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                                                                   EXHIBIT 10.26

MARUBUN/PEERLESS Supplier/Distribution Agreement


                        SUPPLIER/DISTRIBUTION AGREEMENT

THIS AGREEMENT, is concluded and made effective on this December 14, 1999 by and
between MARUBUN Corporation, a corporation organized and existing under the laws
of Japan, having principal place of business at Marubun Daiya Bldg., 8-1,
Nihonbashi Odenmacho, Chuo-ku, Toyko 103-8577, Japan (hereinafter referred to as
"MARUBUN") and PEERLESS Systems (Registered Trademark) Corporation, a Delaware
corporation having its principal place of business at 2381 Rosecrans Avenue, El
Segundo, CA 90245 USA (hereinafter referred to as "PEERLESS"), either or both of
which is referred to as a "party" or the "parties".

                                   RECITALS:

WHEREAS, MARUBUN is desirous of stable supplies of a certain product hereinafter
specified in Attachment A (hereinafter referred to as the "PRODUCTS") from
PEERLESS;

WHEREAS, MARUBUN will supply PRODUCTS and special value-added services to any
Japan-based customers that require said PRODUCTS and services;

WHEREAS, MARUBUN will be the exclusive distributor of the PRODUCT in Japan,

WHEREAS, MARUBUN is desirous of supplying PRODUCTS to MARUBUN throughout the
period hereinafter specified;

NOW, THEREFORE, the parties hereby agree as follows:

APPLICATION. This Agreement shall be applied to all the transactions with regard
to PRODUCTS between MARUBUN and PEERLESS. In case any INDIVIDUAL RELEASE as
stipulated in Paragraph 3.1 herein conflicts with this Agreement, this Agreement
shall prevail over the conflicting parts of such INDIVIDUAL RELEASE.


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MARUBUN/PEERLESS Supplier/Distribution Agreement


1.   PRODUCTS. PRODUCTS subject to this Agreement are listed in Attachment A.
     The description of PRODUCTS is as specified in an INDIVIDUAL RELEASE or
     otherwise agreed by both parties.

2.   Forecasting

     2.1. Demand Forecast
          2.1.1.    MARUBUN shall provide PEERLESS a PRODUCT demand forecast,
                    which shall cover a minimum of twelve (12) months detailed
                    by PRODUCT and month.

          2.1.2.    Forecasts shall constitute actual production estimates of
                    MARUBUN's anticipated requirements for PRODUCTS. This
                    forecast shall not contractually obligate PEERLESS to
                    supply, nor contractually obligate MARUBUN to purchase the
                    quantities of PRODUCTS set forth in such forecasts.

     2.2. Forecast Updates
          2.2.1.    By the first of every month, during the term of this
                    Agreement, MARUBUN will provide PEERLESS an updated PRODUCTS
                    demand forecast covering a rolling twelve (12) month period
                    (not to extend beyond the term of the Agreement), which will
                    be reviewed for approval by PEERLESS within ten (10) days of
                    receipt by PEERLESS.

     2.3. Forecast Acceptance
          2.3.1.    PEERLESS shall have the right to ask for clarification of
                    data or format.

3.   Order

     3.1. Individual Releases
          3.1.1.    The actual transaction for PRODUCTS between the parties
                    hereof shall be carried out by exchanging MARUBUN order-
                    release forms and PEERLESS' order acknowledgment forms both
                    in written form duly signed by respective managers with
                    execution authority (hereinafter referred to as "INDIVIDUAL
                    RELEASE"). Without limited the foregoing, to the extent the
                    provisions of a purchase order conflict with the terms and
                    provisions of this Agreement, the terms and provisions of
                    this Agreement shall control. Each INDIVIDUAL RELEASE shall
                    specify:

                    3.1.1.1.  MARUBUN's purchase order number
                    3.1.1.2.  MARUBUN's tax status -exempt or non-exempt
                    3.1.1.3.  Ship to location-complete address
                    3.1.1.4.  Bill to location -complete address
                    3.1.1.5.  Order from location-complete address
                    3.1.1.6.  Shipping instructions, including preferred carrier
                              and carrier account number
                    3.1.1.7.  The agreement number of this agreement
                    3.1.1.8.  Name of MARUBUN designated contact for procurement
                    3.1.1.9.  Product part numbers and quantities being ordered
                              (in increments of the Minimum Order Quantity)
                    3.1.1.10. Product's negotiated unit price per Attachment A
                    3.1.1.11. Requested receipt dates (in increments of the
                              Minimum Shipment/Pack Quantity)

     3.2. Quantity Discounts
          3.2.1.    MARUBUN agrees that if MARUBUN decreased the total quantity
                    of an order that has a unit price based on an agreed to
                    quantity MARUBUN will pay an applicable higher unit price
                    for previous shipments and for new shipments.

     3.3. Lead Times
          3.3.1.    PEERLESS shall publish manufacturing lead times on the fifth
                    working day of each month.

