Document:

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                                                                    Exhibit 10.7
                           [LOGO] NEON Systems, Inc.

                       LICENSE AND DISTRIBUTION AGREEMENT

     This License and Distribution Agreement ("Agreement") is made effective as
of the 1st day of August, 2002 (the "Effective Date") between NEON Systems,
Inc., a Delaware corporation, having its principal offices at 14100 Southwest
Freeway, Suite 500, Sugar Land, Texas 77478 ("NEON") and Peregrine/Bridge
Transfer Corporation, a Delaware corporation having its principal offices at
12680 High Bluff Drive, Suite 200, San Diego, California 92130 ("PBTC").

     WHEREAS, NEON owns rights in certain software identified in Exhibit A
(collectively the "Licensed Software"); and

     WHEREAS, PBTC wishes to license and distribute such Licensed Software
incorporated in or with certain software products of PBTC (the "PBTC Products").

     NOW, THEREFORE, the parties hereby agree as follows:

1.   GRANT OF LICENSES

     1.1 Product Software Distribution License. Subject to the terms and
conditions hereof, NEON hereby grants to PBTC a nonexclusive, worldwide license
during the term of this Agreement, with rights of sublicense (through multiple
tiers of distribution), to the Licensed Software object code in order to use,
reproduce, distribute, grant access to, sell licenses to, offer to sell licenses
to, and to import, market, display, perform, demonstrate, distribute, or
otherwise derive revenues from PBTC Products. Subject to the terms and
conditions hereof, NEON grants to PBTC the right to appoint distributors and
resellers to exercise and grant the right to use, market, demonstrate,
reproduce, distribute and grant access to PBTC Products.

     1.2 Product Software Development License. For the term of this Agreement
or as otherwise provided under this Agreement, NEON grants to PBTC: a
nonexclusive, worldwide, royalty-free, fully paid up, license to the Licensed
Software source code solely to use, reproduce, make derivative works, modify,
improve, import, have imported, export, display, perform and provide support to
sublicensees and subdistributors of PBTC Products. PBTC acknowledges that
Licensed Software Source Materials are subject to copyrights and contain trade
secrets owned or licensed by NEON. PBTC acknowledges that all components of the
Licensed Software and all related knowledge and information are trade secrets of
NEON. PBTC shall be responsible for ensuring the secrecy of such Licensed
Software. PBTC shall not remove, alter, or obscure any title, trademark,
restricted rights, confidentiality, or copyright notices of NEON (unless such
removal is reasonably necessary to avoid potential infringement of any third
party marks), or its suppliers, that are incorporated in the Licensed Software
or Documentation, and shall reproduce all such notices on any copies thereof. In
the event that PBTC is required to remove any notice or trademarks per this
Section, then PBTC shall provide NEON with written notice thereof within thirty
(30) days.

     1.3 Documentation. NEON grants to PBTC a nonexclusive, worldwide,
royalty-free, fully paid up license, with right of sublicense, to use,
reproduce, make derivative works of, modify, import, market, display, perform,
demonstrate, distribute, and reproduce NEON's standard user documentation, user
instructions, and user's guides, whether in printed or electronic format,
associated with the Licensed

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Software, including user manuals, handbooks and related materials (the
"Documentation") solely for use with the PBTC Products. PBTC is authorized to
produce, reproduce and distribute, and authorize distributors and resellers to
produce, reproduce and distribute, such Documentation under PBTC's or its
reseller's own name(s), subject to the inclusion of a copyright notice
acknowledging NEON' s copyright in the Documentation.

     1.4   End User License Terms. PBTC shall distribute the PBTC Products and
Documentation to third parties using an end user license agreement ("End User
License Agreement") having terms that are substantially similar to the terms set
forth in Exhibit B. PBTC shall not license or provide a copy of the Licensed
Software to anyone who: (a) has not signed a written End User License Agreement,
or (b) is not required, in order to install or use the PBTC Products, to
electronically sign the End User License Agreement in a manner such that the End
User License Agreement is valid, binding, and enforceable under federal law
(i.e., the E-Sign Act) or state law (i.e., UETA as adopted by a state).

     1.5   Subdistributors & Resellers. Subject to all the terms and conditions
herein, PBTC may authorize subdistributors and resellers to reproduce and
distribute the Licensed Products and the Documentation; provided that PBTC first
obtains from each such subdistributor or reseller a signed, written agreement
substantially as protective of the Licensed Software as this Agreement
("Subdistributor Agreement"). Each Subdistributor Agreement pertaining to a
distribution to a reseller or PBTC shall contain terms and conditions
substantially as protective of NEON's proprietary rights as the terms and
conditions of this Agreement and shall state that NEON is an intended third
party beneficiary under such agreement. PBTC will promptly notify NEON of any
violation of a Subdistributor Agreement of which it becomes aware, and will take
all commercially reasonable efforts to enforce each Subdistributor Agreement
with at least the same degree of diligence used in enforcing similar agreements
governing distribution of PBTC's own products.

