Exhibit
10.4  PEREGRINE
SYSTEMS, INC.  1999
NONSTATUTORY STOCK OPTION PLAN  (as
amended through October 17, 2001 and
applicable to Options granted on or after April 17, 2001)(1)  1.             Purposes
of the Plan.  The purposes of this
Nonstatutory Stock Option Plan are:  to attract and
retain the best available personnel for positions of substantial
responsibility,  to provide
additional incentive to Employees and Consultants, and  to promote the
success of the Companys business.  Options granted under the Plan will be Nonstatutory
Stock Options.  2.             Definitions.  As used herein, the following definitions
shall apply:  (a)           Administrator
means the Board or any of its Committees as shall be administering the Plan, in
accordance with Section 4 of the Plan.  (b)           Applicable
Laws means the requirements relating to the administration of stock option
plans under U.S. state corporate laws, U.S. federal and state securities laws,
the Code, any stock exchange or quotation system on which the Common Stock is
listed or quoted and the applicable laws of any foreign country or jurisdiction
where Options are, or will be, granted under the Plan.  (c)           Board
means the Board of Directors of the Company.  (d)           Change
of Control means the occurrence of any of the following events:  (i)            Any
person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Companys
then outstanding voting securities; or  (ii)           The
consummation of the sale or disposition by the Company of all or substantially
all the Companys assets; or  
 (1) Options granted prior
to April 17, 2001 shall be governed by the terms of the Plan in effect prior to
such date.  
   (iii)          The
consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining out-standing or by being converted into voting
securities of the surviving entity or its parent) at least fifty percent (50%)
of the total voting power represented by the voting securities of the Company
or such surviving entity or its parent outstanding immediately after such
merger or consolidation; or  (iv)          A
change in the composition of the Board occurring within a two-year period, as a
result of which fewer than a majority of the directors are Incumbent
Directors.  Incumbent Directors shall
mean directors who either (A) are directors of the Company as of April 17,
2001 or (B) are elected, or nominated for election, to the Board with the affirmative
votes of at least a majority of those directors whose election or nomination
was not in connection with any transaction described in subsections (i), (ii),
or (iii) above, or in connection with an actual or threatened proxy contest
relating to the election of directors to the Company.  (e)           Code
means the Internal Revenue Code of 1986, as amended.  (f)            Committee  means a committee of Directors appointed by
the Board in accordance with Section 4 of the Plan.  (g)           Common
Stock means the Common Stock of the Company.  (h)           Company
means Peregrine Systems, Inc., a Delaware corporation.  (i)            Consultant
means any person, including an advisor, engaged by the Company or a Parent or
Subsidiary to render services to such entity.  (j)            Director
means a member of the Board.  (k)           Disability
means total and permanent disability as defined in Section 22(e)(3) of the
Code.  (l)            Employee
means any person, including Officers, employed by the Company or any Parent or
Subsidiary of the Company.  A Service Provider
shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company
or between the Company, its Parent, any Subsidiary, or any successor.  Neither service as a Director nor payment of
a directors fee by the Company shall be sufficient to constitute employment
by the Company.  (m)          Exchange
Act means the Securities Exchange Act of 1934, as amended.  (n)           Fair
Market Value means, as of any date, the value of Common Stock determined
as follows:  2 
   (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 Journal or
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 last market trading day prior to the day of determination,
as reported in The Wall Street Journal or such other source as the
Administrator deems reliable;  (iii)          In
the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Administrator.  (o)           Notice
of Grant means a written or electronic notice evidencing certain terms and
conditions of an individual Option grant. 
