Exhibit 10.3  PEREGRINE
SYSTEMS, INC.  1997
DIRECTOR OPTION PLAN  (As Amended January 18, 2000 and Effective April 8,
1997)  1.Purposes of the Plan.  The
purposes of this 1997 Director Option Plan are to attract and retain the best
available personnel for service as Outside Directors (as defined herein) of the
Company, to provide additional incentive to the Outside Directors of the
Company to serve as Directors, and to encourage their continued service on the
Board.  All
options granted hereunder shall be nonstatutory stock options.  2.Definitions.  As used herein, the following
definitions shall apply:  (a)Board means the Board of Directors of the Company.  (b)Code means the Internal Revenue Code of 1986, as amended.  (c)Common Stock means the Common Stock of the Company.  (d)Company means Peregrine Systems, Inc., a Delaware corporation.  (e)Director means a member of the Board.  (f)Employee means any person, including
officers and Directors, employed by the Company or any Parent or Subsidiary of
the Company. The payment of a Directors fee by the Company shall not be
sufficient in and of itself to constitute employment by the Company.  (g)Exchange Act means the Securities Exchange Act of 1934, as
amended.  (h)Fair Market Value means, as of any date, the value of Common
Stock determined as follows:  (i)If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall
Street Journalor such other source as the Administrator deems
reliable;  (ii)If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the high bid and low asked prices for
the Common Stock on the date of determination, as reported in The Wall Street Journalor such other
source as the Board deems reliable, or;  
   (iii)In
the absence of an established market for the Common Stock, the Fair Market
Value thereof shall be determined in good faith by the Board.  (i)Inside
Director means a Director who is an Employee.  (j)Option
means a stock option granted pursuant to the Plan.  (k)Optioned
Stock means the Common Stock subject to an Option.  (1)Optionee
means a Director who holds an Option.  (m)Outside
Director means a Director who is not an Employee.  (n)           Parent
means a parent corporation, whether now or hereafter existing, as defined in
Section 424(e) of the Code.  (o)Plan
means this 1997 Director Option Plan.  (p)Share
means a share of the Common Stock, as adjusted in accordance with Section 10 of
the Plan.  (q)Subsidiary
means a subsidiary corporation, whether now or hereafter existing, as defined
in Section 424(f) of the Internal Revenue Code of 1986.  3.Stock
Subject to the Plan.  Subject to the
provisions of Section 10 of the Plan, the maximum aggregate number of Shares
which may be optioned and sold under the Plan is 600,000 Shares of Common Stock
(the Pool).  The Shares may be
authorized, but unissued, or reacquired Common Stock.  If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.  4.Administration
and Grants of Options under the Plan.  (a)Procedure
for Grants. All grants of Options to Outside Directors under this Plan
shall be automatic and nondiscretionary and shall be made strictly in
accordance with the following provisions:  (i)No
person shall have any discretion to select which Outside Directors shall be
granted Options or to determine the number of Shares to be covered by Options
granted to Outside Directors.  (ii)Each
Outside Director shall be automatically granted an Option to purchase 25,000
Shares (the First Option) on the date on which such person first becomes an
Outside Director, whether through election by the shareholders of the Company
or appointment by  2 
   the
Board to fill a vacancy; provided, however, that a Director who was an Inside
Director immediately prior to becoming an Outside Director shall not receive a
First Option; provided further, however, that no Director who is an Outside
Director on the effective date of this Plan shall be granted a First Option.  (iii)Each Outside Director shall be automatically granted an Option to
purchase 5,000 Shares (a Subsequent Option) on the day following each Annual
Meeting of the Companys Shareholders commencing with the 1998 Annual Meeting
of the Companys Shareholders; provided that he or she is then an Outside
Director and if, as of such date, he or she shall have served on the Board for
at least the preceding six (6) months.  (iv)The terms of a First Option granted hereunder shall be as follows:  (A)the term of the First Option shall be ten (10) years.  (B)the First Option shall be exercisable only while the Outside Director
remains a Director of the Company, except as set forth in Sections 8 and 10
hereof.  (C)the exercise price per Share shall be 100% of the Fair Market Value per
Share on the date of grant of the First Option.  In the event that the date of grant of the First Option is not a
trading day, the exercise price per Share shall be the Fair Market Value on the
next trading day immediately following the date of grant of the First Option.  (D)subject to Section 10 hereof, the First Option shall become exercisable
as to twenty-five percent (25%) of the Shares subject to the First Option on
