Document:

Exhibit
4.2

    

    WARRANT

    

    THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
WARRANT (COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT.

    

    WARRANT
TO PURCHASE

    

    WARRANT
#2009-1

    

    COMMON
STOCK, PAR VALUE $.0001 PER SHARE

    

    OF

    

    ICC
WORLDWIDE, INC.

    

          This
certifies that, for value received, The Melanie S. Altholtz Irrevocable Trust,
or registered assigns ("Warrant holder"), is entitled to purchase from ICC
WORLDWIDE, INC.  (the "Company"), subject to the provisions of this
Warrant, at any time and from time to time until 5:00 p.m. Pacific Standard Time
on January 31, 2014, eight million (8,000,000) shares of the Company's Common
Stock, par value $.0001 per share ("Warrant Shares"). The purchase price payable
upon the exercise of this Warrant shall be $.0009 per Warrant Share. The Warrant
Price and the number of Warrant Shares which the Warrant holder is entitled to
purchase is subject to adjustment upon the occurrence of the contingencies set
forth in Section 3 of this Warrant, and as adjusted from time to time, such
purchase price is hereinafter referred to as the "Warrant Price."

    

          This
Warrant is subject to the following terms and conditions:

    

    I.
Exercise of Warrant.

    

                (a)
This Warrant may be exercised in whole or in part but not for a fractional
share. Upon delivery of this Warrant at the offices of the Company or at such
other address as the Company may designate by notice in writing to the
registered holder hereof with the Subscription Form annexed hereto duly
executed, accompanied by payment of the Warrant Price for the number of Warrant
Shares purchased (in cash, by certified, cashier's or other check acceptable to
the Company, by Common Stock of the Company having a Market Value (as
hereinafter defined) equal to the aggregate Warrant Price for the Warrant Shares
to be purchased, or any combination of the foregoing), the registered holder of
this Warrant shall be entitled to receive a certificate or certificates for the
Warrant Shares so purchased. Such certificate or certificates shall be promptly
delivered to the Warrant holder. Upon any partial exercise of this Warrant, the
Company shall execute and deliver a new Warrant of like tenor for the balance of
the Warrant Shares purchasable hereunder.

    

                (b)
In lieu of exercising this Warrant pursuant to Section 1(a), the holder may
elect to receive shares of Common Stock equal to the value of this Warrant
determined in the manner described below (or any portion thereof remaining
unexercised) upon delivery of this Warrant at the offices of the Company or at
such other address as the Company may designate by notice in writing to the
registered holder hereof with the Notice of Cashless Exercise Form annexed
hereto duly executed. In such event the Company shall issue to the holder a
number of shares of the Company's Common Stock computed using the following
formula:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

                      X
= Y(A-B)/A

    

    Where X =
the number of shares of Common Stock to be issued to the holder.

                Y
= the number of shares of Common Stock purchasable under this Warrant (at the
date of such calculation).

                A
= the Market Value of the Company's Common Stock on the business day immediately
preceding the day on which the Notice of Cashless Exercise is received by the
Company.

                B
= Warrant Price (as adjusted to the date of such calculation).

    

                (c)
The Warrant Shares deliverable hereunder shall, upon issuance, be fully paid and
non-assessable and the Company agrees that at all times during the term of this
Warrant it shall cause to be reserved for issuance such number of shares of its
Common Stock as shall be required for issuance and delivery upon exercise of
this Warrant.

    

