PEREGRINE SYSTEMS INC, S-8, 1997-10-03

PEREGRINE SYSTEMS INC
S-8, 1997-10-03
PREPACKAGED SOFTWARE

Previous: ILLUMINATED MEDIA INC, 424B3, 1997-10-03

Next: ILOG SA, 20-F, 1997-10-03

<PAGE>

As filed with the Securities and Exchange Commission on October 3, 1997
Registration No.__________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8/S-3
REGISTRATION STATEMENT
(INCLUDING REGISTRATION OF SHARES FOR RESALE BY MEANS OF A FORM S-3 PROSPECTUS)
UNDER
THE SECURITIES ACT OF 1933
------------------------
PEREGRINE SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
------------------------

DELAWARE 95-3773312
-------- ----------
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)

12670 HIGH BLUFF DRIVE
SAN DIEGO, CA 92130
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
NONQUALIFIED STOCK OPTION PLAN
1991 NONQUALIFIED STOCK OPTION PLAN
1994 STOCK OPTION PLAN
XVT SOFTWARE INC. STOCK OPTION AGREEMENTS
UNITED SOFTWARE, INC., 1997 STOCK OPTION AGREEMENTS
RESTRICTED STOCK AGREEMENTS
UNITED SOFTWARE, INC., RESTRICTED STOCK AGREEMENTS
1997 EMPLOYEE STOCK PURCHASE PLAN
1997 DIRECTOR OPTION PLAN
(FULL TITLE OF THE PLAN)
------------------------
ALAN H. HUNT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PEREGRINE SYSTEMS, INC.
12670 HIGH BLUFF DRIVE
SAN DIEGO, CA 92130
(619) 481-5000
(NAME, ADDRESS, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
------------------------
Copy to:
MARK BAUDLER, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
(415) 493-9300
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED(1) SHARE PRICE FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value

Issued under 1991 Nonqualified Stock Option Plan . . . . . . . . 16,000 shares $ 1.340(2) $ 21,440 $ 6.50

Issued under 1994 Stock Option Plan . . . . . . . . . . . . . . 90,409 shares $ 2.340(3) $ 211,557 $ 64.11

Issued under United Software 1997 Stock Plan . . . . . . . . . . 74,947 shares $ 0.315(4) $ 23,608 $ 7.15

Issued under 1997 Employee Stock Purchase Plan . . . . . . . . . 14,013 shares $ 7.863(5) $ 110,184 $ 33.39

Issued under Restricted Stock Agreements . . . . . . . . . . . . 571,704 shares $ 2.340(6) $ 1,337,787 $ 405.39

Issued under Restricted Stock Purchase Agreements of
United Software, Inc. . . . . . . . . . . . . . . . . . . . 321,918 shares $ 0.315(7) $ 101,404 $ 30.73

To be issued under Nonqualified Stock Option Plan . . . . . . . 536,250 shares $ 0.510(8) $ 273,487 $ 82.88

To be issued under 1991 Nonqualified Stock
Option Plan . . . . . . . . . . . . . . . . . . . . . . . . 975,000 shares $ 1.330(9) $ 1,296,750 $ 392.95

To be issued under XVT Software Inc. Stock
Option Agreements . . . . . . . . . . . . . . . . . . . . . 15,204 shares $ 4.240(10) $ 64,465 $ 19.53

To be issued under United Software 1997 Stock Plan . . . . . . . 32,021 shares $ 0.315(11) $ 10,087 $ 3.06

To be issued under 1994 Stock Option Plan . . . . . . . . . . . 3,056,341 shares $ 5.572(12) $17,028,703 $ 5,160.21

To be issued under 1997 Employee Stock
Purchase Plan . . . . . . . . . . . . . . . . . . . . . . . 235,987 shares $ 13.388(13) $ 3,159,394 $ 957.39

To be issued under 1997 Director Option Plan . . . . . . . . . . 150,000 shares $ 17.688(14) $ 2,653,125 $ 803.98

TOTAL 6,089,794 shares $26,291,993 $ 7,967.27

</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

- -------------------------------
(1) For the sole purpose of calculating the registration fee, the number
of shares to be registered under this Registration Statement has been
broken down into nine subtotals.
(2) Computed in accordance with Rule 457(h) under the Securities Act of
1933 (the "Securities Act"). Such computation is based on the
exercise price of $1.34 per share covering 16,000 shares issued under
Peregrine Systems, Inc.'s (the "Company") 1991 Nonqualified Stock
Option Plan.
(3) Computed in accordance with Rule 457(h) under the Securities Act.
Such computation is based on the weighted average exercise price of
$2.34 per share covering 90,409 shares issued under the Company's 1994
Stock Option Plan.
(4) Computed in accordance with Rule 457(h) under the Securities Act.
Such computation is based on the fair value of such shares at the time
of issuance covering 74,947 shares issued under the United Software,
Inc., 1997 Stock Plan.
(5) The exercise price of $7.863 per share, computed in accordance with
Rule 457(h) under the Securities Act, is 85% of the closing price of a
share of Common Stock of the Company as reported in the Nasdaq
National Market on May 1, 1997, the initial Enrollment Date. Pursuant
to Section 2(o) of the 1997 Employee Stock Purchase Plan
(Exhibit 10.5), shares are sold at 85% of the lesser of the fair
market value of such shares on the Enrollment Date or on the Exercise
Date.
(6) Computed in accordance with Rule 457(h) under the Securities Act.
Such computation is based on the fair value of such shares at the time
of issuance of $2.34 per share covering 571,704 restricted shares
issued under certain Restricted Stock Agreements entered into by the
Company with certain of its executive officers.
(7) Computed in accordance with Rule 457(h) under the Securities Act.
Such computation is based on the fair value of such shares at the time
of issuance of $0.315 per share covering 321,918 restricted shares
under certain Restricted Stock Agreements entered into by United
Software, Inc., and certain of its employees.
(8) Computed in accordance with Rule 457(h) under the Securities Act.
Such computation is based on the exercise price of $0.51 per share
covering 536,250 authorized but unissued shares under the Company's
Nonqualified Stock Option Plan.
(9) Computed in accordance with Rule 457(h) under the Securities Act.
Such computation is based on the weighted average exercise price of
$1.33 per share covering 975,000 authorized but unissued shares under
the Company's 1991 Nonqualified Stock Option Plan.
(10) Computed in accordance with Rule 457(h) under the Securities Act.
Such computation is based on the exercise price of $4.24 per share
covering 15,204 authorized but unissued shares under the XVT Software
Inc. ("XVT") Stock Option Agreements. The Company assumed the XVT
Stock Option Agreements in connection with its acquisition of XVT in
November 1995.
(11) Computed in accordance with Rules 457(h) and 457(i) under the
Securities Act. Such computation is based on the weighted average
exercise price of $0.315 per share covering authorized but unissued
shares under United Software, Inc.'s 1997 Stock Plan.
(12) Computed in accordance with Rule 457(h) and 457(c) under the
Securities Act. Such computation is based on the weighted average
exercise price of $5.233 per share covering 2,973,226 outstanding
options and the estimated exercise price of $17.688 per share covering
83,115 authorized but unissued shares under the Company's 1994 Stock
Option Plan. The estimated exercise price of $17.688 per share was
computed in accordance with Rule 457 by averaging the high and low
prices of shares of Common Stock of the Company as reported in the
Nasdaq National Market on September 30, 1997.
(13) The exercise price of $13.388 per share, computed in accordance with
Rule 457(h) under the Securities Act, is 85% of the closing price of a
share of Common Stock of the Company as reported in the Nasdaq
National Market on August 1, 1997, the Current Enrollment Date.
Pursuant to Section 2(o) of the 1997 Employee Stock Purchase Plan
(Exhibit 10.5), shares are sold at 85% of the lesser of the fair
market value of such shares on the Enrollment Date or on the Exercise
Date.
(14) Computed in accordance with Rule 457(h) and 457(c) under the
Securities Act. Such computation is based on the estimated exercise
price of $17.6888 per share covering 150,000 authorized but unissued
shares under the Company's 1997 Director Option Plan. The estimated
exercise price of $17.6875 per share was computed in accordance with
Rule 457 by averaging the high and low prices of a share of the Common
Stock of the Company as reported in the Nasdaq National Market on
September 30, 1997.

<PAGE>

THIS DOCUMENT CONSISTS OF 23 PAGES.
THE INDEX TO EXHIBITS IS ON PAGE II-6.
PROSPECTUS

PEREGRINE SYSTEMS, INC.

1,088,991 SHARES

COMMON STOCK

______________________________________

This Prospectus relates to 1,088,991 of the Common Stock (the "Common
Stock") of Peregrine Systems, Inc. (the "Registrant" or the "Company"), a
Delaware corporation, which may be offered from time to time by Selling
Stockholders (the "Selling Stockholders") for their own accounts. It is
anticipated that the Selling Stockholders will offer shares for sale at
prevailing prices on the Nasdaq National Market on the date of sale. The
Company will receive no part of the proceeds from sales made hereunder. The
Selling Stockholders will bear all sales commissions and similar expenses. Any
other expenses incurred by the Company in connection with the registration and
offering and not borne by the Selling Stockholders will be borne by the Company.
None of the shares offered pursuant to this Prospectus have been registered
prior to the filing of the Registration Statement of which this Prospectus is a
part.

______________________________________

Each Selling Stockholder and any broker executing selling orders on behalf
of a Selling Stockholder may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933, in which event commissions received by such
broker may be deemed to be underwriting commissions under the Securities Act.

The Common Stock is traded on the Nasdaq National Market (Nasdaq Symbol:
PRGN). On October 2, 1997, the last reported sale price of the Common Stock was
$17.00 per share.

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS," BEGINNING ON PAGE 5.

______________________________________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

______________________________________

The date of this Prospectus is October 3, 1997

<PAGE>

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY SELLING STOCKHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH
PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

______________________________________

TABLE OF CONTENTS

PROSPECTUS

Page
----
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Information by Reference. . . . . . . . . . . . . 3
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . 14
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Indemnification of Directors and Officers. . . . . . . . . . . . . . . . . 17

______________________________________

-2-
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, New York 10048 and Northwestern
Atrium Center, 500 Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such materials may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates, and through the National Association of Securities Dealers, Inc. located
at 1735 K Street, N.W., Washington, D.C. 20006. The Commission maintains a
World Wide Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of the Commission's Web site is http://www.sec.gov.

This Prospectus contains information concerning the Company and the sale of
its Common Stock by the Selling Stockholders, but does not contain all the
information set forth in the Registration Statement on Form S-8/S-3 (the
"Registration Statement") which the Company has filed with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). Statements made
in this Prospectus as to the contents of any referenced contract, agreement or
other document are not necessarily complete, and such statement shall be deemed
qualified in its entirety by reference thereto. The Registration Statement,
including various exhibits, may be obtained upon payment of the fee prescribed
by the Commission, or may be examined without charge at the Commission's office
in Washington, D.C.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed with the Commission.

(1) The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997, filed pursuant to Section 13 of the Exchange Act.

(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, filed pursuant to Section 13 of the Exchange Act.

(3) The Company's Current Report on Form 8-K for its acquisition of United
Software, Inc., filed pursuant to Section 13 of the Exchange Act on October 2,
1997.

(4) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed March 7, 1997 pursuant to
Section 12(g) of the Exchange Act.

All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities registered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing of such documents.

-3-
<PAGE>

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement or this Prospectus to the extent that
a statement contained herein, in a Prospectus Supplement or in any other
document subsequently filed with the Commission which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.

The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of any
such person, a copy of any and all of the information that has been or may be
incorporated by reference in this Prospectus, other than exhibits to such
documents. Requests for such copies should be directed to Richard T. Nelson,
General Counsel, 12670 High Bluff Drive, San Diego, California 92130. The
Company's telephone number at that location is (619) 481-5000.

-4-
<PAGE>

THE COMPANY

Peregrine is a leading provider of Enterprise Service Desk software. The
Company develops markets, and supports SERVICECENTER, an integrated suite of
applications that automates the management of complex, enterprise-wide
information technology ("IT") infrastructures. SERVICECENTER is designed to
address the IT management requirements of large organizations and can be
deployed across all major hardware platforms and network operating systems
and protocols. SERVICECENTER utilizes advanced client/server and intelligent
agent technologies and a modular architecture. In addition, in September 1997
the Company acquired United Software, Inc., the parent holding company of
Apsylog S.A. ("United Software" or "Apsylog"), through a merger whereby
Apsylog will continue to operate as a wholly-owned subsidiary of the Company
(the "Acquisition"). Apsylog is a leading provider of IT asset management
software solutions. The development of a market for asset management
solution has paralleled that of the market for Enterprise Service Desk
solutions and reflects the need of large organizations to manage increasingly
complex and dispersed IT infrastructures. Apsylog's ASSETMANAGER product
line, now renamed ASSETCENTER, provides asset management capabilities for IT
infrastructures by tracking an organization's assets throughout their life
cycles, thereby permitting more informed investment decisions in the
acquisition, change and disposition of IT assets. The Company believes that
ASSETCENTER will complement SERVICECENTER, allowing the Company to deliver an
integrated suite of software applications that enables organizations to take
a more comprehensive approach to managing their IT infrastructures. Through
shared common data between the two product lines, an organization is provided
with an end-to-end solution that allows a common understanding of both the
operational and financial aspects of managing its IT infrastructure.

The Company was incorporated in California in 1981 and reincorporated in
Delaware in 1994. Unless the context otherwise requires, references to
"Peregrine" and the "Company" refer to Peregrine Systems, Inc., a Delaware
corporation, its predecessor, Peregrine Systems, Inc., a California corporation,
and except as otherwise indicated, its subsidiaries, including Apsylog. The
executive offices of the Company are located at 12670 High Bluff Drive, San
Diego, California 92130. The Company's telephone number at that location is
(619) 481-5000.