The Notice of Grant is part of the Option Agreement.  (p)           Officer
means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.  (q)           Option
means a nonstatutory stock option granted pursuant to the Plan, that is not
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder.  (r)            Option
Agreement means an agreement between the Company and an Optionee
evidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the terms
and conditions of the Plan.  (s)           Option
Exchange Program means a program whereby outstanding options are
surrendered in exchange for options with a lower exercise price.  (t)            Optioned
Stock means the Common Stock subject to an Option.  (u)           Optionee
means the holder of an outstanding Option granted under the Plan.  (v)           Parent
means a parent corporation, whether now or hereafter existing, as defined in
Section 424(e) of the Code.  (w)          Plan
means this 1999 Nonstatutory Stock Option Plan.  (x)            Service
Provider means an Employee, Officer, Consultant or Director.  3 
   (y)           Share
means a share of the Common Stock, as adjusted in accordance with
Section 12 of the Plan.  (z)            Subsidiary
means a subsidiary corporation, whether now or hereafter existing, as defined
in Section 424(f) of the Code.  3.             Stock
Subject to the Plan.  Subject to the
provisions of Section 12 of the Plan, the maximum aggregate number of
Shares, which may be optioned and sold under the Plan, is
7,000,000 Shares.  The Shares may
be authorized, but unissued, or reacquired Common Stock.  If an Option expires or becomes unexercisable without
having been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated).  4.             Administration
of the Plan.  (a)           Administration.  The Plan shall be administered by
(i) the Board or (ii) a Committee, which committee shall be
constituted to satisfy Applicable Laws.  (b)           Powers
of the Administrator.  Subject to
the provisions of the Plan, and in the case of a Committee, subject to the
specific duties delegated by the Board to such Committee, the Administrator
shall have the authority, in its discretion:  (i)            to
determine the Fair Market Value of the Common Stock;  (ii)           to
select the Service Providers to whom Options may be granted hereunder;  (iii)          to
determine whether and to what extent Options are granted hereunder;  (iv)          to
determine the number of shares of Common Stock to be covered by each Option
granted hereunder;  (v)           to
approve forms of agreement for use under the Plan;  (vi)          to
determine the terms and conditions, not inconsistent with the terms of the
Plan, of any award granted hereunder. 
Such terms and conditions include, but are not limited to, the exercise
price, the time or times when Options may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option  or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine;  4 
   (vii)         to
reduce the exercise price of any Option to the then current Fair Market Value
if the Fair Market Value of the Common Stock covered by such Option shall have
declined since the date the Option was granted;  (viii)        to
institute an Option Exchange Program;  (ix)           to
construe and interpret the terms of the Plan and awards granted pursuant to the
Plan;  (x)            to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws;  (xi)           to
modify or amend each Option (subject to Section 14(b) of the Plan),
including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan;  (xii)          to
authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Option previously granted by the
Administrator;  (xiii)         to
determine the terms and restrictions applicable to Options;  (xiv)        to
allow Optionees to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Option that
number of Shares having a Fair Market Value equal to the amount required to be
withheld.  The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined.  All
elections by an Optionee to have Shares withheld for this purpose shall be made
in such form and under such conditions as the Administrator may deem necessary
or advisable; and  (xv)         to
make all other determinations deemed necessary or advisable for administering
the Plan.  (c)           Effect
of Administrators Decision.  The
Administrators decisions, determinations and interpretations shall be final
and binding on all Optionees and any other holders of Options.  5.             Eligibility.  Options may be granted to Service Providers;
provided, however, that notwithstanding anything to the contrary contained in
the Plan, Options may not be granted to Officers and Directors, except in
connection with an Officers initial service to the Company.  6.             Limitation.  Neither the Plan nor any Option shall confer
upon an Optionee any right with respect to continuing the Optionees
relationship as a Service Provider with the Company, nor shall they interfere
in any way with the Optionees right or the Companys right to terminate such
relationship at any time, with or without cause.  5 
   7.             Term
of Plan.  The Plan shall become
effective upon its adoption by the Board. 