                (d)
For purposes of this Warrant, the Market Value of a share of Common Stock on any
date shall be equal to (i) the closing bid price per share as published by a
national securities exchange on which shares of Common Stock (or other units of
the security) are traded (an "Exchange") on such date or, if there is no bid for
Common Stock on such date, the bid price on such exchange at the close of
trading on the next earlier date or, (ii) if shares of Common Stock are not
listed on a national securities exchange on such date, the closing bid price per
share as published on the National Association of Securities Dealers Automatic
Quotation System ("NASDAQ") National Market System if the shares are quoted on
such system on such date, or (iii) the closing bid price in the over-the-counter
market at the close of trading on such date if the shares are not traded on an
exchange or listed on the NASDAQ National Market System, or (iv) if the Common
Stock is not traded on a national securities exchange or in the over-the-counter
market, the fair market value of a share of Common Stock on such date as
determined in good faith by the Board of Directors. If the holder disagrees with
the determination of the Market Value of any securities of the Company
determined by the Board of Directors under Section 1(d)(iv) the Market Value of
such securities shall be determined by an independent appraiser acceptable to
the Company and the holder (or, if they cannot agree on such an appraiser, by an
independent appraiser selected by each of them, and Market Value shall be the
median of the appraisals made by such appraisers). If there is one appraiser,
the cost of the appraisal shall be shared equally between the Company and the
holder. If there are two appraisers, each of the Company and the holder shall
pay for its own appraisal.

    

    II.
Transfer or Assignment of Warrant.

    

                (a)
Any assignment or transfer of this Warrant shall be made by surrender of this
Warrant at the offices of the Company or at such other address as the Company
may designate in writing to the registered holder hereof with the Assignment
Form annexed hereto duly executed and accompanied by payment of any requisite
transfer taxes, and the Company shall, without charge, execute and deliver a new
Warrant of like tenor in the name of the assignee for the portion so assigned in
case of only a partial assignment, with a new Warrant of like tenor to the
assignor for the balance of the Warrant Shares purchasable.

    

                (b)
Prior to any assignment or transfer of this Warrant, the holder thereof shall
deliver an opinion of counsel to the Company to the effect that the proposed
transfer may be effected without registration under the Act.

    

    III.
Adjustment of Warrant Price and Warrant Shares — Anti-Dilution
Provisions.

    

                A.
(1) Except as hereinafter provided, in case the Company shall at any time after
the date hereof issue any shares of Common Stock (including shares held in the
Company's treasury) without consideration, then, and thereafter successively
upon each issuance, the Warrant Price in effect immediately prior to each such
issuance shall forthwith be reduced to a price determined by multiplying the
Warrant Price in effect immediately prior to such issuance by a
fraction:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

                      (a)
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such issuance, and

    

                      (b)
the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such issuance.

    

                For
the purposes of any computation to be made in accordance with the provisions of
this clause (1), the following provisions shall be applicable:

    

                            (i)
Shares of Common Stock issuable by way of dividend or other distribution on any
stock of the Company shall be deemed to have been issued and to be outstanding
at the close of business on the record date fixed for the determination of
stockholders entitled to receive such dividend or other distribution and shall
be deemed to have been issued without consideration. Shares of Common Stock
issued otherwise than as a dividend, shall be deemed to have been issued and to
be outstanding at the close of business on the date of issue.

    

                            (ii)
The number of shares of Common Stock at any time outstanding shall not include
any shares then owned or held by or for the account of the Company.

    

            (2)
In case the Company shall at any time subdivide or combine the outstanding
shares of Common Stock, the Warrant Price shall forthwith be proportionately
decreased in the case of the subdivision or proportionately increased in the
case of combination to the nearest one cent. Any such adjustment shall become
effective at the close of business on the date that such subdivision or
combination shall become effective.

    

                B.
In the event that the number of outstanding shares of Common Stock is increased
by a stock dividend payable in shares of Common Stock or by a subdivision of the
outstanding shares of Common Stock, which may include a stock split, then from
and after the time at which the adjusted Warrant Price becomes effective
pursuant to the foregoing Subsection A of this Section by reason of such
dividend or subdivision, the number of shares issuable upon the exercise of this
Warrant shall be increased in proportion to such increase in outstanding shares.
In the event that the number of outstanding shares of Common Stock is decreased
by a combination of the outstanding shares of Common Stock, then, from and after
the time at which the adjusted Warrant Price becomes effective pursuant to such
Subsection A of this Section by reason of such combination, the number of shares
issuable upon the exercise of this Warrant shall be decreased in proportion to
such decrease in outstanding shares.

