Exhibit
10.1

    

     

    AMENDED AND
RESTATED

    EMPLOYMENT
AGREEMENT

     

    


    This
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of May
11, 2010 (the “Effective Date”) amends and restates the EMPLOYMENT AGREEMENT
(the “Original Agreement”), dated as of December 3, 2008, between Peerless
Systems Corporation, a Delaware corporation, (the “Company”) and its
successors and assigns, and Edward M. Gaughan, a natural person, whose principal
address is 14605 Woodlake Trace, Louisville,
Kentucky  40245 (“Executive”)
(collectively, the “Parties.

    


    RECITALS

    


    WHEREAS,
Executive is currently employed by the Company as the President and Vice
President/Head of Sales.

    


    WHEREAS,
the Company and Executive desire to enter into this Agreement to amend and
restate the terms and conditions of Executive’s position with Company and
simultaneously wish to extinguish any and all obligations owed by each Party to
the other arising out of their prior employment relationship and any other
agreements with respect thereto.

    


    NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth, the Company and Executive agree as follows:

     

    AGREEMENT

     

    1. 1.           Employment.

    


     

    (a)           At-Will.  The
term (the “Term”) of this Agreement shall begin on the Effective  Date
and shall continue “at-will”, provided that: (i) if the Company terminates
Executive’s employment  before July 15, 2010 without Cause, the
Company shall pay to Executive the retention bonus set forth in Section 2(b)
with a payment date of July 15, 2010 and (ii) if the Company terminates
Executive’s employment  before May 31, 2010 without Cause, the Company
shall pay to Executive the retention bonus set forth in Section 2(b) with a
payment date of May 31, 2010, provided that any payment of such retention bonus
with a payment date of July 15, 2010  shall be subject to Executive’s
execution and delivery to the Company of a release in the form attached hereto
as Exhibit B (the “Release”).  Cause shall be defined as (i)
Executive’s conviction, pleading guilty or no contest with respect to a felony
involving dishonesty or moral turpitude, (ii) Executive’s commission of any act
of theft, fraud, dishonesty, or falsification of any employment or Company
records, (iii) Executive’s engagement in misconduct that is detrimental to the
Company’s reputation or business, (iv) Executive’s refusal without proper legal
reason to substantially perform the duties and responsibilities required of
Executive, or (v) any breach by Executive of any material term of this Agreement
(including without limitation the Non-Disclosure Agreement) and/or of
Executive’s fiduciary duties to the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    (b)  Duties and
Responsibilities.  The Executive will report to William
Neil  (“Neil”), the Board of Directors of the Company (the “Board”),
or another appointee of the Board.  Executive shall be employed
as  President and Vice President/Head of Sales and shall perform and
discharge well and faithfully the duties which may be assigned to him from time
to time by the Board and/or Neil in connection with the conduct of the Company’s
business as well as those duties which are normally and customarily vested in
an  President and Vice President/Head of Sales of a
corporation.  Executive’s job responsibilities shall include, but not
be limited to, anything reasonably requested or required of Executive on behalf
of the Company.

     

    (c)           Extent of Services and
Business Activities.  Executive shall devote his full-time
efforts to the business
of the Company and shall not devote time to other activities except with the
prior consent of the Board of the Company.  Executive covenants and
agrees that for so long as he is employed by the Company, Executive shall not,
whether as an executive, employee, employer, consultant, agent, principal,
partner, member, stockholder, corporate officer or director, or in any other
individual or representative capacity, whether or not for compensation, engage
in or participate in or render services to any other, provided, however, that,
notwithstanding the foregoing, Executive (a) may invest in securities of any
entity, solely for investment purposes and without participating in the business
thereof, if (x) such securities are traded on any national securities exchange
or the National Association of Securities Dealers, Inc. Automated Quotation
System, and (y) Executive does not, directly or indirectly, own two percent (2%)
or more of any class of securities of such entity.

     

    (d)           Location.  During
the Term, Executive shall regularly perform his duties from his home office
located in the state of Kentucky or at the request of the Board, at the
Company’s principal location (the “Headquarters”).  In addition to
spending time at the Headquarters, Executive may be required to travel from time
to time in order to perform his duties hereunder.

     

    (e)           Representations of
Executive.  As of the date hereof, Executive hereby represents
to the Company that Executive has informed the Company’s Board of Directors of
all information material to the Company with respect to the matters set forth on
Exhibit A hereto.

