SEVERANCE SETTLEMENT AGREEMENT
                             AND RELEASE OF CLAIMS


     This Severance Settlement Agreement and Release of Claims (the 
"Agreement ) is made by and between  Alan H. Hunt ("Hunt") and Peregrine 
Systems, Inc. ("PSI") and effective this January 30, 1998.
                                       
                                   RECITALS


     A.   Hunt was an employee and a Director of PSI until his resignation on 
January 20, 1998, from all such positions and from any and all positions he 
may have held with PSI and any of its foreign or domestic affiliates or 
subsidiaries.
     
     B.   PSI and Hunt are parties to an Option Agreement dated November 1, 
1995 pursuant to which Hunt was granted the right to acquire 400,000 shares 
of PSI's Common Stock at an exercise price of $2.34 per share (the "Hunt 
Option").  PSI and Hunt are parties to a Restricted Stock Agreement of 
November 1, 1995 pursuant to which Hunt was granted the right to acquire 
400,000 shares of PSI's Common Stock (the "Hunt Restricted Stock"). 

     C.   In connection with his resignation, Hunt and PSI have discussed 
certain terms and conditions relating to the termination of the employment 
relationship and the commencement of a consulting relationship. 
 
     D.   It is the intent of the parties in entering this Agreement to set 
forth all agreements between the parties and resolve all pending matters 
between the parties.
     
         NOW, THEREFORE, in consideration of the promises and mutual 
agreements hereinafter set forth, it is hereby agreed by and among the 
parties as follows: 

I.   COMPENSATION TO HUNT

     1.1.1     HUNT OPTION.  Notwithstanding any provisions of the Hunt 
Option agreement to the contrary, and subject to termination as set forth in 
paragraph 1.3.10 hereof, Hunt and PSI agree that as of January 31, 1999, all 
vesting of the Hunt Option shall cease.  The Hunt Options shall remain 
exercisable until ninety days beyond January 31, 1999 pursuant to the terms 
of the Hunt Option.
     
     1.1.2     Hunt and PSI agree that the Hunt Option is hereby amended in a 
manner that limits the change of control provision under the 1994 Stock Plan 
and Hunt's stock option agreement in such a manner that the change of control 
provision will not apply to any of the Hunt Option shares that will not vest 
on the vesting schedule prior the January 31, 1999 cessation of vesting set 
forth in the above paragraph. 
     

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     1.2.1     HUNT RESTRICTED STOCK.  Notwithstanding any provisions of the 
Hunt Restricted Stock agreement to the contrary, and subject to termination 
as set forth in paragraph 1.3.10 hereof, Hunt and PSI agree that as of March 
31, 1999, all vesting of the Hunt Restricted Stock shall cease. 
     
     1.2.2     Effective with the execution of this Agreement the 202,000 
shares of Hunt Restricted Stock scheduled to lapse restriction after March 
31, 1999 shall be immediately returned to PSI and Hunt hereby renounces all 
right, title, and ownership of such shares.
     
     1.3  CONSULTING AGREEMENT

          1.3.1     Hunt agrees to act as a consultant to PSI and shall 
provide such advice and assistance to PSI as the Chairman of the Board shall 
reasonably request. Such advice and assistance shall include without 
limitation the transition of the Chief Executive Office, and cooperation in 
responding to requests for testimony, documentation or other information and 
analysis relating to any litigation now pending, threatened, or in the future 
arising against PSI and relating to actions or events occurring during Hunt's 
tenure as an employee, director or officer of PSI.

          1.3.2     The term of such consultancy shall commence on the date 
hereof and shall continue for a period ending January 31, 1999.

          1.3.3     During the term of his consultancy,  PSI agrees to pay 
Hunt at rate equal to his pro rata annual base salary at the level at the 
time of his resignation (the "Annual Consulting Rate").  PSI agrees to pay 
such amounts on the fifth (5th) day of each month during the consultancy term 
at the rate of 1/12th of the Annual Consulting Rate.

          1.3.4     PSI agrees to pay Hunt's COBRA payment for continuation 
of his employee benefit plans for 12 months beyond his January 1998 
termination. Such payment shall cease upon Hunt's taking employment within 
the 12 months.

          1.3.5     Hunt will not accrue any vacation benefits as a result of 
this consulting arrangement.

          1.3.6     PSI shall be under no obligation to provide Hunt with an 
office or secretarial assistance during the term of his consultancy.