2.   TAXES

     PBTC shall be solely responsible for any and all sales, use, value-added,
withholding, and other taxes and duties related to the Licensed Products. PBTC
will pay all taxes and duties assessed in connection with this Agreement
(including, but not limited to, withholding taxes) and its performance under
this Agreement by any authority within or outside of the United States, except
solely for taxes payable on NEON income.

3.   DELIVERY

     Upon execution of this Agreement, NEON shall promptly deliver to PBTC the
master copy of the Licensed Software specified in Exhibit A, and one specimen of
the current Documentation. All shipments shall be FOB shipping point. Except as
otherwise expressly set forth herein, NEON shall have no obligation to provide
any goods or services to PBTC, and shall have no obligation to support,
maintain, update, or otherwise develop the Licensed Software and/or the PBTC
Products.

4.   MARKETING AND COOPERATIVE EFFORTS

     PBTC may assign PBTC's own label or brand to the PBTC Products and
associated documentation provided that PBTC shall include a copyright notice in
the start-up or "About" screen and the splash screen of the PBTC Products and on
the PBTC Products documentation indicating that portions of the PBTC Products
include technology used under license from NEON.

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5.   CONFIDENTIALITY

     5.1  Confidential Information. As used in this Agreement, the term
"Confidential Information" shall mean any information disclosed by one party to
the other pursuant to this Agreement which is in written, graphic, machine
readable or other tangible form and is marked "Confidential", "Proprietary" or
in some other manner to indicate its confidential nature. "Confidential
Information" shall include the Licensed Software and Documentation. Confidential
Information may also include oral information disclosed by one party to the
other pursuant to this Agreement, provided that such information is designated
as confidential at the time of disclosure and is reduced to writing by the
disclosing party within a reasonable time (not to exceed thirty (30) days) after
its first oral disclosure, and such writing is marked in a manner to indicate
its confidential nature and delivered to the receiving party.

     5.2  Confidentiality. Each party shall treat as confidential all
Confidential Information of the other party and shall not disclose such
Confidential Information to any third party. Without limiting the foregoing,
each of the parties shall use at least the same degree of care with respect to
the other's Confidential Information that such party uses to prevent the
disclosure of its own confidential information of like importance. Each party
shall promptly notify the other party of any actual or suspected misuse or
unauthorized disclosure of the other party's Confidential Information. Except
for such materials PBTC may need to exercise its rights under Section 9.2(d)
hereof, each party shall, upon expiration or termination of this Agreement for
any reason, promptly return any and all documents, media, or other items which
contain or constitute any of the other's Confidential Information.

     5.3 Exceptions. Notwithstanding the above, neither party shall have
liability to the other with regard to any Confidential Information of the other
which the receiving party can demonstrate:

          (a) was in the public domain at the time it was disclosed or has
     entered in the public domain through no fault of the receiving party;

          (b) was known to the receiving party, without restriction, at the time
     of disclosure, as evidenced by the receiving party's files in existence at
     the time of disclosure;

          (c) is disclosed with the prior written approval of the disclosing
     party;

          (d) was independently developed by the receiving party as evidenced by
     the receiving party's files in existence at the time of disclosure;

          (e) becomes known to the receiving party, without restriction, from a
     source other than the disclosing party not under a duty of confidentiality
     to the disclosing party;

          (f) is disclosed by the disclosing party to any third party without
     confidentiality obligations similar to those contained in this Agreement;
     or

          (g) is disclosed pursuant to the order or requirement of a court,
     administrative agency, or other governmental body; provided, however, that
     the receiving party shall provide prompt notice thereof to the disclosing
     party to enable the disclosing party to seek a protective order or
     otherwise prevent or restrict such disclosure. Notwithstanding anything to
     the contrary herein, NEON shall be free to develop and commercially exploit
     any and all goods and services which do not infringe upon the Confidential
     Information or other proprietary rights of PBTC, including without
     limitation any goods or services which are similar to or competitive with
     any of the PBTC Products.