     

    2. 2.           Compensation.

     

    (a)           Base
Salary.  Executive shall be paid an annual base salary (“Base Salary”) during
the Term of two hundred thousand dollars ($200,000.00).  Executive’s
Base Salary shall be payable in installments consistent with the payroll
practices established by the Company with respect to its senior executive
employees.

     

    (b)           Retention
Bonuses.  Executive shall be entitled to receive each of the
following retention bonuses provided Executive remains employed by the Company
in good standing as of the applicable payment dates, provided that payment of
the retention bonus with respect to July 15, 2010 shall be subject to
Executive’s execution and delivery to the Company of the Release.

     

    
      
        
        

      

      
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              Payment Date

            	 	
              Amount

            
	
              May
      31, 2010

            	 	
              $40,000

            
	
              July
      15, 2010

            	 	
              $100,000

            


    

     

    (c)           Performance Achievement
Bonus.  In addition, Executive is eligible to earn the
following Performance Achievement Bonuses provided that Executive remains
employed by the Company in good standing as of the applicable payment date and
has accomplished the task(s) set forth below as determined by the
Board.  If after the date hereof, the Company enters into a license
agreement with any customer or customers set forth on Exhibit A (the “Customer”)
pursuant to which the Customer is required to make payment to the Company that
results in a net payment (“Net Payment”) to the Company greater than or equal to
the threshold set forth on Exhibit A (the “Threshold”), the Company shall pay to
Executive an incentive payment of (i)  $40,000 (Forty Thousand
Dollars) plus (ii) 20% (Twenty Percent) of the difference between the Net
Payment and the Threshold.  For avoidance of doubt, (i) any license,
sublicense or other fees payable by the Company to any third party in connection
with the Customer agreement shall not be included in the Net Payment, (ii) Net
Payment shall not include any amounts payable pursuant to any access fee,
perpetual license or other similar arrangement included in such agreement,
unless prior to the execution of such agreement any third party whose consent to
such agreement is determined to be required by the Company has agreed in writing
to the portion of the Net Payment attributable to the Company under such access
fee, perpetual license or other similar arrangement and (iii) Net Payment shall
not include any amounts payable by customers with respect to the Excluded
Products set forth on Exhibit A. Payment to Executive will be made promptly upon
execution of the license agreement by Customer.  Executive hereby
agrees that any such customer agreement shall meet the minimum requirements set
forth in Exhibit A.

    


    (d)           Payment.  Payment
of all compensation to Executive, when due pursuant to this agreement, shall be
made in accordance with the relevant written Company policies in effect from
time to time, including normal payroll practices, and shall be subject to all
applicable employment and withholding taxes.  This provision shall
survive the termination of Executive’s employment with the Company, for any
reason.

     

    3. 3.           Other Employment
Benefits.

     

    (a)           Business
Expenses.  Upon submission of itemized expense statements, in
the manner as shall be specified by the Company, Executive shall be entitled to
reimbursement for reasonable business and travel expenses duly incurred by
Executive in the performance of his duties under this Agreement, pursuant to
written Company policy and any relevant written policies established by the
Board and provided to Executive.

     

    (b)           Benefit
Plans.  To the extent offered by the Company, Executive shall
be entitled to participate, on a basis commensurate with his position, in the
Company’s medical insurance, retirement (e.g., non-matching 401(k)
plan) and other benefit plans pursuant to their terms and conditions during the
Term.  Nothing in this Agreement shall preclude the Company or any
affiliate of the Company from terminating or amending any employee benefit plan
or program from time to time.

     

    
      
        
        

      

      
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    (c)           Vacation.  Executive
has 509 vacation hours as of the date hereof. Executive agrees to use One
Hundred Sixty (160) hours of vacation ending the calendar year
2010.  Executive acknowledges that he is not entitled to accrue any
further vacation until all vacation balances are exhausted.

     

    (d)           No Other
Benefits.  Executive understands and acknowledges that the
compensation and benefits specified in Paragraphs 2 and 3 of this Agreement are
the only compensation and benefits he is entitled to receive under this
Agreement.

     

    4. 4.           Confidentiality; Unfair
Competition; Non-Solicitation Agreement.  The Non-Disclosure
Agreement delivered by Executive to the Company pursuant to the Original
Agreement  (the “Non-Disclosure Agreement”) shall remain in full force
and effect. The terms of the Non-Disclosure Agreement are incorporated by this
reference as if set forth in full.

