Exhibit 10.4
PEERLESS SYSTEMS CORPORATION
STOCK OPTION GRANT NOTICE AND
STOCK OPTION AGREEMENT
     Peerless Systems Corporation, a Delaware corporation (the “Company”) hereby
grants to the holder listed below (“Participant”), an option to purchase the
number of shares of the Company’s common stock, par value $0.001 (“Stock”), set
forth below (the “Option”). This Option is subject to all of the terms and
conditions set forth herein and in the Stock Option Agreement attached hereto as
Exhibit A (the “Stock Option Agreement”) which is incorporated herein by
reference. Unless otherwise defined herein, the terms used shall have the same
defined meanings as ascribed to them in the Company’s 2005 Incentive Award Plan
(the “Plan”) and the Stock Option Agreement.

     
Participant:
  Richard L. Roll
 
   
Grant Date:
  December 15, 2006
 
   
Exercise Price per Share:
  $2.84
 
   
Total Exercise Price:
  $1,704,000
 
   
Total Number of Shares Subject to the Option:
  600,000 shares
 
   
Expiration Date:
  December 15, 2016

     
Type of Option:
  o Incentive Stock Option            þ Non-Qualified Stock Option
 
   
Vesting Schedule:
  The Time-Vested Option will vest over a four-year period, subject to your
continued employment with Peerless. In particular, 25% will vest on the first
anniversary of your first day of employment and, thereafter, the remaining
portion shall vest monthly in equal installments over the subsequent 36 months.

     By his or her signature, Participant agrees to be bound by the terms and
conditions of the Stock Option Agreement and this Grant Notice. Participant has
reviewed the Stock Option Agreement and this Grant Notice in their entirety, has
had an opportunity to obtain the advice of counsel prior to executing this Grant
Notice and fully understands all provisions of this Grant Notice, and the Stock
Option Agreement. Participant hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Board of Directors of the Company
upon any questions relating to the Option.

              PEERLESS SYSTEMS CORPORATION   PARTICIPANT
 
           
By:
  /s/ John Rigali   By:   Richard L. Roll
 
           
Print Name:
  John Rigali   Print Name:   Richard L. Roll
Title:
  Vice President and CFO        
Address:
  2381 Rosecrans Avenue   Address:   15 Cellano
 
  El Segundo, CA 90245       Laguna Niguel, CA 92677

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EXHIBIT A
TO STOCK OPTION GRANT NOTICE
STOCK OPTION AGREEMENT
     Pursuant to the Stock Option Grant Notice (the “Grant Notice”) to which
this Stock Option Agreement (this “Agreement”) is attached, Peerless Systems
Corporation, a Delaware corporation (the “Company”), has granted to Participant
an option to purchase the number of shares of Stock indicated in the Grant
Notice.
ARTICLE I
GENERAL
     1.1 Defined Terms. Capitalized terms not specifically defined herein shall
have the meanings specified in the Grant Notice and the Company’s 2005 Incentive
Award Plan (the “Plan”).
ARTICLE II
GRANT OF OPTION
     2.1 Grant of Option. In consideration of Participant’s past and/or
continued employment with or service to the Company or a Parent or Subsidiary
and for other good and valuable consideration, effective as of the Grant Date
set forth in the Grant Notice (the “Grant Date”), the Company irrevocably grants
to Participant the Option to purchase any part or all of an aggregate of the
number of shares of Stock set forth in the Grant Notice, upon the terms and
conditions set forth in this Agreement. Unless designated as a Non-Qualified
Stock Option in the Grant Notice, the Option shall be an Incentive Stock Option
to the maximum extent permitted by law.
     2.2 Exercise Price. The exercise price of the shares of Stock subject to
the Option shall be as set forth in the Grant Notice, without commission or
other charge; provided, however, that the exercise price per share of Stock
subject to the Option shall not be less than 100% of the Fair Market Value of a
share of Stock on the Grant Date. Notwithstanding the foregoing, if this Option
is designated as an Incentive Stock Option and Participant owns (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any “subsidiary
corporation” of the Company or any “parent corporation” of the Company (each
within the meaning of Section 424 of the Code), the exercise price per share of
Stock subject to the Option shall not be less than 110% of the Fair Market Value
of a share of Stock on the Grant Date.
     2.3 Consideration to the Company; No Employment Rights. In consideration of
the grant of the Option by the Company, Participant agrees to render faithful
and efficient services to the Company or any Parent or Subsidiary. Nothing in
the Plan or this Agreement shall confer upon Participant any right to continue
in the employ or service of the Company or any Parent or Subsidiary or shall
interfere with or restrict in any way the rights of the Company and its Parents
and Subsidiaries, which rights are hereby expressly reserved, to discharge or
terminate the services of Participant at any time for any reason whatsoever,
with or without Cause, except to the extent expressly provided otherwise in a
written agreement between the Company, a Parent or a Subsidiary and Participant.