          3.3.2.    MARUBUN shall issue individual orders in accordance with the
                    published lead times.

     3.4. Minimum Order Amount
          3.4.1.    PEERLESS shall publish minimum Amount orders on the fifth
                    working day of each month.


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          3.4.2.    MARUBUN shall issue individual orders in accordance with the
                    published minimum order quantities. Failure to comply shall
                    result in an increase in the unit cost at a pre-negotiated
                    rate.

     3.5. Minimum Shipment/Pack Quantity
          3.5.1.    PEERLESS shall publish minimum shipment quantities on the
                    fifth working day of each month.

          3.5.2.    MARUBUN shall issue individual orders in accordance with the
                    published minimum shipment quantities. Failure to comply
                    shall result in an increase in the unit cost at a pre-
                    negotiated rate.

     3.6. Acceptance Criteria
          3.6.1.    PEERLESS shall acknowledge MARUBUN's order in writing within
                    10 calendar days.

          3.6.2.    PEERLESS shall reject any order that it cannot reasonably
                    deliver according to the terms of the release.

          3.6.3.    Acceptance by PEERLESS shall be deemed to have occurred if
                    PEERLESS fails to accept or reject the order within 10
                    calendar days after receiving such order.

     3.7. Order Release Rescheduling
          3.7.1.    MARUBUN may reschedule the delivery date of any undelivered
                    PRODUCTS scheduled for delivery provided: (i) the notice is
                    received by PEERLESS more than thirty (30) days prior to
                    shipment date, (ii) the rescheduled delivery date is within
                    sixty (60) days after the shipment date.

          3.7.2.    Once a shipment date is rescheduled, the new shipment date
                    is firm and cannot be rescheduled by MARUBUN.

          3.7.3.    Only one (1) reschedule for an order line item (scheduled
                    ship date) is permitted of PRODUCT schedule for shipment.
                    MARUBUN shall be liable for any additional costs or expenses
                    incurred by PEERLESS in the delivery date by MARUBUN.

     3.8. Order Release Cancellation
          3.8.1.    MARUBUN can cancel any order release for convenience prior
                    to production start. If cancellation is after production
                    start, MARUBUN agrees to pay PEERLESS 100% of the release.

          3.8.2.    If PRODUCT is rescheduled by MARUBUN and subsequently
                    cancelled, cancellation charges for such rescheduled product
                    shall be computed based upon the originally scheduled
                    delivery date.

          3.8.3.    If MARUBUN directs PEERLESS to stop work or hold shipments,
                    such action shall be deemed equivalent to a cancellation,
                    unless otherwise mutually agreed in writing.

4.   Payment

    4.1.  Price
          4.1.1.    PEERLESS shall guarantee that the unit price of PRODUCTS in
                    this Agreement is not higher than that charged to any third
                    party under the same or the similar conditions to this
                    Agreement.

          4.1.2.    Unit price shall be as agree upon by PEERLESS and MARUBUN
                    as set forth in Attachment A.

     4.2. Invoices
          4.2.1.    PEERLESS shall invoice MARUBUN at the time of shipment for
                    all PRODUCTS shipped.

     4.3. Terms
          4.3.1.    Prices and payment shall be in U.S. dollars in the U.S.


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          4.3.2.    PRODUCTS shall be shipped F.O.B. Place of Manufacture as
                    designed by PEERLESS unless otherwise agreed upon in
                    writing. The said trade terms shall be construed according
                    to the California Commercial Code.

          4.3.3.    MARUBUN shall pay the full amount of the price of the
                    PRODUCT shipped in a given month by the 15th of the
                    following month in which the invoice was submitted.


          4.3.4.    In the event MARUBUN fails to pay the amount in full within
                    such period, MARUBUN shall in addition pay PEERLESS interest
                    on the remaining unpaid balance, commencing to accrue 31
                    calendar days after the date of the invoice, at the lesser
                    1.5 percent simple interest per month or the highest rate of
                    interest permitted by law with respect to such balance.

     4.4. Taxes, Tariffs & Duties
          4.4.1.    Unless otherwise agreed between PEERLESS and MARUBUN prior
                    to the completion of manufacture of each pertinent order,
                    MARUBUN shall have sole responsibility for collecting,
                    reporting, and/or paying all income, sales, excise,
                    property, value-added tax, and other taxes imposed by any
                    governmental authority, as they pertain to MARUBUN's duties,
                    obligations, and performance hereunder. Without limiting the
                    generality of the foregoing, MARUBUN shall be responsible
                    for reporting and paying all customs, import, and remittance
                    duties or assessments arising from the import of the Product
                    into any and all countries, except for taxes based on
                    PEERLESS' net income.

5.   Customer Pricing. It is agreed between the parties that all pricing for
     Product, as defined in Attachment A herein, to third parties, as offered by
     MARUBUN, shall be reviewed and approved by PEERLESS prior to the initial
     release of each pricing plan. Once approved by PEERLESS, and attached
     hereto as Attachment B, MARUBUN may offer this pricing plan without further
     prior approval from PEERLESS.

