EXHIBIT 10.71 PEREGRINE SYSTEMS, INC. PERFORMANCE STOCK UNIT AGREEMENT

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Exhibit 10.71

PEREGRINE SYSTEMS, INC.
PERFORMANCE STOCK UNIT AGREEMENT

        PERFORMANCE STOCK UNIT AGREEMENT (the "Agreement"), effective August 16, 2004, by and between Kenneth Saunders ("Awardee") and Peregrine Systems, Inc., a Delaware corporation ("PSI").

        RECITALS

        WHEREAS, Awardee and PSI are parties to an employment letter agreement dated July 20, 2004, as amended and restated March    , 2005, pursuant to which Awardee agreed to provide certain services to PSI as an employee and officer of PSI (the "Employment Agreement"); and

        WHEREAS, the Employment Agreement provides that PSI will 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 (in the event of certain terminations of employment prior to a Sale Event Section 3.2 shall control), the target number of Units to be issued to Awardee shall be determined based on the Total Consideration and the Target Payout (each as defined and determined 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 August 16, 2004 through the date of termination, and the denominator of which is the total number of days from August 16, 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 August 16, 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, 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.