          1.3.7     INDEPENDENT CONTRACTOR.    The parties expressly intend 
and agree that Hunt will act as an independent contractor and not as an 
employee of PSI.  Hunt understands and agrees that he shall not be entitled 
to any of the rights and privileges established for PSI's employees.  Hunt 
understands and agrees that PSI will not pay or withhold from the 
compensation paid to him pursuant to this Agreement any sums customarily paid 
or withheld 


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for or on behalf of employees for income tax, unemployment insurance, social 
security, workers' compensation or any other withholding tax, insurance, or 
payment pursuant to any law or governmental regulation, and all such payments 
as may be required by law are the sole responsibility of Hunt.
     
          1.3.8     NONDISPARAGEMENT.    Hunt agrees that he will not make 
any statements, written or verbal, disparaging the performance or business 
reputation of PSI (including its officers, directors, employees, agents and 
any related entities), or the personal or business reputation or character of 
any employees of  PSI.

          1.3.9     COOPERATION.     In the event of any claims, disputes or 
litigation against PSI in which Hunt is named as a party or in which Hunt is 
a witness or can be of assistance to PSI, Hunt agrees to make himself 
available upon reasonable notice to meet with representatives of PSI and 
provide them with such information and documents as he may have.  Hunt shall 
also make himself available, upon reasonable notice, to give sworn testimony 
and statements, affidavits, depositions, trial testimony, declarations or 
other such disclosures as may be necessary in connection with such 
litigation.  Nothing herein is intended or should be construed as requiring 
anything other than Hunt's cooperation in providing truthful and accurate 
information.

          1.3.10    Hunt acknowledges that in the course of his prior 
employment with PSI, and during the term of his consultancy, he has become 
and will continue to become familiar with trade secrets and with other 
confidential information concerning PSI and its affiliates and subsidiaries.  
Therefore, Hunt agrees that, during the initial term of his consultancy and 
any renewal term, and for one year (1) year thereafter, he shall not, 
directly or indirectly, or through another entity, undertake any conduct, or 
induce or attempt to induce any other person or entity to undertake any 
conduct, not in the best of PSI.  PSI reserves the right to determine, at the 
sole discretion of its Board of Directors as comprised at the time of such 
determination, whether the conduct as issue is in the best interest of PSI.  
A breach of the obligations in any of section 1.3, 1.4, or 1.5 by Hunt shall 
cause immediate termination of the Hunt Option and the Hunt Restricted Stock.

     1.4  AGREEMENT NOT TO SOLICIT EMPLOYEES.  Hunt agrees that during the 
term of his consulting agreement herein and thereafter until February 1, 
2001, he will not:
          a.  Induce or attempt to induce, any employee of PSI to leave 
              employment with PSI;
          b.  Interfere with or disrupt PSI's relationship with any of its
              employees, consultants, customers, suppliers, or vendors; or
          c.  Solicit any employee of PSI to come to work for Hunt or Hunt's
              subsequent employer(s).

     1.5  NONCOMPETITION AND COVENANT NOT TO COMPETE
          
          1.5.1     As a significant portion of the compensation paid to Hunt
pursuant to this


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<PAGE>

Agreement, Hunt agrees that during the term of his consulting agreement 
herein and thereafter until February 1, 2001 thereafter, he will not compete 
with PSI. This noncompetition agreement is made in recognition of the 
extraordinary skills and experience of Hunt in the industry in which PSI does 
business, and PSI's exposure to Hunt of its most confidential and 
competitively sensitive information, including, but not limited to PSI's 
technical product information, pricing information, customer lists, patents, 
engineering data, research and development plans, business methods, operating 
procedures, and other such highly valuable trade secret information.
     
          1.5.2     Hunt agrees that during the term of his consulting 
agreement herein and thereafter until February 1, 2001 thereafter, he will 
not act as an officer, director, employee, consultant, or agent for any of 
PSI's competitors.  In addition, for a similar period of time, Hunt agrees 
that he will not directly or indirectly, alone or with others, engage in or 
have any interests in, any business, firm, partnership, or corporation, 
whether as an employee, officer, director, agent, creditor, consultant or 
otherwise that engages in any activity that is the same or similar to, or in 
competiton with, any activity engaged in by PSI. 
     
          1.5.3     In furtherance of his consulting agreement herein, Hunt 
agrees to execute PSI's standard Invention and Non-disclosure Agreement, and 
Arbitration Agreement.  Hunt further agrees that, should he at any time 
during the term of this Agreement seek to be become employed by or a 
consultant for any competitor of PSI, PSI shall have the right to inform each 
such company of this Agreement, as well as PSI's Invention and Non Disclosure 
Agreement, and that disclosure of this information and any other necessary 
and related communications by PSI shall not provide the basis for any legal 
claim by Hunt against PSI.
     