6.   Delivery

     6.1. Delivery Date
          6.1.1.    MARUBUN shall designate the delivery date of PRODUCTS to
                    MARUBUN in each individual release.

          6.1.2.    PEERLESS shall obtain MARUBUN's consent if PEERLESS intends
                    to deliver PRODUCTS before or after the delivery date.

          6.1.3.    In case such revised delivery schedule cannot satisfy
                    MARUBUN, then MARUBUN may indicate PEERLESS a schedule
                    acceptable to MARUBUN, require air shipment or other rapid
                    transport method, or terminate this Agreement and INDIVIDUAL
                    RELEASE partly or entirely at its discretion.

          6.1.4.    MARUBUN and PEERLESS shall negotiate in good faith as to
                    indemnity for the loss, if any, due to such delay or change.

     6.2. Delay of delivery
          6.2.1.    PEERLESS shall not be liable nor in default of the Agreement
                    if PEERLESS' supply of the PRODUCTS becomes constrained or
                    if, for any reason beyond PEERLESS' reasonable control,
                    including inventory shortages, work slowdowns or stoppages,
                    PEERLESS is unable to fill the order or make delivery. In
                    such event, PEERLESS may, as PEERLESS deems reasonable,
                    reduce quantities or delay shipments to MARUBUN.

     6.3. Shipment & Packing
          6.3.1.    Unless otherwise agreed, PEERLESS shall, at its expense,
                    package and label PRODUCTS in accordance with PEERLESS'
                    customary procedures.

          6.3.2.    Unless MARUBUN designates a preferred carrier shipment shall
                    be by a carrier selected by PEERLESS.

          6.3.3.    PEERLESS shall devote reasonable efforts to ship the
                    PRODUCTS within the quoted lead-time plus 5 working days
                    after receipt and acceptance of the order.

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          6.3.4.    PEERLESS shall make all the arrangements at its expense
                    until the delivery so that PRODUCTS can be transported
                    safely to the aforementioned destination.

          6.3.5.    Title and all risks of loss or damage of PRODUCTS shall
                    transfer from PEERLESS to MARUBUN upon delivery thereof.

          6.3.6.    In case of necessity, MARUBUN may have PEERLESS transport
                    PRODUCTS to any destination other than the place that is
                    stipulated in INDIVIDUAL RELEASE, upon MARUBUN's prior
                    written notice.

     6.4. Inspection
          6.4.1.    PEERLESS shall perform inspection of PRODUCTS at their own
                    expense and responsibility under the Inspection Standard
                    agreed by both parties before the shipment of PRODUCTS.
                    PEERLESS shall deliver only the units of PRODUCTS that have
                    passed this shipping inspection.

          6.4.2.    MARUBUN shall carry out an acceptance inspection under the
                    Inspection Standard agreed by both parties within reasonable
                    period after the receipt of PRODUCTS by MARUBUN at MARUBUN's
                    own expense and responsibility.

          6.4.3.    MARUBUN shall notice PEERLESS in writing within 5-day period
                    and inform PEERLESS of the nature of such nonconformity in
                    reasonable detail.

          6.4.4.    PEERLESS may take whatever actions deemed necessary or
                    appropriate to remedy or cure such nonconformity in the
                    PRODUCTS in any reasonable manner, during the 60-day period
                    following PEERLESS' receipt of such notice.

          6.4.5.    If 60 days elapse after PEERLESS has received the notice of
                    nonconformity and PEERLESS has not remedied or cured such
                    nonconformity in the PRODUCTS, MARUBUN may return to
                    PEERLESS any PRODUCTS in such shipment that demonstrate
                    material nonconformity.

     6.5. Quality Assurance
          6.5.1.    In case MARUBUN acknowledges it necessary, MARUBUN may
                    inspect the production and quality control procedure
                    PRODUCTS, observe the shipping-inspection of PEERLESS at
                    PEERLESS's facility(s) or the ordinary ship place(s) with
                    prior written notice and guide PEERLESS with regard to such
                    production and quality con procedures and/or such shipping
                    inspection.

          6.5.2.    The inspection in the production and quality control
                    procedures of PRODUCTS, observation and guidance shall be
                    performed by MARUBUN's qualified representatives. All of the
                    expenses for such inspection, observation and guidance
                    (which include voyage expenses and hotel expenses for
                    MARUBUN's qualified representatives) shall be borne by
                    PEERLESS when aforementioned inspection, observation and
                    guidance are based upon PEERLESS' request

     6.6. Export Regulations
          6.6.1.    MARUBUN shall comply with all export laws and restrictions
                    and regulations of the Department of Commerce, or other U.S.
                    or foreign agency or authority, and shall not export, or
                    allow re-export of the PRODUCTS or any Confidential
                    Information or any direct product thereof in violation of
                    any such restrictions, laws or regulations, or to
                    Afghanistan, People's Republic of China or any Group Q, S,
                    W, Y or Z country specified in the then current Supplement
                    No. 1 to Section 770 of the U.S. Export Administration
                    Regulations (or any successor supplement or regulations).

