Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.60    
    

August 20,
2004 

Mr. John
Mutch

P.O. Box 1590

Rancho Santa Fe, CA 92067 

	Re:
	Amendment to Employment Letter dated August 14, 2003 between Peregrine Systems, Inc. and Mr. John Mutch (the "Original
Agreement").

Dear
John: 

        On
behalf of the Board of Directors (the "Board") of Peregrine Systems, Inc. ("PSI"), we are pleased to amend and restate the terms of your Original Agreement with PSI as set
forth in this letter agreement (the "Employment Agreement"). This Employment Agreement amends and restates in its entirety the Original Agreement, effective as of May 25, 2004. By executing a
copy of this Employment Agreement, you will agree to continue to serve as President and Chief Executive Officer of PSI, and to the restatement of the terms of your Original Agreement as follows: 

        1.    TITLE; BASE SALARY.    You will continue to be employed as President and Chief Executive Officer of PSI and to
report to the Board. Your base salary will continue at the rate of $400,000 annually through July 31, 2004. From and after August 1, 2004, your base salary will be increased to the rate
of $450,000 annually. Your base salary will be payable in accordance with PSI's standard payroll practices. So long as you serve as PSI's Chief Executive Officer, PSI shall include you on the slate of
directors nominated for election at each annual meeting of PSI stockholders. 

        2.    EMPLOYMENT TERM.    The term of your employment as President and Chief Executive Officer under this Employment
Agreement (the "Employment Term") will end when it is terminated in accordance with Section 6. 

        3.    BONUS.    You will be eligible to receive bonuses as set forth below. 

        (a)    Fiscal 2004.    You acknowledge receipt of payment in the amount of $178,500 on June 15, 2004 pursuant
to PSI's Management Incentive Compensation Plan ("MICP") in recognition of your achievements in fiscal 2004, and the ability to earn up to an additional $59,500, based on the confirmation of
attainment of bonus objectives previously established by the Board in consultation with you, to be paid in accordance with the terms of the MICP and at the time or times payments are made to other
participants in the MICP. 

        (b)    Fiscal 2005.    In fiscal 2005, you will be eligible to participate in the MICP with a target bonus of
$400,000, based on the attainment of reasonable bonus objectives determined by the Board in consultation with you (which shall include, without limitation, the attainment of fiscal 2005 earnings and
revenue targets consistent with PSI's fiscal 2005 budget approved by the Board), to be paid in accordance with the terms of the MICP and at the time or times payments are made to other participants in
the MICP. 

        (c)    Fiscal 2006 and Beyond.    In fiscal 2006 and subsequent years, you will be eligible to participate in the MICP
or a successor bonus plan with a target bonus and reasonable bonus objectives to be determined by the Board in consultation with you, to be paid in accordance with the terms of the MICP or a successor
plan and at the time or times payments are made to other participants in such plan. 

        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 ("PTO") in accordance with PSI polices in effect during the term of this Employment Agreement and will receive such other benefits as PSI
generally provides to its other employees of comparable position and experience. However, you will in any event 

 

be
eligible for at least three weeks of PTO from the commencement of your employment through August 17, 2004, and at least four weeks of PTO during each subsequent year of employment. 

        5.    EQUITY-BASED AWARDS.    

        (a)    Options.    You acknowledge that the Compensation Committee of the Board approved the grant to you of an option
to purchase up to 350,000 shares of PSI's common stock (the "Options") under the 2003 Equity Incentive Plan (the "Equity Incentive Plan") effective August 18, 2003 with an exercise price of
$17.00 per share of PSI common stock, the fair market value of the PSI common stock on the date of grant and that PSI granted and you accepted the Options subject to the terms and conditions of the
Stock Option Grant Agreement, dated August 18, 2003, between you and PSI. 

        (b)    Restricted Stock Award.    You acknowledge that the Compensation Committee of the Board approved the grant to
you on May 25, 2004, as additional compensation, of 40,000 restricted shares of PSI common stock (the "Restricted Shares"), subject to the execution of this Employment Agreement and a
Restricted Stock Grant Notice and Restricted Stock Agreement (collectively, the "Restricted Stock Agreement") in the form attached hereto as Exhibit A, consistent with the terms and conditions
of the Equity Incentive Plan and this Employment Agreement. 

        (i)    Vesting of Restricted Shares.    All of the Restricted Shares shall be vested immediately upon issuance. 

