<PAGE>
                                       
                            PEREGRINE SYSTEMS, INC.

                        1997 EMPLOYEE STOCK PURCHASE PLAN


        1.     PURPOSE.  The purpose of the Plan is to provide employees of 
the Company and its Designated Subsidiaries with an opportunity to purchase 
Common Stock of the Company through accumulated payroll deductions.  It is 
the intention of the Company to have the Plan qualify as an "Employee Stock 
Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as 
amended.  The provisions of the Plan, accordingly, shall be construed so as 
to extend and limit participation in a manner consistent with the 
requirements of that section of the Code.

        2.     DEFINITIONS.

             (a)    "BOARD" shall mean the Board of Directors of the Company.

             (b)    "CODE" shall mean the Internal Revenue Code of 1986, as 
amended.

             (c)    "COMMON STOCK" shall mean the Common Stock of the Company.

             (d)    "COMPANY" shall mean Peregrine Systems, Inc., a Delaware 
corporation, and any Designated Subsidiary of the Company.

             (e)    "COMPENSATION" shall mean all base straight time gross 
earnings and commissions, exclusive of payments for overtime, shift premium, 
incentive compensation, incentive payments, bonuses, and other compensation.

             (f)    "DESIGNATED SUBSIDIARY" shall mean any Subsidiary which 
has been designated by the Board from time to time in its sole discretion as 
eligible to participate in the Plan.

             (g)    "EMPLOYEE" shall mean any individual who is an Employee 
of the Company for tax purposes and whose customary employment with the 
Company is at least twenty (20) hours per week and more than five (5) months 
in any calendar year.  For purposes of the Plan, the employment relationship 
shall be treated as continuing intact while the individual is on sick leave 
or other leave of absence approved by the Company.  Where the period of leave 
exceeds 90 days and the individual's right to reemployment is not guaranteed 
either by statute or by contract, the employment relationship shall be deemed 
to have terminated on the 91st day of such leave.

             (h)    "ENROLLMENT DATE" shall mean the first day of each 
Offering Period.

             (i)    "EXERCISE DATE" shall mean the last day of each Offering 
Period.

             (j)    "FAIR MARKET VALUE" shall mean, as of any date, the value 
of Common Stock determined as follows:

                  (1)    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 


                                                                  Page 1 of 8

<PAGE>

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, or;

                  (2)    If the Common Stock is regularly quoted by a 
recognized securities dealer but selling prices are not reported, its Fair 
Market Value shall be the mean of the closing bid and asked prices for the 
Common Stock on the date of such determination, as reported in THE WALL 
STREET JOURNAL or such other source as the Board deems reliable, or;

                  (3)    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.
        
                  (4)    For purposes of the Enrollment Date of the first 
Offering Period under the Plan, the Fair Market Value shall be the initial 
price to the public as set forth in the final prospectus included within the 
registration statement on Form S-1 filed with the Securities and Exchange 
Commission for the initial public offering of the Company's Common Stock (the 
"Registration Statement").

             (k)    "HOLDING PERIOD" shall mean that period of time beginning 
on an Exercise Date on which shares are purchased by participants under the 
Plan and ending twelve (12) calendar months thereafter.
        
             (l)    "OFFERING PERIOD" shall mean a period of three (3) months 
during which an option granted pursuant to the Plan may be exercised, 
commencing on the first Trading Day on or after May 1 and terminating on the 
last Trading Day in the period ending the following July 31; or commencing on 
the first Trading Day on or after August 1 and terminating on the last 
Trading Day in the period ending the following October 31; or commencing on 
the first Trading Day on or after November 1 and terminating on the first 
Trading Day in the period ending the following January 31; or commencing on 
the first Trading Day on or after February 1 and terminating on the last 
Trading Day in the period ending the following April 30; PROVIDED, HOWEVER, 
that the first Offering Period under the Plan shall commence with the first 
Trading Day on or after May 1, 1997, and shall terminate on the last Trading 
Day on or before July 31, 1997.  The duration of Offering Periods may be 
changed pursuant to Section 4 of this Plan.