    

                C.
In the event of an adjustment of the Warrant Price, the number of shares of
Common Stock (or reclassified stock) issuable upon exercise of this Warrant
after such adjustment shall be equal to the number determined by
dividing:

    

                      (1)
an amount equal to the product of (i) the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such adjustment, and
(ii) the Warrant Price immediately prior to such adjustment, by

    
       

                        (2)
the Warrant Price immediately after such adjustment.

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

                  D.
In the case of any reorganization or reclassification of the outstanding shares
of Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination) or in the case of any consolidation of the Company with, or merger
of the Company with, another corporation, or in the case of any sale, lease or
conveyance of all, or substantially all, of the property, assets, business and
goodwill of the Company as an entity, the holder of this Warrant shall
thereafter have the right upon exercise to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification, consolidation, merger or sale by a holder of
the number of shares of Common Stock which the holder of this Warrant would have
received had all Warrant Shares issuable upon exercise of this Warrant been
issued immediately prior to such reorganization, reclassification,
consolidation, merger or sale, at a price equal to the Warrant Price then in
effect pertaining to this Warrant (the kind, amount and price of such stock and
other securities to be subject to adjustment as herein provided).

    

                E.
In case the Company shall, at any time prior to the expiration of this Warrant
and prior to the exercise thereof, dissolve, liquidate or wind up its affairs,
the Warrant holder shall be entitled, upon the exercise thereof, to receive, in
lieu of the Warrant Shares of the Company which it would have been entitled to
receive, the same kind and amount of assets as would have been issued,
distributed or paid to it upon such  Warrant Shares of the Company,
had it been the holder of record of shares of Common Stock receivable upon the
exercise of this Warrant on the record date for the determination of those
entitled to receive any such liquidating distribution. After any such
dissolution, liquidation or winding up which shall result in any distribution in
excess of the Warrant Price provided for by this Warrant, the Warrant holder may
at its option exercise the same without making payment of the aggregate Warrant
Price and in such case the Company shall upon the distribution to said Warrant
holder consider that the aggregate Warrant Price has been paid in full to it and
in making settlement to said Warrant holder, shall deduct from the amount
payable to such Warrant holder an amount equal to the aggregate Warrant
Price.

    

                F.
In case the Company shall, at any time prior to the expiration
of  this Warrant and prior to the exercise thereof make a distribution
of assets (other than cash) or securities of the Company to its stockholders
(the "Distribution") the Warrant holder shall be entitled, upon the exercise
thereof, to receive, in addition to the Warrant Shares it is entitled to
receive, the same kind and amount of assets or securities as would have been
distributed to it in the Distribution had it been the holder of record of shares
of Common Stock receivable upon exercise of this Warrant on the record date for
determination of those entitled to receive the Distribution.

    

                G.
Irrespective of any adjustments in the number of Warrant Shares and the Warrant
Price or the number or kind of shares purchasable upon exercise of this Warrant,
this Warrant may continue to express the same price and number and kind of
shares as originally issued.

    

    III.
Officer's Certificate.

    

     Whenever
the number of Warrant Shares and the Warrant Price shall be adjusted pursuant to
the provisions hereof, the Company shall forthwith file, at its principal
executive office a statement, signed by the Chairman of the Board, President, or
one of the Vice Presidents of the Company and by its Chief Financial Officer or
one of its Treasurers or Assistant Treasurers, stating the adjusted number of
Warrant Shares and the new Warrant Price calculated to the nearest one hundredth
and setting forth in reasonable detail the method of calculation and the facts
requiring such adjustment and upon which such calculation is based. Each
adjustment shall remain in effect until a subsequent adjustment hereunder is
required. A copy of such statement shall be mailed to the Warrant
holder.

    

    IV.
Charges, Taxes and Expenses

    

    The
issuance of certificates for Warrant Shares upon any exercise of this Warrant
shall be made without charge to the Warrant holder for any tax or other expense
in respect to the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued only in the
name of the Warrant holder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    V.
Miscellaneous.

    

                (a)
The terms of this Warrant shall be binding upon and shall inure to the benefit
of any successors or assigns of the Company and of the holder or holders hereof
and of the shares of Common Stock issued or issuable upon the exercise
hereof.

