Document:

Exhibit 10.24

 

CONFIDENTIAL SEPARATION AGREEMENT 

AND GENERAL RELEASE OF ALL CLAIMS

 

This
Confidential Separation Agreement and General Release of All Claims
(“Agreement”) is made by and between Peregrine Systems, Inc. (“Peregrine”) and
Andrew Cahill (“Employee”) with respect to the following facts:

 

A.                                   Employee is
currently employed by Peregrine as Executive Vice President, Global Field
Operations.

 

B.                                     Employee’s
employment will terminate effective November 26, 2003 (“Separation Date”).

 

C.                                     Employee and Peregrine
are parties to a Secured Promissory Note (the “Note”), effective June 8,
2000.

 

D.                                    The parties desire
to settle all claims and issues that have, or could have been raised, between
them including all claims in relation to Employee’s employment with Peregrine
and arising out of or in any way related to the acts, transactions or
occurrences between Employee and Peregrine to date, including, but not limited
to, Employee’s employment with Peregrine or the termination of that employment,
on the terms set forth below.

 

THEREFORE,
in consideration of the promises and mutual agreements hereinafter set forth,
it is agreed by and between the undersigned as follows:

 

1.                                       Severance Package.  Peregrine agrees to provide Employee with
the following payments and benefits (“Severance Package”) to which Employee is
not otherwise entitled.  The parties
acknowledge and agree that the consideration herein constitutes adequate legal
consideration for the promises and representations made by the parties in this
Agreement.

 

1.1.                              Salary
Continuation Severance Payments. 
Peregrine agrees to pay Employee the equivalent of twelve (12) months’
base salary, or Three Hundred Thirty Thousand Dollars and Zero Cents
($330,000.00), less all appropriate federal and state income and employment
taxes (“SC Severance Payment”).  The SC
Severance Payment will be paid in semi-monthly installments during the period
between December 1, 2003 and November 30, 2004 (“Salary Continuation
Period”), following the Effective Date of the Agreement as described in
paragraph 8.4.

 

1.1.1.                     Notwithstanding the above,

 

[This portion of the Agreement has
been omitted pursuant to a request for confidential treatment.  The omitted portion has been filed
separately with the Securities and Exchange Commission.]

 

1.2.                              Lump Sum Severance
Payment.  Peregrine agrees to pay
Employee $300,000 in a lump sum on January 5, 2004, less all appropriate
federal and state income and employment taxes (“LS Severance Payment”).

 

 

1.2.1.                     Payment of the LS Severance
Payment is not subject to paragraph 1.1.1, above.

 

1.3.                              Payment
of the Note.  Employee agrees to pay
to Peregrine all sums remaining unpaid under the Note simultaneously with the
payment made to Employee pursuant to section 1.2.

 

1.4.                              Continuation
of Medical, Dental, and Vision Benefits. 
Peregrine agrees to reimburse Employee for the cost of continuing
medical, dental, and vision benefits under COBRA that is above the amount
Employee would pay for such benefits as a full-time employee, provided Employee
makes a timely election under COBRA. 
Peregrine will continue these payments through the earlier to occur of
November 30, 2004, and the date Employee is eligible for medical benefits
from another employer.

 

1.5.                              Del
Mar Country Club Membership. 
Peregrine and Employee acknowledge that the Del Mar Country Club
Membership, originally understood by the parties to be held in Peregrine’s
name, has recently been determined to be held in Employee’s name and is,
therefore, Employee’s membership and not an asset of Peregrine.  Peregrine will make a payment to appropriate
tax authorities to cover Employee’s imputed income on the payments made by the
Company for this membership.  This
payment will be made through Peregrine’s normal payroll gross up process.

 

1.6.                              Initial
Communication of Employee’s Termination. 
Employee has agreed to and approved the language set forth in Attachment
A to the Agreement, which is incorporated herein by reference, to be
distributed by Peregrine to initially communicate that his employment with
Peregrine has terminated.

 

2.                                       General Release.

 

2.1.                              Except
as provided in 6.5, Employee unconditionally, irrevocably and absolutely
releases and discharges Peregrine, and any parent and subsidiary corporations,
divisions and affiliated corporations, partnerships or other affiliated
entities of Peregrine, past and present, as well as Peregrine’s employees,
officers, directors, agents, successors and assigns(collectively, “Released
Parties”) from all claims related in any way to the transactions or occurrences
between Employee and Released Parties to date, to the fullest extent permitted
by law, including, but not limited to, Employee’s employment with Peregrine,
the termination of Employee’s employment, and all other losses, liabilities,
claims, charges, demands and causes of action, known or unknown, suspected or
unsuspected, arising directly or indirectly out of or in any way connected with
Employee’s employment with Peregrine. 
This release is intended to have the broadest possible application and
includes, but is not limited to, any tort, contract, common law, constitutional
or other statutory claims, including, but not limited to alleged violations of
the California Labor Code or the federal Fair Labor Standards Act, Title VII of
the Civil Rights Act of 1964 and the California Fair Employment and Housing
Act, the Americans with Disabilities Act, the Age Discrimination in Employment
Act of 1967, as amended, ERISA, FMLA and all claims for attorneys’ fees, costs
and expenses.