          6.6.2.    MARUBUN shall obtain and bear all expenses relating to any
                    necessary licenses and/or exemptions with respect to the
                    export from the U.S., of all material or items deliverable
                    by PEERLESS to any location, and shall demonstrate to
                    PEERLESS compliance with all applicable laws, and
                    regulations prior to delivery thereof by PEERLESS

          6.6.3.    MARUBUN agrees to defend, indemnify, and hold harmless
                    PEERLESS from and against any claim, loss liability,
                    expense, or damage (including fines and legal fees) incurred
                    by

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                    PEERLESS with respect to any of MARUBUN's export or re-
                    export activities contrary to foregoing instructions.

7.   Warranty

     7.1. Conforming Material
          7.1.1.    PEERLESS shall warrant that PRODUCTS conform to MARUBUN's
                    specifications and free from any defects in quality,
                    material and workmanship for six (6) months from the date
                    when PRODUCTS have passed MARUBUN's acceptance inspection
                    (hereinafter referred to as "WARRANTY TERM") .

          7.1.2.    In case any defect is found in PRODUCTS within WARRANTY
                    TERM MARUBUN shall notify PEERLESS thereof and may adopt
                    either of the following measures as determined by the lowest
                    cost to PEERLESS, and then, PEERLESS shall accept MARUBUN's
                    decision and settle the matter at its cost immediately.

                    7.1.2.1.  to repair the defective unit on MARUBUN's site and
                              demand the payment of the cost thereof from
                              PEERLESS, or

                    7.1.2.2.  to return such defective unit to PEERLESS and
                              demand replacement from PEERLESS

     7.2. Nonconforming Material
          7.2.1.    Product damaged in transit shall be returned to PEERLESS
                    within 30 days after receipt, accompanied by such
                    documentation as may reasonably be required to assert any
                    claims that may lie against the carrier causing such damage.

          7.2.2.    In case MARUBUN finds any non-qualified units of PRODUCTS
                    that does not conform to the specification specified by
                    MARUBUN and/or conditions under this Agreement and /or
                    INDIVIDUAL RELEASE through acceptance-inspection, MARUBUN
                    shall notify PEERLESS thereof in writing and MARUBUN may
                    adopt either of the follow measures at MARUBUN's discretion:


                    7.2.2.1.  to repair PRODUCTS by MARUBUN or PEERLESS at the
                              expense of PEERLESS

                    7.2.2.2.  to refuse the receipt of such non-qualified unit
                              and demand replacement therefor without delay
                              expenses occasioned thereby such as sending back
                              of such non-qualified unit and transport of
                              substitute shipment be borne by PEERLESS

                    7.2.2.3.  to reduce the price of non-qualified unit of
                              PRODUCTS from the amount price of PRODUCTS at
                              subsequent INDIVIDUAL RELEASE or to demand the
                              payment of such price

                    7.2.2.4.  to terminate this Agreement and/or INDIVIDUAL
                              RELEASE partly or in its entirety

          7.2.3.    In case the quantity of PRODUCTS delivered by PEERLESS has
                    not conformed to agreed quantity in INDIVIDUAL RELEASE,
                    MARUBUN shall notify PEERLESS thereof and may demand
                    PEERLESS, to take back, supply the balance agreed quantity
                    within the period designated by MARUBUN, or adjust at
                    subsequent INDIVIDUAL RELEASES at PEERLESS' expense unless
                    otherwise agreed upon

          7.2.4.    In case MARUBUN has incurred any damage because of such non-
                    qualified units of PRODUCTS and/or shortage, MARUBUN and
                    PEERLESS shall negotiate in good faith as to indemnity for
                    the loss.

     7.3. Latent Defects
          7.3.1.    Notwithstanding after WARRANTY TERM, in case any serious
                    latent defect(s) or the same or very similar defects occur
                    frequently or continuously on the same spot or area of
                    PRODUCTS and MARUBUN recognizes such defects fall in the
                    category of so called "EPIDEMIC FAILURE" rationally.

     7.4. Patent Defects

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          7.4.1.    A patent defect is defined as a defect that is discernable
                    upon inspection of the product in the exercise of ordinary
                    care and prudence.

          7.4.2.    MARUBUN is deemed to have accepted nonconforming material if
                    after 45 days fails to (1) perform an incoming inspection of
                    the material, (2) notify the seller of the nonconformance
                    and (3) make an effective rejection of the material.

