SEVERANCE
      AGREEMENT

    


     

    This
      Severance Agreement (the “Agreement”) is effective as of the date set forth
      below in Paragraph 8(f) (the “Effective Date”) by and between Peerless Systems
      Corporation (“Company” or “Peerless”) and Richard L. Roll (“Mr. Roll” or
“Employee”) (collectively the “Parties”, and individually, a
“Party”).

     

    WHEREAS
      Mr. Roll is currently employed as the Company’s Chief Executive Officer and
      President pursuant to an Employment Letter between the Parties dated June 12,
      2008;

     

    WHEREAS
      Mr. Roll wishes
      to
      resign his employment as well as any and all offices, directorships and board
      memberships he currently holds with the Company, and the Company wishes to
      accept such resignations; and

     

    WHEREAS
      the Parties wish to resolve all disputes between them.

     

    NOW,
      therefore, the Parties agree as follows:

     

    1.    Separation
      of Employment:
      Mr.
      Roll will resign his employment with the Company effective October 1, 2008
      (the
“Resignation Date”). Upon the Resignation Date, Mr. Roll will also take all
      steps necessary to immediately resign from any and all offices, directorships
      and board memberships he currently holds with the Company and will execute
      the
      Resignation Letter attached hereto as Exhibit “A” in conjunction with such
      resignations. By his signature below, Mr. Roll confirms that he has received
      $10,461.44 which
      represents his final wages through the Resignation Date, $507 for reimbursement
      for expenses and is eligible for up to another $143 for reimbursement
      for any and all documented outstanding business expenses. As a result of Mr.
      Roll’s receipt of such payments on the Resignation Date, Mr. Roll acknowledges
      that he has now received payment for any and all outstanding wages, overtime
      pay, bonus, expenses, incentives and accrued but unused vacation pay and that
      Mr. Roll is not owed any further payment of any type as a result of Mr. Roll’s
      employment by Peerless, except as set forth herein. Mr. Roll specifically
      acknowledges that he is not entitled to any further bonus or incentive amounts
      from the Company of any type, including without limitation, any and all bonuses
      or incentives which are or may become due to him for Peerless’ 2009 fiscal year.


     

    2.    Payment:
      In
      consideration for Mr. Roll entering into this Agreement, Peerless will pay
      Mr.
      Roll the total gross amount of two hundred fifty thousand dollars ($250,000)
      to
      which Mr. Roll is not otherwise entitled, less deductions required by law.
      Included in this total amount is $35,907.76 representing Mr. Roll’s accrued but
      unused vacation pay through the Resignation Date. Such payment will be made
      in
      one lump sum payable within (5) five business days following the later of:
      (i)
      the expiration of the seven (7) day revocation period described in Paragraph
      8(f) below without revocation; (ii) Peerless’ receipt of this Agreement, duly
      executed by Mr. Roll and approved as to form by his attorneys and, (iii)
      delivery by Mr. Roll to the Company of the Certificates of Common Stock
      referenced in Paragraph 5 of this Agreement, collectively (the “Conditions of
      Payment”). In addition, the Company will pay 6 (six) months COBRA premiums for
      Mr. Roll’s existing health care coverage subject to the Conditions of Payment
      being met. Should the Company fail to make the payments described above, Mr.
      Roll may revoke the resignations set forth in Paragraph 1 after providing the
      Company’s Board of Directors with ten (10) days written notice of breach and the
      opportunity to cure.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.    General
      Release:
      For and
      in consideration of the payment described above in Paragraph 2 above to which
      Mr. Roll is not otherwise entitled, and other good and valuable
      consideration:

     