    

                (b)
No holder of this Warrant, as such, shall be entitled to vote or receive
dividends or be deemed to be a stockholder of the Company for any purpose, nor
shall anything contained in this Warrant be construed to confer upon the holder
of this Warrant, as such, any rights of a stockholder of the Company or any
right to vote, give or withhold consent to any corporate action, receive notice
of meetings, receive dividends or subscription rights, or

    otherwise.

    

                (c)
Receipt of this Warrant by the holder hereof shall constitute acceptance of an
agreement to the foregoing terms and conditions.

    

                (d)
The Warrant and the performance of the parties hereunder shall be construed and
interpreted in accordance with the laws of the State of Delaware and the parties
hereunder consent and agree that the State and Federal Courts which sit in the
State of Delaware and the County of Nassau shall have exclusive jurisdiction
with respect to all controversies and disputes arising hereunder.

    

          IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer and its corporate seal to be affixed hereto.

    

    Date
Warrant Effective: January 28, 2009

    Date (for
signing purposes only) January 28, 2009

    

    
      
        
          
            
              
                	 
      	
                        ICC
      WORLDWIDE, INC.

                      	 
	 
      	 
      	 
	 
      	 
      	 
	 
      	BY: 	
                         /s/ Richard K Lauer

                      	 
	 
      	
                        Richard
      K Lauer

                      	 
	 
      	
                        President

                      	 

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SUBSCRIPTION
FORM

    

    (TO BE
EXECUTED BY THE REGISTERED HOLDER

    IF HE
DESIRES TO EXERCISE THE WARRANT)

    

    To: ICC
WORLDWIDE, INC.

    

          The
undersigned hereby exercises the right to purchase _________ shares of
Common
Stock, par value $.0001 per share, covered by the attached Warrant in
accordance
with the terms and conditions thereof, and herewith makes payment of
the
Warrant Price for such shares in full.

     

                      Signature:
_______________________________________

    

    

                      Address:
_________________________________________

    

    

    DATED:
___________________________

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    NOTICE
OF EXERCISE OF COMMON STOCK WARRANT

    PURSUANT
TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS

    

    Attention:
Corporate Secretary

    ICC
WORLDWIDE, INC.

    3334 E.
Coast Highway

    Corona
del Mar, CA 92625

    

    Aggregate
Price of
Warrant                                                                           $
_______________

    

    Aggregate
Price Being
Exercised                                                                  $________________

    

    Warrant
Price (per
Shares)                                                                              
________________

    

    Number of
Shares of Common Stock to be Issued Under this
Notice:______________

    

    CASHLESS
EXERCISE

    

    Gentlemen:

    

          The
undersigned, registered holder of the Warrant to Purchase Common Stock delivered
herewith ("Warrant") hereby irrevocably exercises such Warrant for, and
purchases thereunder, shares of the Common Stock of ICC WORLDWIDE, INC., a
Delaware corporation, as provided below. Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings given in the Warrant. The
portion of the Aggregate Price (as hereinafter defined) to be applied toward the
purchase of Common Stock pursuant to this Notice of Exercise is $__________,
thereby leaving a remainder Aggregate Price (if any) equal to $__________. Such
exercise shall be pursuant to the net issue exercise provisions of Section I.
(b) of the Warrant; therefore, the holder makes no payment with this Notice of
Exercise.

    

    The
number of shares to be issued pursuant to this exercise shall be determined by
reference to the formula in Section I.(b)of the Warrant which requires the use
of the Market Value (as defined in Section I.(d) of the Warrant) of the
Company's Common Stock on the business day immediately preceding the day on
which this Notice is received by the Company. To the extent the foregoing
exercise is for less than the full Aggregate Price of the Warrant, the remainder
of the Warrant representing a number of Shares equal to the quotient obtained by
dividing the remainder of the Aggregate Price by the Warrant Price (and
otherwise of like form, tenor and effect) may be exercised under Section I(a) of
the Warrant. For purposes of this Notice the term "Aggregate Price" means the
product obtained by multiplying the number of shares of Common Stock for which
the Warrant is exercisable times the Warrant Price.