RISK FACTORS

PROSPECTIVE INVESTORS IN THE SHARES OF COMMON STOCK OFFERED HEREBY SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS OR IN DOCUMENTS INCORPORATED BY
REFERENCE HEREIN. THE RISK FACTORS SET FORTH HEREIN REFLECT THOSE RISKS KNOWN
TO MANAGEMENT AS OF THE DATE OF THE FILING OF THE COMPANY'S REGISTRATION
STATEMENT ON FORM S-8/S-3, AND WHICH MANAGEMENT BELIEVES COULD BE MATERIAL TO
THE COMPANY'S BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION. SUCH FACTORS
MAY CHANGE OVER TIME AND MAY DIFFER MATERIALLY FROM THE RISK FACTORS LISTED
HEREIN. PROSPECTIVE INVESTORS ARE CAUTIONED TO REVIEW, IN ADDITION TO THE RISK
FACTORS SET FORTH HEREIN, THE RISK FACTORS CONTAINED IN "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" CONTAINED IN THE
COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-K OR QUARTERLY REPORT ON
FORM 10-Q AS WELL AS THE ADDITIONAL INFORMATION CONTAINED IN SUCH REPORTS AND
THE COMPANY'S OTHER FILINGS UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

LIMITED PROFITABILITY; HISTORY OF OPERATING LOSSES

The Company has recorded cumulative net losses of approximately $14.4
million through June 30, 1997. Through June 30, 1997, Apsylog had recorded
approximately $8.9 million in cumulative net losses. In recent years, the
product lines of both the Company and Apsylog have changed substantially. The
Company's SERVICECENTER product, from which the Company derived substantially
all of its license revenues for the fiscal year ended March 31, 1997, only began
shipping in mid-1995. Apsylog's ASSETCENTER product only began shipping in
mid-1996. As a result, prediction of the Company's future operating results is
difficult, if not impossible. Although the Company achieved profitability during
the year ended March 31, 1997 and for the three months ended June 30, 1997,
there can

-5-
<PAGE>

be no assurance that the Company will be able to remain profitable on a
quarterly or annual basis. In addition, the Company does not believe that the
growth in revenues it has experienced in recent years is indicative of future
operating results. See "--Product Concentration; Dependence on Market Acceptance
of Enterprise Service Desk Software" and "--Risks Associated with Acquisition of
Apsylog and Future Acquisitions."

POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS; SEASONALITY

The Company's quarterly operating results have varied significantly in the
past and may vary significantly in the future depending upon a number of
factors, many of which are beyond the Company's control. These factors include,
among others, the ability of the Company to develop, introduce and market new
and enhanced versions of its software on a timely basis; market demand for the
Company's software; the size, timing and contractual terms of significant
orders; the timing and significance of new software product announcements or
releases by the Company or its competitors; changes in pricing policies by the
Company or its competitors; changes in the Company's business strategies;
budgeting cycles of its potential customers; changes in the mix of software
products and services sold; changes in the mix of revenues attributable to
domestic and international sales; the impact of acquisitions of competitors; the
impact of acquisitions by the Company, including the Acquisition; seasonal
trends; the cancellations of licenses or maintenance agreements; product life
cycles; software defects and other product quality problems; and personnel
changes. The Company has often recognized a substantial portion of its revenues
in the last month or weeks of a quarter. As a result, license revenues in any
quarter are substantially dependent on orders booked and shipped in the last
month or weeks of that quarter. Due to the foregoing factors, quarterly revenues
and operating results are not predictable with any significant degree of
accuracy. In particular, the timing of revenue recognition can be affected by
many factors, including the timing of contract execution and delivery. The
timing between initial customer contact and fulfillment of criteria for revenue
recognition can be lengthy and unpredictable, and revenues in any given quarter
can be adversely affected as a result of such unpredictability. In the event of
any downturn in potential customers' businesses or the economy in general,
planned purchases of the Company's products may be deferred or canceled, which
could have a material adverse effect on the Company's business, operating
results and financial condition.

The Company's business has experienced and is expected to continue to
experience seasonality. The Company's revenues and operating results in its
December quarter typically benefit from purchase decisions made by the large
concentration of customers with calendar year-end budgeting requirements, while
revenues and operating results in the March quarter typically benefit from the
efforts of the Company's sales force to meet fiscal year-end sales quotas. In
addition, the Company is currently attempting to expand its presence in
international markets, including Europe, the Pacific Rim and Latin America.
International revenues comprise a significant percentage of the Company's total
revenues, and the Company may experience additional variability in demand
associated with seasonal buying patterns in such foreign markets. In
particular, the quarter ended September 30 tends to reflect the effects of
summer slowing of business activity internationally. See "--International
Operations; Currency Fluctuations."

PRODUCT CONCENTRATION; DEPENDENCE ON MARKET ACCEPTANCE OF ENTERPRISE SERVICE
DESK SOFTWARE

The Company currently derives substantially all of its license revenues
from the sale of SERVICECENTER and expects SERVICECENTER to account for a
significant portion of the Company's revenues for the foreseeable future. As a
result, the Company's future operating results are dependent upon continued
market acceptance of SERVICECENTER, including future enhancements, as well as
market acceptance of ASSETCENTER. Factors adversely affecting the pricing of,
demand for, or market acceptance of SERVICECENTER or ASSETCENTER, such as
competition or technological change, could have a material adverse effect on the
Company's business, operating results and financial condition.

-6-
<PAGE>

The Company's product strategy has focused on integrating a broad array of
IT management applications with other traditional internal help desk
applications to create an Enterprise Service Desk. The market for Enterprise
Service Desk software is relatively new and is characterized by ongoing
technological developments, frequent new product announcements and
introductions, evolving industry standards and changing customer requirements.
The Company's future financial performance will depend in part on continued
growth in the number of organizations implementing Enterprise Service Desk
solutions.

RISKS ASSOCIATED WITH ACQUISITION OF APSYLOG AND FUTURE ACQUISITIONS

The Acquisition involves a significant amount of integration of two
companies that have previously operated independently. The principal operations
of Apsylog, including most of its employees, are located in Paris, France. No
assurance can be given that difficulties will not be encountered in integrating
certain products, technologies or operations of Apsylog with the Company or that
the benefits expected from such integration will be realized or that Apsylog
employee morale will not be adversely affected by the integration process. The
difficulties of integration may be increased by the necessity of coordinating
geographically separated organizations or of integrating personnel with
disparate business backgrounds and different corporate cultures. There can be
no assurance that either company will retain its key personnel, that the
engineering teams of Apsylog and the Company will successfully cooperate and
realize any technological benefits or that Apsylog or the Company will realize
any of the other anticipated benefits of the Acquisition. Apsylog's ASSETCENTER
product has traditionally been sold into an organization's finance or
procurement departments as opposed to SERVICECENTER, which is typically
purchased by the IT Department. There can be no assurance that the Company will
be successful in continuing to sell to such constituencies or that it can
successfully persuade customers and potential customers that an integrated
approach to managing IT assets is desirable. In addition, the public
announcement and consummation of the Acquisition could result in the
cancellation, termination or nonrenewal of arrangements with Apsylog by
suppliers, distributors or customers of Apsylog or the loss of certain key
Apsylog employees, or the termination of negotiations or delays in ordering by
prospective customers of Apsylog as a result of uncertainties associated with
the Acquisition. Any significant amount of cancellations, terminations, delays
or nonrenewals of arrangements with Apsylog or loss of key employees or
termination of negotiations or delays in ordering could have a material adverse
effect on the business, operating results or financial condition of the Company.

Apsylog's success depends to a significant extent upon a limited number of
members of Apsylog's senior management, certain development personnel, and other
key Apsylog employees. Apsylog's future performance will also depend in
significant part upon the continued service of its key technical, sales and
senior management personnel following the Acquisition. Only certain of these
individuals (including Apsylog's Chief Executive Officer and six additional
employees) will be bound by non-competition agreements. In addition, in
connection with the Acquisition, all repurchase restrictions on shares of
restricted Apsylog Common Stock held by Apsylog stockholders lapsed and all
unvested options in respect of Apsylog Common Stock vested and became
immediately exercisable. The loss of the services of one or more of Apsylog's
executive officers, development personnel, or other key employees or the
decision of one or more of such officers or key employees to join a competitor
or otherwise compete directly or indirectly with the Company could have a
material adverse effect on the Company's business, operating results and
financial condition.

The Company will incur a charge of approximately $35 million in
connection with the Acquisition. Such charge consists primarily of the
purchase of in-process research and development costs. There can be no
assurance that the companies' estimate is correct or that unanticipated
contingencies will not occur that will substantially increase the costs of
combining the operations of the two companies. In any event, costs associated
with the Acquisition will negatively impact results of operations in the
quarter ending September 30, 1997 and may affect subsequent quarters.

-7-
<PAGE>

In addition to the Acquisition and as part of its business strategy, the
Company may make acquisitions of, or significant investments in, businesses that
offer complementary products and technologies. Any such future acquisitions or
investments would present risks commonly encountered in acquisitions of
businesses. Such risks include, among others, the difficulty of assimilating
the operations or personnel of the acquired businesses, the potential disruption
of the Company's on-going business, the inability of management to maximize the
financial and strategic position of the Company through the successful
incorporation of acquired personnel, clients, or technologies, the maintenance
of uniform standards, controls, procedures, and policies and the impairment of
relationships with employees and clients as a result of any integration of new
management personnel. The Company expects that future acquisitions, if any,
could provide for consideration to be paid in cash, shares of stock or a
combination of cash and stock. The Company is not presently in negotiations
with respect to any acquisition or investment, and there can be no assurances
that the Company will make any additional acquisitions in the future. In the
event of such an acquisition or investment, the factors described herein could
have a material adverse effect on the Company's business, financial condition,
and results of operations.

DEPENDENCE ON KEY PERSONNEL; ABILITY TO RECRUIT PERSONNEL

The ability to achieve anticipated revenues is substantially dependent on
the ability to attract and retain skilled personnel, especially sales, service
and implementation personnel. Other than certain employees of Apsylog, none of
the Company's employees, including its senior management, is bound by an
employment or non-competition agreement, and the Company does not maintain key
man life insurance on any employee. The loss of the services of one or more of
the Company's executive officers or key employees or the decision of one or more
of such officers or employees to join a competitor or otherwise compete directly
or indirectly with the Company could have a material adverse effect on the
Company's business, operating results and financial condition.

In addition, the Company believes that its future success will depend in
large part on its ability to attract and retain additional highly skilled
technical, sales, management and marketing personnel. Competition for such
personnel in the computer software industry is intense, and the Company has at
times in the past experienced difficulty in recruiting qualified personnel. New
employees hired by the Company generally require substantial training in the use
and implementation of the Company's products. In particular, a number of the
Company's sales personnel have been with the Company for only a limited period
of time. There can be no assurance that the Company will be successful in
attracting, training and retaining qualified personnel, and the failure to do so
could have a material adverse effect on the Company's business, operating
results and financial condition.

COMPETITION

The market for the Company's products is highly competitive, fragmented and
subject to rapid technological change and frequent new product introductions and
enhancements. Competitors vary in size and in the scope and breadth of the
products and services offered. The Company encounters competition from a number
of sources, including (i) providers of internal help desk software applications
such as Remedy Corporation and Software Artistry, Inc., (ii) customer
interaction software companies such as Clarify Inc. and The Vantive Corporation,
whose products include internal help desk applications, (iii) information
technology and systems management companies such as International Business
Machines Corporation, Computer Associates International, Inc., Hewlett-Packard
Company through its recent acquisition of PROLIN, and McAfee Associates, Inc.,
(iv) providers of asset management software, and (v) the internal information
technology departments of those companies with help desk requirements. Because
barriers to entry in the software market are relatively low, the Company
anticipates additional competition from other established and emerging companies
as the market for Enterprise Service Desk applications expands. In addition,
current and potential competitors have established or may in the future
establish cooperative relationships among themselves or with third parties. The
Company expects software industry consolidation to occur in the future, and it
is possible that new competitors or alliances among competitors may emerge and
rapidly acquire significant market share. Increased competition is likely to
result in price reductions, reduced gross margins and loss of market

-8-
<PAGE>

share, any of which could have a material adverse effect on the Company's
business, operating results and financial condition. Some of the Company's
current and many of its potential competitors have significantly greater
financial, technical, marketing and other resources than the Company. As a
result, they may be able to respond more quickly to new or emerging technologies
and changes in customer requirements or to devote greater resources to the
development, promotion and sale of their products than the Company. There can be
no assurance that the Company will be able to compete successfully against
current and future competitors or that competitive pressures faced by the
Company will not have a material adverse effect on the Company's business,
operating results and financial condition.

MANAGEMENT OF GROWTH

The Company's business has grown substantially in recent periods, with
total revenues increasing from $19.6 million in fiscal 1995 to $23.8 million in
fiscal 1996 and to $35.0 million in fiscal 1997. If the Company is successful
in achieving its growth plans, including the integration of Apsylog, such growth
is likely to place a significant burden on the Company's operating and financial
systems, resulting in increased responsibility for senior management and other
personnel within the Company. The Company's ability to compete effectively and
to manage future growth, if any, and its future operating results will depend in
part on the ability of its officers and other key employees to implement and
expand operational, customer support and financial control systems and to
expand, train and manage its employee base. In particular, in connection with
the Acquisition, the Company will be required to integrate additional personnel
and to augment or replace Apsylog's existing financial and management systems.
Such integration could result in a disruption of operations of the Company or
Apsylog and could impact the Company's financial results. There can be no
assurance that the Company's existing management or any new members of
management will be able to augment or improve existing systems and controls or
implement new systems and controls in response to future growth, if any. The
Company's failure to do so could have a material adverse effect on the Company's
business, operating results and financial condition. See "--Dependence on Key
Personnel; Ability to Recruit Personnel" and "--Risks Associated with
Acquisition of Apsylog and Future Acquisitions."

LENGTHY SALES CYCLES

The license of the Company's software generally requires the Company to
engage in a sales cycle that typically takes approximately six to nine months to
complete. The length of the sales cycle may vary depending on a number of
factors over which the Company may have little or no control, including the size
of the transaction and the level of competition which the Company encounters in
its selling activities. In addition, the sales cycle is typically extended
90 days for product sales through indirect channels. During the sales cycle,
the Company typically provides a significant level of education to prospective
customers regarding the use and benefits of the Company's products. Any delay
in the sale cycle of a large license or a number of smaller licenses could have
a material adverse effect on the Company's business, operating results and
financial condition. See "--Potential Fluctuations in Quarterly Results;
Seasonality."

EXPANSION OF DISTRIBUTION CHANNELS

The Company has historically sold its products through its direct sales
force and a limited number of distributors and has provided maintenance and
support services through its technical and customer support staff. The Company
is currently investing and intends to continue to invest significant resources
in developing additional sales and marketing channels through system integrators
and original equipment manufacturers and other channel partners. There can be no
assurance that the Company will be able to attract channel partners that will be
able to market the Company's products effectively and will be qualified to
provide timely and cost-effective customer support and service. To the extent
the Company establishes distribution through such indirect channels, its
agreements with channel partners may not be exclusive and such channel partners
may also carry competing product lines. Any failure

-9-
<PAGE>

by the Company to establish and maintain such distribution relationships could
have a material adverse effect on the Company's business, operating results and
financial condition. See "--Management of Growth" and "--International
Operations; Currency Fluctuations."

