Document:

Unassociated Document

    
      AMENDED AND
RESTATED

    

    
      NOMINATION
AGREEMENT

    

    
      

    

    
      

    

    
      This Amended and Restated
Nomination Agreement, dated as of the 26th day of August, 2010 (this
“Agreement”), amends and restates the
Nomination Agreement, dated May 14, 2009 (the “Original 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 together with Bylinsky,
the “Bandera Directors”) 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, the parties hereto
are party to the Original Agreement, relating to the nomination of the Bandera
Directors and the Bandera Parties’ investment in the
Company;

    

    
      

    

    
      WHEREAS, simultaneously
herewith, the Board is approving a tender offer by the Company pursuant to the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) to all of its stockholders
to repurchase up to 13,846,153 shares of its common stock, par value $.001 (the
“Common Stock”),  at a price of $3.25 per share (the “Tender
Offer”);

    

    
      

    

    
      WHEREAS, the parties hereto
desire to amend and restate the Original Agreement in connection with the Tender
Offer;

       

      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 to amend and restate the Original
Agreement as follows:

    

    
       

    

    
      1.           Tender
Offer and Board Composition.

    

    
       

    

    
      (a)           Tender
Offer.   The
Company will commence the Tender Offer as soon as reasonably practicable after
the date hereof, and the Company will use its reasonable efforts to cause the
closing of the Tender Offer (the “Closing”) to occur on or before
December 1, 2010.  The Bandera Parties hereby agree to tender to the
Company in the Tender Offer 3,599,320 shares of Common Stock directly owned by
BMF and to not withdraw such shares from such tender unless and until the
Tender Offer expires or is terminated.  Each of Gramm and Bylinsky
hereby agrees to: (i) exercise all options to acquire Common Stock directly
owned by him which are vested on or before the date of the Closing and (ii)
tender in the Tender Offer all shares of Common Stock received upon exercise of
such options and to not withdraw such shares from such tender unless and until
the Tender Offer expires or is terminated.

    

    
      

    

    
      (b)           Board
Composition.  Immediately
following the closing of the Tender Offer (the “Closing”), Bylinsky shall resign
from the Board and the Board shall be comprised as
follows:

    

    

    
      (i)         If immediately following the
Closing the Bandera Parties beneficially own 450,000 (Four Hundred and Fifty
Thousand) or more shares of Common Stock, the size of the Board shall be reduced
to six directors and the Board shall be comprised of the following six persons:
Steven M. Bathgate, Timothy E. Brog, Jefferson Gramm, Jeffrey A. Hammer, Eric
Kuby and Jeffrey S. Wald.

    

    
      

    

    
      (ii)         If immediately following the
Closing the Bandera Parties beneficially own 360,000 (Three Hundred and Sixty
Thousand) or more shares of Common Stock, but less than 450,000 (Four Hundred
and Fifty Thousand) shares of Common Stock, the Board shall be comprised of the
following seven directors: Steven M. Bathgate, Timothy E. Brog, Jefferson Gramm,
Jeffrey A. Hammer, Eric Kuby, Robert Frankfurt and Jeffrey S.
Wald.

    

    

    
      (iii)         If immediately following the
Closing the Bandera Parties beneficially own less than 360,000 (Three Hundred
and Sixty Thousand) shares of Common Stock, Gramm shall resign from the Board,
the size of the Board shall be reduced to six directors and the Board shall be
comprised of the following six persons: Steven M. Bathgate, Timothy E. Brog,
Robert Frankfurt, Jeffrey A. Hammer, Eric Kuby, and Jeffrey S.
Wald.

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      (iv)           If any Bandera Director
leaves the Board (whether by resignation or otherwise) during the period
commencing on the date of this Agreement and ending on November 11, 2010, 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(b)(iv),
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(b)(iv).  The
provisions of this Section 1(b)(iv) shall not apply with respect to any vacancy
created by any resignation of a Bandera Director that was required pursuant to
Section 1(b)(iii).

    

    
      

    

    
      (v)           Subject to Section 1(b)(iv),
if a vacancy occurs in any of the directorships set forth above, the Nominating
and Corporate Governance Committee shall fill such directorship in accordance
with the Company’s bylaws.