        (ii)    Restrictions on Resale.    In addition to any restrictions of the Equity Incentive Plan or the Restricted
Stock Agreement to the contrary, you may not sell, assign, hypothecate or otherwise transfer the Restricted Shares or any interest therein prior to May 25, 2005, other than in connection with a
Sale Event (as defined in the PSU Agreement, as defined in Section 5(c)), a Termination for Death or Disability, Termination without Cause or a Termination for Good Reason (each as defined in
Section 6). PSI may impose one or more of the following restrictions as it in good faith determines appropriate to control the timing and manner of any resales by you or other subsequent
transfers by you of any Restricted Shares: (i) restrictions under an insider trading policy, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by you
and other security holders and (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers. You hereby acknowledge that the
Restricted Shares have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws, and the Restricted Shares are subject to, and the certificates
representing the Restricted Shares shall be legended to reflect, certain restrictions on transfer pursuant to the terms of this Employment Agreement and the Equity Incentive Plan and under applicable
securities laws, and you hereby agree to comply with all such restrictions and to execute such documents or take such other actions as PSI may require in connection with such
restrictions.

        (iii)    Limited Transferability of Restricted Shares.    The Restricted Shares may be assigned in whole or in part
during your lifetime to one or more members of your family or to a trust established exclusively for one or more such family members or to an entity in which you are majority owner, to the extent such
assignment is in connection with your estate or financial planning or pursuant to a Domestic Relations Order (as defined in the Equity Incentive Plan); provided the assignees shall hold the Restricted
Shares subject to the terms, conditions and restrictions applicable to the Restricted Shares immediately prior
to such assignment. Any assignee shall be required to execute documentation satisfactory to PSI agreeing to be bound by all such terms, conditions and restrictions. 

        (iv)    Form S-8 Reoffer Prospectus.    Within 30 days following the later of (A) a
Sale Event, Termination for Death or Disability, Termination without Cause or a Termination for 

2

 

Good
Reason prior to May 25, 2005, and (B) the date following the occurrence of any of the events described in clause (A) of this Subsection (b)(iv) on which PSI first
satisfies all of the requirements for the use of a registration statement on a Form S-8 (as set forth in the General Instructions to the Form S-8), including the
use of a "reoffer prospectus" contemplated by General Instruction C of Form S-8 (the "S-8 Requirements"), PSI will file a registration statement on a
Form S-8 including a reoffer prospectus with respect to the Restricted Shares and, to the extent PSI continues through May 25, 2005 to satisfy the S-8
Requirements, will maintain the effectiveness of such registration statement and reoffer prospectus until May 25, 2005. 

        Notwithstanding
anything in this Subsection (b)(iv) to the contrary, if the Board determines, in good faith, that because of the existence of material non-public
information about PSI it would be disadvantageous to PSI to file registration statement on a Form S-8, PSI shall be entitled to delay the filing of such registration statement until
the Board determines, in good faith, that the filing of the registration statement would no longer be disadvantageous to PSI. 

        (c)    Performance Stock Unit Award.    The Compensation Committee of the Board has approved, subject to the execution
of this Employment Agreement and a Performance Stock Unit Agreement in the form attached hereto as Exhibit B (the "PSU Agreement"), a grant to you of performance stock units (the "Units")
representing the right to participate in the future value of PSI on the terms and conditions of this Employment Agreement and the PSU Agreement. 

        6.    TERMINATION.    Your employment with PSI may be terminated by you or by PSI at any time for any reason as
follows: 

        (a)   You
may terminate your employment upon prior written notice to the Board at any time in your discretion ("Voluntary Termination"); 

        (b)   PSI
may terminate your employment upon written notice to you at any time following a determination by the Board 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 Board without a determination that there is Cause for such
termination ("Termination without Cause"); 

        (d)   Your
employment will automatically terminate upon your death or upon your Disability (as defined below) ("Termination for Death or Disability"); or 

        (e)   You
may terminate your employment upon prior written notice (the "Notice Period") to the Board at any time following a determination by you that there is "Good Reason"
(as defined below) for such termination ("Termination for Good Reason"), such termination to be effective at the end of the Notice Period if PSI has not remedied the Good Reason for such termination. 