     5.4  Confidentiality of Agreement. Each party agrees that the specific
terms and conditions of this Agreement will be treated as confidential
information and that no disclosure thereof will be made in any form without the
prior written consent of the other party, except (i) as required by applicable
disclosure laws; (ii) to accountants, banks, financing sources, lawyers and
related parties subject to a duty not to disclose to others; or (iii) in
connection with the enforcement of this Agreement.

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6.   OWNERSHIP

     Title and ownership of all proprietary rights in the Licensed Software and
Documentation and any translations thereof, including any copyright, patent,
trade secret, trademark or other intellectual property rights, shall remain the
property of NEON and its licensors where applicable. Notwithstanding anything in
this Agreement to the contrary, PBTC shall own and retain all right, title and
interest in and to any PBTC intellectual property in derivative works and the
like. Except as expressly set forth herein, no other rights or licenses are
granted to under this Agreement, whether by implication, estoppel, or otherwise.
NEON shall have no duty or obligation to protect, record, register, or enforce
any of its rights in any of the Licensed Software; NEON shall do so only in its
sole discretion.

7.   WARRANTIES

     7.1  Warranties by NEON. NEON warrants for the benefit of PBTC that NEON
has the full corporate right and authority to enter this Agreement, to carry out
its obligations under this Agreement, and to grant the rights granted to PBTC
and that its performance under this Agreement will not violate the terms of any
other agreement to which it is a party. 7.2 Warranties by PBTC. PBTC warrants
for the benefit of NEON that PBTC has full corporate right and authority to
enter into this Agreement and to carry out its obligations under this Agreement
and that its performance under this Agreement will not violate the terms of any
other agreement to which it is a party.

     7.3. EXCLUSION OF WARRANTIES. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH
ABOVE, NEON, ITS LICENSORS AND PBTC DISCLAIM ALL OTHER WARRANTIES OF ANY KIND,
EXPRESS, IMPLIED, STATUTORY, OR IN ANY COMMUNICATION BETWEEN THEM, INCLUDING
WITHOUT LIMITATION ALL IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT,
TITLE, AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY OF THE PRODUCTS
OR SERVICES SUBJECT TO THIS AGREEMENT.

8.   INDEMNIFICATION

     PBTC shall defend NEON against or settle, and indemnify and hold NEON
harmless from, any third party claim, suit, or other action ("Claim") and pay
any judgments or damages awarded in any judicial proceeding on the Claim, pay
any settlement amounts agreed upon by PBTC, and pay any associated costs and the
reasonable fees of attorneys, arising out of, or relating to any Claim (a) that
any PBTC Product, or its use, copying, distribution, modification, or
disclosure, infringes any third party intellectual property rights, including
any infringement of any third party patent, trademark, trade secret, copyright,
mask work, or other intellectual property or proprietary rights, or (b) that any
third party has incurred, suffered, or otherwise been damaged by any PBTC
Product, or its use, modification, copying, distribution, or disclosure, or (c)
based on PBTC's actions or omissions. In the event of any such Claim, NEON
agrees to promptly notify PBTC of the Claim and give PBTC sole control and
reasonably requested non-monetary assistance in the defense and settlement of
the Claim. PBTC'S OBLIGATIONS UNDER THIS SECTION SHALL EXTEND TO CLAIMS WHERE
NEON IS PARTIALLY OR CONCURRENTLY NEGLIGENT. If a court of competent
jurisdiction enters a final judgment that NEON is partially negligent with
respect to any such Claim, PBTC's obligations under this Section shall be
reduced on a proportionate basis based on the relative share of NEON's
negligence so adjudicated.

9.   TERM AND TERMINATION

     9.1  Term. The term of this Agreement shall be three (3) years from the
Effective Date ("Initial Term") and shall automatically be renewed thereafter on
an annual basis. PBTC may terminate this Agreement at any time by providing
ninety (90) day written notice to NEON. NEON may terminate the Agreement, upon
sixty (60) days written notice, if PBTC publicly announces discontinuance of
distribution or support for Licensed Software.

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     9.2   Termination.

           (a) Termination for Cause. Either party may terminate this Agreement
     following thirty (30) days written notice to the other of a material breach
     of this Agreement if such material breach is not cured within such period.

           (b) Termination for Insolvency. Either party may terminate this
     Agreement upon written notice if the other becomes the subject of a
     voluntary or involuntary petition in bankruptcy or any proceeding relating
     to insolvency, receivership, liquidation, or composition for the benefit of
     creditors, if such petition or proceeding is not dismissed with prejudice
     within sixty (60) days after filing.

