Document:

ex10_1.htm

    
      

    

    EXHIBIT
10.1

    

    QUALSTAR
CORPORATION

    2008
STOCK INCENTIVE PLAN

    

    

    This 2008
STOCK INCENTIVE PLAN (the “Plan”) is hereby established by Qualstar Corporation,
a California corporation (the “Company”), and adopted by its Board of Directors
as of November 5, 2008 (the “Effective Date”).

    

    ARTICLE
1.

    

    PURPOSES
OF THE PLAN

    

    1.1           Purposes.  The
purposes of the Plan are (a) to enhance the Company’s ability to attract and
retain the services of qualified employees, officers, directors, consultants and
other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the Company’s business largely depends,
and (b) to provide additional incentives to such persons or entities to devote
their utmost effort and skill to the advancement and betterment of the Company,
by providing them an opportunity to participate in the ownership of the Company
and thereby have an interest in the success and increased value of the
Company.

    

    ARTICLE
2.

    

    DEFINITIONS

    

    For
purposes of this Plan, the following terms shall have the meanings
indicated:

    

    2.1           Administrator.  “Administrator”
means the Board or, if the Board delegates responsibility for any matter to the
Committee, the term Administrator shall mean the Committee.

    

    2.2           Affiliated
Company.  “Affiliated Company” means:

    

    (a)           with
respect to Incentive Options, any “parent corporation” or “subsidiary
corporation” of the Company, whether now existing or hereafter created or
acquired, as those terms are defined in Sections 424(e) and 424(f) of the Code,
respectively; and

    

    (b)           with
respect to Nonqualified Options, any entity described in paragraph (a) of this
Section 2.2 above, plus any other corporation, limited liability company
(“LLC”), partnership or joint venture, whether now existing or hereafter created
or acquired, with respect to which the Company beneficially owns more than fifty
percent (50%) of:  (1) the total combined voting power of all
outstanding voting securities or (2) the capital or profits interests of an LLC,
partnership or joint venture.

     

    2.3           Board.  “Board”
means the Board of Directors of the Company.

    

    2.4           Change in
Control.  “Change in Control” shall mean:

    

    (a)           The
acquisition, directly or indirectly, in one transaction or a series of related
transactions, by any person or group (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the
beneficial ownership of securities of the Company possessing more than fifty
percent (50%) of the total combined voting power of all outstanding securities
of the Company;

    

    
      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

    

    (b)           A
merger or consolidation in which the Company is not the surviving entity, except
for a transaction in which the holders of the outstanding voting securities of
the Company immediately prior to such merger or consolidation hold as a result
of holding Company securities prior to such transaction, in the aggregate,
securities possessing more than fifty percent (50%) of the total combined voting
power of all outstanding voting securities of the surviving entity (or the
parent of the surviving entity) immediately after such merger or
consolidation;

    

    (c)           A
reverse merger in which the Company is the surviving entity but in which the
holders of the outstanding voting securities of the Company immediately prior to
such merger hold, in the aggregate, securities possessing less than fifty
percent (50%) of the total combined voting power of all outstanding voting
securities of the Company or of the acquiring entity immediately after such
merger;

    

    (d)           The
sale, transfer or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company, except
for a transaction in which the holders of the outstanding voting securities of
the Company immediately prior to such transaction(s) receive as a distribution
with respect to securities of the Company, in the aggregate, securities
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the acquiring entity immediately after such
transaction(s); or

    

    (e)           The
approval by the stockholders of a plan or proposal for the liquidation or
dissolution of the Company.

    

    2.5           Code.  “Code” means the Internal
Revenue Code of 1986, as amended from time to time.

    

    2.6           Committee.  “Committee”
means a committee of two or more members of the Board appointed to administer
the Plan, as set forth in Section 6.1 hereof.

    

    2.7           Common
Stock.  “Common Stock” means the Common Stock
of the Company, subject to adjustment pursuant to Section 4.2
hereof.

    

    2.8           Company.  “Company”
means Qualstar Corporation, a California corporation, or any entity that is a
successor to the Company.

    

    2.9           Disability.  “Disability”
means permanent and total disability as defined in Section 22(e)(3) of the
Code.  The Administrator’s determination of a Disability or the
absence thereof shall be conclusive and binding on all interested
parties.

    

    2.10         Effective
Date.  “Effective Date” means the date on which
the Plan was originally adopted by the Board, as set forth on the first page
hereof.

    

    2.11         Exchange
Act.  “Exchange Act” means the Securities and Exchange Act of
1934, as amended.

    

    2.12         Exercise
Price.  “Exercise Price” means the purchase price per share of
Common Stock payable by the Optionee to the Company upon exercise of an
Option.

    

    2.13         Fair Market
Value.  “Fair Market Value” on any given date means
the value of one share of Common Stock, determined as follows:

    

    (a)           If
the Common Stock is then listed or admitted to trading on The NASDAQ Stock
Market or another stock exchange which reports closing sale prices, the Fair
Market Value shall be the closing sale price on the date of valuation on The
NASDAQ Stock Market or principal stock exchange on which the Common Stock is
then listed or admitted to trading, or, if no closing sale price is quoted on
such day, then the Fair Market Value shall be the closing sale price of the
Common Stock on The NASDAQ Stock Market or such exchange on the next preceding
day on which a closing sale price is reported.

    

    
      
        
           

        

        
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    (b)           If
the Common Stock is not then listed or admitted to trading on The NASDAQ Stock
Market or a stock exchange which reports closing sale prices, the Fair Market
Value shall be the average of the closing bid and asked prices of the Common
Stock in the over-the-counter market on the date of valuation.

    

    (c)           If
neither (a) nor (b) is applicable as of the date of valuation, then the Fair
Market Value shall be determined by the Administrator in good faith using any
reasonable method of evaluation, which determination shall be conclusive and
binding on all interested parties.

    

    2.14         FINRA
Dealer.  “FINRA Dealer” means a broker-dealer that is a member
of the Financial Industry Regulatory Authority.

    

    2.15         Incentive
Option.  “Incentive Option” means any Option designated and
qualified as an “incentive stock option” as defined in Section 422 of the
Code.

    

    2.16         Incentive Option
Agreement.  “Incentive Option Agreement” means an Option
Agreement with respect to an Incentive Option.

    

    2.17         Nonqualified
Option.  “Nonqualified Option” means any Option that is
not an Incentive Option.  To the extent that any Option designated as
an Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Stockholder or because it exceeds the annual limit provided for in
Section 5.7 below, it shall to that extent constitute a Nonqualified
Option.

    

    2.18         Nonqualified Option Agreement.
“Nonqualified Option Agreement” means an Option Agreement with respect to
a Nonqualified Option.

    

    2.19         Option.  “Option” means any option to
purchase Common Stock granted pursuant to this Plan.

    

    2.20         Option
Agreement.  “Option Agreement” means the written
agreement entered into between the Company and the Optionee with respect to an
Option granted under this Plan.

