Document:

Schechter
      & Co. Limited

    12
      Charles Street, Suite B 

    Mayfair,
      London W1J 5DR 

    United
      Kingdom 

    23
      April
      2007 

    

    Bio
      Solutions Manufacturing, Inc. 

    4440
      South Arville, # 6 

    Las
      Vegas, Nevada 89103 

    USA
      

    

    For
      the
      attention of Mr David Bennett, President & CEO 

     

    Dear
      Sirs

    
       

      
        	 	 	 
	
                1.
                  

              	
                This
                  letter sets forth the basis of understanding between Bio Solutions
                  Manufacturing, Inc. and its affiliated companies (collectively
                  “BSLM”
                  or the “Company”)
                  and Schechter & Co. Limited (“Schechter”)
                  and affiliated companies (“Schechter
                  Group”),
                  whereby Schechter will act as BSLM’s lead financial adviser in seeking to
                  arrange an initial private placement of approximately $30 million
                  of
                  Project Finance Notes to construct a series of 12 Bio-Diesel Production
                  Plants at an approximate cost of $2.5 million per plant (the “Transaction”).
                  

              
	 	 	 
	
                In
                  acting as your financial adviser, Schechter: 

              
	 	 	 
	 	
                (i)
                  

              	
                will
                  prepare, and advise in relation to, a confidential memorandum
                  (“Memorandum”)
                  containing all the information that Schechter may deem necessary
                  to effect
                  the successful placement of the financing. This Memorandum will
                  be
                  submitted to the Company for approval by its management that its
                  contents
                  are true and accurate and not misleading in anyway before it is
                  distributed to any third party and the Company shall afford to
                  Schechter
                  and its representatives full co-operation in its preparation;
                  

              
	 	 	 
	 	
                (ii)
                  

              	
                has
                  an exclusive right in relation to a secured private placement,
                  for a
                  period of 120 days from the time the Company has approved the final
                  Memorandum, to arrange the Transaction and will exert its reasonable
                  efforts to do so. The private placement of such securities is subject
                  to
                  the terms and form of this financing being mutually agreeable to
                  both the
                  Company, at its sole discretion, and the investors (“Note
                  Purchasers”).
                  Schechter will contact potential Note Purchasers and assist in
                  the
                  negotiations and the structuring of the Transaction; 

              
	 	 	 
	 	
                (iii)
                  

              	
                acknowledges,
                  with respect to the aforementioned exclusivity, that the following
                  investors have already been approached independently and fall outside
                  the
                  scope of this agreement: 

              

      

      

      Tel:
        +44
        (0)20 7629 7729 Fax: +44 (0)20 7629 3196 

      Website:
        www.schechterco.com E-mail: larry@schechterco.com Mobile: +44 (0)7909 990
        178

      

      Company
        No. 4396905. Registered in England and Wales. Registered office as above.
        

      VAT
        Registration No. 801985424 

      Regulated
        by the Financial Services Authority. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Schechter
        & Co. Limited

      -
        Highland Capital Management, L.P.; 

      -
        ACI
        Capital; 

      -
        Warburg
        Pincus; 

      -
        Laurus
        Funds; 

      -
        EnTrust
        Capital; and 

      -
        Wachovia Bank NA; 

      

      For
        clarity, a municipal deal fully funded out of a revenue bond also falls outside
        the scope of this agreement. 

      

      With
        respect to the aforementioned exclusivity, the Company acknowledges that
        no
        other potential Note Purchasers other than those listed in (iii) above have
        been
        contacted about the Transaction and further acknowledges that any and all
        Note
        Purchasers that participate in the placement fall inside the scope of this
        agreement. 

      

      (The
        “Engagement”).
        

      

      For
        the
        avoidance of doubt, Schechter will be acting as the Company’s agent in arranging
        the private placement but shall not be entitled to bind the Company. Schechter
        may, as appropriate, involve other members of the Schechter Group or other
        registered broker dealers in the Engagement, provided that as between the
        Company and Schechter, Schechter shall remain fully responsible for the acts
        and
        omissions of the other members of the Group or broker dealers so involved.
        

      

      Fees
        and Expenses 

      

      
        	
                2.
                  

              	
                As
                  compensation for the services to be performed by Schechter pursuant
                  to the
                  Engagement, the Company hereby agrees to pay Schechter the following
                  fees.
                  

              

      

      

      A
        cash
        fee equal to 5.0% (five per cent.) of the principal amount of funds raised
        (“the
Funds”).
        The
        fee is payable at the time the Funds are received by the Company or the
        acceptance of the Funds is foregone by the Company after the execution of
        a
        definitive agreement between the Company and the Note purchasers, whether
        or not
        the Funds are drawn down immediately or a delayed takedown is secured.

      

      For
        clarity, the cash fee is payable when the first dollar is drawn down per
        project
        and will be paid out of the proceeds of each funding. 

      

      If
        the
        Notes are sold with warrants, in addition to the cash fee, Schechter will
        receive warrants equal to 5.0% (five per cent.) of the warrants issued pro
        rata
        for each investor on the same terms and conditions as the investor. Schechter
        may keep such warrants in its own name or nominee’s name at its discretion.

      If
        the
        Notes are sold without warrants, in addition to the cash fee, Schechter will
        receive pure common stock or net profit interest equal to 5.0% (five per
        cent.)
        issued pro rata for each investor on the plants financed. 

      

      (Collectively,
        the “Fees”).
        

      

      The
        Company has represented its intention to construct 60 Bio Diesel plants over
        five years. Provided that the same investor group commits to fund future
        plants
        beyond the initial Transaction, Schechter will receive the same Fees mentioned
        above less 1.0% (one per cent for 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Schechter
        & Co. Limited

      

      the
        next
        12 plants to be financed. In other words, if a new facility is committed
        for
        future plants 13-24, Schechter will receive 4.0% (four per cent.) of the
        above
        Fees, if a new facility is committed for future plants 25-36, Schechter will
        receive 3.0% (three per cent.) on the above Fees, and so on. This clause
        shall
        survive any termination of the agreement and arrangements contained in this
        letter. 

      

      BSLM
        undertakes that it will promptly reimburse Schechter for all reasonable
        out-of-pocket costs and expenses properly incurred by it in relation to the
        Engagement, provided that total expenses, including any legal fees for
        Schechter’s legal advisors, do not exceed $25,000 without the Company’s written
        consent. No individual expense in excess of $2,500 will be incurred without
        the
        Company’s approval. 

      

      In
        the
        event that Schechter fails to perform and investor due diligence confirms
        Company representations, out-of-pocket expenses will be borne by Schechter.
        For
        clarity, in the event that an offer of funding is made by an investor, all
        out-of-pocket expenses will be paid by the Company regardless of whether
        the
        offer is accepted or not. 

      

      Schechter
        understands that VAT is not applicable to the services it renders to BSLM.
        However, the Company will pay to Schechter, if applicable, any additional
        VAT
        chargeable in respect of payments made by BSLM to us (including under clause
        4).

      

      BSLM
        represents and warrants that it has not agreed that any person is entitled
        directly or indirectly to make any claim against Schechter in respect of
        making
        the introduction between Schechter and the Company. 

      

      If
        Schechter is successful in this Engagement, the Company will grant Schechter
        a
        right of first refusal to finance non-US facilities. Such right of first
        refusal
        will expire 90 days from the notification to install sites outside of the
        United
        States. 

      

      Provision
        of Information 

      

      
        	
                3.
                  

              	
                BSLM
                  will provide Schechter with all material information in its possession
                  relevant for the purposes of the Engagement and will ensure that
                  such
                  information is, to the best of its knowledge (having made due enquiry),
                  true and accurate in all material respects and not misleading.
                  BSLM
                  confirms that it has the right to supply such information to Schechter
                  and
                  that the supply of such information by the Company and its receipt
                  and use
                  by Schechter for the purposes of the Engagement, will not infringe
                  any
                  rights held by any third party, involve the unauthorized use of
                  confidential information belonging to a third party or result in
                  a breach
                  by BSLM or Schechter of any law, regulatory obligation, fiduciary
                  duty
                  owed to any third party, intellectual property rights or agreement.
                  BSLM
                  accepts that any advice given to it by Schechter will be on the
                  basis that
                  Schechter has been supplied with all information relevant to it
                  for the
                  purposes of the Engagement. Schechter will agree appropriate arrangements
                  and procedures to ensure that any information disclosed between
                  BSLM and
                  Schechter is kept confidential and BSLM and Schechter shall comply
                  with
                  such arrangements and procedures. 

              

      

      

      The
        Company undertakes that it will, at all times, keep Schechter fully informed
        of
        all strategies, developments and discussions relevant to the Engagement and
        that
        no initiatives relevant to the Transaction will be taken without prior
        consultation with Schechter. 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

         

      

      Schechter
        & Co. Limited

      

      Schechter
        undertakes that it will, at all times, keep the Company promptly and fully
        informed of all material questions, comments or responses from potential
        Note
        Purchasers and shall not provide any confidential information or documentation
        provided to Schechter by or on behalf of the Company (other than the Memorandum)
        to such potential Note Purchasers without the prior written consent of the
        Company. 

      

      Indemnity
        

      

      
        	
                4.
                  

              	
                BSLM
                  agrees with Schechter (for itself and on trust and as agent for
                  the other
                  persons mentioned below): 

              

      

      

      
        	 	
                (a)
                  

              	
                that
                  BSLM will indemnify Schechter and each other member of the Schechter
                  Group
                  and each of its and their respective directors, partners, officers,
                  employees and agents (each of the foregoing an “Indemnified
                  Person”)
                  against any and all actions, claims, losses, liabilities, damages,
                  costs,
                  charges and expenses which it or they may suffer or incur in any
                  jurisdiction or which may be made or taken against them arising
                  as a
                  result of a legal action by a third party against any Indemnified
                  Person
                  under, out of, or in connection with, the Engagement or Schechter’s role
                  in connection therewith or the Transaction (including any reasonable
                  and
                  proper costs, charges and expenses (including legal fees) involved
                  in
                  investigating, preparing for or defending the relevant claim whether
                  or
                  not in connection with pending or threatened litigation in which
                  Schechter
                  or any other Indemnified Person is or may be a party) save to the
                  extent
                  that the same shall have arisen from such Indemnified Person’s negligence,
                  default or breach of the terms of this letter (other than any such
                  breach
                  which has arisen as a result of any matter or event beyond the
                  Indemnified
                  Person’s reasonable control) or that the same shall have arisen from such
                  Indemnified Person’s negligent non-compliance with the applicable laws,
                  rules and regulations in the applicable jurisdiction. 