           (c) Survival. In the event of termination or expiration of this
     Agreement, then the provisions of Sections 1.2, 1.3, 2, 5.1-5.4, 6, 7.3, 8,
     9.2(d), 10, and 11.1 shall survive termination or expiration. Those
     sections or clauses contained in the Exhibits to this Agreement which by
     their nature are meant to survive shall survive termination of this
     Agreement.

           (d) Post-Termination Rights. Unless otherwise provided for in this
     Agreement, in the event of any termination or expiration of this Agreement,
     except for a material breach by PBTC, (i) all end user licenses for the
     PBTC Products that have been paid for shall remain in effect, and (ii) PBTC
     shall have the right to continue to use the Licensed Software, including
     the Documentation, in accordance with this Agreement, for the sole and
     limited purpose of supporting and maintaining existing end users of the
     PBTC Product for up to one (1) additional year from such termination. PBTC
     shall promptly return any and all documents, media and other items which
     contain or constitute any of the Confidential Information of NEON upon the
     expiration of such one (1) year period.

     9.3   Termination Remedies Not Exclusive. The termination rights and
obligations of the parties set forth above in this Section 9 are not exclusive,
but are in addition to any other rights and remedies available to the parties,
in law or in equity, for breach of this Agreement.

10.  LIMITATIONS OF LIABILITY

     EXCEPT FOR A BREACH OF SECTIONS 1.1-1.5, 5.1-5.4, 6, or 8, IN NO EVENT WILL
EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL OR
INCIDENTAL DAMAGES, HOWEVER CAUSED, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. THESE LIMITATIONS OF LIABILITY WILL APPLY NOTWITHSTANDING ANY FAILURE
OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.

11.  GENERAL PROVISIONS

     11.1  Governing Law. This Agreement shall be governed by, and interpreted
under, the laws of the State of Texas, without regard to conflict of laws
principles. The parties agree that the United Nations Convention on Contracts
for the International Sales of Goods is specifically excluded from application
to this Agreement. In the event an action is brought to enforce any provision or
declare a breach of this Agreement, the prevailing party shall be entitled to
recover, in addition to any other amounts awarded, reasonable legal and other
related costs and expenses, including attorney's fees, incurred thereby.

     11.2  Compliance with Laws. Each party shall comply with all applicable
laws, rules and regulations in its performance of this Agreement. In particular,
PBTC shall not export or re-export, either directly or indirectly, any product,
information or data or any portion thereof, to any country outside of the United
States, except as permitted by relevant U.S. laws and regulations, including
without limitation the U.S. Export Administration Act and the regulations
promulgated thereunder.

     11.3  Force Majeure. Neither party shall be liable for any loss, damage or
penalty resulting from delays or failures in performance hereunder, resulting
from acts of God or other causes beyond its

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control; provided that the affected party shall promptly notify the other and
use its good faith efforts to perform or effect a cure.

     11.4   Assignment. This Agreement shall bind and inure to the benefit of
the successors and permitted assigns of the parties, but neither party shall
have the right to assign or otherwise transfer its rights under this Agreement
without receiving the express prior written consent of the other party, such
consent not to be unreasonably withheld. Notwithstanding the foregoing, (a) NEON
may assign or transfer this Agreement (i) to any entity or other person
controlled by, in control of, or under common control with NEON, or (ii) in the
event of a merger or a sale of all or a substantial portion of either party's
assets or stock; and (b) PBTC or NEON may assign this agreement to another
entity in connection with a corporate name-change, reorganization,
reincorporation, recapitalization or other corporate transaction, that does not
effect a change in control of the relevant company, without the consent of the
other party. In the event that a party assigns this Agreement, it is expressly
agreed that the entity to which the Agreement has been assigned shall be bound
by the same terms as those set forth in this Agreement.

     11.5   Modification and Waiver. No modification to this Agreement, nor any
waiver of any rights, will be effective unless agreed to in writing by the party
to be charged. The waiver of any breach or default shall not constitute a waiver
of any other right hereunder or any subsequent breach or default.

     11.6   Notices. All notices, consents and other communications hereunder to
be given in writing, as expressly provided herein, shall be transmitted to the
addresses for the parties first set forth above or to such other addresses as
either party may substitute by written notice to the other in such manner. Any
such notice shall be deemed served when delivered or, if delivery is not
accomplished by reason of some fault of the addressee, when tendered.

     11.7   Severability. If any provision of this Agreement is determined to be
invalid or unenforceable, it shall be deemed to be modified to the minimum
extent necessary to be valid and enforceable. If it cannot be so modified, it
shall be deleted and the deletion shall not affect the validity or
enforceability of any other provision.