    

    2.21         Optionee.  “Optionee”
means any Participant who holds an Option.

    

    2.22         Participant.  “Participant”
means an individual or entity that holds an Option under this Plan.

    

    2.23         Performance
Criteria.  “Performance Criteria” means one or more of the
following as established by the Administrator, which may be stated as a target
percentage or dollar amount, a percentage increase over a base period percentage
or dollar amount or the occurrence of a specific event or events:

    

    (a)           Revenue;

    

    (b)           Gross
profit;

    

    (c)           Operating
income;

    

    (d)           Pre-tax
income;

    

    (e)           Earnings
before interest, taxes, depreciation and amortization (“EBITDA”);

    

    (f)
           Earnings
per common share on a fully diluted basis (“EPS”);

    

    (g)           Consolidated
net income of the Company divided by the average consolidated common
stockholders equity (“ROE”);

    

    
      
        
           

        

        
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    (h)           Cash
and cash equivalents derived from either (i) net cash flow from operations, or
(ii) net cash flow from operations, financings and investingactivities (“Cash
Flow”);

    

    (i)
           Adjusted
operating cash flow return on income;

    

    (j)
           Cost
containment or reduction;

    

    (k)           The
percentage increase in the market price of the Company’s common stock over a
stated period; and

    

    (l) 
          Individual business
objectives.

    

    2.24         Service
Provider.  “Service Provider” means a consultant or
other person or entity the Administrator authorizes to become
a  Participant in the Plan and who provides services to (i) the
Company, (ii) an Affiliated Company, or (iii) any other business venture
designated by the Administrator in which the Company or an Affiliated Company
has a significant ownership interest.

    

    2.25         10%
Stockholder.  “10% Stockholder” means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.

    

    ARTICLE
3.

    

    ELIGIBILITY

    

    3.1           Incentive
Options.  Only employees of the Company or of an Affiliated
Company (including members of the Board if they are employees of the Company or
of an Affiliated Company) are eligible to receive Incentive Options under the
Plan.

    

    3.2           Nonqualified
Options.  Employees of the Company or of an Affiliated Company,
members of the Board (whether or not employed by the Company or an Affiliated
Company), and Service Providers are eligible to receive Nonqualified Options
under the Plan.

    

    3.3           Section 162(m)
Limitation.  In no event shall any Participant be granted
Options in any one calendar year pursuant to which the aggregate number of
shares of Common Stock that may be acquired thereunder exceeds one hundred
thousand (100,000) shares, subject to adjustment as to the number and kind of
shares pursuant to Section 4.2 hereof.

    

    ARTICLE
4.

    

    PLAN
SHARES

    

    4.1           Shares Subject to the
Plan.

    

    (a)           The
number of shares of Common Stock that may be issued under this Plan shall be
five hundred thousand (500,000) shares, subject to adjustment as to the number
and kind of shares pursuant to Section 4.2 hereof.  For purposes
of this limitation, in the event that (a) all or any portion of any Option
granted under the Plan can no longer under any circumstances be exercised, or
(b) any shares of Common Stock are reacquired by the Company pursuant to an
Option Agreement, the shares of Common Stock allocable to the unexercised
portion of such Option or the shares so reacquired shall again be available for
grant or issuance under the Plan.

    

    (b)           The
maximum number of shares of Common Stock that may be issued under the Plan as
Incentive Options shall be five hundred thousand (500,000) shares, subject to
adjustment as to the number and kind of shares pursuant to Section 4.2
hereof.

    

    
      
        
           

        

        
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    4.2           Changes in Capital
Structure.  In the event that the outstanding shares of Common
Stock are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of a recapitalization, stock split, reverse stock split, reclassification, stock
dividend, or other change in the capital structure of the Company, then
appropriate adjustments shall be made by the Administrator to the aggregate
number and kind of shares subject to this Plan, the number and kind of shares
and the price per share subject to outstanding Option Agreements, and the limit
on the number of shares under Section 3.3, all in order to preserve, as nearly
as practical, but not to increase, the benefits to Participants.

    

    ARTICLE
5.

    

    OPTIONS

    

    5.1           Grant of Stock
Options.  The Administrator shall have the right to grant
pursuant to this Plan, Options subject to such terms, restrictions and
conditions as the Administrator may determine at the time of
grant.  Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives
established by the Administrator with respect to one or more Performance
Criteria.

    

    5.2           Option
Agreements.  Each Option granted pursuant to this Plan shall be
evidenced by an Option Agreement which shall specify the number of shares
subject thereto, vesting provisions relating to such Option, the Exercise Price
per share, and whether the Option is an Incentive Option or Nonqualified
Option.  As soon as is practical following the grant of an Option, an
Option Agreement shall be duly executed and delivered by or on behalf of the
Company to the Optionee to whom such Option was granted.  Each Option
Agreement shall be in such form and contain such additional terms and
conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable.

    

    5.3           Exercise Price.  The
Exercise Price per share of Common Stock covered by each Option shall be
determined by the Administrator, subject to the following:  (a) the
Exercise Price of an Incentive Option shall not be less than 100% of Fair Market
Value on the date the Incentive Option is granted, (b) the Exercise Price of a
Nonqualified Option shall not be less than 100% of Fair Market Value on the date
the Nonqualified Option is granted, and (c) if the person to whom an Incentive
Option is granted is a 10% Stockholder on the date of grant, the Exercise Price
shall not be less than 110% of Fair Market Value on the date the Incentive
Option is granted.  However, an Option may be granted with an exercise
price lower than that set forth in the preceding sentence if such Option is
granted pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424 of the Code.

    

    5.4           Payment of Exercise
Price.  Payment of the Exercise Price shall be made upon
exercise of an Option and may be made, in the discretion of the Administrator,
subject to any legal restrictions, by:  (a) cash; (b) check;
(c) the surrender of shares of Common Stock owned by the Optionee (provided
that shares acquired pursuant to the exercise of options granted by the Company
must have been held by the Optionee for the requisite period necessary to avoid
a charge to the Company’s earnings for financial reporting purposes), which
surrendered shares shall be valued at Fair Market Value as of the date of such
exercise; (d)  the cancellation of indebtedness of the Company to the
Optionee; (e) the waiver of compensation due or accrued to the Optionee for
services rendered; (f) provided that a public market for the Common Stock
exists, a “same day sale” commitment from the Optionee and a FINRA Dealer
whereby the Optionee irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased to pay for the Exercise Price and whereby the
FINRA Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (g) provided that a public market for
the Common Stock exists, a “margin” commitment from the Optionee and a FINRA
Dealer whereby the Optionee irrevocably elects to exercise the Option and to
pledge the shares so purchased to the FINRA Dealer in a margin account as
security for a loan from the FINRA Dealer in the amount of the Exercise Price,
and whereby the FINRA Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or (h) any combination
of the foregoing methods of payment or any other consideration or method of
payment as shall be permitted by applicable law.