    

    
      

    

    
      (c)           Board
Committees and Meetings.

    

    
       

    

    
      (i)           Committees. The Board shall not
form an Executive Committee prior to the date of the Company’s 2011 Annual
Meeting (the “2011 Meeting Date”) without the unanimous approval of the
Board.  The composition of the Nominating and Corporate Governance
Committee and other committees of the Board following the Closing shall be
determined by the Board.

    

    
       

    

    
      (ii)           Meetings.  As long as any
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.

    

    
        

    

    
      2.           Termination.  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 the 2011 Meeting
Date.  Notwithstanding the foregoing, Sections 16 and 17 will indefinitely survive
any termination of this Agreement and the first sentence of Section 6 will
survive any termination of this Agreement for such period as may be required by
applicable law.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    
      

    

    
      3.           Standstill.

    

    
       

    

    
      (a)           During
the period commencing on the date of this Agreement and ending on November 11,
2010, 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 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 Securities and Exchange
Commission (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 any of the Bandera Parties on the Schedule 13D filed
with the SEC on February 9, 2010 (the “Bandera 13D”), the Form 4 filed with the
SEC on June 9, 2009 (the “June 2009 Form 4”) or the Form 4 filed with the SEC on
June 23, 2010 (the “June 2010 Form 4”); 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;

    

    
        

    

    
      (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, the June 2009 Form
4 or the June 2010 Form 4;

    

    
       

    

    
      (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.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    
       

    

    
      (b)           During
the period commencing on the date of this Agreement and ending on November 11,
2010, 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.  For so long as a
Bandera Director remains on the Board, and for such period thereafter as may be
required by applicable law due to a Bandera Director’s  service on the
Board, 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.

    

    
       

    

    
      (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.  In
addition, each of Gramm and Bylinsky directly own (i) options to acquire
40,000 shares of Common Stock, as disclosed on the June 2009 Form 4 and the June
2010 Form 4, and (ii) 10,000 shares of restricted Common Stock, as
disclosed on the June 2010 Form 4.  As of the date hereof, such shares
of Common Stock, options and shares of restricted Common Stock constitute all of
the Voting Securities owned by the Bandera Parties and their Affiliates and
Associates as of the date hereof.

    

    
      

    

    
      (d)           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 (i) has been approved by a resolution adopted by a majority vote of
all Board members other than the Bandera Directors, (ii) has been duly and
validly authorized, executed and delivered by the Company, (iii) constitutes a
valid and binding obligation and agreement of the Company, and (iv) is
enforceable against the Company in accordance with its
terms.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    
      

    

    
      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.

    

    
         

    

    
      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.           
Release. Simultaneously herewith, the
parties to the release attached hereto as Exhibit A shall execute and deliver
the release in the form attached hereto as Exhibit A.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    
      

    

    
      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):

    

    
       

    

    
      If to the
Company:                               

    

    
      

    

    
      Peerless Systems
Corporation

    

    
      2361 Rosecrans
Avenue

    

    
      Suite
440

    

    
      El Segundo, California
90254

    

    
      Attn: Chairman of the
Board

    

    
      
        	
              	
                Telephone:

              	
                310-536-0908

              

      

    

    
      
        	
              	
                Facsimile: 

              	
                310-536-0058

              

      

    

    
      

    

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

    

    
      

    

    
      Peerless Systems
Corporation

    

    
      2361 Rosecrans
Avenue

    

    
      Suite
440

    

    
      El Segundo, California
90254

    

    
      Attn: General
Counsel

    

    
      
        	
              	
                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.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    
       

    

    
      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.

    

    
       

    

    
      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
amends and restates the Original Agreement in its entirety from and after the
date hereof and 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.  Any action by the Company to enforce this Agreement shall
be duly taken if authorized by a written resolution adopted by a majority vote
of all Board members other than the Bandera Directors.

    

    
       

    

    
      [Signature Page
Follows]

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    
       

    

    
      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/
      Jefferson Gramm

                  
	
                    Name:

                  	
                    Jefferson
      Gramm

                  
	
                    Title:

                  	
                    Managing
      Director

                  

          

        

      

    

    
      

    

    
      

    

    
      
        
          
            	
                    BANDERA
      MASTER FUND L.P.