              
	 	 	 
	 	
                (b)
                  

              	
                No
                  claims will be made against any Indemnified Person by BSLM or any
                  director, employee, agent, subsidiary or affiliate of the Company
                  in
                  respect of any and all actions, claims, losses, liabilities, damages,
                  costs, charges and expenses which BSLM or any director, employee,
                  agent,
                  subsidiary or affiliate of the Company may suffer relating to the
                  Engagement or Schechter’s role in connection therewith or the Transaction
                  or arising from the arrangements contemplated hereby or requested
                  pursuant
                  hereto (“Client
                  Losses”)
                  save to the extent that the same shall have arisen directly as
                  a result of
                  such Indemnified Person’s negligence or default or breach of the terms of
                  this letter (other than any such breach which has arisen as a result
                  of
                  any matter or event beyond the Indemnified Person’s reasonable control),
                  or that the same shall have arisen from such Indemnified Person’s
                  negligent non-compliance with the applicable laws, rules and regulations
                  in the applicable jurisdiction. 

              
	 	 	 
	 	
                (c)
                  

              	
                Notwithstanding
                  anything in clause 4(b) above, where any Indemnified Person is
                  the subject
                  of a claim alleging liability in respect of any Client Losses arising
                  from
                  or in any way connected with the Engagement or Schechter’s role in
                  connection therewith or the Transaction, then the total amount
                  of such
                  Client Losses recoverable from any such Indemnified Persons shall
                  be
                  limited to such proportion of the Client Losses as is finally determined
                  to be just and equitable, having regard to the relative responsibility
                  of
                  (i) each Indemnified Person so liable and

              

      

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      Schechter
        & Co. Limited

      

      
        	 	
                (ii)
                  

              	
                any
                  other person (including for the avoidance of doubt, both BSLM (and
                  any
                  director, employee, agent, subsidiary or affiliate of the Company)
                  and any
                  other person unrelated to the Company) who is jointly or severally
                  liable
                  for the Client Losses or any part thereof (a “Third
                  Party”).
                  For the avoidance of doubt, any limitation or exclusion or restriction
                  on
                  the liability of any Third Party under any jurisdiction, whether
                  arising
                  under statute or contract or resulting from death, bankruptcy or
                  insolvency (a “Liability
                  Limitation”)
                  shall be ignored for the purposes of determining the extent of
                  responsibility of that Third Party under (ii) above.
                  

              

      

       

      
        	 	
                (d)
                  

              	
                Without
                  prejudice to clause 4(c) above,
                  where:

              

      

       

      
        	 	 	
                (i)
                  

              	
                notwithstanding
                  anything in clause 4(b) above, it has been fully determined that
                  one or
                  more Indemnified Persons is liable to BSLM for any Client Losses
                  in any
                  way connected with the Engagement, or Schechter’s role in connection
                  therewith or the Transaction; and 

              
	 	 	 	 
	 	 	
                (ii)
                  

              	
                any
                  Third Party has the benefit of a limitation or exclusion or restriction
                  of
                  liability arising under a contract with BSLM (the “Contractual
                  Liability Limitation”);
                  

              

      

      

      then
        the
        total liability of any such Indemnified Person to the Company in respect
        of the
        Client Losses shall not exceed the maximum amount which it could recover
        from
        such Indemnified Person after deducting such sums as that Indemnified Person
        would have been entitled to recover from any Third Party in respect of the
        Client Losses, but is prevented from recovering as a result of the Contractual
        Liability Limitation. 

      

      
        	 	
                (e)
                  

              	
                Nothing
                  in this letter shall be taken to exclude or restrict any duty or
                  liability
                  to BSLM which Schechter has under the Financial Services & Market Act
                  2000 (“FSMA”)
                  or under the regulatory system (as defined in the rules and regulations
                  (the “Rules
                  of the FSA”)
                  of the Financial Services Authority Limited (“FSA”)
                  or the Securities Act 1933, as amended. 

              
	 	 	 
	 	
                (f)
                  

              	
                Schechter
                  shall, so far as permitted by law and/or our insurers, comply with
                  any
                  reasonable request that BSLM may make in relation to any relevant
                  action
                  or claim brought or made against the Company, subject to the Company
                  indemnifying and securing Schechter in a manner reasonably satisfactory
                  to
                  Schechter against any and all costs, charges and expenses incurred
                  by it
                  in complying with any such request. Where Schechter reasonably
                  believes
                  that any of the circumstances giving rise to the indemnity set
                  out in
                  clause 4(a) above might apply, BSLM will co-operate, so far as
                  it is able,
                  with any reasonable request from Schechter in relation to such
                  circumstances, and, in particular, BSLM will promptly provide copies
                  of,
                  or access to, all documents so requested. 

              
	 	 	 
	 	
                (g)
                  

              	
                These
                  paragraphs (a) to (g) and clause 7 shall be without prejudice to
                  any other
                  rights or remedies Schechter may have and shall survive any termination
                  of
                  the agreement and arrangements contained in this letter.
                  

              

      

      
      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      Schechter
        & Co. Limited

       

      FSA
        Rules and other Applicable Laws and Regulations 

      

      
        	
                5.
                  

              	
                All
                  services provided by Schechter are subject to the Rules of the
                  FSA and may
                  constitute corporate finance business (as defined in the Rules
                  of the
                  FSA); they are also subject to the extent applicable, to regulation
                  by the
                  Financial Services Authority. In providing such services to BSLM,
                  Schechter is proposing to treat the Company as a non-private customer
                  within the meaning of the Rules of the FSA.

              

      

       

      BSLM
        agrees that it will comply with, and will ensure that its subsidiaries,
        directors and employees all comply with, all applicable laws, rules and
        regulations in England and other relevant overseas territories in relation
        to
        the Transaction including, in particular, in respect of all announcements
        made
        or documents published in connection therewith. BSLM acknowledges that no
        member
        of the Schechter Group is responsible for advising the Company in respect
        of any
        of the foregoing laws, rules and regulations and, without prejudice to clause
        4(b) above, acknowledges that Schechter shall not incur any liability to
        the
        Company in respect of any breach of applicable laws or regulations where
        Schechter has acted in good faith in the absence of, or in accordance with,
        any
        advice you have received and communicated to Schechter. 

       

      Communications
        

      

      
        	
                6.
                  

              	
                All
                  announcements and documents made or published by BSLM or on its
                  behalf, or
                  by Schechter or on Schechter’s behalf in relation to the Transaction, will
                  only be made or published after consultation between BSLM and Schechter
                  in
                  respect of the wording of such announcements and documents made
                  or
                  published. Except as may be required by law, no communication,
                  information
                  or advice rendered by BSLM or Schechter in writing or otherwise
                  in
                  connection with the Transaction will be quoted, nor will any such
                  communication or advice or the Company’s name or the name of Schechter be
                  referred to, in any report, document, statement, press release
                  or other
                  communication (“Communication”)
                  without BSLM’s and Schechter’s prior written
                  authorization.

              

      

       

      Except
        where required by law or the Rules of the FSA, Schechter shall not be
        responsible for ensuring the truth, accuracy, completeness or fairness of
        any
        Communication made by or on behalf of BSLM in connection with the Transaction
        (including any such communication Schechter has approved for the purposes
        of the
        FSA). 

      If,
        for
        any reason, any such Communication is made without the consent of the Company
        or
        Schechter, or if the Company or Schechter subsequently becomes aware of
        information which renders such Communication untrue or misleading in any
        material respect, the parties to this letter agreement mutually acknowledge
        that
        the Company or Schechter shall be entitled to publish any documents, statements
        or communications as it thinks fit in the Company’s or Schechter’s interest
        without reference or liability to the other. 

      

      Termination
        

      

      
        	
                7.
                  

              	
                Subject
                  to clause 4, Schechter reserves the right to terminate the Engagement
                  and
                  cease acting for BSLM in connection with the Transaction at any
                  time and
                  without prejudice to either rights accrued and obligations incurred
                  by
                  either Schechter or BSLM prior to Schechter’s ceasing to act, except that
                  following any such termination or expiration of the Engagement,
                  Schechter
                  shall remain entitled to any fees accrued and/or expenses incurred
                  pursuant to clause 2 above but not yet paid prior to termination
                  or
                  expiration. 

              

      

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

      Schechter
        & Co. Limited 

      

      BSLM
        has
        the right to terminate the Engagement in connection with the Transaction
        at any
        time and without prejudice to either rights accrued or obligations incurred
        by
        either Schechter or BSLM prior to Schechter’s ceasing to act. Following any such
        termination by BSLM or expiration of the Engagement, Schechter shall remain
        entitled to any fees accrued and/or expenses incurred pursuant to clause
        2 above
        but not yet paid prior to termination or expiration. In addition, in the
        case of
        termination by BSLM, where such termination is not as a result of Schechter’s
        failure to perform its obligations under this Engagement in any material
        respect, Schechter shall remain entitled to full payment of all fees
        contemplated by paragraph 2 hereof in respect of any Transaction announced
        or
        resulting from negotiations commenced during the period from the date hereof
        until the date twelve months following such termination. The Company agrees
        to
        pay any and all legal or court costs from any dispute which may arise in
        connection with the Transaction prior to or post Termination. In any event,
        the
        Engagement shall terminate on the date which is the later of (a) twelve months
        after the date of this letter or (b) twelve months after Schechter’s substantive
        work on the Engagement ceases, and any obligations Schechter may have under
        this
        letter shall thereupon terminate automatically without further notice. In
        the
        event of any such termination, Schechter shall, subject to clause 6 and 8
        (Communications and Material Interests), be free to act for any other person
        in
        connection with the subject matter of the Engagement. The provisions of clauses
        6 and 8 shall survive the termination of the Engagement. 

      

      Material
        Interests 

      

      
        	
                8.
                  

              	
                The
                  business of Schechter may give rise to situations where members
                  of the
                  Schechter Group might have a client whose interest may conflict
                  with your
                  interests or may be regarded as having interests which conflict
                  with your
                  interests in relation to the Transactions or investment concerned
                  or might
                  have some other interest, relationship or arrangement that is material
                  (“Material
                  Interest”).
                  Schechter has established practices and procedures designed to
                  ensure that
                  your interests are not prejudiced by any such Material Interest.
                  

              
	
                 

              	BSLM
                hereby acknowledges and accepts, so as expressly to override any
                duties,
                obligations or restrictions which would otherwise be implied by law
                or by
                the rules of any regulatory authorities, and exchanges, any other
                member
                of the Schechter Group may be prohibited from disclosing, or it may
                be
                inappropriate for any member of the Schechter Group to disclose,
                information to BSLM, in particular about Material Interests.
                

      

      

      Confidentiality
        

      

      
        	
                9.
                  