    


    5. 5.           Termination of
Employment.

    


    (a)                 Termination of At-Will
Employment.  From and after July 15, 2010 either the Company or
Executive may terminate Executive’s employment at any time with or without
advance notice or Cause.  Executive acknowledges that the payments set
forth herein are in lieu of severance and that upon termination of Executive’s
employment at any time following July 15, 2010 Executive shall not be entitled
to any severance or other payment or amount from the Company.

     

    (b)           Payments Upon
Termination.  If Executive’s employment is terminated for any
reason by either party, the Company shall promptly pay or provide to the
Executive, or his estate, (i) the Executive’s earned but unpaid Base Salary
accrued through the date of termination, (ii) accrued, but unpaid, vacation time
through such date of termination, (iii) any Bonus or Incentive Compensation
required to be paid to the Executive pursuant to this Agreement, to the extent
earned prior to the date of termination and payable, but not previously paid,
(iv) reimbursement of any business expenses incurred by the Executive prior to
the Date of Termination that are reimbursable under Paragraph 3(a) above, and
(v) any vested benefits and other amounts due to Executive under any plan,
program, policy of, or other agreement with, the Company(subsections (i) to (v),
above, are referred to together as the “Accrued
Obligations”).

    


    (c)           If
Executive’s employment is terminated by the Company without Cause (as Cause is
defined above), Executive shall also receive reimbursement for nine (9) months
of COBRA premiums for Executive’s existing healthcare coverage and shall have
ninety (90) days from his last day of employment to exercise any vested but
unexercised stock options.

     

    
      
        
        

      

      
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    6.           Executive’s Duties Upon
Termination.

     

    (a)           Cooperation.  After
notice of termination, Executive shall, at the Company’s expense and subject to
Executive’s professional availability, cooperate with the Company, as reasonably
requested by the Company, to effect a transition of Executive’s responsibilities
and to ensure that the Company is aware of all matters being handled by
Executive.

     

    (b)           Return of Company
Property.  Within seven days of the termination of Executive’s
employment under this Agreement for any reason, Executive will return all
Company property in Executive’s possession to the Company

    


    (c)           Resignation of
Office.  On the termination of Executive’s employment for
whatever reason, Executive agrees that Executive shall resign any directorship
or any other offices held by Executive in the Company or any subsidiary of the
Company.

     

    7.           Assignment and
Transfer.  Executive’s rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, and any
purported assignment, transfer or delegation thereof shall be
void.  This Agreement shall be assignable by the Company and inure to
the benefit of, and be binding upon and enforceable by, any purchaser of
substantially all of Company’s assets, any corporate successor to Company or any
assignee thereof; provided however that such assignee assumes in writing the
Company’s obligations thereunder.

     

    8.           No Inconsistent
Obligations.  This Agreement and the  Non-Disclosure
Agreement shall represent the sole agreements with Company as to the subject
matter herein, and Executive has no other employment relationship and is not
subject to any other employment agreement with the Company or any other
affiliate of the Company and Executive has no obligations, legal or otherwise,
inconsistent with the terms of this Agreement or with Executive undertaking
employment with the Company.  Executive represents and warrants that
Executive has the right and power to enter into this Agreement, to perform
Executive’s obligations hereunder and by entering into this Agreement and
performing Executive’s obligations hereunder Executive is not in conflict with
any agreement with any third party.  The Company represents and
warrants that the Company has all requisite corporate power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder.

     

    9.           Mutual Release of Claims
Under Prior Employment Arrangement.  In exchange and as
consideration for each Party entering into this Agreement, each Party agrees to
release the other from any claims they may have against the other, as stated
below:

     

    (a)           Each
Party hereby voluntarily, knowingly and willingly releases, acquits and forever
discharges the other Party including, without limitation, each of their 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, members, joint ventures,
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, which against any
or all of them any Party ever had, now has or hereinafter may have, against the
other Party, up to and including the date of the Parties’ execution of this
Agreement, including, but not limited to, pursuant to the Original
Agreement  and the  Change in Control Severance Agreement
(the “CIC Agreement”), dated as of June 2, 2004, between the Executive and the
Company.  The Parties hereby agree to terminate  each of the
Original Agreement and the CIC Agreement, and that each of such agreements shall
be null and void and have no further effect.