             (m) "OFFICER" means a person who is an officer of the Company 
within the meaning of Section 16 of the Securities Exchange Act of 1934, as 
amended, and the rules and regulations promulgated thereunder.

             (n)    "PLAN" shall mean this Employee Stock Purchase Plan.

             (o)    "PURCHASE PRICE" shall mean an amount equal to 85% of the 
Fair Market Value of a share of Common Stock on the Enrollment Date or on the 
Exercise Date, whichever is lower.

             (p)    "RESERVES" shall mean the number of shares of Common 
Stock covered by each option under the Plan which have not yet been exercised 
and the number of shares of Common Stock which have been authorized for 
issuance under the Plan but not yet placed under option.
 
             (q)    "SUBSIDIARY" shall mean a corporation, domestic or 
foreign, of which not less than 50% of the voting shares are held by the 
Company or a Subsidiary, whether or not such corporation now exists or is 
hereafter organized or acquired by the Company or a Subsidiary.


                                                                  Page 2 of 8

<PAGE>

             (r)    "TRADING DAY" shall mean a day on which national stock 
exchanges and the Nasdaq System are open for trading.

        3.   ELIGIBILITY.

             (a)    Any Employee who shall be employed by the Company on a 
given Enrollment Date and who is not an Officer on such date shall be 
eligible to participate in the Plan.

             (b)    Any provisions of the Plan to the contrary 
notwithstanding, no Employee shall be granted an option under the Plan (i) to 
the extent that, immediately after the grant, such Employee (or any other 
person whose stock would be attributed to such Employee pursuant to Section 
424(d) of the Code) would own capital stock of the Company and/or hold 
outstanding options to purchase such stock possessing five percent (5%) or 
more of the total combined voting power or value of all classes of the 
capital stock of the Company or of any Subsidiary, or (ii) to the extent that 
his or her rights to purchase stock under all employee stock purchase plans 
of the Company and its subsidiaries accrue at a rate which exceeds 
Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the fair 
market value of the shares at the time such option is granted) for each 
calendar year in which such option is outstanding at any time.

        4.   OFFERING PERIODS.  The Plan shall be implemented by consecutive 
Offering Periods with a new Offering Period commencing on the first Trading 
Day on or after May 1, August 1, November 1, and February 1 of each year, or 
on such other date as the Board shall determine, and continuing thereafter 
until terminated in accordance with Section 21 hereof; PROVIDED, HOWEVER, that 
the first Offering Period under the Plan shall commence with the first Trading 
Day on or after May 1, 1997, and shall terminate on the last Trading Day on or 
before July 31, 1997.  The Board shall have the power to change the duration 
of Offering Periods (including the commencement dates thereof) with respect to 
future offerings without stockholder approval if such change is announced at 
least five (5) days prior to the scheduled beginning of the first Offering 
Period to be affected thereafter. 

        5.   PARTICIPATION.

             (a)    An eligible Employee may become a participant in the Plan 
by completing a participation agreement authorizing payroll deductions in the 
form of EXHIBIT A to this Plan and filing it with the Company's payroll 
office prior to the applicable Enrollment Date.

             (b)    Payroll deductions for a participant shall commence on 
the first payroll following the Enrollment Date and shall end on the last 
payroll in the Offering Period to which such authorization is applicable, 
unless sooner terminated by the participant as provided in Section 11 hereof.
        
        6.   PAYROLL DEDUCTIONS.

             (a)    At the time a participant files his or her participation 
agreement, he or she shall elect to have payroll deductions made on each pay 
day during the Offering Period in an amount not exceeding fifteen percent 
(15%) of the Compensation which he or she receives on each pay day during the 
Offering Period.

             (b)    All payroll deductions made for a participant shall be 
credited to his or her account under the Plan and shall be withheld in whole 
percentages only.  A participant may not make any additional payments into 
such account.


