Document:

exv10w2

 

Exhibit 10.2

SEPARATION AND RELEASE AGREEMENT

     THIS SEPARATION AND RELEASE AGREEMENT (“Agreement”) is made this 4th day of March, 2005,
effective as of the close of business March 31, 2005 (“Effective Date”), by and between Ameritrade
Holding Corporation, and its successors and assigns (collectively, the “Company”) and Michael R.
Feigeles, his heirs, representatives, affiliates, successors and assigns (collectively the
“Executive”).

WITNESSETH:

     WHEREAS, Executive and the Company are parties to an Employment Agreement dated February 28,
2003, as amended by a certain letter agreement dated February 28, 2005 (collectively, the
“Employment Agreement”) pursuant to which Executive is employed by the Company; and

     WHEREAS, the Term of Executive’s employment under the Employment Agreement ends on March 31,
2005 “Termination Date”; and

     WHEREAS, as a condition precedent to Executive receiving certain of the severance benefits,
and subject to Executive’s continued employment through the Termination Date, the parties have
agreed to execute this Agreement.

     NOW, THEREFORE, in consideration of the covenants undertaken in this Agreement, including the
release contained herein, the parties agree as follows:

	1.  	Severance Payments In full and complete satisfaction of Executive’s claims under the
Employment Agreement, including, but not limited to, salary, vacation, bonus, stock options,
severance, change in control payments, incentive pay, sick pay, benefits, holiday, out
placement services and other compensation of any kind, and as consideration for the promises
contained in this Agreement, including but not limited to the release set forth in paragraph 6
herein, and subject to Executive’s compliance with the terms of this Agreement and the
Employment Agreement, the Company agrees to provide Executive with the following payments:

a. The Company shall pay Executive a sum equal to 10,000.00 Dollars, payable on, or as
soon as practicable after, March 31, 2005; and

b. If the total amount of Non-Competition Payments paid to the Executive as described in
Section 4 below, do not exceed the following MIP computation (“Computed Amount”), then
Executive shall be paid the difference up to, but not exceeding the Computed Amount.
Computed Amount shall be determined as follows: 50% of the MIP award the Executive would
have received for FY 05 had he been employed with the Company on October 31, 2005, reduced
by $155,833.34. Such payment, if due, will be made to Executive on or as soon as

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practicable after the date the payments are made to participants in the MIP for FY05.

Except as provided herein and in Section 4 below, Executive will be entitled to no other or
further compensation, remuneration, payments or benefits of any kind, including but not
limited to MIP, paid time off hours, Company contributions to its 401(k) profit sharing
plan, insurances and other salary continuation benefits. However, nothing in this
Agreement is intended to divest Executive of any vested rights, if any, in the Company’s
401(k) Profit Sharing plan.

	2.  	Assignment of Claims. In consideration of the payments and benefits to Executive in
Section 1 herein, and Executive’s execution of this Agreement, and as an express condition of
this Agreement, Executive hereby represents and warrants that, up through the date on which
this Agreement is executed by the parties, he has not assigned or transferred, and he will not
after such date assign or transfer, (a) any claims against the Company, (b) any rights that he
may have had to assert compulsory or permissive counterclaims against the Company, or (c) any
rights that he has or may have to aforesaid payments and benefits.
	 
	3.  	Return of Property. Executive hereby agrees that, within ten (10) calendar days
after the Effective Date, he shall turn over to the Company all company equipment and
property, including but not limited, to computers, printers, and related equipment, cell
phones, pagers, Company Credit cards, and keys, as well as originals and copies of notes,
correspondence, memoranda, records, documents, computer disks and files, and all other
information or products, no matter how produced or reproduced, pertaining to the business of
the Company, its subsidiaries, affiliates, officers, and shareholders (“Company Materials”),
it being hereby acknowledged that all of said items are the sole and exclusive property of the
Company. Executive’s signature on this Agreement shall serve as a representation and warranty
that Executive has not retained any originals or copies of Company Materials.
	 
	4.  	Non-Compete and Confidentiality. As an inducement for the Company to enter into this
Agreement and in furtherance of the terms of the Employment Agreement, Executive expressly
agrees that he provides unique and specialized services, skills and expertise to the Company,
and that the Company hired him because of the unique and specialized services, skills and
expertise he is able to provide. Executive further expressly agrees that he has been given
access to Confidential Information and trade secrets of the Company, its affiliates, and
subsidiaries (collectively “Ameritrade”). Accordingly, Executive acknowledges and reaffirms
his obligations under the terms of Section 5 of the Employment Agreement. In addition, the
Company elects to require the Executive to comply with the terms of the Non-competition,
Non-Solicitation and Non-hire provisions set forth in Section 4 of the Employment Agreement
commencing on the Effective Date and for a six (6) month period thereafter (“Restricted
Period”) and will pay to the Executive the Non-Competition Payments for the Restricted Period
as described therein.