          1.5.4     This entire Agreement, including Noncompetition and 
Covenant not to Compete paragraph, has been reviewed by legal counsel for 
both parties. The parties intend and presume that this noncompetition 
agreement is enforceable and intend that this Noncompetition and Covenant not 
to Compete paragraph be given the fullest force and effect allowable by law.  
In the event of nay alleged breach of this provision, PSI shall be entitled, 
if it so elects, to institute and prosecute proceedings in any court of 
competent jurisdiction, either in law or in equity, to enjoin Hunt from 
violating this noncompetition provision, and to enforce the specific 
performance of Hunt to the terms of this Agreement, and to obtain damages, or 
nay of them, but nothing herein shall be construed to prevent such remedy or 
combination of remedies as PSI may elect.
     
     1.5.5     If for any reason an arbitrator or court of competent 
jurisdiction finds that this Noncompetition and Covenant not to Compete 
paragraph is not enforceable, in whole or in part, then the parties agree 
that Hunt shall pay to Company one half of the amount of compensation paid by 
PSI to Hunt to the date of such finding, not to exceed the sum of $50,000, 
since a significant portion of the consideration being paid by PSI to Hunt is 
for this Noncompetition and Covenant Not to Compete agreement.


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          1.5.6     For purposes of this Section 1.5, PSI competitors shall 
be any entity or organization involved in the development or implementation 
of software which functions in the help desk industry.    

II.  GENERAL RELEASE OF CLAIMS.

     2.1  Nothing contained in this Section 2 shall release or diminish 
Hunt's obligations set forth in Section 1 of this Agreement.
     
     2.2  Hunt, for himself, his wife, and for his heirs, assigns, executors, 
affiliates, successors and each of them hereby acknowledges full and complete 
satisfaction of releases and forever discharges PSI, its subsidiary 
corporations, affiliates, and any and all of its past or present owners, 
officers, directors, agents, shareholders, employees, attorneys, heirs, 
assigns, executors, administrators and successors (hereinafter collectively 
referred to as "PSI") from any and all claims, demands, actions, causes of 
action, in law or in equity, suits, liabilities, demands, losses, costs or 
expenses known or unknown, suspected or unsuspected, of any kind or nature 
that Hunt now has or may have against PSI related including costs, expenses 
and attorneys' fees.  This full and complete release includes, but is not 
limited to, claims relating to Hunt's employment with PSI.  Hunt reserves, 
and by this sentence expressly excepts from this release, Hunt's right to 
seek indemnification from PSI against expenses, judgements, fines, 
settlements, and other amounts actually and reasonably incurred in connection 
with any proceeding initiated by a third-party against Hunt for Hunt's 
authorized conduct within the scope of his employment, including acts of 
commission, during his employment by PSI.

     2.3  Hunt acknowledges that he is aware of and is familiar with the 
provisions of Section 1542 of the California Civil Code which provides as 
follows:

          A GENERAL RELEASE DOES NOT EXEND 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 SETTELEMENT WITH THE
          DEBTOR.

     Hunt hereby waives and relinquishes all rights and benefits which he may 
have under Section 1542 of the California Civil Code, or the law of any other 
state or jurisdiction, or common law principle, to the same or similar effect.

     2.4  Hunt acknowledges that he may discover facts or law different from, 
or in addition to, the facts or law that he knows or believes to be true with 
respect to the claims released in this Agreement and agrees, nonetheless, 
that this Agreement and the releases contained in it shall be and remain 
effective in all respects notwithstanding such different or additional facts 
or the discovery of them.

     2.5  Hunt declares and represents that he is executing this Agreement 
with full 


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<PAGE>

advice from his legal counsel, and that he intends that this Agreement shall 
be complete and shall not be subject to any claim of mistake, and that the 
release herein expresses a full and complete release and, regardless of the 
adequacy or inadequacy of the consideration, he intends the release herein to 
be final and complete.  Hunt and PSI execute this release with the full 
knowledge that this release covers all possible claims, except as provided in 
Section 2.1 above, and the right to enforce the provisions of this Agreement 
as set forth herein.   