    (a) Mr.
      Roll
      hereby voluntarily, knowingly and willingly releases, acquits and forever
      discharges Company including, each of Company’s former, current and future
      parents, subsidiaries, divisions, affiliates, predecessors, successors and
      assigns and all of their current, former and future agents, employees, officers,
      directors, shareholders, board members, partners, joint venturers, members,
      attorneys, representatives, predecessors, successors, assigns, owners and
      servants, from any and all claims, costs or expenses of any kind or nature
      whatsoever, whether known or unknown, foreseen or unforeseen, including without
      limitation, any and all claims for any type of bonus or incentive compensation
      arising out of or relating to work performed for the Company in 2008, any claims
      related to the Company’s stock or the issuance of stock options, any and all
      claims arising out of or related to the June 12, 2008 Employment Letter, any
      and
      all claims under any Change of Control Severance Agreement, Stock Option Grant
      Notice or Restricted Stock Purchase Agreement between the Parties, any currently
      pending claim under the Company’s various policies of insurance for actions of
      directors or officers, any employment related claims under the Americans with
      Disabilities Act, the Age Discrimination in Employment Act, Title VII of the
      Civil Rights Act, the Family Medical Leave Act, the California Fair Employment
      and Housing Act, the California Family Rights Act, the Employment Retirement
      Income Security Act, the California Constitution, the California Labor Code,
      or
      under common law, which against any or all of them Mr. Roll ever had, now has
      or
      hereinafter may have, up to and including the date of Mr. Roll’s execution of
      this Agreement, including, without limitation, those arising out of or in any
      way related to Mr. Roll’s employment at Company or the separation of that
      employment.

     

    (b) Company
      hereby voluntarily, knowingly and willingly releases, acquits and forever
      discharges Mr. Roll from any and all claims, costs or expenses of any kind
      or
      nature whatsoever, whether known or unknown, foreseen or unforeseen, which
      Company ever had, now has or hereinafter may have, up to and including the
      date
      of Company’s execution of this Agreement, including, without limitation, those
      arising out of or in any way related to Mr. Roll’s employment at Company or the
      separation of that employment, except for such currently unknown claims for
      restitution arising directly from any currently unknown criminal conduct engaged
      in by Mr. Roll. In conjunction with this exception, the Company represents
      that
      it is not aware of, is not investigating as of the date hereof, and has no
      present intention to investigate any such conduct at the time of the Effective
      Date of this Agreement. 

     

    (c) It
      is a
      condition hereof, and it is all Parties intention in the execution of the
      General Release in subparagraphs 3(a) and (b), above, that the same shall be
      effective as a bar to each and every claim specified above. In furtherance
      of
      this intention, (and with the sole exception of unknown claims for restitution
      against Mr. Roll as described in Paragraph 3(b)above to which the Company’s
      waiver of Section 1542 of the California Civil Code does not apply) all Parties
      hereby expressly waive any and all rights and benefits conferred upon the other
      by Section 1542 of the California Civil Code, which provides:

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    A
      general release does not extend to claims which the creditor does not know
      or
      suspect to exist in his or her favor at the time of executing the Release,
      which
      if known by him or her must have materially affected his or her settlement
      with
      the debtor.

     

    4.    Stock
      Options:
      Mr.
      Roll acknowledges and agrees that he has ninety (90) days from the Resignation
      Date in which to exercise any and all vested stock options. All options which
      remain unvested as of the Resignation Date will be extinguished as of that
      date.


     

    5.    Common
      Stock:
      By his
      signature below, Mr. Roll represents and warrants that he owns good and
      marketable title to two hundred thousand (200,000) shares of common stock in
      the
      Company and that his ownership of such stock is free and clear of any
      indebtedness, restrictions or encumbrances (the “Roll Stock”). Mr. Roll agrees
      to sell, and Company agrees to buy, such Roll Stock for $2.00 a share. Mr.
      Roll
      will deliver the Certificates of Common Stock for the Roll Stock to the Company
      as of the Effective Date of this Agreement. Payment for the Roll Stock will
      be
      made within five (5) business days of the date of the Conditions of Payment
      set
      forth in Paragraph 2 are satisfied.

     

    In
      addition, Mr. Roll acknowledges, agrees and warrants that for two (2) years
      following the Effective Date, he will not purchase, hold or contract to purchase
      or hold, directly or indirectly any stock of any type in the Company except
      with
      the sole exception of stock purchased in conjunction with the exercise of the
      vested stock options as set forth in Paragraph 4 of this Agreement.