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	5.  	Remedies for Breach. The parties agree that it will be very difficult to determine
damages caused to the Company should there be a breach by Executive of the provisions of this
Agreement, including, but not limited to, Section 4. Therefore, in furtherance of the
provisions of Section 9 of the Employment Agreement and any other rights or remedies afforded
to the Company and not as a penalty, the parties agree that if a breach of any of the
provisions of this Agreement or the Employment Agreement occurs (Forfeiture Event), the
Company has the right to require that the Executive will immediately forfeit all payments and
benefits paid or due to be paid to the Executive that result from the cessation of
employment, including, but not limited to, the Non-Competition Payments (“Forfeited Amount”).

Payment to the Company of any Forfeited Amount will be made by any or all of the following
methods, at the sole discretion of the CEO of the Company to recoup the Forfeited Amount:

	 	i.  	The Company may subtract any Forfeited Amount from any payment
payable to the Executive by the Company or any related entity after the Forfeiture
Event, and/or

	 	ii.  	The Executive will pay to the Company any Forfeited Amount which is
not repaid to the Company pursuant to paragraph i. above within 30 days of the
Forfeiture Event.

For purposes of clarity, the parties also agree that rights afforded to Executive under the
terms of Section 9 of the Employment Agreement remain in full force and effect.

	6.  	Release. Except for claims based upon a breach of this Agreement or the Option
Agreement (see Section 16 below), in consideration of the promises contained in this Agreement
and the payments set forth herein, Executive hereby releases and forever discharges the
Company, its subsidiaries and affiliates, and its officers, directors, shareholders,
representatives, agents, predecessors, Executives, successors and assigns (hereinafter
collectively and individually the “Company Releasees”) from and concerning any and all
liabilities, rights, claims, demands, debts, dues, sums of money, accounts, attorney’s fees,
complaints, judgments, executions, actions and causes of action of any nature whatsoever, from
the beginning of the world through the Effective Date, whether known or unknown, contingent or
noncontingent, that Executive may now or in the future have against Company Releasees,
including but not limited to any damages, harms, personal injuries or any rights, claims,
complaints or actions or causes of action which were or could have been asserted by Executive
arising out of or related to his work for the Company or his separation therefrom, or not
being hired by Ameritrade, or any other relationship with Company Releasees, or under any
local, state, or federal human rights, civil rights, labor, employment, contract, tort or
other laws including, but not limited to, those dealing with employment discrimination,
including Title

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VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the
Executive Retirement Income Security Act of 1974, as amended (“ERISA”) and the Worker
Adjustment and Retraining Notification Act of 1988. This release is not intended to waive
any rights or claims that may arise after the date Executive signs this Agreement.
Executive agrees to hold Company harmless from any costs or expenses, including without
limitation, attorney fees, if sued by Executive or Executive’s assignee, with respect to
any of the claims released in this section.

	7.  	Proceedings. Executive represents that he has not sued or commenced any proceeding,
and except for claims based upon a breach of this Agreement, hereby covenants and agrees not
to sue, file any grievances or arbitration or commence any other proceeding, administrative or
judicial, against the Company or the Company Releasees, in any court of law or equity, or
before any administrative agency, with respect to any matter arising from or relating to
Executive’s employment with the Company, his separation thereof, or otherwise.
	 
	8.  	Non-Disparagement/Non-Disclosure. Executive shall not disparage or make negative,
derogatory or defamatory statements about the Company, its business activities, or any of its
directors, officers, Executives, affiliates, agents, or representatives, or any of them, to
the press, any person or business entity. The Company agrees that it shall not disparage or
make negative, derogatory statements about the Executive. Disparagement shall in no event
include statements of testimony provided pursuant to or in connection with legal regulatory
matters. Executive agrees not to disclose the contents of this Agreement, unless required by
law. This restriction will not apply to disclosure by Executive to members of immediate
family or to legal, tax or financial advisors; provided that they are advised of this
provision and Executive uses his best efforts to protect against any further disclosure by
these persons.
	 
	9.  	Adequate Consideration. Executive expressly acknowledges that he has received
adequate consideration in exchange for the release given in this Agreement, and the other
obligations contained herein, and covenants that he will not in any way seek to challenge this
Agreement on the grounds of lack of consideration.
	 
	10.  	Governing Law. This Agreement shall be construed in accordance with the laws of the
State of Nebraska, without regard to the conflict of law provisions of any state or
jurisdiction, to the extent not preempted by ERISA.
	 