              	
                Schechter
                  undertakes to keep confidential within the Schechter Group any
                  information
                  relating to BSLM or its business which has been provided to Schechter
                  by
                  or on behalf of BSLM and which is not public knowledge, provided
                  that
                  Schechter may disclose such confidential information or details
                  relating
                  to the Engagement or this letter if required by law or its insurers
                  (subject to such insurers agreeing in writing to keep such information
                  confidential) or the rules and regulations of the FSA, the Panel
                  on
                  Take-overs and Mergers or any other relevant regulatory authority
                  or
                  exchange. BSLM hereby authorizes and consents to such disclosure
                  and
                  authorizes Schechter to co-operate with and/or report to such authorities
                  and exchanges. BSLM agrees that Schechter’s duties to the Company will not
                  restrict Schechter’s freedom to take all steps which it considers to be
                  necessary to comply with the laws, rules and regulations applicable
                  to it.
                  

              

      

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      Schechter
        & Co. Limited

      Communications,
        Documents and Records 

      

      
        	
                10.
                  

              	
                All
                  correspondence and other papers created by Schechter relating to
                  the
                  Engagement or the subject matter of the Engagement (other than
                  copies of
                  such documentation provided to BSLM in the course of the Engagement)
                  shall
                  be Schechter’s sole property. No announcements or communications relating
                  to the Transaction or the other party hereto shall be made without
                  the
                  prior written consent of the other party.

              

      

      

      General
        

      

      
        	
                11.
                  

              	
                Schechter
                  will not act as an employee of the Company or be responsible for
                  providing
                  it with or obtaining or reviewing on its behalf, any specialist
                  advice,
                  for the avoidance of doubt including but not limited to legal,
                  accounting,
                  actuarial, environmental or information technology advice, although
                  Schechter would be happy to discuss with BSLM the implications
                  of any such
                  advice the Company receives

              
	 	 
	
                12.
                  

              	
                In
                  this letter “Schechter” means Schechter & Co. Limited and “Schechter
                  Group” means Stephen L. Schechter & Co., Incorporated and its
                  subsidiary and associated undertakings (as defined respectively
                  in Section
                  258 and paragraph 20(1) of Schedule 4A of the Companies Act 1985)
                  together
                  with any subsidiary or associated undertakings of any such undertaking
                  and
                  Charles Penn Longview Associates Ltd. 

              
	 	 
	
                13.
                  

              	
                A
                  person who is not a party to this letter shall have no rights under
                  the
                  Contracts (Third Parties) Act 1999 to enforce any of its items.
                  

              
	 	 
	
                14.
                  

              	
                This
                  letter shall be governed by and construed in accordance with New
                  York law.
                  

              
	
                 

              	Both
                Schechter and BSLM agree that the Courts of New York will have exclusive
                jurisdiction to settle any dispute which may arise in connection
                with this
                letter. Alternatively, disputes may be settled by independent arbitration
                upon agreement of both parties. 

      

      

      Please
        indicate the Company’s agreement by signing and returning this letter.

      Yours
        sincerely 

       

      
         

        
          	                
                  	 
	
                  For
                    and on behalf of 

                	 
	
                  SCHECHTER
                    & CO. LIMITED 

                	 
	
                  We
                    agree to the foregoing 

                	 

        

         

         

        
          	                    
                  	 	                          
                  
	
                  For
                    and on behalf of 

                	 	
                  Date
                    

                
	
                  BIO
                    SOLUTIONS MANUFACTURING, INC.

                	 	 

        

         

      

      
        
          
          

        

        
          8CONFIDENTIAL
        TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
        REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
        THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION

    

    

      
        	
                KYOCERA
                  MITA/PEERLESS Master Development Agreement

              	
                CONFIDENTIAL

              

      

    

     

    MASTER
      DEVELOPMENT AGREEMENT

    

    This
      Master Development Agreement (this “Agreement” or “MDA”) is entered into
      effective as of February 1, 2005 (the “Effective Date”) by and between Kyocera
      Mita Corporation, a Japanese corporation, (“KYOCERA MITA”) and Peerless Systems
      Corporation, a Delaware corporation (“PEERLESS”). Each of KYOCERA MITA and
      PEERLESS is sometimes referred to individually as a “Party” or collectively as
      the “Parties”.

    

    This
      Agreement shall consist of this MDA one or more Project Addenda and the terms
      of
      the Memorandum of Understanding entered into as of February 1, 2005 by and
      between the Parties (the “MOU”), and the Non-Disclosure Agreement entered into
      as of February 21, 2005 by and between the Parties, as amended and restated
      (the
“NDA”) which are hereby incorporated into this Agreement. All terms incorporated
      from the MOU that refer to the MOU shall be deemed to reference both the MOU
      and
      this Agreement. In the event of any conflict between the provisions of this
      Agreement and those of the MOU, the provisions of the MOU shall prevail except
      with respect to Section 7.2 of this MDA, which shall control over Section 5
      of
      the MOU.

    

    BOTH
      PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ THIS AGREEMENT, UNDERSTAND IT,
      AND AGREE TO BE BOUND BY THE TERMS AND CONDITIONS CONTAINED HEREIN. Each
      Party represents and warrants that the person who signs this Agreement on its
      behalf is authorized to sign on its behalf. Each Party signs only for itself
      and
      not for any subsidiary or affiliate.

    

    

    
      	
              KYOCERA
                MITA CORPORATION

               

              By:

            	 	
              PEERLESS
                SYSTEMS CORPORATION

               

              By:

            
	
              /S/
                Katsumi
                Komaguchi                                         

              (Authorized
                Signature)

            	 	
              /S/
                Richard L.
                Roll                                                   
                

              (Authorized
                Signature)

            
	
              Name:
                Katsumi Komaguchi

            	 	
              Name:
                Richard L. Roll

            
	
              Title:
                President

            	 	
              Title:
                President and CEO

            
	
              Date:
                April 10, 2007

            	 	
              Date:
                April 17, 2007

            

    

     

    
      
         

      

      
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          1

        
          

        

      

      
         

      

    

    
      CONFIDENTIAL
        TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
        REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
        THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION

      

        
          	
                  KYOCERA
                    MITA/PEERLESS Master Development Agreement

                	
                  CONFIDENTIAL

                

        

         

      

    

    1. Definitions

    

    1.1 Acceptance
      Criteria.“Acceptance
      Criteria” means the criteria specified as Acceptance Criteria in an
      applicable Project Addendum that must be satisfied in order for a PEERLESS
      Deliverable to be accepted by KYOCERA MITA.

    

    1.2 Bill
      of Materials.“Bill
      of
      Materials” means a document that lists all components, identified by their
      respective manufacturer’s part number, used in the assembly of a Printed Circuit
      Board Assembly.

    

    1.3 Change
      Order. “Change
      Order” means a written amendment signed by KYOCERA MITA and PEERLESS

    

    1.4 Confidential
      Information.“Confidential
      Information” shall have the meaning as set forth in the
      NDA.

    

    1.5 Controller.“Controller”
means
      a printer engine controller, including its associated
      Firmware, which shall perform the functions and support the engines described
      in
      a Project Addendum.

    

    1.6 Derivative
      IP. “Derivative
      IP” shall have the meaning as set forth in Section 7.1 of the MOU

    

    1.7 Firmware.“Firmware”
means
any
      software programs and/or data installed semi-permanently into devices or media
      such as read-only memory, random access memory, flash memory, and hard
      disk.

    

    1.8 First
      Customer Shipment.“First
      Customer Shipment” shall mean shipment of a KYOCERA MITA product that includes a
      PEERLESS Deliverable to an affiliate, distributor or other customer for sale.
      First Customer shipment shall not include any disposition of a KYOCERA MITA
      product that includes a PEERLES Deliverable for development purposes, such
      as a
      prototype, or as may otherwise be mutually agreed upon between the Parties
      in
      the applicable PS-LSA.

    

    1.9 IP.
      “IP”
      shall have the meaning as set forth in Section 7.3 of the MOU.

    

    1.10 KYOCERA
      MITA Deliverables.“KYOCERA
      MITA Deliverables” means any materials provided by KYOCERA MITA to PEERLESS
      under the applicable Project Addendum, including without limitation KYOCERA
      MITA
      Provided Print Engines and Related Documentation.

    

    1.11 KYOCERA
      MITA Provided Print Engines.“KYOCERA
      MITA Provided Print Engines” means any printer engines and associated
      accessories described in a Project Addendum that are provided to PEERLESS by
      KYOCERA MITA.

    

    1.12 KYOCERA
      MITA Technology.“KYOCERA
      MITA Technology” means KYOCERA MITA IP and Derivative IP of KYOCERA MITA IP, as
      specified in Section 7 of the MOU, as well as all patents, utility models,
      patent and utility model applications, copyrights, software, trade secrets,
      scientific knowledge and technical information, including without limitation,
      all inventions, creations, know-how, developments, improvements, steps,
      processes, methods, data and any other intellectual property, whether patentable
      or copyrightable or not, which are controlled or owned by KYOCERA MITA. For
      the
      avoidance of doubt, KYOCERA MITA Technology shall exclude any PEERLESS
      Technology acquired by KYOCERA MITA after the Effective Date.

    

    1.13 Licensed
      Products.“Licensed
      Products” means that portion of the PEERLESS Deliverables other than
      IP owned jointly by the parties, KYOCERA MITA Technology, or KYOCERA MITA
      Deliverables and the computer programs and other PEERLESS Technology identified
      in the applicable Project Addendum and to be licensed to KYOCERA MITA under
      the
      MTLA, as amended by the applicable PS-LSA. 

    

    
      
         

      

      
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        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    1.14 MMSA.
      “MMSA”
      means the Master Maintenance and Support Agreement between the Parties dated
      February 1, 2005.

    

    1.15 Project
      Specific Licensed Software Addendum. “Project
      Specific Licensed Software Addendum” or “PS-LSA”
means
      a
      written document expressly designated as a Licensed Software Addendum, that
      is
      an addendum to the MTLA, and under which PEERLESS is granting KYOCERA MITA
      rights to use, distribute, and otherwise commercialize and exploit the PEERLESS
      Deliverables as contemplated under the MOU. The PS-LSAs include and are limited
      to: [REDACTED].
      

    

    1.16 Master
      Technology License Agreement.“Master
      Technology License Agreement” or “MTLA”
means
      the Master Technology License Agreement between PEERLESS and KYOCERA MITA dated
      April 1, 1997. 

    

    1.17 
      PCBA Documentation Package.“PCBA
      Documentation Package” means a set of drawings that provides assembly
      instructions for a specific electronic assembly. Unless otherwise specified,
      PEERLESS-supplied PCBA Documentation Packages will be delivered in PEERLESS’
standard format. PCBA Documentation Package to be supplied by PEERLESS to
      KYOCERA MITA includes the following items:

    

    
      	 	
              (a)
                A PCBA drawing that indicates the approximate location of all components
                used on the PCBA; and

            

    

    

    
      	 	
              (b)
                A Bill of Materials that indicates a generic or PEERLESS part number
                and
                location reference for all components used on the
                PCBA.

            

    

    

    1.18 PEERLESS
      Deliverables.“PEERLESS
      Deliverables” means the deliverables to be delivered by PEERLESS to
      KYOCERA MITA as specifically set forth in a Project Addendum. 

