Exhibit
10.39  MUTUAL
RELEASE AGREEMENT  THIS MUTUAL RELEASE AGREEMENT (the Release
Agreement) is entered into effective this 7th day of August, 2003
(the Release Date), by and among
Peregrine Systems, Inc., a Delaware corporation and Debtor and Debtor In
Possession (PSI) under Case No.
02-12740 (JKF), jointly administered (the Case)
in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court) and Peregrine Remedy,
Inc., a Delaware corporation and Debtor and Debtor In Possession (Remedy) in the Case and those PSI and
Remedy subsidiaries and other affiliates who are also signatories to this
Release Agreement (collectively, the Peregrine
Parties and individually, a Peregrine
Party), on the one hand, and Fleet Business Credit, LLC, a Delaware
limited liability company (Fleet),
in its individual capacity and in its capacity as Purchaser Bank Agent as
defined in the hereinafter defined Plan (in its individual capacity, and in its
capacity as Purchaser Bank Agent, the Lender,
and, together with the Peregrine Parties, the Parties),
on the other hand, with respect to the following facts and circumstances:  A.  Pursuant
to that certain Order Pursuant to Section 1129 of the Bankruptcy Code
Confirming Debtors Fourth Amended Plan of Reorganization, as Modified, Dated
July 14, 2003, the Bankruptcy Court has approved and confirmed the Fourth
Amended Plan of Reorganization of Peregrine Systems, Inc. and Peregrine Remedy,
Inc. (as modified, the Plan).  B.  Section
V.B.2.a(4) of the Plan provides that the Parties shall mutually execute and
deliver a release agreement on the Effective Date (as defined in the Plan).  C.  The
Parties are executing and delivering this Agreement in satisfaction of the
requirements of Section V.B.2.a (4).  D.  Except
for terms specifically defined herein, the capitalized terms used herein shall
have the same meanings as such terms have when utilized in that certain
Agreement Regarding Purchaser Bank Arrangements of even date herewith, among
the Peregrine Parties, Lender and others (as amended, modified or supplemented
from time to time, the Purchaser Bank
Agreement).  NOW,
THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which each of the Parties hereby agrees:  1.  Peregrine Parties Release.  (a)           Peregrine
and Remedy, for themselves and anyone claiming by, through or under them,
hereby release and absolutely discharge Lender and each and all of its
successors and assigns (collectively, the Debtor
Lender Releasees) of and from any and all rights, claims, demands,
debts, fees, penalties, payments, liabilities, accounts, reckonings,
obligations, costs, expenses, liens, interests, security interests, actions,
and causes of action, of every kind and nature whatsoever, whether known or
unknown, matured or unmatured, absolute or contingent (the foregoing are
collectively referred to herein as Claims),
which Peregrine and/or Remedy may now have, own, or at any time heretofore have
ever had, owned, or held against Lender (hereinafter collectively referred to
as the Debtor Released Claims);
provided, however, nothing herein shall be deemed to release, discharge or
affect any Excluded Claims (as hereinafter defined) and the Debtor Released
Claims shall not include any Excluded Claims.  1 
   (b)           The Peregrine Parties, for themselves and each and all of
their respective successors, assigns, affiliates, and anyone claiming by,
through or under them, hereby release and absolutely discharge Lender and each
and all of its affiliates, successors, and assigns, and all present and former
representatives, agents, employees, attorneys, shareholders, partners,
venturers, members, principals, officers, and directors (collectively, the Lender Releasees) of and from any and all
Claims, which the Peregrine Parties may now have, own, or at any time
heretofore have ever had, owned, or held against the Lender Releasees, or any
of them, to the extent that (and only to the extent) such Claims arise out of,
under or in connection with or relate to the Fleet Purchase Documents, the
Forbearance Agreement, or, in each case, the transactions contemplated thereby
(hereinafter collectively referred to as the Peregrine
Released Claims); provided, however, nothing herein shall be deemed
to release, discharge or affect any Excluded Claims and the Peregrine Released
Claims shall not include any Excluded Claims.  (c)           As used in this Agreement, Excluded Claims means any Claims, to the extent (and only to
the extent) they:  (i)            (A) constitute Claims owned or held
