Exhibit
10.40  PROMISSORY
NOTE  $52,056,266.01
  August
  26, 2002
  Los Angeles, California  FOR VALUE RECEIVED, the undersigned (hereinafter Maker), hereby promises to pay
to the order of FLEET BUSINESS CREDIT, LLC, a Delaware limited liability
company (hereinafter Holder), in such coin or currency of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, the principal sum of $52,056,266.01 (which
said principal sum represents the Past Due Purchase Obligations of Maker to
Holder as of the date hereof in accordance with Schedule A to the Forbearance
Agreement (as defined below)), or such greater or lesser amount as may be
outstanding hereunder from time to time in accordance with the terms hereof,
together with interest from and after the date hereof on the unpaid principal
balance outstanding as set forth herein.  Forbearance
Agreement. This
Promissory Note (this Note) is one of the Promissory Notes referred
to in, and is issued pursuant to, that certain Forbearance Agreement (the Forbearance
Agreement), dated as of the date hereof, among Maker, the subsidiaries of
Maker identified on the signature pages thereof, Fleet Business Credit, LLC, a
Delaware limited liability company, as successor to Sanwa Business Credit
Corporation (Fleet), Wells Fargo HSBC Trade Bank, N.A., a national
banking association (the Trade Bank), and Silicon Valley Bank, a
California state bank (SVB; together with Fleet and the Trade Bank,
each, a Purchaser, collectively Purchasers), and Fleet, as
agent for the Purchasers (in such capacity, together with its successors in
such capacity, Purchaser Agent). All of the terms, covenants and
conditions of the Forbearance Agreement and the other Forbearance Documents are
hereby made a part of this Note and are deemed incorporated herein in full.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in the Forbearance Agreement.  Senior
Debt. The obligations
of Maker hereunder (whether of principal, interest or otherwise) shall
constitute Senior Debt under the Indenture.  Payments
of Principal and Interest. The principal amount and accrued interest of this Note shall be due
and payable on the dates and in the manner hereinafter set forth:  (a)
Interest. Interest on the outstanding principal balance hereof shall
accrue at a per annum rate of 6.00%; provided, however, that upon
the occurrence and during the continuation of a New Event of Default, interest
on the outstanding principal balance hereof shall accrue at a per annum rate of
9.00%. Interest shall accrue monthly and shall be due and payable on the first
day of each calendar month, in arrears, until such time as the full principal
balance hereof, together with all other amounts owing hereunder, shall have
been paid in full. The foregoing to the contrary notwithstanding, upon the
commencement of the first, if any, Chapter 11 Proceeding filed by or against
maker, (a) during the period from the Filing Date thereof through  
   the Moratorium End Date,
interest shall accrue during the period from such Filing Date through the
Moratorium End Date (without compounding during such period) and on the
Moratorium End Date shall be added to the outstanding principal balance hereof,
(b) any interest accruing for any period prior to such Filing Date and due and
payable after such Filing Date shall be payable in accordance with the
immediately preceding sentence, and (c) after the Moratorium End Date, interest
shall accrue and be due and payable in accordance with the immediately
preceding sentence. Notwithstanding the date of this Note, in addition to the
interest otherwise payable hereunder, on the first due date of interest
hereunder, Maker shall pay interest on the outstanding Past Due Purchase
Obligations during the period from August 1, 2002 through and including the
date of this Note at the rate applicable to the principal amount hereof.
Without limiting Makers obligation to pay interest on the due date thereof,
subject to the interest moratorium provisions above, any interest not paid when
due shall be added to the outstanding principal balance hereof and thereafter
interest shall accrue on such amount in accordance with the terms hereof.  (b)           Principal. (i) The principal
balance of this Note shall be amortized over three years commencing on August
1, 2003 as set forth in the below table;   Period
  
  Annual Amortization (as a
  percentage of the Adjusted
  Original Principal Balance (as
  hereinafter defined) of each
  Promissory NoteAugust 1, 2003 through
  July 31, 2004
  