 

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2.1.1.                     Except to the extent provided in
paragraph 6.5, this release further includes an agreement on the part of
Employee to release and consent to the disallowance, with prejudice, of all
proofs of claim that have been or could be filed by Employee in the Peregrine
bankruptcy case, including, without limitation, proof of claim numbers 809 and
812.  Employee will cooperate with
Peregrine in submitting an order to the bankruptcy court disallowing these
proofs of claim.

 

2.2.                              Employee
acknowledges that he may discover facts or law different from, or in addition
to, the facts or law that are presently known or believed to be true with
respect to the claims released in this Agreement and agrees, nonetheless, that
this Agreement and the release contained in it shall be and remain effective in
all respects notwithstanding such different or additional facts or the
discovery of them.

 

2.3.                              Employee
declares and represents that he intends this Agreement to be complete and not
subject to any claim of mistake, and that the release herein expresses a full
and complete release of all claims known and unknown, suspected or unsuspected
and, regardless of the adequacy or inadequacy of the consideration, he intends
the release herein to be final and complete. 
Employee executes this release with the full knowledge that this release
covers all possible claims to the fullest extent permitted by law.

 

3.                                       California Civil
Code Section 1542 Waiver.  Employee
expressly acknowledges and agrees that all rights under Section 1542 of
the California Civil Code are expressly waived.  That section provides:

 

A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

4.                                       Representation
Concerning Filing of Legal Actions. 
Employee represents that, as of the date of this Agreement, he has not
filed any lawsuits, charges, complaints, petitions, claims or other accusatory
pleadings against any Released Parties in any court or with any governmental
agency.  Employee further agrees that,
to the fullest extent permitted by law, he will not prosecute, nor allow to be
prosecuted on his behalf, in any administrative agency, whether state or
federal, or in any court, whether state or federal, any claim or demand of any
type related to the matters released above, it being the intention of Employee
that with the execution of this release, the Released Parties will be absolutely,
unconditionally and forever discharged of and from all obligations related in
any way to the matters discharged herein.

 

5.                                       Nondisparagement.  Employee agrees not to make any voluntary
statements, written or verbal, or cause or encourage others to make any such
statements that defame, disparage or in any way criticize the personal and/or
business reputations, practices, products, services or conduct of Peregrine or
any of the other Released Parties.

 

6.                                       Confidentiality
and Return of Peregrine Property.

 

6.1.                              Confidential
Separation Information.  Employee
agrees that the terms and conditions of this Agreement, as well as the
discussions that led to the terms and conditions of

 

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this Agreement
(collectively referred to as the “Confidential Separation Information”) are
intended to remain confidential between Employee and Peregrine.  Employee further agrees that Employee will
not disclose the Confidential Separation Information to any other persons,
except that Employee may disclose such information to Employee’s immediate
family members and to Employee’s attorney(s) and accountant(s), if any, to the
extent needed for legal advice or income tax reporting purposes.  When releasing this information to any such
person, Employee shall advise the person receiving the information of its
confidential nature, and shall receive from such person, that person’s
agreement to maintain the confidentiality of the information provided to that
person.  Neither Employee, nor anyone to
whom the Confidential Separation Information has been disclosed will respond
to, or in any way participate in or contribute to, any public discussion,
notice or other publicity concerning the Confidential Separation Information.  Without limiting the generality of the
foregoing, Employee specifically agrees that neither Employee, Employee’s
immediate family, Employee’s attorney nor Employee’s accountant, if any, shall
disclose the Confidential Separation Information to any current, former or
prospective employee of Peregrine.

 

6.2.                              Confidential and
Proprietary Information.  Employee
also agrees that Employee will not use, remove from Peregrine’s premises, make
unauthorized copies of or disclose any confidential or proprietary information
of Peregrine or any affiliated or related entities, including but not limited
to, their trade secrets, copyrighted information, customer lists, human
resources records, payroll records, personnel file records, billing records,
any information encompassed in any research and development, reports, work in
progress, drawings, software, computer files or models, designs, plans,
proposals, marketing and sales programs, financial projections, and all
concepts or ideas, materials or information related to the business or sales of
Peregrine and any affiliated or related entities that has not previously been
released to the public by an authorized representative of those companies.

 

6.3.                              Return of Company
Property.  By signing this Agreement,
Employee represents and warrants that Employee will have returned to Peregrine
on or before the Separation Date, all Peregrine property, including all
confidential and proprietary information, as described in paragraph 6.2
above, and all materials and documents containing trade secrets and copyrighted
materials, including all copies and excerpts of the same.