    

                      Signature:_____________________________________

    

                      Address:______________________________________

    

                      Date:__________________________________________Unassociated Document

    TERMINATION
OF LEASE AGREEMENT

    

    THIS TERMINATION OF LEASE
AGREEMENT (this "Agreement") is made as of this 30th day of January,
2009, by and between Continental 2361/2381 LLC, a California limited liability
company ("Lessor"), and Peerless Systems Corporation, a Delaware corporation
("Lessee").

    

    RECITALS

    

    WHEREAS Lessor and Lessee
entered into that certain Lease Agreement (the "Lease") dated August 1, 2006,
pursuant to which Lessor leased to Lessee and Lessee leased from Lessor those
certain premises (the "Premises"), commonly known as 2381 Rosecrans Avenue,
Suites 330 and 400, El Segundo, California.  Any capitalized terms
used herein but not defined herein shall have the meaning ascribed to them in
the Lease;

    

    WHERAS Lessee and Kyocera
Technology Development, Inc., a California corporation (“Kyocera”), entered into
that certain Standard Sublease dated April 30, 2008 (the “Sublease”);
and

    

    WHEREAS the parties hereto
wish to provide for the termination of the Lease and the assignment and
assumption of the Sublease subject to certain conditions and certain other
matters, all as more particularly set forth below,

    

    NOW, THEREFORE, the parties
hereto do hereby agree as follows:

    

    
      	
              A.

            	
              Termination
      of Lease-Conditions.

            

    

    

    1. Lessor
and Lessee hereby agree that the Lease shall be terminated on January 31, 2009
(the “Effective Date”).  Lessee shall be permitted to occupy, free of
charge, through February 28, 2009, the space that Lessee is presently occupying
on the fourth (4th) floor of the Building and on the third (3rd) floor of the
Building; however, until such time that Lessee shall completely vacate the
Premises, Lessee shall continue to comply with all of the terms and conditions
of the Insurance and Indemnification provisions set forth in Article 14 of the
Lease.  Upon vacating the Premises, Lessee shall be permitted to leave
the Premises in its “AS-IS” condition, and Lessee shall not be required to
comply with any restoration obligation under the Lease, except, however, that
Lessee shall be required to remove all of its furniture, furnishings and
equipment from the Premises, and that Lessee shall surrender the Premises, in
good working order and condition, free from damage, commercially ordinary wear
and tear excepted.

    

    2. Each
of Lessor and Lessee acknowledges that the other party will continue, through
the date Lessee shall vacate its Premises as indicated in Section 1 above, to
fully perform all obligations to be performed by such party under the Lease
(except, however, that Lessee shall be permitted to occupy the Premises free of
charge after January 31, 2009, pursuant to Section 1 above, and that Lessor
shall not be required to provide any janitorial services to Lessee after January
31, 2009).

    

    3.
Concurrently with the return of this executed document by Lessee to Lessor,
Lessee shall pay Lessor a cancellation fee of Two Million Three Hundred
Ninety-Nine Thousand Dollars ($2,399,999.00).  Lessee shall also
forfeit its security deposit of $110,000.00.  The aforementioned fee
takes into consideration (1) all outstanding rent, parking and other charges due
to Lessor under the Lease through the Effective Date, (2) the credit to Lessee
of $69,300.00, which represents the difference between the security deposit of
$110,000.00 paid by Lessee under the Lease and the security deposit of
$40,700.00 paid to Lessee by its sublessee, Kyocera Technology Development, and
(3) a credit to Lessee of $329,587.00 for the unused Construction
Allowance.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4. Lessee
shall not be obligated to pay Lessor any outstanding charges for Operating
Expenses, to the extent that Lessee’s estimated payments towards said Operating
Expenses were less than the actual obligation owed, and Lessor shall not be
obligated to reimburse Lessee for any overpayment towards Operating Expenses, to
the extent that Lessee’s estimated payments towards said Operating Expenses were
more than the actual obligation owed.

    

    5. Lessee
shall not be required to reimburse Lessor for any unpaid electricity charges
incurred through January 31, 2009, and Lessee shall not be required to reimburse
Lessor for any Operating Expenses or electricity charges incurred by Lessee from
February 1, 2009 through February 28, 2009.