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ARTICLE III
PERIOD OF EXERCISABILITY
     3.1 Commencement of Exercisability.
          (a) Subject to Sections 3.3, 5.8 and 5.10, the Option shall become
vested and exercisable in such amounts and at such times as are set forth in the
Grant Notice.
          (b) No portion of the Option which has not become vested and
exercisable at the date of Participant’s Termination of Employment, Termination
of Directorship or Termination of Consultancy shall thereafter become vested and
exercisable, except as may be otherwise provided by the Board of Directors or as
set forth in a written agreement between the Company and Participant.
     3.2 Duration of Exercisability. The installments provided for in the
vesting schedule set forth in the Grant Notice are cumulative. Each such
installment which becomes vested and exercisable pursuant to the vesting
schedule set forth in the Grant Notice shall remain vested and exercisable until
it becomes unexercisable under Section 3.3, except as may be otherwise provided
by the Board of Directors or as set forth in a written agreement between the
Company and the Participant.
     3.3 Expiration of Option. The Option may not be exercised to any extent by
anyone after the first to occur of the following events:
          (a) The expiration of ten years from the Grant Date;
          (b) If this Option is designated as an Incentive Stock Option and
Participant owned (within the meaning of Section 424(d) of the Code), at the
time the Option was granted, more than 10% of the total combined voting power of
all classes of stock of the Company or any “subsidiary corporation” of the
Company or any “parent corporation” of the Company (each within the meaning of
Section 424 of the Code), the expiration of five years from the Grant Date;
          (c) The expiration of three months following the date of Participant’s
Termination of Employment, Termination of Directorship or Termination of
Consultancy, unless such termination occurs by reason of Participant’s death or
Disability or Participant’s discharge for Cause;
          (d) The expiration of one year following the date of Participant’s
Termination of Employment, Termination of Directorship or Termination of
Consultancy by reason of Participant’s death or Disability; or
          (e) The expiration of three months following the date of Participant’s
Termination of Employment, Termination of Directorship or Termination of
Consultancy by the Company or any Parent or Subsidiary by reason of
Participant’s discharge for Cause.
     Participant acknowledges that an Incentive Stock Option exercised more than
three months after Participant’s Termination of Employment, other than by reason
of death or Disability, will be taxed as a Non-Qualified Stock Option.
     3.4 Special Tax Consequences. Participant acknowledges that, to the extent
that the aggregate Fair Market Value (determined as of the time the Option is
granted) of all shares of Stock with respect to which Incentive Stock Options,
including the Option, are exercisable for the first time by Participant in any
calendar year exceeds $100,000, the Option and such other options shall be Non-

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Qualified Stock Options to the extent necessary to comply with the limitations
imposed by Section 422(d) of the Code. Participant further acknowledges that the
rule set forth in the preceding sentence shall be applied by taking the Option
and other “incentive stock options” into account in the order in which they were
granted, as determined under Section 422(d) of the Code and the Treasury
Regulations thereunder.
ARTICLE IV
EXERCISE OF OPTION
     4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b) and
5.2(c), during the lifetime of Participant, only Participant may exercise the
Option or any portion thereof. After the death of Participant, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by Participant’s personal
representative or by any person empowered to do so under the deceased
Participant’s will or under the then applicable laws of descent and
distribution.
     4.2 Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or portion thereof becomes unexercisable
under Section 3.3.
     4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may
be exercised solely by delivery to the Secretary of the Company or the
Secretary’s office of all of the following prior to the time when the Option or
such portion thereof becomes unexercisable under Section 3.3:
          (a) An Exercise Notice in writing signed by Participant or any other
person then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Board of Directors. Such notice shall be
substantially in the form attached as Exhibit B to the Grant Notice (or such
other form as is prescribed by the Board of Directors);
          (b) The receipt by the Company of full payment for the shares with
respect to which the Option or portion thereof is exercised, including payment
of any applicable withholding tax, which may be in one or more of the forms of
consideration permitted under Section 4.4;
          (c) A bona fide written representation and agreement, in such form as
is prescribed by the Board of Directors, signed by Participant or the other
person then entitled to exercise such Option or portion thereof, stating that
the shares of Stock are being acquired for Participant’s own account, for
investment and without any present intention of distributing or reselling said
shares or any of them except as may be permitted under the Securities Act and
then applicable rules and regulations thereunder and any other applicable law,
and that Participant or other person then entitled to exercise such Option or
portion thereof will indemnify the company against and hold it free and harmless
from any loss, damage, expense or liability resulting to the Company if any sale
or distribution of the shares by such person is contrary to the representation
and agreement referred to above. The Board of Directors may, in its absolute
discretion, take whatever additional actions it deems appropriate to ensure the
observance and performance of such representation and agreement and to effect
compliance with the Securities Act and any other federal or state securities
laws or regulations and any other applicable law. Without limiting the
generality of the foregoing, the Board of Directors may require an opinion of
counsel acceptable to it to the effect that any subsequent transfer of shares
acquired on an Option exercise does not violate the Securities Act, and may
issue stop-transfer orders covering such shares. Share certificates evidencing
Stock issued on exercise of the Option shall bear an appropriate legend
referring to the provisions of this subsection (c) and the agreements herein.
The written representation and agreement referred to in the first

