<PAGE>

                           PEREGRINE SYSTEMS, INC.

                          1997 DIRECTOR OPTION PLAN


          1.   PURPOSES OF THE PLAN.  The purposes of this 1997 Director 
Option Plan are to attract and retain the best available personnel for 
service as Outside Directors (as defined herein) of the Company, to provide 
additional incentive to the Outside Directors of the Company to serve as 
Directors, and to encourage their continued service on the Board.

               All options granted hereunder shall be nonstatutory stock 
options.

          2.   DEFINITIONS.  As used herein, the following definitions shall 
apply:

               (A)  "BOARD" means the Board of Directors of the Company.

               (B)  "CODE" means the Internal Revenue Code of 1986, as amended.

               (C)  "COMMON STOCK" means the Common Stock of the Company.

               (D)  "COMPANY" means Peregrine Systems, Inc., a Delaware 
corporation.

               (E)  "DIRECTOR" means a member of the Board.

               (F)  "EMPLOYEE" means any person, including officers and 
Directors, employed by the Company or any Parent or Subsidiary of the 
Company.  The payment of a Director's fee by the Company shall not be 
sufficient in and of itself to constitute "employment" by the Company.

               (G)  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

               (H)  "FAIR MARKET VALUE" means, as of any date, the value of 
Common Stock determined as follows:

                    (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 date of determination, 
as reported in THE WALL STREET JOURNAL or such other source as the Board 
deems reliable, or;

                    (iii) 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.

               (I)  "INSIDE DIRECTOR" means a Director who is an Employee.

               (J)  "OPTION" means a stock option granted pursuant to the Plan.

               (K)  "OPTIONED STOCK" means the Common Stock subject to an 
Option.

               (L)  "OPTIONEE"  means a Director who holds an Option.

                                                                     Page 1 of 6
<PAGE>

               (M)  "OUTSIDE DIRECTOR" means a Director who is not an Employee.

               (N)  "PARENT" means a "parent corporation," whether now or 
hereafter existing, as defined in Section 424(e) of the Code.

               (O)  "PLAN" means this 1997 Director Option Plan.

               (P)  "SHARE" means a share of the Common Stock, as adjusted in 
accordance with Section 10 of the Plan.

               (Q)  "SUBSIDIARY" means a "subsidiary corporation," whether 
now or hereafter existing, as defined in Section 424(f) of the Internal 
Revenue Code of 1986.

          3.   STOCK SUBJECT TO THE PLAN.  Subject to the provisions of 
Section 10 of the Plan, the maximum aggregate number of Shares which may be 
optioned and sold under the Plan is 150,000 Shares of Common Stock (the 
"Pool").  The Shares may be authorized, but unissued, or reacquired Common 
Stock.

               If an Option expires or becomes unexercisable without having 
been exercised in full, the unpurchased Shares which were subject thereto 
shall become available for future grant or sale under the Plan (unless the 
Plan has terminated). Shares that have actually been issued under the Plan 
shall not be returned to the Plan and shall not become available for future 
distribution under the Plan.

          4.   ADMINISTRATION AND GRANTS OF OPTIONS UNDER THE PLAN.

               (A)  PROCEDURE FOR GRANTS.  All grants of Options to Outside 
Directors under this Plan shall be automatic and non-discretionary and shall 
be made strictly in accordance with the following provisions:

                    (i)   No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number of 
Shares to be covered by Options granted to Outside Directors.

                    (ii)  Each Outside Director shall be automatically granted 
an Option to purchase 25,000 Shares (the "First Option") on the date on which 
such person first becomes an Outside Director, whether through election by 
the shareholders of the Company or appointment by the Board to fill a 
vacancy; provided, however, that a Director who was an Inside Director 
immediately prior to becoming an Outside Director shall not receive a First 
Option; provided further, however, that no Director who is an Outside 
Director on the effective date of this Plan shall be granted a First Option.