     

    
      
        
        

      

      
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    (b)           It
is a condition hereof, and it is the Parties intention in the execution of the
General Release in subparagraph 9(a), above, that the same shall be effective as
a bar to each and every claim hereinabove specified, and in furtherance of this
intention, the Parties hereby expressly waive any and all rights and benefits
conferred upon them by Section 1542 of the California Civil Code (or its
Kentucky equivalent), which provides:

    


    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.

     

    (c)           Executive
further acknowledges and agrees that he is not owed any wages, commissions,
bonuses, MBO’s, accrued but unused vacation pay or unreimbursed business
expenses except as set forth herein arising out of or relating to Executive’s
prior employment with the Company.

     

    10.           Miscellaneous.

     

    (a)           Survival.  The
provisions of this Agreement, including, without limitation Paragraphs 10(c)
(Arbitration), contained herein shall survive the termination of
employment.

     

    (b)           Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Kentucky without regard to conflict of law principles.

     

    (d)           Arbitration
.  With the exception of any claims for workers compensation,
unemployment insurance, claims before any governmental administrative agencies
or claims related to the National Labor Relations Act, any controversy relating
to this Agreement or Employee’s employment shall be settled by binding
arbitration according to the American Arbitration Association’s Employment
Arbitration Rules and Mediation Procedures (available at http://www.adr.org) and
subject to the Federal Arbitration Act and the Federal Rules of Civil Procedure
(including their mandatory and permission rights to discovery.)  This
provision to arbitrate applies to both Company and Executive.  Such
arbitration shall be presided over by a single arbitrator in
Delaware.  Such binding arbitration is applicable to any and all
claims under state and federal employment related statutes including, without
limitation, the Fair Employment and Housing Act, the Age Discrimination in
Employment Act, the Family Medical Leave Act, the Title VII of the Civil Rights
Act and any similar statute law or regulation of the state of Kentucky, as well
as any claims related to a claimed breach of this Agreement.  The
Company shall bear all costs uniquely associated with the arbitration process,
including the arbitrator’s fees where required by law.  The arbitrator
shall have the authority to award any damages authorized by law, including,
without limitation, costs and attorneys’ fees.  The Parties agree to
execute all documents necessary to keep the documents, findings, and award, if
any, of the arbitration confidential, including, without limitation, execution
of a protective order.

     

    
      
        
        

      

      
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    (e)           Amendment. This
Agreement may be amended only by a writing signed by Executive and by a duly
authorized representative of the Company (other than Executive) as approved by
the Board.

     

    (f)           Severability. If any
term, provision, covenant or condition of this Agreement, or the application
thereof to any person, place or circumstance, shall be held to be invalid,
unenforceable or void, the remainder of this Agreement and such term, provision,
covenant or condition as applied to other persons, places and circumstances
shall remain in full force and effect, provided however, that any such provision
found invalid, unenforceable or void shall be deemed amended only to the extent
necessary and shall preserve the intent of the parties hereto.

     

    (g)           Construction. The
headings and captions of this Agreement are provided for convenience only and
are intended to have no effect in construing or interpreting this Agreement. The
language in all parts of this Agreement shall be in all cases construed
according to its fair meaning and not strictly for or against the Company or
Executive.

     

    (h)          
Nonwaiver. No failure
or neglect of either party hereto in any instance to exercise any right, power
or privilege hereunder or under law shall constitute a waiver of any other
right, power or privilege or of the same right, power or privilege in any other
instance. All waivers by either party hereto must be contained in a written
instrument signed by the party to be charged and, in the case of the Company, by
an officer of the Company (other than Executive) or other person duly authorized
by the Company.

     