It shall continue in effect for ten (10) years, unless sooner
terminated under Section 14 of the Plan.  8.             Term
of Option.  The term of each Option
shall be stated in the Option Agreement.  9.             Option
Exercise Price and Consideration.  (a)           Exercise
Price.  The per share exercise price
for the Shares to be issued pursuant to exercise of an Option shall be
determined by the Administrator.  (b)           Waiting
Period and Exercise Dates.  At the
time an Option is granted, the Administrator shall fix the period within which
the Option may be exercised and shall determine any conditions which must be
satisfied before the Option may be exercised.  (c)           Form
of Consideration.  The Administrator
shall determine the acceptable form of consideration for exercising an Option,
including the method of payment.  Such
consideration may consist entirely of:  (i)            cash;  (ii)           check;  (iii)          promissory
note;  (iv)          other
Shares which (A) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six months on the date of
surrender, and (B) 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;  (v)           consideration
received by the Company under a cashless exercise program implemented by the
Company in connection with the Plan;  (vi)          a
reduction in the amount of any Company liability to the Optionee, including any
liability attributable to the Optionees participation in any Company-sponsored
deferred compensation program or arrangement;  (vii)         such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws; or  (viii)        any
combination of the foregoing methods of payment.  10.           Exercise
of Option.  (a)           Procedure
for Exercise; Rights as a Shareholder. Any Option granted hereunder shall
be exercisable according to the terms of the Plan and at such times and under
such  6 
   conditions as determined by the Administrator and set
forth in the Option Agreement.  An
Option may not be exercised for a fraction of a Share.  An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with
the Option Agreement) from the person entitled to exercise the Option, and
(ii) full payment for the Shares with respect to which the Option is
exercised.  Full payment may consist of
any consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan.  Shares issued upon exercise of an Option shall be issued in the
name of the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse.  Until
the Shares are issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be
issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are issued,
except as provided in Section 12 of the Plan.  Exercising an Option in any manner shall decrease the
number of Shares thereafter 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 Relationship as a Service Provider. 
If an Optionee ceases to be a Service Provider, other than upon the
Optionees death or Disability, the Optionee may exercise his or her Option,
but only within such period of time as is specified in the Option Agreement,
and only to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement).  In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for ninety (90) days following the Optionees termination.  If, on the date of termination, the Optionee
is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not
exercise his or her Option within the time specified by the Administrator, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.  (c)           Disability
of Optionee.  If an Optionee ceases
to be a Service Provider as a result of the Optionees Disability, the Optionee
may exercise his or her Option within such period of time as is specified in
the Option Agreement, to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). 
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for six (6) months following the Optionees
termination.  If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.  7 
   (d)           Death
of Optionee. In the event of the death of an Optionee, the Option shall
vest and become exercisable as to all of the Shares subject thereto and may be
exercised within such period of time as is specified in the Option Agreement
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant), by the Optionees estate or by a person who
acquires the right to exercise the Option by bequest or inheritance.  In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionees termination. 
The Option may be exercised by the executor or administrator of the
Optionees estate or, if none, by the person(s) entitled to exercise the Option
under the Optionees will or the laws of descent or distribution.  If the Option is not so exercised with the
specified time, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.  (e)           Buyout
Provisions.  The Administrator may
at any time offer to buy out for a payment in cash or Shares, an Option
previously granted based on such terms and conditions as the Administrator
shall establish and communicate to the Optionee at the time that such offer is
made.  11.           Non-Transferability
of Options.  Unless determined otherwise
by the Administrator, 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 descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.  If the Administrator makes an Option transferable, such Option
shall contain such additional terms and conditions as the Administrator deems
appropriate.  12.           Adjustments
Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.  (a)           Changes
in Capitalization.  Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock 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 of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock 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 of Common Stock 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. 
Such adjustment shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive.  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 of Common Stock subject to an
Option.  (b)           Dissolution
or Liquidation.  In the event of the
proposed dissolution or liquidation of the Company, the Administrator shall
notify each Optionee as soon as practicable prior to the effective date of such
proposed transaction.  The Administrator
in its discretion may provide for an Optionee to have the right to exercise his
or her Option until fifteen (15) days prior to such  8 
   transaction as to all of the Optioned Stock covered
thereby, including Shares as to which the Option would not otherwise be
exercisable.  In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated.  To the extent
it has not been previously exercised, an Option will 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, each outstanding Option shall be assumed or
an equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. 