                    (iii) Each Outside Director shall be automatically granted 
an Option to purchase 5,000 Shares (a "Subsequent Option") on the day 
following each Annual Meeting of the Company's Shareholders commencing with 
the 1998 Annual Meeting of the Company's Shareholders; provided that he or 
she is then an Outside Director and if, as of such date, he or she shall have 
served on the Board for at least the preceding six (6) months.

                    (iv)  Notwithstanding the provisions of subsections (ii) 
and (iii) hereof, any exercise of an Option granted before the Company has 
obtained shareholder approval of the Plan in accordance with Section 16 
hereof shall be conditioned upon obtaining such shareholder approval of the 
Plan in accordance with Section 16 hereof.

                    (v)   The terms of a First Option granted hereunder shall 
be as follows:

                         (A)  the term of the First Option shall be ten (10) 
years.

                         (B)  the First Option shall be exercisable only 
while the Outside Director remains a Director of the Company, except as set 
forth in Sections 8 and 10 hereof.

                                                                    Page 2 of 6

<PAGE>

                         (C)  the exercise price per Share shall be 100% of 
the Fair Market Value per Share on the date of grant of the First Option.  In 
the event that the date of grant of the First Option is not a trading day, 
the exercise price per Share shall be the Fair Market Value on the next 
trading day immediately following the date of grant of the First Option.

                         (D)  subject to Section 10 hereof, the First Option 
shall become exercisable as to twenty-five percent (25%) of the Shares 
subject to the First Option on the first anniversary of its date of grant, 
and as to six and one-quarter percent (6.25%) on the last day of each 
consecutive three-month period thereafter, provided that the Optionee 
continues to serve as a Director on such dates.

                    (vi)  The terms of a Subsequent Option granted hereunder 
shall be as follows:

                         (A)  the term of the Subsequent Option shall be ten 
(10) years.

                         (B)  the Subsequent Option shall be exercisable only 
while the Outside Director remains a Director of the Company, except as set 
forth in Sections 8 and 10 hereof.

                         (C)  the exercise price per Share shall be 100% of 
the Fair Market Value per Share on the date of grant of the Subsequent 
Option.  In the event that the date of grant of the Subsequent Option is not 
a trading day, the exercise price per Share shall be the Fair Market Value on 
the next trading day immediately following the date of grant of the 
Subsequent Option.

                         (D)  subject to Section 10 hereof, the Subsequent 
Option shall become exercisable as to twenty-five percent (25%) of the Shares 
subject to the Subsequent Option on the first anniversary of its date of 
grant, and as to six and one-quarter percent (6.25%) on the last day of each 
consecutive three-month period thereafter, provided that the Optionee 
continues to serve as a Director on such dates.

                    (vii) In the event that any Option granted under the Plan 
would cause the number of Shares subject to outstanding Options plus the 
number of Shares previously purchased under Options to exceed the Pool, then 
the remaining Shares available for Option grant shall be granted under 
Options to the Outside Directors on a pro rata basis.  No further grants 
shall be made until such time, if any, as additional Shares become available 
for grant under the Plan through action of the Board or the shareholders to 
increase the number of Shares which may be issued under the Plan or through 
cancellation or expiration of Options previously granted hereunder.

          5.   ELIGIBILITY.  Options may be granted only to Outside 
Directors; PROVIDED, HOWEVER, no Outside Director shall be granted an Option 
hereunder if (A) he or she is directly or indirectly the beneficial owner of 
three percent (3%) or more of the Company's outstanding Common Stock, or (B) 
he or she is an affiliate of any person or group of persons or entity or 
group of entities who individually or in the aggregate are directly or 
indirectly the beneficial owner(s) of three percent (3%) or more of the 
Company's outstanding Common Stock.  All Options shall be automatically 
granted in accordance with the terms set forth in Section 4 hereof.

               The Plan shall not confer upon any Optionee any right with 
respect to continuation of service as a Director or nomination to serve as a 
Director, nor shall it interfere in any way with any rights which the 
Director or the Company may have to terminate the Director's relationship 
with the Company at any time.