                                                                  Page 3 of 8

<PAGE>

             (c)    A participant may discontinue his or her participation in 
the Plan as provided in Section 11 hereof, or may increase or decrease the 
rate of his or her payroll deductions during the Offering Period by 
completing or filing with the Company a new participation agreement 
authorizing a change in payroll deduction rate.  The Board may, in its 
discretion, limit the number of participation rate changes during any 
Offering Period.  The change in rate shall be effective with the first full 
payroll period following five (5) business days after the Company's receipt 
of the new participation agreement unless the Company elects to process a 
given change in participation more quickly.  A participant's participation 
agreement shall remain in effect for successive Offering Periods unless 
terminated as provided in Section 11 hereof.

             (d)    Notwithstanding the foregoing, to the extent necessary to 
comply with Stection 423(b)(8) of the Code and Section 3(b) hereof, a 
participant's payroll deductions may be decreased to zero percent (0%) at any 
time during an Offering Period.  Payroll deductions shall recommence at the 
rate provided in such participant's participation agreement at the beginning 
of the first Offering Period which is scheduled to end in the following 
calendar year, unless terminated by the participant as provided in Section 11 
hereof.

             (e)    At the time the option is exercised, in whole or in part, 
or at the time some or all of the Company's Common Stock issued under the 
Plan is disposed of, the participant must make adequate provision for the 
Company's federal, state, or other tax withholding obligations, if any, which 
arise upon the exercise of the option or the disposition of the Common Stock. 
At any time, the Company may, but shall not be obligated to, withhold from 
the participant's compensation the amount necessary for the Company to meet 
applicable withholding obligations, including any withholding required to 
make available to the Company any tax deductions or benefits attributable to 
sale or early disposition of Common Stock by the Employee.

        7.   GRANT OF OPTION.  On the Enrollment Date of each Offering 
Period, each eligible Employee participating in such Offering Period shall be 
granted an option to purchase on the Exercise Date of such Offering Period 
(at the applicable Purchase Price) up to a number of shares of the Company's 
Common Stock determined by dividing such Employee's payroll deductions 
accumulated prior to such Exercise Date and retained in the Participant's 
account as of the Exercise Date by the applicable Purchase Price; provided 
that in no event shall an Employee be permitted to purchase during each 
Offering Period more than 25,000 shares (subject to any adjustment pursuant 
to Section 20), and provided further that such purchase shall be subject to 
the limitations set forth in Sections 3(b) and 14 hereof. Exercise of the 
option shall occur as provided in Section 8 hereof, unless the participant 
has withdrawn pursuant to Section 11 hereof.  The Option shall expire on the 
last day of the Offering Period.

        8.   EXERCISE OF OPTION.  Unless a participant withdraws from the Plan 
as provided in Section 11 hereof, notice of exercise of his or her option 
shall be deemed to have been given by the participant and his or her option 
for the purchase of shares shall be exercised automatically on the Exercise 
Date, and the maximum number of full shares subject to option shall be 
purchased for such participant at the applicable Purchase Price with the 
accumulated payroll deductions in his or her account.  No fractional shares 
shall be purchased; any payroll deductions accumulated in a participant's 
account which are not sufficient to purchase a full share shall be retained in 
the participant's account for the subsequent Offering Period, subject to 
earlier withdrawal by the participant as provided in Section 11 hereof.  Any 
other monies left over in a participant's account after the Exercise Date 
shall be returned to the participant. During a participant's lifetime, a 
participant's option to purchase shares hereunder is exercisable only by him 
or her.

                                                                  Page 4 of 8

<PAGE>

        9.   HOLDING PERIOD.  Shares purchased by a participant shall be held 
in the participant's account under the Plan during the Holding Period.  In the 
event of a sale of all or substantially all of the Company's assets, or a 
merger of the Company with or into another corporation, the Holding Period 
shall lapse.

        10.  DELIVERY.  As promptly as practicable after each Exercise Date 
on which a purchase of shares occurs, the Company shall credit each 
participant's account under the Plan with the shares purchased upon exercise 
of his or her option.  As promptly as practicable after expiration of the 
Holding Period, the Company shall, in its discretion, either (a) arrange for 
the delivery to each participant of a certificate representing the shares 
purchased upon exercise of his or her option, or (b) credit the shares 
purchased to an account in the participant's name with a brokerage firm 
selected by the Company to hold the shares in street name.