 

6.4.                              Continuing
Obligations.  Employee further agrees to
comply with all continuing obligations of the Invention, Non-Disclosure and
Arbitration Agreement, signed by him, including but
not limited to promises to protect all confidential and proprietary information
of Peregrine.  Employee understands that
he may have knowledge that may be needed by Peregrine in the event of an
investigation or court proceeding involving Peregrine.  In return for the severance payment Employee
is receiving under the Agreement, Employee agrees to cooperate fully with and
respond truthfully, completely, and promptly to any request for information
made by Peregrine or its attorneys in connection with any investigation or
court proceeding involving Peregrine. 
Peregrine agrees to reimburse Employee for reasonable travel expenses
that Employee incurs at Peregrine’s request to respond to Peregrine requests
for information.  Peregrine agrees to
consider in good faith any request for information made by Employee or his
attorneys in connection with any investigation or court proceeding involving
Employee, but Peregrine will determine in its sole discretion whether or not to
provide any such information

 

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and Peregrine reserves the right in its sole
discretion to notify any government agency of information provided to Employee.

 

6.5.                              Advance of Legal
Expenses; Indemnification.  [This portion of the Agreement has been omitted
pursuant to a request for confidential treatment.  The omitted portion has been filed separately with the Securities
and Exchange Commission.] 
Any claim(s) for indemnification of Employee with regard to Peregrine
arising out of facts occurring before the effective date of the Fourth Amended
Plan of Reorganization of Peregrine Systems Inc. and Peregrine Remedy, Inc., as
modified (the “Plan”), shall be governed exclusively by the terms of the
Plan.  Any claims for
indemnification of Employee with regard to Peregrine arising out of facts
occurring after the effective date of the Plan, shall be governed by applicable
law.

 

6.6                                 Noncompetiton/Inevitable
Disclosure.  Employee acknowledges that
Peregrine’s business is highly innovative and competitive and that trade secret
information and Confidential Information that Employee has come to possess
during his employment involve valuable and proprietary information, including
information with regard to the products, services, product development and
design, manufacturing, pricing and sales and marketing strategy.  Employee further acknowledges that this
trade secret information and Confidential Information would necessarily be
utilized by Employee during the lifecycle of the Company’s products, even if
Employee attempted in good faith not to utilize the information, if Employee
were to accept other employment involving products and/or services similar to
those with which Employee was involved with Peregrine.  Although the lifecycles of such products and
services vary depending upon the service or the product, Employee and Peregrine
agree that for Peregrine and its products a 12 month period of protection is
reasonable and necessary in order to protect Peregrine’s trade secrets and
Confidential Information.  Accordingly, Employee
agrees that for the 12 month period following the termination of Employee’s
employment with Peregrine, Employee will not, directly or indirectly, engage in
any business, or become an employee of, consult with, render services for, own,
manage, control, participate in, or in any manner engage in any business where
the performance of Employee’s duties and/or the knowledge utilized would be
similar to the duties of, or the knowledge utilized by, Employee at Peregrine,
for in such circumstances Employee and Peregrine agree that the performance of
Employee’s duties for any such new employer, business or entity would
inevitably result (through intentional, negligent or inadvertent action) in
Employee’s utilizing trade secret or Confidential Information that Employee
acquired as a result of Employee’s employment by, or association with,
Peregrine.  Because of the international
scope of Peregrine’s markets, Employee and Peregrine agree that such
limitations shall apply throughout the world wherever Peregrine sells its
products.

 

7.                                       No Admissions.  By entering into this Agreement, the
Released Parties make no admission that they have engaged, or are now engaging,
in any unlawful conduct.  The parties
understand and acknowledge that this Agreement is not an admission of liability
and shall not be used or construed or such in any legal or administrative
proceeding.

 

8.                                       Older Workers’
Benefit Protection Act.  This
Agreement is intended to satisfy the requirements of the Older Workers’ Benefit
Protection Act, 29 U.S.C. sec. 626(f). 
The following general provisions, along with the other provisions of
this Agreement, are agreed to for this purpose:

 

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8.1. Employee acknowledges and agrees that he has read
and understands the terms of this Agreement.

 

8.2.                              Employee
acknowledges that this Agreement advises him in writing that he may consult
with an attorney before executing this Agreement, and that he has obtained and
considered such legal counsel as he deems necessary, such that he is entering
into this Agreement freely, knowingly, and voluntarily.

 

8.3.                              Employee
acknowledges that he has been given at least twenty-one (21) days in which to
consider whether or not to enter into this Agreement. Employee understands
that, at him option, Employee may elect not to use the full 21-day period.