     7.5. Exclusion of Warranties
          7.5.1.    EXCEPT AS SPECIFICALLY PROVIDED HEREIN, PEERLESS DISCLAIMS
                    ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING THE IMPLIED
                    WARRANTIES OR MERCHANTABILITY, TITLE AND FITNESS FOR A
                    PARTICULAR PURPOSE AND AGAINST INFRINGEMENT. Without
                    limiting the foregoing, PEERLESS does not warrant that any
                    of the PRODUCTS that it provides will be error free or
                    operate without interruption. PEERLESS does not make, and
                    hereby expressly disclaims, any representation or warranty
                    to any End User or other third party. MARUBUN shall not have
                    the right to make or pass though, and shall take all
                    measures necessary to insure that neither it nor any of its
                    agents or employees attempt to make or pass through, any
                    such representation or warranty on behalf of PEERLESS.

8.   Product Liability Indemnification
     8.1. Damages
          8.1.1.    PEERLESS agrees, at its expense, to protect, indemnify and
                    hold MARUBUN or its customers harmless from and against all
                    liability resulting from any and all claims by third parties
                    for loss, damage or injury (including death) allegedly
                    caused by any PRODUCTS supplied by PEERLESS under this
                    Agreement, by reason of any defect in design, material,
                    workmanship or warning, to the extent not caused by misuse,
                    abuse or other fault directly attributable to MARUBUN or its
                    customers and provided that PEERLESS is notified by MARUBUN
                    of all such claims within a reasonable period of time
                    following MARUBUN's initial notification of such claims, and
                    provided that PEERLESS is given full control over any
                    negotiation, arbitration, or litigation concerning such
                    claims. The provisions of his Section 8 shall survive the
                    term and any termination of this Agreement.

          8.1.2.    Except as for payments pursuant to PAYMENT above, in no
                    event or circumstances shall each party's total liability
                    under this Agreement to the other party for damages however
                    denominated, attorneys fees and costs from a judgment
                    arising out of any and all actions and proceedings brought
                    by either party against the other party for any cause of
                    action sounding in tort, contract or otherwise, exceed the
                    lesser of the amounts actually paid by MARUBUN to PEERLESS
                    during the twelve months prior to the event sued upon or
                    five hundred thousand dollars ($500,000.00).

          8.1.3.    IN NO EVENT SHALL PEERLESS BE LIABLE FOR ANY SPECIAL,
                    INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING,
                    WITHOUT LIMITATION DAMAGES FOR LOSS OF USE, LOST PROFITS OR
                    LOSS OF DATA OR INFORMATION OF ANY KIND, ARISING OUT OF OR
                    IN CONNECTION WITH THIS AGREEMENT, WHETHER OR NOT PEERLESS
                    HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE.

9.   Intellectual Property

     9.1. Rights
          9.1.1.    Execution of this Agreement does not signify that MARUBUN is
                    given any right with regard to Intellectual Property and/or
                    technical information concerning PRODUCTS as patents,
                    registered designs, trade mark, trade dress, copy right or
                    know-how which are possessed or will be possessed by
                    PEERLESS. It is further agreed that all such Intellectual
                    Property and/or technical information concerning PRODUCTS as
                    patents, registered designs, trade mark, trade dress, copy
                    right or know-how is the sole property of PEERLESS and
                    MARUBUN shall claim no such rights in any form or structure
                    now or in the future.

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          9.1.2.    MARUBUN shall have the right at no additional charge to use
                    and/or reproduce PEERLESS's applicable Non-Confidential
                    literature such as operating and maintenance manuals,
                    technical publication, prints, drawing, training manuals and
                    other similar supporting documentation and sales literature.

          9.1.3.    MARUBUN agrees not to decompile, disassemble or otherwise
                    attempt to reverse engineer any PRODUCTS provided in
                    firmware form.



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     9.2. Indemnification

          9.2.1.    PEERLESS shall indemnify MARUBUN and hold it harmless from
                    any liabilities to any third parties, in the United States
                    and the several countries set out in Attachment A attached
                    hereto, as finally awarded by a court of competent
                    jurisdiction, arising out of, and any costs and expenses of
                    defending or settling, any claim that any Current Release,
                    Update Release or any part thereof infringes any copyright,
                    patent or trade secret existing or issued as of the date of
                    this Agreement. MARUBUN shall notify PEERLESS in writing of
                    any such claim promptly after MARUBUN first learns thereof,
                    shall tender sole control of the defense and settlement of
                    such claim to PEERLESS, and shall provide PEERLESS with such
                    reasonable assistance and cooperation as PEERLESS may
                    reasonably request from time to time in connection with such
                    defense. In the event of any such claim, PEERLESS, at its
                    sole discretion may replace at its expense any allegedly
                    infringing PEERLESS Material with non-infringing software or
                    other material of equivalent functionality, and MARUBUN
                    shall thereupon cease all use or distribution of such
                    PEERLESS material and return all copies thereof to PEERLESS.
                    None of PEERLESS' obligations under this Section 9 shall
                    apply in connection with any claim of infringement if
                    MARUBUN has modified any PEERLESS Material or combined any
                    such material with or into any other programs, data, device,
                    component or applications or breached this Agreement and
                    such infringement would not have occurred without such
                    modifications, combination or breach. Under no circumstances
                    will PEERLESS have an obligation to indemnify MARUBUN from
                    any claims relating to any technology provided by third
                    parties for which MARUBUN enters into a separate agreement
                    with such third party for such technology; MARUBUN'S sole
                    indemnity rights, if any, relating to such third
                    party technology will be governed under its separate
                    agreement with the third party. PEERLESS will not be
                    required to defend and indemnify MARUBUN with respect to
                    losses and expense finally adjudged to have been caused by
                    MARUBUN's negligence, gross negligence or willful
                    misconduct.