        11.  WITHDRAWAL.

             (a)    A participant may withdraw all but not less than all the 
payroll deductions credited to his or her account and not yet used to 
exercise his or her option under the Plan at any time by giving written 
notice to the Company in the form of EXHIBIT B to this Plan.  All of the 
participant's payroll deductions credited to his or her account shall be paid 
to such participant promptly after receipt of notice of withdrawal and such 
participant's option for the Offering Period shall be automatically 
terminated, and no further payroll deductions for the purchase of shares 
shall be made for such Offering Period. If a participant withdraws from an 
Offering Period, payroll deductions shall not resume at the beginning of the 
succeeding Offering Period unless the participant delivers to the Company a 
new participation agreement.

             (b)    A participant's withdrawal from an Offering Period shall 
not have any effect upon his or her eligibility to participate in any similar 
plan which may hereafter be adopted by the Company or in succeeding Offering 
Periods which commence after the termination of the Offering Period from 
which the participant withdraws.
             
        12.  TERMINATION OF EMPLOYMENT.  Upon a participant's ceasing to be 
an Employee for any reason, he or she shall be deemed to have elected to 
withdraw from the Plan and the payroll deductions credited to such 
participant's account during the Offering Period but not yet used to exercise 
the option shall be returned to such participant or, in the case of his or 
her death, to the person or persons entitled thereto under Section 16 hereof, 
and such participant's option shall be automatically terminated.

        13.  INTEREST.  No interest shall accrue on the payroll deductions of 
a participant in the Plan.

        14.  STOCK.

             (a)    The maximum number of shares of the Company's Common 
Stock which shall be made available for sale under the Plan shall be two 
hundred fifty thousand (250,000) shares, subject to adjustment upon changes 
in capitalization of the Company as provided in Section 20 hereof.  If, on a 
given Exercise Date, the number of shares with respect to which options are 
to be exercised exceeds the number of shares then available under the Plan, 
the Company shall make a pro rata allocation of the shares remaining 
available for purchase in as uniform a manner as shall be practicable and as 
it shall determine to be equitable.

             (b)    The participant shall have no interest or voting right in 
shares covered by his option until such option has been exercised.


                                                                  Page 5 of 8

<PAGE>

             (c)    Shares to be delivered to a participant under the Plan 
shall be registered in the name of the participant or in the name of the 
participant and his or her spouse.

        15.  ADMINISTRATION.  The Plan shall be administered by the Board or 
a committee of members of the Board appointed by the Board.  The Board or its 
committee shall have full and exclusive discretionary authority to construe, 
interpret, and apply the terms of the Plan, to determine eligibility and to 
adjudicate all disputed claims filed under the Plan.  Every finding, decision 
and determination made by the Board or its committee shall, to the full 
extent permitted by law, be final and binding upon all parties.  

        16.  DESIGNATION OF BENEFICIARY.

             (a)    Subject to applicable domestic and foreign law, a 
participant may file a written designation of a beneficiary who is to receive 
any shares and cash, if any, from the participant's account under the Plan in 
the event of such participant's death subsequent to an Exercise Date on which 
the option is exercised but prior to delivery to such participant of such 
shares and cash.  In addition, a participant may file a written designation 
of a beneficiary who is to receive any cash from the participant's account 
under the Plan in the event of such participant's death prior to exercise of 
the option. If a participant is married and the designated beneficiary is not 
the spouse, spousal consent shall be required for such designation to be 
effective.

             (b)    Such designation of beneficiary may be changed by the 
participant at any time by written notice.  In the event of the death of a 
participant and in the absence of a beneficiary validly designated under the 
Plan who is living at the time of such participant's death, the Company shall 
deliver such shares and/or cash to the executor or administrator of the 
estate of the participant, or if no such executor or administrator has been 
appointed (to the knowledge of the Company), the Company, in its discretion, 
may deliver such shares and/or cash to the spouse or to any one or more 
dependents or relatives of the participant, or if no spouse, dependent or 
relative is known to the Company, then to such other person as the Company 
may designate.