 

8.4.                              This
Section 8 shall not become effective or enforceable until the eighth day
after Employee signs this Agreement.  In
other words, Employee may revoke his acceptance of this Section within
seven (7) days after the date he signs it. 
Employee’s revocation must be in writing and received by Peregrine’s
Human Resources Department by 5:00 p.m. P.S.T. on the seventh day in order to
be effective.  If Employee does not
revoke acceptance within the seven (7) day period, Employee’s acceptance of
this Section shall become binding and enforceable on the eighth day
(“Effective Date”).  The SC Severance
Payment is being paid in consideration of his waiver of any claims with regard
to the federal Age Discrimination in Employment Act and that in the event of a
revocation provided in this subsection 8.4, such payments will not be
made.

 

9.                                       Severability.  In the event any provision of this Agreement
shall be found unenforceable by an arbitrator or a court of competent
jurisdiction, the provision shall be deemed modified to the extent necessary to
allow enforceability of the provision as so limited, it being intended that the
parties shall receive the benefits contemplated herein to the fullest extent permitted
by law.  If a deemed modification is not
satisfactory in the judgment of such arbitrator or court, the unenforceable
provision shall be deemed deleted, and the validity and enforceability of the
remaining provisions shall not be affected thereby.

 

10.                                 Full Defense.  This Agreement may be pled as a full and
complete defense to, and may be used as a basis for an injunction against, any
action, suit or other proceeding that may be prosecuted, instituted or
attempted by Employee in breach hereof. 
Employee and Peregrine agree that in the event an action or proceeding
is instituted by the other in order to enforce the terms or provisions of this
Agreement, the prevailing party shall be entitled to an award of reasonable
costs and attorneys’ fees incurred in connection with enforcing this Agreement.

 

11.                                 Good Faith.  The parties agree to do all things necessary
and to execute all further documents necessary and appropriate to carry out and
effectuate the terms and purposes of this Agreement.

 

12.                                 Applicable Law.  The validity, interpretation and performance
of this Agreement shall be construed and interpreted according to the laws of
the United States of America and the state of California.

 

13.                                 Entire Agreement;
Modification.  Except with respect to any rights
that may exist in either party with regard to indemnification, this Agreement,
including the surviving provisions of the Invention, Non-Disclosure and
Arbitration Agreement (including its arbitration

 

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provisions) referenced above, is intended to be the
entire agreement between the parties and supersedes and cancels any and all
other and prior agreements, written or oral, between the parties regarding this
subject matter.  It is agreed that there
are no collateral agreements or representations, written or oral, regarding the
terms and conditions of Employee’s separation of employment with Peregrine and
settlement of all claims between the parties other than those set forth in this
Agreement.  This Agreement may be
amended only by a written instrument executed by all parties hereto.

 

7

 

THE
PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY
UNDERSTAND EACH AND EVERY PROVISION CONTAINED HEREIN.  WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES
SHOWN BELOW.

 

	
  Dated: 

  	
  12/24/03

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Andrew Cahill

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated: 

  	
  12/24/03

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Mary Lou O’Keefe

  
	
   

  	
   

  	
   

  	
   

  	
  Sr. VP, Human Resources

  

 

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ADDITIONAL CONSIDERATION

 

In
order to induce Peregrine Systems, Inc. hereinafter “Peregrine”) to enter into
the foregoing Agreement, I agree to forever release and discharge Peregrine and
any past and present parent, subsidiary, and related corporations of Peregrine
as well as the successors, shareholders, officers and directors of corporate
shareholders, officers, directors, heirs, predecessors, assigns, agents,
employees, attorneys and representatives of each of them, past and present,
from any and all causes of action, actions, judgments, liens, indebtedness,
damages, losses, claims, liabilities and demands of whatsoever kind or
character, known or unknown, suspected to exist or not suspected to exist or
not suspected to exist, anticipated or not anticipated, whether or not
heretofore brought before any state or federal court or before any state or
federal agency or other governmental entity, including without limitation on
the generality of the foregoing, any and all claims, demands or causes of
action attributable to, connected with, or incidental to the employment of my
husband by Peregrine, the separation of that employment, and any dealings
between the parties concerning my husband’s employment or any other matter
existing prior to the date of execution of this Agreement, excepting only those
obligations to be performed hereunder. 
This release is intended to apply to any and all claims based on common
law contract theories or state or federal statutory or constitutional law
theories.  As a further inducement to
Peregrine to enter into the Agreement, I agree that the provisions of the
foregoing Agreement relating to confidentiality shall be incorporated herein by
reference and I agree to abide by each such provision and every obligation
thereof as if they had been written to apply directly to me.