     11.8   Relationship of Parties. The parties are independent contractors.
Under no circumstances will the employees of one party be deemed the employees
of the other party. This Agreement does not grant authority for either party to
act for the other in an agency or other capacity, or to make commitments of any
kind for the account of or on the behalf of the other party. There are no third
party beneficiaries of this Agreement, and nothing herein shall create any
rights in any third parties.

     11.9   Entire Agreement. This Agreement, including all Exhibits hereto,
constitutes the entire and exclusive Agreement between the parties hereto with
respect to the subject matter hereof. The parties agree that this Agreement
takes precedence over and supercedes any other agreements referenced herein
solely to the extent that any conflicts or contradictions are created by such
other agreements. The Agreement shall not be modified by the terms in any
subsequent purchase order of PBTC or any invoice of NEON.

     11.10  Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.

     11.11  Government End Users. It is NEON's position that the U.S. Government
should gain no greater or lesser rights than any other customer. NEON reserves
all unpublished rights under the United States copyrights laws. For all Federal
Acquisitions subject to the 1995 regulations, the following shall apply: This
provision applies to all acquisition of the Software by or for the U.S.
Government. In accordance with FAR 12.212 - Computer Software, the U.S.
Government shall have only those rights specified in the license contained in
any addendum to the contract.

The following FAR Clauses will be incorporated by reference for all Federal
Acquisitions:

     52.212-4   Contract Terms and Conditions - Commercial Items (May 1999). In
                accordance with FAR 12.302 the following provisions and clauses
                are removed from

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               52.212-4 and are not applicable to this Agreement: Sections (a),
               (h), (n), (o) and (s).

     52.212-5  Contract Terms and Conditions Required to Implement Statutes or
               Executive Orders Commercial Items (Feb 2000)

     52.227-19 Commercial Computer Software - Restricted Rights (Jun 87)

     IN WITNESS WHEREOF, the undersigned are duly authorized to execute this
Agreement effective as of the last date set forth below.

     NEON Systems, Inc.                   Peregrine/Bridge Transfer Corporation

     By: ___________________________      By: ________________________________

     _______________________________      ____________________________________

     (Printed Name)                       (Printed Name)

     Title: ________________________      Title: _____________________________

     Date: _________________________      Date: ______________________________

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                                    EXHIBIT A

                                LICENSED SOFTWARE

LICENSED SOFTWARE:

The Shadow Code base incorporated in the NEON 24x7 computer software product,
including object and source code therefor, as of the Effective Date.

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                                    EXHIBIT B

               Terms To Be Included in End User License Agreement

          Each End User License Agreement between PBTC and its end user licensee
     ("End User"), for the PBTC Products shall require the End User to agree to
     terms substantially as follows:

          1.  Title to the PBTC Product does not pass to the End User. Licensed
     Software and all copies (in whole or part) shall remain the exclusive
     property of NEON and its licensors.

          2.  End User only obtains a non-exclusive license, without the right
     to sublicense, to access and/or use the Licensed Software, as applicable,
     solely in conjunction with PBTC Products, and for no other purpose. End
     User may make up to two copies of each PBTC Product exclusively for
     inactive back-up or archival purposes. All archival and backup copies of
     the PBTC Products are subject to the provisions herein, and all titles,
     trademarks, confidentiality, and copyright and restricted rights notices
     shall be reproduced in such copies.

          3.  End User shall not transfer, assign or license the use of all or
     any portion of the Licensed Software to any third party or entity.

          4.  The Licensed Software included in the PBTC Products constitutes
     highly valuable property of NEON and its licensors and contains trade
     secrets and confidential information owned by NEON. End User shall observe
     complete confidentiality with respect to the Licensed Software, and End
     User shall not disclose all or any portion thereof to any third party or
     entity, except to its employees, consultants and contractors as required in
     the course of their work for PBTC, provided such employees, consultants and
     contractors are under a confidentiality agreement that complies with the
     terms of this Agreement.

          5.  End User shall not modify, decompile, disassemble or otherwise
     reverse engineer, reverse assemble or reverse compile or create derivative
     works based on the Licensed Software or any part thereof.

          6.  NEON has made no representation or warranties to the End User, and
     End User shall look solely to PBTC with respect to any claim related to any
     PBTC Products.

          7.  End User shall not remove or alter NEON's ownership, trademark,
     copyright or other proprietary notices on the Licensed Software.

          8.  End User shall not transfer, directly or indirectly, any
     restricted Licensed Software within the PBTC Product to any destination
     subject to export restrictions under U.S. law, unless prior written
     authorization is obtained from the appropriate U.S. agency.