        17.  TRANSFERABILITY.  Neither payroll deductions credited to a 
participant's account nor any rights with regard to the exercise of an option 
or to receive shares under the Plan may be assigned, transferred, pledged, or 
otherwise disposed of in any way (other than by will, the laws of descent and 
distribution, or as provided in Section 16 hereof) by the participant.  Any 
such attempt at assignment, transfer, pledge, or other disposition shall be 
without effect, except that the Company may treat such act as an election to 
withdraw funds from an Offering Period in accordance with Section 11 hereof.

        18.  USE OF FUNDS.  All payroll deductions received or held by the 
Company under the Plan may be used by the Company for any corporate purpose, 
and the Company shall not be obligated to segregate such payroll deductions.

        19.  REPORTS.  Individual accounts shall be maintained for each 
participant in the Plan.  Statements of account shall be given to 
participating Employees at least annually, which statements shall set forth 
the amounts of payroll deductions, the Purchase Price, the number of shares 
purchased, and the remaining cash balance, if any.

        20.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,  DISSOLUTION, 
LIQUIDATION, MERGER OR ASSET SALE.

                                                                  Page 6 of 8

<PAGE>

             (a)    CHANGES IN CAPITALIZATION.  Subject to any required 
action by the stockholders of the Company, the Reserves, the maximum number 
of shares each participant may purchase per Offering Period (pursuant to 
Section 7), as well as the price per share and the number of shares of Common 
Stock covered by each option under the Plan which has not yet been exercised 
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 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 Offering Period shall 
terminate immediately prior to the consummation of such proposed action, 
unless otherwise provided by the Board.

             (c)    MERGER OR ASSET SALE.  In the event of a proposed sale of 
all or substantially all of the assets of the Company, or the merger of the 
Company with or into another corporation, the Offering Period then in 
progress shall be shortened by setting a new Exercise Date (the "New Exercise 
Date").  The New Exercise Date shall be before the date of the Company's 
proposed sale or merger.  The Board shall notify each participant in writing, 
at least ten (10) business days prior to the New Exercise Date, that the 
Exercise Date for the participant's option has been changed to the New 
Exercise Date and that the participant's option shall be exercised 
automatically on the New Exercise Date, unless prior to such date the 
participant has withdrawn from the Offering Period as provided in Section 11 
hereof.

        21.   AMENDMENT OR TERMINATION.

             (a)    The Board of Directors of the Company may at any time and 
for any reason terminate or amend the Plan.  Except as provided in Section 20 
hereof, no such termination can affect options previously granted, provided 
that an Offering Period may be terminated by the Board of Directors on any 
Exercise Date if the Board determines that the termination of the Plan is in 
the best interests of the Company and its stockholders.  Except as provided 
in Section 20 hereof, no amendment may make any change in any option 
theretofore granted which adversely affects the rights of any participant.  
To the extent necessary to comply with Section 423 of the Code (or any other 
applicable law, regulation or stock exchange rule), the Company shall obtain 
shareholder approval in such a manner and to such a degree as required.  

             (b)    Without stockholder consent and without regard to whether 
any participant rights may be considered to have been "adversely affected," 
the Board (or its committee) shall be entitled to change the Offering 
Periods, limit the frequency and/or number of changes in the amount withheld 
during an Offering Period, establish the exchange ratio applicable to amounts 
withheld in a currency other than U.S. dollars, permit payroll withholding in 
excess of the amount designated by a participant in order to adjust for 
delays or mistakes in the Company's processing of properly completed 
withholding elections, establish reasonable waiting and adjustment periods 
and/or accounting and crediting procedures to ensure that amounts applied 
toward the purchase of Common Stock for each participant properly correspond 
with amounts withheld from the participant's Compensation, and 


                                                                  Page 7 of 8

<PAGE>

establish such other limitations or procedures as the Board (or its 
committee) determines in its sole discretion advisable which are consistent 
with the Plan.
        