 

Executed
this 12th day of December, 2003

 

	
   

  	
   

  
	
   

  	
  Janet CahillExhibit 10.25

 

 

December
9, 2003

 

Mr.
David Sugishita

5910
Deerland Court

San
Jose, CA 95124

 

Dear
David:

 

On behalf of Peregrine Systems, we would like to offer you the position
of Executive Vice President and Chief Financial Officer reporting to John Mutch,
CEO, effective with both the resignation of Peregrine’s current CFO, Ken
Sexton, and the filing of the Fiscal Year 2003 10K and 10Qs and Fiscal Year
2004 10Q for Ql, Q2, and Q3. In the event the conditions listed above are not
met by April 30, 2004 and you decide to terminate your employment, you will be
entitled to a Separation Benefit equal to one month base salary for every full
month employed. Upon your appointment to Executive Vice President and Chief
Financial Officer, you will need to coordinate the Company’s Form 10K for
Fiscal Year 2004.  In your capacity as
Executive Vice President and Chief Financial Officer, in order to coordinate
the filing of the 2004 10K, you agree to review the Company’s 2003 10K and
10Qs, as well as the Company’s 10Qs for Ql, Q2, and Q3 of fiscal 2004. However,
as part of your employment agreement, you cannot be terminated in the event you
reasonably determine that you cannot certify the results in the Company’s 2004
10K.

 

In the interim, beginning
December 10, 2003 (Commencement Date) you will join the Company as Executive
Vice President, Special Projects reporting directly to me. In this capacity,
you will provide financial guidance and direction limited to only prospective
financial activities. In your capacity as EVP Special Projects, you will not be
responsible, accountable or associated in any manner with past financial
statements including, but not limited to, preparing, reviewing, auditing,
discussing, commenting, and signing documents

 

1.               BASE
SALARY.  Your starting salary will
be $12,500 per semi-monthly pay period effective December 10, 2003.

 

2.               EMPLOYMENT
TERM.  The term of your employment
under this letter agreement (the “Employment Term”) will commence on December
10, 2003 and end when it is terminated in accordance with Section 6.

 

3.               BONUS.  Additionally, you will be eligible to
participate in the Management Incentive Compensation Plan (MICP) with an annual
target of $175,000. This

 

 

 

bonus is paid semi-annually, prorated from your hire date. A copy of the
summary plan description is attached.

 

4.               benefits.  You
will be eligible to participate in PSI’s employee benefit plans of general
application, including, without limitation, those plans covering medical,
disability and life insurance in accordance with the rules established for
individual participation in any such plan and under applicable law. You will be
eligible for vacation and sick leave in accordance with PSI policies in effect
during the term of this letter agreement and will receive such other benefits
as PSI generally provides to its other employees of comparable position and
experience.

 

a.               During your first eighteen (18) months of
employment you will be provided a monthly housing allowance of $5,000, which
will be grossed up to cover all applicable federal, state and local withholding
taxes.

 

i.                  At the conclusion of your first eighteen (18)
months of employment, we will
mutually assess continuation of the housing allowance or your relocation to the
San Diego area.

 

b.              If the mutual decision is made for you to
relocate to San Diego, we would expect that move to occur within the six months
following the first eighteen (18) months of employment. PSI will continue to
pay the $5,000 housing allowance (which will be tax grossed up to cover all
applicable taxes) until you move to a San Diego residence. Peregrine will hire
Relocation Coordinates to evaluate your relocation needs and to provide the
company with a cost estimate (currently anticipated to be approximately
$350,000). Peregrine will reimburse your relocation expenses (to a mutually
agreed upon limit after Relocation Coordinates reviews) and will gross-up those
items that are taxable to you.

 

5.               OPTIONS.  Subject to formal approval by
the Compensation Committee of the Board of Directors, you will be granted an
option to purchase up to 150,000 shares of Peregrine Systems, Inc. (PSI) common
stock, subject to execution of this letter agreement and your executing a stock
option agreement consistent with the terms and conditions of the 2003 Equity Incentive
Plan (“Plan”). The date of grant of the Options will be the Commencement Date
and the exercise price per share of the Options will be the fair market value
of PSI’s common stock on the Commencement Date as determined under the Plan.
The right to exercise the Options will vest 25% after the first 12 months, and
in 24 equal monthly installments thereafter. All vested Options will be
exercisable for 180 days following the date of termination. Notwithstanding any
provisions of the 2003 Equity Incentive Plan or the stock option grant
agreement evidencing the Options to the contrary, if a Change in Control
occurs, then the vesting and

 

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exercisability
of all shares of common stock issuable pursuant to the Options will be
accelerated in full upon public announcement of the closing of a Change in
Control. A “Change in Control” means:

 

(a)          the consummation of a merger or consolidation of PSI with or into
another entity or any other corporate reorganization, if persons who were not
stockholders of PSI immediately prior to such merger, consolidation or other
reorganization own immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the outstanding securities of
each of (i) the continuing or surviving entity and (ii) any direct or indirect
parent corporation of such continuing or surviving entity.