  20%August 1, 2004 through
  July 31, 2005
  
  30%August 1, 2005 through
  July 31, 2006
  
  30%  (ii)           Principal on this Note shall be
payable in monthly installments commencing on the first day of each period set
forth above and continuing on the first day of each calendar month during each
such period until paid in full, in an amount equal to (a) the Adjusted
Original Principal Balance (as hereinafter defined) of this Note (as of the
date on which such payment is due), multiplied by (b) a fraction, (i) the
numerator of which is the Annual Amortization for such period (as set forth
in the table above), and (ii) the denominator of which is 12. As used herein
the Adjusted Original Principal Balance of this Note shall mean the original
principal amount hereof plus the aggregate amount that is added to the original
principal balance hereof after the date hereof as a result of Holder or any
other holder hereof exercising its rights under its Purchase  2 
   Documents to have any
Peregrine Party repurchase any of Holders Purchased Accounts, plus the amount
of any accrued interest added to the principal balance of such Promissory Note
pursuant to section (a) above on the Moratorium End Date minus the aggregate
amount that is subtracted from the original principal balance hereof after the
date hereof as a result of any payments received by Holder from the account
debtor or other obligor on any Purchased Account the repurchase price of which
is evidenced hereby.  The entire remaining
principal amount then outstanding, together with all accrued and unpaid
interest and any and all other amounts due hereunder, shall be due and payable
in full on July 31, 2006.  Prepayments. 
This Note may be prepaid in full or in port without penalty or premium.
This Note is subject to mandatory prepayment in accordance with the terms of
the Forbearance Agreement. Any prepayment of less than the outstanding amount
of principal, accrued interest, and other amounts payable hereunder, shall be
applied first to accrued interest, then to the outstanding principal balance,
and then to the other amounts payable hereunder.  Past
Due Purchase Obligations.  If any Past Due Purchase Obligations owing
to Holder arise after the date hereof, then such Past Due Purchase Obligations
may be added to the outstanding principal balance hereof in accordance with the
terms of the Forbearance Agreement.  Holders
Books and Records.  Holder is authorized, at Holders option, to
note the date and amount of each payment or prepayment of principal hereunder
and the incurrence of any new Past Due Purchase Obligations in its books and
records, including computer records. Such books and records reasonably and in
good faith maintained shall constitute conclusive evidence, absent manifest
error, of the accuracy of the information contained therein. From time to time,
on Holders request, Maker shall execute and deliver to Holder, a new
promissory note, in the same form as this Note, in substitution of this
promissory note in a principal amount equal to the then outstanding principal
balance hereof.  Rights
and Remedies.  Upon the occurrence of a New Event of
Default, Holder (at its election but without notice of its election and without
demand) shall have all of the rights and remedies set forth in Section X
of the Forbearance Agreement.  Collection
Costs.  In addition to Holders other rights and
remedies, in the event Maker shall fail to pay any payment of principal or
interest, or both, required hereunder, Maker shall pay all collection costs
(including attorneys fees and expenses) incurred by Holder.  Remedies
Cumulative.  The rights and remedies of Holder under this
Note, the Forbearance Agreement and the other Forbearance Documents shall be
cumulative. Holder shall have all other rights and remedies not inconsistent
herewith as provided under the Uniform Commercial Code (as in effect in
California from time to time), by law, or in equity. No exercise by Holder of
one right or remedy shall be deemed an election, and no  3 
   waiver by Holder of any Event of Default
shall be deemed a continuing waiver. No delay by Holder shall constitute a
waiver, election, or acquiescence by it.  Intent
to Limit Charges to Maximum Lawful Rate.  In
no event shall the interest rate or rates payable under this Note, plus any
other amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Maker and Holder, in executing and delivering
this Note, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso facto,as of the date of this Note,
Maker is and shall be liable only for the payment of such maximum as allowed by
law, and payment received from Maker in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of Makers
obligations hereunder to the extent of such excess.  Time
is of the essence of this Note.  Subject to the provisions of
the Forbearance Agreement and/or Forbearance Documents requiring the giving of
notices, to the fullest extent permitted by applicable law, Maker, for itself
and its legal representatives, successors and assigns, expressly waives
presentment, demand, protest, notice of dishonor, notice of non-payment, notice
of maturity, notice of protest, presentment for the purpose of accelerating
maturity, diligence in collection, and the benefit of any exemption or
insolvency laws.  Wherever possible, each
provision of this Note shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Note shall be
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or remaining provisions of this Note. No delay or
failure on the part of Holder in the exercise of any right or remedy hereunder
shall operate as a waiver thereof, nor as an acquiescence in any default, nor
shall any single or partial exercise by Holder of any right or remedy preclude
any other right or remedy. Holder, at its option, may enforce its rights
against any collateral securing this Note without enforcing its rights against
Maker, any guarantor of the indebtedness evidenced hereby or any other property
or indebtedness due or to become due to Maker. Maker agrees that, without
releasing or impairing Makers liability hereunder, Holder may at any time
release, surrender, substitute or exchange any collateral securing this Note
and may at any time release any party primarily or secondarily liable for the
indebtedness evidenced by this Note.  Governing
Law.  This Note shall be governed by, and
construed and enforced in accordance with, the laws of the State of California.  [Remainder
of page intentionally left blank.]  4 
   IN WITNESS WHEREOF, Maker has caused this Note to be duly
executed and delivered on the date first above written.  PEREGRINE
  SYSTEMS, INC.
  a Delaware corporation (Maker)By:
  /s/ Gary G. GreenfieldTitle:
  CEO  S-1