by Peregrine or Remedy against Lender or constitute Claims owned or held by
Lender against Peregrine or Remedy, (B) arise out of, under or in connection
with or relate to the Fleet Purchase Documents, or the transactions
contemplated thereby, and (C) constitute Claims to be performed, paid or
observed solely after the Release Date (it being expressly understood, that if
any Claim is to be performed, paid or observed multiple times (whether before
or after the Release Date), that each such performance, payment or observation
shall for purposes hereof be deemed and considered a separate and individual
Claim); and/or  (ii)           are liens, interests or security
interests arising under the Fleet Purchase Documents in the Fleet Purchased
Accounts; and/or  (iii)          arise out of or under the Purchaser
Bank Agreement; and/or  (iv)          arise out of or under any agreement or
transaction between any one or more Peregrine Parties and any one or more other
persons or entities, with respect to which agreement or transaction (in whole
or in part) Lender has acquired, directly or indirectly, a security interest or
other interest from one or more of such other persons or entities and such
Claim arises out of the security interest or other interest acquired by Lender;
provided, however, that to the extent that any such security interest or other
interest is in a Past Due Purchase Obligation (as defined in the Forbearance
Agreement), such Claim shall be subject to the terms of the Releases (as
defined in Paragraph 3 below) and shall in no event be deemed an Excluded Claim
hereunder (subject to the immediately preceding proviso, but without otherwise
limiting the generality of the foregoing, this clause (iv) shall include as
Excluded Claims any Claims arising as a result of Lender acquiring a security
interest or other interest in any account, payment intangible or other payment
obligations owed by any Peregrine Party from the person or entity to which such
account, payment intangible or other payment obligations is owed); and/or  (v)           arise out of or under the agreements
or arrangements described on Exhibit A
attached hereto and incorporated herein by this reference.  2 
   2.  Lenders Release.  (a)           The Lender, for itself and anyone claiming by, through or
under it, hereby releases and absolutely discharges Peregrine, Remedy and each
and all of their respective successors and assigns (collectively, the Debtor Releasees) of and from any and all
Claims which the Lender may now have, own, or at any time heretofore have ever
had, owned, or held against Peregrine and/or Remedy (hereinafter collectively
referred to as the Lender Released Debtor
Claims); provided, however, nothing herein shall be deemed to
release, discharge or affect any Excluded Claims and the Lender Released Debtor
Claims shall not include any Excluded Claims.  (b)           The Lender, for itself and anyone claiming by, through or
under it, hereby releases and absolutely discharges the Peregrine Parties and
each and all of their respective successors, and assigns, and all present and
former representatives, agents, employees, attorneys, shareholders, members,
principals, officers, and directors (collectively, the Peregrine Releasees) of and from any and
all Claims which the Lender may now have, own, or at any time heretofore have
ever had, owned, or held against the Peregrine Releasees, or any of them, to
the extent that (and only to such extent) such Claims arise out of, under or in
connection with or relate to the Fleet Purchase Documents, the Forbearance
Agreement, or, in each case, the transactions contemplated thereby (hereinafter
collectively referred to as the Lender
Released Claims); provided, however, nothing herein shall be deemed
to release, discharge or affect any Excluded Claims and the Lender Released
Claims shall not include any Excluded Claims.  3. Scope of Release. The releases provided
for in Paragraphs 1 and 2 of this Release Agreement (collectively, the Releases) shall be effective as full and
final accords and satisfactions and general releases of and from all Lender
Released Claims, Lender Released Debtor Claims, Debtor Released Claims and
Peregrine Released Claims. In furtherance of this intention, the Peregrine Parties
and Lender each hereby acknowledge that that they are fully familiar with
Section 1542 of the California Civil Code, which Section provides as follows:  A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with debtor.  The Peregrine Parties and Lender further each