    

    
      
        
           

        

        
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    5.5           Term and Termination of
Options.  The term and provisions for termination of each
Option shall be as fixed by the Administrator, but no Option may be exercisable
more than ten (10) years after the date it is granted.  An Incentive
Option granted to a person who is a 10% Stockholder on the date of grant shall
not be exercisable more than five (5) years after the date it is
granted.

    

    5.6           Vesting and Exercise of
Options.  Each Option shall vest and become exercisable in one
or more installments at such time or times and subject to such conditions,
including without limitation the achievement of specified performance goals or
objectives established with respect to one or more Performance Criteria, as
shall be determined by the Administrator.

    

    5.7           Annual Limit on Incentive
Options.  To the extent required for “incentive stock option”
treatment under Section 422 of the Code, the aggregate Fair Market Value
(determined as of the time of grant) of the Common Stock with respect to which
Incentive Options granted under this Plan and any other plan of the Company or
any Affiliated Company become exercisable for the first time by an Optionee
during any calendar year shall not exceed $100,000.

    

    5.8           Nontransferability of
Options.  Except as otherwise provided in this Section 5.8,
Options shall not be assignable or transferable except by will, the laws of
descent and distribution or pursuant to a domestic relations order entered by a
court in settlement of marital property rights, and during the life of the
Optionee, Options shall be exercisable only by the Optionee.  At the
discretion of the Administrator and in accordance with rules it establishes from
time to time, Optionees may be permitted to transfer some or all of their
Nonqualified Options to one or more “family members,” which is not a “prohibited
transfer for value,” provided that (i) the Optionee (or such Optionee’s estate
or representative) shall remain obligated to satisfy all income or other tax
withholding obligations associated with the exercise of such Nonqualified
Option; (ii) the Optionee shall notify the Company in writing that such transfer
has occurred and disclose to the Company the name and address of the “family
member” or “family members” and their relationship to the Optionee, and (iii)
such transfer shall be effected pursuant to transfer documents in a form
approved by the Administrator.  For purposes of the foregoing, the
terms “family members” and “prohibited transfer for value” have the meaning
ascribed to them in the General Instructions to Form S-8 (or any successor form)
promulgated under the Securities Act of 1933, as amended.

    

    5.9           Rights as a
Stockholder.  An Optionee or permitted transferee of an Option
shall have no rights or privileges as a stockholder with respect to any shares
covered by an Option until such Option has been duly exercised and certificates
representing shares purchased upon such exercise have been issued to such
person.

    

    5.10         Repricing
Prohibited.  Subject to Section 4.2 hereof, without the prior
approval of the Company’s stockholders, evidenced by a majority of votes cast,
neither the Committee nor the Board shall cause the cancellation, substitution
or amendment of an Option Agreement that would have the effect of reducing the
exercise price of an Option previously granted under this Plan, or otherwise
approve any modification to an Option that would be treated as a “repricing”
under the then applicable rules, regulations or listing requirements adopted by
The NASDAQ Stock Market or the principal exchange on which the Company’s shares
of Common Stock are then listed or admitted to trading.

    

    5.11         Compliance with Code Section
409A.  Notwithstanding anything in this Article 5 to the
contrary, all Option Agreements must be structured to satisfy the requirements
of Code Section 409A or an applicable exemption therefrom, as determined by the
Administrator in its sole discretion.

    

    
      
        
           

        

        
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    ARTICLE
6.

    

    ADMINISTRATION
OF THE PLAN

    

    6.1           Administrator.  Authority
to control and manage the operation and administration of the Plan shall be
vested in the Board, which may delegate such responsibilities in whole or in
part to a committee consisting of two (2) or more members of the Board (the
“Committee”).  Members of the Committee may be appointed from time to
time by, and shall serve at the pleasure of, the Board.  The Board may
limit the composition of the Committee to those persons necessary to comply with
the requirements of Section 162(m) of the Code and Section 16 of the Exchange
Act.  As used herein, the term “Administrator” means the Board or,
with respect to any matter as to which responsibility has been delegated to the
Committee, the term Administrator shall mean the Committee.

    

    6.2           Powers of the
Administrator.  In addition to any other powers or authority
conferred upon the Administrator elsewhere in this Plan or by law, the
Administrator shall have full power and authority:  (a) to
determine the persons to whom, and the time or times at which, Incentive Options
or Nonqualified Options shall be granted, the number of shares to be represented
by each Option, and the consideration to be received by the Company upon the
exercise of such Options; (b) to interpret the Plan; (c) to create,
amend or rescind rules and regulations relating to the Plan; (d) to
determine the terms, conditions and restrictions contained in, and the form of,
Option Agreements; (e) to determine the identity or capacity of any persons
who may be entitled to exercise a Participant’s rights under any Option
Agreement under the Plan; (f) to correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any Option Agreement;
(g) to accelerate the vesting of any Option; (h) to extend the
expiration date of any Option; (i)  to amend outstanding Option Agreements
to provide for, among other things, any change or modification which the
Administrator could have included in the original Agreement or in furtherance of
the powers provided for herein; and (j) to make all other determinations
necessary or advisable for the administration of this Plan, but only to the
extent not contrary to the express provisions of this Plan.  Any
action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under this Plan
shall be final and binding on the Company and all Participants.

    

    6.3           Limitation on
Liability.  No employee of the Company or member of the Board
or Committee shall be subject to any liability with respect to duties under the
Plan unless the person acts fraudulently or in bad faith.  To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person’s conduct in the performance of duties
under the Plan.

    

    ARTICLE
7.

    

    CHANGE
IN CONTROL

    

    7.1           Options.  In order
to preserve a Participant’s rights with respect to any outstanding Options in
the event of a Change in Control of the Company:

    

    (a)           Vesting
of all outstanding Options shall accelerate automatically effective as of
immediately prior to the consummation of the Change in Control unless the Options
are to be assumed by the acquiring or successor entity (or parent thereof) or
new options or New Incentives are to be issued in exchange therefor, as provided
in subsection (b) below.

    

    (b)           Vesting
of outstanding Options shall not accelerate if and
to the extent that:  (i) the Options (including the unvested
portion thereof) are to be assumed by the acquiring or successor entity (or
parent thereof) or new options of comparable value are to be issued in exchange
therefor pursuant to the terms of the Change in Control transaction, or
(ii) the Options (including the unvested portion thereof) are to be
replaced by the acquiring or successor entity (or parent thereof) with other
incentives of comparable value under a new incentive program (“New Incentives”)
containing such terms and provisions as the Administrator in its discretion may
consider equitable.  If outstanding Options are assumed, or if new
options of comparable value are issued in exchange therefor, then each such
Option or new option shall be appropriately adjusted, concurrently with the
Change in Control, to apply to the number and class of securities or other
property that the Optionee would have received pursuant to the Change in Control
transaction in exchange for the shares issuable upon exercise of the Option had
the Option been exercised immediately prior to the Change in Control, and
appropriate adjustment also shall be made to the Exercise Price such that the
aggregate Exercise Price of each such Option or new option shall remain the same
as nearly as practicable.