 

(b)         The sale, transfer or other disposition of all or substantially all of
the assets of PSI

 

6.               TERMINATION.  Peregrine Systems is an
“at-will” employer, and as such the employer/employee relationship is subject
to termination at any time by either party at any time with or without cause as
follows: 

 

a)              You may terminate your employment upon
written notice to the Company at any time in your discretion (“Voluntary
Termination”) by providing 60 days written notice;

 

b)             PSI may terminate your employment upon
written notice to you at any time following a determination by the CEO that
there is “Cause” as defined below, for such termination (“Termination for
Cause”);

 

c)              PSI may terminate your employment upon
written notice to you at any time in the sole discretion of the CEO without a
determination that there is Cause for such termination (“Termination without
Cause”) by providing 60 days written notice;

 

d)             You may terminate your employment upon
written notice to the Company at any time following a determination by you that
there is “Good Reason” as defined below, for such termination (‘Termination for
Good Reason”).

 

e)              Your employment will automatically terminate
upon your death or upon your Disability (as defined below) (“Termination for
Death or Disability”).

 

For purposes of this letter
agreement, the term “Disability” shall mean your inability to perform your job
responsibilities for a period of 180 consecutive days or 180 days in the
aggregate in any 12-month period. For purposes of this letter agreement,
“Cause” means (i) gross negligence or willful misconduct in the performance of
your duties to

 

3

 

PSI (other than as a result of
a Disability); (ii) repeated and continued failure to perform your duties and
responsibilities as a PSI employee (including, but not limited to your
compliance with any written policy of PSI) in good faith after having a
reasonable opportunity to cure such failure upon receiving specific written
notice of such failure from PSI; (iii) commission of any act of fraud or
violation of any SEC rules and regulations with respect to PSI; or (iv)
conviction of a felony or a crime involving moral turpitude if such felony or
crime could cause material harm to the business affairs or reputation of PSI.
No act or failure to act by you shall be considered “willful” if done or
omitted by you in good faith with reasonable belief that your action or
omission was in the best interests of PSI. “Good Reason” shall mean (i) without
the your express written consent, the significant reduction of your duties,
authority or responsibilities relative to your duties, authority and
responsibilities as in effect immediately prior to such reduction or the
assignment of such reduced duties, authority or responsibilities such as but
not limited to no longer reporting directly to the CEO, no longer EVP and CFO
of a publicly held company and, in the event, if you are still in your interim
position as EVP, Special Projects, no longer responsible for providing
financial guidance and direction for the Company limited to only prospective
financial activities ii) without your express written consent, a substantial
reduction without good business reasons, of the facilities and perquisites
(including office space and location) available to you immediately prior to
such reduction; iii) without your express written consent, a reduction by the Company
in your Base Compensation and Target Bonus in effect immediately prior to such
reduction; iv) material reduction by the Company in the kind or level of
overall benefits package; v) requirement for you to relocate to a facility or a
location more than 50 miles from your then present location, without your
written consent; vi) any purported termination of you by the Company which is
not effected for Disability of for Cause, or any purported termination of your
employment for which the grounds relied upon are not valid; or vii) the failure
of the Company to obtain the assumption of this agreement by any successors
contemplated in Section 13 below.

 

7.               SEPARATION BENEFITS. 
Upon termination of your employment with PSI for any reason, you will
receive payment for all salary and unpaid PTO (paid time off) accrued to the
date of your termination of employment. Your benefits will be continued under
PSI’s then existing benefit plans and policies for so long as provided under
the terms of such plans and policies and as required by applicable law. Under
certain circumstances, you will also be entitled to receive severance benefits
as set forth below, but you will not be entitled to any other compensation,
award or damages with respect to your employment or termination.

 

a.               In the event of your Voluntary Termination or
Termination for Cause, you will not be entitled to any cash severance benefits
or additional vesting of shares of stock options.

 

b.              Subject to your compliance with Section 9, in
the event of your Termination for Good Reason or Termination without Cause, (i)
at any time during the first 12

 

4

 

months following the Commencement Date (the “First Year”), you will be
entitled to a severance payment equal to your annual base salary and bonus
target paid in twenty four semi-monthly installments plus one (1) year of COBRA
coverage, paid by the Company, for medical, dental, and vision insurance
subject to the same coverage levels as in effect prior to termination, (ii) at
any time after the First Year, you will be entitled to a severance payment
equal to two (2) times your annual base salary and bonus target paid in a lump
sum cash payment plus eighteen (18) months of COBRA coverage, paid by the
Company, for medical, dental, and vision insurance subject to the same coverage
levels as in effect prior to termination. Lump sum payment will be due in full
on last day of employment with the Company.

 

c.               Subject to your compliance with section 9, in
the event of a Change of Control in conjunction with either a Termination for
Good Reason or Termination without Cause during and after the subsequent twelve
(12) month period following a Change of Control,, you will be paid a lump sum
cash payment equal to three (3) times both your annual base salary and bonus
target plus eighteen (18) months of COBRA coverage, paid by the Company, for
medical, dental, and vision insurance subject to the same coverage levels as in
effect prior to termination. Lump sum payment will be due in full on last day
of employment with the Company. In the event of your termination by PSI or any
successor corporation for any reason in connection with or during the 12-month
period following a Change of Control, you will only be entitled to the payment
set forth in this Subsection c) (for purposes of clarity, you will not be
entitled to any additional severance payment pursuant to Subsection (b)).