10.  Termination

     10.1. Terminate

           10.1.1.  Either party may terminate this Agreement at no charge upon
                    sixty (60) days written notice if:

                  10.1.1.1. A party breaches any provision of the Agreement and
                            upon written notification of said breach and failed
                            to cure the breach within 30 days

                  10.1.1.2. Any terms of the Agreement violates any law or
                            regulation of either parties nation or governmental
                            agency

                  10.1.1.3. Upon assignment of rights under this Agreement to
                            any third party without the express and written
                            consent of the non-assigning party

           10.1.2.  All outstanding orders shall be deemed canceled upon the
                    termination of the Agreement. The terms in Paragraph 4.3
                    herein, remain applicable as set forth in this Agreement.
                    All monies owed shall become immediately due and payable.

           10.1.3.  The following Sections of this Agreement shall survive and
                    remain in effect upon the termination of this Agreement.

11.  Confidentiality

     11.1. Disclosure

           11.1.1.  Both PEERLESS and MARUBUN shall not disclose to any third
                    party any documentation, drawings, technical information
                    and/or managerial information of disclosing party whether
                    it's written or not which receiving party has come to know
                    through this Agreement and/or INDIVIDUAL RELEASE
                    (hereinafter referred to as "CONFIDENTIAL INFORMATION").
                    However, MARUBUN may disclose CONFIDENTIAL INFORMATION to a
                    third party for the purpose of distribution, sale and
                    service of PRODUCTS as necessary.

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           11.1.2.  Receiving party shall limit the disclosure of CONFIDENTIAL
                    INFORMATION to a minimum number of employees who need to
                    know to fulfill their functions. Receiving party shall
                    alert such employees not to violate aforementioned secrecy
                    observance and shall take all responsibility whatever may
                    happen when said receiving party discloses CONFIDENTIAL
                    INFORMATION to them.

           11.1.3.  When this Agreement is terminated, or when requested by
                    disclosing party, receiving party shall cease to use and
                    return all the documents concerning CONFIDENTIAL
                    INFORMATION as soon as possible to said disclosing party.

           11.1.4.  CONFIDENTIAL INFORMATION shall be kept secret strictly not
                    only during Validity Term of this Agreement but also even
                    after the expiration or the termination thereof regardless
                    of other Articles herein.

           11.1.5.  Disclosure by laws, regulations or governmental orders
                    shall not be deemed to constitute a violation hereof.

           11.1.6.  The obligation herein shall not apply to any information
                    which:

                   11.1.6.1. is already in the public domain or becomes
                             available to the public through no breach of the
                             Agreement by receiving party.

                   11.1.6.2. Was the possession of receiving party prior to
                             receipt from disclosing party.

                   11.1.6.3. Is received by receiving party independently from a
                             third party free to disclose such information to
                             said receiving party.

                   11.1.6.4. Is subsequently independently developed by
                             receiving party.
           11.1.7.  Receiving party shall have the written burden of proving
                    the existence or availability of any of the exceptions set
                    out in this Article.

12.  Arbitration

     12.1. Binding Arbitration

           12.1.1.  Unless otherwise provided in this Agreement, any
                    controversy or claim, whether based on tort, contract or
                    legal theory (including, but not limited to, a claim of
                    fraud or misrepresentation) arising out of or related to
                    this Agreement shall be resolved by arbitration pursuant to
                    this Paragraph and the then current rules and supervision
                    of the American Arbitration Association as modified herein,
                    The duty to arbitrate shall extend to any officer,
                    employee, agent or subsidiary making or defending a claim
                    that would otherwise be arbitrable.

           12.1.2.  The arbitration shall be held in Los Angeles, CA before a
                    single arbitrator who is knowledgeable in the embedded
                    software industry. The arbitrator must be selected within
                    14 days after the claim for arbitration is filed. The
                    arbitrator must hold a preliminary hearing within 14 days
                    after he or she is selected. Discovery must be conducted
                    and concluded not later than 90 days after the preliminary
                    hearing concludes. The arbitration hearing must commence no
                    later than 30 days after discovery concludes and must
                    conclude not later than 21 days thereafter. The arbitration
                    hearing shall run from 8:00 A.M. to 12:00 P.M. and 1:30
                    P.M. to 4:30 P.M. each day with one morning beak and one
                    afternoon break not to exceed 15 minutes each and, except
                    for Sundays and holidays, shall run day-to-day until
                    concluded. The arbitrator shall render his or her decision
                    within 10 days after the conclusion of the arbitration
                    proceeding.