     

    6.    Non-Disparagement:
      Unless
      otherwise compelled by applicable law, Company’s currently serving Board members
      while serving on the Board and Mr. Roll will not say or do anything to disparage
      the other or any of the Company’s current, former or future managers, officers,
      employees, board members, directors or agents or its products or services to
      any
      person or entity. Provided Mr. Roll directs inquiries regarding his employment
      history at the Company to the Chairman of the Board, the Company will respond
      to
      all such inquiries with only dates of employment and job title held, and final
      salary information. If asked for any other information concerning Mr. Roll’s
      employment, the Company shall state that Company policy does not permit the
      disclosure of any additional information. In addition, should Mr. Roll
      reasonably believe Mike Levine has breached his obligations to the Company
      and
      disclosed confidential information regarding Mr. Roll to a third party, the
      Company will assign its rights under its agreement with Mr. Levine to Mr. Roll
      for enforcement.

     

    7.    Non-Disclosure
      and Destruction of Mr. Roll’s Personal Information:
      The
      Company acknowledges that it is currently in possession of certain personal
      information regarding Mr. Roll and/or his family which does not pertain to
      Company business (“Personal Information”). Personal Information includes but is
      not limited to the following: (a) written correspondence and e-mails; (b)
      information embodied in such written correspondence and e-mails; and, (c)
      information obtained by any inquiry, discussion, or in any other manner relating
      to the Personal Information and/or Mr. Roll or his family other than standard
      personnel information. Unless otherwise compelled by applicable law, the Company
      (including its employees, shareholders, directors, officers, attorneys, agents,
      and/or representatives) shall not verbally or in writing discuss or disclose
      to
      any person or entity the Personal Information.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    The
      Company hereby represents that it shall destroy all written Personal Information
      contained in any media, whether electronic, paper, or otherwise. This obligation
      includes the obligation to destroy any information contained on backup tapes
      or
      any other backup system of the Company, as well as any information contained
      on
      hard drives or servers of the Company.

     

    8.    Miscellaneous:
      

     

    (a) The
      Parties represent and warrant that they have not assigned or transferred, or
      purported to assign or transfer, to any person, firm, corporation or entity
      any
      claim or other matter released by this Agreement. The Parties agree to indemnify
      each other and hold each other harmless against any claims, costs or expenses,
      including, without limitation, attorneys’ fees actually paid or incurred,
      arising out of, related to or in any manner whatsoever connected with any such
      transfer or assignment or purported or claimed transfer or
      assignment.

     

    (b) With
      the
      exception of any previously executed confidentiality and proprietary information
      agreements between Company and Mr. Roll, this Agreement sets forth the entire
      agreement between Mr. Roll and Company and fully supersedes any and all prior
      agreements or understanding between them pertaining to the subject matter of
      this Agreement. It may not be altered, modified, amended or changed, in whole
      or
      in part, except in writing executed by Mr. Roll and Company.

     

    (c) Should
      any provision or term or part of a provision or term, of this Agreement be
      declared or determined by any court or arbitrator to be illegal or invalid,
      the
      validity of the remaining parts, provision or terms shall not be affected
      thereby and said illegal or invalid part, provision or term shall not be deemed
      to be a part of this Agreement.

     

    (d) This
      Agreement shall be governed by the laws of the State of California.

     

    (e) Nothing
      contained in this Agreement nor the fact that the Parties sign this Agreement
      shall be considered as an admission of any type by either Party. Each Party
      shall bear its or his own attorneys fees in conjunction with all matters related
      to this Agreement and the events leading up to this Agreement.

     

    (f) Pursuant
      to the Older Workers Benefit Protection Act, Company and Mr. Roll acknowledge
      and agree that: (i) Mr. Roll will have twenty-one (21) days to consider the
      terms of this Agreement (including, without limitation, Mr. Roll’s release and
      waiver of any and all claims under the Age Discrimination in Employment Act)
      before executing it; (ii) Mr. Roll will have seven (7) days after Mr. Roll’s
      execution of this Agreement in which to revoke this Agreement, in which event
      a
      written notice of revocation must be received by 5pm PST, on or before the
      seventh day; and (iii) this Agreement will not become effective and enforceable
      until the seven (7) day revocation period has expired without revocation of
      the
      Agreement by Mr. Roll. However, nothing contained in this Paragraph 8(f) shall
      allow Mr. Roll to revoke the resignations as set forth in Paragraph 1 of this
      Agreement.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (g) Mr.
      Roll
      agrees to take all necessary steps to withdraw or otherwise extinguish his
      current claim under the Company’s Director and Officers liability policy for
      defense and indemnity and further agrees he will not reinstate a claim which
      arises out of or relates to the same underlying facts giving rise to his current
      claim under any Company insurance policy.