 

8.               280G PAYMENT.

 

a.               In the event of any of the benefits provided
for in this Agreement (including stock options) constitute “parachute payments”
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), and will be subject to the excise tax imposed by Section
4999 of the Code, then, subject to the provisions of Section 8(d) below, you
shall receive from PSI (A) a cash payment sufficient to pay such excise tax,
and (B) an additional payment sufficient to pay the excise tax and federal and
state income and employment taxes arising from the payments made by PSI to you
pursuant to this sentence,

 

b.              Unless PSI and you otherwise agree in
writing, the determination of your excise tax liability and the amount required
to be paid to you by PSI under this Section 8 shall be made in writing by PSI’s
independent accountants (the “Accountants”), and the amounts to be paid to you
by PSI under this Section 8 will be paid to you within thirty (30) days after
the Accountants

 

5

 

have finally
determined that amount as provided herein (or such shorter time after the
Accountants have finally determined that amount as may be necessary in order
for you to timely pay any withholding or estimated tax obligations arising from
your receipt of any payment under this Section 8). For purposes of making the calculations
required by this Section 8, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 49999 of
the Code. PSI and you shall furnish to the Accountants such information and
documents as the Accountants may reasonably request in order to make a
determination under this Section 8. PSI shall bear all costs the Accountants
may reasonably incur in connection with any calculations contemplated by this
Section 8.

 

c.               In the event that the Internal Revenue
Service (“IRS”) determines that the amount of excise tax payable by you as
described above in this Section 8 is different than the amount of such excise
tax as determined by the Accountants as provided above, then: (A) if the amount
of such excise tax payable by you as determined by the IRS is less than the
amount of such excise tax as computed by the Accountants, you will reimburse
PSI for all excess amounts actually paid to you by PSI under this Section 8 due
to the over-calculation of such excise tax by the Accountants within five (5)
business days after you receive either a refund from the IRS due to such
over-calculation or you receive an economic benefit from the IRS (such as a
credit against tax payable) on account of such over-calculation, provided you
reported and paid all your excise and income tax liabilities resulting from the
operation of this Section 8 consistent with the amounts you were actually paid
hereunder; and (B) if the amount of such excise tax payable by you as
determined by the IRS is greater than the amount of such excise tax as computed
by the Accountants, then PSI will promptly reimburse you for the amounts that
PSI underpaid you under this Section 8 due to the under-calculation of such
excise tax by the Accountants.

 

d.              In the event any of the benefits provided for
in this Agreement or any other benefits approved at any time by the Board or
the Compensation Committee of the Board and otherwise payable to you (including
stock options) constitute “parachute payments” within the meaning of Section
280G of the Code and will be subject to the excise tax imposed by Section 4999
of the Code, then you may, at your sole option and discretion, elect to waive,
not receive and/or reduce such benefits to such lesser extent as will result in
no portion of such benefits; being subject to the excise tax

 

6

 

imposed by Section 4999 of the Code in that case PSI’s obligation to
make a payment to you pursuant to the provisions of Section 8 will be
correspondingly reduced.

 

9.               RELEASE.  You agree that the severance
payments you may be entitled to upon Termination for Good Reason, Termination
without Cause or upon a Change of Control (assuming your employment is
terminated in connection with such Change of Control) will not apply unless you
(i) have executed a general release (in a form customarily used by PSI) of all
known and unknown claims that you may then have against PSI and/or persons or
entities affiliated with PSI, (ii) have agreed not to prosecute or bring any
legal action or other proceeding based upon any of such claims and (iii) have
agreed to provide reasonable telephonic transition assistance to PSI (or the surviving
corporation) for three (3) months following termination of employment.

 

10.         CONFIDENTIALITY, NONSOLICITATION. In light of the fact that the confidential
information that you have acquired, and will acquire, is inextricably bound
with your knowledge regarding the conduct of PSI’s business activities and that
therefore you would necessarily use confidential information if you were to
compete with PSI, you agree that during the Employment Term, and for a period
of one year thereafter, you will not provide any services, whether as an
officer, director, proprietor, employee, partner, consultant, advisor, agent,
sales representative or otherwise, nor will you own beneficially securities of
any entity (except that, in the case of any entity whose equity securities are
publicly-held, you may beneficially own up to 2% of the outstanding equity
securities of such entity or any mutual fund holding securities of such entity)
that, directly or indirectly, competes with any of PSI’s present or future (up
to the date of termination) business activities. You further agree that in
light of the nature of PSI’s business, and the life-cycle of product
development, the one-year period provided for above shall apply in regardless
of the nature or reason for your termination and that it is reasonable and
necessary in order to protect the confidential, proprietary and trade-secret
information that you will acquire as a result of being CFO of PSI.
Notwithstanding the foregoing, such restrictions shall not preclude you from providing
any services to a distinct business unit of an entity if such unit does not
compete with PSI’s business activities, regardless of whether any other
distinct business unit of such entity competes with PSI’s business activities.
You also, further and independently, agree that during your employment with
PSI, and for a period of one (1) year after termination of your employment with
PSI, you will not for any reason, whether directly or indirectly: (a) solicit,
recruit, lake away or attempt to take away, any employee or consultant of PSI
or any of its affiliates, or induce (or attempt to induce) any employee or
consultant of