           12.1.3.  The parties must use reasonable best efforts to meet the
                    foregoing time schedule, and the arbitrator shall have the
                    right to impose appropriate sanctions against any party who
                    fails to comply with the agreed upon time schedule. The
                    arbitrator shall not have the poser to unilaterally modify
                    the foregoing time schedule. The parties may stipulate in
                    writing to modify the agreed upon time schedule subject to
                    the arbitrator's approval.

           12.1.4.  The arbitrator's decision and award shall be a final and
                    binding judgment and may be entered in any court having
                    jurisdiction. The arbitrator shall not have the power to
                    award

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                    punitive or exemplary damages. Issues of arbitrability
                    shall be determined in accordance with the federal
                    substantive and procedural laws relating to arbitration:
                    all other aspects shall be interpreted in accordance with
                    the laws of the State of California. California Rules of
                    Evidence shall apply. The arbitrator shall be required to
                    conform to California case and statutory law. Either party
                    appeal the arbitrator's decision on any legal
                    ground(s).

           12.1.5.  The prevailing party shall be entitled to an award of its
                    attorneys fees associated with the arbitration and any
                    other costs and expenses of the arbitration shall be borne
                    as provided by the rules of the American Arbitration
                    Association.

           12.1.6.  If court proceedings to stay litigation or compel
                    arbitration are necessary, the party who unsuccessfully
                    opposes such proceedings must pay all associated costs,
                    expenses and attorneys fees reasonably incurred by the
                    other party. If any portion of this Section 12 is held to
                    be unenforceable, it shall be severed and shall not affect
                    either the duty to arbitrate or any other part of the
                    Paragraph.

           12.1.7.  The following disputes shall not be subject to arbitration:
                    (a) any dispute involving infringement of and title to
                    PEERLESS' intellectual property; b) any dispute involving
                    immediate termination of this Agreement; c) any dispute
                    involving enforcement of the confidentiality provisions set
                    forth in this Agreement; d) any dispute in which any party
                    seeks an award of compensatory damages exceeding
                    $500,000.00; e) any judicial proceeding in equity seeking
                    temporary retraining orders, preliminary injunctions or
                    other interlocutory relief; and f) any dispute involving
                    the provisions in Section 8 herein.

            12.1.8. Equitable Relief. It is understood and agreed that one
                    party's remedies at law for a breach by the other party of
                    its obligations under may be inadequate. Notwithstanding
                    any other provisions of this Agreement, the parties shall,
                    in the event of any such breach, be entitled to equitable
                    relief by a court of law (including without limitation
                    injunctive relief and specific performance) without a
                    requirement to post a bond, in addition to all other
                    remedies provided under this Agreement or available to the
                    parties at law or otherwise.

13.  Miscellaneous

     13.1. Sub-Contracts

          13.1.1.   The work may be performed, in whole or in part, by third
                    parties selected by PEERLESS.

          13.1.2.   In the event of an accident, a strike or the like that may
                    cause any hindrance to supply PRODUCTS to MARUBUN happens
                    relating such subcontract, PEERLESS shall inform thereof to
                    MARUBUN immediately and comply with MARUBUN's instructions.

     13.2. Governing Law

          13.2.1.   This Agreement shall be construed and enforced in accordance
                    with the laws of the United States of America and the State
                    of California without giving effect to its conflicts of laws
                    principles. Any action or proceeding brought by MARUBUN or
                    PEERLESS against the other arising out of or related to this
                    Agreement shall be brought in a state or federal court of
                    competent jurisdiction located in the County of Los Angeles,
                    State of California, and MARUBUN hereby submits knowingly to
                    the in personam jurisdiction of such courts for purposes of
                    any such action or proceeding. The parties agree that the
                    International Regimes, including but not limited to the
                    United Nations Convention On Contracts For the International
                    Sale of Goods, and Supernational Regimes, including but not
                    limited to NAFTA, shall not apply to this Agreement or the
                    Addenda thereto.

     13.3. Transfer

          13.3.1.   Neither party shall transfer or give as a security the
                    rights or obligations stemming from this Agreement or
                    position herein partly or entirely to any third party(s)
                    without obtaining the other party's consent in writing in
                    advance.

     13.4 Force Majeure

          13.4.1.   Neither party hereto shall be liable to the other party for
                    failure to perform its obligations hereunder due to the
                    occurrence of any event beyond the reasonable control of
                    such party and affecting its performance such as including,
                    without limitation, governmental

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                    regulations or orders, outbreak of a state of emergency,
                    acts of God, war, hostilities, civil commotion, riots,
                    epidemics, fire, strikes, lockout or any other similar cause
                    or causes (hereinafter referred to as "FORCE MAJEURE").

          13.4.2.   The party so affected shall make its best efforts to avoid
                    or remove such causes of non-fulfillment and shall continue
                    fulfillment hereunder without delay whenever such causes are
                    removed.