          9.  THE PBTC PRODUCTS ARE PROVIDED "AS IS", WITH ALL FAULTS. PBTC, ITS
     AFFILIATES AND LICENSORS SPECIFICALLY DISCLAIM ALL OTHER WARRANTIES,
     INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY,
     FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT AND QUIET ENJOYMENT.
     PBTC DOES NOT WARRANT THAT THE OPERATION OF THE PBTC PRODUCTS WILL BE
     UNINTERRUPTED OR ERROR FREE, OR THAT ALL PRODUCT DEFECTS CAN BE CORRECTED.

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          10.  NEITHER PBTC, ITS AFFILIATES, NOR LICENSORS ARE LIABLE FOR ANY
     SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES RELATING
     TO THIS AGREEMENT AND/OR ANY OF THE PBTC PRODUCTS (INCLUDING WITHOUT
     LIMITATION LOST PROFITS, LOST COMPUTER USAGE TIME, AND DAMAGE OR LOSS OF
     USE OF DATA), EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
     SUCH DAMAGES, AND IRRESPECTIVE OF THE NEGLIGENCE OF ANY SUCH PARTY OR
     WHETHER SUCH DAMAGES RESULT FROM A CLAIM ARISING UNDER TORT OR CONTRACT
     LAW.

          11.  LIMITED RIGHTS DATA AND RESTRICTED RIGHTS COMPUTER SOFTWARE.
     UNPUBLISHED - RIGHTS RESERVED UNDER THE COPYRIGHT LAWS OF THE UNITED
     STATES. Use, duplication, or disclosure of any data and computer software
     by the U.S. Government is subject to restrictions, as applicable, set forth
     in FAR Section 52.227-14, DFARS 252.227-7013, DFARS 227.227-7014, DFARS
     252.227-7015, and DFARS 252.227-7025, as amended from time to time.
     Contractor/Manufacturer is NEON Systems, Inc., 14100 Southwest Freeway,
     Suite 500, Sugar Land, Texas 77478, USA. Any contract notices should be
     sent to this address.

          12.  The provisions of paragraphs 1, 4, 5, 6, 7, 9, 10, and 11 shall
     survive any expiration of the term of End User License Agreement.

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                                                                    Exhibit 10.8

                               SERVICES AGREEMENT

     THIS SERVICES AGREEMENT (the "Agreement") is entered into effective as of
the 1st day of August 2002, between NEON Systems, Inc., a Delaware corporation
("NEON"), and Peregrine/Bridge Transfer Corporation, a Delaware corporation
("PBTC").

                              W I T N E S S E T H:

WHEREAS, NEON and PBTC have entered into a Termination and Support Agreement
dated effective as of August 1, 2002, whereby NEON and PBTC agreed to terminate
the Distributorship Agreement dated as of January 1, 1996, the First Amendment
to the Distributor Agreement dated as of January 1, 1999, the Remarketing
Agreement dated as of January 25, 2000 and the Services Agreement dated as of
December 18, 1998; and

WHEREAS, such Termination Agreement provides that NEON will provide PBTC with
certain administrative services and office space in consideration of PBTC's
execution and delivery of the Termination Agreement; and

WHEREAS, PBTC desires NEON to provide, or cause to be provided, certain
administrative, marketing and legal services and assistance to PBTC pursuant to
the terms and conditions hereof, which NEON is able to provide more economically
than PBTC.

NOW, THEREFORE, in consideration of the promises set forth herein and the
benefits to be derived herefrom, the parties hereby agree as follows:

                                    ARTICLE I
                         SERVICES TO BE PROVIDED BY NEON

     1.1 Provision of Services. NEON shall provide and perform, or cause its
affiliates to provide and perform, the services listed on Exhibit A attached to
this Agreement (the "Services"), which may include procurement of services to be
provided by third parties. Exhibit A may from time to time be modified by the
mutual written agreement of the parties.

     1.2 Service Fee; Reimbursement of Expenses. During the first twelve months
of this Agreement (the "Initial Term"), such Services will be provided as
additional consideration to PBTC's execution and delivery of the Termination
Agreement, with no service fee. After the Initial Term, PBTC will have the
option to renew this Agreement for up to an additional twelve months (the
"Renewal Term"), except that during the Renewal Term, PBTC shall be required to
pay to NEON a set monthly service fee in the amount of $10,000 per month (the
"Service Fee") for the remaining term of this Agreement and any subsequent
renewal, if any. At the end of such Renewal Term, if any, or such Initial Term,
if PBTC does not elect to renew this Agreement for the Renewal Term, NEON will
have no further obligation to provide Services to PBTC. Notwithstanding the
foregoing, PBTC shall reimburse NEON monthly for all actual out-of-pocket costs
and expenses incurred by NEON during the prior month in

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connection with its performance or provision of the Services (the "Reimbursable
Amounts") during the full Initial Term and the Renewal Term, if applicable, of
this Agreement, including, without limitation, costs and expenses associated
with the procurement of services from third party providers.

