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                                                                   EXHIBIT 10.79

                          PEERLESS SYSTEMS CORPORATION

                           TRANSACTION INCENTIVE PLAN

         This Transaction Incentive Plan (the "Plan") is hereby established by
Peerless Systems Corporation (the "Company") as of October 10, 2003 (the
"Effective Date").

         1.       Purpose. The purposes of the Plan are to incentivize certain
key executives of the Company in securing and completing a corporate
transaction, align such executives' interests in maximizing value to the
shareholders, directly tie the bonus pool to the transaction value and
compensate such executives for prior salary adjustments and periodic stock
option grants that were not made.

         2.       Definitions. The following terms as used herein shall have the
meanings set forth in this Section 2.

                  "Board" shall mean the Board of Directors of the Company.

                  "Bonus" shall mean a Participant's Target Bonus; provided,
however, that in the event the Price Per Share is less than or equal to $2.50,
Bonus shall mean 75% of such Target Bonus and in the event the Price Per Share
is greater than $4.50, Bonus shall mean 125% of such Target Bonus.

                  "Bonus Pool" shall mean 5% of the Enterprise Value.

                  "Cause" shall mean (i) willful and continued failure by the
Participant to perform his or her duties (other than any such failure resulting
from the Participant's incapacity due to physical or mental illness or
disability), (ii) willful commission of an act of fraud or dishonesty resulting
in economic or financial injury to the Company, (iii) conviction of, or entry by
the Participant of a guilty or no contest plea to, the commission of a felony or
a crime involving moral turpitude, (iv) a willful breach by the Participant of
his or her fiduciary duty to the Company which results in economic or other
injury to the Company, or (v) willful and material breach of the Participant's
confidentiality and non-solicitation covenants. The Company shall provide
written notice to the Participant of its determination that Cause exists and
give the Participant an opportunity to cure such Cause and to have the matter
heard by the Company's Board.

                  "Change in Control" shall mean: (i) the acquisition by any
person, entity or group (other than the Company, its subsidiaries or any
employee benefit plan of the Company) of fifty percent (50%) or more of the
combined voting power of the Company's then outstanding securities, (ii) a
change, during any period of two consecutive years, in a majority or more of the

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Board, if the new members have not been approved by at least two-thirds of the
incumbent Board, (iii) the consummation by the Company of a merger,
consolidation, reorganization or business combination of the Company, a sale or
other disposition of all or substantially all of the Company's assets or the
acquisition of assets or stock of another entity, in each case other than a
transaction in which the voting securities of the Company immediately prior
thereto continue to represent at least fifty percent (50%) of the combined
voting power of the outstanding voting securities of the surviving entity
immediately after such transaction, or (iv) a liquidation or dissolution of the
Company.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Common Stock" shall mean the common stock of the Company, par
value $.001 per share.

                  "Committee" shall mean the Compensation Committee of the
Board.

                  "Enterprise Value" shall mean the Transaction Value minus
$23,100,000.

                  "Excise Tax" shall mean the excise tax imposed by Section 4999
of the Code, together with any interest or penalties imposed with respect to
such excise tax.

                  "Participant" shall mean any employee of the Company who is
designated in writing as a participant in the Plan pursuant to Section 3.

                  "Percentage Interest" shall mean a grant to a Participant,
pursuant to the Plan, of a percentage of the Bonus Pool.

                  "Price Per Share" shall mean the fair market value of the per
share consideration received by the Company and/or the holders of the Common
Stock upon a Change in Control.

                  "Target Bonus" for a Participant shall mean an amount equal to
such Participant's Percentage Interest multiplied by the Bonus Pool.

                  "Transaction Value" shall mean the product of (i) the Price
Per Share and (ii) the number of shares of Common Stock outstanding immediately
prior to the Change in Control.

         3.       Participants. The Participants in the Plan shall be the
Company's Chief Participant Officer ("CEO"), Chief Financial Officer ("CFO") and
General Counsel ("GC").

         4.       Allocation of Bonus Pool. The Percentage Interests awarded to
the CEO, CFO and GC shall be as follows: 50%, 35%, and 15%, respectively.

         5.       Payment of Bonuses.

                  (a)      Subject to Sections 5(b) and 6 hereof, upon a Change
in Control, each Participant shall be entitled to receive payment of the
Participant's Bonus under the Plan, and in the sole discretion of the Committee,
such payment shall be made either at the time the Company

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or its stockholders receive payments on or following the Change in Control or in
a lump sum upon the Change in Control (with any lump sum payment to be equal to
the present value of the sum of payments to be received over time by the Company
or its stockholders, as determined by the Committee in its reasonable and good
faith discretion); provided, however, that Bonuses under the Plan shall be
payable in the same kind and form or forms as the consideration received by the
Company or its stockholders; provided, further, that to the extent that the
consideration received by the Company or its stockholders pursuant to the Change
in Control is comprised (whether in whole or in part) of consideration other
than cash and the Company is unable to provide such form of consideration to the
Participants, the Company may made payments under the Plan in the form of cash.
The Company may withhold from any amounts payable under the Plan such federal,
state, local or foreign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.