    

    
      
        
           

        

        
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    (c)           If
any Option is assumed by an acquiring or successor entity (or parent thereof) or
a new option of comparable value or New Incentive is issued in exchange therefor
pursuant to the terms of a Change in Control transaction, then, if so provided
in an Option Agreement, the vesting of the Option, the new option or the New
Incentive shall accelerate if and at such time as the Optionee’s service as an
employee, director, officer, consultant or other service provider to the
acquiring or successor entity (or a parent or subsidiary thereof) is terminated
involuntarily or voluntarily under certain circumstances within a specified
period following consummation of the Change in Control, pursuant to such terms
and conditions as shall be set forth in the Option Agreement.

    

    (d)           If
vesting of outstanding Options will accelerate pursuant to subsection (a)
above, the Administrator in its discretion may provide, in connection with the
Change in Control transaction, for the purchase or exchange of each Option for
an amount of cash or other property having a value equal to the amount (or
“spread”) by which (x) the value of the cash or other property that the
Optionee would have received pursuant to the Change in Control transaction in
exchange for the shares issuable upon exercise of the Option had the Option been
exercised immediately prior to the Change in Control, exceeds (y) the
Exercise Price of the Option.

    

    (e)           The
Administrator shall have the discretion to provide in each Option Agreement
other terms and conditions that relate to (i) vesting of such Option in the
event of a Change in Control, and (ii) assumption of such Options or
issuance of comparable securities or New Incentives in the event of a Change in
Control.  The aforementioned terms and conditions may vary in each
Option Agreement, and may be different from and have precedence over the
provisions set forth in Sections 7.1(a) - 7.1(d) above.

    

    (f)           Outstanding
Options shall terminate and cease to be exercisable upon consummation of a
Change in Control except to the extent that the Options are assumed by the
successor entity (or parent thereof) pursuant to the terms of the Change in
Control transaction.

    

    (g)           If
outstanding Options will not be assumed by the acquiring or successor entity (or
parent thereof), the Administrator shall cause written notice of a proposed
Change in Control transaction to be given to Optionees not less than fifteen
(15) days prior to the anticipated effective date of the proposed
transaction.

    

    ARTICLE
8.

    

    AMENDMENT
AND TERMINATION OF THE PLAN

    

    8.1           Amendments.  The
Board may from time to time alter, amend, suspend or terminate this Plan in such
respects as the Board may deem advisable.  No such alteration,
amendment, suspension or termination shall be made which shall substantially
affect or impair the rights of any Participant under an outstanding Option
Agreement without such Participant’s consent.  The Board may alter or
amend the Plan to comply with requirements under the Code relating to Incentive
Options or other types of options which give Optionees more favorable tax
treatment than that applicable to Options granted under this Plan as of the date
of its adoption.  Upon any such alteration or amendment, any
outstanding Option granted hereunder may, if the Administrator so determines and
if permitted by applicable law, be subject to the more favorable tax treatment
afforded to an Optionee pursuant to such terms and conditions.

    

    8.2           Plan
Termination.  Unless this Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options may be granted under the Plan thereafter, but
Option Agreements then outstanding shall continue in effect in accordance with
their respective terms.

    

    
      
        
           

        

        
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    ARTICLE
9.

    

    TAX
WITHHOLDING

    

    9.1           Withholding.  The
Company shall have the power to withhold, or require a Participant to remit to
the Company, an amount sufficient to satisfy any applicable Federal, state, and
local tax withholding requirements with respect to any Options
exercised.  To the extent permissible under applicable tax, securities
and other laws, the Administrator may, in its sole discretion and upon such
terms and conditions as it may deem appropriate, permit a Participant to satisfy
his or her obligation to pay any such tax, in whole or in part, up to an amount
determined on the basis of the highest marginal tax rate applicable to such
Participant, by (a) directing the Company to apply shares of Common Stock
to which the Participant is entitled as a result of the exercise of an Option,
or (b) delivering to the Company shares of Common Stock owned by the
Participant.  The shares of Common Stock so applied or delivered in
satisfaction of the Participant’s tax withholding obligation shall be valued at
their Fair Market Value as of the date of measurement of the amount of income
subject to withholding.

    

    ARTICLE
10.

    

    MISCELLANEOUS

    

    10.1         Benefits Not
Alienable.  Other than as provided above, benefits under this
Plan may not be assigned or alienated, whether voluntarily or
involuntarily.  Any unauthorized attempt at assignment, transfer,
pledge or other disposition shall be without effect.

    

    10.2         No Enlargement of Employee
Rights.  This Plan is strictly a voluntary undertaking on the
part of the Company and shall not be deemed to constitute a contract between the
Company and any Participant to be consideration for, or an inducement to, or a
condition of, the employment of any Participant.  Nothing contained in
the Plan shall be deemed to give the right to any Participant to be retained as
an employee of the Company or any Affiliated Company or to interfere with the
right of the Company or any Affiliated Company to discharge any Participant at
any time.

    

    10.3         Application of
Funds.  The proceeds received by the Company from the sale of
Common Stock pursuant to Option Agreements, except as otherwise provided herein,
will be used for general corporate purposes.

    

    10.4         Annual
Reports.  During
the term of this Plan, the Company will furnish to each Participant who does not
otherwise receive such materials, copies of all reports, proxy statements and
other communications that the Company distributes generally to its
stockholders.

      
  
9Exhibit
10.1

    

    NOMINATION
AGREEMENT

    

    This
Nomination Agreement, dated the 14th day of
May, 2009 (this “Agreement”), by and
among Peerless Systems Corporation, a Delaware corporation (the “Company”), on the one
hand, and (i) Bandera Partners LLC (“Bandera Partners” or
“BP”), (ii)
Bandera Master Fund L.P. (“Bandera Master Fund”
or “BMF”),
(iii) Bandera Partners Management LLC (“BPM”), (iv) Gregory
Bylinsky (“Bylinsky”), (v)
Jefferson Gramm (“Gramm”) and (vi) any
other Affiliates of BP, BMF, BPM, Bylinsky or Gramm (together with BP, BMF, BPM,
Bylinsky and Gramm, the “Bandera Parties” and,
each, a “Bandera
Party”), on the other hand.