hereby waive and relinquish any right or benefit which they have or may have
under Section 1542 of the California Civil Code or any similar provision of
statutory or non-statutory law of California or any other jurisdiction to the
fullest extent that the Parties may lawfully waive such rights and benefits
pertaining to the subject matter of the Releases. In that regard, the Parties
further acknowledge that they are aware that they or their attorneys may
hereafter discover Claims or facts in addition to or different from those which
they now know or believe to exist with respect to the subject matter of the
Releases, and that it is the Lenders and Peregrine Parties intention,
respectively, fully, finally, and forever to settle and release all of its
possible Claims (other than Excluded Claims) with respect to the matters which
are the subject matter of the Releases. It is expressly understood that
notwithstanding the discovery or existence of any such additional or different
claims or facts, such Releases shall be and remain in full force and effect as
full and complete releases with respect to Debtor Released Claims, Lender
Released Claims, Lender Released Debtor Claims and Peregrine Released Claims,
as applicable. The Peregrine Parties and Lender each further acknowledge that
the other(s) has not made any representation of any kind or character
whatsoever in order to induce the execution of this Agreement.  3 
   4. Applicable Law, Etc.
This Release Agreement shall be enforced, interpreted, and construed in
accordance with internal laws of the State of California, without regard to
conflicts of laws principles. Whenever the context of this Release Agreement
may so require, the singular shall include the plural, the male gender shall
include the female gender and/or the neuter and vice versa.  5. Authority, No Prior Transfer.
The persons executing this Release Agreement on behalf of a Party hereby
represent and warrant that they are duly-authorized to execute and deliver this
Agreement on behalf of such Party, and that when so executed and delivered,
this Release Agreement will be binding upon and enforceable against that
Party.  The Lender, as to the Lender
Released Claims and the Lender Released Debtor Claims, and the Peregrine
Parties, as to the Debtor Released Claims and the Peregrine Released Claims,
each represent and warrant to the other(s) that they have not heretofore
transferred or assigned, or granted to any third party any interest of any kind
in or with respect to, the Lender Released Claims, the Lender Released Debtor
Claims, the Debtor Released Claims, or the Peregrine Released Claims, as
applicable, or purported to take any of the foregoing actions.  6. Bankruptcy Court
Jurisdiction; Waiver of Jury Trial. Until substantial
consummation (as defined in 11 U.S.C. sec. 1101(2)) of the Plan, the Bankruptcy
Court shall have exclusive jurisdiction to resolve and determine all disputes
and other matters arising in connection with the interpretation or enforcement
of this Release Agreement (collectively, Disputed Matters) and each Party
hereby expressly consents and submits to such jurisdiction. Following such
substantial consummation, jurisdiction shall be non-exclusive and shall lie in
such state or federal court(s) as may properly assert jurisdiction over the
Disputed Matter in question. In addition,
each of the Parties hereby expressly and irrevocably waives all right to trial
by jury in any action, proceeding or claim arising out of or relating to this
Release Agreement.  7. Payment of Expenses.
In the event any action (whether or not in a court proceeding) shall be
required or initiated to interpret, implement, modify, or enforce the terms and
provisions of this Release Agreement, and/or to declare any Partys rights
hereunder, the prevailing party in such action shall be entitled to recover
from the losing party all of its reasonable fees and costs.  8. Complete Agreement of
Parties. This Release Agreement constitutes the entire agreement
among the Parties with respect to the subject matter hereof. Any supplements,
modifications, waivers or terminations of this Release Agreement shall not be
binding unless executed in writing by the parties to be bound thereby. No
waiver of any provision of this Release Agreement shall constitute a waiver of
any other provisions of this Release Agreement (whether similar or not), nor
shall such waiver constitute a continuing waiver unless otherwise expressly so
provided.  9. Execution In Counterparts.
This Release Agreement may be executed in any number of counterparts each of
which, when so executed and delivered, shall be deemed an original, and all of
which together shall constitute but one and the same agreement.  10. Consultation with Counsel.
Each Party acknowledges that it is freely and voluntarily entering into this
Release Agreement. Moreover, each Party also acknowledges that it has been
represented by counsel of its own choice in the preparation and negotiation of
this Release Agreement.  11. Benefited Parties.
Those parties comprising Debtor Lender Releasees, Lender Releasees, Debtor
Releasees and Peregrine Releasees who are not signatories to this Release  4 
   Agreement are intended third party
beneficiaries of this Release Agreement and the Releases provided for herein.  12. Purchaser Bank Agent.
