Exhibit 10.37  Settlement Agreement and Release By and Among Peregrine Systems, Inc., International
Business Machine Corporation, and IBM Credit Corporation (the Agreement)  WHEREAS
Peregrine Systems, Inc. (Peregrine) and International Business Machines
Corporation (IBM) entered into the IBM Global Services International Master
Agreement (the Master Agreement) and the International Country Agreement for
the United States of America (the US Country Agreement) on June 1, 2001;  WHEREAS
Peregrine and IBM entered into an agreement referred to as the Assignment
Agreement with an Effective Date of June 23, 2002 (the US Assignment
Agreement) pursuant to which the Master Agreement and US Country Agreement
were assigned to Peregrine Connectivity, Inc. (nka Inovis, Inc., Inovis) and,
under the terms of the US Assignment Agreement, Peregrine retained certain
payment obligations to IBM and IBM agreed to permit certain services
obligations to Inovis to be passed through to Peregrine;  WHEREAS
Peregrine and IBM Credit Corporation (ICC) entered into an agreement referred
to as the Supplement #D00066494 to the Term Lease Master Agreement (#PAH0364)
and an agreement referred to as the Supplement #C00066484 to the Term Lease
Master Agreement (#PAH0364) between ICC and Peregrine dated 3/28/02 (the IGF
Agreements);  WHEREAS
Peregrine filed a voluntary petition under Chapter 11 of the Bankruptcy Code,
11 U.S.C §§101, et. seq. (the Bankruptcy Code), on September 22, 2002,
in the United States Bankruptcy Court for the District of Delaware (Bankruptcy
Court); and,  WHEREAS the
parties, subject to Bankruptcy Court approval, now wish to (a) amend the terms
of the US Assignment Agreement to provide for (i) the transition to Peregrine
of certain hosting services provided by IBM which are no longer cost-effective
in light of Peregrines customer base; and (ii) the termination of certain
purchase obligations of Peregrine, and (b) make such other agreements as are
described below.  Now THEREFORE,
in consideration of the mutual promises and covenants contained herein, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:  1.On
the Effective Date (as defined in Section 7(a) below), IBM shall provide
Transition Services Assistance as described in the attached Exhibit A,
attached hereto (the Transition Services Assistance).  2.On
the Effective Date, IBM hereby transfers title to the twenty-one (21) servers
described in Exhibit B, attached hereto.  3.On
the Effective Date, IBM hereby reduces the number of laptops that Peregrine was
obligated to take delivery of under PCR #49 to the US Country Agreement (PCR
#49) from 1,000 to 676 and hereby transfers title to the 676 laptops to
Peregrine.  4.On
the Effective Date, the parties agree to offset the amount of $5,250,311.36
(subject to fluctuations in the currency exchange rates as of the Effective
Date as described in Part 2 of Exhibit C) owed by IBM or its affiliates to
Peregrine or its affiliates under the invoices listed in Part 2 of Exhibit C,
attached hereto, against (i) the amount of $1,766,282.00 owed by Peregrine to
ICC under the IGF Agreements, (ii) the amount of $1,189,000 owed by Peregrine
to IBM for the purchase of the laptops described in Section 3 above, and (iii) the
amount of $1,974,944.74 owed by Peregrine to IBM under the US Assignment
Agreement.  1 
   5.On
the Effective Date:  a.Peregrine
will pay to IBM US$1,147,628.31 (the TSA Payment) in immediately available
funds for the Transition Services Assistance set forth in Section 1 above and
for the transfer of the titles to the servers described in Section 2 above; and  b.IBM
will pay to Peregrine US$320,084.62, subject to fluctuations in the currency
exchange rates as of the Effective Date as described in Part 2 of Exhibit C, in
immediately available funds for the balance of amounts owed to Peregrine as
described in Section 4 above.  6.After
the Effective Date, Peregrine and IBM will make prompt payment on any future
undisputed invoices that each party may owe to the other after December 1,
2002, and IBM will make prompt payment on any undisputed currently outstanding
Peregrine invoices.  Attached as Exhibit
D to this Agreement is a partial list of worldwide Invoices of receivables
due to Peregrine or its affiliates from IBM or its affiliates.  Upon the Effective Date, IBM will notify
Peregrine in writing whether each listed invoice is disputed or undisputed.  Any undisputed invoices will be paid within
thirty (30) days after the Effective Date. 