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sentence of this subsection (c) shall, however, not be required if the shares to
be issued pursuant to such exercise have been registered under the Securities
Act, and such registration is then effective in respect of such shares; and
          (d) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than Participant,
appropriate proof of the right of such person or persons to exercise the Option.
     4.4 Method of Payment. Payment of the exercise price shall be by any of the
following, or a combination thereof, at the election of the Participant:
          (a) cash;
          (b) check;
          (c) To the extent permitted under applicable laws, delivery of a
notice that the Participant has placed a market sell order with a broker with
respect to shares of Stock then issuable upon exercise of the Option, and that
the broker has been directed to pay a sufficient portion of the net proceeds of
the sale to the Company in satisfaction of the aggregate exercise price;
provided, that payment of such proceeds is then made to the Company upon
settlement of such sale;
          (d) With the consent of the Board of Directors, such payment may be
made, in whole or in part, through the surrender of shares of Stock then
issuable upon exercise of the Option having a Fair Market Value on the date of
Option exercise equal to the aggregate exercise price of the Option or exercised
portion thereof;
          (e) With the consent of the Board of Directors, such payment may be
made, in whole or in part, through the delivery of shares of Stock which have
been owned by Participant for at least six (6) months, duly endorsed for
transfer to the Company with a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; or
          (f) With the consent of the Board of Directors, any combination of the
consideration provided in the foregoing paragraphs (a), (b), (c), (d) and (e).
     4.5 Conditions to Issuance of Stock Certificates. The shares of Stock
deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any shares
of Stock purchased upon the exercise of the Option or portion thereof prior to
fulfillment of all of the following conditions:
          (a) The admission of such shares to listing on all stock exchanges on
which such Stock is then listed;
          (b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Board of Directors shall, in its absolute discretion, deem necessary
or advisable;
          (c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Board of Directors shall, in its absolute
discretion, determine to be necessary or advisable;

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          (d) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax, which may be in one or more
of the forms of consideration permitted under Section 4.4; and
          (e) The lapse of such reasonable period of time following the exercise
of the Option as the Board of Directors may from time to time establish for
reasons of administrative convenience.
     4.6 Rights as Stockholder. The holder of the Option shall not be, nor have
any of the rights or privileges of, a stockholder of the Company in respect of
any shares purchasable upon the exercise of any part of the Option unless and
until such shares shall have been issued by the Company to such holder (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
shares are issued, except as provided in Section 12.3 of the Plan, which are
incorporated herein by reference.
ARTICLE V
OTHER PROVISIONS
     5.1 Administration. The Board of Directors shall have the power to
interpret this Agreement and to adopt such rules for the administration,
interpretation and application of this Agreement as are consistent therewith and
to interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Board of Directors in good faith
shall be final and binding upon Participant, the Company and all other
interested persons. No member of the Board of Directors shall be personally
liable for any action, determination or interpretation made in good faith with
respect to this Agreement or the Option.
     5.2 Option Not Transferable.
          (a) Subject to Section 5.2(b), the Option may not be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution, unless and until the shares underlying the Option have been
issued, and all restrictions applicable to such shares have lapsed. Neither the
Option nor any interest or right therein shall be liable for the debts,
contracts or engagements of Participant or his or her successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
          (b) Notwithstanding any other provision in this Agreement, with the
consent of the Board of Directors and to the extent the Option is not intended
to qualify as an Incentive Stock Option, the Option may be transferred to one or
more Permitted Transferees, subject to the terms and conditions set forth in
Section 12.1(b) of the Plan, which are incorporated herein by reference.
          (c) Unless transferred to a Permitted Transferee in accordance with
Section 5.2(b), during the lifetime of Participant, only Participant may
exercise the Option or any portion thereof. Subject to such conditions and
procedures as the Board of Directors may require, a Permitted Transferee may
exercise the Option or any portion thereof during Participant’s lifetime. After
the death of Participant, any exercisable portion of the Option may, prior to
the time when the Option becomes unexercisable under Section 3.3, be exercised
by Participant’s personal representative or by any person empowered to do so
under the deceased Participant’s will or under the then applicable laws of
descent and distribution.