the first anniversary of its date of grant, and as to six and one-quarter
percent (63%) on the last day of each consecutive three-month period
thereafter, provided that the Optionee continues to serve as a Director on such
dates.  (v)The terms of a Subsequent Option granted hereunder shall be as follows:  (A)the term of the Subsequent Option shall be ten (10) years.  (B)the Subsequent Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Sections 8
and 10 hereof.  (C)the exercise price per Share shall be 100% of the Fair Market Value per
Share on the date of grant of the Subsequent Option. In the event that the date
of grant of the Subsequent Option is not a trading day, the exercise price per
Share shall be the Fair Market Value on the next trading day immediately
following the date of grant of the Subsequent Option.  (D)subject to Section 10 hereof, the Subsequent Option shall become
exercisable as to twenty-five percent (25%) of the Shares subject to the
Subsequent Option on the first anniversary of its date of grant, and as to six
and one-quarter percent (63%) on the last day of each consecutive three-month
period thereafter, provided that the Optionee continues to serve as a Director
on such dates.  3 
   (vi)Notwithstanding any provision of Section 10 hereof, in no event shall
either (i) the number of shares of Common Stock, issuable upon exercise of a
First Option or Subsequent Option granted pursuant hereto or (ii) the number of
shares of Common Stock issuable upon exercise of a then-outstanding First
Option or Subsequent Option, or the exercise price thereof, be adjusted in
connection with any forward split of the Companys Common Stock (including any
stock split effected in the form of a stock dividend).  (vii)In the event that any Option granted under the Plan would cause the
number of Shares subject to outstanding Options plus the number of Shares
previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the shareholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.  5.Eligibility. Options may be granted only to Outside Directors; provided, however,
no Outside Director shall be granted an Option hereunder if (A) he or she is
directly or indirectly the beneficial owner of three percent (3%) or more of
the Companys outstanding Common Stock, or (B) he or she is an affiliate of any
person or group of persons or entity or group of entities who individually or
in the aggregate are directly or indirectly the beneficial owner(s) of three
percent (3%) or more of the Companys outstanding Common Stock.  All Options shall be automatically granted
in accordance with the terms set forth in Section 4 hereof.  The
Plan shall not confer upon any Optionee any right with respect to continuation
of service as a Director or nomination to serve as a Director, nor shall it
interfere in any way with any rights which the Director or the Company may have
to terminate the Directors relationship with the Company at any time.  6.Term of Plan.  The
Plan shall become effective upon the earlier to occur of its adoption by the
Board or its approval by the shareholders of the Company as described in
Section 16 of the Plan.  It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 11 of the Plan.  7.Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) consideration received
by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.  8.Exercise of Option.  (a)           Procedure for Exercise: Rights as
a Shareholder. Any Option granted hereunder shall be exercisable at such
times as are set forth in Section 4 hereof; provided, however,  4 
   that
no Options shall be exercisable until shareholder approval of the Plan in
accordance with Section 16 hereof has been obtained.  An
Option may not be exercised for a fraction of a Share.  An
Option shall be deemed to be exercised when written notice of such exercise has
been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company. Full
payment may consist of any consideration and method of payment allowable under
Section 7 of the Plan. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10
of the Plan.  Exercise
of an Option in any manner shall result in a decrease in the number of Shares
which thereafter may be available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the Option is exercised.  (b)Termination of Continuous Status as a
Director. Subject to Section
10 hereof, in the event an Optionees status as a Director terminates (other
than upon the Optionees death or total and permanent disability (as defined in
Section 22(e)(3) of the Code)), the Optionee may exercise his or her Option,
but only within three (3) months following the date of such termination, and
only to the extent that the Optionee was entitled to exercise it on the date of
such termination (but in no event later than the expiration of its ten (10)
year term). To the extent that the Optionee was not entitled to exercise an
Option on the date of such termination, and to the extent that the Optionee
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.  (c)Disability of Optionee. In the event Optionees status as a
Director terminates as a result of total and permanent disability (as defined