    (i)           I.R.C.
409A.  Unless otherwise expressly provided, any payment of
compensation by Company to Executive, whether pursuant to this Agreement or
otherwise, shall be made within two and one-half months (21⁄2 months) after the
later of the end of the calendar year of the Company’s fiscal year in which
Executive’s right to such payment vests (i.e., is not subject to a “substantial
risk of forfeiture” for purposes of Code Section 409A of the Internal Revenue
Code of 1986, as amended (“Code”)).  To the extent that any severance
payments come within the definition of “involuntary severance” under Code
Section 409A, such amounts up to the lesser of two times the Executive’s annual
compensation for the year preceding the year of termination or two times the
401(a)(17) limit for the year of termination, shall be excluded from “deferred
compensation” as allowed under Code Section 409A, and shall not be subject to
the following Code Section 409A compliance requirements.  All payments
of “nonqualified deferred compensation” (within the meaning of Section 409A) are
intended to comply with the requirements of Code Section 409A, and shall be
interpreted in accordance therewith. Neither party individually or in
combination may accelerate any such deferred payment, except in compliance with
Code Section 409A, and no amount shall be paid prior to the earliest date on
which it is permitted to be paid under Code Section 409A.  In the
event that Executive is determined to be a “key employee” (as defined in Code
Section 416(i) (without regard to paragraph (5) thereof)) of Company at a time
when its stock is deemed to be publicly traded on an established securities
market, payments determined to be “nonqualified deferred compensation” payable
following termination of employment shall be made no earlier than the earlier of
(i) the last day of the sixth (6th) complete calendar month following such
termination of employment, or (ii) Executive’s death, consistent with the
provisions of Code Section 409A.  Any payment delayed by reason of the
prior sentence shall be paid out in a single lump sum at the end of such
required delay period in order to catch up to the original payment
schedule.   Notwithstanding anything herein to the contrary, no
amendment may be made to this Agreement if it would cause the Agreement or any
payment hereunder not to be in compliance with Code Section 409A.

     

    
      
        
        

      

      
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    (j)           Notices. All notices,
requests, demands, claims and other communications hereunder will be in
writing.  Any notice, request, demand, claim or other communication
hereunder will be deemed duly given as of the day such information is sent by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:

    


    If to
Executive:

    


    Mr.
Edward M. Gaughan

    14605
Woodlake Trace

    Louisville,
Kentucky  40245

    Tel:           502-245-3090

    Fax:           502-245-0896

    If to
Company:

    


    Peerless
Systems Corporation,

    a
Delaware corporation

    Attn:  Mr.
William Neil

    2361
Rosecrans Avenue, Suite 400

    El
Segundo, CA 90245

    Tel:
(310) 536-0908

    


    with an
additional copy to (which copy will not constitute notice):

    


    Chairman
of Board

    2361
Rosecrans Avenue, Suite 400

    El
Segundo, CA 90245

     

    
      
        
        

      

      
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    Any party
may send any notice, request, demand, claim, or other communication hereunder to
the intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication will be deemed to have been duly given unless and
until it is received by the intended recipient (which shall be evidenced by fax
or e-mail confirmation, or registered receipt, or declaration via a
messenger).  Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set
forth.

    


    (i)           Assistance in
Litigation. Executive shall, during and after termination of employment,
upon reasonable notice, furnish such information and proper assistance to the
Company as may reasonably be required by the Company in connection with any
litigation in which it or any of its subsidiaries or affiliates is, or may
become a party; provided, however, that such assistance following termination
shall be furnished at mutually agreeable times and for mutually agreeable
compensation.

    


    (j)           Employee
Acknowledgment. The undersigned Executive hereby acknowledges that he has
had the option to consult legal counsel in regard to this Agreement, that he has
read and understands this Agreement, that he is fully aware of its legal effect,
and that he has entered into it freely and voluntarily and based on his own
judgment and not on any representations or promises other than those contained
in this Agreement.  Further, Executive hereby agrees to abide by all
federal, state, and local laws, ordinances and regulations.

    


    (k)           Counterparts. This
Agreement may be executed in two (2) or more counterparts, each of which will be
deemed an original and all of which together will constitute one and the same
instrument.

     

    (l)           Entire Agreement.
This Agreement, and the documents referenced herein and executed herewith
contain the entire agreement and understanding between the Parties hereto and
supersede any prior or contemporaneous written or oral agreements,
representations and warranties between them respecting the subject matter
hereof.

     

    


    [SIGNATURE
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    IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date set forth above.

     

    
      	
              Peerless
      Systems Corporation, Inc. (“Company”)

               

               

            
	
              By:
      /s/ William R.
      Neil

              Name:  William
      R. Neil

              Title:  Chief
      Financial Officer and Acting Chief Executive Officer

            
	
              Dated: May 11, 2010

               

              /s/
      Edward M. Gaughan

            
	
              Mr.
      Edward M. Gaughan (“Executive”)

            
	 
      
	
              Dated:
      May 11, 2010

            


    

     

    
      
        
        

      

      
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