INTERNATIONAL OPERATIONS; CURRENCY FLUCTUATIONS

International sales represented approximately 29% and 33% of the Company's
total revenues in fiscal 1997 and for the three months ended June 30, 1997,
respectively. The Company currently has international sales offices in London,
Paris, Frankfurt and Amsterdam. Apsylog currently has offices in Paris and
Munich. The Company believes that its continued growth and profitability will
require continued expansion of its international operations, particularly in
Europe, Latin America and the Pacific Rim. Accordingly, the Company intends to
expand its international operations and enter additional international markets,
which will require significant management attention and financial resources. In
addition, the Company's international operations are subject to a variety of
risks associated with conducting business internationally, including
fluctuations in currency exchange rates, longer payment cycles, difficulties in
staffing and managing international operations, problems in collecting accounts
receivable, seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world, increases in tariffs, duties, price
controls or other restrictions on foreign currencies, and trade barriers imposed
by foreign countries, any of which could have a material adverse effect on the
Company's business, operating results and financial condition. In addition, the
Company has only limited experience in developing localized versions of its
products and marketing and distributing its products internationally. There can
be no assurance that the Company will be able to successfully localize, market,
sell and deliver its products internationally. The inability of the Company to
expand its international operations successfully and in a timely manner could
have a material adverse effect on the Company's business, operating results and
financial condition.

A significant portion of the Company's business is conducted in currencies
other than the U.S. dollar. Foreign currency transaction gains and losses
arising from normal business operations are credited to or charged against
earnings in the period incurred. As a result, fluctuations in the value of the
currencies in which the Company conducts its business relative to the U.S.
dollar have caused and will continue to cause currency transaction gains and
losses. Due to the substantial volatility of currency exchange rates, among
other factors, the Company cannot predict the effect of exchange rate
fluctuations upon future operating results. There can be no assurance that the
Company will not experience currency losses in the future. The Company has not
previously undertaken hedging transactions to cover its currency exposure but
may hedge a portion of its currency exposure in the future as management deems
appropriate. See "--Management of Growth."

YEAR 2000 IMPACT ON INFORMATION TECHNOLOGY BUDGETS

Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, in less than three years, computer systems
and/or software used by many companies may need to be upgraded to comply with
such "Year 2000" requirements. Significant uncertainty exists in the software
industry concerning the potential effects associated with such compliance.

The Company believes that the purchasing patterns of customers and
potential customers may be affected by Year 2000 issues. Many companies are
expending significant resources to correct their current software systems for
Year 2000 compliance. These expenditures may result in reduced funds available
to purchase software products such as those offered by the Company.

-10-
<PAGE>

DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISKS OF INFRINGEMENT

The Company's success is dependent upon proprietary technology. The Company
relies primarily on a combination of copyright and trademark laws, trade
secrets, confidentiality procedures and contractual provisions to protect its
proprietary rights. The Company seeks to protect its software, documentation and
other written materials under trade secret and copyright laws, which provide
only limited protection. Despite precautions taken by the Company, it may be
possible for unauthorized third parties to copy aspects of its current or future
products or to obtain and use information that the Company regards as
proprietary. In particular, the Company may provide its licensees with access to
its data model and other proprietary information underlying its licensed
applications. There can be no assurance that the Company's means of protecting
its proprietary rights will be adequate or that the Company's competitors will
not independently develop similar or superior technology. Policing unauthorized
use of the Company's software is difficult and, while the Company is unable to
determine the extent to which piracy of its software products exists, software
piracy can be expected to be a persistent problem. In addition, the laws of some
foreign countries do not protect the Company's proprietary rights to the same
extent as do the laws of the United States. Litigation may be necessary in the
future to enforce the Company's intellectual property rights, to protect the
Company's trade secrets or to determine the validity and scope of the
proprietary rights of others. Such litigation could result in substantial costs
and diversion of resources and could have a material adverse effect on the
Company's business, operating results and financial condition.

The Company is not aware that any of its software product offerings
infringes the proprietary rights of third parties. There can be no assurance,
however, that third parties will not claim infringement by the Company with
respect to its current or future products. The Company expects that software
product developers will increasingly be subject to infringement claims as the
number of products and competitors in the Company's industry segment grows and
the functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require the Company to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company or at all,
which could have a material adverse effect on the Company's business, operating
results and financial condition.

RAPID TECHNOLOGICAL CHANGE AND PRODUCT DEVELOPMENT RISKS

The market for the Company's products is subject to rapid technological
change, changing customer needs, frequent new product introductions and evolving
industry standards that may render existing products and services obsolete. As a
result, the Company's position in its existing markets or other markets that it
may enter could be eroded rapidly by product advances. The life cycles of the
Company's products are difficult to estimate. The Company's growth and future
financial performance will depend in part upon its ability to enhance existing
applications, develop and introduce new applications that keep pace with
technological advances, meet changing customer requirements and respond to
competitive products. The Company's product development efforts are expected to
continue to require substantial investments by the Company. There can be no
assurance that the Company will have sufficient resources to make the necessary
investments. The Company has in the past experienced development delays, and
there can be no assurance that the Company will not experience such delays in
the future. There can be no assurance that the Company will not experience
difficulties that could delay or prevent the successful development,
introduction or marketing of new or enhanced products. In addition, there can be
no assurance that such products will achieve market acceptance, or that the
Company's current or future products will conform to industry requirements. The
inability of the Company, for technological or other reasons, to develop and
introduce new and enhanced products in a timely manner could have a material
adverse effect on the Company's business, operating results and financial
condition.

Software products as complex as those offered by the Company may contain
errors that may be detected at any point in a product's life cycle. The Company
has in the past discovered software errors in certain of its products and has
experienced delays in shipment of products during the period required to correct
these errors. There can be

-11-
<PAGE>

no assurance that, despite testing by the Company and by current and potential
customers, errors will not be found, resulting in loss of, or delay in, market
acceptance and sales, diversion of development resources, injury to the
Company's reputation, or increased service and warranty costs, any of which
could have a material adverse effect on the Company's business, results of
operations and financial condition.

PRODUCT LIABILITY

The Company's license agreements with its customers typically contain
provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in the Company's license agreements may not be effective
under the laws of certain jurisdictions. Although the Company has not
experienced any product liability claims to date, the sale and support of
products by the Company may entail the risk of such claims, and there can be no
assurance that the Company will not be subject to such claims in the future. A
product liability claim brought against the Company could have a material
adverse effect on the Company's business, operating results and financial
condition.

EFFECT OF CERTAIN CHARTER PROVISIONS; LIMITATION OF LIABILITY OF DIRECTORS;
ANTITAKEOVER EFFECTS OF DELAWARE LAW

The Company is authorized to issue 5,000,000 shares of undesignated
Preferred Stock. The Board of Directors has the authority to issue the Preferred
Stock in one or more series and to fix the price, rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting a series or the
designation of such series, without any further vote or action by the Company's
stockholders. The issuance of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of delaying, deferring or preventing a change in
control of the Company without further action by the stockholders and may
adversely affect the market price of the Common Stock and the voting and other
rights of the holders of Common Stock. The issuance of Preferred Stock with
voting and conversion rights may adversely affect the voting power of the
holders of Common Stock, including the loss of voting control to others. The
Company has no current plans to issue any shares of Preferred Stock.

Certain provisions of the Company's Amended and Restated Certificate of
Incorporation and Bylaws eliminate the right of stockholders to act by written
consent without a meeting and specify certain procedures for nominating
directors and submitting proposals for consideration at stockholder meetings.
Such provisions are intended to enhance the likelihood of continuity and
stability in the composition of the Board of Directors and in the policies
formulated by the Board of Directors and to discourage certain types of
transactions which may involve an actual or threatened change of control of the
Company. Such provisions are designed to reduce the vulnerability of the Company
to an unsolicited acquisition proposal and, accordingly, could discourage
potential acquisition proposals and could delay or prevent a change in control
of the Company. Such provisions are also intended to discourage certain tactics
that may be used in proxy fights but could, however, have the effect of
discouraging others from making tender offers for the Company's shares and,
consequently, may also inhibit fluctuations in the market price of the Company's
Common Stock that could result from actual or rumored takeover attempts. These
provisions may also have the effect of preventing changes in the management of
the Company.

The Company is subject to Section 203 of the Delaware General Corporation
Law (the "Antitakeover Law"), which regulates corporate acquisitions. The
Antitakeover Law prevents certain Delaware corporations, including those whose
securities are listed for trading on the Nasdaq National Market, from engaging,
under certain circumstances, in a "business combination" with any "interested
stockholder" for three years following the date that such stockholder became an
interested stockholder. For purposes of the Antitakeover Law, a "business
combination" includes, among other things, a merger or consolidation involving
the Company and the interested stockholder and the sale of more than 10% of the
Company's assets. In general, the Antitakeover Law defines an "interested
stockholder" as any entity

-12-
<PAGE>

or person beneficially owning 15% or more of the outstanding voting stock of the
Company and any entity or person affiliated with or controlling or controlled by
such entity or person. A Delaware corporation may "opt out" of the Antitakeover
Law with an express provision in its original certificate of incorporation or an
express provision in its certificate of incorporation or bylaws resulting from
amendments approved by the holders of at least a majority of the company's
outstanding voting shares. The Company has not "opted out" of the provisions of
the Antitakeover Law.

VOLATILITY OF STOCK PRICE

The Company completed its initial public offering of Common Stock in
April 1997, prior to which time no public market existed for the Company's
Common Stock. The market price of the Company's Common Stock has been since the
initial public offering and is expected to continue to be subject to significant
fluctuations in the future based on a number of factors, including any shortfall
in the Company's revenues or net income from revenues or net income expected by
securities analysts; announcements of new products by the Company or its
competitors; quarterly fluctuations in the Company's financial results or the
results of other software companies, including those of direct competitors of
the Company; changes in analysts' estimates of the Company's financial
performance, the financial performance of competitors, or the financial
performance of software companies in general; general conditions in the software
industry; changes in prices for the Company's products or competitors' products;
changes in revenue growth rates for the Company or its competitors; sales of
large blocks of Common Stock by holders whose ability to sell has been limited
by market stand-off agreements with the underwriters of the Company's initial
public offering or by restrictions under applicable securities laws and
conditions in the financial markets. In addition, the stock market may from time
to time experience extreme price and volume fluctuations, which particularly
affect the market price for the securities of many technology companies and
which have often been unrelated to the operating performance of the specific
companies. There can be no assurance that the market price of the Company's
Common Stock will not experience significant fluctuations in the future.

-13-
<PAGE>

SELLING SECURITY HOLDERS

Except as otherwise set forth below, none of the Selling Stockholders is an
executive officer or director of the Company, and none of the Selling
Stockholders beneficially owns, individually or in the aggregate, more than 1%
of the outstanding Common Stock of the Company prior to this offering. In
addition, except as set forth below, all of the shares of Common Stock
beneficially owned by the Selling Stockholders were issued upon exercise of
stock options granted under the Company's 1994 Stock Option Plan. Beneficial
ownership calculations are determined in accordance with the Rules of the
Securities and Exchange Commission and are based on 17,208,334 shares
outstanding as of June 30, 1997 as adjusted to reflect the issuance of 1,884,194
shares of Common Stock in connection with the Acquisition; in computing the
number of shares beneficially owned by a person and the percentage ownership of
that person, shares of Common Stock that are presently exercisable or that will
become exercisable within 60 days of June 30, 1997 are deemed outstanding for
such person, but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person. The following table shows the names of
the Selling Stockholders and the number of shares of Common Stock to be sold by
them pursuant to this Prospectus.

Number of Shares
Name Being Offered(1)
- ------------------------------------------------------------- -----------------

Douglas App(2) . . . . . . . . . . . . . . . . . . . . . . . 1,248

Joel Armengaud(3) . . . . . . . . . . . . . . . . . . . . . . 10,382

Fabrice Blondeau(3) . . . . . . . . . . . . . . . . . . . . . 1,801

Thomas Boudalier(3) . . . . . . . . . . . . . . . . . . . . . 17,745

Jean-Michel Bouillin(3) . . . . . . . . . . . . . . . . . . . 7,508

Nicolas Bourveau(3) . . . . . . . . . . . . . . . . . . . . . 10,511

Phillippe Cairic(3) . . . . . . . . . . . . . . . . . . . . . 1,801

Daniel Callahan(4) . . . . . . . . . . . . . . . . . . . . . 74,947

Remy Carron(3) . . . . . . . . . . . . . . . . . . . . . . . 1,801

Andrew Cassidy(3) . . . . . . . . . . . . . . . . . . . . . . 1,200

Brian Compton(5) . . . . . . . . . . . . . . . . . . . . . . 16,000

Stephen Dehoche(3) . . . . . . . . . . . . . . . . . . . . . 22,671

Douglas Dittrich . . . . . . . . . . . . . . . . . . . . . . 2,500

Pierre Dubois(3) . . . . . . . . . . . . . . . . . . . . . . 17,745

David Farley(6) . . . . . . . . . . . . . . . . . . . . . . . 200,000

Jerome Fedi(3) . . . . . . . . . . . . . . . . . . . . . . . 1,200

Wayne Fisher . . . . . . . . . . . . . . . . . . . . . . . . 18,750

Lionel Fradin(3) . . . . . . . . . . . . . . . . . . . . . . 1,801

Oliver Gilder(3) . . . . . . . . . . . . . . . . . . . . . . 1,200

Christophe Gires(3) . . . . . . . . . . . . . . . . . . . . . 1,801

Laurent Gittler(3) . . . . . . . . . . . . . . . . . . . . . 3,303

Benoit Gourdon(3) . . . . . . . . . . . . . . . . . . . . . . 3,303

William Holsten(7) . . . . . . . . . . . . . . . . . . . . . 1,000

Alan Hunt(8) . . . . . . . . . . . . . . . . . . . . . . . . 371,704

Erik Kawalkowski(3) . . . . . . . . . . . . . . . . . . . . . 3,303

William Korbin . . . . . . . . . . . . . . . . . . . . . . . 1,250

Bruno Labruere(3) . . . . . . . . . . . . . . . . . . . . . . 1,200

Frederic Luddy(2) . . . . . . . . . . . . . . . . . . . . . . 2,029

James Legg . . . . . . . . . . . . . . . . . . . . . . . . . 15,625

Michael Lerendu(3) . . . . . . . . . . . . . . . . . . . . . 18,325

Dominique Martineau(3) . . . . . . . . . . . . . . . . . . . 1,200

Anne-Laure Mazin(3) . . . . . . . . . . . . . . . . . . . . . 3,303

Pierre Henri Milheim(3) . . . . . . . . . . . . . . . . . . . 1,200

Charles Mitelhaus(9) . . . . . . . . . . . . . . . . . . . . 19,036

Stephane Moreau(3) . . . . . . . . . . . . . . . . . . . . . 1,801

-14-
<PAGE>

Number of Shares
Name Being Offered(1)
- ------------------------------------------------------------- -----------------