    

    
      	
              B.

            	
              Mutual
      Release.

            

    

    

    1. As of
the date that Lessee shall vacate the Premises, Lessee shall irrevocably and
unconditionally release and forever discharge Lessor, and Lessor's predecessors,
successors, assigns, executors and administrators, agents, employees,
representatives, attorneys, affiliates and all persons acting by, through, under
or in concert with Lessor (collectively, “Lessor's Releasees") or any of them,
from all actions, debts, liens, agreements, obligations, liabilities, claims,
rights, demands, damages, judgments, losses, costs and expenses, including,
without limitation, attorneys' fees, of any nature whatsoever, known or unknown
("Claim" or "Claims"), which Lessee now has, claims to have, at any time
heretofore had, claimed to have, against Lessor or any of Lessor's Releasees,
including, without limitation, any and all such Claims which arose from, were
based upon, or were related to Lessor's performance under the Lease and Lessee's
occupancy of the Premises thereunder.

    

    2. Except
as regards all provisions in the Lease that specifically survive the termination
or earlier expiration of the Lease, including, but not limited to, subsections
B.2(a) through B.2(d) below, as of the date that Lessee shall vacate the
Premises, Lessor shall irrevocably and unconditionally release and forever
discharge Lessee, and Lessee's predecessors, successors, assigns, executors and
administrators, agents, employees, representatives, attorneys, affiliates and
all persons acting by, through, under or in concert with Lessee (collectively,
“Lessee's Releasees") or any of them, from all actions, debts, liens,
agreements, obligations, liabilities, claims, rights, demands, damages,
judgments, losses, costs and expenses, including, without limitation, attorneys'
fees, of any nature whatsoever, known or unknown ("Claim" or "Claims"), which
Lessor now has, claims to have, at any time heretofore had, claimed to have,
against Lessee or any of Lessee's Releasees, including, without limitation, any
and all such Claims which arose from, were based upon, or were related to
Lessee's performance under the Lease and Lessee's occupancy of the Premises
thereunder .  The parties understand that Lessor shall not release and
discharge Lessee from the following obligations and liabilities under the Lease,
understanding that the following obligations and liabilities survive the
termination of the Lease:

    

    (a)
Lessee's obligation to indemnify, defend and hold Lessor and Lessor's employees
harmless from and against any and all liabilities, costs, expenses, claims,
judgments, damages, penalties, fines and losses (including, without limitation,
diminution in value of the Premises, or other portions of the building, damages
for the loss or restriction or use of rentable and usable space or of any
amenity of the Premises or other portions of the Building, and sums paid in
settlement of claims, attorney's fees, consultant's fees and expert fees) which
arise as a result of the contamination of the premises or other portions of the
Project or building by Hazardous Materials caused or permitted by Lessee,
Lessee's employees or Lessee's invitees, or Lessee's sublessees or their
invitees;

    

    (b)
Lessee's obligation to, at Lessee's expense, protect, defend, indemnify and hold
Lessor and Lessor's agents, contractors, licensees, employees, directors,
officers, partners, trustees and invitees, and any and all of Lessor's lenders
and mortgagees, harmless from and against any and all claims, arising out of or
in connection with, Lessee's use of the premises, the Building or the property,
the conduct of Lessee's business, any activity, work or things done, permitted
or allowed by Lessee in or about the premises or the property, Lessee's or
Lessee's employees nonobservance or nonperformance of any statute, ordinance,
rule, regulation or other law, or any negligence or willful act or failure to
act of lessee or lessee's employees (for which Lessee was required to purchase
and maintain Liability Insurance, Property Insurance, and/or other coverage
dictated by the Lease);

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (c) Lessee's
obligation to indemnify, defend and hold Lessor harmless from and against the
payment of all unpaid governmental taxes, fees and other charges (all of which
are defined in the Lease as "Assessments")  as provided in Section 3.2
of the Lease;

    

    (d)
Lessee's obligation to indemnify, defend, protect, and hold Lessor harmless from
and against any and all claims for mechanics, materialmen's or other liens in
connection with any alterations, repairs, or other work performed, materials
furnished or obligations incurred by or for Lessee.