     2.6  Hunt irrevocably and absolutely agrees that he will not prosecute 
nor allow to be prosecuted on his behalf, in any administrative agency, 
whether federal, state or local, or in any court, whether federal, state, or 
local, any claim or demand of any type related to the matters released in 
this Agreement, it being his intention that with the execution of this 
Agreement, PSI (as defined above) will be absolutely, unconditionally and 
forever discharged of and from all obligations related in any way to the 
matters discharged herein, subject only to the exception in Section 2.1 
above. 

III. GENERAL PROVISIONS

     3.1  Hunt further agrees that he shall not directly or indirectly 
disclose or use any trade secrets or other confidential or proprietary 
information of PSI which came into, or will come into,  Hunt's possession 
during his employment and/or consulting relationship with PSI; provided, that 
confidential information shall not include any information known generally to 
the public, generally known to industry or in the public domain.

     3.2  AGREEMENT TO RETURN PSI PROPERTY AND INFORMATION. Hunt agrees that 
immediately upon his resignation from PSI, he shall return to the Company all 
property of PSI including, but not limited to information stored on his 
computer, product and pricing information, customer lists, research and 
development plans, business plans, credit cards, keys and computers, 
excepting his PSI-issued notebook computer.
     
     3.3  Hunt and PSI agree that the terms and conditions of this Agreement, 
and events which have lead to the parties entering into this Agreement, shall 
remain confidential.  The parties will make every effort to avoid disclosure, 
directly or indirectly, of any of the terms, conditions, facts or 
allegations, to any other person or entity.  It is understood that the 
parties may, if necessary, disclose information concerning this Agreement and 
settlement or its terms, to their attorneys and accountants and /or as 
required by law.  Such disclosure shall not be a violation of this Agreement.

     3.4  Hunt agrees that he will not voluntarily participate in, be an 
expert witness in, be a party, or otherwise voluntarily involve himself in 
any other litigation against PSI, its related corporations, divisions, 
partners, officers, employees (past or present), agents, shareholders, 
representatives, heirs, assigns, executives, administrators and successors, 
or any of  them.  Hunt further agrees that he will not voluntarily assist in 
any manner whatsoever any other party or litigant, in any action, against 
PSI, its related corporations, divisions, partners, officers, employees (past 
or present), agents, shareholders, representatives, heirs, assigns, 
executives, administrators and successors, or any of them.  Hunt agrees to 
cooperate with and 


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<PAGE>

to assist PSI in the event any claims are made against PSI where his 
assistance would be of value to PSI. 

     3.5  This Agreement has been reviewed by the parties hereto and their 
respective attorneys, and the parties have had full opportunity to negotiate 
the contents hereof.  The parties hereto expressly waive any common law or 
statutory rule of construction that ambiguity shall be construed against the 
drafter of this Agreement, and acknowledge that both parties contributed 
equally to the drafting of this Agreement.

     3.6  The parties agree that this Agreement constitutes a compromise of, 
and full accord and satisfaction of, doubtful and disputed claims and shall 
not be treated as an admission of liability by anyone, at any time, for any 
purpose.

     3.7  All parties to this Agreement agree that they will bear their own 
attorneys'  fees, costs and all other expenses.

     3.8  Any dispute or controversy arising between PSI (and its directors, 
officers, or employees) and Hunt including, but not limited to, all potential 
claims arising out of the consultancy relationship, such as breach of 
contract, tort, discrimination, termination, compensation, and claims for any 
violation of any law, statute, regulation, or ordinance, unless prohibited by 
law shall be resolved by final and binding arbitration under the commercial 
arbitration rules of the American Arbitration Association in effect at that 
time.  The arbitration shall be governed by California law.  Judgment upon 
the arbitrator's decision may be entered in any court of competent 
jurisdiction.  The arbitration fee shall be divided equally between Employee 
and PSI.

          3.8.1     At any time prior to the setting of a date for 
arbitration, either party may elect in writing to submit the case to 
nonbinding mediation. Mediation, if elected by either party, shall be in 
advance of and not in substitution of the arbitration required by this 
section.  The mediation fee shall be divided equally between Employee and PSI. 

          3.8.2     In any action at law or equity between the parties 
seeking enforcement of any of the terms and provisions of this Agreement, the 
prevailing party in such action shall be awarded, in addition to damages or 
other relief, his or its reasonable attorneys' fees.  Such recovery shall 
also include out-of-pocket expenses and attorneys' fees on appeal, if any.  
The court shall determine the prevailing party pursuant to California Civil 
Code Section 1717.
     