        22.  NOTICES.  All notices or other communications by a participant 
to the Company under or in connection with the Plan shall be deemed to have 
been duly given when received in the form specified by the Company at the 
location, or by the person, designated by the Company for the receipt thereof.

        23.  CONDITIONS UPON ISSUANCE OF SHARES.  Shares shall not be issued 
with respect to an option unless the exercise of such option and the issuance 
and delivery of such shares pursuant thereto shall comply with all applicable 
provisions of law, domestic or foreign, including, without limitation, the 
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as 
amended, the rules and regulations promulgated thereunder, 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 applicable provisions of law.

        24.  TERM OF PLAN.  The Plan shall become effective upon the earlier 
to occur of its adoption by the Board of Directors or its approval by the 
stockholders of the Company.  It shall continue in effect for a term of ten 
(10) years unless sooner terminated under Section 21 hereof.


                                                                  Page 8 of 8

<PAGE>
                                       
                                   EXHIBIT A

                            PEREGRINE SYSTEMS, INC.

                        1997 EMPLOYEE STOCK PURCHASE PLAN

                            PARTICIPATION AGREEMENT



_____ Original Application                      Enrollment Date: __________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)


1.   _____________________________________ hereby elects to participate in the
     Peregrine Systems, Inc. 1997 Employee Stock Purchase Plan (the "Employee
     Stock Purchase Plan") and subscribes to purchase shares of the Company's
     Common Stock in accordance with this Participation Agreement and the
     Employee Stock Purchase Plan.

2.   I hereby authorize payroll deductions from each paycheck in the amount of
     ____% of my Compensation on each payday (from 0 to 15%) during the Offering
     Period in accordance with the Employee Stock Purchase Plan.  (Please note
     that no fractional percentages are permitted.)

3.   I understand that said payroll deductions shall be accumulated in order to
     exercise the option(s) granted to me pursuant to the Employee Stock
     Purchase Plan and to purchase shares of Common Stock at the applicable
     Purchase Price determined in accordance with the Employee Stock Purchase
     Plan.  I understand that if I do not withdraw from an Offering Period, any
     accumulated payroll deductions will be used to automatically exercise my
     option. I further understand that shares of Common Stock purchased for me
     under the Employee Stock Purchase Plan upon exercise of my option are
     subject to the Holding Period described in Section 9 of the Employee Stock
     Purchase Plan.

4.   I have received a copy of the complete Employee Stock Purchase Plan.  I
     understand that my participation in the Employee Stock Purchase Plan is in
     all respects subject to the terms of the Plan.  I understand that my
     ability to exercise the option under this Participation Agreement is
     subject to stockholder approval of the Employee Stock Purchase Plan.

5.   Shares purchased for me under the Employee Stock Purchase Plan should be
     issued in the name(s) of (Employee or Employee and Spouse only):_________.

6.   I understand that if I dispose of any shares received by me pursuant to the
     Plan within 2 years after the Enrollment Date (the first day of the
     Offering Period during which I purchased such shares), I will be treated
     for federal income tax purposes as having received ordinary income at the
     time of such disposition in an amount equal to the excess of the fair
     market value of the shares at the time such shares were purchased by me
     over the price which I paid for the shares.  I HEREBY AGREE TO NOTIFY THE
     COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY DISPOSITION OF
     SHARES AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE, OR OTHER TAX
     WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF THE
     COMMON STOCK.  The Company may, but 


                                                                  Page 1 of 3

<PAGE>

     will not be obligated to, withhold from my compensation the amount 
     necessary to meet any applicable withholding obligation including any 
     withholding necessary to make available to the Company any tax 
     deductions or benefits attributable to sale or early disposition of 
     Common Stock by me. If I dispose of such shares at any time after the 
     expiration of the 2-year holding period, I understand that I will be 
     treated for federal income tax purposes as having received income only 
     at the time of such disposition, and that such income will be taxed as 
     ordinary income only to the extent of an amount equal to the lesser of 
     (1) the excess of the fair market value of the shares at the time of 
     such disposition over the purchase price which I paid for the shares, or 
     (2) 15% of the fair market value of the shares on the first day of the 
     Offering Period.  The remainder of the gain, if any, recognized on such 
     disposition will be taxed as capital gain.