        For
purposes of this Employment 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 Employment Agreement, "Cause" means (i) gross negligence or willful misconduct in the performance of your duties to 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 with respect to PSI; or (iv) conviction of a felony or a crime involving moral turpitude if such felony or crime caused material harm to the business and affairs of PSI; provided,
however, that clause (i) of this definition of the term "Cause" shall not apply following a Change in Control. No act or failure to act by you shall be considered "willful" if done or 

3

 

omitted
by you in good faith with reasonable belief that your action or omission was in the best interests of PSI. For purposes of this Employment Agreement, "Good Reason" shall mean (i) a
significant reduction of your duties, title, position or responsibilities, including a material change in your reporting structure, which shall include, but not be limited to, (A) your no
longer reporting to the Board, or (B) your no longer serving as President and Chief Executive Officer of PSI, that is effected without your written consent; (ii) a substantial reduction,
without good business reasons, of the facilities or perquisites available to you immediately prior to such reduction if such reduction is effected without your written consent; (iii) a
reduction of your base salary and target bonus as in effect immediately prior to such reduction if such reduction is effected without your written consent (other than any such reduction that is
effected on substantially a company-wide basis in order to reduce PSI's operating expenses); (iv) a material reduction in the aggregate level of employee benefits made available to
you when compared to the employee benefits made available to you immediately prior to such reduction if such reduction is effected without your written consent (other than any such reduction that is
effected on substantially a company-wide basis in order to reduce PSI's operating expenses); or (v) the relocation of your primary office at PSI to a facility or location that is
more than fifty (50) miles away from your primary office location immediately prior to such relocation, if such relocation is effected without your written consent. 

        7.    SEPARATION BENEFITS; CHANGE OF CONTROL PAYMENT.    Upon termination of your employment with PSI for any reason,
you will receive payment for all salary and earned but unused paid time off ("PTO") accrued to the date of your termination of employment in addition to any payment that you are entitled to receive in
respect of your Units. 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. You will also be entitled to the payments set forth in Section 7(e) upon a Change of Control (as defined in Section 7(e)). 

        (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 or stock
options. 

        (b)   Subject
to your compliance with Section 9, in the event of your Termination without Cause, Termination for Death or Disability or Termination for Good Reason:
(i) at any time prior to August 18, 2004 (the "First Year Stub Period"), you will be entitled to a severance payment equal to your base salary plus an amount equal to the maximum amount
of the target bonus for fiscal 2005 under the MICP; or (ii) at any time after the First Year Stub Period, you will be entitled to a severance payment equal to two (2) times your base
salary plus an amount equal to two (2) times the target bonus under the MICP or a successor plan for the fiscal year in which the termination occurs, in either case payable within five
(5) days after the effective date of your termination; provided, that any severance payable hereunder in the event of your Termination for Death or Disability shall be reduced by the proceeds
received by you or your heirs pursuant to insurance policies paid for by PSI. The severance payments will be in addition to unpaid salary, accrued PTO and accrued but unpaid bonuses for periods ended
prior to the date of termination of employment, each of which will be payable in accordance with applicable law and PSI's policies as in effect at the time of your termination. In addition, in the
event of your Termination without Cause or Termination for Good Reason at any time after the First Year Stub Period, all Options that would have vested during the 12 months following the date
of termination shall become immediately exercisable on such date. 

        (c)   In
the event of your Termination for Death or Disability, all Options that would have vested during the 12 months following the date of termination shall become
immediately exercisable on such date. 

4

 

        (d)   In
the event of your Termination without Cause, Termination for Good Reason or Termination for Death or Disability, PSI will reimburse you for any verified payments that
you actually make pursuant to your rights under COBRA (as defined below) in order to continue your coverage under PSI's medical, dental and vision insurance benefit plans, subject to the same coverage
levels and employee contribution rates as in effect prior to the termination, during the Continuation Period (as defined below). In addition, during (and only during) the Continuation Period, PSI
will, at its expense continue your coverage under any life insurance benefits in which you are participating in your capacity as a PSI
employee immediately prior to the date your employment terminated, to the extent permitted under any such life insurance benefit plan(s) or policy(ies) or pursuant to any riders thereto that PSI may
obtain using commercially reasonable efforts and without increasing PSI's cost to maintain such plan(s) or policy(ies) by more than thirty percent (30%). For purposes of this Employment Agreement, the
term "COBRA" shall mean the provisions of Section 4980B of the Internal Revenue Code of 1986, as amended (the "Code"), adopted as part of the Consolidated Omnibus Budget Reconciliation Act,
which allow former employees of an employer to continue to receive health and medical benefits, at their expense, for a specified time period. For purposes of this Employment Agreement, the term
"Continuation Period" shall mean that time period beginning on the date your employment is terminated and ending upon the earlier to occur of (i) eighteen (18) months after such date,
(ii) the first date on or after such date on which you commence employment with any other employer who provides you with medical, dental and vision insurance benefits or (iii) the first
date on which you cease to be eligible under COBRA to continue your coverage under PSI's medical, dental and vision benefit plans. 