 

7

 

PSI or any of its affiliates to terminate his or its
employment or services with PSI or any of PSI’s affiliates; or (b) directly or
indirectly, solicit any customer of PSI or any of its affiliates or induce any
customer of PSI or its affiliates to terminate its relationship with PSI or any
PSI affiliate; provided, however, that this non-solicitation provision shall
not prevent you from hiring any employee or consultant of PSI or any of its
affiliates that you can demonstrate either (i) approached you independently
without any prior direct or indirect solicitation or encouragement by you or on
your part, or (ii) replied to a solicitation made to the general public without
any direct or indirect solicitation or encouragement by you or on your part.

 

11.         GOVERNING LAW. 
This letter agreement will be governed by the internal laws of the State
of California without reference to its conflict of laws provisions.

 

12.         ENTIRE AGREEMENT. 
This letter agreement, your stock option agreement and your employee
invention assignment and confidentiality agreement with PSI contain the entire
agreement and understanding of the parties with respect to the subject nature
hereof. Except as provided in this letter agreement, no other agreements,
representations or understandings (whether oral or written and whether
expressed or implied) which are not expressly set forth in this letter
agreement have been made or entered into by either party with respect to the
subject matter hereof.

 

13.         SUCCESSORS AND ASSIGNS. 
This letter agreement will be binding upon you (and your successors,
heirs, and assigns) and any successor (whether direct or indirect and whether
by purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of PSI’s business and/or assets. For all purposes of this
letter agreement, the term “PSI” shall include any successor to PSI’s business
and/or assets, which become bound by this letter agreement.

 

14.         INDEMNIFICATION. 
Company will indemnify you against all claims, at the Company’s expense,
to the fullest extent by law.

 

15.         MISCELLANEOUS PROVISIONS

 

a.               No Duty to Mitigate. You shall not be required to mitigate the
amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor shall any such payment be reduced by
any earnings that you may receive from any other source.

 

b.              Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by you and by an authorized
officer of the Company (other
than you). No waiver by either party of any breach of, or of compliance with,
any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same
condition or provision at another time.

 

8

 

c.               Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

 

d.              Arbitration. Any dispute or controversy arising out of, relating to or in
connection with this Agreement shall be settled exclusively by binding
arbitration in San Diego, California, in accordance with the National Rules for
the Resolution of Employment Disputes of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator’s award in any court
having jurisdiction. You and the Company shall each pay one-half of the costs
and expenses of such arbitration, and each shall separately pay its counsel
fees and expenses. Punitive damages shall not be awarded.

 

e.               Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.

 

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

 

In compliance with the
Immigration Control and Reform Act, this offer of employment is contingent upon
your showing proof, within three days of commencing work, of eligibility and
right to work in the United States. Proof is comprised of original documents
that establish your identity and your eligibility to work in this country.

 

Your employment would not be
effective until we receive an executed Invention and Non-Disclosure, and
Arbitration Agreement (“1NDA”), a copy of which is attached. Additionally, this
employment offer is contingent upon your execution and return of all employment
documents as well as satisfactory reference and background checks.

 

We are anxious to receive your
response to this offer as soon as possible. If you decide to accept, please
sign a copy of this letter in the space indicated below, and return it. If we
do not receive your response to this job offer within five days of receipt of
this letter, the offer will be rescinded. If you have any questions about the
offer details outlined in this letter, please call me.

 

9

 

David, we look forward to
having you join the Peregrine Team and to your contributions to the success of
Peregrine.

 

Sincerely,

 

John
Mutch

Chief
Executive Officer

 

cc:  Compensation Committee

 

IN WITNESS WHEREOF, each of the
parties has executed this Agreement, in the case of the Company by its duly
authorized officer, as of the day and year first above written.

 

	
  COMPANY:

  	
  Peregrine Systems

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Mutch

  	
   

  
	
   

  	
  Title:

  	
  CEO

  	
   

  
	
   

  	
  Date:

  	
  12/9/03

  	
   

  
	
   

  	
   

  
	
  EMPLOYEE:

  	
  /s/ David M. Sugishita

  	
   

  
	
   

  	
  David
  M. Sugishita

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  12/9/03

  	
   

  
							

 

10

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