In the event that the successor corporation refuses to assume or
substitute for the Option, the Optionee shall fully vest in and have the right
to exercise the Option as to all of the Optioned Stock, including Shares as to
which it would not otherwise be vested or exercisable.  If an Option is not assumed or substituted
(and already was exercisable or becomes fully vested and exercisable in lieu of
assumption or substitution), the Administrator shall notify the Optionee in
writing or electronically that the Option shall be fully vested and exercisable
for a period of fifteen (15) days from the date of such notice, and the Option
shall terminate upon the expiration of such period.  For the purposes of this paragraph, the Option shall be
considered assumed if, following the merger or sale of assets, the option or
right 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); provided, however, that 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.  13.           Date
of Grant.  The date of grant of an
Option shall be, for all purposes, the date on which the Administrator makes
the determination granting such Option, or such other later date as is
determined by the Administrator.  Notice
of the determination shall be provided to each Optionee within a reasonable
time after the date of such grant.  14.           Amendment
and Termination of the Plan.  (a)           Amendment
and Termination.  The Board may at
any time amend, alter, suspend or terminate the Plan.  (b)           Effect
of Amendment or Termination.  No
amendment, alteration, suspension or termination of the Plan shall impair the
rights of any Optionee, unless mutually agreed otherwise between the Optionee
and the Administrator, which agreement must be in writing and signed by the  9 
   Optionee and the Company.  Termination of the Plan shall not affect the Administrators
ability to exercise the powers granted to it hereunder with respect to options
granted under the Plan prior to the date of such termination.  15.           Conditions
Upon Issuance of Shares.  (a)           Legal
Compliance.  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 shall comply with Applicable Laws
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.  (b)           Investment
Representations.  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.  16.           Inability
to Obtain Authority.  The 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 the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.  17.           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.  10 
   PEREGRINE
SYSTEMS, INC.  1999
NONSTATUTORY STOCK OPTION PLAN  STOCK
OPTION AGREEMENT  Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Option Agreement.  I               NOTICE OF STOCK OPTION GRANT  [Optionees
Name]  You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:  Date of Grant:Vesting Commencement Date:Exercise Price per Share:
  $Total Number of Shares Granted:Type of Option:
  Nonstatutory Stock OptionTerm/Expiration Date:  Vesting Schedule:  25% of the total number of Shares subject to the Option shall vest
twelve months after the Vesting Commencement Date, and 6.25% of the total
number of Shares subject to the Option shall vest each quarter thereafter,
provided that Shares actually will vest on any such date only if the Optionee
continues to be a Service Provider on such date.  Notwithstanding the preceding, all of the Shares subject to the Option
shall vest on the date the Optionee ceases to be a Service Provider if (and
only if) the cessation as a Service Provider both (1) occurs within 12 months
after a Change of Control, and (2) either was by action (a) of the Company for
a reason other than Cause, or (b) of the Employee for Good Reason.  For purposes of the preceding paragraph, Cause means (i) any act
of personal dishonesty taken in connection with the Optionees responsibilities
as a Service Provider that is intended to result in his or her substantial personal
enrichment, (ii) the Optionees conviction or plea of no contest to a
crime that will have a detrimental effect on the Companys reputation or
business, (iii) willful misconduct by the Optionee that is injurious to
the Company, or (iv) the Optionees continued violation of his or her  1 
   obligations to the
Company after the Optionee has been delivered written notice of the violation
and given a reasonable opportunity to cure. Good Reason means, without the
Optionees written consent (i) a material reduction in the optionees duties
and/or status at the Company, (ii) the Optionees principal work location being
moved more than 30 miles, (iii) the Company reducing the Optionees base salary
below his or her salary immediately before the Change of Control, or (iv) the
Company reducing the Optionees bonus opportunity below his or her bonus
opportunity immediately before the Change of Control.  Termination Period:  This Option may be exercised for 90 days after
termination of Optionees Continuous Status as an Employee or Consultant, or
such longer period as may be applicable upon death or disability of Optionee as
provided in the Plan, but in no event later than the Term/Expiration Date as
provided above.  II             AGREEMENT  1.             Grant of Option. 