          6.   TERM OF PLAN.  The Plan shall become effective upon the 
earlier to occur of its adoption by the Board or its approval by the 
shareholders of the Company as described in Section 16 of the Plan.  It shall 
continue in effect for a term of ten (10) years unless sooner terminated 
under Section 11 of the Plan.

          7.   FORM OF CONSIDERATION.  The consideration to be paid for the 
Shares to be issued upon exercise of an Option, including the method of 
payment, shall consist of (i) cash, (ii) check, (iii) other shares which (x) 
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 (y) 
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, (iv) 
consideration received

                                                                    Page 3 of 6
<PAGE>

by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.

          8.   EXERCISE OF OPTION.

               (A)  PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any 
Option granted hereunder shall be exercisable at such times as are set forth 
in Section 4 hereof; provided, however, that no Options shall be exercisable 
until shareholder approval of the Plan in accordance with Section 16 hereof 
has been obtained.

               An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed to be exercised when written notice 
of such exercise has been given to the Company in accordance with the terms 
of the Option by the person entitled to exercise the Option and full payment 
for the Shares with respect to which the Option is exercised has been 
received by the Company.  Full payment may consist of any consideration and 
method of payment allowable under Section 7 of the Plan.  Until the issuance 
(as evidenced by the appropriate entry on the books of the Company or of a 
duly authorized transfer agent of the Company) of the stock certificate 
evidencing such Shares, no right to vote or receive dividends or any other 
rights as a stockholder shall exist with respect to the Optioned Stock, 
notwithstanding the exercise of the Option.  A share certificate for the 
number of Shares so acquired shall be issued to the Optionee as soon as 
practicable after exercise of the Option. No adjustment shall be made for a 
dividend or other right for which the record date is prior to the date the 
stock certificate is issued, except as provided in Section 10 of the Plan.

               Exercise of an Option in any manner shall result in a decrease 
in the number of Shares which thereafter may be 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 CONTINUOUS STATUS AS A DIRECTOR.  Subject 
to Section 10 hereof, in the event an Optionee's status as a Director 
terminates (other than upon the Optionee's death or total and permanent 
disability (as defined in Section 22(e)(3) of the Code)), the Optionee may 
exercise his or her Option, but only within three (3) months following the 
date of such termination, and only to the extent that the Optionee was 
entitled to exercise it on the date of such termination (but in no event 
later than the expiration of its ten (10) year term). To the extent that the 
Optionee was not entitled to exercise an Option on the date of such 
termination, and to the extent that the Optionee does not exercise such 
Option (to the extent otherwise so entitled) within the time specified 
herein, the Option shall terminate.

               (C)  DISABILITY OF OPTIONEE.  In the event Optionee's status 
as a Director terminates as a result of total and permanent disability (as 
defined in Section 22(e)(3) of the Code), the Optionee may exercise his or 
her Option, but only within twelve (12) months following the date of such 
termination, and only to the extent that the Optionee was entitled to 
exercise it on the date of such termination (but in no event later than the 
expiration of its ten (10) year term). To the extent that the Optionee was 
not entitled to exercise an Option on the date of termination, or if he or 
she does not exercise such Option (to the extent otherwise so entitled) 
within the time specified herein, the Option shall terminate.

               (D)  DEATH OF OPTIONEE.  In the event of an Optionee's death, 
the Optionee's estate or a person who acquired the right to exercise the 
Option by bequest or inheritance may exercise the Option, but only within 
twelve (12) months following the date of death, and only to the extent that 
the Optionee was entitled to exercise it on the date of death (but in no 
event later than the expiration of its ten (10) year term).  To the extent 
that the Optionee was not entitled to exercise an Option on the date of 
death, and to the extent that the Optionee's estate or a person who acquired 
the right to exercise such Option does not exercise such Option (to the 
extent otherwise so entitled) within the time specified herein, the Option 
shall terminate.