    

    1.19 PEERLESS
      Provided Materials.“PEERLESS
      Provided Materials” means any hardware, software or equipment provided
      by PEERLESS to KYOCERA MITA for test or evaluation, together within any
      documentation related to such hardware, software or equipment, all as
      specifically set forth on a Project Addendum. 

    

    1.20 PEERLESS
      Technology.“PEERLESS
      Technology” means PEERLESS IP and Derivative IP of PEERLESS IP, as
      specified in Section 7 of the MOU, as well as all patents, utility models,
      patent and utility model applications, copyrights, software, trade secrets,
      scientific knowledge and technical information, including without limitation,
      all inventions, creations, know-how, developments, improvements, steps,
      processes, methods, data and any other intellectual property, whether patentable
      or copyrightable or not, which are controlled or owned by PEERLESS. For the
      avoidance of doubt, Peerless Technology shall exclude any KYOCERA MITA
      Technology acquired by PEERLESS after the Effective Date. 

    

    1.21 Pre-Production.“Pre-Production”
means
      a version of a PCBA, including but not limited to the
      Controller, which is in its final form. Pre-Production PCBA’s are intended to be
      complete and accurate representa-tions of the final PCBA to be released for
      manufacturing. Pre-Production PCBA’s will have full hardware functionality as
      specified by the Product Specification for the PCBA. A version of a PCBA that
      meets its specified Acceptance Criteria is deemed to be a Pre-Production
      PCBA.

    

    1.22 Printed
      Circuit Board Assembly.“Printed
      Circuit Board Assembly” or “PCBA”
means
      a
      fully assembled and tested electronic assembly that consists of a printed
      circuit board and the components specified by a Bill of Materials.

    

    
      
         

      

      
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        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    1.23 Product
      Specification.“Product
      Specification” means a description of the features, functionality, performance,
      operation and possible configurations of a PEERLESS Deliverable as included
      as
      part of the Project Addendum.

    

    1.24 Project.“Project”
means
      each specific development work relating to one or more Peerless
      Deliverables to be performed hereunder by PEERLESS, as agreed in writing by
      KYOCERA MITA and PEERLESS and set forth in a Project Addendum. 

    

    1.25 Project
      Addendum.“Project
      Addendum” means a written document expressly designated as a Project Addendum
      with reasonable terms agreed to in good faith by both Parties which describes
      in
      detail the applicable Project. Either party may propose Project Addendums which
      shall be negotiated in good faith by the Parties, the terms and conditions
      of
      which shall be reasonable and based on the initial Project
      Addendums.

    

    1.26 Project
      Schedule.“Project
      Schedule” means the development and delivery schedule for any Project as set
      forth in the applicable Project Addendum.

    

    1.27 Related
      Documentation.“Related
      Documentation” means documentation and specifications relating to any KYOCERA
      MITA Provided Print Engine.

    

    1.28
       Semiconductor
      Chip.“Semiconductor
      Chip” means an integrated circuit or other electronic component
      containing a semiconductor as a base material.

    

    1.29 Undefined
      Terms.
      Any
      undefined, capitalized terms used in this Agreement shall have the meanings
      ascribed to them in the MOU.

    

    2. Scope
      and Responsibilities

    

    2.1 Projects.
      During
      the term of this Agreement, KYOCERA MITA and PEERLESS will work together on
      each
      Project as set forth in a Project Addendum. 

    

    2.2 Deliverables.
      Each
      Project Addendum shall describe, among other things, the PEERLESS Deliverables
      and the KYOCERA MITA Deliverables, contain Product Specifications and Acceptance
      Criteria for the Peerless Deliverables, contain the Project Schedule and specify
      any additional fees, costs or expenses if applicable, all as mutually agreed
      to
      by the Parties. In the event that the Product Specifications are not finalized
      prior to execution of a Project Addendum, the Parties shall attach the then
      current version of what is referred to as the “design document”, “design notes”,
      or similar document to the Project Addendum. In such an event, “Specification
      Approval” shall be identified as a milestone on the Project Schedule of the
      Project Addendum, and the parties shall work together in good faith to prepare
      such Product Specifications. Such Product Specifications shall be finalized
      by
      and subject to the final approval of KYOCERA MITA consistent with what is
      commercially reasonable, what is within the technical capabilities of PEERLESS
      and the objectives of the MOU. Such approval shall take place no later than
      such
      milestone, and such document in the form approved shall be the final Product
      Specifications. Any changes thereafter to such final Product Specifications
      shall be subject to a Change Order. 

    

    2.3 Project
      Schedule and Reports. Each
      Party shall perform and shall deliver their respective deliverables in
      accordance with the Project Schedule. 

    

    
      
         

      

      
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        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    2.4 Loan
      and Support of Engines.
      KYOCERA
      MITA shall, at no charge to PEERLESS, lend PEERLESS for the entire development
      period of each Project the number of units of KYOCERA MITA Provided Printer
      Engines and Related Documentation set forth in the applicable Project Addendum,
      and PEERLESS may use and modify the KYOCERA MITA Provided Printer Engines and
      Related Documentation solely for benefit of KYOCERA MITA and shall not allow
      access to or use by any third party without the advance written permission
      of
      KYOCERA MITA. The KYOCERA MITA Provided Printer Engines and Related
      Documentation are and shall remain KYOCERA MITA’s property. PEERLESS shall use
      the KYOCERA MITA Provided Printer Engines only within PEERLESS’ facilities and
      shall not lend, sell, transfer, sublicense, encumber, pledge or assign the
      KYOCERA MITA Provided Printer Engines and Related Documentation provided
      hereunder. PEERLESS shall not move any KYOCERA MITA Engines or Related
      Documentation outside PEERLESS’ facilities without KYOCERA MITA’s express
      written consent. KYOCERA MITA shall supply such technical support (including
      repair service) for the KYOCERA MITA Provided Printer Engines as PEERLESS may
      require for its timely and successful completion of the Project. Within fifteen
      (15) calendar days after KYOCERA MITA’s written request, which may not be
      delivered prior to the later of (i) the expiration of PEERLESS’ warranty and
      support obligations for the applicable PEERLESS Deliverables or (ii) termination
      of the applicable Project Addendum, PEERLESS shall return to KYOCERA MITA all
      KYOCERA MITA Provided Printer Engines and Related Documentation for which such
      PEERLESS Deliverables were prepared. KYOCERA MITA shall pay all shipping,
      customs, insurance and similar costs of transportation for delivery of the
      KYOCERA MITA Engines and Related Documentation to PEERLESS and for return of
      the
      KYOCERA MITA Provided Printer Engines and Related Documentation to KYOCERA
      MITA.
      Except as provided in Section 8, risk of loss of the KYOCERA MITA provided
      Printer Engines or Related Documentation shall remain with KYOCERA MITA.
      PEERLESS further acknowledges and agrees that any and all printing samples
      of
      KYOCERA MITA Provided Engines shall be treated as KYOCERA MITA’s “Confidential
      Information”. PEERLESS shall use such practices to protect KYOCERA MITA
      materials as to the same extent that PEERLESS protects its own materials of
      a
      similar nature.

    

    2.5 PEERLESS
      Provided Materials.
      PEERLESS
      shall, at no charge to KYOCERA MITA, provide KYOCERA MITA for the entire
      development period of each Project the PEERLESS Provided Materials set forth
      in
      the applicable Project Addendum for the purposes described in the Project
      Addendum. The PEERLESS Provided Materials are and shall remain PEERLESS’
property. KYOCERA MITA shall use the PEERLESS Provided Materials only within
      KYOCERA MITA’s facilities and shall not lend, transfer, sublicense, encumber,
      pledge or assign the PEERLESS Provided Materials provided hereunder. KYOCERA
      MITA shall not move any PEERLESS Provided Materials outside KYOCERA MITA’s
      facilities without PEERLESS’ express written consent. PEERLESS shall supply such
      technical support (including repair service) for the PEERLESS Provided Materials
      as KYOCERA MITA may require for its timely and successful completion of the
      Project. Within fifteen (15) calendar days after PEERLESS’ written request,
      KYOCERA MITA shall return to PEERLESS all PEERLESS Provided Materials. PEERLESS
      shall pay all shipping, customs, insurance and similar costs of transportation
      for delivery of the PEERLESS Provided Materials to KYOCERA MITA and for return
      of the PEERLESS Provided Materials to PEERLESS. Except as provided in Section
      8,
      risk of loss of the PEERLESS Provided Materials shall remain with
      PEERLESS.

    

    2.6 Final
      Production Models.
      KYOCERA
      MITA shall provide to PEERLESS, at no charge, the number of production models
      as
      set forth in each Project Addendum, to be used by PEERLESS solely for the
      benefit of KYOCERA MITA, and PEERLESS shall not allow access to or use by any
      third party, provided, however, that PEERLESS may internally use such production
      models solely for its internal end use or as otherwise mutually agreed upon
      in
      advance and in writing by the Parties.

    

    2.7 Exclusive
      Use.
      Any
      KYOCERA MITA Technology provided to PEERLESS under this MDA shall only be used
      by PEERLESS in the development and support of a KYOCERA MITA Project and
      PEERLESS shall not allow access to or use by any third party of any KYOCERA
      MITA
      Technology. For the avoidance of doubt, nothing in this Agreement or otherwise
      shall restrict KYOCERA MITA’s right to provide any KYOCERA MITA Technology to a
      third party.

    

    
      
         

      

      
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        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    2.8 Third
      Party Products.
      PEERLESS
      Deliverables shall not incorporate the software of any third party unless
      expressly provided in the applicable Project Addendum. 

    

    3. Acceptance
      Procedure

    

    3.1 KYOCERA
      MITA Inspection.
      In each
      Project Addendum, KYOCERA MITA and PEERLESS shall mutually agree on the
      acceptance tests and acceptance testing procedures to determine whether the
      PEERLESS Deliverables meet the Acceptance Criteria. PEERLESS shall have the
      right to be present at all such acceptance tests. KYOCERA MITA will inspect
      PEERLESS Deliverables and notify PEERLESS in writing of its acceptance or
      rejection of such PEERLESS Deliverables in accordance with the applicable
      Acceptance Criteria within [REDACTED]
      calendar
      days of delivery or for any PEERLESS Deliverables delivered to KYOCERA MITA
      prior to the execution of this MDA, the later of (i)
      [REDACTED]
      calendar
      days after the delivery of such PEERLESS Deliverable or (ii) [REDACTED]
      calendar
      days after the execution of this MDA (either of the foregoing period, the
“Acceptance Period”). If KYOCERA MITA fails to notify PEERLESS of its acceptance
      or rejection within the applicable Acceptance Period, KYOCERA MITA shall be
      deemed to have accepted the PEERLESS Deliverables.

