Development Agreement

<PAGE>
                                                                   EXHIBIT 10.99



Date of Agreement:  March 27, 2006

PMC Sierra Corporation
Mission Tower One
3975 Freedom Circle, #300
Santa Clara, CA 95054

Re:    Development Agreement ("Agreement")

       The purpose of this Agreement is to set forth certain binding agreements
with respect to a development project wherein Peerless Systems Corporation
("Peerless") will assist PMC-Sierra Corporation ("PMC-Sierra") in developing
"Bluestone", a certain Application Specific Standard Product ("ASSP") device
(the "Development"). Terms used in this Agreement which are capitalized are
defined where first used or as set forth in Annex A this Agreement.

1.     The Development.

       1.1.   PMC-Sierra hereby retains Peerless for the Development, and
              Peerless hereby accepts retention for the Development, in
              accordance with the terms and conditions of this Agreement.

       1.2.   PMC-Sierra and Peerless will agree to the product specifications,
              statements of work, deliverables, schedules, acceptance criteria
              and other details of the Development in one or more addendums to
              this Agreement (each a "Project Addendum").

       1.3.   PMC-Sierra and Peerless will enter into one or more license
              agreements for software and hardware to be used in the Development
              and/or to be included in or with the ASSP upon commercial sale of
              the ASSP.

2.     Engineering Services for the Development

       2.1.   Peerless has applied (beginning in January 2006) and will continue
              to apply technical personnel to the Development, with the make-up
              of personnel being a mix of Hardware and Software Architects, ASIC
              Engineers, Software/Firmware Engineers, Hardware Engineers, and a
              Peerless Project Manager, as dictated by the needs of the
              Development at a particular time.



                                       1


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

<PAGE>

       2.2.   Overall coordination of the Development shall be performed by a
              PMC-Sierra program manager. This program manager will be
              responsible for determining and providing staffing requirements
              for the Development to Peerless, and Peerless will use its best
              efforts to meet the staffing requirements. Peerless shall not be
              required to provide more than *** personnel at any time without
              Peerless' further consent. The PMC-Sierra program manager will
              provide a rolling six-week staffing forecast to allow Peerless
              time to plan for project staffing increases and reductions. If, at
              any time, in the judgment of the PMC-Sierra program manager that a
              Peerless employee or contractor is not performing to expected
              levels, the program manager will have the right to elevate the
              employee performance issue to a Peerless Vice President with the
              expectation of immediate corrective action to address the issue.

3.     Consideration for the Development

       3.1.   PMC-Sierra will pay Peerless *** per hour for each hour of time
              expended by Peerless personnel in connection with the Development,
              up to a maximum charge of 40 hours per week per employee or
              contractor.

       3.2.   Peerless will invoice PMC-Sierra on a monthly basis. Invoices must
              be paid not later than thirty (30) days after the date of the
              invoice. Peerless may suspend work if payments are not made when
              due.

       3.3.   All payments made by PMC-Sierra to Peerless for work performed on
              the Development, shall be non-refundable upon payment except as
              expressly provided herein.

4.     Licensing and Royalty Rates

       4.1.   No licenses are granted by Peerless to PMC-Sierra or by PMC-Sierra
              to Peerless in this Agreement. All licenses must be negotiated as
              addendums to this agreement.

       4.2.   The parties shall negotiate one or more separate license
              agreements whereby Peerless will grant PMC-Sierra a license to
              use, modify and reproduce Peerless Hardware Intellectual Property
              specified in Annex B and to combine the specified Peerless
              Hardware Intellectual Property with PMC-Sierra materials as
              necessary or appropriate to complete the Development and to
              manufacture, support and maintain the Bluestone ASSP product. The
              license agreements shall provide that the Bluestone ASSP product
              shall not be transferred, sold, offered for sale, or distributed
              without the inclusion and appropriate licensing of the Peerless
              PDS product. PMC-Sierra will pay Peerless a Recurring License Fee
              (royalty) on each Bluestone ASSP product sold that contains a
              Peerless proprietary hardware product and is inclusive of Peerless
              PDS ( the total of which shall be referred to as the "Bundled
              Product"). PMC-Sierra and Peerless will collaborate to create a
              single Bundled Product pricing schedule. PMC-Sierra will be
              responsible for selling the Bundled Product in the market. The
              purchase order, shipment and revenue flow will be through
              PMC-Sierra with PDS royalties paid back to Peerless on a monthly
              basis. *** The Recurring License



                                       2

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

<PAGE>

              Fee of the Bundled Product shall be determined by Peerless in
              consultation with PMC-Sierra ***. There will be no license fees
              charged to PMC-Sierra for the use of Peerless Hardware
              Intellectual Property in the development, support, and maintenance
              of the Bluestone ASSP product.

