any
of the Credits and to exercise any or all of the rights of a beneficiary or
secured party pursuant to applicable law.  All rights, powers and remedies of
Bank may be exercised at any time by Bank and from time to time after the
occurrence of an Event of Default, are cumulative and not exclusive, and shall
be in addition to any other rights, powers or remedies provided by law or
equity.


                                     ARTICLE VII
                                    MISCELLANEOUS

     SECTION 7.1.   NO WAIVER.  No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy.  Any waiver, permit, consent or approval of any
kind by Bank of any breach of

<PAGE>

or default under any of the Loan Documents must be in writing and shall be
effective only to the extent set forth in such writing.

     SECTION 7.2.   NOTICES.  All notices, requests and demands which any party
is required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

              BORROWER:  Peregrine Systems, Inc.
                         12670 High Bluff Drive
                         San Diego, CA 92130
                         Attention:  Chief Financial Officer

              BANK:      WELLS FARGO BANK, NATIONAL ASSOCIATION
                         401 B street, Suite 2201
                         San Diego, CA 92101

or to such other address as any party may designate by written notice to all
other parties.  Each such notice, request and demand shall be deemed given or
made as follows:  (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

     SECTION 7.3.   COSTS, EXPENSES AND ATTORNEYS' FEES.  Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
Agreement and the other Loan Documents not to exceed a maximum of $2000.00,
Bank's continued administration hereof and thereof, and the preparation of any
amendments and waivers hereto and thereto, (b) the enforcement of Bank's rights
and/or the collection of any amounts which become due to Bank under any of the
Loan Documents, and (c) the prosecution or defense of any action in any way
related to any of the Loan Documents, including without limitation, any action
for declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity.

     SECTION 7.4.   SUCCESSORS, ASSIGNMENT.  This Agreement shall be binding
upon and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent.  Bank reserves the right to sell, assign, transfer,

<PAGE>

negotiate or grant participations in all or any part of, or any interest in,
Bank's rights and benefits under each of the Loan Documents.  In connection
therewith, Bank may disclose all documents and information which Bank now has or
may hereafter acquire relating to any of the Credits, Borrower or its business,
or any collateral required hereunder.

     SECTION 7.5.   ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other
Loan Documents constitute the entire agreement between Borrower and Bank with
respect to the Credits and supersede all prior negotiations, communications,
discussions and correspondence concerning the subject matter hereof.  This
Agreement may be amended or modified only in writing signed by each party
hereto.  In the event of a conflict between the terms of this Agreement and any
other Loan Document, the terms of this Agreement shall prevail.

     SECTION 7.6.   NO THIRD PARTY BENEFICIARIES.  This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.

     SECTION 7.7.   TIME.  Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.

     SECTION 7.8.   SEVERABILITY OF PROVISIONS.  If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.

     SECTION 7.9.   COUNTERPARTS.  This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which when taken together shall constitute one and the
same Agreement.

     SECTION 7.10.  GOVERNING LAW.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

     SECTION 7.11.  ARBITRATION.

     (a)  ARBITRATION.  Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this Agreement.  A "Dispute" shall mean any action, dispute,
claim or controversy of any kind, whether in contract or tort, statutory or
common law, legal or equitable, now existing or hereafter arising under or in

<PAGE>

connection with, or in any way pertaining to, any of the Loan Documents, or any
past, present or future extensions of credit and other activities, transactions
or obligations of any kind related directly or indirectly to any of the Loan
Documents, including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other remedies
pursuant to any of the Loan Documents.  Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute.  Any party who
fails or refuses to submit to arbitration following a lawful demand by any other
party shall bear all costs and expenses incurred by such other party in
compelling arbitration of any Dispute.

     (b)  GOVERNING RULES.  Arbitration proceedings shall be administered by the
American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules.  All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents.  The arbitration shall be conducted at a location in California
selected by the AAA or other administrator.  If there is any inconsistency
between the terms hereof and any such rules, the terms and procedures set forth
herein shall control.  All statutes of limitation applicable to any Dispute
shall apply to any arbitration proceeding.  All discovery activities shall be
expressly limited to matters directly relevant to the Dispute being arbitrated.
Judgment upon any award rendered in an arbitration may be entered in any court
having jurisdiction; provided however, that nothing contained herein shall be
deemed to be a waiver by any party that is a bank of the protections afforded to
it under 12 U.S.C. Section 91 or any similar applicable state law.

     (c)   NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE.  No
provision hereof shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding.  The exercise of any such remedy shall not waive the right of any
party to compel arbitration or reference hereunder.

     (d)  ARBITRATOR QUALIFICATIONS AND POWERS; AWARDS.  Arbitrators must be
active members of the California State Bar or retired judges of the state or
federal judiciary of California, with expertise in the substantive laws
applicable to the subject matter of the Dispute.  Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing.  Arbitrators (i) shall resolve all

<PAGE>

Disputes in accordance with the substantive law of the state of California, (ii)
may grant any remedy or relief that a court of the state of California could
order or grant within the scope hereof and such ancillary relief as is necessary
to make effective any award, and (iii) shall have the power to award recovery of
all costs and fees, to impose sanctions and to take such other actions as they
deem necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law.  Any Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses).  By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000.  Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.

     (e)  JUDICIAL REVIEW.  Notwithstanding anything herein to the contrary, in
any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law.  In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the grounds referred
to in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
California.  Judgment confirming an award in such a proceeding may be entered
only if a court determines the award is supported by substantial evidence and
not based on legal error under the substantive law of the state of California.

     (f)  REAL PROPERTY COLLATERAL; JUDICIAL REFERENCE.  Notwithstanding
anything herein to the contrary, no Dispute shall be submitted to arbitration if
the Dispute concerns indebtedness secured directly or indirectly, in whole or in
part, by any real property unless (i) the holder of the mortgage, lien or
security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that might accrue to them by virtue of the single action rule statute of
California, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such

<PAGE>

indebtedness and obligations, shall remain fully valid and enforceable.  If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638.  A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA's selection procedures.  Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.

     (g)  MISCELLANEOUS.  To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA.  No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein.  If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control.  This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.

                                                 WELLS FARGO BANK,
PEREGRINE SYSTEMS, INC.                             NATIONAL ASSOCIATION


By: /s/ Alan H. Hunt                             By: /s/ Christopher L. Snider
    -----------------------                          -------------------------
    Alan H. Hunt                                     Christopher L. Snider
    President/                                       Relationship Manager
    Chief Executive Officer