	11.  	Arbitration. Any controversy, claim or dispute arising out of or relating to this
Agreement or breach thereof will be settled by final, binding and nonappealable arbitration
(excluding, however, any dispute, controversy or claim arising out of Sections 4 or 5 of the
Employment Agreement but only to the extent not specifically made subject to arbitration by
Section 9 of said Employment Agreement) in Jersey City, New Jersey by three arbitrators.
Except as otherwise expressly provided in this Section 11, the arbitration shall be conducted
in

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accordance with the rules of the American Arbitration Association (the
“Association”) then in effect. The Company shall appoint one of the arbitrators.
The Executive shall also appoint one of the arbitrators. And, finally, the first two
arbitrators shall appoint the third. If the first two arbitrators cannot agree on the
third arbitrator within 30 days of the appointment of the second arbitrator, then the
Association shall appoint the third. All expenses of such arbitration, including fees and
expenses of counsel, shall be borne by the Company unless the arbitrators determine that
the Executive’s position was overall frivolous or otherwise taken in bad faith, in which
case the arbitrators may determine that the Executive shall bear his own legal fees.
Nothing in this paragraph shall be construed to limit the Company’s ability to obtain
equitable relief with respect to any matter or controversy arising from an alleged actual
or threatened breach of paragraph 4 of this Agreement without first being required to
arbitrate such matter or controversy.

	12.  	Counterparts. This Agreement may be signed in multiple counterparts, each of which
shall be deemed to be an original for all purposes.

	13.  	Acknowledgement. Executive acknowledges that he has carefully read and fully
understands the terms and provisions of this Agreement; that he is legally competent, and
capable of signing this Agreement; that he has been cautioned to consult with an attorney
prior to signing this Agreement; and that sufficient opportunity had been made available to
him to consult with an attorney to consider the terms of this Agreement and that he has
availed himself of that right. Executive further acknowledges that he has not relied upon any
oral representation or statement by the Company or its representation or statement by the
Company or its representatives, which is not set forth in this Agreement. Executive shall
have the right to revoke this Agreement at any time up to seven (7) days following his
execution of the Agreement. This Agreement shall not be enforceable or effective until after
the seven-day revocation period has expired.

	14.  	Cooperation. Executive agrees to cooperate fully with Company in any matters that
may have or may result in a proceeding or legal claim against the Company, and of which
Executive may have knowledge as a result of his employment. This requires Executive, without
limitation to (1) make himself available upon reasonable request to provide information and
assistance to the Company on such matters without additional compensation, except for
reimbursement of your out-of-pocket costs, and (2) notify the Company promptly or any requests
to him for information related to any pending or potential legal claim or litigation involving
the Company, reviewing any such request with a designated representative of the Company prior
to disclosing any such information, and permitting the representative of the Company to be
present during any communication of such information. Notwithstanding anything to the
contrary, the Company’s obligation to reimburse Executive for costs will not apply to any
proceeding in which Executive or his interests are, in whole or in part, as determined by the
Company, adverse to those of the Company, or if such proceeding involves, in whole or in part,
Executive’s breach or alleged breach of his obligations under this Agreement

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or the violation of any obligation which Executive owed to the Company during the course of
or in connection with employment by the Company.

	15.  	Entire Agreement. This Agreement, the Employment Agreement through the Effective
Date and the surviving provisions of the Employment Agreement after the Effective Date
constitute the entire understanding of the parties, supersedes all prior oral or written
agreements, and cannot be modified in nor any of its conditions waived, except by a writing
signed by both parties. No agreements or representations, oral or otherwise, expressed or
implied, with respect to the subject matter hereof have been made by any party, which are not
set forth expressly in this Agreement. To the extent of any inconsistency between the terms
of this Agreement and the terms of the Employment Agreement, the terms of this Agreement will
control.

	16.  	Options. The parties agree that the Employment Agreement expired at the end of its
Term and that pursuant to Section 4(d) of the Option Agreement and subject to the terms of the
Option Agreement, the Expiration Date of the options shall be the two year anniversary of the
Executive’s Termination Date, such Termination Date defined herein as March 31, 2005.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth below.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	AMERITRADE HOLDING CORPORATION  
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	March 4, 2005
	 	 	 	By:
	 	/s/ Kurt D. Halvorson	 	 	 	 	 	 
	

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name: Kurt D. Halvorson
	 	 	 	 	 	 	Title: EVP & CAO

Acknowledgments and Certifications:

You acknowledge and certify that you:

	 	(a)  	have read and understand all of the terms of this Agreement and do not rely
on any representation or statement, written or oral, not set forth in this Agreement;
	 