     

    WHEREAS,
on April 29, 2009, the Company’s Board of Directors (the “Board”) voted to
reduce the size of the Board from six to five members effective as of the date
of the Company’s 2009 annual meeting of stockholders expected to be held on June
5, 2009 (the “2009
Annual Meeting”);

     

    WHEREAS,
on May 1, 2009, the Company filed with the Securities and Exchange Commission
(the “SEC”) a
proxy statement (the “Proxy Statement”) for
the election of five directors at the 2009 Annual Meeting, having a filing date
of May 4, 2009;

     

    WHEREAS,
the Company received from Bandera Partners a letter, dated May 5, 2009,
requesting that the Company appoint Gramm to the Board;

     

    WHEREAS,
the Company received on May 8, 2009 from Cede & Co., acting at the request
of its principal, Goldman Sachs Execution & Clearing, L.P., on behalf of
BMF,  a notice letter nominating Bylinsky, Gramm and Edward Ramsden
for election to the Board at the 2009 Annual Meeting (the “Bandera Stockholder
Nominations”);

     

    WHEREAS,
following further discussions with Bandera Partners, the Nominating and
Corporate Governance Committee of the Board has reviewed the qualifications of
both Gramm and Bylinsky (the “Bandera
Directors”);

     

    WHEREAS,
conditional upon the execution of this Agreement, the Nominating and Corporate
Governance Committee has (i) determined that the Bandera Directors are
“independent” as defined under NASDAQ listing rules applicable to directors and
members of the nominating committee, as may be amended from time to time (the
“General NASDAQ
Independence Standards”), and (ii) resolved to nominate the Bandera
Directors, and three other nominees, for election to the Board at the 2009
Annual Meeting; and

     

    WHEREAS,
the Company and the Bandera Parties have come to an agreement with respect to
certain matters related to the Bandera Directors and the Bandera Parties’
investment in the Company, as provided in this Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    NOW,
THEREFORE, in consideration of the foregoing premises and the respective
representations, warranties, covenants and agreements hereinafter set forth,
and, intending to be legally bound hereby, the parties hereby agree as
follows:

     

    1.           Bandera Board
Appointment.

     

    (a)           Bandera Board
Appointments.  The Company hereby agrees to nominate Bylinsky
and Gramm for election at the 2009 Annual Meeting to the Board, to serve until
the Company’s 2010 annual meeting of stockholders (the “2010 Annual
Meeting”).  As soon as practicable after the date hereof, the
Company shall file an amended and restated Proxy Statement with the SEC to
include Bylinsky and Gramm as nominees for director of the Company and mail such
amended and restated Proxy Statement and the accompanying proxy card to all
stockholders entitled to vote at the 2009 Annual Meeting.  The
language relating to such amended and restated Proxy Statement, the proxy card
and all other proxy solicitation materials shall be in a form reasonably
acceptable to the Bandera Parties.  The Company hereby agrees to use
its best efforts to cause the election of the Bandera Directors to the Board at
the 2009 Annual Meeting, including, without limitation, supporting them for
election in a manner no less rigorous and favorable than the manner in which the
Company supports its other nominees, in the aggregate.  In connection
with the amendment of the Proxy Statement and the Nominating and Corporate
Governance Committee’s nomination and determination of independence, each of the
Bandera Directors shall complete a director’s questionnaire provided by the
Company, which shall be true, complete and correct in all material
respects.  Each of the Bandera Directors shall be entitled to the same
rights and benefits, including with respect to insurance, indemnification,
compensation and fees, as are applicable to all independent directors of the
Company.

     

    (b)           Number and Identity of
Nominees.  The Nominating and Corporate Governance Committee
shall nominate five (and not more than five) persons for election at the 2009
Annual Meeting to the Board.  In addition to Bylinsky and Gramm,
Steven M. Bathgate, Timothy E. Brog and Jeffrey Hammer shall be nominated by the
Nominating and Corporate Governance Committee for election at the 2009 Annual
Meeting to the Board.

     

    (c)           Withdrawal of the Bandera
Stockholder Nominations.  Bandera Master Fund hereby agrees to
cause the Bandera Stockholder Nominations to be withdrawn as soon as practicable
after the date hereof.

     

    (d)           Vacancy.  If
on or before the date of the 2010 Annual Meeting, any Bandera Director leaves
the Board (whether by resignation or otherwise), the Bandera Parties shall be
entitled to recommend to the Nominating and Corporate Governance Committee a
replacement nominee; provided; that such
nominee shall be subject to the approval of the Nominating and Corporate
Governance Committee and shall be a person who (i) may reasonably be determined
by the Nominating and Corporate Governance Committee to be “independent” under
the General NASDAQ Independence Standards and (ii) meets the other requirements
for the Company’s directors pursuant to the Company’s certificate of
incorporation, bylaws and other governance documents, each as may be amended
from time to time.  The Nominating and Corporate Governance Committee
will not unreasonably withhold, or delay beyond five business days, its approval
and nomination of any replacement director recommended by the Bandera
Parties.  No later than five business days after the Nominating and
Corporate Governance Committee’s approval and nomination of a replacement
director recommended by the Bandera Parties pursuant to this Section 1(d), the
Board will appoint such replacement director to the Board, and such replacement
director will be a Bandera Director and shall be required to sign this
Agreement.  In the event the Nominating and Corporate Governance
Committee does not approve and nominate a replacement director recommended by
the Bandera Parties, the Bandera Parties will have the right to recommend
another replacement director for consideration by the Nominating and Corporate
Governance Committee in accordance with this Section 1(d).

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (e)           Board Committees and
Meetings.

     

    (i) Committees.  For
so long as a Bandera Director serves on the Board, (A) one Bandera Director
shall be on the Nominating and Corporate Governance Committee and (B) one
Bandera Director shall be on the Strategic Committee.

     

    (ii)           Meetings.  As
long as each Bandera Director serves on the Board, such Bandera Director shall
be given the same amount of advance notice of any meeting of the entire Board
and of any Committee of the Board of which such Bandera Director is a member as
is given to any other director of the Company.

     

    (f)           Decrease in Beneficial
Ownership.

     

    (i)           Dilution Below
16%.  Within two business days of the first date hereafter on
which the Bandera Parties become aware that their beneficial ownership of the
Company’s Voting Securities has fallen below 16% of the then outstanding Voting
Securities, the Bandera Parties shall (A) provide written notice thereof to the
Company and (B) cause one of the Bandera Directors to resign from the Board;
provided, that
the Nominating and Corporate Governance Committee, by a majority vote of all
Committee members other than the Bandera Director appointed to such Committee,
shall have the right, in its sole discretion, to waive the resignation
requirement set forth in the foregoing clause (B).

     

    (ii)           Dilution Below
10%.  Within two business days of the first date hereafter on
which the Bandera Parties become aware that their beneficial ownership of the
Company’s Voting Securities has fallen below 10% of the then outstanding Voting
Securities, the Bandera Parties shall (A) provide written notice thereof to the
Company and (B) cause both of the Bandera Directors (or the sole remaining
Bandera Director, as the case may be) to resign from the Board; provided, that the
Nominating and Corporate Governance Committee, by a majority vote of all
Committee members other than the Bandera Director appointed to such Committee,
shall have the right, in its sole discretion, to waive the resignation
requirement set forth in the foregoing clause (B).

