TERMINATION OF LEASE AGREEMENT

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

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

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

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

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

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

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

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

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

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

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