	 	(b)  	understand that this Agreement specifically applies to any rights or claims
you may have against Ameritrade or any Released Party under the federal Age
Discrimination in Employment Act of 1967, as amended;
	 
	 	(c)  	understand that this Agreement does not purport to waive rights or claims
that may arise from acts or events occurring after the date that this Agreement is
executed by you;

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	 	(d)  	have had a reasonable period of time to consider this Agreement;
	 
	 	(e)  	are signing this Agreement knowingly and voluntarily;
	 
	 	(f)  	have been advised to consult with an attorney before signing this Agreement;
	 
	 	(g)  	have the right to consider the terms of this Agreement for 45 days and if you
take fewer than 45 days to review this Agreement, you hereby waive any and all rights
to the balance of the 45 day review period; and
	 
	 	(h)  	have the right to revoke this Agreement within seven days after signing it
(the “Revocation Period”) and therefore this Agreement shall not become effective or
enforceable until the expiration of the Revocation Period. If you choose to revoke
this Agreement, you must do so by notifying Ameritrade in writing delivered to

	 	 	 
	

	 	Ameritrade
	

	 	Attn: Valerie Sherod
	

	 	6940 Columbia Gateway Drive
	

	 	Columbia, MD 21046

If you revoke this Agreement during this seven-day period, it at once becomes null
and void in its entirety.

THIS IS A LEGALLY ENFORCEABLE DOCUMENT.

	 	 	 	 	 	 	 	 	 
	Date:

	 	March 8, 2005
	 	 	 	/s/ Michael R. Feigeles
	 	 
	

	 	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Michael R. Feigeles	 	 

AMERITRADE

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Confidential treatment has been requested for portions of this document. This copy of the
document filed as an Exhibit omits the confidential information subject to the confidentiality
request. Omissions are designated by three asterisks (***). A complete version of this document
has been filed separately with the Securities and Exchange Commission.

EXHIBIT 10.86

Memorandum of Understanding

This Memorandum of Understanding (this “MOU”) is made and entered into as of February 1, 2005
by and between Kyocera Mita Corporation, a Japanese corporation, having its principal place of
business at 2-28, 1-chome, Tamatsukuri, Chuo-ku, Osaka 540-8585, Japan (“KMC”) and Peerless Systems
Corporation, a Delaware corporation, having its principal place of business at 2381 Rosecrans
Avenue, El Segundo, CA 90245 (“Peerless”).

WHEREAS, each of KMC and Peerless desire to enter into a three (3) year understanding wherein
Peerless will assist KMC in developing certain high speed controllers and controller technologies;

WHEREAS, as compensation for Peerless assisting in such development, KMC intends to pay to
Peerless at least eight million dollars ($8,000,000) per annum in accordance with the terms and
conditions set forth herein.

For the purpose of forming this business alliance between KMC and Peerless, KMC and Peerless agree
as follows:

	1  	Consignment of Development
	 
	1.1  	KMC will retain Peerless and Peerless accepts such retention for the development of new
products under the terms and conditions set forth in this MOU (“Development”). The immediate
target products which are expected to be developed during the initial three (3) year term of
this MOU (“Immediate Products”) are as follows:

	 	(1)  	***;
	 
	 	(2)  	***; and
	 
	 	(3)  	***.

	1.2  	Other target products to be developed by Peerless during the term of the Development
(including initial term of three (3) years) shall be separately agreed upon in writing by the
parties. Immediate Products and other target products to be agreed by the parties in
accordance with this Section 1.2 are collectively referred to hereinafter as the “Target
Products”.
	 
	1.3  	KMC and Peerless agree to discuss in good faith to fix the specifications, statement of work,
deliverables, schedule and other details of the Development, and to execute an individual
agreement for each Target Product (“Individual Agreement”), a Sublicense Agreement covering
additional terms and conditions associated with the distribution of any third party software
sublicensed by Peerless (including but not limited to Adobe PostScript® and Novell NetWare®)
(“Third Party Software”), and a Licensed Software Addendum (“LSA”) to the Master Technology
License Agreement dated April 1, 1997 and Addenda thereto entered into by and between KMC and
Peerless for licenses to be granted by Peerless to KMC covering the licensing of the Peerless
deliverables that will be developed under the Development (collectively, the “Agreements”).
No licenses are granted by Peerless to KMC in this MOU. This MOU does not constitute a
license to distribute any Peerless products or any derivative works thereof alone or in a KMC
product.
	 
	1.4  	Except as referenced in the licensing and distribution restrictions provided in Section 7.4
of this MOU and/or other Agreements related to Section 7.4 which follow this MOU,

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Confidential treatment has been requested for portions of this document. This copy of the
document filed as an Exhibit omits the confidential information subject to the confidentiality
request. Omissions are designated by three asterisks (***). A complete version of this document
has been filed separately with the Securities and Exchange Commission.