For any disputed invoices, IBM will provide to Peregrine a reasonable
description of the nature of the dispute and identify an IBM contact
responsible for the handling of the dispute. 
IBM and Peregrine will work together in good faith to resolve such
disputes in a timely manner.  If
Peregrine seeks to escalate any disputed invoices, then Peregrine will first
contact the IBM Client Executive for the Worldwide Peregrine Systems Alliance
(IBM/Peregrine Alliance Manager), presently Frank P. Sung.  If within a reasonable time period Peregrine
does not feel that its concerns were adequately addressed by the IBM/Peregrine
Alliance Manager, then Peregrine may contact (i) for US invoices, Mike
Lindberg, the Director of Strategic Solution Offerings, or (ii) for invoices
related to Europe, the Middle East and Africa (EMEA), an equivalent or higher
level IBM executive in EMEA, to be identified by IBM to Peregrine for this
purpose (each an IBM Escalation Executive). 
Each IBM Escalation Executive will work in good faith with Peregrine to
resolve each escalated issue or have it resolved in an equitable and timely
manner.  7.Additional
Terms and Conditions:  a.This
Agreement is contingent upon Peregrine obtaining the Bankruptcy Courts
approval of this Agreement no later than December 16, 2002, and the Effective
Date will be the eleventh (11th) day following the entry by the
Bankruptcy Court of an order approving this Agreement (Effective Date),
provided that such order has not been modified, reversed or stayed on appeal
(Approval Order).  In calculating the
Effective Date, Bankruptcy Rule 9006 shall apply.  b.Peregrine
will continue to pay $275,956.71 per month, in advance, starting January 1,
2003, for IBMs performance of its obligations under the US Assignment
Agreement until the earlier of (i) such time that the Transition Services
Assistance described in the attached Exhibit A is completed by IBM, or (ii) 90
days after IBMs receipt of the TSA Payment. 
IBM and Peregrine will use reasonable efforts to complete the Transition
Services Assistance within 45 days of receiving the TSA Payment.  IBM will pro-rate and/or refund as
appropriate the charges described in this section thru the date that the
Transition Services Assistance is actually completed.  c.Except
for obligations expressly created or preserved pursuant to this Agreement, each
party hereto (each, a Releasing Party) hereby releases and discharges forever
the other party.  Its directors,
officers, affiliates, agents, employees, and attorneys, its successors and
assigns, from any and all claims, debts, defenses, suits, warranties, damages,
interests, actions, or causes of actions now has or may have arising out of (a)
Peregrine Continuing Obligations, as defined in Exhibit A of the US
Assignment Agreement including, but not limited to, the Peregrine Services
Purchase Commitment defined in PCR#1 to the US Country Agreement, (b) the IGF  2 
   Agreements,
and (o) the Services, Equipment or other deliverables relating to the
aforementioned agreements (each as respectively defined therein).  d.In
the event of a failure by Peregrine to make any required payments due to IBM
under this Agreement, in addition to any other remedies available to IBM
against Peregrine, IBM shall be entitled to withhold services under this
Agreement and under the US Assignment Agreement for which Peregrine is the
intended Service Recipient.  e.The
parties agree to cooperate in good faith to ensure the delivery of services,
the payment of fees and the timely discharge of all other contractual
obligations by the appropriate party charged therewith in accordance with the
terms of this Agreement and the US Assignment Agreement.  Peregrine acknowledges that in the event
that the provision of services contemplated by this Agreement require
modifications to the manner in which IBM provides services, IBM reserves the
right to treat such modified services as New Services under the US Country
Agreement and reasonably revise charges accordingly pursuant to the procedures
described for New Services in the US Country Agreement.  f.Capitalized
terms not otherwise defined herein shall have the meanings set forth under the
Master Agreement, US Country Agreement and the IGF Agreements.  g.This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
Instrument.  h.This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and permitted assigns, including any subsequently
appointed trustee.  i.By
executing this Agreement, each party represents and acknowledges that it has
relled upon the legal advice of counsel of his or its own choice regarding the
settlement and compromise of this case and at all times relevant to and
throughout the negotiation of this Agreement and in connection with the
preparation and execution of this Agreement.  j.Each
party hereto represents and warrants that it has not heretofore assigned or
transferred, or purported to assign or transfer, to any person, firm, or
corporation any claim herein released. 