Donald Odom . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Eric Polin(3) . . . . . . . . . . . . . . . . . . . . . . . . 4,504

Douglas Powanda(10) . . . . . . . . . . . . . . . . . . . . . 101

Elienne Prat(3) . . . . . . . . . . . . . . . . . . . . . . . 1,200

Thomas Price . . . . . . . . . . . . . . . . . . . . . . . . 3,750

Julinka Prudik . . . . . . . . . . . . . . . . . . . . . . . 5,416

Gilles Queru(3)(11) . . . . . . . . . . . . . . . . . . . . . 146,404

Christian Roue(3) . . . . . . . . . . . . . . . . . . . . . . 1,801

Corine Sana(3) . . . . . . . . . . . . . . . . . . . . . . . 1,200

Jose Santos(3) . . . . . . . . . . . . . . . . . . . . . . . 1,801

Daniel Sargeant(3) . . . . . . . . . . . . . . . . . . . . . 1,801

Michael Sauvee(3) . . . . . . . . . . . . . . . . . . . . . . 1,200

Thierry Schreiber(3) . . . . . . . . . . . . . . . . . . . . 3,303

Philippe Sourn(3) . . . . . . . . . . . . . . . . . . . . . . 1,200

Michel Terrisse(3) . . . . . . . . . . . . . . . . . . . . . 1,200

Jean-Marie Vidal(3) . . . . . . . . . . . . . . . . . . . . . 7,508

Michele Vitte(3) . . . . . . . . . . . . . . . . . . . . . . 1,200

Other Selling Stockholders (each a non-affiliate of the Company
holding less than 1,000 shares of the shares issuable
under the employee compensation plans to which this
Form S-8/S-3 registration statement relates) (12) . . . 25,208

TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,088,991

- -------------------------
(1) Until such time that the Company satisfies the requirements for
use of Form S-3, as promulgated under the Securities Act, the
volume limitations specified in Rule 144(e) concerning the amount
of securities to be offered by each person and any other person
with whom he or she is acting in concert for the purpose of
selling securities of the Company, during any three-month period
apply to the sale of the securities registered hereunder.
(2) The Company issued such shares in connection with its 1997
Employee Stock Purchase Plan.
(3) The Company issued such shares pursuant to the conversion of
shares of United Software Common Stock into shares of the Common
Stock of the Company in connection with the Acquisition. Prior
to the Acquisition, United Software had issued such stock under
employee equity incentive restricted stock purchase agreements.
Each of these Selling Stockholders who were parties to the
United Software restricted stock purchase agreements are
currently employees of the Company.
(4) Mr. Callahan was issued 74,947 shares of Common Stock pursuant to
the conversion of his shares of United Software Common Stock into
shares of Common Stock of the Company in connection with the
Acquisition. Prior to the Acquisition, Mr. Callahan was issued
shares of United Software Common Stock pursuant to the exercise
of a stock option granted to him under the United Software 1997
Stock Plan. The Company assumed all obligations under that stock
plan in connection with the Acquisition.
(5) Mr. Compton was issued 16,000 shares of Common Stock pursuant to
the exercise of his stock option granted under the Company's 1991
Nonqualified Stock Option Plan.
(6) Mr. Farley is the Company's Vice President, Finance and Chief
Financial Officer and a member of its Board of Directors. In
November 1995, the Company issued Mr. Farley an aggregate of
200,000 shares of Common Stock pursuant to restricted stock
agreements in connection with his initial employment. Such
shares vest incrementally over ten years subject to earlier
vesting over six years contingent upon the Company's achieving
certain financial milestones. Mr. Farley's restricted stock
agreement permits him to surrender shares to satisfy tax
withholding obligations that arise as shares vest. Prior to this
offering, Mr. Farley beneficially owned 436,908 shares of Common
Stock, including 87,500 shares of Common Stock issuable upon
exercise of outstanding stock options which are presently
exercisable or will become exercisable within 60 days of June 30,
1997, approximately 2.5% of the outstanding shares of Common
Stock of the Company. If all of Mr. Farley's registered shares
are sold pursuant to this Prospectus, Mr. Farley will hold less
than 1% of the outstanding stock of the Company.

-15-
<PAGE>

(7) Mr. Holsten is the Company's Vice President, Professional
Services.
(8) Mr. Hunt is the Company's President and Chief Executive Officer
and a member of its Board of Directors. In November 1995, the
Company issued Mr. Hunt an aggregate of 400,000 shares of Common
Stock pursuant to restricted stock agreements in connection with
his initial employment. Such shares vest incrementally over ten
years subject to earlier vesting over six years contingent upon
the Company's achieving certain financial milestones. Mr. Hunt's
restricted stock agreement permits him to surrender shares to
satisfy tax withholding obligations that arise as shares vest.
In connection with the vesting of 66,000 shares in April 1997,
Mr. Hunt surrendered 28,296 shares subject to his restricted
stock agreement. Prior to this offering, Mr. Hunt beneficially
owned 546,704 shares of Common Stock, including 175,000 shares of
Common Stock issuable upon exercise of outstanding stock options
which are presently exercisable or will become exercisable within
60 days of June 30, 1997, approximately 3.1% of the outstanding
shares of Common Stock of the Company. If all of Mr. Hunt's
registered shares are sold pursuant to this Prospectus, Mr. Hunt
will hold approximately 1.0% of the outstanding stock of the
Company.
(9) Includes 286 shares issued under the Company's 1997 Employee
Stock Purchase Plan.
(10) Mr. Powanda is the Company's Vice President, International Sales.
(11) Mr. Queru is the former president chief executive officer of
United Software. Prior to this offering, Mr. Queru beneficially
owned 395,963 shares of Common Stock, approximately 2.3% of the
outstanding shares of Common Stock of the Company. If all of
Mr. Queru's registered shares are sold pursuant to this
Prospectus, Mr. Queru will hold approximately 1.5% of the
outstanding stock of the Company.
(12) The Other Selling Shareholders, each of whom is not an affiliate
of the Company, did not own 1% or greater of the Company's
outstanding Common Stock as of June 30, 1997, are as follows:
Chimene Abelli, Christophe Baissin, Taylor Barada, Eric Belsoe,
Laurence Berthet, Mark Bol, Annick Bovero, Peter Budic,
Ricardo Campos, Ilse Cappel, Patrick Casey, Olivier Charissourx,
Elsa Charpentier, Richard Corchia, David Culpepper,
Jocelyne Davein, James Dudley, Timothy Duffy, William
Dunne, Karine Eichenberger, Marc Erikson, Michael Franco, Lynn
Frantz, Joshua Gage, Catherine Gillespie, Brigette Girbeau, Jan
Goode, Melissa Gregory, Louisa Grider, Catherine Hamard, Louis
Harwood, Ute Hemke, Spencer Hodges, Jon Houg, Sean Howes, Gary
Hughes, Thai Huynh, Dana Johnson, Sandra Johnson, Paul Jones,
Lori Jordan, Jan Juul, Kari Dietrich-Keiber, William Knox, Regis
Kuzel, Guillaume Lebaron, Janet LeClainche, Valerie Lefresne,
Margaret Lydon, Gary Mahon, Sebastien Marchadier, Lynne Marimoto,
Russ McKenna, Erin McLaughlin, Steve McKesson, Alan McNeil, Essam
Melehy, Karine Mora, James Nugent, Carole Oberle, Diane Olivo,
Hamid Omrani, Charareh Pakrouz, Paul-Eric Paumard, Nils Petersen,
Kasey Phimmasone, Micheal Price, Barbara Prinsell, Mark Rabe,
Peter Rietkerk, Lance Roberts, Joe Ryan, Eric Schindler, William
Schmidt, Sylvic Silveiro, Carmen Simanteris, Catherine
Swormstedt, Pascal Tahler, Tim Thorpe, Charles Troeber, David
Turner, Margrit Turner, Michele Voth, Patricia Wentzel, Doyle
Wesley, John Woodall, David Wright, Keiko Yamasaki and Carol
Yates. Of the shares held by these selling stockholders, (i)
11,491 were originally issued under restricted stock purchase
agreements with Apsylog and subsequently exchanged for shares of
the Company's Common Stock in connection with the Acquisition,
(ii) 10,450 shares were issued pursuant to the Company's 1997
Employee Stock Purchase Plan and (iii) 3,275 were issued under
the 1994 Stock Option Plan.

PLAN OF DISTRIBUTION

The Company has been advised by the Selling Stockholders that they intend
to sell all or a portion of the shares offered hereby from time to time in the
Nasdaq National Market and that sales will be made at prices prevailing in the
Nasdaq National Market at the times of such sales. The Selling Stockholders may
also make private sales directly or through a broker or brokers, who may act as
agent or as principal. Further, the Selling Stockholders may choose to dispose
of the shares offered hereby by gift to a third party or as a donation to a
charitable or other non-profit entity. In connection with any sales, the
Selling Stockholders and any brokers participating in such sales may be deemed
to be underwriters within the meaning of the Securities Act of 1933, as amended
(the "Securities Act").

Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders (and, if such broker acts as agent for
the purchaser of such shares, from such purchaser). Usual and customary
brokerage fees will be paid by the Selling Stockholders. Broker-dealers may
agree with the Selling Stockholders to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the Selling Stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the Selling Stockholders. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
shares commissions computed as described above.

The Company has advised the Selling Stockholders that Regulation M
promulgated under the Exchange Act may apply to sales in the market and has
informed them of the possible need for delivery of copies of this Prospectus.
The Selling Stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the

-16-
<PAGE>

shares against certain liabilities, including liabilities arising under the
Securities Act. Any commissions paid or any discounts or concessions allowed to
any such broker-dealers, and, if any such broker-dealers purchase shares as
principal, any profits received on the resale of such shares, may be deemed to
be underwriting discounts and commissions under the Securities Act.

Upon the Company's being notified by the Selling Stockholders that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a cross or block trade, a supplemental prospectus will be filed
under Rule 424(c) under the Securities Act, setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such shares were sold by the Selling Stockholders, the commissions paid or
discounts or concessions allowed by the Selling Stockholders to such
broker-dealer(s), and where applicable, that such broker-dealer(s) did not
conduct any investigation to verify the information set out in this Prospectus.

As of October 2, 1997, all Selling Stockholders were subject to lock-up
agreements pursuant to which they would not be permitted to sell, transfer or
otherwise dispose of any shares of, or securities convertible into or
exchangeable for, the Company's Common Stock for a period of 180 days from
April 8, 1997, the date of the Company's initial public offering, without the
prior written consent of UBS Securities LLC, one of the managing underwriters
of the initial public offering. Such lock-up agreements expire in accordance
with their terms on October 5, 1997.

Any securities covered by this Prospectus which qualify for sale pursuant
to Rules 144 and 701 under the Securities Act may be sold under Rule 144 rather
than pursuant to this Prospectus. In general, under Rule 144 as currently in
effect, a person (or persons whose shares are aggregated), including any person
who may be deemed to be an "affiliate" of the Company, is entitled to sell
within any three month period "restricted shares" beneficially owned by him or
her in an amount that does not exceed the greater of (i) 1% of the then
outstanding shares of Common Stock or (ii) the average weekly trading volume in
shares of Common Stock during the four calendar weeks preceding such sale,
provided that at least one year has elapsed since such shares were acquired from
the Company or an affiliate of the Company. Sales are also subject to certain
requirements as to the manner of sale, notice and availability of current public
information regarding the Company. However, a person who has not been an
"affiliate" of the Company at any time within three months prior to the sale is
entitled to sell his or her shares without regard to the volume limitations or
other requirements of Rule 144, provided that at least one year has elapsed
since such shares were acquired from the Company or an affiliate of the Company.
In general, under Rule 701 as currently in effect, any employee, consultant or
advisor of the Company who purchases shares from the Company in connection with
a compensatory stock or option plan or other written agreement related to
compensation is eligible to resell such shares 90 days after the date of the
Company's initial public offering on April 8, 1997 in reliance on Rule 144, but
without compliance with certain restrictions contained in Rule 144.

There can be no assurance that the Selling Stockholders will sell any or
all of the shares of Common Stock offered hereunder.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents, and in agreements between the corporation
and its directors and officers, provisions expanding the scope of
indemnification beyond that specifically provided by the current law.

Article IX of the Registrant's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permissible under Delaware Law.

-17-
<PAGE>

Article VI of the Registrant's Bylaws provides for the indemnification of
officers, directors and third parties acting on behalf of the corporation if
such person acted in good faith and in a manner reasonably believed to be in and
not opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.

The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to the indemnification provided
for in the Registrant's Bylaws, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.

Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Prospectus or
otherwise, the Registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

-18-
<PAGE>

PEREGRINE SYSTEMS, INC.
REGISTRATION STATEMENT ON FORM S-8

PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

There are hereby incorporated by reference in this Prospectus the
following documents and information heretofore filed with the Commission:

(1) The Company's Annual Report on Form 10-K for the fiscal year
ending March 31, 1997, filed pursuant to Section 13 of the Exchange Act.

(2) The Company's Quarterly Report on Form 10-Q for the quarter
ending June 30, 1997, filed pursuant to Section 13 of the Exchange Act.

(3) The Company's Current Report on Form 8-K for its acquisition of
United Software, Inc., filed pursuant to Section 13 of the Exchange Act on
October 2, 1997.

(4) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed March 7, 1997 pursuant to
Section 12(g) of the Exchange Act.

All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities registered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to
be part hereof from the date of filing of such documents.

ITEM 4. DESCRIPTION OF SECURITIES.

Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law permits a
corporation to include in its charter documents, and in agreements between
the corporation and its directors and officers, provisions expanding the
scope of indemnification beyond that specifically provided by the current law.

Article IX of the Registrant's Amended and Restated Certificate of
Incorporation provides for the indemnification of directors to the fullest
extent permissible under Delaware Law.

Article VI of the Registrant's Bylaws provides for the indemnification
of officers, directors and third parties acting on behalf of the corporation
if such person acted in good faith and in a manner reasonably believed to be
in and not opposed to the best interest of the corporation, and, with respect
to any criminal action or proceeding, the indemnified party had no reason to
believe his conduct was unlawful.