     1.3  Standards of Services. NEON shall use its reasonable efforts to cause
any and all personnel providing the Services to (i) perform such Services with
the same degree of care, skill and diligence with which it causes similar
services to be performed for itself and its various other subsidiaries, and (ii)
in cases where the Services entail providing third party services to PBTC,
utilizing the same or comparable vendors that are used by itself and its various
other subsidiaries.

     1.4  Payment of Service Fees. On September 30, 2002, NEON shall invoice
PBTC and PBTC shall remit to NEON all Reimbursable Amounts incurred during the
period beginning on the effective date of this Agreement and ending on September
30, 2002. Thereafter, on the last day of each calendar month occurring
thereafter during the Initial Term and Renewal Term, if applicable, of this
Agreement, PBTC shall remit to NEON the Service Fee, if applicable, for the
month just beginning and all Reimbursable Amounts incurred during such prior
month and required to be paid by PBTC pursuant to Section 1.2 for such month. In
the event that PBTC exercises its option to continue receiving the Services
after the Initial Term, the first payment of the Service Fee shall occur on July
31, 2003.

     1.5  Term. The Initial Term of this Agreement shall be twelve (12) months
beginning August 1, 2002 (the "Initial Term"). The term of this Agreement may be
continued by PBTC, in its sole discretion, for up to an additional twelve (12)
months subject to its payment of the Services Fee for each such additional
month. Unless otherwise renewed by PBTC for the Renewal Term, this Agreement
will terminate at the close of business on July 31, 2003. Notwithstanding the
foregoing; this Agreement may be terminated by PBTC at any time on written
notice thereof to NEON. The parties may extend the term beyond the dates hereof
by mutual agreement in writing signed by authorized representatives of both
parties.

     1.6  Return of Records. Upon termination or expiration of this Agreement,
NEON shall deliver to PBTC all records, reports and data of PBTC that are in its
possession relating to the Services. NEON may retain copies of all such records,
reports and data as NEON may require, which copies will be prepared at the
expense of NEON.

     1.7  Indemnification of NEON. PBTC agrees to defend, indemnify and hold
NEON and its affiliates and its and their officers, directors, agents and
employees harmless against any and all claims, losses, liabilities, damages and
causes of action, whether based on tort, breach of contract or any other legal
theory, on account of taxes, liens, debts, personal injuries, death or damage to
property and all other claims or demands of every character arising out of, in
connection with, or as an incident to, any act or omission in connection with
NEON's performance of the Services or fulfillment of its responsibilities under
this Agreement, including negligence (but not gross negligence or willful
misconduct) of NEON, its affiliates, or its or their officers, directors, agents
or employees.

     1.8  NEON's Liability. NEON, its affiliates and its and their officers,
directors,

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<PAGE>

agents and employees shall not be liable to PBTC for any loss or damage suffered
by PBTC resulting from the performance of the Services by NEON or the
fulfillment of NEON's responsibilities under this Agreement, except to the
extent that such loss or damage results from the gross negligence or willful
misconduct of NEON or its affiliates or its or their respective officers,
directors, agents or employees.

                                   ARTICLE II
                                  MISCELLANEOUS

     2.1  Assignment. Neither NEON nor PBTC may transfer or assign this
Agreement or any of its obligations or rights herein without the consent of the
other parties hereto, which consent will not unreasonably be withheld.
Notwithstanding the foregoing, PBTC or NEON may assign this agreement in
connection with a corporate name-change, reorganization, reincorporation,
recapitalization or other corporate transaction that does not effect a change in
control of the relevant company, without the consent of the other party. Any
attempted assignment without such consent shall be void.

     2.2  Force Majeure. Performance under this Agreement, other than the
obligation to make payments of money due, shall be suspended in the event such
performance is prevented by fires, floods, hurricanes, storms, bad weather,
tornadoes, lightning, explosions, acts of God or the public enemy, governmental
laws, rules, regulations or orders, and other events, whether similar or
dissimilar, beyond the control of the parties.

     2.3  Independent Contractor. In performing the Services hereunder, NEON and
any of its affiliates performing Services hereunder shall be considered to be
independent contractors. In no event shall any party hereto be deemed a partner,
co-venturer or agent of the other party hereto.