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (iii)           Sell-Down.  Within
two business days of the first date hereafter on which the Bandera Parties’
beneficial ownership of the Company’s common stock (“Common Stock”) falls
below 75% of the aggregate number of shares of Common Stock reported as being
beneficially owned by Bandera Partners on the Schedule 13D filed with the SEC on
May 5, 2009 (the “Bandera 13D”) as a
result of sales or other dispositions of shares by the Bandera Parties, with
such aggregate number of shares being subject to adjustment to proportionally
account for any stock split, reverse stock split or stock dividend, the Bandera
Parties shall (A) provide written notice thereof to the Company and (B) cause
both of the Bandera Directors to resign from the Board; provided, that the
Nominating and Corporate Governance Committee, by a majority vote of all
Committee members other than the Bandera Director appointed to such Committee,
shall have the right, in its sole discretion, to waive the resignation
requirement set forth in the foregoing clause (ii).

     

    2.           Voting and the 2009 Annual
Meeting.

     

    (a)           Voting.  For
so long as a Bandera Director remains on the Board, at each meeting of the
Company’s stockholders, and with respect to each other matter presented to a
vote of the Company’s stockholders, each Bandera Party will vote, and will cause
its respective Affiliates and Associates (as such terms are defined in Section 12) to vote,
all Voting Securities (as such term is defined in Section 12)
beneficially owned by it in the manner recommended by a majority of the
Company’s Board.

     

    (b)           2009 Annual Meeting
Date.  The Company will hold its 2009 Annual Meeting on
such date as is determined by the Board; provided, that the
Company will use its reasonable best efforts to cause the 2009 Annual Meeting to
be held on June 5, 2009.

     

    3.           Termination.  

     

    (a)           This
Agreement will remain in full force and effect and will be fully binding on the
parties hereto in accordance with the provisions hereof until November 11,
2010.  Notwithstanding the foregoing and paragraphs (b) and (c) below,
Section 16 and
Section 17 will
indefinitely survive any termination of this Agreement.

     

    (b)           Notwithstanding
paragraphs (a) above and (c) below, this Agreement may be terminated by the
Bandera Parties immediately following:

     

    (i)           the
vote of Company stockholders at the 2009 Annual Meeting for the election of
directors if such vote does not result in the election to the Board of (A) both
Bandera Directors and (B) Steven M. Bathgate or an alternative independent
director acceptable to, and approved in writing by, Bandera Partners in its
reasonable discretion; and

     

    (ii)           any
material breach of any representation or warranty or covenant made by the
Company under this Agreement; provided, in the case
of a breach of any covenant for which a cure is reasonably practicable, that the
Bandera Parties have delivered written notice to the Company of such breach and
such breach is not cured within five (5) business days after the Company
receives written notice of such breach.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (c)           Notwithstanding
paragraphs (a) and (b) above, all obligations of the Company under this
Agreement shall terminate upon, and the Bandera Parties shall cause the Bandera
Directors to resign within three business days of, any material breach of any
representation or warranty or covenant made by any Bandera Party under this
Agreement; provided, in the case
of a breach of any covenant for which a cure is reasonably practicable, that the
Company has delivered written notice to the Bandera Parties of such breach and
such breach is not cured within five (5) business days after the Bandera Parties
receive written notice of such breach; and provided, further, that the
Bandera Parties shall continue to be obligated under Section 4 after such
termination until November 11, 2010.

     

    4.           Standstill.

     

    (a)           During
the period commencing on the date of this Agreement and ending on the date of
termination of this Agreement, each Bandera Party agrees that, without the prior
written consent of the Company, which consent shall have been specifically
expressed in a written resolution adopted by a majority vote of all Board
members other than the Bandera Directors, it will not, and will cause each of
its Affiliates, Associates (as such terms are defined in Section 12),
officers, agents and other Persons acting on its behalf not to:

     

    (i)           acquire,
offer or propose to acquire, or agree to acquire, directly or indirectly,
whether by purchase, tender or exchange offer, through the acquisition of
control of another Person (as such term is defined in Section 12), by
joining a partnership, limited partnership, syndicate or other “group” (within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”)), or otherwise, any Voting Securities (as such term is defined in
Section 12), or
otherwise become the beneficial owner (as such term is defined in Section 12) of any
Voting Securities; provided,
that no such acquisition shall be deemed to occur solely due to a stock split,
reverse stock split, stock dividend, cancellation or repurchase of Voting
Securities, reclassification, reorganization or other transaction affecting the
Voting Securities generally.

     

    (ii)           engage,
or in any way participate, directly or indirectly, in any “solicitation” (as
such term is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange
Act) of proxies or consents (whether or not relating to the election or removal
of directors); seek to advise, encourage or influence any Person with respect to
the voting of any Voting Securities in any manner other than that recommended by
a majority of the Board; initiate, propose or otherwise “solicit” (as such term
is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange Act)
stockholders of the Company for the approval of stockholder proposals whether
made pursuant to Rule 14a-8 or Rule 14a-4 under the Exchange Act or otherwise;
induce or attempt to induce any other Person to initiate any such stockholder
proposal; or otherwise communicate or seek to communicate with the Company’s
stockholders or others pursuant to Rule 14a-1(l)(2)(iv) under the Exchange Act;
provided, that
this Section 4(b)(ii) shall not prohibit any Bandera Party from (A) voting,
in such manner as it may determine in its sole discretion, any of the Voting
Securities reported as being beneficially owned by Bandera Partners on the
Bandera 13D; provided, however, this
subparagraph (A) shall only be applicable if the Bandera Party has been advised
in writing by its outside counsel that voting such Voting Securities based upon
the recommendation of the Board would breach a fiduciary duty owed to its
investors, (B) communicating with the Company or any officer or director of
the Company in a non-public manner or (C) communicating with any Person who
is an investor in any of the Bandera Parties in a non-public
manner;

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (iii)           form,
join or in any way participate in any “group” (within the meaning of Rule 13d-5
of Regulation 13D-G under the Exchange Act) with respect to any Voting
Securities with any Person not identified in the Bandera 13D;

     

    (iv)           deposit
any Voting Securities in any voting trust or subject any Voting Securities to
any arrangement or agreement with respect to the voting of any Voting
Securities, except with a Bandera Party or as expressly set forth in this
Agreement;

     

    (v)           seek
to have called, or cause to be called, any meeting of the stockholders of the
Company;

     

    (vi)           make
any public demand to inspect the books and records of the Company, including
pursuant to any statutory right that the Bandera Parties may have;

     

    (vii)           enter
into any arrangements, understanding or agreements (whether written or oral)
with, or advise, finance, assist or encourage, any other Person in connection
with any of the foregoing, or make any investment in, any other Person that, to
the best knowledge of the Bandera Parties at the time such investment is made,
engages, or offers or proposes to engage, in any of the foregoing;