To the extent any Claim is being released by Fleet in its capacity as Purchaser
Bank Agent pursuant hereto, such release shall only extend to any Claims held
by Fleet in its capacity as Purchaser Bank Agent and shall not extend to any
Claims of any Purchaser Bank as defined in the Plan. The release of any
Claims of any Purchaser Bank (other than Fleet) shall be governed by the terms
and conditions of a mutual release to be entered into among such Purchaser Bank
and the Peregrine Parties. The release of any Claims by Fleet in its individual
capacity shall be governed by the terms and conditions of this Release
Agreement as if Fleet were entering into this Release Agreement solely in its
individual capacity and not in its capacity as Purchaser Bank Agent  [Remainder
of page intentionally left blank.]  5 
   IN WITNESS WHEREOF, the Parties have executed this Release
Agreement as of this 7th day of August, 2003.  LENDER:FLEET BUSINESS CREDIT,
  LLC,a Delaware limited
  liability company, in its individualcapacity and in its capacity as Purchaser Bank AgentBy:
  /s/ [ILLEGIBLE]Senior Vice President  6 
   PEREGRINE PARTIES:PEREGRINE
  SYSTEMS, INC.,a Delaware
  corporationBy:
  /s/ Gary G. GreenfieldIts:
  CEO and PresidentPEREGRINE
  REMEDY, INC.,a Delaware
  corporationBy:
  /s/ Gary G.
  GreenfieldIts:
  CEO and PresidentTELCO
  RESEARCH CORPORATION,a Tennessee corporationBy:
  /s/ Gary G.
  GreenfieldIts:
  CEO and PresidentPEREGRINE
  DIAMOND, INC.,a Delaware corporationBy:
  /s/ Gary G.
  GreenfieldIts:
  CEO and PresidentPEREGRINE
  CALIFORNIA PADRES, INC.,aDelaware corporationBy:
  /s/ Gary G.
  GreenfieldIts:
  CEO and PresidentPEREGRINE
  ONTARIO BLUE JAYS, INC.,a Delaware corporationBy:
  /s/ Gary G.
  GreenfieldIts:
  CEO and President  7 
   BALLGAME
  ACQUISITION CORPORATION,aDelaware corporationBy:
  /s/ Gary G.
  GreenfieldIts:
  President and CEOOCTOBER
  ACQUISITION CORPORATION,aDelaware corporationBy:
  /s/ Gary G. GreenfieldIts:
  CEO and PresidentPEREGRINE
  BODBA, INC.,a California corporationBy.
  /s/ Gary G. GreenfieldIts:
  CEO and PresidentPEREGRINE
  FEDERAL SYSTEMS, INC.,an Illinois
  corporationBy:
  /s/ Gary G. GreenfieldIts:
  CEO President and DirectorLORAN
  NETWORK SYSTEMS, LLC,
  a Delaware limited liability companyBy:
  /s/ Gary G. GreenfieldIts:
  DirectorPEREGRINE
  SYSTEMS OF CANADA. INC., acorporation organized under
  the laws of CanadaBy:
  /s/ Gary G. GreenfieldIts:
  Director and President  8 
   PEREGRINE
  NOVA SCOTIA COMPANY,a Nova Scotia unlimited
  liability company,By:
  /s/ Gary G. GreenfieldIts:
  Director and PresidentPEREGRINE
  SYSTEMS LTD.,a
  corporation organized under the laws of OntarioBy:
  /s/ Kathryn VizasIts:
  Director and PresidentPEREGRINE
  OTTAWA NOVA SCOTIA COMPANY,a Nova Scotia unlimited
  liability companyBy:
  /s/ Gary G. GreenfieldIts:
  Director and PresidentPEREGRINE
  NETWORKS CANADA INC.,a corporation organized
  under the laws of CanadaBy:
  /s/ Gary G. GreenfieldIts:
  Director and PresidentLORAN
  INTERNATIONAL TECHNOLOGIES INC.,a
  corporation organized under the laws of CanadaBy:
  /s/ Gary G. GreenfieldIts:
  Director and PresidentLORAN
  NETWORK SYSTEMS INC.,a corporation organized
  under the laws of CanadaBy:
  /s/ Gary G. GreenfieldIts:
  Director and President  9 
   REMEDY
  CANADA LTD.,a corporation organized
  under the laws of OntarioBy.
  /s/ Gary G. GreenfieldIts:
  Director and PresidentEXTRICITY
  (CANADA) CORP.,a Nova Scotia unlimited
  liability companyBy:
  /s/ Gary G. GreenfieldIts:
  Director and President  10