	   	Peerless’ relationship contemplated under this MOU
for the Development is non-exclusive and Peerless
reserves the right to continue its sales,
marketing, licensing, and/or engineering services
operations for other parties.
	 
	2  	Keeping Engineers by Peerless
	 
	2.1  	During the term of the Development, Peerless shall have *** of its fully-experienced
engineers available for engagement in the Development.
	 
	3  	Delivery
	 
	3.1  	During the course of the Development, Peerless shall submit a monthly progress report to KMC.
	 
	3.2  	Peerless shall make and deliver deliverables as set forth in each Individual Agreement
(“Deliverables”) in accordance with the schedule set forth in each Individual Agreement
(“Schedule”).
	 
	3.3  	If any Deliverables include software programs and co-developed ASIC code, such software
programs and co-developed ASIC code shall be delivered to KMC in source code form with any
related documentation. This requirement applies only to software programs developed and owned
by Peerless and not to any third party software that may be delivered to KMC.
	 
	3.4  	If the Development under this MOU or the Agreements ceases for any reason, Peerless shall, at
KMC’s written request, deliver to KMC any Deliverables, whether complete or incomplete, as of
the termination or expiration, provided that (i) KMC has paid to Peerless through the date of
termination or expiration for any amounts owed under Section 4.1(1), (ii) KMC and Peerless
have entered into one or more LSAs covering the licensing of the Deliverables and which
provide for the payment of royalties with respect to such Deliverables, and (iii) KMC is not
in breach or default of the MOU or any of the Agreements. Section 3.3 shall also apply to
this Section 3.4.
	 
	4  	Consideration
	 
	4.1  	In accordance with the terms and conditions set out in the MOU, KMC shall pay Peerless in
accordance with the following terms and conditions:

	 	(1)  	An aggregate of twenty-four million dollars (US $24,000,000) to be paid over the
three year term of the Development as follows: eight million dollars (US$8,000,000) per
annum as a development and retention fee (“Development Fee”) on a fiscal quarterly basis
(the last business day of each April, July, October and January) (the “Payment Due
Date”) during the initial three-year term of the Development with the initial quarterly
payment of two million dollars to be paid no later than April 29, 2005. When the scope
of the Development is defined and the number of hours required for the Development is
expected to *** hours per fiscal quarter by ***, then Peerless shall notify KMC thereof
beforehand and both parties discuss the solutions such as (i) reconsidering the
Schedule, (ii) increase of the number of KMC’s engineers dispatched, and/or (iii)
increase of the number of Peerless engineers assigned for the Development. When both
parties decide to increase the number of hours, KMC shall pay Peerless, in addition to
the Development Fee, at a rate of ***. In any event, Peerless shall not charge KMC for
the increased Peerless engineers without prior approval of KMC.
	 
	 	(2)  	During the initial three year period of the Development, *** will be paid as an
incentive bonus on a fiscal quarter basis on condition that Peerless completes mutually
agreed upon objectives in a timely manner as set forth in the Schedule.

	 	(i)  	If Peerless fails to meet the mutually agreed upon objectives in a
timely manner

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Confidential treatment has been requested for portions of this document. This copy of the
document filed as an Exhibit omits the confidential information subject to the confidentiality
request. Omissions are designated by three asterisks (***). A complete version of this document
has been filed separately with the Securities and Exchange Commission.

	 	  	of the Schedule due to causes attributable to Peerless, this
incentive bonus will not be paid.
	 
	 	(ii)  	If Peerless fails to meet the mutually agreed upon objectives in a
timely manner
of the Schedule due to causes attributable to KMC, this incentive bonus shall be
paid by KMC.
	 
	 	(iii)  	If during any specific fiscal quarter all or any part of the incentive
bonus is not paid to Peerless by KMC, such amount will be withheld from incentive
bonus and will not be carried over. All incentive bonus payments shall be
non-refundable upon payment.

	 	(3)  	Payments made by KMC to Peerless are non-transferable or non-creditable to other
arrangements that may exist between the parties and are non-refundable upon payment.

	5  	Maintenance Service
	 
	5.1  	As long as KMC is paying Peerless the Development Fee as defined in Section 4.1 (1) herein in
accordance with the terms and conditions set forth in this MOU and/or Agreements, Peerless
shall provide at no charge bug fix and error correction and response to technical inquiry for
each Target Product using Deliverables prior to KMC’s acceptance date of the final
Deliverable.
	 