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     5.3 Restrictive Legends and Stop-Transfer Orders.
          (a) The share certificate or certificates evidencing the shares of
Stock purchased hereunder shall be endorsed with any legends that may be
required by state or federal securities laws.
          (b) Participant agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.
          (c) The Company shall not be required: (i) to transfer on its books
any shares of Stock that have been sold or otherwise transferred in violation of
any of the provisions of this Agreement, or (ii) to treat as owner of such
shares of Stock or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such shares shall have been so transferred.
     5.4 Shares to Be Reserved. The Company shall at all times during the term
of the Option reserve and keep available such number of shares of Stock as will
be sufficient to satisfy the requirements of this Agreement.
     5.5 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary of the
Company at the address given beneath the signature of the Company’s authorized
officer on the Grant Notice, and any notice to be given to Participant shall be
addressed to Participant at the address given beneath Participant’s signature on
the Grant Notice. By a notice given pursuant to this Section 5.5, either party
may hereafter designate a different address for notices to be given to that
party. Any notice which is required to be given to Participant shall, if
Participant is then deceased, be given to the person entitled to exercise his or
her Option pursuant to Section 4.1 by written notice under this Section 5.5. Any
notice shall be deemed duly given when sent via email or when sent by certified
mail (return receipt requested) and deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
     5.6 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.
     5.7 Governing Law; Severability. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware, without regard
to the conflicts of law principles thereof. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
     5.8 Conformity to Securities Laws. Participant acknowledges that the Option
is intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Option shall be administered, and is granted and may be exercised,
only in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and this Agreement shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.

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     5.9 Amendments. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by Participant or such other person
as may be permitted to exercise the Option pursuant to Section 4.1 and by a duly
authorized representative of the Company.
     5.10 Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth in Section 5.2, this Agreement shall
be binding upon Participant and his or her heirs, executors, administrators,
successors and assigns.
     5.11 Notification of Disposition. If this Option is designated as an
Incentive Stock Option, Participant shall give prompt notice to the Company of
any disposition or other transfer of any shares of Stock acquired under this
Agreement if such disposition or transfer is made (a) within two years from the
Grant Date with respect to such shares or (b) within one year after the transfer
of such shares to him. Such notice shall specify the date of such disposition or
other transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by Participant in such disposition or other
transfer.
     5.12 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of this Agreement, if Participant is subject to Section 16 of
the Exchange Act, the Option and this Agreement shall be subject to any
additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the
Exchange Act) that are requirements for the application of such exemptive rule.
To the extent permitted by applicable law, this Agreement shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.
     5.13 Entire Agreement. This Agreement (including all Exhibits hereto), and
the Plan (to the extent incorporated herein by reference), constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Participant with respect to the subject matter
hereof.

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EXHIBIT B
TO STOCK OPTION GRANT NOTICE
FORM OF EXERCISE NOTICE
     Effective as of today,                      ___, 20___, the undersigned
(“Participant”) hereby elects to exercise Participant’s option to purchase the
number of shares of common stock specified below (the “Shares”) of Peerless
Systems Corporation, a Delaware corporation (the “Company”), under and pursuant
to the Stock Option Grant Notice and Stock Option Agreement dated as of ________
(the “Option Agreement”). Capitalized terms used herein without definition shall
have the meanings given in the Company’s 2005 Incentive Award Plan (the “Plan”)
and, if not defined in the Plan, the Option Agreement.

     
Grant Date:
                                                                     
                  
 
   
Number of Shares as to which Option is Exercised:
                                                                   
                    
 
   
Exercise Price per Share:
  $                    
 
   
Total Exercise Price:
  $                     
 
   
Certificate to be issued in name of:
                                                                      
                 
 
   
Payment delivered herewith:
  $                     (Representing the full exercise price for the Shares, as
well as any applicable withholding tax)
 
  Form of Payment:                     
 
                                 (Please specify)

Type of Option:       o Incentive Stock Option            o Non-Qualified Stock
Option
     Participant acknowledges that Participant has received, read and understood
the Option Agreement. Participant agrees to abide by and be bound by their terms
and conditions. Participant understands that Participant may suffer adverse tax
consequences as a result of Participant’s purchase or disposition of the Shares.
Participant represents that Participant has consulted with any tax consultants
Participant deems advisable in connection with the purchase or disposition of
the Shares and that Participant is not relying on the Company for any tax
advice. The Option Agreement is incorporated herein by reference. This Agreement
and the Option Agreement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the Company
and Participant with respect to the subject matter hereof.

              ACCEPTED BY:         PEERLESS SYSTEMS CORPORATION   SUBMITTED BY:
 
           
By:
      By:    
 
           
Print Name:
      Print Name:    
 
           
Title:
           
 
           
 
      Address:    
 
           
 
           
 
           

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