    

    3.2 Nonconformity
      Correction.
      If
      KYOCERA MITA in good faith determines that a PEERLESS Deliverable does not
      materially conform to the Acceptance Criteria, it will notify PEERLESS promptly
      of such nonconformance in writing, with sufficient specificity as to allow
      PEERLESS to attempt to remedy the alleged nonconformance. If PEERLESS is able
      to
      confirm the alleged nonconformance which it shall attempt to do in good faith,
      at its cost, PEERLESS shall correct and re-deliver the PEERLESS Deliverables
      (as
      corrected and re-delivered, the “Modified PEERLESS Deliverables”) to KYOCERA
      MITA within [REDACTED]
      calendar
      days following receipt of such written notice. KYOCERA MITA will inspect the
      Modified PEERLESS Deliverables and notify PEERLESS of its acceptance or
      rejection of such Modified PEERLESS Deliverables in accordance with the
      applicable Acceptance Criteria within [REDACTED]
      calendar
      days of delivery. If KYOCERA MITA fails to notify PEERLESS of its acceptance
      or
      rejection within the [REDACTED]
      period,
      KYOCERA MITA shall be deemed to have accepted the Modified PEERLESS
      Deliverables. 

    

    3.3 Nonconformity
      of Modified Deliverables.
      In the
      event that the Modified PEERLESS Deliverables do not reasonably conform to
      the
      Acceptance Criteria, KYOCERA MITA may, by notifying PEERLESS in writing of
      the
      ineffective correction of errors within the times set forth in Section 3.2
      above, elect one of the following remedies:

    

    [REDACTED].

    

    3.4 Final
      Acceptance.
      Final
      acceptance of a PEERLESS Deliverable shall be deemed to occur upon the
      occurrence of any of the following:

    

    
      	 	
              (a)
                KYOCERA MITA’s written acceptance of such PEERLESS Deliverable pursuant to
                Sections 3.1 or 3.2;

            

    

    

    
      	 	
              (b)
                KYOCERA MITA’s failure to provide a written acceptance or statement of
                nonconformances within the time specified in Section 3.1 or
                3.2;

            

    

    

    
      
         

      

      
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        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
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                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    
      	 	
              (c)
                Upon First Customer Shipment of a KYOCERA MITA product that includes
                such
                PEERLESS Deliverable.

            

    

    

    
      
        4. Changes

      

    

    

    4.1
       Changes.
      No
      changes or other amendments to a Project Addendum, Product Specification,
      Project, PEERLESS Deliverable, Project Schedule, or Acceptance Criteria, will
      be
      made unless and until documented in a Change Order executed by both
      Parties.

    

    4.2 Procedures
      for Change Order Review and Approval. Either
      Party, from time to time, may submit a proposed Change Order to the other Party.
      Either Party will consider the other Party’s proposed Change Order in good
      faith. A Change Order shall not modify a designated document unless it is
      approved by both Parties. Further, if a modification is approved by both
      Parties, it may require a schedule change.

    

    5. Payment

    

    5.1 Additional
      Services.
      If
      KYOCERA MITA requests any services that are beyond the scope of the MOU, KYOCERA
      MITA shall pay PEERLESS’ then current standard time and materials rates for such
      work. PEERLESS shall not undertake such additional work without KYOCERA MITA’s
      written authorization. PEERLESS will invoice KYOCERA MITA for such charges
      on a
      quarterly basis, and payment shall be due without offset within thirty (30)
      days
      of receipt of PEERLESS’ invoice.

    

    5.2 Taxes.
      KYOCERA
      MITA shall be obligated to pay all applicable federal, state, local , foreign,
      value added tax, use tax and sales tax relating to the PEERLESS Deliverables
      or
      the services delivered to KYOCERA MITA, other than taxes owed by PEERLESS for
      its income derived hereunder.

    

    5.3 General.
      KYOCERA
      MITA shall not offset payments hereunder. All amounts not paid in full when
      due
      shall accrue interest at a rate equal to twelve percent (12%) per annum until
      paid in full.

    

    
      
        6. Ownership;
          Right of Use

      

    

    

    6.1 Ownership.
      Ownership of the PEERLESS Technology, KYOCERA MITA Technology, Deliverables
      and
      other intellectual property shall be as set forth in the MOU. 

    

    6.2 Further
      Assurances.
      Each
      Party agrees to execute, or cause to be executed by its employees, agents,
      or
      subcontractors, whatever assignments of intellectual property rights and
      ancillary and confirmatory documents that may be required or appropriate so
      that
      title to the IP and Derivative IP shall be held as set forth in Section 7.3
      of the MOU.

    

    6.3 No
      Reverse Engineering.
      KYOCERA
      MITA agrees not to decompile, disassemble or otherwise attempt to reverse
      engineer any PEERLESS Technology. PEERLESS agrees not to decompile, disassemble
      or otherwise attempt to reverse engineer any KYOCERA MITA
      Technology.

    

    6.4 Government
      Data Rights.
      The
      PEERLESS Deliverables are provided to KYOCERA MITA, and the KYOCERA MITA
      Deliverables are provided to PEERLESS with RESTRICTED RIGHTS with respect to
      distri-bu-tion or licensing to the United States of America, its agencies and/or
      instrumentalities (the “Government”). Use, duplication or disclosure by the
      Government is subject to restriction as set forth in subparagraphs (a) through
      (d) of the Commercial Computer Software Restricted Rights clause at FAR
      52.22719, and subparagraph (c)(1)(ii) of the Technical Data and Computer
      Software clause at DFAR 252.227-7013, or as set forth in the parti-cular
      department or agency regulations or rules which provide PEERLESS or KYOCERA
      MITA
      protection equivalent to or greater than the above-cited clause. Under no
      circumstances shall PEERLESS or KYOCERA MITA be obligated to comply with any
      Governmental requirements regarding the submission of or the request for
      exemption from submission of cost or pricing data or cost accounting
      requirements.

    

    
      
         

      

      
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        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    7. Warranties
      and Maintenance

    

    7.1 No
      Warranties.
      EXCEPT
      AS OTHERWISE PROVIDED IN SECTIONS 7, 14.6 AND 14.7 OF THIS MDA, NEITHER PARTY
      MAKES ANY WARRANTIES UNDER THIS MDA, THE MOU, THE PROJECT ADDENDA OR THE NDA
      AND
      HEREBY DISCLAIMS ALL WARRANTIES IN THE FOREGOING, WHETHER EXPRESS, IMPLIED,
      OR
      STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
      MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.
For
      the
      sake of clarity, nothing in this Section 7.1 affects any warranties that
      may be made in any agreements between the parties other than this MDA, the
      MOU,
      the Project Addenda or the NDA with respect to the subject matter of any such
      agreements.

    

    7.2 Maintenance.
      Section
      5 of the MOU is hereby deleted in its entirety without renumbering any
      subsequent sections or paragraphs. PEERLESS shall provide KYOCERA MITA with
      maintenance and product support services according to the terms and conditions
      of the MMSA. It is further agreed that the terms of this MDA shall not, in
      any
      way, be construed by either Party to be applicable to maintenance and product
      support services.

    

    7.3 Nonconformity
      of KYOCERA MITA Provided Printer Engines. To
      the
      extent that any KYOCERA MITA Provided Printer Engines or KYOCERA MITA
      Deliverables fail to substantially comply with their specifications and to
      the
      extent such failure causes PEERLESS to be unable to perform its obligations
      under this MDA, the MOU or a Project Addendum, (i) PEERLESS shall be excused
      from performing such obligation by a period of time equal to the period that
      such failure continues and such additional time as reasonable given the duration
      and nature of the non-compliance and (ii) the Parties will in good faith
      reschedule the activities that were affected by the supply of non-complying
      KYOCERA MITA Provided Printer Engines or KYOCERA MITA Deliverables.

    

    8 Limitations
      of Liability and Exclusion of Damages 

    

    IN
      NO
      EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
      INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING WITHOUT LIMITATION
      DAMAGES FOR LOSS OF USE, LOST PROFITS OR LOSS OF DATA OR INFORMATION OF ANY
      KIND, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE MOU, THE PS-LSAs,
      THE MTLA (ONLY WITH RESPECT TO THE PS-LSAs), THE PROJECT ADDENDA, THE MMSA,
      OR
      THE NDA, WHETHER OR NOT THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
      LOSS OR DAMAGE. THIS EXCLUSION SHALL NOT LIMIT EITHER PARTY’S RIGHT TO BE
      INDEMNIFIED AS PROVIDED IN
      SECTION 9 OF THIS AGREEMENT. 

    

    
      
         

      

      
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          8

        
          

        

      

      
         

      

      
        CONFIDENTIAL
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          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    OTHER
      THAN FOR (1) INDEMNIFICATION UNDER SECTION 9,
      (2)LIQUIDATED DAMAGES UNDER SECTION 8.5 OF THE MOU, (3)ANY RECURRING LICENSE
      FEES OR SOURCE CODE FEES ACTUALLY DUE AND PAYABLE TO PEERLESS UNDER THE PS-LSAs
      BUT WHICH IN FACT HAVE NOT BEEN PAID, OR (4) ANY MAINTENANCE AND SUPPORT FEES
      OR
      TIME AND MATERIAL CHARGES ACTUALLY DUE AND PAYABLE TO PEERLESS UNDER THE MMSA
      BUT WHICH IN FACT HAVE NOT BEEN PAID,
      IN NO
      EVENT SHALL EITHER PARTY’S LIABILITY TO THE OTHER ARISING OUT OF OR IN
      CONNECTION WITH THE MOU, THE PS-LSAs, THE MTLA (ONLY WITH RESPECT TO THE
      PS-LSAs), THIS MDA, THE PROJECT ADDENDA, THE MMSA AND THE NDA, WHETHER IN
      CONTRACT, TORT, OR OTHERWISE, EXCEED U.S. [REDACTED].

    

    For
      the
      sake of clarity, nothing in this Section 8 affects any remedies that may be
      available under any agreements between the parties other than this MDA, the
      MTLA
      (with respect to the PS-LSAs), the PS-LSAs, the MOU, the Project Addenda, MMSA
      or the NDA with respect to the subject matter of those agreements.

    

    9.
       Indemnification

    

    9.1 Indemnification
      of PEERLESS.
      KYOCERA
      MITA shall indemnify, defend and hold harmless PEERLESS and its affiliates
      and
      the officers, directors, and employees of any of the foregoing, from and against
      any and all losses, liabilities, claims, obligations, costs, expenses (including
      reasonable attorneys’ fees) which result from, arise in connection with or are
      related in any way to claims by third parties arising out of or in connection
      with:

    

    
      	
            	(a)	
              KYOCERA
                MITA’s negligence, willful misconduct or willful
                misrepresentation;

            

    

    

    
      	
            	(b)	
              KYOCERA
                MITA’s violation of applicable laws;

            

    

    

    
      	
            	(c)	
              any
                claims that any KYOCERA MITA Technology, KYOCERA MITA Deliverable
                and/or
                KYOCERA MITA Provided Print Engine infringes any copyright, patent
                or
                trade secret or other intellectual property or proprietary rights;
                and/or

            

    

    

    
      	
            	(d)	
              any
                infringement claims to the extent that they are caused by or result
                from
                the matters described in Sections 9.2(i) through
                9.2(iv).

