Exhibit 10.58

[Logo]

July 20, 2004

Mr. Ken
Saunders
30862 Steeplechase Drive
San Juan Capistrano, CA 92675

Dear
Ken:

On
behalf of Peregrine Systems, Inc. ("Peregrine" or "PSI") we would like to offer you the position, effective August 16, 2004 (the "Commencement Date"), of Executive Vice
President, reporting to John Mutch, President and Chief Executive Officer. In this capacity, you will provide financial guidance and direction to me and the finance department staff, subject to the
terms and conditions described below. Additionally, effective on the earlier of (i) October 1, 2004 or (ii) the resignation of Ken Sexton as Peregrine's Chief Financial Officer,
you will become the Executive Vice President and Chief Financial Officer.

1.BASE SALARY.Your starting salary will be $14,583.34 per semi-monthly pay period effective with
your Commencement Date.

2.EMPLOYMENT TERM.The term of your employment under this letter agreement (the "Employment Term") will begin
on your Commencement Date and end when it is terminated in accordance with Section 6.

3.BONUS.(a)MICP.You will be
eligible to participate in Peregrine's Management Incentive Compensation Plan (MICP) with an annual target for fiscal year 2005 of $150,000, prorated from your hire date. A copy of the summary plan
description is attached.



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4.BENEFITS.You will be eligible to participate in PSI's employee benefit plans of general application,
including, without limitation, those plans covering medical, disability and life insurance in accordance with the rules established for individual participation in any such plan and under applicable
law. You
will be eligible for vacation and sick leave ("PTO") in accordance with PSI polices in effect during the term of this letter agreement and will receive such other benefits as PSI generally provides to
its other employees of comparable position and experience.

5.EQUITY-BASED AWARDS.



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6.TERMINATION.Your employment with PSI may be terminated by you or by PSI at any time for any reason as
follows:



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For
purposes of this letter agreement, the term "Disability" shall mean your inability to perform your job responsibilities for a period of 180 consecutive days or 180 days in the
aggregate in any 12-month period. For purposes of this letter agreement, "Cause" means (i) gross negligence or willful misconduct in the performance of your duties to PSI (other
than as a result of a Disability); (ii) repeated and continued failure to perform your duties and responsibilities as a PSI employee (including but not limited to your compliance with any
written policy of PSI) in good faith after having a reasonable opportunity to cure such failure following written notice of such failure; (iii) commission of any act of fraud or violation of
any federal or state securities laws or any SEC rules and regulations with respect to PSI; or (iv) conviction of a felony or a crime involving moral turpitude if such felony or crime caused
material harm to the business and affairs of PSI in the reasonable
determination of PSI's Board of Directors. No act or failure to act by you shall be considered "willful" if done or omitted by you in good faith with reasonable belief that your action or omission was
in the best interests of PSI. For purposes of this letter agreement, "Good Reason" shall mean (i) a significant reduction of your duties, title, position or responsibilities relative to your
duties, title, position or responsibilities in effect immediately prior to such reduction (including a material change in your reporting structure, which shall include, but not be limited to, your no
longer reporting to the President and Chief Executive Officer) that is effected without your consent or agreement; (ii) a substantial reduction, without a reasonable business reasons, of the
facilities or perquisites available to you immediately prior to such reduction if such reduction is effected without your consent or agreement; (iii) a reduction by PSI of your base salary and
target bonus as in effect immediately prior to such reduction if such reduction is effected without your consent or agreement (other than any such reduction that is effected on substantially a
company-wide basis in order to reduce PSI's operating expenses); or (iv) the relocation of your primary office at PSI to a facility or location that is more than fifty
(50) miles away from your primary office location immediately prior to such relocation, if such relocation is effected without your consent or agreement.

7.SEPARATION BENEFITS.Upon termination of your employment with PSI for any reason, you will receive payment
for all salary and earned but unused PTO accrued to the date of your termination of employment in addition to any payment that you are entitled to receive in respect of your Units. Your benefits will
be continued under PSI's then existing benefit plans and policies for so long as provided under the terms of such plans and policies and as required by applicable law. Under certain circumstances, you
will also be entitled to receive severance benefits as set forth below, but you will not be entitled to any other compensation, award or damages with respect to your employment or termination.



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8.280G PAYMENT.