II-1
<PAGE>

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

The issuance of the shares being offered by the Form S-3 resale
prospectus were deemed to be exempt from registration under the Securities
Act in reliance on Section 4(2) of the Securities Act or Regulation D
promulgated thereunder, or Rule 701 promulgated under Section 3(b) of the
Securities Act, as transactions by an issuer not involving a public offering
or transactions pursuant to compensatory benefit plans and contracts relating
to compensation as provided under such Rule 701. The recipients of
securities in each such transaction represented their intention to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed
to the share certificates and instruments issued in such transactions. All
recipients had adequate access, through their relationship with the Company,
to information about the Registrant.

ITEM 8. EXHIBITS.

Exhibit
Number Description
- ------- -----------------------------------------------------------------
5.1 Opinion of counsel as to legality of securities being registered.
10.1* Nonqualified Stock Option Plan, as amended, and forms of Stock
Option Agreement and Buy-Sell Agreement.
10.2* 1991 Nonqualified Stock Option Plan, as amended, and forms of
Stock Option Agreement and Stock Buy-Sell Agreement.
10.3*** 1994 Stock Option Plan, as amended through February 6, 1997,
including 1995 Stock Option Plan for French Employees.
10.4*** Form of Stock Option Agreement under 1994 Stock Option Plan, as
amended through February 6, 1997.
10.5*** 1997 Employee Stock Purchase Plan and form of participation
agreement thereunder.
10.6*** 1997 Director Option Plan.
10.13* XVT Stock Option Agreement, dated January 18, 1995, between the
Registrant and William Holsten, as amended on October 3, 1996.
10.14* XVT Stock Option Agreement, dated November 1, 1995, between the
Registrant and Christopher Cole, as amended on October 3, 1996.
10.15** Restricted Stock Agreement, dated November 1, 1995 between the
Registrant and Alan Hunt.
10.16** Restricted Stock Agreement, dated November 1, 1995 between the
Registrant and David Farley.
10.24 United Software, Inc. 1997 Stock Plan.
10.25 Form of Stock Option Agreement Under United Software, Inc., 1997
Stock Plan.
10.26 Form of United Software, Inc., Restricted Stock Purchase
Agreement.
23.1 Consent of counsel (contained in Exhibit 5.1).
23.2 Independent Auditors' Consent (see page II-5).
24.1 Power of Attorney (see page II-4).

- ------------------------
* Incorporated by reference to the exhibit bearing the same number
filed with the Registrant's Registration Statement on Form S-1,
as amended (No. 333-21483), which the Commission declared
effective on April 8, 1997.

II-2
<PAGE>

** Incorporated by reference to the exhibit bearing the same number
filed with the Registrant's Registration Statement on Form S-1,
as amended (No. 333-21483), which the Commission declared
effective on April 8, 1997. The Registrant has received
confidential treatment with respect to certain portions of this
exhibit. Such portions have been omitted from this exhibit and
have been filed separately with the Commission.
*** Incorporated by reference to the exhibit bearing the same number
filed with the Registrant's Annual Report on Form 10-K for the
fiscal year ending March 31, 1997.

ITEM 9. UNDERTAKINGS.

A. The Company hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

B. The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to law, the Company's Certificate of Incorporation,
Bylaws or indemnification agreements, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in a successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Company will,
unless in the opinion of its counsel the matter has already been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8/S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on this third day of
October, 1997.

PEREGRINE SYSTEMS, INC.

By: /s/ Alan H. Hunt
---------------------------------------
Alan H. Hunt
President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW CONSTITUTES AND APPOINTS ALAN H. HUNT AND DAVID A. FARLEY, AND
EACH OF THEM, AS HIS OR HER ATTORNEY-IN-FACT, WITH FULL POWER OF SUBSTITUTION IN
EACH, FOR HIM OR HER IN ANY AND ALL CAPACITIES TO SIGN ANY AMENDMENTS TO THIS
REGISTRATION STATEMENT ON FORM S-8/S-3, AND TO FILE THE SAME, WITH EXHIBITS
THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND
EXCHANGE COMMISSION, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEY-IN-FACT, OR HIS SUBSTITUTES, MAY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

Signature Title Date
- --------------------------- -------------------------------- ----------------

/s/ Alan H. Hunt President and Chief Executive October 3, 1997
- --------------------------- Officer (Principal Executive
Alan H. Hunt Officer) and Director

/s/ David A. Farley Chief Financial Officer October 3, 1997
- --------------------------- (Principal Financial and
David A. Farley Accounting Officer) and Director

/s/ John J. Moores Director October 3, 1997
- ---------------------------
John J. Moores

/s/ Christopher A. Cole Director October 3, 1997
- ---------------------------
Christopher A. Cole

Director October 3, 1997
- ---------------------------
Richard A. Hosley II

/s/ Charles E. Noell III Director October 3, 1997
- ---------------------------
Charles E. Noell III

/s/ Norris van den Berg Director October 3, 1997
- ---------------------------
Norris van den Berg

II-4
<PAGE>

INDEPENDENT AUDITORS' CONSENT

As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated April 21, 1997,
included or incorporated by reference in Peregrine Systems, Inc. Form 10-K
for the year ended March 31, 1997 and to all references to our Firm included
in this registration statement.

San Diego, California
October 3, 1997

Arthur Anderson LLP
/S/ ARTHUR ANDERSON LLP

II-5
<PAGE>

INDEX TO EXHIBITS

Exhibit Sequentially
Number Description Numbered Page
- -------------- ------------------------------------------------ -------------
5.1 Opinion of counsel as to legality of securities
being registered.
10.1* Nonqualified Stock Option Plan, as amended, and
forms of Stock Option Agreement and Buy-Sell
Agreement.
10.2* 1991 Nonqualified Stock Option Plan, as amended,
and forms of Stock Option Agreement and Stock
Buy-Sell Agreement.
10.3*** 1994 Stock Option Plan, as amended through
February 6, 1997, including 1995 Stock Option
Plan for French Employees.

10.4*** Form of Stock Option Agreement under 1994 Stock
Option Plan, as amended through February 6, 1997.
10.5*** 1997 Employee Stock Purchase Plan and form of
participation agreement thereunder.
10.6*** 1997 Director Option Plan.
10.13* XVT Stock Option Agreement, dated January 18,
1995, between the Registrant and William Holsten,
as amended on October 3, 1996.
10.14* XVT Stock Option Agreement, dated November 1,
1995, between the Registrant and Christopher
Cole, as amended on October 3, 1996.
10.15** Restricted Stock Agreement, dated November 1,
1995 between the Registrant and Alan Hunt.
10.16** Restricted Stock Agreement, dated November 1,
1995 between the Registrant and David Farley.
10.24 United Software, Inc. 1997 Stock Plan.
10.25 Form of Stock Option Agreement Under United
Software, Inc., 1997 Stock Plan.
10.26 Form of United Software, Inc., Restricted Stock
Purchase Agreement.
23.1 Consent of counsel (contained in Exhibit 5.1).
23.2 Independent Auditors' Consent (see page II-5).
24.1 Power of Attorney (see page II-4).
- ---------------------
* Incorporated by reference to the exhibit bearing the same number filed with
the Registrant's Registration Statement on Form S-1, as amended
(No. 333-21483), which the Commission declared effective on April 8, 1997.
** Incorporated by reference to the exhibit bearing the same number filed with
the Registrant's Registration Statement on Form S-1, as amended
(No. 333-21483), which the Commission declared effective on April 8, 1997.
The Registrant has received confidential treatment with respect to certain
portions of this exhibit. Such portions have been omitted from this
exhibit and have been filed separately with the Commission.
*** Incorporated by reference to the exhibit bearing the same number filed with
the Registrant's Annual Report on Form 10-K for the fiscal year ending
March 31, 1997.

II-6

<PAGE>

EXHIBIT 5.1

October 3, 1997

Peregrine Systems, Inc.
12670 High Bluff Drive
San Diego, California 92130

RE: REGISTRATION STATEMENT ON FORM S-8/S-3

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-8/S-3 to be filed by
you with the Securities and Exchange Commission on October 3, 1997 (as such may
thereafter be amended or supplemented, the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of 6,089,794 shares of your Common Stock, $0.001 par value (the "Shares"), of
which 571,704 have been issued pursuant to certain restricted stock agreements
between the Company and certain of its executive officers, 235,987 are to be
issued and 14,013 have been issued pursuant to the 1997 Employee Stock Purchase
Plan, 150,000 are to be issued pursuant to the 1997 Director Option Plan,
3,056,341 are to be issued and 90,409 have been issued pursuant to the 1994
Stock Option Plan, 15,204 are to be issued pursuant to certain XVT Software Inc.
Stock Option Agreements, 975,000 are to be issued and 16,000 have been issued
pursuant to the 1991 Nonqualified Stock Option Plan, 566,250 are to be issued
and 30,000 have been issued pursuant to the Nonqualified Stock Option Plan,
32,021 are to be issued and 74,947 have been issued under the United Software,
Inc., 1997 Stock Plan and 321,918 have been issued under the United Software,
Inc., Restricted Stock Agreements. As your legal counsel, we have examined the
proceedings taken, and are familiar with the proceedings proposed to be taken,
by you in connection with the sale and issuance of the Shares.

It is our opinion that the Shares, as or when issued and sold in the
manner described in the Registration Statement and in accordance with the
resolutions adopted by the Board of Directors of the Company, are or will be
legally and validly issued, fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.

Very truly yours,

WILSON SONSINI GOODRICH & ROSATI
Professional Corporation

<PAGE>

UNITED SOFTWARE, INC.

1997 STOCK PLAN

1. PURPOSES OF THE PLAN. The purposes of this 1997 Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or nonstatutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock purchase rights may also be granted
under the Plan.

2. DEFINITIONS. As used herein, the following definitions shall apply:

(a) "ADMINISTRATOR" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

(b) "BOARD" means the Board of Directors of the Company.

(d) "COMMITTEE" means the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan.

(e) "COMMON STOCK" means the Common Stock of the Company.

(f) "COMPANY" means United Software, Inc., a Delaware corporation.

(g) "CONSULTANT" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not.

(h) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company, its Subsidiaries or their respective successors. For
purposes of this Plan, a change in status from an Employee to a Consultant or
from a Consultant to an Employee will not constitute an interruption of
Continuous Status as an Employee or Consultant.

<PAGE>

(i) "EMPLOYEE" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company, with the
status of employment determined based upon such minimum number of hours or
periods worked as shall be determined by the Administrator in its discretion,
subject to any requirements of the Code. The payment by the Company of a
director's fee to a Director shall not be sufficient to constitute "employment"
of such Director by the Company.

(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

(k) "FAIR MARKET VALUE" means, as of any date, the fair market value
of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported), as quoted
on such system or exchange, or the exchange with the greatest volume of trading
in Common Stock for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

(ii) If the Common Stock is quoted on the Nasdaq System (but
not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
for the last market trading day prior to the time of determination, as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable; or

(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

(l) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable written option agreement.

(m) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.

(n) "OPTION" means a stock option granted pursuant to the Plan.

(o) "OPTIONED STOCK" means the Common Stock subject to an Option or a
Stock Purchase Right.

(p) "OPTIONEE" means an Employee or Consultant who receives an Option
or a Stock Purchase Right.

<PAGE>

(q) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code, or any successor provision.

(r) "PLAN" means this 1997 Stock Plan.

(s) "REPORTING PERSON" means an officer, director, or greater than
ten percent stockholder of the Company within the meaning of Rule 16a-2 under
the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under
the Exchange Act.

(t) "RESTRICTED STOCK" means shares of Common Stock acquired pursuant
to a grant of a Stock Purchase Right under Section 10 below.

(u) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, as the same may be amended from time to time, or any successor provision.

(v) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

(w) "STOCK EXCHANGE" means any stock exchange or consolidated stock
price reporting system on which prices for the Common Stock are quoted at any
given time.

(x) "STOCK PURCHASE RIGHT" means the right to purchase Common Stock
pursuant to Section 10 below.

(y) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, or any successor
provision.

3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 1,000,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares that were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan.
In addition, any Shares of Common Stock which are retained by the Company upon
exercise of an Option or Stock Purchase Right in order to satisfy the exercise
or purchase price for such Option or Stock Purchase Right or any withholding
taxes due with respect to such exercise shall be treated as not issued and shall
continue to be available under the Plan. Shares repurchased by the Company
pursuant to any repurchase right which the Company may have shall not be
available for future grant under the Plan.

4. ADMINISTRATION OF THE PLAN.

(a) INITIAL PLAN PROCEDURE. Prior to the date, if any, upon which
the Company becomes subject to the Exchange Act, the Plan shall be administered
by the Board or a committee appointed by the Board.

<PAGE>

(b) PLAN PROCEDURE AFTER THE DATE, IF ANY, UPON WHICH THE COMPANY
BECOMES SUBJECT TO THE EXCHANGE ACT.

(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule
16b-3, grants under the Plan may be made by different bodies with respect to
directors, non-director officers and Employees or Consultants who are not
Reporting Persons.

(ii) ADMINISTRATION WITH RESPECT TO REPORTING PERSONS. With
respect to grants of Options or Stock Purchase Rights to Employees who are
Reporting Persons, such grants shall be made by (A) the Board if the Board may
make grants to Reporting Persons under the Plan in compliance with Rule 16b-3,
or (B) a committee designated by the Board to make such grants under the Plan,
which committee shall be constituted in such a manner as to permit grants under
the Plan to comply with Rule 16b-3. Once appointed, such committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the committee and thereafter directly make grants to
Reporting Persons under the Plan, all to the extent permitted by Rule 16b-3.

(iii) ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
EMPLOYEES. With respect to grants of Options or Stock Purchase Rights to
Employees or Consultants who are not Reporting Persons, the Plan shall be
administered by (A) the Board or (B) a committee designated by the Board, which
committee shall be constituted in such a manner as to satisfy the legal
requirements relating to the administration of incentive stock option plans, if
any, of state or other applicable corporate and securities laws, of the Code and
of any applicable Stock Exchange (the "APPLICABLE LAWS"). Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.