          9.   NON-TRANSFERABILITY OF OPTIONS.  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.

                                                                    Page 4 of 6

<PAGE>


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

               (A)  CHANGES IN CAPITALIZATION.  Subject to any required 
action by the stockholders of the Company, the number of Shares covered by 
each outstanding Option, the number of Shares 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 covered by each such outstanding 
Option, and the number of Shares issuable pursuant to the automatic grant 
provisions of Section 4 hereof shall be proportionately adjusted for any 
increase or decrease in the number of issued Shares 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 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."  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 subject 
to an Option.

               (B)  DISSOLUTION OR LIQUIDATION.  In the event of the proposed 
dissolution or liquidation of the Company, to the extent that an Option has 
not been previously exercised, it shall 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, outstanding Options may be assumed or equivalent 
options may be substituted by the successor corporation or a Parent or 
Subsidiary thereof (the "Successor Corporation").  If an Option is assumed or 
substituted for, the Option or equivalent option shall continue to be 
exercisable as provided in Section 4 hereof for so long as the Optionee 
serves as a Director or a director of the Successor Corporation.  Following 
such assumption or substitution, if the Optionee's status as a Director or 
director of the Successor Corporation, as applicable, is terminated other 
than upon a voluntary resignation by the Optionee, the Option or option shall 
become fully exercisable, including as to Shares for which it would not 
otherwise be exercisable.  Thereafter, the Option or option shall remain 
exercisable in accordance with Sections 8(a) through (d) above.

               If the Successor Corporation does not assume an outstanding 
Option or substitute for it an equivalent option, the Option shall become 
fully vested and exercisable, including as to Shares for which it would not 
otherwise be exercisable.  In such event the Board shall notify the Optionee 
that the Option shall be fully exercisable for a period of thirty (30) days 
from the date of such notice, and upon the expiration of such period the 
Option shall terminate.

               For the purposes of this Section 10(c), an Option shall be 
considered assumed if, following the merger or sale of assets, the Option 
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).  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.

          11.  AMENDMENT AND TERMINATION OF THE PLAN.

               (A)  AMENDMENT AND TERMINATION.  The Board may at any time 
amend, alter, suspend, or discontinue the Plan, but no amendment, alteration, 
suspension, or discontinuation shall be made which would impair the rights of 
any Optionee under any grant theretofore made, without his or her consent.  
In addition, to the extent necessary and desirable to comply with any 
applicable law,  regulation or stock exchange rule, the

                                                                    Page 5 of 6
<PAGE>

Company shall obtain stockholder approval of any Plan amendment in such a 
manner and to such a degree as required.

               (B)  EFFECT OF AMENDMENT OR TERMINATION.  Any such amendment 
or termination of the Plan shall not affect Options already granted and such 
Options shall remain in full force and effect as if this Plan had not been 
amended or terminated.

          12.  TIME OF GRANTING OPTIONS.  The date of grant of an Option 
shall, for all purposes, be the date determined in accordance with Section 4 
hereof.

          13.  CONDITIONS UPON ISSUANCE OF SHARES.  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 pursuant thereto shall 
comply with all relevant provisions of law, including, without limitation, 
the Securities Act of 1933, as amended, the Exchange Act, the rules and 
regulations promulgated thereunder, state securities laws, 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 relevant provisions of law.

               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.

          14.  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.

          15.  OPTION AGREEMENT.  Options shall be evidenced by written option
agreements in such form as the Board shall approve.

          16.  STOCKHOLDER APPROVAL.  Continuance of the Plan shall be 
subject to approval by the stockholders of the Company at or prior to the 
first annual meeting of stockholders held subsequent to the granting of an 
Option hereunder.  Such stockholder approval shall be obtained in the degree 
and manner required under applicable state and federal law and any stock 
exchange rules.

                                                                    Page 6 of 6

<PAGE>

                            PEREGRINE SYSTEMS, INC.