            

    

    

    KYOCERA
      MITA shall have no obligation under Section
      9.1 or 9.3(b) with
      respect to any infringement claim to the extent that such infringement is caused
      by or results from (i) alteration or modification of the KYOCERA MITA
      Technology, KYOCERA MITA Deliverables and/or KYOCERA MITA Provided Print Engine
      by any party other than KYOCERA MITA, (ii) use of the KYOCERA MITA Technology,
      KYOCERA MITA Deliverables and/or KYOCERA MITA Provided Print Engine in a manner
      not authorized or intended by this Agreement or its documentation, or (iii)
      use
      of the KYOCERA MITA Technology, KYOCERA MITA Deliverables and/or KYOCERA MITA
      Provided Print Engine in combination with any product or service not intended
      or
      authorized by this Agreement, and/or (iv) any grant of license or other
      commercialization or exploitation by PEERLESS in connection with any jointly
      developed IP (as defined in the MOU).

    

    9.2 Indemnification
      of KYOCERA MITA.
      PEERLESS shall indemnify, defend and hold harmless KYOCERA MITA and its
      affiliates, and the officers, directors, and employees of any of the foregoing,
      from and against any and all losses, liabilities, claims, obligations, costs,
      expenses (including reasonable attorneys’ fees) which result from, arise in
      connection with or are related in any way to claims by third parties arising
      out
      of or in connection with:

    

    
      
         

      

      
        Page
          9

        
          

        

      

      
         

      

      
        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    
      	
            	(a)	
              PEERLESS’
                negligence, willful misconduct or willful
                misrepresentation;

            

    

    

    
      	
            	(b)	
              PEERLESS’
                violation of applicable laws;

            

    

    

    
      	
            	(c)	
              any
                claims that any PEERLESS Technology and/or PEERLESS Deliverable infringes
                any copyright, patent or trade secret or other intellectual property
                or
                proprietary rights; 

            

    

    

    
      	
            	(d)	
              any
                claims that PEERLESS provided any PEERLESS Provided Materials to
                KYOCERA
                MITA in violation of the terms of any agreement between PEERLESS
                and a
                third party or that the import, possession, use or other activities
                contemplated hereunder of such PEERLESS Provided Materials infringes
                any
                copyright, patent or trade secret or other intellectual property
                or
                proprietary rights; and/or

            

    

    

    
      	
            	(e)	
              any
                infringement claims to the extent that they are caused by or result
                from
                matters described in Sections 9.1(i) through
                9.1(iv).

            

    

    

    PEERLESS
      shall have no obligation under Section 9.2 or 9.3(a) with respect to any
      infringement claim to the extent that such infringement is caused by or results
      from (i) alteration or modification of the PEERLESS Technology, PEERLESS
      Provided Materials and/or PEERLESS Deliverables by any party other than
      PEERLESS, (ii) use of the PEERLESS Technology, PEERLESS Provided Materials
      and/or PEERLESS Deliverables in a manner not authorized or intended by this
      Agreement or its documentation, and/or (iii) use of the PEERLESS Technology,
      PEERLESS Provided Materials and/or PEERLESS Deliverables in combination with
      any
      product or service not intended or authorized by this Agreement and/or (iv)
      any
      grant of license or other commercialization or exploitation by KYOCERA MITA
      in
      connection with any jointly developed IP (as defined in the MOU) other than
      in
      connection with KYOCERA MITA products covered by any license or sublicense
      from
      PEERLESS.

    

    9.3 Remedies.

    

    (a) If
      as a
      result of any claim of infringement of any copyright, patent or trade secret
      or
      other intellectual property or proprietary rights with respect to any PEERLESS
      Technology, PEERLESS Provided Materials and/or PEERLESS Deliverables KYOCERA
      MITA or its customers are enjoined from using such PEERLESS Technology, PEERLESS
      Provided Materials and/or PEERLESS Deliverables, or if PEERLESS in good faith
      reasonably believes that any portion of the PEERLESS Technology, PEERLESS
      Provided Materials and/or PEERLESS Deliverables is likely to become the subject
      of a claim of infringement, then, in addition to and not in lieu of its
      indemnification and other obligations under this MDA or otherwise, PEERLESS
      shall at its sole option and expense do one or more of the following: (i)
      procure for KYOCERA MITA the right to continue to use the PEERLESS Technology,
      PEERLESS Provided Material and/or PEERLESS Deliverable, (ii) modify the PEERLESS
      Technology, PEERLESS Provided Material and/or PEERLESS Deliverable so that
      it
      achieves the same functionality and performance, but is no longer infringing,
      or
      (iii) replace the PEERLESS Technology, PEERLESS Provided Material and/or
      PEERLESS Deliverable with an alternative technology that achieves substantially
      the same functionality and performance but is not infringing. At KYOCERA MITA’s
      sole option, the Parties will work cooperatively and in good faith to achieve
      the same form and fit of any Printed Circuit Board Assembly and/or Semiconductor
      Chip modified to make it non-infringing or, if achieving the same form and
      fit
      is not possible, to minimize the extent of modifications to the form and fit,
      to
      the extent reasonably possible.

    

    (b) To
      the
      extent that any KYOCERA MITA Technology, KYOCERA MITA Deliverable and/or KYOCERA
      MITA Provided Print Engine is found to infringe and to the extent that such
      infringement causes PEERLESS to be unable to reasonably perform its obligations
      under this MDA or a Project Addendum (i) PEERLESS shall be excused from such
      obligation by a period of time equal to the period that such infringement
      continues and (ii) the Parties will in good faith, through a Change Order,
      reschedule the activities that were affected by the infringement and any changes
      to the specifications of the KYOCERA MITA Technology, KYOCERA MITA Deliverable
      and/or KYOCERA MITA Provided Print Engines. All of KYOCERA MITA’s payment
      obligations shall continue during any such period. Nothing in the Section shall
      require PEERLESS to extend the term of this Agreement or any Project
      Addendum.

    

    
      
         

      

      
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          10

        
          

        

      

      
         

      

      
        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    9.4
       Defense
      and Settlement. Upon
      receipt of written notice of a valid indemnification claim from the other Party,
      which notice shall be promptly provided, the indemnifying Party shall, at its
      own expense, defend or settle any claim, demand, action or proceeding and pay
      any final settlement or judgment, fines, and/or penalties against the
      indemnified Party. The indemnifying Party may, in its sole discretion, elect
      to
      control and direct the investigation, defense and settlement of each such claim.
      The indemnified Party shall provide the indemnifying Party, at the cost of
      the
      indemnifying Party, with such reasonable assistance and cooperation as
      indemnifying Party may reasonably request from time to time in connection with
      such defense. The terms of any settlement arising under this Section shall
      be
      subject to the reasonable approval of the indemnified Party.

    

    9.5
       Separate
      Counsel.
      The
      indemnified Party retains the right to employ independent counsel of its choice,
      at its expense, to participate in any legal action or proceedings.

    

    9.6 Entire
      Indemnification Obligation.
      The
      Parties hereby agree and acknowledge that this Section 9 contains in its
      entirety the Parties’ indemnification obligations under this
      Agreement. 

    

    
      
        10.
          Proprietary
          Rights and Confidentiality

      

    

    

    10.1 Proprietary
      Rights Notices.
      For each
      KYOCERA MITA product incorporating any PEERLESS Deliverables distributed to
      a
      customer, KYOCERA MITA agrees to affix the following notice to all hardcopy
      or,
      if no hardcopy, electronic copies of KYOCERA MITA product manuals:

    

    
      	 	
              COPYRIGHT
                [YEAR] PEERLESS SYSTEMS
                CORPORATION.

            

    

    

    Such
      notices are not required on microchips or semiconductor chips containing the
      Deliverables. KYOCERA MITA shall not remove, obscure or modify any PEERLESS
      copyright, trademark or confidentiality notices or marks. 

    

    10.2 Obligations
      to Observe Confidentiality.
      The
      terms of the NDA shall govern each Party’s obligations to observe
      confidentiality of the other Party’s Confidential Information.

    

    
      
         

      

      
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          11

        
          

        

      

      
         

      

      
        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    11. Training

    

    PEERLESS
      shall make available for KYOCERA MITA at KYOCERA MITA’s request no less than
      five (5) days (or such other number of days agreed by the Parties) of training
      for not less than three (3) KYOCERA MITA employees (or such other number of
      employees agreed by the Parties) at PEERLESS’ El Segundo CA facility in the use
      of the Licensed Products for no additional consideration. The scheduling of
      such
      training shall be mutually agreed to in good faith between the Parties. KYOCERA
      MITA shall bear the expense of all out of pocket costs paid to third parties
      associated with such training, including but not limited to, meals, room and
      board, and travel expenses for KYOCERA MITA employees to attend such classes.
      KYOCERA MITA shall pay for any training, in addition to that indicated above,
      at
      PEERLESS’ then current rates for such training. This training shall be provided
      during the three (3) year term of the MOU, as such term may be extended or
      renewed. Time spent by PEERLESS providing training shall be applied against
      the
      14,500 hours per calendar quarter of engineering services available under the
      MOU. For purposes of this Section 11, training shall include only training
      specifically identified and requested by KYOCERA MITA under this Section 11
      and
      shall not include any joint development activities.

    

    12. Term
      and Termination

    

    12.1 Term.
      Upon
      execution, the term of this MDA shall run concurrently with the term of the
      MOU
      and be subject to any termination provision affecting the MOU. 

    

    12.2 Survival.
      Notwithstanding any other provision in this Agreement to the contrary, Sections
      1 (to the extent necessary to interpret other Sections that survive), 2.4,
      2.5,
      2.6, 2.7, 3, 5.3, 6, 7.1, 7.2, 8, 9, 10, 12, 13, and 14 shall survive
      termination of the Agreement.