                  
	
                    By: 
      Bandera Partners LLC

                    Its:   General
      Partner

                     

                  
	
                    By:

                  	
                    /s/
      Jefferson Gramm

                  
	
                    Name:

                  	
                    Jefferson
      Gramm

                  
	
                    Title:

                  	
                    Managing
      Director

                  

          

        

      

    

    
      

    

    
      

    

    
      
        
          
            	
                    BANDERA
      PARTNERS MANAGEMENT LLC

                  
	 
      	 
      
	
                    By:

                  	
                    /s/
      Jefferson Gramm

                  
	
                    Name:

                  	
                    Jefferson
      Gramm

                  
	
                    Title:

                  	
                    Managing
      Director

                  

          

        

      

    

    
      

    

    
      

    

    
      
        
          
            	
                    /s/
      Gregory Bylinsky

                  
	
                    Gregory
      Bylinsky

                  

          

        

      

    

    
      

    

    
      

    

    
      
        
          
            	
                    /s/
      Jefferson Gramm

                  
	
                    Jefferson
      Gramm

                  

          

        

      

    

    
      

    

    
      

    

    
      
        
          
            	
                    PEERLESS
      SYSTEMS CORPORATION

                  
	 
      	 
      
	 
      	 
      
	
                    By:

                  	
                    /s/
      William Neil

                  
	
                    Name:

                  	
                    William
      Neil

                  
	
                    Title:

                  	
                    Chief
      Financial Officer

                  

          

        

      

    

    
      

    

    
      Solely with respect to
Section 14 above:

    

    
       

    

    
      
        
          
            	
                    /s/
      Timothy Brog

                  
	
                    Timothy
      E. Brog

                  

          

           

          
            
               

            

            
              8Unassociated Document

    August
26, 2010

    

    Peerless
Systems Corporation

    2361
Rosecrans Avenue

    El
Segundo, CA 90254

    

    

    Ladies
and Gentlemen:

    

    As of the
date hereof, Edward Ramsden (“Mr. Ramsden”) beneficially owns 323,672 shares of
common stock (the “Common Stock”) of Peerless Systems Corporation (the
“Company”) and options to acquire 30,000 shares of Common Stock, which options
are unvested.  Such 323,672 shares of Common Stock (the “Caburn
Shares”) are directly owned by funds and accounts for which Caburn Management
LP, a company which Mr. Ramsden may be deemed to control, serves as investment
manager.  Except as expressly set forth herein, Mr. Ramsden and Caburn
do not beneficially own any shares of Common Stock.  For the purposes
of this letter, the term “beneficial ownership” shall have the meaning set forth
in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the
rules promulgated thereunder.

    

    Simultaneously herewith, the Board of
Directors of the Company (the “Board”) is approving a public tender offer (the
“Tender Offer”) whereby the Company will repurchase from its stockholders up to
13,846,153 shares of Common Stock at a price of $3.25 per
share.  Caburn hereby agrees to tender into the Tender Offer all of
the Caburn Shares and to not withdraw such shares unless and until the Tender
Offer expires or is terminated.  Mr. Ramsden hereby agrees to resign
from the Board effective immediately upon closing of the Tender
Offer.

    

    Caburn and Mr. Ramsden acknowledge
that the Board is relying on this letter in approving the Tender Offer. Caburn
and Mr. Ramsden further acknowledge and agree that damages would be an
inadequate remedy for a breach of the agreements set forth herein and that their
obligations hereto shall be specifically enforceable by the Company, in addition
to any other remedy which may be available at law or in equity.

     

    
      
        
          
            
              
                
                  
                    	 	      
                            Sincerely,

                             

                            CABURN MANAGEMENT,
      LP

                          	 
	 	 	 	 
	
                             

                          	
                            By:
      

                          	/s/ Edward
      Ramsden	 
	 	Name:   	Edward
      Ramsden	 
	 	Title:
      	Managing
      Partner	 
	 	 	 	 
	 	/s/
      Edward Ramsden	 
	 	Edward
      Ramsden

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