     2.4  Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile
transmission or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice; provided
that notices of a change of address shall be effective only upon receipt
thereof):

     (i)  To NEON, as follows:

                       NEON Systems, Inc.
                       14100 Southwest Freeway, Suite 500
                       Sugar Land, Texas 77478
                       Att: Chief Financial Officer
                       Phone: 281-634-8301
                       Fax: 281-634-8282

     (ii) To PBTC, as follows:

                       Peregrine/Bridge Transfer Corporation
                       12680 High Bluff Drive, Suite 200

                                        3

<PAGE>

                           San Diego, California 92130
                           Att: Chief Financial Officer
                           Phone: 858-259-2500
                           Fax: 858-259-4843

         2.5  Governing Law. This Agreement shall be governed by and construed
in accordance with laws of the State of Texas, without regard to its principles
of conflicts of laws.

         2.6  Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         2.7  No Third Party Beneficiaries. Except as expressly provided herein,
nothing in this Agreement shall entitle any person other than NEON or PBTC or
their respective successors and assigns permitted hereby to any claim, cause of
action, remedy or right of any kind.

         2.8  Counterparts. This Agreement may be executed in any number of
counterparts, no one of which needs to be executed by both parties, and this
Agreement shall be binding upon both parties with the same force and effect as
if both parties had signed the same document, and each such signed counterpart
shall constitute an original of this Agreement.

         2.9  Amendment. No modification or amendment of this Agreement shall be
binding upon a party unless in writing and signed by the other party hereto.

         2.10 Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof, and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties hereto regarding the subject matter hereof.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.

Neon  Systems, Inc.

By:______________________________________
         Brian D. Helman
         Chief Financial Officer

Date:____________________________________

Peregrine Bridge Transfer Corporation

                                       4

<PAGE>

By:______________________________________
         J. Bradford Poynter
         Chief Financial Officer

Date:____________________________________

                                       5

<PAGE>

                                    EXHIBIT A

                             Description of Services

During the Initial Term and the Renewal Term, if applicable, of this Agreement,
NEON will provide, or cause to be provided, to PBTC, the services described
below (the "Services"). The Services may be modified from time to time by the
mutual written agreement of the parties.

      (a) Facilities Management. NEON will provide office space and furniture
          for PBTC's Houston-based employees (up to a maximum of the square feet
          of office space that NEON's IMS Division occupied at Closing of the
          Termination and Customer Support Agreement dated August 14, 2002).

      (b) Accounting Services. Perform all normal and customary accounting
          functions for PBTC and maintain all necessary books and records in
          connection therewith; and monitor the actual monthly income and
          expenses of PBTC, collect revenues and pay operating expenses, compare
          actual results to the relevant operating budgets, and report to PBTC.

      (c) Risk Management Services. Assist PBTC in review of the insurable risks
          of PBTC and the determination of levels of insurance coverage,
          develop, administer and implement a risk management program for PBTC;
          procure insurance coverage in accordance with PBTC's instructions; and
          subject to PBTC's guidelines and approval, oversee the investigation
          and resolution of all casualty and liability claims brought by or
          against PBTC.

      (d) Tax Services. Assist in the preparation of state and federal income
          tax returns for PBTC; sales tax filings and state unemployment tax
          filings; and coordinate with PBTC and oversee any challenges,
          disputes, and audits of any income, sales, or unemployment taxes.

      (e) Human Resources. Provide standard human resource services including
          implementation and oversight of interview and hiring guidelines and
          services; implementation and oversight of employment policies and
          procedures; conduct of periodic employee reviews; and to the extent
          permitted by applicable law and governmental regulations, employee
          benefits and payroll administration.

      (f) Regulatory Compliance Review. Assist PBTC in assuring compliance with
          applicable governmental regulations (including without limitation
          labor and employment regulations and Americans with Disabilities Act)
          solely with respect to PBTC employees who office in NEON's corporate
          headquarters; and implementing a program to monitor continuing
          compliance with governmental regulations.

      (g) Legal Services. NEON's Legal Department will provide legal and
          contracts review services to Recipient. Specifically, NEON's Legal
          department will draft and/or review any contracts to be entered into,
          counsel and consult with all departments regarding legal matters, and
          address legal questions of PBTC.

Monthly Services Fee

          Service Fees and Reimbursable Amounts (as defined in Section 1.2 of
this Agreement) shall be paid in accordance with Sections 1.2 and 1.4 of this
Agreement.

                                       6

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