	5.2  	The Development Fee described in Section 4.1(1) includes the fee for maintenance service to
be performed by Peerless during the course of one (1) year from the acceptance date of final
Deliverable of each Target Product, provided, however, that the terms and conditions which
will apply to such maintenance will be separately agreed upon in writing by the parties.
	 
	6  	***
	 
	7  	Ownership and Restriction of IPR
	 
	7.1  	Nothing in this MOU transfers ownership of any pre-existing intellectual property from one
party to the other. Any improvements, modifications, or revisions of any pre-existing
intellectual property, or any other form in which such pre-existing intellectual property may
be recast, transformed, or adapted, shall remain the sole property of the owner of the
pre-existing intellectual property (“Derivative IP”).
	 
	7.2  	Any intellectual property used during the Development of any Target Product or licensed to
KMC that is owned by a third party shall remain the property of such third party.
	 
	7.3  	Any intellectual property (including, but not limited to software program, property that is
protected by patents or copyrights, know-how, and other proprietary information) developed or
created during the course of the Development (“IP”) shall be owned in accordance with as
follows:

	 	(1)  	IP jointly developed by KMC and Peerless will be jointly and equally owned by KMC
and Peerless. Either party, subject to the conditions of 7.4, will have the right to
exploit such jointly developed IP without accounting or incurring any other obligation
to the other party.
	 
	 	(2)  	IP independently developed by either party without reference to other party’s
technical information will be solely owned by the party who develops or acquires such
intellectual property rights.
	 
	 	(3)  	Notwithstanding any of the foregoing, any Third Party Software shall remain the
property of such third party.
	 
	 	(4)  	Derivative IP of Peerless IP is Peerless property.

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Confidential treatment has been requested for portions of this document. This copy of the
document filed as an Exhibit omits the confidential information subject to the confidentiality
request. Omissions are designated by three asterisks (***). A complete version of this document
has been filed separately with the Securities and Exchange Commission.

	 	(5)  	Derivative IP of KMC IP is KMC property.
	 
	 	(6)  	Derivative IP of jointly developed IP shall be subject to Sections 7.3(1) and
7.4.

	7.4  	Even if Peerless has joint ownership of IP, for a period of ***, whichever comes first,
Peerless agrees not to

	 	(a)  	grant any third party a license of the jointly developed IP which is incorporated
into such Target Product; and
	 
	 	(b)  	distribute any deliverables and/or products covering jointly developed IP which
is incorporated into such Target Product in any form (e.g. SDK, components) to any third
party.

	8  	Term
	 
	8.1  	The term of MOU and the Development shall be for three years, from February 1, 2005 to
January 31, 2008, and thereafter shall be automatically extended for additional consecutive
periods of one year each, unless either party shall have otherwise notified the other party in
writing at least three (3) months prior to the expiration of the Development or any extension
thereof. For the avoidance of doubt, each party agrees that this MOU is effective from the
date specified in the preamble and shall continue to apply to the Development so long as the
MOU is in effect.
	 
	8.2  	Notwithstanding Section 8.1, Peerless and KMC may terminate without any liability of
terminating party, except as provided in Section 8.3, this MOU and all or any part of the
Development in the event of the other party’s Default under this MOU or the Agreements. A
“Default” shall be deemed to occur in accordance with as follows:

	 	(1)  	With respect to KMC

	 	(a)  	KMC’s failure to pay any amounts owed within thirty (30) calendar days of the
date due: or
	 
	 	(b)  	KMC materially breaches any of its obligations under this MOU and/or
Agreements, which breach continues uncured for a period of thirty (30) calendar days
after written notice.

	 	(2)  	With respect to Peerless

	 	(a)  	Peerless materially breaches any of its obligations under this MOU and/or
Agreements, which breach continues uncured for a period of thirty (30) calendar days
after written notice,
	 
	 	(b)  	Peerless becomes insolvent, bankrupt, or makes a general assignment for the
benefit of creditors, or goes into liquidation or receivership; or
	 
	 	(c)  	Peerless ceases or takes action to cease to carry on its Turn-Key business or
disposes of the whole of its assets or any substantial part of its assets that are
necessary for Peerless to perform its obligations hereunder.

	8.3  	Any amounts unpaid as of the termination or expiration date shall be paid by KMC to Peerless
within ten (10) business days after the termination or expiration date. Such amounts shall be
prorated amounts from the prior Payment Due Date up to the date of termination or expiration.
Notwithstanding any other provision in this MOU to the contrary, Sections 3.4, 4.1(3), 5.2,
7, 8.2, 8.3, 8.5, 10.3, 10.4, 10.6, 10.7, 10.9, 10.10, and 10.12 shall survive any termination
or expiration hereof.
	 