        (e)   Subject
to your compliance with Section 9, in the event of a Change of Control (as defined below) that occurs either (i) while you are employed by PSI or
(ii) within three (3) months following a Termination without Cause, Termination for Good Reason or Termination for Death or Disability, you will be entitled to a payment equal to three
(3) times your base salary plus an amount equal to three (3) times your target bonus, payable on the effective date of the Change of Control. In the event of your termination by PSI or
any successor corporation for any reason following a Change of Control, you will only be entitled to the payment set forth in this Subsection (e) (for purposes of clarity, you will not be
entitled to any additional severance payment pursuant to Subsection (b)). Furthermore, any amounts payable pursuant to this Subsection (e) as a result of a Change of Control that occurs within
three (3) months following a Termination without Cause, Termination for Good Reason or Termination for Death or Disability shall be offset against any payments previously paid pursuant to the
first sentence of Subsection (b) (for purposes of clarity, you will only be entitled to receive an aggregate of three (3) times your base salary plus an amount equal to three
(3) times your target bonus). 

A
"Change of Control" means: 

          (i)  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; 

         (ii)  the
sale, transfer, exclusive license or other disposition of all or substantially all of the assets of PSI; 

5

 

        (iii)  a
change in the composition of the Board, as a result of which fewer than 50% of the incumbent directors are directors who either: 

        (A)  Had
been directors of PSI immediately after PSI's emergence from bankruptcy protection on August 7, 2003 or had been designated to serve on the Board during the
90-day period after emergence pursuant to the terms of the confirmed plan of reorganization (the "Original Directors"); or 

        (B)  Were
appointed to the Board, or nominated for election to the Board, with the affirmative votes of at least a majority of the aggregate of (A) the Original
Directors who were in office at the time of their appointment or nomination and (B) the directors whose appointment or nomination was previously approved in a manner consistent with this
Paragraph (ii); 

        (iv)  Any
transaction as a result of which any person (excluding any person who was a stockholder of PSI immediately after emergence from bankruptcy protection on
August 7, 2003) is the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of PSI
representing at least 35% of the total voting power represented by PSI's then outstanding voting securities. For purposes of this Subsection (d), the term "person" shall have the same meaning as when
used in sections 13(d) and 14(d) of such Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of PSI or of a parent or subsidiary of PSI and
(ii) a corporation owned directly or indirectly by the stockholders of PSI in substantially the same proportions as their ownership of the common stock of PSI; or 

        (iv)  Approval
by the stockholders of PSI of a complete liquidation or dissolution of PSI. 

        8.    280G PAYMENT.    

        (a)   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, 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 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 4999 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 

6

 

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 imposed by Section 4999 of the Code, and 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 without Cause or
Termination for Good Reason or the payments you may be entitled to upon a Change of Control will not apply unless (i) you and PSI have each executed a mutual general release (in a form
determined by PSI) of all known and unknown claims that either you or PSI may then have against the other and/or persons or entities affiliated with you or PSI, as applicable, other than payments by
PSI under the Employment Agreement, the Options, the Restricted Stock Agreement or the PSU Agreement to the extent such payments are required to be performed after the date of the release,
(ii) you and PSI have agreed not to prosecute or bring any legal action or other proceeding based upon any of such claims and (iii) you have agreed to provide reasonable transition
assistance to PSI (or the
surviving corporation) as requested and without further compensation for three (3) months following the termination of employment. Notwithstanding anything in this Employment Agreement to the
contrary, in no event shall the payments provided for in Sections 7(b) and 7(e) of this Employment Agreement that are otherwise due and payable be delayed as a result of PSI's request that you perform
Transition Services. 