    

    3. Lessee
represents and warrants that Lessee is the sole owner of the tenant's interest
in the Lease and that it has not made any assignment, sublease, transfer,
encumbrance, conveyance, or other disposition of: (a) any interest it has in the
Lease; or (b) any claim, demand, obligation, liability, action, or cause of
action arising under or relating to the terms of the Lease, to any person or
entity.

    

    4. Each
party represents and warrants to the other party and such other party's
Releasees that it has not assigned or transferred or purported to assign or
transfer any Claim or any portion thereof of any interest therein, and agrees to
indemnify, defend, and hold the other party and such other party's Releasees
harmless from and against any Claim based on or arising out of any such
assignment or transfer, or purported assignment or transfer.

    

    5. The
releases set forth in Sections B.1 and B.2 above shall be effective
notwithstanding any law, whether statutory or common law, to the contrary,
including but not limited to California Civil Code Section 1542, which reads as
follows:

    

    "A
GENERAL RELEASE  DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH DEBTOR."

     

    
      	  	 	  	 
	Lessee	 	Lessor	 

    

     

    
      
        	
                C.

              	
                Assignment of
      Sublease.

              

      

       

      Lessee
assigns and transfers to Lessor all right, title, and interest in the Sublease
and Lessor accepts from Lessee all right, title, and interest.  Lessor
assumes and agrees to perform and fulfill all the terms, covenants, conditions,
and obligations required to be performed and fulfilled by Lessee as Sublessor
under the Sublease.

    

    

    
      	
              D.

            	
              Miscellaneous.

            

    

    

    1. This
Agreement shall be binding upon the heirs, administrators, executors, successors
and assigns of each of the parties hereto.

    

    2. Each
of the parties hereto, without further consideration, agrees to execute and
deliver such other documents and take such other action as may be necessary to
consummate more effectively the subject matter hereof.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    3. This
Agreement shall be construed in accordance with and all disputes hereunder shall
be governed by the internal laws of the State of California.

    

    4. In the
event of any controversy or dispute arising out of this Agreement, the
prevailing party or parties shall be entitled to recover from the non-prevailing
party or parties, reasonable expenses, including, without limitation, attorneys'
fees and costs actually incurred.

    

    5. As
used in this Agreement, the masculine, feminine or neuter gender and the
singular or plural number shall be deemed to include the others whenever the
context so indicates or requires.

    

    6. The
section headings used in this Agreement are intended solely for convenience of
reference and shall not in any manner amplify, limit, modify or otherwise be
used in the interpretation of any of the provisions hereof.

    

    7. This
Agreement shall not be effective until executed by both Lessor and
Lessee.

    

    IN WITNESS WHEREOF, the
parties have executed this agreement on the date first set forth above,
acknowledging that each has carefully read each and every provision of this
agreement, and has entered into this agreement of its own free will and
volition.

    
      

      
        	
                "LESSOR"

              	
                "LESSEE"

              
	 
      	 
      
	
                Continental
      2361/2381 LLC

              	
                Peerless
      Systems Corporation

              
	
                a
      California limited liability company

              	
                a
      Delaware corporation

              

      

      

      
        	
                By:

              	
                Continental
      2361/2381, Inc.

              
	 
      	
                a
      Delaware corporation

              
	 
      	
                its
      Managing member

              

      

      

      

      
        	
                By:

              	 
      	 
      	
                By:

              	 
      
	 
      	
                Richard
      C. Lundquist

              	 
      	 
      	 
      	 
      
	 
      	
                President

              	 
      	
                Print
      Name:

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                Title:

              	  
      

      

      

      

      
        	
                By:

              	 
      	 
      	
                By:

              	 
      
	 
      	
                Leonard
      E. Blakesley, Jr

              	 
      	 
      	 
      	 
      
	 
      	
                Secretary

              	 
      	
                Print
      Name:

              	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                Title:

              	 
      

      

       

      
        
          
          

        

        
          4

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