(c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any Stock Exchange, the Administrator
shall have the authority, in its discretion:

(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(k) of the Plan;

(ii) to select the Consultants and Employees to whom Options
and Stock Purchase Rights may from time to time be granted hereunder;

(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof are granted hereunder;

<PAGE>

(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;

(v) to approve forms of agreement for use under the Plan;

(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder;

(vii) to determine whether and under what circumstances an
Option may be settled in cash under Section 9(f) instead of Common Stock;

(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;

(ix) to determine the terms and restrictions applicable to
Stock Purchase Rights and the Restricted Stock purchased by exercising such
Stock Purchase Rights; and

(x) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan; and

(xi) in order to fulfill the purposes of the Plan and without
amending the Plan, to modify grants of Options or Stock Purchase Rights to
participants who are foreign nationals or employed outside of the United States
in order to recognize differences in local law, tax policies or customs.

(d) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all holders of Options or Stock Purchase Rights.

5. ELIGIBILITY.

(a) RECIPIENTS OF GRANTS. Nonstatutory Stock Options and Stock
Purchase Rights may be granted to Employees and Consultants. Incentive Stock
Options may be granted only to Employees. An Employee or Consultant who has
been granted an Option or Stock Purchase Right may, if he or she is otherwise
eligible, be granted additional Options or Stock Purchase Rights.

(b) TYPE OF OPTION. Each Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares with respect to which Options designated
as Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account

<PAGE>

in the order in which they were granted, and the Fair Market Value of the Shares
subject to an Incentive Stock Option shall be determined as of the date of the
grant of such Option.

(c) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with such Optionee's right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.

6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 15 of the Plan.

7. TERM OF OPTION. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement and provided further that, in the case of an
Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the written option
agreement.

8. OPTION EXERCISE PRICE AND CONSIDERATION.

(a) The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be such price as is determined by the Board and
set forth in the applicable agreement, but shall be subject to the following:

(i) In the case of an Incentive Stock Option that is:

(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.

(B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

(ii) In the case of a Nonstatutory Stock Option that is:

(A) granted to a person who, at the time of the grant
of such Option, owns stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of the grant.

<PAGE>

(B) granted to any person, the per Share exercise
price shall be no less than 85% of the Fair Market Value per Share on the date
of grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note (subject to the provisions of Section 153 of the
Delaware General Corporation Law), (4) other Shares that (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six months on the date of surrender or such other period as may be
required to avoid a charge to the Company's earnings, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which such Option shall be exercised, (5) authorization for the
Company to retain from the total number of Shares as to which the Option is
exercised that number of Shares having a Fair Market Value on the date of
exercise equal to the exercise price for the total number of Shares as to which
the Option is exercised, (6) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price and
any applicable income or employment taxes, (7) any combination of the foregoing
methods of payment, or (8) such other consideration and method of payment for
the issuance of Shares to the extent permitted under Applicable Laws. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

9. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, and reflected in the written option
agreement, which may include vesting requirements and/or performance criteria
with respect to the Company and/or the Optionee; provided that such Option shall
become exercisable at the rate of at least twenty percent (20%) per year over
five (5) years from the date the Option is granted. In the event that any of the
Shares issued upon exercise of an Option should be subject to a right of
repurchase in the Company's favor, such repurchase right shall lapse at the rate
of at least twenty percent (20%) per year over five (5) years from the date the
Option is granted.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and the Company has
received full payment for the Shares with respect to which the Option is
exercised. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares,

<PAGE>

no right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Stock, not withstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
promptly upon exercise of the Option. No adjustment will be made for a dividend
or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 12 of the Plan.

Exercise of an Option in any manner shall result in a decrease in
the number of Shares that thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Subject to
Section 9(c), in the event of termination of an Optionee's Continuous Status as
an Employee or Consultant with the Company, such Optionee may, but only within
three (3) months (or such other period of time not less than thirty (30) days as
is determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option and not
exceeding three (3) months) after the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent that the Optionee
was entitled to exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate. No
termination shall be deemed to occur and this Section 9(b) shall not apply if
(i) the Optionee is a Consultant who becomes an Employee; or (ii) the Optionee
is an Employee who becomes a Consultant.

(i) Notwithstanding Section 9(b) above, in the event of
termination of an Optionee's Continuous Status as an Employee or Consultant as a
result of his or her total and permanent disability (within the meaning of
Section 22(e)(3) of the Code), Optionee may, but only within twelve (12) months
from the date of such termination (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), exercise
the Option to the extent otherwise entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if Optionee does not exercise such Option
to the extent so entitled within the time specified herein, the Option shall
terminate.

(ii) In the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of a disability which does not
fall within the meaning of total and permanent disability (as set forth in
Section 22(e)(3) of the Code), Optionee may, but only within six (6) months from
the date of such termination (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), exercise the
Option to the extent otherwise entitled to exercise it at the date of such
termination. However, to the extent that such Optionee fails to exercise an
Option which is an Incentive Stock Option ("ISO") (within the meaning of Section
422 of the Code) within three (3) months of the date of such termination, the
Option will not qualify for ISO treatment under the Code. To the extent

<PAGE>

that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within six months (6) from the date of termination, the Option shall
terminate.

(d) DEATH OF OPTIONEE. In the event of the death of an Optionee
during the period of Continuous Status as an Employee or Consultant since the
date of grant of the Option, or within thirty (30) days following termination of
Optionee's Continuous Status as an Employee or Consultant, the Option may be
exercised, at any time within six (6) months following the date of death (but in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), by Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
of the right to exercise that had accrued at the date of death or, if earlier,
the date of termination of Optionee's Continuous Status as an Employee or
Consultant. To the extent that Optionee was not entitled to exercise the Option
at the date of death or termination, as the case may be, or if Optionee does not
exercise such Option to the extent so entitled within the time specified herein,
the Option shall terminate.

(e) RULE 16b-3. Options granted to Reporting Persons shall comply
with Rule 16b-3 and shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption for Plan
transactions.

(f) BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

10. STOCK PURCHASE RIGHTS.

(a) RIGHTS TO PURCHASE. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid (which price shall not be less than 85% of the
Fair Market Value of the Shares as of the date of the offer, or, in the case of
a person owning stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, the price shall not be less than one hundred percent (100%) of the
Fair Market Value of the Shares as of the date of the offer), and the time
within which such person must accept such offer, which shall in no event exceed
thirty (30) days from the date upon which the Administrator made the
determination to grant the Stock Purchase Right. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator. Shares purchased pursuant to the grant of a Stock Purchase Right
shall be referred to herein as "Restricted Stock."

(b) REPURCHASE OPTION. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company

<PAGE>

for any reason (including death or disability). The purchase price for Shares
repurchased pursuant to the Restricted Stock purchase agreement shall be the
original purchase price paid by the purchaser and may be paid by cancellation of
any indebtedness of the purchaser to the Company. The repurchase option shall
lapse at such rate as the Administrator may determine, but at a minimum rate of
20% per year.

(c) OTHER PROVISIONS. The Restricted Stock purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.

(d) RIGHTS AS A STOCKHOLDER. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 12
of the Plan.

11. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option or Stock Purchase Right, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by one or some
combination of the following methods: (a) by cash payment, or (b) out of
Optionee's current compensation, (c) if permitted by the Administrator, in its
discretion, by surrendering to the Company Shares that (i) in the case of Shares
previously acquired from the Company, have been owned by the Optionee for more
than six months on the date of surrender, and (ii) have a fair market value on
the date of surrender equal to or less than Optionee's marginal tax rate times
the ordinary income recognized, or (d) by electing to have the Company withhold
from the Shares to be issued upon exercise of the Option, or the Shares to be
issued in connection with the Stock Purchase Right, if any, that number of
Shares having a fair market value equal to the amount required to be withheld.
For this purpose, the fair market value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be determined
(the "TAX DATE").

Any surrender by a Reporting Person of previously owned Shares to
satisfy tax withholding obligations arising upon exercise of this Option must
comply with the applicable provisions of Rule 16b-3.

All elections by an Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

(a) the election must be made on or prior to the applicable Tax Date;

<PAGE>

(b) once made, the election shall be irrevocable as to the particular
Shares of the Option or Stock Purchase Right as to which the election is made;
and

In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option or Stock Purchase
Right is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.

12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR CERTAIN OTHER
TRANSACTIONS.

(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock that have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or that have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination, recapitalization or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option or Stock Purchase Right.

(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action. To the extent it has
not been previously exercised, the Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.

(c) MERGER OR SALE OF ASSETS. In the event of a proposed sale of all
or substantially all of the Company's assets or a merger of the Company with or
into another corporation where the successor corporation issues its securities
to the Company's stockholders, each outstanding Option or Stock Purchase Right
shall be assumed or an equivalent option or right shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the successor corporation does not agree to assume the Option or Stock
Pur-

<PAGE>

chase Right or to substitute an equivalent option or right, in which case such
Option or Stock Purchase Right shall terminate upon the consummation of the
merger or sale of assets.

(d) CERTAIN DISTRIBUTIONS. In the event of any distribution to the
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Administrator may, in its discretion,
appropriately adjust the price per share of Common Stock covered by each
outstanding Option or Stock Purchase Right to reflect the effect of such
distribution.

13. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. Options and
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised or purchased during the lifetime of
the Optionee or Stock Purchase Rights Holder only by the Optionee or Stock
Purchase Rights Holder.

14. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS. The date of grant
of an Option or Stock Purchase Right shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Board; provided
however that in the case of any Incentive Stock Option, the grant date shall be
the later of the date on which the Administrator makes the determination
granting such Incentive Stock Option or the date of commencement of the
Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.

15. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AUTHORITY TO AMEND OR TERMINATE. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made that would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 or
with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of any Stock Exchange), the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.

(b) EFFECT OF AMENDMENT OR TERMINATION. No amendment or termination
of the Plan shall adversely affect Options already granted, unless mutually
agreed otherwise between the Optionee and the Board, which agreement must be in
writing and signed by the Optionee and the Company.

16. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any Stock Exchange. As a condition to the exercise of an
Option, the Company may require the

<PAGE>

person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by law.

17. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

18. AGREEMENTS. Options and Stock Purchase Rights shall be evidenced by
written agreements in such form as the Administrator shall approve from time to
time.

19. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any Stock Exchange upon which the Common Stock is listed. All Options
and Stock Purchase Rights issued under the Plan shall become void in the event
such approval is not obtained.

20. INFORMATION AND DOCUMENTS TO OPTIONEES AND PURCHASERS. The Company
shall provide financial statements at least annually to each Optionee and to
each individual who acquired Shares Pursuant to the Plan, during the period such
Optionee or purchaser has one or more Options or Stock Purchase Rights
outstanding, and in the case of an individual who acquired Shares pursuant to
the Plan, during the period such individual owns such Shares. The Company shall
not be required to provide such information if the issuance of Options or Stock
Purchase Rights under the Plan is limited to key employees whose duties in
connection with the Company assure their access to equivalent information. In
addition, at the time of issuance of any securities under the Plan, the Company
shall provide to the Optionee or the Purchaser a copy of the Plan and any
agreement(s) pursuant to which securities under the Plan are issued.

<PAGE>

UNITED SOFTWARE, INC.

1997 STOCK PLAN

NOTICE OF STOCK OPTION GRANT
(NO EARLY EXERCISE PERMITTED)
________________
________________
________________

You have been granted an option to purchase Common Stock "COMMON STOCK" of
United Software, Inc. (the "COMPANY") as follows:

Board Approval Date: ________

Date of Grant (Later of Board
Approval Date or Commence-
ment of Employment/Consulting): ________

Vesting Commencement Date: ________

Exercise Price per Share: $_______

Total Number of Shares Granted: ________

Total Exercise Price: $_______

Type of Option: ________ Incentive Stock Option
________ Nonstatutory Stock Option
Term/Expiration Date: ________

Vesting Schedule: This Option may be exercised, in whole
or in part, in accordance with the
following schedule: ________ of the
Shares subject to the Option shall vest
on the ________ month anniversary of the
Vesting Commencement Date and 1/________
of the total number of Shares subject to
the Option shall vest on the ________ of
each month thereafter.

Termination Period: Option may be exercised for ________
[MUST BE BETWEEN 30 DAYS AND THREE
MONTHS] days after termination of
employment or consulting relationship
except as set out in Sections 6 and 7 of
the Stock Option Agreement (but in no
event later than the Expiration Date).

<PAGE>

By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
terms and conditions of the 1997 Stock Plan and the Stock Option Agreement, both
of which are attached and made a part of this document.

________: ________

______________________________ By:______________________________
Signature

______________________________ ______________________________
Print Name Print Name and Title

-2-

<PAGE>

UNITED SOFTWARE, INC.

1997 STOCK PLAN

STOCK OPTION AGREEMENT

1. GRANT OF OPTION. United Software, Inc., a Delaware corporation (the
"COMPANY"), hereby grants to ________ ("OPTIONEE"), an option (the "OPTION") to
purchase a total number of shares of Common Stock (the "SHARES") set forth in
the Notice of Stock Option Grant, at the exercise price per share set forth in
the Notice of Stock Option Grant (the "EXERCISE PRICE") subject to the terms,
definitions and provisions of the United Software, Inc. 1997 Stock Plan (the
"PLAN") adopted by the Company, which is incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option.

If designated an Incentive Stock Option, this Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the Code.

2. EXERCISE OF OPTION. This Option shall be exercisable during its Term
in accordance with the Vesting Schedule set out in the Notice of Stock Option
Grant and with the provisions of Section 9 of the Plan as follows:

(a) RIGHT TO EXERCISE.

(i) This Option may not be exercised for a fraction of a
share.

(ii) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Sections 5, 6 and 7 below, subject to the limitation contained in
Section 2(a)(i).

(iii) In no event may this Option be exercised after the date
of expiration of the Term of this Option as set forth in the Notice of Stock
Option Grant.

(b) METHOD OF EXERCISE. This Option shall be exercisable by
execution and delivery of the Exercise Notice and Restricted Stock Purchase
Agreement attached hereto as EXHIBIT A (the "EXERCISE AGREEMENT") or of any
other form of written notice approved for such purpose by the Company which
shall state the election to exercise the Option, the number of Shares in respect
of which the Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such shares of
Common Stock as may be required by the Company pursuant to the provisions of the
Plan. Such written notice shall be signed by Optionee and shall be delivered in
person or by certified mail to the Secretary of the Company. The written notice
shall be accompanied by payment of the Exercise Price. This Option shall be
deemed to be exercised upon receipt by the Company of such written notice
accompanied by the Exercise Price.

<PAGE>

No Shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of
applicable law and the requirements of any stock exchange upon which the Shares
may then be listed. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to Optionee on the date on which the
Option is exercised with respect to such Shares.