        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 of the following entities: Altiris; BMC Software, Inc.; Computer
Associates; Hewlett Packard Company; International Business Machines Corporation; MRO Software; and USU Software AG (each a "Competitor") (except that, in the case of any Competitor whose equity
securities are publicly-held, you may beneficially own up to 2% of the outstanding equity securities of such Competitor or any mutual fund holding securities of such Competitor). 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 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
the President and Chief Executive Officer of PSI. Notwithstanding the foregoing, such restrictions shall not preclude you from providing any services to a 

7

 

distinct
business unit of a Competitor if such unit does not compete 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, take 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 PSI or any of its affiliates to terminate his or its employment or services with
PSI or any of PSI's affiliates; or (b) use any confidential or proprietary information of PSI or any of its affiliates to, 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 Employment Agreement will be governed by the internal laws of the State of California
without reference to its conflict of laws provisions. 

        12.    VENUE; SERVICE OF PROCESS.    Any legal action, arbitration or other legal proceeding relating to this
Employment Agreement or the enforcement of any provision of this Employment Agreement may be brought or otherwise commenced in any state or federal court located in the County of San Diego,
California. Each party to this Employment Agreement: (i) expressly and irrevocably consents and submits to the jurisdiction of each state and federal court located in the County of San Diego,
California (and each appellate court located in the State of California) in connection with any such legal proceeding or arbitration; (ii) agrees that each state and federal court located in
the County of San Diego, California shall be deemed to be a convenient forum; and (iii) agrees not to assert (by way of motion, as a defense or otherwise), in any such legal proceeding or
arbitration commenced in any state of federal court located in the County of San Diego, California, any claim that such party is not subject personally to the jurisdiction of such court, that such
legal proceeding or arbitration has been brought in an inconvenient forum, that the venue of such proceeding is improper or that this Employment Agreement or the subject matter of this Employment
Agreement may not be enforced in or by such court. Process in any action or proceeding referred to in this section may be served on any party anywhere in the world. 

        13    ENTIRE AGREEMENT.    This Employment Agreement, the Restricted Stock Agreement, your stock option agreement
entered into in connection with the Original Agreement, the PSU 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 mature hereof. Except as provided in this Employment Agreement, no other agreements, representations or understandings (whether oral or written and whether
expressed or implied) which are not expressly set forth in this Employment Agreement have been made or entered into by either party with respect to the subject matter hereof. 

        14.    SUCCESSORS AND ASSIGNS.    This Employment 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 Employment Agreement, the term "PSI" shall include any successor to PSI's business and/or asserts which becomes bound by this Employment Agreement. 

        15.    LEGAL FEES.    PSI will reimburse you for legal fees and costs up to $40,000 that you incur in connection with
the negotiation and drafting of this Employment Agreement, the Restricted Stock Agreement and the PSU Agreement. 

        We
look forward to your continued contributions as part of the PSI team. 

	 	 	 	 	Sincerely yours,
	

 	
 	

 	
 	

Chairman of the Board
	

By signing this letter, I am agreeing to the above:
	

Signature:	
 	

 	
 	

 	
 	

Date:	
 	

 
	 	 	
	 	 	 	 	 	

8

QuickLinks

Exhibit 10.60QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.61    
    

 
 

PEREGRINE SYSTEMS, INC.
  PERFORMANCE STOCK UNIT AGREEMENT    
    

        PERFORMANCE STOCK UNIT AGREEMENT (the "Agreement"), effective August 20, 2004, by and between John Mutch ("Awardee") and Peregrine Systems, Inc., a
Delaware corporation ("PSI"). 

 
 

RECITALS    
    

        WHEREAS, Awardee and PSI are parties to an employment letter agreement dated August 14, 2003, pursuant to which Awardee agreed to provide certain services
to PSI as an employee and officer of PSI (the "Original Agreement"); and 

        WHEREAS,
Awardee and PSI are parties to an Employment Agreement, dated as of August 20, 2004 and effective as of May 25, 2004, pursuant to which Awardee and PSI amended and
restated the Original Agreement to, among other things, provide additional incentives to Awardee to accomplish new performance objectives for PSI (the "Employment Agreement"); and 

        WHEREAS,
PSI desires to issue to Awardee, and Awardee desires to acquire from PSI, performance stock units (the "Units") representing the right to participate in the future value of PSI
upon the attainment of certain performance objectives, as contemplated in and subject to the terms and conditions of the Employment Agreement and this Agreement. 