                        DIRECTOR STOCK OPTION AGREEMENT


     Peregrine Systems, Inc., a Delaware corporation (the "Company"), has 
granted to ______________________________________ (the "Optionee"), an option 
to purchase a total of  __________________ (_________) shares of the 
Company's Common Stock (the "Optioned Stock"), at the price determined as 
provided herein, and in all respects subject to the terms, definitions, and 
provisions of the Company's 1997 Director Option Plan (the "Plan") adopted by 
the Company, which is incorporated herein by reference.  The terms defined in 
the Plan shall have the same defined meanings herein.

   1. NATURE OF THE OPTION.  This Option is a nonstatutory option and is not
intended to qualify for any special tax benefits to the Optionee.

   2. EXERCISE PRICE.  The exercise price is $_______ for each share of Common
Stock.

   3. EXERCISE OF OPTION.  This Option shall be exercisable during its term in
accordance with the provisions of Section 8 of the Plan as follows:

      (i)  RIGHT TO EXERCISE.

          (a)  This Option shall become exercisable in installments 
cumulatively with respect to twenty-five percent (25%) of the Optioned Stock 
on the first anniversary of the date of grant, and six and one-quarter 
percent (6.25%) of the Optioned Stock on the last day of each consecutive 
three month period thereafter so that one hundred percent (100%) of the 
Optioned Stock shall be exercisable four (4) years after the date of grant.  
In no event shall any Option be exercisable prior to the date the 
shareholders of the Company approve the Plan.

          (b)  This Option may not be exercised for a fraction of a share.

          (c)  In the event of Optionee's death, disability, or other 
termination of service as a Director, the exercisability of the Option shall 
be governed by Section 8 of the Plan.

      (ii) METHOD OF EXERCISE.  This Option shall be exercisable by 
written notice which shall state the election to exercise the Option and the 
number of Shares in respect of which the Option is being exercised.  Such 
written notice, in the form attached hereto as EXHIBIT A, shall be signed by 
the Optionee and shall be delivered in person or by certified mail to the 
Secretary of the Company.  The written notice shall be accompanied by payment 
of the exercise price.

   4. METHOD OF PAYMENT.  Payment of the exercise price shall be by any of 
the following, or a combination thereof, at the election of the Optionee:

      (i)  cash;

     (ii)  check;

     (iii) surrender of other shares which (x) 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 (y) 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; or

     (iv)  delivery of a properly executed exercise notice together with such 
other documentation as the Company and the broker, if applicable, shall 
require to effect an exercise of the Option and delivery to the Company of 
the sale or loan proceeds required to pay the exercise price.

                                                                    Page 1 of 2

<PAGE>

 5.  RESTRICTIONS ON EXERCISE.  This Option may not be exercised if the 
issuance of such Shares upon such exercise or the method of payment of 
consideration for such shares would constitute a violation of any applicable 
federal or state securities or other law or regulations, or if such issuance 
would not comply with the requirements of any stock exchange upon which the 
Shares may then be listed. As a condition to the exercise of this Option, the 
Company may require Optionee to make any representation and warranty to the 
Company as may be required by any applicable law or regulation.

 6.  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 this Option shall be binding upon the executors, administrators, 
heirs, successors and assigns of the Optionee.

 7.  TERM OF OPTION.  This Option may not be exercised more than ten (10) 
years from the date of grant of this Option, and may be exercised during such 
period only in accordance with the Plan and the terms of this Option.

 8.  TAXATION UPON EXERCISE OF OPTION.  Optionee understands that, upon 
exercise of this Option, he or she will recognize income for tax purposes in 
an amount equal to the excess of the then Fair Market Value of the Shares 
purchased over the exercise price paid for such Shares.  Since the Optionee 
is subject to Section 16(b) of the Securities Exchange Act of 1934, as 
amended, under certain limited circumstances the measurement and timing of 
such income (and the commencement of any capital gain holding period) may be 
deferred, and the Optionee is advised to contact a tax advisor concerning the 
application of Section 83 in general and the availability a Section 83(b) 
election in particular in connection with the exercise of the Option.  Upon a 
resale of such Shares by the Optionee, any difference between the sale price 
and the Fair Market Value of the Shares on the date of exercise of the 
Option, to the extent not included in income as described above, will be 
treated as capital gain or loss.