Each party agrees to indemnify and hold harmless the other party against
any claim based on, arising out of or in connection with any such transfer or
assignment or proposed transfer or assignment.  k.Except
as otherwise expressly set forth in this Agreement, the parties shall bear
their own costs and fees.  l.No
delay or omission by any party in exercising any right or power arising under
this Agreement by reason of any default shall be construed as a waiver of such
default or as an acquiescence therein, nor shall any single or partial exercise
thereof preclude any further exercise thereof. 
Any party may, at his or its option, waive in writing any of the
conditions or terms hereof and any such waiver shall not be deemed a waiver of
such partys rights hereunder, but shall be deemed to have been made pursuant
to this Agreement and not in modification hereof.  No waiver of any default shall be construed as a waiver of or
acquiescence or consent to any proceeding or subsequent default.  m.All
notice required or desired to be given hereunder shall be addressed as follows:  If to IBM,
  to:
  Martha
  MonroeIBM Project
  Office1277 Lenox
  Park Blvd.Atlanta, GA
  30319  3 
   With a copy
  to:
  IBM
  CorporationRoute 100Somers, NY
  10589Attention:
  General Counsel, IGS  AmericasIf to
  Peregrine, to:
  Peregrine
  Systems, Inc.3811 Valley
  Canter DriveSan Diego,
  CA 92130Attn:
  General Counsel,With a copy
  to:
  Malher S.
  Pagay, Esq.Pachuiski,
  Stang, Ziehl, Young & Jones P.C.10100 Santa
  Monica Blvd., Suite 1100Los Angeles,
  California 90067  n.This
Agreement shall be deemed to have been executed and delivered within the State
of New York and the rights and obligations of the parties shall be construed
and enforced in accordance with, and governed by, the laws of the State of New
York.  o.Upon
completion of all obligations under this Agreement including, but not limited
to, Payment of all amounts due and payable to IBM and ICC under this Agreement,
the US Assignment Agreement, the Master Agreement the US Country Agreement and
the IGF Agreements are terminated with respect to IBM, ICC and Peregrine.  Except as modified above, the terms and
conditions of the US Assignment Agreement, the Master Agreement, the US Country
Agreement and the IGF Agreements between IBM, ICC and Peregrine shall remain in
full force and effect; provided, however, that if any terms of condition of the
immediately aforementioned agreements conflicts with or is Inconsistent with
any term or condition of this Agreement, then such terms and conditions hereof
shall prevail and be controlling.  Agreed to and Accepted by:  PEREGRINE SYSTEMS, INC.
  INTERNATIONAL BUSINESS MACHINES CORPORATIONBy:
  /s/ Ken
  Sexton
  
  By:
  /s/ M.
  Martha MonrdePrint Name:
  Ken Sexton
  
  Print Name:
  M. MARTHA
  MONRDETitle:
  CEO
  
  Title:
  GLOBAL PROJECT
  EXECUTIVEDate:
  12/15/02
  
  Date:
  12/12/02INTERNATIONAL BUSINESS MACHINES CREDIT CORPORATIONBy:
  /s/ Sal
  GrassoPrint Name:
  SAL GRASSOTitle:
  MGR OF
  CREDITDate:
  12/12/02  4