	8.4  	In the event that KMC’s competitor (***)(a “Competitor”) becomes a majority stockholder of
Peerless, KMC’s sole remedy for such an event shall be the termination of this MOU or the
continuation of the Development under this MOU.

4

 

Confidential treatment has been requested for portions of this document. This copy of the
document filed as an Exhibit omits the confidential information subject to the confidentiality
request. Omissions are designated by three asterisks (***). A complete version of this document
has been filed separately with the Securities and Exchange Commission.

	8.5  	In case that this MOU and the Development are terminated for any reason other than Peerless
being in Default under Section 8.2(2) during the initial three (3) year term of the MOU, KMC
shall be obligated to pay liquidated damages to Peerless in an amount of ***. This liquidated
damages provision shall not be imposed upon KMC if the reason of termination by KMC is
Peerless’ Default as set forth in Section 8.2(2) or if the termination has occurred after the
initial three (3) year term of the MOU.
	 
	9  	Dispatch of KMC’s Engineers
	 
	9.1  	KMC may request and Peerless will agree to provide facilities for 5-10 engineers designated
and/or dispatched by KMC at Peerless’ El Segundo, California offices for the purpose of
cooperating with and supporting Peerless relating to the Development activities. When the
scope of the Development is defined and it is decided by both parties that the number of KMC
engineers dispatched is to be increased in accordance with Section 4.1, KMC may dispatch its
additional engineers.
	 
	10  	Others
	 
	10.1  	***.

	 
	10.2  	***.

	 
	10.3  	Excluding all third party source code, Peerless will execute an escrow agreement with KMC
promptly after the execution of this MOU and deliver to an escrow agent quarterly a sealed
package containing Peerless’ source code software programs to be developed during the course
of this MOU to allow KMC to have access to such source code in case of changing the control of
management of Peerless by any reason described in Section 10.2 or in case of bankruptcy of
Peerless for the purpose of exercising its rights as licensee under any applicable license
then in force. All costs associated with the maintenance of this escrow shall be borne solely
by KMC. In the event that KMC does not maintain the escrow, or in the event of the termination
of this MOU, all materials in escrow shall be immediately returned to Peerless, provided,
however, that in case of termination of MOU by KMC on the ground of any reason specified in
Section 8.2(2), no materials then in escrow will be released and KMC may access to the source
code and continue to use the source code under any applicable license then in force.
	 
	10.4  	Neither party shall disclose the content or existence of this MOU to any third party, except
to the directors, employees, advisers, consultants or shareholders of each party who are bound
to keep such information confidential, without prior written consent of the other party,
provided, however, that KMC shall not unreasonably withhold the consent relating to announcing
by Peerless to the investment community the broad nature (turnkey development of high
performance color controllers) of this arrangement, including, but not limited to statements
that Peerless will provide development service to KMC for Immediate Products or Target
Products and the potential revenues associated with this MOU. Notwithstanding the foregoing,
each party may disclose the content or existence of this MOU pursuant to governmental or
judicial order requirement (including requirement by “Securities and Exchange Commission”),
provided, however, that such disclosing party shall provide prompt prior written notice
thereof to other party to enable it to seek a protective order or otherwise prevent or contest
such disclosure or, in the case of any filings with the Securities and Exchange Commission,
file a Confidential Treatment Request.
	 
	10.5  	KMC and Peerless shall in good faith exert their best efforts to execute the Agreements as
soon as possible.
	 
	10.6  	In the event any dispute, controversy, or difference, whether based on tort, contract, or

5

 

Confidential treatment has been requested for portions of this document. This copy of the
document filed as an Exhibit omits the confidential information subject to the confidentiality
request. Omissions are designated by three asterisks (***). A complete version of this document
has been filed separately with the Securities and Exchange Commission.

	   	legal theory (including but not limited to a claim of fraud or misrepresentation) arises
between the parties out of or in relation to or in connection with this MOU (a “Dispute”), the
parties hereto agree as follows

	 	(1)  	In the first instance do their utmost to settle the Dispute.
	 
	 	(2)  	If the Dispute is solely related to the payment of money owed to Peerless by KMC,
Peerless shall have the option to seek to resolve such Dispute either by arbitration in
accordance with Section 10.6(3) or in any federal or state court located in Los Angeles,
California, USA. If the Dispute is solely related to the payment of money owed to KMC
by Peerless, KMC shall have the option to seek to resolve such Dispute either by
arbitration in accordance with Section 10.6(3) or in any federal or state court located
in Los Angeles, California, USA. Each party hereby waives the right to a jury trial.
In any proceeding under this Section 10.6(2), neither party shall
be entitled to an award of punitive or exemplary damages.
	 