     

    (h) Mr.
      Roll
      acknowledges that: (i) Mr. Roll fully understands the terms of this Agreement
      including, without limitation, the significance and consequences of the General
      Release in Paragraph 3, above; (ii) Mr. Roll has been advised by Company to
      consult an attorney regarding any potential claims as well as the terms and
      conditions of this Agreement before executing it; (iii) Mr. Roll is executing
      this Agreement in exchange for consideration in addition to anything of value
      to
      which Mr. Roll is already entitled; and (iv) Mr. Roll is fully satisfied with
      the terms of this Agreement and is executing this Agreement voluntarily,
      knowingly and willingly and without duress.

     

    (i) This
      Agreement may be executed in several counterparts, each of which shall be deemed
      an original as against any Party who signed it, and all of which shall
      constitute one and the same document. This Agreement may also be signed by
      facsimile, and such facsimile copies shall be deemed originals against the
      Party
      who faxed them. That Party shall provide an original “wet ink” copy of his
      signature within five business days of sending the fax.

     

    (j) Arbitration.
      Except
      for claims under the National Labor Relations Act, the California Worker’s
      Compensation Act, claims for Unemployment benefits and claims before
      governmental administrative bodies, Mr. Roll and the Company agree that any
      dispute regarding this Agreement or Mr. Roll’s employment by the Company will be
      submitted to binding arbitration before a neutral arbitrator subject to rules
      of
      the American Arbitration Association. Disputes subject to this clause include
      any claims under Title VII of the Civil Rights Act, California’s Fair Employment
      and Housing Act, the Family Medical Leave Act and the California Family Rights
      Act. The Parties’ agreement to arbitrate any and all disputes is governed by and
      is subject to the rules of the Federal Arbitration Act and the California
      Arbitration Act including their mandatory and permissive rights to discovery.
      Each Party may seek injunctive or equitable relief pursuant to California Code
      of Civil Procedure § 1281.8(b). The Parties agree to file any demand for
      arbitration within the time limit established by the applicable statute of
      limitations. The award of the Arbitrator shall be in writing and shall set
      forth
      the basis for his or her decision. Fees of the Arbitrator shall be paid by
      the
      Company where required by applicable law. THE PARTIES UNDERSTAND AND AGREE
      THAT
      THEY ARE WAIVING THEIR RIGHTS TO BRING SUCH CLAIMS TO COURT, INCLUDING THE
      RIGHT
      TO A JURY TRIAL.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS HEREOF, this Agreement is entered into and executed by the Parties
      on
      the date set forth below in Los Angeles, California.

     

    


    
      	
              “Peerless
                Systems Corporation”

            	 	
              “Mr.
                Roll ”

            
	 	 	 
	
              By:
                /s/
                William Neil

              Its:
                Chief Financial Officer

            	 	
              /s/
                Richard L. Roll

              Richard
                L. Roll 

            
	 	 	 
	
              Dated:
                October 7, 2008

            	 	
              Dated:
                October 6, 2008

            


    

     

    


    
      	
              APPROVED
                AS TO FORM:

               

              /s/
                Michelle M. La Mar

              Michelle
                M. La Mar

              LOEB
                & LOEB LLP

              ATTORNEY
                FOR 

              PEERLESS
                SYSTEMS CORPORATION

            	 	
              APPROVED
                AS TO FORM:

               

              /s/
                Mark Fields

              Mark
                Fields

              Greenberg,
                Fields & Whitcombe LLP

              ATTORNEY
                FOR RICHARD L. ROLL

            
	 	 	 
	
              Dated:
                October 6, 2008

            	 	
              Dated:
                October 6, 2008

            


    

     

    
      
        
        

      

      
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    EXHIBIT
      A


    To: Board
      of
      Directors of Peerless Systems Corporation

    


    


    Gentlemen:

    


    The
      undersigned does hereby resign as a Director, Chief Executive Officer, President
      and all other offices which may be held by him of Peerless Systems Corporation
      and each of its subsidiaries and affiliates, effective immediately.

     

    
 

    
      	Dated: October 6, 2008	/s/ Richard L. Roll
	 	Richard L.
              Roll


    

     

    
      
        
        

      

      
        7