     3.9  Should any court of competent jurisdiction determine that any term 
or provision of this Agreement is unenforceable, such term or provision shall 
be deemed to be deleted as though it had never been a part of this Agreement, 
and the validity, legality and 


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<PAGE>

enforceability of the remaining terms and provisions shall not be in any way 
affected or imperiled thereby.

     
     3.10    Any and all notices and other communications that are required 
or permitted to be given pursuant to this Agreement shall be in writing and 
shall be deemed to have been duly given if hand-delivered or if mailed, 
postage prepaid, by registered or certified return mail, to the respective 
parties as follows:
     
               If to Hunt:
               
               Alan H. Hunt
               P.O. Box 17108
               Snowmass Village, CO 81615
     
               If to PSI:
     
               Peregrine Systems, Inc 
               Attn:   President
               12670 High Bluff Drive
               San Diego, CA 92130
     
or to such other address or the attention of such other person as any such 
party may direct by written notice delivered to other party pursuant to the 
provisions of  this Section and shall be effective upon receipt.  

     3.11 No waiver by any party hereto of any breach of this Agreement by 
other party shall operate or be construed as a waiver of any other or 
subsequent breach.  No waiver by any party hereto of any breach of this 
Agreement by any other party hereto shall be effective unless it is in 
writing and signed by the party claimed to have waived such breach.

     3.12 This Agreement may be amended only by a written instrument executed 
by all parties hereto. 
     
     3.13 Subject to the exception set forth in Section 2.1 above (which has 
no application to this paragraph), this Agreement is intended by the parties 
to release and discharge any and all claims of Hunt, including any possible 
claims arising under the Age Discrimination in Employment Act, 29 U.S.C. 
Section 621, ET SEQ.   It is the intent of the parties that this Agreement 
satisfy the requirements of the Older Worker Benefit Protection Act, 29 
U.S.C. Section 626(f).  The following general provisions, along with the 
other provisions of this Agreement, are agreed to for this purpose:

          3.13.1    Hunt acknowledges and agrees that he has read and he 
understands the terms of this Agreement;
          
          3.13.2    Hunt acknowledges that he has been given a full 
opportunity to consult


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with his lawyer with respect to the matters referenced in this Agreement, and 
that Hunt has obtained and considered such legal counsel as he deems 
necessary, such that Hunt is entering into this Agreement freely, knowingly, 
and voluntarily;

          3.13.3    Hunt acknowledges that he has been given at least 
twenty-one (21) days in which to consider whether or not to into this 
Agreement; and 

          3.13.4    This Agreement shall not become effective or enforceable 
until seven (7) days after Hunt signs this Agreement.

          3.13.5    This Agreement may be executed in counterparts by the 
parties in order to expedite the execution of same.

     3.14 In order to expedite the execution of this Agreement, the parties 
agree that facsimile signatures are an acceptable means of expressing their 
agreement to the terms and conditions of this Agreement and for all purposes 
facsimile signatures shall have the same effect as original signatures.  Any 
party providing a facsimile signature further agrees, however, that within 
five (5) days of execution of the Agreement, that party will provide their 
signature on an original signature page to the other parties by overnight 
commercial delivery service.

     3.15 This Agreement shall be construed in accordance with the laws of the
State of California. 

     3.16 The agreements and releases contained in this Agreement bind and 
inure to the benefit of the principals, agents, representatives, heirs, 
successors and assigns of Hunt and PSI.
     
     3.17 This Agreement contains the entire agreement and understanding 
concerning the subject matter herein and supersedes and replaces any prior 
negotiations or agreements between the parties hereto, or any of them, 
whether written or oral, except as expressly provided herein.  Each of the 
parties acknowledges that neither party nor any agent or attorney of either 
party has made any promise, representation or warranty, express or implied, 
not contained in this Agreement to induce the other party to execute this 
Agreement in reliance upon any such promise, representation or warranty not 
contained herein.
     
     3.18 All parties agree to cooperate fully and to execute any and all 
supplementary documents and to take all additional actions that may be 
necessary or appropriate to give full force to the basic terms and intent of 
this Agreement and which are not inconsistent with its terms.

                                       

                         (signatures on following page)


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<PAGE>

DATED:    2/5/98                         /s/ ALAN H. HUNT
       -----------------------------     ------------------------
                                         Alan H. Hunt

DATED:    2/5/98                         PEREGRINE SYSTEMS, INC.
       -----------------------------



                                         By: /s/ RICHARD T. NELSON
                                             ----------------------------------
                                             Richard T. Nelson

                                         Its: Vice President


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Source: OneCLE Business Contracts.