3. METHOD OF PAYMENT. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of Optionee:

(a) cash;

(b) check;

(c) surrender of other shares of Common Stock of the Company which
(i) in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by Optionee for more than six (6) months on the date of
surrender, and (ii) have a fair market value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised;

(d) if there is a public market for the Shares and they are
registered under the Securities Act of 1933, as amended, delivery of a properly
executed exercise notice together with irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds required to
pay the exercise price; or

(e) subject to the provisions of Section 153 of the Delaware General
Corporation Law, a promissory note in the form attached to this Agreement as
EXHIBIT B, or in any other form approved by the Company.

4. RESTRICTIONS ON EXERCISE. This Option may not be exercised until such
time as the Plan has been approved by the stockholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations as promulgated by the
Federal Reserve Board. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.

5. TERMINATION OF RELATIONSHIP. In the event of termination of
Optionee's Continuous Status as an Employee or Consultant, Optionee may, to the
extent otherwise so entitled at the date of such termination (the "TERMINATION
DATE"), exercise this Option during the Termination Period set forth in the
Notice of Stock Option Grant. To the extent that Optionee was not entitled to
exercise this Option at such Termination Date, or if Optionee does not exercise
this Option within the Termination Period, the Option shall terminate.

<PAGE>

6. DISABILITY OF OPTIONEE.

(a) Notwithstanding the provisions of Section 5 above, in the event
of termination of Continuous Status as an Employee or Consultant as a result of
Optionee's total and permanent disability (as defined in Section 22(e)(3) of the
Code), Optionee may, but only within twelve (12) months from the Termination
Date (but in no event later than the Expiration Date set forth in the Notice of
Stock Option Grant), exercise this Option to the extent Optionee was entitled to
exercise it as of such Termination Date. To the extent that Optionee was not
entitled to exercise the Option as of the Termination Date, or if Optionee does
not exercise such Option (to the extent so entitled) within the time specified
in this Section 6(a), the Option shall terminate.

(b) Notwithstanding the provisions of Section 5 above, in the event
of termination of Optionee's consulting relationship or Continuous Status as an
Employee as a result of disability not constituting a total and permanent
disability (as set forth in Section 22(e)(3) of the Code), Optionee may, but
only within six (6) months from the Termination Date (but in no event later than
the Expiration Date set forth in the Notice of Stock Option Grant), exercise the
Option to the extent Optionee was entitled to exercise it as of such Termination
Date; provided, however, that if this is an Incentive Stock Option and Optionee
fails to exercise this Incentive Stock Option within three (3) months from the
Termination Date, this Option will cease to qualify as an Incentive Stock Option
(as defined in Section 422 of the Code) and Optionee will be treated for federal
income tax purposes as having received ordinary income at the time of such
exercise in an amount generally measured by the difference between the Exercise
Price for the Shares and the fair market value of the Shares on the date of
exercise. To the extent that Optionee was not entitled to exercise the Option
at the Termination Date, or if Optionee does not exercise such Option to the
extent so entitled within the time specified in this Section 6(b), the Option
shall terminate.

7. DEATH OF OPTIONEE. In the event of the death of Optionee (a) during
the Term of this Option and while an Employee or Consultant of the Company and
having been in Continuous Status as an Employee or Consultant since the date of
grant of the Option, or (b) within thirty (30) days after Optionee's Termination
Date, the Option may be exercised at any time within six (6) months following
the date of death (but in no event later than the Expiration Date set forth in
the Notice of Stock Option Grant), by Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the Termination Date.

8. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by him or her. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.

9. TERM OF OPTION. This Option may be exercised only within the Term set
forth in the Notice of Stock Option Grant, subject to the limitations set forth
in Section 7 of the Plan.

<PAGE>

10. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
of this Option of certain of the federal and California tax consequences of
exercise of this Option and disposition of the Shares under the laws in effect
as of the Date of Grant. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX
LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a) EXERCISE OF INCENTIVE STOCK OPTION. If this Option qualifies as
an Incentive Stock Option, there will be no regular federal or California income
tax liability upon the exercise of the Option, although the excess, if any, of
the fair market value of the Shares on the date of exercise over the Exercise
Price will be treated as an adjustment to the alternative minimum tax for
federal tax purposes and may subject Optionee to the alternative minimum tax in
the year of exercise.

(b) EXERCISE OF NONSTATUTORY STOCK OPTION. If this Option does not
qualify as an Incentive Stock Option, there may be a regular federal income tax
liability and a California income tax liability upon the exercise of the Option.
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair market value
of the Shares on the date of exercise over the Exercise Price. If Optionee is
an employee, the Company will be required to withhold from Optionee's
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.

(c) DISPOSITION OF SHARES. In the case of a Nonstatutory Stock
Option, if Shares are held for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
and California income tax purposes. In the case of an Incentive Stock Option,
if Shares transferred pursuant to the Option are held for at least one year
after exercise and are disposed of at least two years after the Date of Grant,
any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal and California income tax purposes. If Shares
purchased under an Incentive Stock Option are disposed of within such one-year
period or within two years after the Date of Grant, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the difference between the Exercise Price and the lesser
of (i) the fair market value of the Shares on the date of exercise, or (ii) the
sale price of the Shares.

(d) NOTICE OF DISQUALIFYING DISPOSITION OF INCENTIVE STOCK OPTION
SHARES. If the Option granted to Optionee herein is an Incentive Stock Option,
and if Optionee sells or otherwise disposes of any of the Shares acquired
pursuant to the Incentive Stock Option on or before the later of (i) the date
two years after the Date of Grant, or (ii) the date one year after the date of
exercise, Optionee shall immediately notify the Company in writing of such
disposition. Optionee acknowledges and agrees that he or she may be subject to
income tax withholding by the Company on the compensation income recognized by
Optionee from the early disposition by payment in cash or out of the current
earnings paid to Optionee.

<PAGE>

11. WITHHOLDING TAX OBLIGATIONS. Optionee understands that, upon
exercising a Nonstatutory Stock Option, he or she will recognize income for tax
purposes in an amount equal to the excess of the then fair market value of the
Shares over the Exercise Price. However, the timing of this income recognition
may be deferred for up to six months if Optionee is subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"). If Optionee
is an employee, the Company will be required to withhold from Optionee's
compensation, or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income.
Additionally, Optionee may at some point be required to satisfy tax withholding
obligations with respect to the disqualifying disposition of an Incentive Stock
Option. Optionee shall satisfy his or her tax withholding obligation arising
upon the exercise of this Option by one or some combination of the following
methods: (a) by cash payment, (b) out of Optionee's current compensation,
(c) if permitted by the Administrator, in its discretion, by surrendering to the
Company Shares which (i) in the case of Shares previously acquired from the
Company, have been owned by Optionee for more than six months on the date of
surrender, and (ii) have a fair market value on the date of surrender equal to
or greater than Optionee's marginal tax rate times the ordinary income
recognized, or (d) by electing to have the Company withhold from the Shares to
be issued upon exercise of the Option that number of Shares having a fair market
value equal to the amount required to be withheld. For this purpose, the fair
market value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the "TAX DATE").

If Optionee is subject to Section 16 of the Exchange Act (an "INSIDER"),
any surrender of previously owned Shares to satisfy tax withholding obligations
arising upon exercise of this Option must comply with the applicable provisions
of Rule 16b-3 promulgated under the Exchange Act ("RULE 16b-3").

All elections by Optionee to have Shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

(a) the election must be made on or prior to the applicable Tax Date;

(b) once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made; and

12. MARKET STANDOFF AGREEMENT. In connection with the initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
Optionee hereby agrees not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Shares (other than those
included in the registration) without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time (not to exceed
180 days) from the effective date of such registration as may be requested by
the Company or such managing

<PAGE>

underwriters and to execute an agreement reflecting the foregoing as may be
requested by the underwriters at the time of the public offering.

[Signature Page Follows]

<PAGE>

This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one
document.

UNITED SOFTWARE, INC.

By:_______________________________

_______________________________
(Print name and title)

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT OR CONSULTANCY AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK PLAN WHICH IS INCORPORATED
HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO
CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE
IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S
EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option.

Dated:_______________________________ _______________________________

_______________________________

<PAGE>

UNITED SOFTWARE, INC.

RESTRICTED STOCK PURCHASE AGREEMENT

This Restricted Stock Purchase Agreement (the "AGREEMENT") is made as of
____________, by and between United Software, Inc., a Delaware corporation (the
"COMPANY"), and _________ ("PURCHASER").

1. SALE OF STOCK. Subject to the terms and conditions of this
Agreement, on the Purchase Date (as defined below) the Company will issue and
sell to Purchaser, and Purchaser agrees to purchase from the Company, __ shares
of the Company's Common Stock (the "SHARES") at a purchase price of
$0.075 per Share for a total purchase price of $______. The term "SHARES"
refers to the purchased Shares and all securities received in replacement of
or in connection with the Shares pursuant to stock dividends or splits, all
securities received in replacement of the Shares in a recapitalization,
merger, reorganization, exchange or the like, and all new, substituted or
additional securities or other properties to which Purchaser is entitled by
reason of Purchaser's ownership of the Shares.

2. TIME AND PLACE OF PURCHASE. The purchase and sale of the Shares under
this Agreement shall occur at the principal office of the Company simultaneously
with the execution of this Agreement by the parties, or on such other date as
the Company and Purchaser shall agree (the "PURCHASE DATE"). On the Purchase
Date, the Company will deliver to Purchaser a certificate representing the
Shares to be purchased by Purchaser (which shall be issued in Purchaser's name)
against payment of the purchase price therefor by Purchaser by check made
payable to the Company denominated in U.S. Dollars or French Francs at the
conversion rate in existence as of the date of this Agreement.

3. LIMITATIONS ON TRANSFER. In addition to any other limitation on
transfer created by applicable securities laws, Purchaser shall not assign,
encumber or dispose of any interest in the Shares except in compliance with this
Section 3 and applicable securities laws:

(a) RIGHT OF FIRST REFUSAL. Before any Shares held by Purchaser or
any transferee of Purchaser (either being sometimes referred to herein as the
"HOLDER") may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section 3(a) (the "RIGHT OF FIRST REFUSAL").

(i) NOTICE OF PROPOSED TRANSFER. The Holder of the Shares shall
deliver to the Company a written notice in the form attached hereto as EXHIBIT D
(the "NOTICE") stating: (A) the Holder's bona fide intention to sell or
otherwise transfer such Shares; (B) the name of each proposed purchaser or other
transferee ("PROPOSED TRANSFEREE"); (C) the number of Shares to be transferred
to each Proposed Transferee; and (D) the terms and conditions of each proposed
sale or transfer. The Holder shall offer the Shares at the same price (the
"OFFERED PRICE") and upon the same terms (or terms as similar as reasonably
possible) to the Company or its assignee(s).

<PAGE>

(ii) EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may, by giving written notice to the Holder, elect to purchase all, but not less
than all, of the Shares proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price determined in accordance with
subsection (iii) below.

(iii) PURCHASE PRICE. The purchase price ("PURCHASE PRICE")
for the Shares purchased by the Company or its assignee(s) under this Section
3(a) shall be the Offered Price. If the Offered Price includes consideration
other than cash, the cash equivalent value of the non-cash consideration shall
be determined by the Board of Directors of the Company in good faith.

(iv) PAYMENT. Payment of the Purchase Price shall be made, at
the option of the Company or its assignee(s), in cash (by check), by
cancellation of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to the assignee),
or by any combination thereof within 30 days after receipt of the Notice or in
the manner and at the times set forth in the Notice.

(v) HOLDER'S RIGHT TO TRANSFER. If all of the Shares proposed
in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section 3(a), then the
Holder may sell or otherwise transfer such Shares to that Proposed Transferee at
the Offered Price or at a higher price, provided that such sale or other
transfer is consummated within 60 days after the date of the Notice and provided
further that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section 3 shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are
not transferred to the Proposed Transferee within such period, or if the Holder
proposes to change the price or other terms to make them more favorable to the
Proposed Transferee, a new Notice shall be given to the Company, and the Company
and/or its assignees shall again be offered the Right of First Refusal before
any Shares held by the Holder may be sold or otherwise transferred.

(vi) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the
contrary contained in this Section 3(a) notwithstanding, the transfer of any or
all of the Shares during Purchaser's lifetime or on Purchaser's death by will or
intestacy to Purchaser's Immediate Family or a trust for the benefit of
Purchaser's Immediate Family shall be exempt from the provisions of this Section
3(a). "IMMEDIATE FAMILY" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section 3, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section 3.

(b) INVOLUNTARY TRANSFER.

(i) COMPANY'S RIGHT TO PURCHASE UPON INVOLUNTARY TRANSFER. In
the event, at any time after the date of this Agreement, of any transfer by
operation of law or

-2-
<PAGE>

other involuntary transfer (including death or divorce, but excluding a transfer
to Immediate Family as set forth in Section 3(a)(vi) above) of all or a portion
of the Shares by the record holder thereof, the Company shall have an option to
purchase all of the Shares transferred at the greater of the purchase price paid
by Purchaser pursuant to this Agreement or the fair market value of the Shares
on the date of transfer. Upon such a transfer, the person acquiring the Shares
shall promptly notify the Secretary of the Company of such transfer. The right
to purchase such Shares shall be provided to the Company for a period of thirty
(30) days following receipt by the Company of written notice by the person
acquiring the Shares.

(ii) PRICE FOR INVOLUNTARY TRANSFER. With respect to any stock
to be transferred pursuant to Section 3(b)(i), the price per Share shall be a
price set by the Board of Directors of the Company that will reflect the current
value of the stock in terms of present earnings and future prospects of the
Company. The Company shall notify Purchaser or his or her executor of the price
so determined within thirty (30) days after receipt by it of written notice of
the transfer or proposed transfer of Shares. However, if the Purchaser does not
agree with the valuation as determined by the Board of Directors of the Company,
the Purchaser shall be entitled to have the valuation determined by an
independent appraiser to be mutually agreed upon by the Company and the
Purchaser and whose fees shall be borne equally by the Company and the
Purchaser.

(d) ASSIGNMENT. The right of the Company to purchase any part of the
Shares may be assigned in whole or in part to any stockholder or stockholders of
the Company or other persons or organizations; provided, however, that an
assignee, other than a corporation that is the parent or a 100% owned subsidiary
of the Company, must pay the Company, upon assignment of such right, cash equal
to the difference between the original purchase price and fair market value, if
the original purchase price is less than the fair market value of the Shares
subject to the assignment.