	 	(3)  	If the parties fail to settle the Dispute amicably, then the Dispute shall be
finally settled by arbitration under the Rules of the American Arbitration Association
(“AAA”). The place of arbitration shall be Los Angeles, California, USA. The
arbitration shall be held before a single arbitrator who is knowledgeable in the
embedded software industry. The arbitration shall be conducted in English. The
arbitrator shall not have the power to award punitive or exemplary damages. 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 AAA. The arbitrator’s decision and any award rendered
shall be final and binding upon the parties. Each party hereby waives the right to a
jury trial.
	 
	 	(4)  	The following disputes shall not be subject to arbitration and shall instead be
brought in any federal or state court located in Los Angeles, California, USA: (a) any
dispute involving infringement of, ownership or title to a party’s intellectual
property; (b) any dispute involving enforcement of the confidentiality provisions set
forth in this MOU or any applicable confidentiality agreement; or (c) any judicial
proceeding in equity seeking temporary restraining orders, preliminary injunctions or
other interlocutory relief. Disputes relating to Third Party Software shall be resolved
in accordance with any applicable requirements specified by the owners or principal
licensors of such Third Party Software. Each party hereby waives the right to a jury
trial.

	10.7  	Except for the Master Technology License Agreement dated April 1, 1997 (“MTLA”), the License
Software Addendum #4 (as amended) dated January 15, 2004 to the MTLA, the License Software
Addendum #5 dated February 17, 2004 to the MTLA, and the Non-Disclosure Agreement dated
September 13, 2004, this MOU and the Non-Disclosure Agreement entered into on February 21,
2005 and made effective as of November 10, 2004 constitute the binding and entire agreement
relating to the subject matter of this MOU and supersedes all previous agreements relating to
the subject matter of this MOU, either oral or written, between the parties, provided,
however, that this MOU takes effect only after this MOU passes the resolution of both parties’
board meeting.
	 
	10.8  	Nothing contained herein shall be deemed to create a joint venture or partnership or agency
relationship between KMC and Peerless. Neither party shall have the right or authority to, and
each party shall not, assume or create any obligation or responsibility, express or implied,
on behalf of or in the name of the other party or bind the other party in any manner. Nothing
set forth herein shall be deemed to confer upon any person or entity other than the parties
hereto a right of action either under this MOU or any manner whatsoever.
	 
	10.9  	Neither party may sell, transfer or assign this MOU without the prior written consent of the

6

 

Confidential treatment has been requested for portions of this document. This copy of the
document filed as an Exhibit omits the confidential information subject to the confidentiality
request. Omissions are designated by three asterisks (***). A complete version of this document
has been filed separately with the Securities and Exchange Commission.

	   	other party. This MOU shall be binding upon and inure to the benefit of each party, its
successors or assignees.
	 
	10.10  	This MOU shall be governed by and construed in accordance with the laws of the United States
of America and the State of California.
	 
	10.11  	This MOU is the result of arm’s length negotiations between the parties and shall be
construed to have been drafted by all parties such that any ambiguities in this MOU shall not
be construed against either party.
	 
	10.12  	KMC hereby agrees that, for a period of six (6) months after termination of the MOU, neither
KMC nor any person acting on behalf of or in concert with KMC will, without the prior written
consent of Peerless, directly or indirectly, solicit to employ, or actually employ, any of the
executive officers or key employees of Peerless (i) with whom KMC or any person acting on
behalf of or in concert with KMC have had contact during the Development or (ii) who were
specifically identified to KMC by Peerless or any person acting on behalf of or in concert
with KMC during the Development; provided, however, that KMC may engage in general
solicitations for employees in the ordinary course of
business and consistent with past practice, and (ii) KMC may directly or indirectly solicit
to employ and actually employ any executive officers and/or employees who have been
terminated or laid off or who have voluntary resigned from employment and the resignation
occurred more than six (6) months before or who seek employment by responding to KMC’s
general solicitations.
	 
	10.13  	Prior to either party’s disclosure of any of its confidential information to the other in
connection with the Development, the parties shall enter into a mutually agreeable
confidentiality agreement.

In Witness Whereof, the parties hereto have caused this Memorandum of Understanding to be executed
by their respective authorized representative as of the date first above written.

	 	 	 	 	 	 	 
	Kyocera Mita Corporation	 	Peerless Systems Corporation
	 
	 	 	 	 	 	 
	By:

	 	/s/ TETSUO OKADA
	 	By:
	 	/s/ HOWARD J. NELLOR
	

	 	 
	 	 	 	 
	Name:

	 	Tetsuo Okada
	 	Name:
	 	Howard J. Nellor
	

	 	 
	 	 	 	 
	Title:

	 	President
	 	Title:
	 	CEO and President
	

	 	 
	 	 	 	 

7

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