in Section 22(e)(3) of the Code), the Optionee may exercise his or her Option,
but only within twelve (12) months following the date of such termination, and
only to the extent that the Optionee was entitled to exercise it on the date of
such termination (but in no event later than the expiration of its ten (10)
year term).  To the extent that the
Optionee was not entitled to exercise an Option on the date of termination, or
if he or she does not exercise such Option (to the extent otherwise so
entitled) within the time specified herein, the Option shall terminate.  (d)Death of Optionee.  In
the event of an Optionees death, the Optionees estate or a person who
acquired the right to exercise the Option by bequest or inheritance may
exercise the Option, but only within twelve (12) months following the date of
death, and only to the extent that the Optionee was entitled to exercise it on
the date of death (but in no event later than the expiration of its ten (10)
year term). To the extent that the Optionee was not entitled to exercise an
Option on  5 
   the
date of death, and to the extent that the Optionees estate or a person who
acquired the right to exercise such Option does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option
shall terminate.  9.Non-Transferability of Options.  An
Option may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of descentor
distribution and may be exercised, during the lifetime of the Optionee, only by
the Optionee.  10.Adjustments Upon Changes in Capitalization,
Dissolution, Merger or Asset Sale.  (a)Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been
effected without receipt of consideration. 
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Option.  (b)Dissolution or Liquidation.  In
the event of the proposed dissolution or liquidation of the Company, to the
extent that an Option has not been previously exercised, it shall terminate
immediately prior to the consummation of such proposed action.  (c)Merger or Asset Sale.  In
the event of a merger of the Company with or into another corporation or the
sale of substantially all of the assets of the Company, outstanding Options may
be assumed or equivalent options may be substituted by the successor
corporation or a Parent or Subsidiary thereof (the Successor
Corporation).  If an Option is assumed
or substituted for, the Option or equivalent option shall continue to be
exercisable as provided in Section 4 hereof for so long as the Optionee serves
as a Director or a director of the Successor Corporation. Following such
assumption or substitution, if the Optionees status as a Director or director
of the Successor Corporation, as applicable, is terminated other than upon a
voluntary resignation by the Optionee, the Option or option shall become fully
exercisable, including as to Shares for which it would not otherwise be
exercisable.  Thereafter, the Option or
option shall remain exercisable in accordance with Sections 8(a) through (d)
above.  If
the Successor Corporation does not assume an outstanding Option or substitute
for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.  6 
   For
the purposes of this Section 10(c), an Option shall be considered assumed if,
following the merger or sale of assets, the Option confers the right to
purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares). If such consideration received in the merger or sale of assets is not
solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.  11.Amendment and Termination of the Plan.  (a)Amendment and Termination.  The
Board may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with any applicable law, regulation or stock exchange rule, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such
a degree as required.  (b)Effect of Amendment or Termination.  Any
such amendment or termination of the Plan shall not affect Options already
granted and such Options shall remain in full force and effect as if this Plan
had not been amended or terminated.  12.Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof.  13.Conditions Upon Issuance of Shares. 
Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, state securities laws, and
the requirements of any stock exchange upon which the Shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.  As
a condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.  Inability
of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Companys counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of  7 
   the
failure to issue or sell such Shares as to which such requisite authority shall
not have been obtained.  14.Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.  15.Option Agreement. Options shall be evidenced by written
option agreements in such form as the Board shall approve.  16.Stockholder Approval. 
Stockholder approval of amendments to the Plan shall be obtained in the
degree and manner required under applicable state and federal law and any stock
exchange rules.  8 
   PEREGRINE SYSTEMS, INC.  DIRECTOR STOCK OPTION
AGREEMENT   Peregrine
Systems, Inc., a Delaware corporation (the Company), has granted to
                                                       