       4.3.   In furtherance of Section 4.2, Peerless will make the following
              Peerless proprietary products available to PMC-Sierra for internal
              use in the Development and to manufacture, sell, support and
              maintain the Bluestone Product under a separate license agreement
              to be negotiated by the parties:

                     -      Build environments

                     -      Software tools

                     -      PeerlessPage imaging environment

                     -      PeerlessPrint7 (PCL-XL emulation) language
                            interpreter

                     -      Peerless' implementation of ***

                     -      Peerless connectivity solutions for networking

                     -      PeerlessPage Drawing Services

       4.4.   In furtherance of Section 4.2, PMC-Sierra will make PMC-Sierra
              proprietary products available to Peerless for internal use only
              in the Development under a separate agreement to be determined by
              the parties. These proprietary products will be specified as
              necessary during the Development. Peerless will have no right to
              sublicense PMC-Sierra Intellectual Property or proprietary
              products.

       4.5.   The parties shall also negotiate a royalty bearing agreement for
              PMC-Sierra to distribute to its customers the Peerless software
              designated in Section 9.

       4.6.   Peerless shall not charge PMC-Sierra any fee or royalty for using
              the Peerless Intellectual Property referred to in Section 4.3 for
              the development, support and maintenance of the Bluestone ASSP
              product.

       4.7.   PMC-Sierra will have no right to modify or create Derivative Works
              from Peerless Intellectual Property elements other than those
              elements identified in Annex B. Modifications may be made to Annex
              B by mutual consent of both parties.

       4.8.   In the event that PMC-Sierra utilizes Peerless Hardware
              Intellectual Property in future products then the parties agree
              that such future products will be marketed and sold by PMC-Sierra
              using the Bundled Product business model specified in section 4.2.
              Otherwise, the parties mutually agree to negotiate a royalty fee
              for the use of the Hardware Intellectual Property in those future
              products.

       4.9.   During the Term, PMC Sierra shall not directly or indirectly
              develop or commercialize a product with competing functionality to
              the functionality as Peerless Intellectual Property.

5.     Ownership and Restrictions of Intellectual Property Rights



                                       3

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

<PAGE>

       5.1.   Nothing in this Agreement transfers ownership of any pre-existing
              Intellectual Property from one party to the other.

              5.1.1. The intent of this clause is to preserve original ownership
                     rights to a body of Intellectual Property in the event that
                     modifications or improvements are made to such Intellectual
                     Property. It is also the intent of this clause to allow
                     PMC-Sierra the rights to create new products using Peerless
                     native Intellectual Property in such a way as to keep the
                     Peerless native Intellectual Property intact. With respect
                     to any Intellectual Property to which rights to make
                     improvements, modifications, or revisions have been
                     granted, any improvements, modifications, or revisions of
                     any pre-existing Intellectual Property, or any other form
                     in which such pre-existing may be recast, transformed, or
                     adapted, (each a "Derivative Work") shall be the sole
                     property of the owner of the pre-existing Intellectual
                     Property. If the party making the Derivative Work can by
                     law or otherwise retain any rights to such Derivative Work,
                     such party agrees to assign (and upon creation thereof
                     hereby automatically assigns), without further
                     consideration, all worldwide right, title and interest,
                     including without limitation all Intellectual Property
                     rights of any kind, in and to such Derivative Works to the
                     party that owns the underlying or pre-existing Intellectual
                     Property. However, should either party develop Intellectual
                     Property which can be reduced in practice to operate
                     without the use of the other party's existing Intellectual
                     Property, the developer of the new Intellectual Property
                     shall be the sole owner of such new Intellectual Property.

              5.1.2. Notwithstanding Section 5.1.1, in the event that PMC-Sierra
                     creates additions or modifications resulting in a
                     Derivative Work based upon Peerless pre-existing
                     Intellectual Property, Peerless shall grant to PMC-Sierra
                     an exclusive license, with no right to sublicense, to the
                     Derivative Work in conjunction with any license grant to
                     the pre-existing Intellectual Property. Peerless shall be
                     prohibited from using any Derivat