The Plan Administrator of the Company hereby grants to the Optionee
named in the Notice of Grant attached as Part I of this Agreement (the
Optionee) an option (the Option) to purchase the number of Shares, as set forth
in the Notice of Grant, at the exercise price per share set forth in the Notice
of Grant (the Exercise Price), subject to the terms and conditions of the
Plan, which is incorporated herein by reference.  Subject to Section 14(b) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and the terms and
conditions of this Option Agreement, the terms and conditions of the Plan shall
prevail.  2.             Exercise of Option.  (a)           Right to Exercise.  This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.  (b)           Method of Exercise.  This Option is exercisable by delivery of an
exercise notice (in a form and manner satisfactory to the Company) which shall
state the election to exercise the Option, the number of Shares in respect of
which the Option is being exercised (the Exercised Shares), and such other
representations and agreements as may be required by the Company pursuant to
the provisions of the Plan.  The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares.  This Option
shall be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by such aggregate Exercise Price. No Shares shall be issued pursuant to the exercise of
this Option unless such issuance and exercise complies with Applicable
Laws.  Assuming such compliance, for
income tax purposes the Exercised Shares shall be considered transferred to the
Optionee on the date the Option is exercised with respect to such Exercised
Shares.  2 
   3.             Method of Payment.  Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:  (a)     cash;  (b)     check;  (c)     consideration received by the Company under
a cashless exercise program implemented by the Company in connection with the
Plan; or  (d)     surrender of other Shares, which
(i) 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 (ii) have a Fair Market Value on the date of surrender equal
to the aggregate Exercise Price of the Exercised Shares.  4.             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 the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.  5.             Term of Option. 
This Option may be exercised only within the term set out in the Notice
of Grant, and may be exercised during such term only in accordance with the
Plan and the terms of this Option Agreement.  6.             Tax Consequences.  Some of the federal tax consequences relating to this Option, as
of the date of this Option, are set forth below.  THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.  THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.  (a)           Exercising the Option.  The Optionee may incur regular federal
income tax liability upon exercise of an NSO. 
The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price.  If the
Optionee is an Employee or a former Employee, the Company will be required to
withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.  (b)           Disposition of Shares.  If the Optionee holds NSO Shares for at
least one year, any gain realized on disposition of the Shares will be treated
as long-term capital gain for federal income tax purposes.  7.             Entire Agreement; Governing Law.  The Plan is incorporated herein by
reference.  The Plan and this Option
Agreement constitute the entire agreement of the  3 
   parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionees interest except by means of a writing
signed by the Company and Optionee.  The
internal substantive laws, but not the choice of law rules, of California
govern this agreement.  8.             NO
GUARANTEE OF CONTINUED SERVICE. 
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER
AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER).  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN
DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEES RIGHT OR THE COMPANYS RIGHT TO TERMINATE
OPTIONEES RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.  By your signature and the
signature of the Companys representative below, you and the Company agree that
this Option is granted under and governed by the terms and conditions of the
Plan and this Option Agreement. 
Optionee has reviewed the Plan and this Option Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option Agreement and fully understands all provisions of the
Plan and Option Agreement.  Optionee
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement.  Optionee further
agrees to notify the Company upon any change in the residence address indicated
below.  OPTIONEE
  
  PEREGRINE
  SYSTEMS, INC.a Delaware corporationPrint Name of Optionee/s/ Stephen P. GardnerSignature of Optionee
  
  Stephen P. GardnerChief Executive OfficerResidential Address  4