        NOW
THEREFORE, in consideration of the foregoing, and the mutual covenants and agreements set forth herein, the parties hereto agree as follows: 

1.    Definitions.    

        Capitalized
terms not explicitly defined in this Agreement but defined in the Employment Agreement shall have the same meanings ascribed to them in the Employment Agreement. 

2.    Grant of Award.    

        PSI
hereby grants to Awardee, and Awardee hereby accepts, pursuant to the terms of the Employment Agreement and this Agreement (collectively, the "Award"), the right to acquire, upon
satisfaction of the Performance Conditions (as defined in Schedule II attached hereto) and the other terms and conditions set forth in herein, that number of Issued Units specified herein and
Awardee hereby accepts the Award. The Units are not and shall not be considered an equity interest in PSI and solely represent Awardee's right to receive the financial benefits described herein if and
only if a Sale Event is consummated that satisfies the criteria relating thereto set forth on Schedule I hereto. 

3.    Units.    

        3.1.  If
Awardee remains continuously employed by PSI through the date of consummation of a Sale Event, target number of Units to be issued to Awardee shall be determined
based on the fair market value of the consideration paid per share of PSI common stock in a Sale Event (the "Per Share Consideration") in accordance with Schedule I hereto (the "Target
Number"). The actual number of Units to be issued to Awardee shall be that portion of the Target Number to which the Compensation Committee of the Board determines in good faith Awardee is entitled
based on Awardee's achievement of the performance conditions set forth in Schedule II (the "Issued Units"). Each Issued Unit shall have a value equal to the Per Share Consideration. 

        3.2.  In
the event of Awardee's Termination without Cause, Termination for Good Reason or a Termination for Death or Disability (each as defined in the Employment Agreement)
prior to the occurrence of a Sale Event, and a Sale Event subsequently occurs on or before December 31, 2005 in which the Per Share Consideration equals or exceeds an amount that would have
resulted in a Target Number of Units being issued to Awardee if he had been employed at the date of consummation of the Sale Event, the target number of Units to be issued to Awardee (the
"Pro-Rated Target Number") 

 

shall
be equal to (i) the target number of Units that would have been issued to Awardee had Awardee remained continuously employed by PSI through the date of consummation of a Sale Event
multiplied by (ii) a fraction, the numerator of which is the number of days of Awardee's employment with PSI from May 25, 2004 through the date of termination, and the denominator of
which is the total number of days from May 25, 2004 through the date of consummation of a Sale Event. The actual number of Units to be issued to Awardee pursuant to this Section 3.2
shall be that portion of the Pro-Rated Target Number to which the Compensation Committee of the Board determines in good faith Awardee is entitled based on Awardee's achievement of the
performance conditions set forth in Schedule II through the date of Awardee's termination of employment with PSI (the "Pro-Rated Issued Units"). Each Pro-Rated Issued
Unit shall have a value equal to the Per Share Consideration. 

4.    Non-transferability.    

        Awardee
shall not transfer, assign, encumber or otherwise dispose of the Units, or any interest therein. 

5.    Payment in Respect of Issued Units.    

        Payment
of an amount per Issued Unit or Pro-Rated Issued Unit equal to the Per Share Consideration shall be made by PSI, at its sole election, in cash, shares of PSI common
stock (the aggregate fair market value of which shall be equivalent to the aggregate Per Share Consideration of all Issued Units or Pro-Rated Issued Units with respect to which payment is
made in PSI common stock), or a combination of cash and PSI common stock, at the closing of the Sale Event or within a reasonable time thereafter; provided that (i) PSI may only elect to pay
all or a portion of the payment in shares of PSI common stock if such PSI common stock remains registered under Section 12 of the Securities Exchange Act of 1934, as amended, and is traded on
an established stock exchange, quoted on a national market system or quoted regularly by a recognized securities dealer immediately following the closing of the Sale Event and (ii) if PSI
elects to make all or a portion of the payment in shares of PSI common stock, such shares shall be issued pursuant to an effective registration statement permitting immediate resale thereof by Awardee
without any volume limitations. 

6.    "Sale Event" Defined.    