DATE OF GRANT:
                 --------------
                                        PEREGRINE SYSTEMS, INC.
                                        a Delaware corporation



                                        By:
                                            -------------------------------
                                        Name:
                                              -----------------------------
                                        Title:
                                              -----------------------------

     Optionee acknowledges receipt of a copy of the Plan, a copy of which is 
attached hereto, and represents that he or she is familiar with the terms and 
provisions thereof, and hereby accepts this Option subject to all of the 
terms and provisions thereof.  Optionee hereby agrees to accept as binding, 
conclusive, and final all decisions or interpretations of the Board upon any 
questions arising under the Plan.

 Dated:
        -----------------

                                   ------------------------------
                                   Optionee
[PEREGRINE SYSTEMS 1997 DIRECTOR OPTION PLAN -- OPTION AGREEMENT SIGNATURE PAGE]


                                                                     Page 2 of 2

<PAGE>

                                  EXHIBIT A

                     DIRECTOR STOCK OPTION EXERCISE NOTICE



Peregrine Systems, Inc.
12670 High Bluff Drive
San Diego, California  92130

Attention:  Corporate Secretary


   1. EXERCISE OF OPTION.  The undersigned ("Optionee") hereby elects to 
exercise Optionee's option to purchase ______ shares of the Common Stock (the 
"Shares") of Peregrine Systems, Inc. (the "Company") under and pursuant to 
the Company's 1997 Director Option Plan and the Director Option Agreement 
dated _______________ (the "Agreement").

   2. REPRESENTATIONS OF OPTIONEE.  Optionee acknowledges that Optionee has
received, read, and understood the Agreement.

   3. FEDERAL RESTRICTIONS ON TRANSFER.  Optionee understands that the Shares 
must be held indefinitely unless they are registered under the Securities Act 
of 1933, as amended (the "1933 Act"), or unless an exemption from such 
registration is available, and that the certificate(s) representing the 
Shares may bear a legend to that effect.  Optionee understands that the 
Company is under no obligation to register the Shares and that an exemption 
may not be available or may not permit Optionee to transfer Shares in the 
amounts or at the times proposed by Optionee.

   4. TAX CONSEQUENCES.  Optionee understands that Optionee may suffer 
adverse tax consequences as a result of Optionee's purchase or disposition of 
the Shares. Optionee represents that Optionee has consulted with any tax 
consultant(s) Optionee deems advisable in connection with the purchase or 
disposition of the Shares and that Optionee is not relying on the Company for 
any tax advice.

   5. DELIVERY OF PAYMENT.  Optionee herewith delivers to the Company the 
aggregate purchase price for the Shares that Optionee has elected to purchase 
and has made provision for the payment of any federal or state withholding 
taxes required to be paid or withheld by the Company.

                                                                     Page 1 of 2

<PAGE>

   6. ENTIRE AGREEMENT.  The Agreement is incorporated herein by reference.  
This Exercise Notice and the Agreement constitute the entire agreement of the 
parties and supersede in their entirety all prior undertakings and agreements 
of the Company and Optionee with respect to the subject matter hereof.  This 
Exercise Notice and the Agreement are governed by California law except for 
that body of law pertaining to conflict of laws.

Submitted by:                           Accepted by:

OPTIONEE:                               PEREGRINE SYSTEMS, INC.

Name:                                   Name:
      -------------------------------         ----------------------------------

                                        Title:
                                              ----------------------------------
Address:                                Address:

--------------------------------------            12670 High Bluff Drive
                                        San Diego, California 92130
--------------------------------------



Dated:                                  Dated:
      -------------------------------          --------------------------------

                                                                     Page 2 of 2