(the Optionee), an option to purchase a total of 
                             
(              )
shares of the Companys Common Stock (the Optioned Stock), at the price
determined as provided herein, and in all respects subject to the terms, definitions,
and provisions of the Companys 1997 Director Option Plan (the Plan) adopted
by the Company, which is incorporated herein by reference.  The terms defined in the Plan shall have the
same defined meanings herein.  1.Nature of the
Option.  This Option is a
nonstatutory option and is not intended to qualify for any special tax benefits
to the Optionee.  2.Exercise Price.  The exercise price is
$             
for each share of Common Stock.  3.Exercise of Option.  This Option shall be exercisable during its
term in accordance with the provisions of Section 8 of the Plan as
follows:  (i)Right to Exercise.  (a)This Option shall
become exercisable in installments cumulatively with respect to twenty-five
percent (25%) of the Optioned Stock on the first anniversary of the date of
grant, and six and one-quarter percent (6.25%) of the Optioned Stock on the
last day of each consecutive three month period thereafter so that one hundred
percent (100%) of the Optioned Stock shall be exercisable four (4) years after
the date of grant.  In no event shall
any Option be exercisable prior to the date the shareholders of the Company
approve the Plan.  (b)This Option may not be
exercised for a fraction of a share.  (c)In the event of
Optionees death, disability, or other termination of service as a Director,
the exercisability of the Option shall be governed by Section 8 of the Plan.  (ii)Method of Exercise.  This Option shall be exercisable by written
notice which shall state the election to exercise the Option and the number of
Shares in respect of which the Option is being exercised.  Such written notice, in the form attached
hereto as Exhibit A, shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company.  The written notice shall be accompanied by
payment of the exercise price.  4.Method of Payment.  Payment of the exercise price shall be by
any of the following, or a combination thereof, at the election of the
Optionee:  (i)cash;  (ii)check;  (iii)surrender of other
shares which (x) in the case of Shares acquired upon exercise of an
Option, have been owned by the Optionee for more than six (6) months on the
date of surrender, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised; or  (iv)delivery of a properly
executed exercise notice together with such other documentation as the Company
and the broker, if applicable, shall require to effect an exercise of the
Option and delivery to the Company of the sale or loan proceeds required to pay
the exercise price.  5.Restrictions on
Exercise.  This Option may not be
exercised if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable  1 
   federal or state securities or
other law or regulations, or if such issuance would not comply with the
requirements of any stock exchange upon which the Shares may then be
listed.  As a condition to the exercise
of this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.  6.Non-Transferability
of Option.  This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee.  The terms of this Option
shall be binding upon the executors, administrators, heirs, successors and
assigns of the Optionee.  7.Term of Option.  This Option may not be exercised more than
ten (10) years from the date of grant of this Option, and may be exercised
during such period only in accordance with the Plan and the terms of this
Option.  8.Taxation Upon
Exercise of Option.  Optionee
understands that, upon exercise of this Option, he or she will recognize income
for tax purposes in an amount equal to the excess of the then Fair Market Value
of the Shares purchased over the exercise price paid for such Shares.  Since the Optionee is subject to Section
16(b) of the Securities Exchange Act of 1934, as amended, under certain limited
circumstances the measurement and timing of such income (and the commencement
of any capital gain holding period) may be deferred, and the Optionee is
advised to contact a tax advisor concerning the application of Section 83 in
general and the availability a Section 83(b) election in particular in
connection with the exercise of the Option. 
Upon a resale of such Shares by the Optionee, any difference between the
sale price and the Fair Market Value of the Shares on the date of exercise of
the Option, to the extent not included in income as described above, will be treated
as capital gain or loss.  DATE OF
  GRANT:PEREGRINE
  SYSTEMS, INC.a Delaware
  corporationBy:Name:Title:  Optionee
acknowledges receipt of a copy of the Plan, a copy of which is attached hereto,
and represents that he or she is familiar with the terms and provisions
thereof, and hereby accepts this Option subject to all of the terms and
provisions thereof.  Optionee hereby
agrees to accept as binding, conclusive, and final all decisions or
interpretations of the Board upon any questions arising under the Plan.  Dated:Optionee[Peregrine
  Systems 1997 Director Option Plan  Option Agreement Signature Page]  2 
   EXHIBIT A  DIRECTOR STOCK OPTION
EXERCISE NOTICE   Peregrine Systems, Inc. 12670 High Bluff Drive San Diego, California  92130  Attention:  Corporate Secretary  1.Exercise of Option.  The undersigned (Optionee) hereby elects
to exercise Optionees option to purchase
             
shares of the Common Stock (the Shares) of Peregrine Systems, Inc. (the
Company) under and pursuant to the Companys 1997 Director Option Plan and
the Director Option Agreement dated
                    
(the Agreement).  2.Representations of
Optionee.  Optionee acknowledges
that Optionee has received, read, and understood the Agreement.  3.Federal
Restrictions on Transfer.  Optionee
understands that the Shares must be held indefinitely unless they are
registered under the Securities Act of 1933, as amended (the 1933 Act), or
unless an exemption from such registration is available, and that the
certificate(s) representing the Shares may bear a legend to that effect.  Optionee understands that the Company is
under no obligation to register the Shares and that an exemption may not be
available or may not permit Optionee to transfer Shares in the amounts or at
the times proposed by Optionee.  4.Tax Consequences.  Optionee understands that Optionee may
suffer adverse tax consequences as a result of Optionees purchase or
disposition of the Shares.  Optionee
represents that Optionee has consulted with any tax consultant(s) Optionee
deems advisable in connection with the purchase or disposition of the Shares
and that Optionee is not relying on the Company for any tax advice.  5.Delivery of
Payment.  Optionee herewith delivers
to the Company the aggregate purchase price for the Shares that Optionee has
elected to purchase and has made provision for the payment of any federal or
state withholding taxes required to be paid or withheld by the Company.  6.Entire Agreement.  The Agreement is incorporated herein by
reference.  This Exercise Notice and the
Agreement constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof. 
This Exercise Notice and the Agreement are governed by California law
except for that body of law pertaining to conflict of laws.  Submitted
  by:
  
  Accepted by:OPTIONEE:
  
  PEREGRINE SYSTEMS, INC.Name:
  
  
  Name:Title:Address:
  
  Address:3611 Valley Centre DriveSan Diego, California 92130Dated:
  
  
  Dated:  1