        For
purposes hereof, a "Sale Event" shall mean a sale of all or substantially all of (i) the assets of PSI or (ii) the equity securities of PSI, in each case pursuant to a
merger, consolidation, recapitalization, tender offer, exchange offer or other transaction or series of related transactions; provided, however, that a
"Sale Event" shall not be deemed to have occurred if more than 50% of the outstanding voting securities of the surviving or resulting entity (including, without limitation, an entity which as a result
of such transaction owns PSI or all or substantially all of PSI's assets either directly or through one or more subsidiaries) are, or are to be, beneficially owned, directly or indirectly, by the PSI
stockholders
who were the beneficial owners of the outstanding voting securities of PSI immediately prior to such transaction (excluding, for such purposes, any such stockholder who is or, within two years prior
to the consummation date of such transaction, was, an "affiliate" or "associate" (as each are defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended) of a party to the transaction) in substantially the same proportions as their beneficial ownership, immediately prior to such transaction, of the outstanding voting securities of PSI. 

7.    Vesting.    

        The
Award shall be fully vested as of May 25, 2004 (the "Date of Grant"). 

8.    Limitations on Transfer.    

        Only
Awardee may receive any Issued Units under the Award. In addition to any other limitation on transfer created by applicable securities laws, Awardee agrees not to sell, assign,
hypothecate, 

2

 

donate,
encumber or otherwise dispose of any interest in the Award until such time as the Units become Issued Units pursuant to the Employment Agreement. 

9.    Restrictive Legends.    

        The
stock certificates evidencing any Shares issued under the Award shall bear appropriate legends determined by PSI. 

10.    Award not a Service Contract.    

        The
Award is not an employment or service contract, and nothing in the Award shall be deemed to create in any way whatsoever any obligation on PSI or an affiliate to continue Awardee's
employment or service. In addition, nothing in the Award shall obligate PSI or an affiliate, their respective stockholders, Boards of Directors, officers or employees to continue any relationship that
Awardee may have as an employee or director of, or consultant to, PSI or an affiliate. 

11.    Withholding Obligations.    

        11.1. At
the time the Units become Issued Units, and at any time after the date this Award is granted as is reasonably requested by PSI, Awardee authorizes withholding from
payroll and any other amounts payable to him or her, and otherwise agrees to make adequate provision for, any sums required to satisfy the federal, state, local and foreign tax withholding obligations
of PSI or an affiliate, if any, which arise in connection with the Award, subject to Section 8 (280G Payment) of the Employment Agreement. 

        11.2. Unless
the tax withholding obligations of PSI or any affiliate are satisfied, PSI shall have no obligation to make a payment in respect of the Award (but subject to
Section 8 (280G Payment) of the Employment Agreement). 

12.    Representations.    

        Awardee
has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement.
Awardee is relying solely on such advisors and not on any statements or representations of PSI or any of its agents. Awardee understands that he (and not PSI) shall be responsible for any tax
liability that may arise as a result of this investment or the transactions contemplated by this Agreement. 

13.    Notices.    

        Any
notices provided for in the Award or the Employment Agreement shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by
mail by PSI to Awardee, five days after deposit in the United States mail, postage prepaid, addressed to Awardee at the last address provided by Awardee to PSI. 

14.    Survival of Terms.    

        This
Agreement shall apply to and bind Awardee and PSI and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors. 

15.    Failure to Enforce not a Waiver.    

        The
failure of PSI to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. 

16.    Amendments.    

        This
Agreement may be amended or modified at any time only by an instrument in writing signed by each of the parties hereto. 

3

 

17.    Authority of the Committee.    

        The
committee of the Board of Directors appointed to administer PSI's 2003 Equity Incentive Plan (the "Committee") shall have full authority to interpret and construe the terms of this
Agreement. 

18.    Miscellaneous.    

        18.1. The
rights and obligations of PSI under the Award shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure
to the benefit of, and be enforceable by PSI's successors and assigns. 

        18.2. Awardee
agrees upon request to execute any further documents or instruments necessary or desirable in the sole determination of PSI to carry out the purposes or intent
of the Award. 

        18.3. Awardee
acknowledges and agrees that he or she has reviewed the Award in its entirety, has had an opportunity to obtain the advice of counsel prior to executing and
accepting such Award and fully understands all provisions of the Award. 

19.    Employment Agreement Governs.    

        The
Award is subject to all the provisions of the Employment Agreement, the provisions of which are hereby made a part of Awardee's Award, and is further subject to all amendments which
may from time to time be adopted in relation to the Employment Agreement. In the event of any conflict between the provisions of the Award and those of the Employment Agreement, the provisions of the
Employment Agreement shall control. 