    

    13.
      Export Controls

    

    The
      Parties shall comply with any and all United States export regulations, rules
      or
      orders now in effect or that may be promulgated from time to time that govern
      or
      relate to any export of any PEERLESS Technology and PEERLESS Deliverables,
      including without limitation any KYOCERA MITA product incorporating any PEERLESS
      Deliverable or PEERLESS Technology. The Parties shall comply with any and all
      United States export regulations, rules or orders now in effect or that may
      be
      promulgated from time to time that govern or relate to any export of any
      PEERLESS Deliverables or PEERLESS Technology. The Parties shall comply with
      the
      U.S. Foreign Corrupt Practices Act and all applicable export laws, restrictions
      and regulations of the U.S. Department of Commerce, the U.S. Department of
      Treasury and any other U.S. or non-U.S. agency or authority. The Parties shall
      not export or re-export or allow the export or re-export of any product,
      technology or information it obtains or learns pursuant to this Agreement in
      violation of such law, restriction or regulation, including, without limitation,
      export or re-export to any country subject to U.S. trade embargoes, or any
      party
      on the U.S. Export Administration Table of Denial Orders or the U.S. Department
      of Treasury List of Specially Designated Nationals or to any prohibited
      destination in any of the County Groups specified in the then current Supplement
      Number 1 to part 740 of the Commerce Control List specified in the then current
      Supplement Number 1 to part 738 of the U.S. Export Administration Regulations
      or
      any successor supplement or regulations. KYOCERA MITA shall obtain and bear
      all
      expenses relating to any necessary licenses and/or exemptions with respect
      to
      the export or re-export of any KYOCERA MITA product incorporating any PEERLESS
      Deliverable or PEERLESS Technology to any location in compliance with all
      applicable laws and regulations, and PEERLESS shall provide KYOCERA MITA with
      reasonable assistance in such matters. If either Party is involved in a
      transaction that gives the other Party reason to suspect that any product,
      technology or information it obtains or learns pursuant to this Agreement will
      be exported, re-exported or diverted in violation of any such laws, restrictions
      or regulations (including, without limitation. knowledge of suspect end users,
      abnormal transaction circumstances, or any other Bureau of Export Administration
      “red flag” indicators), then that Party will take appropriate steps to terminate
      such transaction, notify the correct U.S. agency and give notice to the other
      Party.

    

    
      
         

      

      
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          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    14. Miscellaneous

    

    14.1 Notices.
      All
      notices or other communications required hereunder shall be in writing and
      delivered personally or sent by certified mail, return receipt requested, by
      facsimile machine, or by a reputable courier service to the parties at the
      addresses set forth below, or at such other addresses as shall be designated
      in
      writing from time to time by either party to the other in accordance with this
      Section 14.1.

    

      
        	
                All
                  notices to KYOCERA MITA shall be sent to:

              	 
	 	 
	
                Kyocera
                  Mita Corporation

              	
                Tel:
                  81-3-3708-3846

              
	
                Yohga
                  Office

              	 
	
                2-14-9
                  Tamagawadai

              	
                FAX:
                  81-3-3708-0423

              
	
                Setagaya-ku

              	 
	
                Tokyo
                  158-8610 Japan

              	 
	
                Attention:
                  General Manager: RD Division 6

              	 
	 	 
	
                All
                  notices to PEERLESS shall be sent to:

              	 
	 	 
	
                Peerless
                  Systems Corporation

              	
                Tel:
                  (310)536-0058

              
	
                2381
                  Rosecrans Avenue

              	
                FAX:
                  (310)727-3623

              
	
                El
                  Segundo, CA 90245 USA

              	
                FAX:
                  (310)297-3142

              
	
                Attention:
                  Vice President, Business Development

              	 

      

    

    

    Such
      notice shall be effective: (i) on the fifth business day following deposit
      thereof in the mail (via first class air mail), (ii) on the second business
      day
      following any such deposit for express delivery, (iii) on the next business
      day
      if delivered or via facsimile and (iv) upon receipt if delivered
      personally.

    

    14.2 Agreement.
      This
      Agreement, the Project Addenda, the MMSA, the NDA, the MOU, the PS-LSAs, the
      MTLA (with respect to LSA #6), and any third party software sublicense(s)
      entered into between the Parties constitute the entire understanding and
      agreement between PEERLESS and KYOCERA MITA with respect to the matters
      contemplated herein and supersede any and all prior or contemporaneous oral
      or
      written communications with respect to the subject matter hereof, all of which
      are merged herein. This Agreement shall not be modified, amended or in any
      way
      altered except by an instrument in writing signed by authorized representatives
      of both PEERLESS and KYOCERA MITA. Except as specifically provided herein,
      no
      remedy available to either party hereunder or relating hereto shall be exclusive
      of any other remedy, and each and every such remedy shall be cumulative and
      shall be in addition to every other remedy given hereunder or now or hereafter
      existing at law or in equity or by statute or otherwise. No waiver of any
      provision of this Agreement or any rights or obligations of either party
      hereunder shall be effective, except pursuant to a written instrument signed
      by
      the party or parties waiving compliance, and any such waiver shall be effective
      only in the specific instance and for the specific purpose stated in such
      writing.

    

    14.3 Force
      Majeure.
      Except
      for payment obligations, neither Party shall be responsible for delays or
      failures in performance hereunder to the extent that such party was hindered
      in
      its performance by any act of God, natural disasters, acts of war or terrorism,
      riots, labor dispute, or any other occurrence beyond its reasonable
      control.

    

    
      
         

      

      
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          13

        
          

        

      

      
         

      

      
        CONFIDENTIAL
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          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    14.4 Severability.
      If any
      provision hereof is found invalid or unenforceable pursuant to judicial decree
      or decision, the remainder of this Agreement shall remain valid and enforceable
      according to its terms. Without limiting the foregoing, it is expressly
      understood and agreed that each and every provision of this Agreement which
      provides for a limitation of liability, disclaimer of warranties,
      indemnification of a party or exclusion of damages or other remedies is intended
      by the parties to be severable and indepen-dent of any other provision and
      to be
      enforced as such. Further, it is expressly understood and agreed that if any
      remedy hereunder is determined to have failed of its essential purpose, all
      limitations of liability and exclusions of damages or other remedies set forth
      herein shall remain in effect.

    

    14.5 Intentional
      Risk Allocation.
      PEERLESS
      and KYOCERA MITA each acknowledges that the provisions of the Agreement were
      negotiated to reflect an informed voluntary allocation between them of all
      the
      risks, both known and unknown associated with the transactions associated with
      this Agreement. The disclaimers and limitations in this Agreement are intended
      to limit the circumstances of liability and the forms of relief
      available.

    

    14.6 Representations
      and Warranties of KYOCERA MITA.
      KYOCERA
      MITA hereby represents and warrants as follows:

    

    
      	
            	(a)	
              it
                has full corporate power and authority to execute and enter into
                this
                Agreement;

            

    

    

    
      	
            	(b)	
              the
                consummation by KYOCERA MITA of the transactions contemplated by
                this
                Agreement have been duly authorized by all necessary corporate actions
                on
                behalf of KYOCERA MITA;

            

    

    

    
      	
            	(c)	
              the
                execution and delivery of this Agreement by KYOCERA MITA, and the
                consummation of the transactions contemplated by this Agreement,
                do not
                conflict with or violate the charter documents or by-laws of KYOCERA
                MITA
                or any contract or agreement to which KYOCERA MITA is a party, by
                which
                KYOCERA MITA or any of its affiliates is bound, or to which any of
                KYOCERA
                MITA’s assets are subject or any applicable law or the order of any court
                or governmental authority. 

            

    

    

    14.7 Representations
      and Warranties of PEERLESS.
      PEERLESS
      hereby represents and warrants as follows:

    

    
      	
            	(a)	
              it
                has full corporate power and authority to execute and enter into
                this
                Agreement;

            

    

    

    
      	
            	(b)	
              the
                consummation by PEERLESS of the transactions contemplated by this
                Agreement have been duly authorized by all necessary corporate actions
                on
                behalf of PEERLESS;

            

    

    

    
      	
            	(c)	
              the
                execution and delivery of this Agreement by PEERLESS, and the consummation
                of the transactions contemplated by this Agreement, do not conflict
                with
                or violate the charter documents or by-laws of PEERLESS or any contract
                or
                agreement to which PEERLESS is a party, by which PEERLESS or any
                of its
                affiliates is bound, or to which any of PEERLESS’ assets are subject or
                any applicable law or the order of any court or governmental
                authority.

            

    

    

    14.8 Governing
      Law. This
      Agreement shall be construed and enforced in accordance with the laws of the
      United States of America and the State of California applicable to contracts
      wholly executed and wholly to be performed therein, without giving effect to
      the
      conflict of law principles thereof. The parties agree that the International
      Regimes, including but not limited to the United Nations Convention on Contracts
      for the International Sale of Goods, and Supernational Regimes, including but
      not limited to NAFTA, shall not apply to this Agreement.

    

    
      
         

      

      
        Page
          14

        
          

        

      

      
         

      

      
        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    14.9 Contractors.
      KYOCERA
      MITA may contract with any person or entity (a “Contractor”) to exercise KYOCERA
      MITA’s rights and perform its obligations under this Agreement, solely for
      KYOCERA MITA’s benefit and account. If such Contractor is to exercise such
      rights or perform such obligations other than at a KYOCERA MITA Facility (as
      defined in a PS-LSA), such Contractor shall be subject to PEERLESS prior written
      approval. Any Contractor shall be bound by a written agreement with terms and
      conditions no less restrictive then this Agreement and the NDA. KYOCERA MITA
      shall cause Contractors to comply with this Agreement and the NDA, and shall
      be
      liable to PEERLESS for the acts and omissions of any Contractor or any breach
      of
      such agreements by such Contractor.

    

    

    ///End

    

    
      
         

      

      
        Page
          15

        
          

        

      

      
         

      

    

    CONFIDENTIAL
      TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
      REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
      THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION

    

      
        	
                KYOCERA
                  MITA/PEERLESS Master Development Agreement

              	
                CONFIDENTIAL

              

    

    Memorandum
      of Understanding 

    Dated
      February 1, 2005

    

    (Attached)

    

    SEE
      EXHIBIT 10.86
      TO
      THE COMPANY’S
      ANNUAL
      REPORT ON FORM 10-K

    FILED
      WITH THE COMMISSION ON MAY 2, 2005

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    CONFIDENTIAL
      TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
      REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
      THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION

    

      
        	
                KYOCERA
                  MITA/PEERLESS Master Development Agreement

              	
                CONFIDENTIAL

              

    

    Amended
      and Restated Non-Disclosure Agreement

    

    Dated
      Effective February 1, 2005

    

    

    (Attached)

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    CONFIDENTIAL
      TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
      REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
      THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION

    

      
        	
                KYOCERA
                  MITA/PEERLESS Master Development Agreement

              	
                CONFIDENTIAL

              

      

       

    

    AMENDED
      AND RESTATED NON-DISCLOSURE AGREEMENT

    

    This
      Amended and Restated Non-Disclosure Agreement (this “Agreement”) is entered into
      by and between Kyocera Mita Corporation (hereinafter “KMC”) and Peerless Systems
      Corporation (hereinafter “Company”) on the 1st day of February, 2007 and made
      retroactively effective as of the 1st day of February, 2005 (“Effective
      Date”).