     

    (viii)                      make
any proposal (including the public disclosure or discussion of any proposal) or
statement regarding any of the foregoing, or publicly disclose any intention,
plan or arrangement (whether written or oral) inconsistent with the foregoing,
or make or publicly disclose any request to amend, waive or terminate any
provision of this Agreement; provided, that this
Section 4(b)(viii) shall not prohibit any Bandera Party from communicating with
the Company or any officer or director of the Company in a non-public manner;
or

     

    (ix)           take,
or cause or induce others to take, any action inconsistent with any of the
foregoing.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (b)           During
the period commencing on the date of this Agreement and ending on the date of
the 2009 Annual Meeting, each Bandera Party agrees that, without the prior
written consent of the Company, which consent shall have been specifically
expressed in a written resolution adopted by a majority vote of all Board
members, it will not, and will cause each of its Affiliates, Associates,
officers, agents and other Persons acting on its behalf not to:

     

    (i)           directly
or indirectly enter into any agreement, arrangement, understanding or contract
(whether written or oral) with any other stockholder or director of the Company
with respect to the Company, the Common Stock or other securities of the
Company, other than the terms set forth in this Agreement;

     

    (ii)           enter
into any arrangements, understanding or agreements (whether written or oral)
with, or advise, finance, assist or encourage, any other Person in connection
with any of the foregoing, or make any investment in, any other Person that, to
the best knowledge of the Bandera Parties at the time such investment is made,
engages, or offers or proposes to engage, in any of the foregoing;
or

     

    (iii)           take,
or cause or induce others to take, any action inconsistent with any of the
foregoing.

     

    5.           Inspection.  For
so long as this Agreement shall remain in effect, this Agreement shall be made
available for inspection by any stockholder at the principal executive offices
of the Company.

     

    6.           Insider Trading; SEC
Filings.  During the term of this Agreement, each of the
Bandera Parties shall be bound by, and shall cause its Associates and Affiliates
to be bound by, the Company’s Insider Trading Compliance Program, as such
program may be amended from time to time by the Board.  A copy of such
program as in effect as of the day hereof, has been provided to the Bandera
Parties.  Each of the Bandera Parties agrees to timely file such
reports as may be required by applicable law with respect to their Voting
Securities, including, but not limited to, reports under Sections 13(d) and 16
of the Exchange Act.

     

    7.           Representations and
Warranties of Bandera Parties.  The Bandera Parties jointly and
severally represent and warrant to the Company as follows:

     

    (a)           Each
Bandera Party has the power and authority to execute, deliver and carry out the
terms and provisions of this Agreement and to consummate the transactions
contemplated hereby.

     

    (b)           This
Agreement has been duly and validly authorized, executed, and delivered by each
Bandera Party, constitutes a valid and binding obligation and agreement of each
Bandera Party, and is enforceable against each Bandera Party in accordance with
its terms.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (c)           The
aggregate number of shares of Common Stock reported as being beneficially owned
by Bandera Partners on the Bandera 13D are beneficially owned by Bandera
Partners (as disclosed on the Bandera 13D) as of the date hereof, and such
shares of Common Stock constitute all of the Voting Securities owned by the
Bandera Parties and their Affiliates and Associates as of the date
hereof.

     

    (d)           Each
of the Bandera Directors has completed and delivered to the Company a director’s
questionnaire provided by the Company, which is true, complete and correct in
all material respects as of the date hereof.

     

    (e)           As
of the date hereof, none of the Bandera Parties has any direct or indirect
agreement, arrangement, understanding or contract (whether written or oral) with
any other stockholder, employee, agent or director of the Company with respect
to the Company, the Common Stock or other securities of the Company, other than
the terms set forth in this Agreement.

     

    8.           Representations and
Warranties of the Company.  The Company hereby represents and
warrants as follows:

     

    (a)           The
Company has the corporate power and authority to execute, deliver and carry out
the terms and provisions of this Agreement and to consummate the transactions
contemplated hereby.

     

    (b)           This
Agreement has been duly and validly authorized, executed and delivered by the
Company, constitutes a valid and binding obligation and agreement of the
Company, and is enforceable against the Company in accordance with its
terms.

     

    (c)           On
April 29, 2009, the Board voted to reduce the size of the Board from six to five
members effective as of the date of the 2009 Annual Meeting, and such vote has
not been, and will not at any time prior to the 2009 Annual Meeting be, revoked,
rescinded or superseded by any subsequent vote of the Board.

     

    (d)           The
Company has not received any nominations by stockholders pursuant to Article
III, Section 5(c) of its bylaws with respect to the 2009 Annual Meeting, other
than the Bandera Stockholder Nominations.

     

    (e)           The
Company has not mailed or otherwise delivered, and will not mail or otherwise
deliver, a Proxy Statement and proxy card substantially in the form filed with
the SEC on May 1, 2009 (with a filing date of May 4, 2009) to its
stockholders.

     

    (f)           On
May 12, 2009, the Nominating and Corporate Governance Committee
(i) determined that each of the Bandera Directors is “independent” under
the Listing General NASDAQ Independence Standards, and (ii) conditional
upon the execution of this Agreement, resolved to nominate the Bandera Directors
and Timothy Brog, Jeffrey Hammer and Steven Bathgate for election to the Board
at the 2009 Annual Meeting.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (g)           The
2009 annual meeting of the Board will be held immediately following (and not
before) the 2009 Annual Meeting.  As of such annual meeting of the
Board, unless otherwise unanimously agreed to by the Board at such meeting,
there will be no committees of the Board other than the Audit Committee, the
Compensation Committee, the Nominating and Corporate Governance Committee and
the Strategic Committee.

     

    (h)           True,
complete and correct copies of the Company’s certificate of incorporation or
bylaws in full force and effect as of the date hereof are attached to this
Agreement as Exhibits 1 and 2, respectively.  The Board will not
approve any amendment to the Company’s certificate of incorporation or bylaws,
or any certificate of designations of preferred stock, prior to the 2009 annual
meeting of the Board.

     

    9.           Specific
Performance.  Each of the Bandera Parties, on the one hand, and
the Company, on the other hand, acknowledges and agrees that irreparable injury
to the other party hereto would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached and that such injury would not be adequately compensable in
damages.  It is accordingly agreed that the Bandera Parties, on the
one hand, and the Company, on the other hand (the “Moving Party”), will
each be entitled to specific enforcement of, and injunctive relief to prevent
any violation of, the terms hereof and the other party hereto will not take
action, directly or indirectly, in opposition to the Moving Party seeking such
relief on the grounds that any other remedy or relief is available at law or in
equity.