        Awardee
represents that he has read this Agreement and is familiar with its terms and provisions. 

20.    Community Property.    

        Without
prejudice to the actual rights of the spouses as between each other, for all purposes of this Agreement, Awardee shall be treated as agent and
attorney-in-fact for that interest held or claimed by his or her spouse with respect to this Award and any Shares issued under this Award and the parties hereto shall act in
all matters as if the Awardee was the sole owner of the same. This appointment is coupled with an interest and is irrevocable. 

21.    Governing Law.    

        This
Agreement will be governed by the internal laws of the State of California without reference to its conflict of laws provisions. 

22.    Arbitration.    

        22.1.    General.    Any controversy, dispute, or claim between the parties to this Agreement,
including any claim arising out of, in connection with, or in relation to the formation, interpretation, performance or breach of this Agreement shall be settled exclusively by binding arbitration,
before a single arbitrator, in accordance with these provisions and the then most applicable rules of the American Arbitration Association. Judgment upon any award rendered by the arbitrator may be
entered by any state or federal court having jurisdiction thereof. Such arbitration shall be administered by the American Arbitration Association. Arbitration shall be the exclusive remedy for
determining any such dispute, regardless of its nature. Notwithstanding the foregoing, either party may in an appropriate matter apply to a court for provisional relief, including a temporary
restraining order or a preliminary injunction, on the ground that the award to which the applicant may be entitled in arbitration may be rendered ineffectual without provisional relief. Unless
mutually agreed by the parties otherwise, any arbitration shall take place in the City of San Diego, California. 

        22.2.    Selection of Arbitrator.    In the event the parties are unable to agree upon an
arbitrator, the parties shall select a single arbitrator from a list of nine arbitrators drawn by the parties at random 

4

 

from
the "Independent" (or "Gold Card") list of retired judges or, at Awardee's option, from a list of nine persons (which shall be retired judges or corporate or litigation attorneys experienced in
stock options and buy-sell agreements) provided by the office of the American Arbitration Association having jurisdiction over San Diego, California. If the parties are unable to agree
upon an arbitrator from the list so drawn, then the parties shall each strike names alternately from the list, with the first to strike being determined by lot. After each party has used four strikes,
the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected. 

        22.3.    Applicability of Arbitration; Remedial Authority.    This agreement to resolve any
disputes by binding arbitration shall extend to claims against any parent, subsidiary or affiliate of each party, and, when acting within such capacity, any officer, director, shareholder, employee or
agent of each party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law. In the
event of a dispute subject to this paragraph the parties shall be entitled to reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the arbitrator (which shall
include the right to grant injunctive or other equitable relief) shall be the same as, but no greater than, would be the remedial power of a court having jurisdiction over the parties and their
dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that he or it would be entitled to summary
judgment if the matter had been pursued in court litigation. In the event of a conflict between the applicable rules of the American Arbitration Association and these procedures, the provisions of
these procedures shall govern. 

        22.4.    Fees and Costs.    Any filing or administrative fees shall be borne initially by the
party requesting arbitration. Notwithstanding the foregoing, the prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be
entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party's costs (including but not limited to the arbitrator's compensation), expenses, and
attorneys' fees. 

        22.5.    Award Final and Binding.    The arbitrator shall render an award and written opinion,
and the award shall be final and binding upon the parties. If any of these arbitration provisions, or of this Agreement, are determined to be unlawful or otherwise unenforceable, in whole or in part,
such determination shall not affect the validity of the remainder of this Agreement, and this Agreement shall be reformed to the extent necessary to carry out its provisions to the greatest extent
possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should
find that the arbitration provisions of this Agreement are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent
action, given great weight by any finder of fact, and treated as determinative to the maximum extent permitted by law. 

[signature
page follows] 

5

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first above written. 

	Peregrine Systems, Inc.	 	John Mutch
	
By:	

 	
 	

By:	

 
	 	
 Signature            	 	 	
 Signature            
	

Name:	

 	
 	

 	

 
	 	
	 	 	 
	

Title:	

 	
 	

 	

 
	 	
	 	 	 

QuickLinks

Exhibit 10.61

PEREGRINE SYSTEMS, INC. PERFORMANCE STOCK UNIT AGREEMENT

RECITALS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]