    

    WHEREAS
      the parties would like to restate herein the terms and conditions to which
      each
      party previously had agreed as of the Effective Date and under which each party
      has disclosed and is willing to continue to disclose (each party in such
      capacity, the “disclosing
      party”)
      certain
      proprietary and confidential information regarding its business, including,
      without limitation, controllers, multifunction peripherals, printers, copiers,
      facsimiles, WiseCoreTM,
      software for any of the foregoing and technical information for any of the
      foregoing, to the other party (hereinafter referred to as “the
      receiving party”)
      as part
      of implementing and otherwise in connection with the Memorandum of
      Understanding, dated February 1, 2005 (the “MOU”),
      the
      Master Development Agreement, dated effective February 1, 2005 (the “MDA”),
      any
      Project Addenda (as such term is defined in the MDA) (each a “PA”),
      the
      Master Technology License Agreement, dated April 1, 1997 (“MTLA”),
      any
      Project Specific Licensed Software Addendum (as such term is defined in the
      MDA)) (each a “PS
      LSA”)
      and the
      Master Software and Support Agreement dated effective February 1, 2005 (the
      “MMSA”).
      

    

    NOW
      THEREFORE, the parties agree as follows:

    

    
      	
              1.

            	
              Definition.
                Capitalized
                terms used in this Agreement will have the meanings set forth below
                or as
                defined elsewhere in this Agreement.

            

    

    

    
      	 	
              (a)

            	
              Confidential
                Information.“Confidential
                Information” means any and all technical and/or business
                information disclosed by the disclosing party or obtained by the
                receiving
                party either directly or indirectly in writing, orally, by drawings,
                by
                inspection of parts or equipment, by observation or otherwise provided
                or
                given by disclosing party including, but not limited to, any such
                information or materials disclosed, given or otherwise provided or
                to
                which access is provided by the disclosing party or otherwise obtained
                by
                the receiving party in connection with the MOU, the MDA, a PA, the
                MTLA, a
                PS LSA or the MMSA; provided, that if the Confidential Information
                is
                disclosed in writing, it shall be marked with a “confidential”,
                “proprietary”, or similar legend, and if the Confidential Information is
                disclosed orally or visually, it shall be designated as confidential
                at
                the time of disclosure and followed by a letter, within thirty (30)
                days
                of such disclosure, setting forth that such oral or visual disclosure
                is
                treated as Confidential Information. Confidential Information disclosed
                via networks such as E-mail shall be also marked with the above or
                similar
                legend at the time of disclosure. Notwithstanding anything contained
                herein to the contrary, this Agreement shall not apply to any Confidential
                Information provided or otherwise disclosed by either party pursuant
                to
                any license agreement covering Novell NEST products or Adobe Postscript3
                products to the extent that the terms and conditions of this Agreement
                conflict with the terms and conditions of any such license agreements.
                 

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

      
        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    
      	 	
              (b)

            	
              Affiliates.“Affiliate”
as
                to a party means any entity in which such party: (a)(i)
                owns or controls directly or indirectly at least fifty percent (50%)
                of
                the outstanding stock or of the outstanding stock conferring the
                right to
                vote at general meetings; (ii) has the right, directly or indirectly,
                to
                elect the majority of the Board of Directors or its equivalent; or
                (iii)
                has the right directly or indirectly to appoint or remove the management;
                but such entity shall be deemed to be an Affiliate, only so long
                as such
                ownership or control exists or (b) any Affiliate of KMC as such term
                is
                defined in any PS LSA (including, without limitation, PS LSA
                #6).

            

    

    

    
      	
              2.

            	
              Confidentiality.
                The receiving party agrees to keep all Confidential Information secret
                and
                confidential. The receiving party shall not disclose the Confidential
                Information to any third party (except its and its Affiliates’ respective
                employees, consultants, attorneys, accountants, contractors and/or
                sublicensees who have reasonable need for access to such Confidential
                Information) without the prior written approval of the disclosing
                party.
                The receiving party shall maintain the Confidential Information with
                at
                least the same degree of care that the receiving party uses to protect
                its
                own similar categories of confidential and proprietary information,
                but no
                less than a reasonable degree of care under the circumstances. The
                receiving party shall not make any copies of the Confidential Information
                received from the disclosing party except as reasonably necessary.
                For any
                copies which are made, the receiving party shall not remove or obscure
                any
                legend affixed by the disclosing party indicating the confidential
                or
                proprietary nature of such Confidential
                Information.

            

    

     

    
      	
              3.

            	
              No
                Confidentiality.
                The receiving party shall not be liable to for the disclosure of
                any
                Confidential Information which is:

            

    

    

    
      	 	
              (a)

            	
              in
                the public domain other than by a breach of this Agreement in the
                part of
                the receiving party; or

            

    

    
      	 	
              (b)

            	
              rightfully
                received from a third party without any obligation of confidentiality;
                or

            

    

    
      	 	
              (c)

            	
              rightfully
                known to the receiving party without any limitation on use or disclosure
                prior to its receipt from the disclosing party;
                or

            

    

    
      	 	
              (d)

            	
              independently
                developed without reference to the disclosing party’s Confidential
                Information by or for the receiving party;
                or

            

    

    
      	 	
              (e)

            	
              generally
                made available to third parties by the disclosing party without
                restriction on disclosure; or

            

    

    
      	 	
              (f)

            	
              approved
                in writing by the disclosing party to disclose the Confidential
                Information. 

            

    

    

    
      	
              4.

            	
              Non-Permitted
                Use.
                The receiving party shall not use the Confidential Information for
                any
                purposes except the purpose as indicated
                above.

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

      
        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    
      	
              5.

            	
              Title.
                Title or the right to possess the Confidential Information between
                the
                parties shall remain in the disclosing party.

            

    

    

    
      	
              6.

            	
              Return
                of Confidential Information.
                All tangible materials containing the Confidential Information, including
                all copies thereof, will be promptly returned or destroyed by the
                receiving party within ten days after: (a) receipt of the disclosing
                party’s written request, or (b) the termination or conclusion of the
                business discussions or transactions between the parties. Upon request
                of
                the disclosing party, the receiving party will certify in writing
                that it
                has complied with the provision of this Section 6.
                

            

    

    

    
      	
              7.

            	
              Term.
                This Agreement shall become effective as of the Effective Date and
                shall
                continue to be effective with respect to Confidential Information
                provided
                or to which access is provided by the disclosing party or otherwise
                obtained by the receiving party in connection with each of the MOU,
                the
                MDA, a PA, the MMSA, the MTLA and/or a PS LSA during the term of
                and for a
                period of three (3) years following the term of each of the foregoing
                respectively (the “Term” for each of the foregoing respectively). Sections
                1, 3, 6, 7 and 8 shall survive any expiration of the Term or termination
                of this Agreement.

            

    

    

    
      	8.	
              General.

            

    

     

    
      	 	
              (a)

            	
              No
                License. Except
                as otherwise expressly provided herein, the parties acknowledge and
                agree
                that nothing contained in this Agreement will be construed as granting
                any
                rights, by license or otherwise, express or implied, from either
                party to
                the other. The receiving party acknowledges that no intellectual
                property
                rights are acquired under this
                Agreement.

            

    

    
      	 	
              (b)

            	
              Non-Waiver.
                The failure to enforce any right resulting from any provision of
                this
                Agreement shall not be deemed a waiver of any right relating to a
                subsequent breach of such provision or of any other right
                hereunder.

            

    

    
      	 	
              (c)

            	
              Governing
                Law and Jurisdiction.
                This Agreement, and all transaction arising out of or relating to
                this
                Agreement, shall be governed by and construed in accordance with
                the laws
                of the United States of America. It is herewith agreed that any and
                all
                disputes arising out of or relating to this Agreement shall be subject
                to
                the exclusive jurisdiction of
                California.

            

    

    
      	 	
              (d)

            	
              Invalidity
                etc.
                If
                a court of competent jurisdiction holds any provision of this Agreement
                invalid or unenforceable, the remaining provisions will remain in
                full
                force and effect. 

            

    

    
      	 	
              (e)

            	
              Entire
                Agreement. This
                Agreement shall constitute the entire agreement, written or verbal,
                between the parties with respect to the disclosure(s) of the Confidential
                Information. This Agreement may not be amended except in writing
                signed by
                a duly authorized representative of the respective party. Any other
                agreements between the parties, including non-disclosure agreements,
                shall
                not be affected by this Agreement.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

      
        CONFIDENTIAL
          TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
          REQUESTED IS OMITTED AND IS NOTED WITH “[REDACTED].” AN UNREDACTED VERSION OF
          THIS DOCUMENT HAS BEEN FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
          COMMISSION

        

          
            	
                    KYOCERA
                      MITA/PEERLESS Master Development Agreement

                  	
                    CONFIDENTIAL

                  

          

        

      

       

    

    
      	 	
              (f)

            	
              Injunctive
                Relief. Each
                party acknowledges and agrees that the release of the Confidential
                Information in violation of this Agreement may cause irreparable
                harm for
                which the injured party might not be fully or adequately compensated
                by
                recovery of monetary damages alone. Accordingly, in addition to any
                other
                remedy available at law, the party harmed by breach of this Agreement
                shall be entitled to injunctive
                relief.

            

    

    
      	 	
              (g)

            	
              Attorney’s
                fees. If
                any action at law is necessary to enforce or interpret the terms
                of this
                Agreement, the prevailing party shall be entitled to reasonable attorney’s
                fees, costs and necessary disbursements in addition to any other
                relief to
                which it may be entitled.

            

    

    
      	 	
              (h)

            	
              Headings.
                The headings to sections or elsewhere in this Agreement are only
                for
                convenience of reference and shall not in any way affect the
                interpretation thereof.

            

    

    
      	 	
              (i)

            	
              Full
                power. Each
                party warrants that it has full power to enter into and perform this
                Agreement, and the person signing this Agreement on such party’s behalf
                has been duly authorized and empowered to enter into this Agreement.
                Each
                party further acknowledges that it has read this Agreement, understands
                it, and agrees to be bound by it.

            

    

    

    

    IN
      WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
      duly authorized representatives.

    

      
        	
                KMC

              	
                Company

              
	 	 
	
                Kyocera
                  Mita Corporation

              	
                Peerless
                  Systems Corporation

              
	
                2-28,
                  1-chome, Tamatsukuri,

              	
                2381
                  Rosecrans Avenue

              
	
                Chuo-ku,
                  Osaka, 540-8585

              	
                EI
                  Segundo, California 90245

              
	
                Japan

              	
                U.S.A.

              

      

    

    

    
      	
              KYOCERA
                MITA CORPORATION

               

              By:

            	
              PEERLESS
                SYSTEMS CORPORATION

               

              By:

            
	
              /S/
                Katsumi
                Konaguichi                                                 
                

              (Authorized
                Signature)

            	
              /S/
                Richard L.
                Roll                                                     
                

              (Authorized
                Signature)

            
	
              Name:
                Katsumi Konaguchi

            	
              Name:
                Richard L. Roll

            
	
              Title:
                President

            	
              Title:
                President and CEO

            
	
              Date:
                April 10, 2007

            	
              Date:
                April 17, 2007

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