(e) RESTRICTIONS BINDING ON TRANSFEREES. All transferees of Shares
or any interest therein will receive and hold such Shares or interest subject to
the provisions of this Agreement, including, insofar as applicable, the
Company's option to repurchase under Section 3(g). Any sale or transfer of the
Company's Shares shall be void unless the provisions of this Agreement are met.

(f) TERMINATION OF RIGHTS. The right of first refusal granted the
Company by Section 3(a) above and the option to repurchase the Shares in the
event of an involuntary transfer granted the Company by Section 3(b) above shall
terminate upon the first sale of Common Stock of the Company to the general
public pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "SECURITIES ACT"). Upon termination of the right of first refusal
described in Section 3(a) and the expiration or exercise of the Company's
Repurchase Option described in Section 3(g) below, a new certificate or
certificates representing the Shares not repurchased shall be issued, on
request, without the legend referred to in Section 6(a)(ii) below and delivered
to Purchaser.

-3-
<PAGE>

(g) REPURCHASE OPTION. Notwithstanding anything to the contrary set
forth in this Agreement, Purchaser shall not assign, encumber or dispose of any
interest in the Shares while the Shares are subject to the Company's Repurchase
Option (as defined below) except as provided below. After any Shares have been
released from such Repurchase Option, Purchaser shall not assign, encumber or
dispose of any interest in such Shares except in compliance with the provisions
herein and applicable securities laws.

(i) For a period of four (4) years from the Repurchase Right
Commencement Date set forth on the signature page of this Agreement, the Company
shall have an irrevocable option (the "REPURCHASE OPTION") to repurchase all or
any portion of the Shares held by Purchaser at the lessor of (i) the original
purchase price per Share plus a premium per Share of eight percent (8%) per
annum compounded annually on such original purchase price per Share or (ii) the
then fair market value of the Shares as determined in good faith by the
Company's Board of Directors. The Company shall have the right to assign this
Repurchase Option in whole or in part at its sole discretion to any third party
at any time.

(ii) The Repurchase Option shall be exercised by the Company by
written notice to Purchaser or Purchaser's executor and, at the Company's
option, (A) by delivery to the Purchaser or Purchaser's executor, with such
notice, of a check in the amount of the purchase price for the Shares being
repurchased, or (B) in the event the Purchaser is indebted to the Company, by
cancellation by the Company of an amount of such indebtedness equal to the
purchase price for the Shares being repurchased, or (C) by a combination of (A)
and (B) so that the combined payment and cancellation of indebtedness equals
such purchase price. Upon delivery of such notice and payment of the purchase
price in any of the ways described above, the Company shall become the legal and
beneficial owner of the Shares being repurchased and all rights and interest
therein or related thereto, and the Company shall have the right to transfer to
its own name the number of Shares being repurchased by the Company, without
further action by Purchaser.

4. ESCROW OF SHARES NOT RELEASED FROM REPURCHASE OPTION. For purposes of
facilitating the enforcement of the provisions of Section 3 above, Purchaser
agrees, immediately upon receipt of the certificate(s) for the Shares subject to
the Company's Repurchase Option described in Section 3(g), to deliver such
certificate(s), together with an Assignment Separate from Certificate in the
form attached to this Agreement as EXHIBIT A executed by Purchaser and by
Purchaser's spouse (if required for transfer), in blank, to the Secretary of the
Company, or the Secretary's designee, to hold such certificate(s) and Assignment
Separate from Certificate in escrow and to take all such actions and to
effectuate all such transfers and/or releases as are in accordance with the
terms of this Agreement. Purchaser hereby acknowledges that the Secretary of
the Company, or the Secretary's designee, is so appointed as the escrow holder
with the foregoing authorities as a material inducement to make this Agreement
and that said appointment is coupled with an interest and is accordingly
irrevocable. Purchaser agrees that said escrow holder shall not be liable to
any party hereof (or to any other party). The escrow holder may rely upon any
letter, notice or other document executed by any signature purported to be
genuine and may resign at any time. Purchaser agrees that if the Secretary of
the Company, or the Secretary's designee, resigns as escrow holder for any or no
reason, the Board of Directors of the Company

-4-
<PAGE>

shall have the power to appoint a successor to serve as escrow holder pursuant
to the terms of this Agreement.

5. INVESTMENT AND TAXATION REPRESENTATIONS. In connection with the
purchase of the Shares, Purchaser represents to the Company the following:

(a) Purchaser is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the securities.
Purchaser is purchasing these securities for investment for his or her own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act.

(b) Purchaser understands that the securities have not been
registered under the Securities Act by reason of a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of
Purchaser's investment intent as expressed herein.

(c) Purchaser understands that the Shares are "restricted securities"
under applicable U.S. federal and state securities laws and that, pursuant to
these laws, Purchaser must hold the Shares indefinitely unless they are
registered with the Securities and Exchange Commission and qualified by state
authorities, or an exemption from such registration and qualification
requirements is available. Purchaser acknowledges that the Company has no
obligation to register or qualify the Shares for resale. Purchaser further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Shares, and
requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.

(d) Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser's purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted any tax consultants Purchaser
deems advisable in connection the purchase or disposition of the Shares and that
Purchaser is not relying on the Company for any tax advice.

6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

(a) LEGENDS. The certificate or certificates representing the Shares
shall bear the following legends (as well as any legends required by applicable
state and federal corporate and securities laws):

(i) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN

-5-
<PAGE>

EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933.

(ii) THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

(iii) IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT
OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES.

(b) STOP-TRANSFER NOTICES. Purchaser agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

(c) REFUSAL TO TRANSFER. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

7. SECTION 83(b) ELECTION. Purchaser understands that Section 83(a) of
the Internal Revenue Code of 1986, as amended (the "CODE"), taxes as ordinary
income the difference between the amount paid for the Shares and the fair market
value of the Shares as of the date any restrictions on the Shares lapse. In
this context, "RESTRICTION" means the right of the Company to buy back the
Shares pursuant to the Repurchase Option set forth in Section 3(g) of this
Agreement. Purchaser understands that Purchaser may elect to be taxed at the
time the Shares are purchased, rather than when and as the Repurchase Option
expires, by filing an election under Section 83(b) (an "83(b) ELECTION") of the
Code with the Internal Revenue Service within 30 days from the date of purchase.
Even if the fair market value of the Shares at the time of the execution of this
Agreement equals the amount paid for the Shares, the election must be made to
avoid income under Section 83(a) in the future. Purchaser understands that
failure to file such an election in a timely manner may result in adverse tax
consequences for Purchaser. Purchaser further understands that an additional
copy of such election form should be filed with his or her

-6-
<PAGE>

federal income tax return for the calendar year in which the date of this
Agreement falls. Purchaser acknowledges that the foregoing is only a summary of
the effect of United States federal income taxation with respect to purchase of
the Shares hereunder, and does not purport to be complete. Purchaser further
acknowledges that the Company has directed Purchaser to seek independent advice
regarding the applicable provisions of the Code, the income tax laws of any
municipality, state or foreign country in which Purchaser may reside, and the
tax consequences of Purchaser's death.

Purchaser agrees that he will execute and deliver to the Company with
this executed Agreement a copy of the Acknowledgment and Statement of Decision
Regarding Section 83(b) Election (the "ACKNOWLEDGMENT"), attached hereto as
EXHIBIT B. Purchaser further agrees that Purchaser will execute and submit with
the Acknowledgment a copy of the 83(b) Election, attached hereto as EXHIBIT C,
if Purchaser has indicated in the Acknowledgment his or her decision to make
such an election.

8. MARKET STANDOFF AGREEMENT. In connection with the initial public
offering of the Company's securities and upon request of the Company or the
underwriters managing any underwritten offering of the Company's securities,
Purchaser agrees not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Shares (other than those included
in the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed 180
days) from the effective date of such registration as may be requested by the
Company or such managing underwriters and to execute an agreement reflecting the
foregoing as may be requested by the underwriters at the time of the public
offering.

9. CONFIDENTIALITY. The Purchaser hereby acknowledges and agrees that
the terms and provisions of this Agreement (except for the terms contained in
Section 1) are currently and are intended to remain confidential for so long as
such terms remain in force and effect. The Purchaser further acknowledges and
hereby agrees that the terms of this Agreement may not be disclosed except as
required by law to any third parties by Purchaser without the prior written
consent of the Company.

10. MISCELLANEOUS.

(a) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.

(b) ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS. This Agreement sets
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them. No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement. The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

-7-
<PAGE>

(c) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.

(d) CONSTRUCTION. This Agreement is the result of negotiations
between and has been reviewed by each of the parties hereto and their respective
counsel, if any; accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

(e) NOTICES. Any notice required or permitted by this Agreement
shall be in writing and shall be deemed sufficient when delivered personally or
sent by telegram or fax or forty-eight (48) hours after being deposited in the
U.S. or French mail, as applicable, as certified or registered mail, with
postage prepaid, and addressed to the party to be notified at such party's
address as set forth below or as subsequently modified by written notice.

(f) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

(g) SUCCESSORS AND ASSIGNS. The rights and benefits of this
Agreement shall inure to the benefit of, and be enforceable by the Company's
successors and assigns. The rights and obligations of Purchaser under this
Agreement may only be assigned with the prior written consent of the Company.

(h) CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

[Signature Page Follows]

-8-
<PAGE>

The parties have executed this Agreement as of the date first set forth
above.
UNITED SOFTWARE, INC.

By:
---------------------------------------

Title:
-------------------------------------

PURCHASER:
____________________________________________
(Signature)

Address:
____________________________________________

____________________________________________

I, ________________________________, spouse of _________, have read and hereby
approve the foregoing Agreement. In consideration of the Company's granting my
spouse the right to purchase the Shares as set forth in the Agreement, I hereby
agree to be irrevocably bound by the Agreement and further agree that any
community property or other such interest shall be similarly bound by the
Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to
any amendment or exercise of any rights under the Agreement.

____________________________________________
Spouse of

-9-
<PAGE>

RECEIPT

United Software, Inc. hereby acknowledges receipt of a check in the
amount of $__________ given by ____________ as consideration for Certificate
No. _________ for shares of Common Stock of United Software, Inc.

Dated: ________________

UNITED SOFTWARE, INC.

By:
-----------------------------------
Title:
---------------------------------

<PAGE>

EXHIBIT A

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, Purchaser hereby sells, assigns and transfers
unto __________________ the Common stock of UNITED SOFTWARE, INC. standing in
Purchaser's name on the books of said corporation represented by Certificate
No. ______ herewith and does hereby irrevocably constitute and appoint
_________________________ to transfer said stock on the books of the within-
named corporation with full power of substitution in the premises. THIS
ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT.

Dated: ______________, 19__ Signature:
___________________________

This Assignment Separate from Certificate was executed in conjunction
with the terms of a Restricted Stock Purchase Agreement between the above
Purchaser and UNITED SOFTWARE, INC.

Instruction: Please do not fill in any blanks other than the signature
line. The purpose of this assignment is to enable the Company to exercise its
repurchase option set forth in the Agreement without requiring additional
signatures on the part of Purchaser.

<PAGE>

EXHIBIT B

ACKNOWLEDGMENT AND STATEMENT OF DECISION
REGARDING SECTION 83(b) ELECTION

The undersigned (which term includes the undersigned's spouse), a
purchaser of _____ shares (the "SHARES") of Common Stock of _________, a
Delaware corporation (the "COMPANY") by exercise of a stock purchase right
granted by the Company, hereby states as follows:

1. The undersigned either [check and complete as applicable]:

(a) ____ has consulted, and has been fully advised by, the
undersigned's own tax advisor, __________________________, whose
business address is _____________________________, regarding the
federal, state and local tax consequences of purchasing the Shares,
and particularly regarding the advisability of making elections
pursuant to Section 83(b) of the Internal Revenue Code of 1986, as
amended (the "CODE") and pursuant to the corresponding provisions, if
any, of applicable state law; or

(b) ____ has knowingly chosen not to consult such a tax advisor.

2. The undersigned hereby states that the undersigned has decided [check
as applicable]:

(a) ____ to make an election pursuant to Section 83(b) of the Code,
and is submitting to the Company, an executed form entitled
"Election Under Section 83(b) of the Internal Revenue Code
of 1986;" or

(b) ____ not to make an election pursuant to Section 83(b) of the
Code.

3. Neither the Company nor any subsidiary or representative of the
Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned's purchase of the Shares or of the
making or failure to make an election pursuant to Section 83(b) of the Code or
the corresponding provisions, if any, of applicable state law.

Date:
------------------------ _______________________________________

Date:
------------------------ _______________________________________
Spouse of

<PAGE>

EXHIBIT C
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code, to include in taxpayer's gross income for the current
taxable year, the amount of any compensation taxable to taxpayer in connection
with taxpayer's receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME OF TAXPAYER: ______________
NAME OF SPOUSE: _______________
ADDRESS: ______________________________
______________________________
IDENTIFICATION NO. OF TAXPAYER: _______________
IDENTIFICATION NO. OF SPOUSE: _______________
TAXABLE YEAR: _______________
2. The property with respect to which the election is made is described as
follows:

________ shares of the Common Stock (the "SHARES"), $0.001 par value,
of United Software, Inc., a Delaware corporation (the "COMPANY").

3. The date on which the property was transferred is: _______________

4. The property is subject to the following restrictions:

Repurchase option at the lesser of (i) cost plus 8% per annum, compounded
annually or (ii) fair market value, in favor of the Company for a period of
four (4) years from the date of purchase.

5. The fair market value at the time of transfer, determined without regard to
any restriction other than a restriction which by its terms will never
lapse, of such property is: ________

6. The amount (if any) paid for such property: ________

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.

THE UNDERSIGNED UNDERSTANDS THAT THE FOREGOING ELECTION MAY NOT BE REVOKED
EXCEPT WITH THE CONSENT OF THE COMMISSIONER.

Date:
------------------------ _______________________________________

Date:
------------------------ _______________________________________
Spouse of

<PAGE>

EXHIBIT D

NOTICE OF PROPOSED TRANSFER

Date of Notice:
-------------------------------

I, _____________________________ ("Holder"), the holder of ______________
shares of Common Stock of United Software, Inc. (the "Company"), do hereby
notify the Company of my intent to transfer and sell Company shares (the
"Offered Shares") as follows:

Number of Shares:
----------------------------
Proposed Transferee:
------------------------
Offered Price:
-------------------------------

Other Terms and Conditions of Transfer:

[DESCRIBE]

I understand and agree that the Company may exercise its Right of First
Refusal with respect to the Offered Shares in accordance with Section 1(a) of
the Restricted Stock Purchase Agreement to which this notice is an exhibit.

HOLDER:

----------------------------------------