7.   I hereby agree to be bound by the terms of the 1997 Employee Stock Purchase
     Plan, including the prohibition on sales by me of any shares purchased
     under the 1997 Employee Stock Purchase for a period of one year from the
     date of purchase.  I acknowledge that the Administrator of the 1997
     Employee Stock Purchase Plan will have no discretion to release any shares
     purchased by me until the expiration of such one-year holding period.  The
     effectiveness of this Participation Agreement is dependent upon my
     eligibility to participate in the Employee Stock Purchase Plan.

8.   In the event of my death, I hereby designate the following as my
     beneficiary(ies) to receive all payments and shares due me under the
     Employee Stock Purchase Plan:



         NAME:  (Please print) ______________________________________________
                                (First)         (Middle)               (Last)


         _____________________________
         Relationship
         _____________________________
         (Address)
         _____________________________

                                                                  Page 2 of 3

<PAGE>

               [PEREGRINE SYSTEMS, INC. ESPP PARTICIPATION AGREEMENT]

Employee's Social
Security Number:              ____________________________________



Employee's Address:           ____________________________________

                              ____________________________________

                              ____________________________________


I UNDERSTAND THAT THIS PARTICIPATION AGREEMENT SHALL REMAIN IN EFFECT 
THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:________________    ____________________________________________________
                          Signature of Employee


                          ____________________________________________________
                          Spouse's Signature (If beneficiary other than spouse)




[Signature Page to ESPP Participation Agreement]


                                                                  Page 3 of 3

<PAGE>
                                       
                                   EXHIBIT B


                             PEREGRINE SYSTEMS, INC.

                        1997 EMPLOYEE STOCK PURCHASE PLAN

                               NOTICE OF WITHDRAWAL


        The undersigned participant in the Offering Period of the Peregrine 
Systems, Inc. 1997 Employee Stock Purchase Plan which began on ___________ 
19____ (the "Enrollment Date") hereby notifies the Company that he or she 
hereby withdraws from the Offering Period.  He or she hereby directs the 
Company to pay to the undersigned as promptly as practicable all the payroll 
deductions credited to his or her account with respect to such Offering 
Period.  The undersigned understands and agrees that his or her option for 
such Offering Period will be automatically terminated.  The undersigned 
understands further that no further payroll deductions will be made for the 
purchase of shares in the current Offering Period and the undersigned shall 
be eligible to participate in succeeding Offering Periods only by delivering 
to the Company a new Participation Agreement.

                                     Name and Address of Participant:

                                      ____________________________________

                                      ____________________________________

                                      ____________________________________



                                      Signature:

                                      ____________________________________


                                      Date: ______________________________


                                                                    Page 1 of 1

<PAGE>
                                       
                                  EXHIBIT A-1


                            PEREGRINE SYSTEMS, INC.

                        1997 EMPLOYEE STOCK PURCHASE PLAN

                            PARTICIPATION AGREEMENT

                              [EUROPEAN EMPLOYEES]



_____ Original Application                          Enrollment Date: __________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)


1.    _________________________________ hereby elects to participate in the 
      Peregrine Systems, Inc. 1997 Employee Stock Purchase Plan (the 
      "Employee Stock Purchase Plan") and subscribes to purchase shares of 
      the Company's Common Stock in accordance with this Participation 
      Agreement and the Employee Stock Purchase Plan.

2.    I hereby authorize payroll deductions from each paycheck in the amount 
      of ____% of my Compensation on each payday (from 0 to 15%) during the 
      Offering Period in accordance with the Employee Stock Purchase Plan.  
      (Please note that no fractional percentages are permitted.)