                  (b)      Except as otherwise provided below, a Participant
must be employed by the Company upon a Change in Control in order for the
Participant to be eligible to receive a Bonus and a termination of a
Participant's employment with the Company prior to such date shall result in the
forfeiture of the Participant's contingent right to receive any Bonus that would
otherwise have become payable on or after the date of the Participant's
termination of employment with the Company. In the event a Participant's
employment with the Company is terminated by reason of the Participant's death
or disability, the Participant (or his or her beneficiary, in the case of his or
her death) shall be entitled to receive 75% of such Participant's Bonus. In
addition, in the event that a Change in Control is consummated (A) with a party
with whom the Company has entered into a non-disclosure agreement while the
Participant was employed by the Company and (B) within one (1) year following
the termination of the Participant's employment by the Company without Cause,
the Participant shall be entitled to receive a Bonus payment under the Plan,
subject to no pro ration. The Committee may impose any additional conditions on
the payment of a Bonus as it reasonably determines to be appropriate. Any Bonus
or portion of a Bonus that is not payable to any Participant shall be retained
by the Company and shall not increase the Bonus or Percentage Interest of any
other Participant.

         6.       Section 280G Parachute Payment Taxes.

                  (a)      If any payment or distribution to or for the benefit
of the Participant (whether paid or payable or distributed or distributable)
pursuant to the terms of the Plan or otherwise (a "Payment") would constitute a
"parachute payment" within the meaning of Section 280G of the Code, the Payments
shall be reduced to the extent necessary so that no portion of the Payments
shall be subject to the Excise Tax, but only if, by reason of such reduction,
the net after-tax benefit to the Participant shall exceed the net after-tax
benefit to the Participant if no reduction was made.

                  (b)      All determinations required to be made under Section
6(a), including whether a reduction of any Payment is required and the
assumptions to be utilized in arriving at such determination, shall be made by
the Company's independent certified public accountants serving immediately prior
to the Change in Control, or such other nationally recognized accounting firm as
may be agreed by the Company and the Participant (the "Accounting Firm");

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provided, that the Accounting Firm's determination shall be made based upon
"substantial authority" within the meaning of Section 6662 of the Code. Any
determination by the Accounting Firm hereunder shall be binding upon the Company
and the Participant.

         7.       Administration. The Plan shall be administered by the
Committee. Subject to the provisions of the Plan, the Committee shall have full
authority and discretion to take any actions it deems necessary or advisable for
the administration of the Plan. Subject to the provisions of the Plan, the
Committee has the authority to determine, in its sole discretion, to whom, and
the time or times at which, Bonuses may be paid as well as the allocation of
interests in the Plan. The Committee has the authority to prescribe, amend and
rescind rules and regulations relating to the Plan and to make all other
determinations necessary or advisable for Plan administration. All decisions,
interpretations and other actions of the Committee shall be final, conclusive
and binding on all parties who have an interest in the Plan. No member of the
Committee shall be liable for any action or determination made by the Committee
with respect to the Plan or any Bonus paid under the Plan. All expenses and
liabilities which members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company or its successor. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or any Bonus paid
hereunder, and all members of the Committee shall be fully indemnified and held
harmless by the Company or its successor in respect of any such action,
determination or interpretation.

         8.       Certain Corporate Events. In the event that the Committee
determines that any dividend or other distribution (whether in the form of cash,
common stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of common stock or
other securities of the Company, issuance of warrant or other rights to purchase
common stock or other securities of the Company, or other similar corporate
transaction or event, affects the Common Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to a Bonus, then the Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the Bonus Pool, (ii) the Enterprise Value, (iii) the
Percentage Interests, (iv) the Transaction Value, and (v) the Price Per Share.

         9.       At-Will Employment. Nothing contained in the Plan shall (i)
confer upon any person any right to continue in the employ of the Company, (ii)
constitute any contract or agreement of employment, or (iii) interfere in any
way with the at-will nature of a Participant's employment with the Company.

         10.      No Equity Interest. Neither the Plan nor any allocation of
interests hereunder creates or conveys any equity or ownership interest in the
Company nor any rights commonly associated with such interests, including,
without limitation, the right to vote on any matters put before the stockholders
of the Company.

         11.      Funding. No provision of the Plan shall require the Company,
for purposes of satisfying any obligations under the Plan, to purchase assets or
place any assets in a trust or other

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entity to which contributions are made or otherwise to segregate any assets, nor
shall the Company maintain separate bank accounts, books, records or other
evidence of the existence of a segregated or separately maintained or
administered fund for such purposes. Participants shall have no rights under the
Plan other than as unsecured general creditors of the Company or its successor.

         12.      Term. The Plan shall be effective immediately and shall
terminate upon the payment of all Bonuses under the Plan, provided that if no
Change in Control has occurred on or before July 31, 2006, the Plan shall
terminate on January 31, 2007.

         13.      Amendment and Termination. Except as provided herein, the Plan
may be amended or terminated at any time or from time to time by the Company;
provided, however, that, subject to Section 12 hereof, no such amendment or
termination shall impair the then-existing rights of a Participant with regard
to the Plan absent (a) his consent or (b) the approval by the Participants
holding at least a majority of the total value of the Bonus Pool then held by
all Participants.

         14.      Assumption of Plan. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company, whether
pursuant to a Change in Control or otherwise, to expressly assume and agree to
perform the obligations under the Plan in the same manner and to the same extent
the Company would be required to perform if no such succession had taken place.

         15.      Choice of Law. All questions concerning the construction,
validation and interpretation of the Plan shall be governed by the law of the
State of California without regard to its conflict of laws provision.

         16.      Stockholder Approval. The Plan shall be disclosed to the
Company's stockholders at the time any Change in Control transaction is
submitted for stockholder approval.

         17.      Hypothetical Illustration. Solely for explanatory purposes,
attached to the Plan as Exhibit A is an example illustrating the Target Bonuses
upon a Change in Control.

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         IN WITNESS WHEREOF, the undersigned has executed the foregoing Plan as
of October 13, 2003.

                                         PEERLESS SYSTEMS CORPORATION

                                         By: /s/ Robert G. Barrett
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                                         Title: Chairman, Compensation Committee

                                         Date: January ___, 2004

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