     

    10.           Invalid
Provisions.  If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.

     

    11.           No
Waiver.  This Agreement may be waived only by a written
instrument duly signed by the party (or, in the case of the Bandera Parties, the
Representative (as defined in Section 19)) against
whom such waiver may be sought to be enforced, except as otherwise expressly
provided in Section
1(f).  Any waiver by either the Representative or the Company
of a breach of any provision of this Agreement will not operate as or be
construed to be a waiver of any other breach of such provision or of any breach
of any other provision of this Agreement.  The failure of either the
Representative or the Company to insist upon strict adherence to any term of
this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    12.           Certain
Definitions.  As used in this Agreement,

     

    (a)           “Person” will mean any
individual, partnership, corporation, group, syndicate, trust, government or
agency, or any other organization, entity or enterprise;

     

    (b)           “Affiliates” and
“Associates”
will have the meanings set forth in Rule 12b-2 under the Exchange Act and will
include Persons who become Affiliates or Associates of any Person subsequent to
the date hereof;

     

    (c)           “Voting Securities”
will mean any securities of the Company entitled, or which may be entitled, to
vote in the election of directors, or securities convertible into or exercisable
or exchangeable for such securities, whether or not subject to passage of time
or other contingencies;  and

     

    (d)           “beneficial owner” and
“beneficially
own” have the same meanings as set forth in Rule 13d-3 promulgated by the
SEC under the Exchange Act.

     

    13.           Successors and
Assigns.  Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by any party hereto without the prior
written consent of the other parties hereto and any attempt to do so will be
void.  Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.

     

    14.           Reserved.

     

    15.           Headings.  The
section headings contained in this Agreement are for reference purposes only and
will not affect in any way the meaning or interpretation of this
Agreement.

     

    16.           Notices. All notices,
demands and other communications to be given or delivered under or by reason of
the provisions of this Agreement will be in writing and will be deemed to have
been given (a) when delivered by hand (with written confirmation of receipt),
(b) upon sending if sent by facsimile during regular business hours or on the
next business day, if sent by facsimile after regular business hours, in each
case with electronic confirmation of sending; provided, that a copy
is sent on the same day by registered mail, return receipt requested, in each
case to the appropriate mailing address set forth below (or to such other
mailing address as a party may designate by notice to the other parties in
accordance with this Section 16), (c)
one (1) day after being sent by nationally recognized overnight carrier to the
addresses set forth below (or to such other mailing addresses as a party may
designate by notice to the other parties in accordance with this Section 16) or (d)
when actually delivered if sent by any other method that results in delivery
(with written confirmation of receipt):

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    If to the
Company:                               

    

    Peerless Systems
Corporation

    2381
Rosecrans Avenue

    El
Segundo, California 90254

    Attn:
Chief Executive Officer

    Telephone:                             310-536-0908

    Facsimile:                                310-536-0058

    

    with a
copy (which shall not constitute notice)
to:                      

    

    Peerless
Systems Corporation

    2381
Rosecrans Avenue

    El
Segundo, California 90254

    Attn:
Chairman of the Board

    Telephone:                             310-536-0908

    Facsimile:                                310-536-0058

    

    If to the
Bandera Parties or the Representative
to:                        

    

    Bandera
Partners LLC

    26
Broadway

    Suite
1607

    New York,
New York 10004

    Attn:
Jefferson Gramm

    Telephone:                             212-232-4583

    Facsimile:                                212-232-4586

    

    with a
copy to

    

    Robert E.
Holton, Esq.

    Arnold
& Porter LLP

    399 Park
Avenue

    New York,
New York 10022-4690

    Telephone:                             212-715-1137

    Facsimile:                                212-715-1399

    

    or to
such other address as the Person to whom notice is given may have previously
furnished to the others in writing in the manner set forth above.

     

    17.           Jurisdiction; Applicable
Law.  Each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of the federal or state courts in Newcastle County
in the State of Delaware in the event any dispute arises out of this Agreement,
(b) agrees that it will not bring any action relating to this Agreement in any
court other than the federal or state courts of the State of Delaware, (c)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (d) agrees that
service of process in any proceeding in any such court may be made by registered
mail, return receipt requested, to the applicable address set forth in, or in
accordance with, Section
16.  This Agreement will be governed in all respects, including
validity, interpretation and effect, by the laws of the State of Delaware
applicable to contracts executed and to be performed wholly within such state
without giving effect to the choice of law principles of such
state.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    18.           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which will be an
original, but all of which together will constitute one and the same
Agreement.

     

    19.           Bandera
Representative.  Each of the Bandera Parties hereby irrevocably
appoints Bandera Partners as its attorney-in-fact and representative (the “Representative”), in
its place and stead, to do any and all things and to execute any and all
documents and give and receive any and all notices or instructions in connection
with this Agreement.  The Company will be entitled to rely, as being
binding on each of the Bandera Parties, upon any action taken by the
Representative or upon any document, notice, instruction or other writing given
or executed by the Representative.

     

    20.           Entire Agreement;
Amendments.  This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and may be amended,
modified or supplemented only by a written instrument duly executed by the
Company and the Representative.  No amendment to this Agreement shall
be deemed to be duly executed by the Company unless authorized by a written
resolution adopted by a majority vote of all Board members other than the
Bandera Directors.

     

    [Signature
Page Follows]

     

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, each of the undersigned parties has executed or `caused this
Agreement to be executed or caused to be executed on its behalf on the date
first above written.

    

    
      	 	
              BANDERA
      PARTNERS LLC

            
	 	 
      	 
      
	 	
              By:

            	
              /s/
      Gregory Bylinsky

            
	 	
              Name:

            	
              Gregory
      Bylinsky

            
	 	
              Title:

            	
              Managing
      Director

            

    

    

    

    
      	 	
              BANDERA
      MASTER FUND L.P.

            
	 	
              By: 
      Bandera Partners LLC

              Its:   General
      Partner

               

            
	 	
              By:

            	
              /s/
      Gregory Bylinsky

            
	 	
              Name:

            	
              Gregory
      Bylinsky

            
	 	
              Title:

            	
              Managing
      Director

            

    

    

    

    
      	 	
              BANDERA
      PARTNERS MANAGEMENT LLC

            
	 	 
      	 
      
	 	
              By:

            	
              /s/
      Gregory Bylinsky

            
	 	
              Name:

            	
              Gregory
      Bylinsky

            
	 	
              Title:

            	
              Managing
      Director

            

    

    

    

    
      	 	
              /s/ Gregory Bylinsky

            
	 	
              Gregory
      Bylinsky

            

    

    

    

    
      	 	
              /s/ Jefferson Gramm

            
	 	
              Jefferson
      Gramm

            

    

    

    

    
      	 	
              PEERLESS
      SYSTEMS CORPORATION

            
	 	 
      	 
      
	 	 
      	 
      
	 	
              By:

            	
              /s/ Timothy Brog

            
	 	
              Name:

            	
              Timothy
      Brog

            
	 	
              Title:

            	
              Chairman
      of the Board

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}]]