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9.RELEASE.You agree that the severance payments you may be entitled to upon Termination without Cause or
Termination for Good Reason or the payments you may be entitled to upon a Change of Control will not apply unless you (i) have executed a general release (in a form customarily used by PSI) of
all known and unknown claims that you may then have against PSI and/or persons or entities affiliated with PSI, (ii) have agreed not to prosecute or bring any legal action or other proceeding
based upon any of such claims and (iii) have agreed to provide transition assistance to PSI (or the surviving corporation) as requested and without further compensation for 3 months
following the termination of employment.

10.CONFIDENTIALITY; NONSOLICITATION.In light of the fact that the confidential information that you have
acquired, and will acquire, is inextricably bound with your knowledge regarding the conduct of PSI's business activities, you agree that during the Employment Term, and for a period of one year
thereafter, you will not provide any services, whether as an officer, director, proprietor, employee, partner, consultant, advisor, agent, sales representative or otherwise, nor will you own
beneficially securities of any entity (except that, in the case of any entity whose equity securities are publicly-held, you may beneficially own up to 2% of the outstanding equity
securities of such entity or any mutual fund holding securities of such entity) that, directly, competes with any of PSI's "Business" activities through the date of your termination of employment.
PSI's Business is defined as service management software solutions that help global IT organizations get control of their service operations by reducing change risk, identifying root causes of service
interruptions and automating requests for routine services. Further, you agree that IBM, HP, BMC and Mercury Interactive are direct competitors of PSI for purposes of this agreement. You further agree
that in light of the nature of PSI's business, and the life-cycle of product development, the one-year period provided for above shall apply regardless of the nature or reason
for your termination and that it is reasonable and necessary in order to protect the confidential, proprietary and trade-secret information that you will acquire as a result of being the Executive
Vice President of PSI. Notwithstanding the foregoing, such restrictions shall not preclude you from providing any services to a distinct business unit of an entity if such unit does not compete with
PSI's business activities, regardless of whether any other distinct business unit of

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such
entity competes with PSI's business activities. You also, further and independently, agree that during your employment with PSI, and for a period of one (1) year after termination of your
employment with PSI, you will not for any reason, whether directly or indirectly: (a) solicit, recruit, take away or attempt to take away, any employee or consultant of PSI or any of its
affiliates, or induce (or attempt to induce) any employee or consultant of PSI or any of its affiliates to terminate his or its employment or services with PSI or any of PSI's affiliates; or
(b) use any confidential or proprietary information of PSI or any of its affiliates to, directly or indirectly, solicit any customer of PSI or any of its affiliates or induce any customer of
PSI or its affiliates to terminate its relationship with PSI or any PSI affiliate; provided, however, that this non-solicitation provision shall not prevent you from hiring any employee or
consultant of PSI or any of its affiliates that you can demonstrate either (i) approached you independently without any prior direct or indirect solicitation or encouragement by you or on your
part, or (ii) replied to a solicitation made to the general public without any direct or indirect solicitation or encouragement by you or on your part.

12.WITHHOLDING TAXES.All compensation that is payable to you by PSI shall be subject to applicable withholding
taxes. The Compensation Committee, in its discretion, may either withhold such taxes from any amount payable to you or may require you to pay such amount by cash or certified cashiers' check.

13.GOVERNING LAW.This letter agreement will be governed by the internal laws of the State of California
without reference to its conflict of laws provisions.

14.ARBITRATION



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15.ENTIRE AGREEMENT.This letter agreement, your stock option agreement, your performance stock unit agreement
and your employee invention assignment and confidentiality agreement with PSI contain the entire agreement and understanding of the parties with respect to the subject mature hereof. Except as
provided in this letter agreement, no other agreements, representations or understandings (whether oral or written and whether expressed or implied) which are not expressly set forth in this letter
agreement have been made or entered into by either party with respect to the subject matter hereof.

16.SUCCESSORS AND ASSIGNS.This letter agreement will be binding upon you (and your successors, heirs and
assigns) and any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of PSI's business and/or assets. For
all purposes of this letter agreement, the term "PSI" shall include any successor to PSI's business and/or asserts which becomes bound by this letter agreement.

We
look forward to your continued contributions as part of the PSI team.

|                                                    |  |              |  | Sincerely yours,                                
|--------------------------------------------------- |  | ------------ |  | ------------------------------------------------
|                                                    |  |              |  | John Mutch
President and Chief Executive Officer
|By signing this letter, I am agreeing to the above:
|Signature:                                          |  |              |  |                                                 
|                                                    |  | Ken Saunders |  |                                                 

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