     13.5. Trademarks

          13.5.1.   Nothing in this Agreement grants either party any rights to
                    use the other party's trademarks or trade names, directly or
                    indirectly, in connection with any product, prototype,
                    service, promotion, publication or publicity without prior
                    written approval of the other party of trademark owner.

     13.6. Offsets

          13.6.1.   In case either PEERLESS or MARUBUN has credit and debt at
                    the same time to the other party. Such credit may be offset
                    against the debt with written notice if possible pursuant to
                    the law.

     13.7. Validity Term

          13.7.1.   Validity Term of this Agreement shall be on (1) year from
                    and including the date of which the Agreement becomes
                    effective.

          13.7.2.   Unless either party proposes a non-extension of this
                    Agreement to the other party with a prior written notice at
                    lease three (3) months before the expiration date, this
                    Agreement shall be extended for another one (1) year
                    automatically. Any further extension of this Agreement shall
                    be made upon the said procedure.

          13.7.3.   The provision of Warranty as stipulated in Section 7 herein,
                    the provision of Indemnity as stipulated in Paragraph 9.2
                    herein, a the provision of Validity Term as stipulated in
                    this Article shall survive the expiration or termination of
                    this Agreement and the provision of Intellectual Property as
                    stipulated in Paragraph 9.1 herein, shall survive the
                    expiration the termination of this Agreement for its own
                    period and the provision of Secrecy as stipulated in Article
                    shall survive expiration or termination of this Agreement
                    for 5 years from the aforementioned expiration termination.

          13.7.4.   Even when this Agreement expires, any INDIVIDUAL RELEASE, of
                    which fulfillment date is beyond expiration date shall
                    survive this Agreement until the date of its final
                    fulfillment unless otherwise agreed by the parties in
                    writing.

     13.8. Specified Change

          13.8.1.   MARUBUN may request engineering-change in PRODUCTS and/or
                    specification-change thereof which need(s) modification on
                    design of PRODUCTS. PEERLESS shall make its best effort to
                    meet said request. Both parties shall in good faith
                    negotiate the cost, delivery date, etc., whichever may occur
                    therefrom.

          13.8.2.   PEERLESS shall obtain prior written approval from MARUBUN
                    before making any change in design, material manufacture
                    process of PRODUCTS or any other matters that may affect the
                    specification, quality level and/or reliability of PRODUCTS.

     13.9. Offer of Data

          13.9.1.   PEERLESS, in case requested MARUBUN, shall furnish MARUBUN
                    with specification. Drawings and other technical data or
                    PRODUCTS in order to facilitate the use and application of
                    PRODUCTS by MARUBUN at the expense of PEERLESS, PEERLESS
                    agrees to advise MARUBUN of any updated information relative
                    to PRODUCTS with timely notifications in writing. Any such
                    date furnished by PEERLESS shall be subject to a
                    Confidential Disclosure Agreement and a site license
                    negotiated between the parties.

     13.10.         Notices

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MARUBUN/PEERLESS Supplier/Distribution Agreement


          13.10.1.  Any notice required or permitted to be given under this
                    Agreement shall be given in writing (including facsimile and
                    telephone) and shall be addressed to the nominated address
                    shown below.

     13.11.         Modification

          13.11.1.  A writing duly signed by the authorized representatives of
                    both parties can only change this Agreement.

     13.12.         Language

          13.12.1.  All the communications, documents and/or any records for
                    mutual understanding with regard to the Agreement and
                    INDIVIDUAL RELEASE shall be provided in English.

     13.13.         Duties

          13.13.1.  Either party shall not assume any role other than stipulated
                    herein and consequently is not vested with rights and/or
                    duties stemming from what is not stipulated herein.

     13.14.         Entirety

          13.14.1.  This Agreement and the Addenda hereto as well as the Mutual
                    Confidential Disclosure Agreement between the PEERLESS and
                    MARUBUN, dated December 14, 1999, as amended, constitute
                    the exclusive statement of the Agreement between PEERLESS
                    and MARUBUN concerning the subject matter hereof. All other
                    prior agreements, arrangements or understandings, oral or
                    written, relating to the subject matter hereto are merged
                    into and are superseded by the terms of this Agreement.
                    Without limiting the foregoing, the pre-printed portions of
                    a purchase order or any other document submitted by MARUBUN
                    in connection with an order shall not add to or vary the
                    terms of this Agreement.


MARUBUN CORPORATION                     PEERLESS SYSTEMS CORPORATION

By: /s/ Takanori Oshima                 By: /s/ Cary A. Kimmel
   -------------------------               -------------------------
   (Authorized Signature)                  (Authorized Signature)
Name:  Takanori Oshima                  Name: Cary A. Kimmel
Title: Senior Vice President            Title: Director of Business Development
Components & Materials Group
Date: December 14, 1999                 Date:  December 14, 1999


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<PAGE>

                                 ATTACHMENT A

                            Detailed Pricing Terms

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                                 ATTACHMENT B

                            Detailed Pricing Terms

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