3.    I understand that said payroll deductions shall be accumulated in order 
      to exercise the option(s) granted to me pursuant to the Employee Stock 
      Purchase Plan and to purchase shares of Common Stock at the applicable 
      Purchase Price determined in accordance with the Employee Stock 
      Purchase Plan.  I understand that if I do not withdraw from an Offering 
      Period, any accumulated payroll deductions will be used to 
      automatically exercise my option. I further understand that shares of 
      Common Stock purchased for me under the Employee Stock Purchase Plan 
      upon exercise of my option are subject to the Holding Period described 
      in Section 9 of the Employee Stock Purchase Plan.

4.    I have received a copy of the complete Employee Stock Purchase Plan.  I 
      understand that my participation in the Employee Stock Purchase Plan is 
      in all respects subject to the terms of the Plan.  I understand that my 
      ability to exercise the option under this Participation Agreement is 
      subject to stockholder approval of the Employee Stock Purchase Plan.

5.    Shares purchased for me under the Employee Stock Purchase Plan should 
      be issued in the name(s) of (Employee or Employee and Spouse 
      only):______________________________.

6.    I understand and acknowledge that notwithstanding any other provision 
      of this Participation Agreement or the Employee Stock Purchase Plan:

      (a)   neither the Employee Stock Purchase Plan nor this Participation 
            Agreement shall form any part of any contract of employment 
            between me and the Company or any Designated Subsidiary, and it 
            shall not confer on me any legal or equitable rights (other 

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            than those constituting the options granted under the Employee Stock
            Purchase Plan themselves) against the Company or any Designated 
            Subsidiary, directly or indirectly, or give rise to any cause of 
            action in law or in equity against the Company or any subsidiary.

      (b)   my benefits under the Employee Stock Purchase Plan shall not form 
            any part of my wages, pay, or remuneration or count as wages, 
            pay, or remuneration for pension fund or other purposes.

      (c)   in no circumstances shall I, upon ceasing to hold my office or 
            employment by virtue of which I am eligible to participate in the 
            Employee Stock Purchase Plan, be entitled to any compensation for 
            any loss of any right or benefit or prospective right or benefit 
            under the Plan, which I might otherwise have enjoyed, whether 
            such compensation is claimed by way of damages for wrongful 
            dismissal or other breach of contract or by way of compensation 
            for loss of office or otherwise.

      (d)   that the Company expressly retains the right to terminate the 
            Employee Stock Purchase Plan at any time and that I will have no 
            right to continued option grants under the Employee Stock 
            Purchase Plan in such event.

7.    I hereby agree to be bound by the terms of the 1997 Employee Stock 
      Purchase Plan, including the prohibition on sales by me of any shares 
      purchased under the 1997 Employee Stock Purchase for a period of one 
      year from the date of purchase.  I acknowledge that the Administrator 
      of the 1997 Employee Stock Purchase Plan will have no discretion to 
      release any shares purchased by me until the expiration of such 
      one-year holding period.  The effectiveness of this Participation 
      Agreement is dependent upon my eligibility to participate in the 
      Employee Stock Purchase Plan.

8.    In the event of my death, I hereby designate the following as my 
      beneficiary(ies) to receive all payments and shares due me under the 
      Employee Stock Purchase Plan:

     NAME: (Please print)________________________________________
                             (First)      (Middle)      (Last)


     ____________________
     Relationship
     ____________________
     (Address)
     ____________________


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                  [PEREGRINE SYSTEMS, INC. ESPP PARTICIPATION AGREEMENT]

Employee's Social
Security Number:             ____________________________________



Employee's Address:          ____________________________________
                             
                             ____________________________________

                             ____________________________________



I UNDERSTAND THAT THIS PARTICIPATION AGREEMENT SHALL REMAIN IN EFFECT 
THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated: ______________________           _________________________________
                                        Signature of Employee


                                        _________________________________
                                        Spouse's Signature 
                                        (If beneficiary other than spouse)



      [Signature Page to ESPP Participation Agreement]


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