Tender Offer Statement by Third Party (sc To-t)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE TO
(Rule 14d-100)

TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR 13(E)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934

PEERLESS SYSTEMS CORPORATION
(Name of Subject Company (Issuer))

MOBIUS ACQUISITION Merger Sub, inc.

a wholly owned subsidiary of

mobius acquisition, LLC

(Name of Filing Persons (Offerors))

Common Stock, $0.001 Par Value Per Share
(Title of Class of Securities)

705536100
(CUSIP Number of Class of Securities)

Lodovico de Visconti
Managing Director
650 Smithfield Street, Suite 705
Pittsburgh, Pennsylvania 15222
(412) 281-7000
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications
on Behalf of Filing Persons)

Ronald W. Frank

Nicholas A. Bonarrigo

Reed Smith LLP

225 Fifth Avenue, Suite 1200
Pittsburgh, Pennsylvania 15222

(412) 288-3131

CALCULATION OF FILING FEE



Transaction Valuation*		Amount of Filing Fee**

$21,506,548		$2,499.06

Estimated solely for purposes of calculating the filing fee pursuant to Rule 0-11(d) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Transaction Valuation was calculated on the basis of (a) 3,072,364 shares of common stock, $0.001 par value per share, of Peerless Systems Corporation (the “Shares”), the estimated maximum number of Shares that may be acquired in this tender offer (representing as of December 22, 2014 (i) 2,701,364 Shares issued and outstanding (which number includes 70,066 unvested shares of restricted stock), and (ii) 371,000 Shares issuable upon the exercise of outstanding options) multiplied by (b) the offer price of $7.00 per Share.

**	The filing fee was calculated in accordance with Rule 0-11 under the Exchange Act and Fee Rate Advisory #1 for fiscal year 2015, issued August 29, 2014, by multiplying the transaction value by 0.0001162.

☐ Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid:	None.		Filing Party:		Not applicable.
Form or Registration No.:	Not applicable.		Date Filed:		Not applicable.

☐ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

☒ third-party tender offer subject to Rule 14d-1.

☐ issuer tender offer subject to Rule 13e-4.

☐ going-private transaction subject to Rule 13e-3.

☐ amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer: ☐

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:

☐

Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

☐

Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

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This Tender Offer Statement on Schedule TO (this “Schedule TO”) relates to the offer (the “Offer”) by Mobius Acquisition Merger Sub, Inc. (“Purchaser”), a Delaware corporation and a wholly owned subsidiary of Mobius Acquisition, LLC (“Parent”), a Delaware limited liability company, to purchase all issued and outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Peerless Systems Corporation, a Delaware corporation (“Peerless”), at a price of $7.00 per Share, net to the seller in cash, without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated January 13, 2015 (the “Offer to Purchase”), which is annexed to and filed with this Schedule TO as Exhibit (a)(1)(A), and in the related Letter of Transmittal, which is annexed to and filed with this Schedule TO as Exhibit (a)(1)(B), which, together with any amendments or supplements thereto, collectively constitute the “Offer.”

Item 1. Summary Term Sheet.

The information set forth in the section of the Offer to Purchase entitled “Summary Term Sheet” is incorporated herein by reference.

Item 2. Subject Company Information.

(a) The name of the subject company and the issuer of the securities to which this Schedule TO relates is Peerless Systems Corporation, a Delaware corporation. Peerless’s principal executive offices are located at 1055 Washington Blvd., 8th Floor, Stamford, Connecticut 06901. Peerless’s telephone number at such address is (203) 350-0040.

(b) This Schedule TO relates to the issued and outstanding shares of Common Stock, par value $0.001 per share, of Peerless. According to Peerless, as of December 22, 2014, there were an aggregate of (i) 2,701,364 Shares issued and outstanding (which number includes 70,066 unvested shares of restricted stock) and (ii) outstanding options to purchase 371,000 Shares, all of which options have an exercise price lower than the Offer Price (as defined in the Offer to Purchase).

(c) The information set forth in Section 6—“Price Range of Shares; Dividends” of the Offer to Purchase is incorporated herein by reference.

Item 3. Identity and Background of Filing Person.

This Schedule TO is being filed by Purchaser and Parent. The information set forth in Section 8—“Certain Information Concerning Parent and Purchaser” in the Offer to Purchase and in Schedule I of the Offer to Purchase is incorporated herein by reference.

Item 4. Terms of the Transaction.

The information set forth in the Offer to Purchase is incorporated herein by reference.

Item 5. Past Contacts, Transactions, Negotiations and Agreements.

The information set forth in the sections of the Offer to Purchase entitled “Summary Term Sheet” and “Introduction,” and Sections 8, 10 and 12—“Certain Information Concerning Parent and Purchaser,” “Background of the Offer; Past Contacts or Negotiations with Peerless” and “Purpose of the Offer; Plans for Peerless” of the Offer to Purchase is incorporated herein by reference.

Item 6. Purposes of the Transaction and Plans or Proposals.

The information set forth in the sections of the Offer to Purchase entitled “Summary Term Sheet” and “Introduction,” and Sections 6, 12 and 13—“Price Range of Shares; Dividends,” “Purpose of the Offer; Plans for Peerless,” and “Certain Effects of the Offer” of the Offer to Purchase is incorporated herein by reference.

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Item 7. Source and Amount of Funds or Other Consideration.

The information set forth in Section 9—“Source and Amount of Funds” of the Offer to Purchase is incorporated herein by reference.

Item 8. Interest in Securities of the Subject Company.

The information set forth in Sections 8 and 12—“Certain Information Concerning Parent and Purchaser” and “Purpose of the Offer; Plans for Peerless” of the Offer to Purchase is incorporated herein by reference.

Item 9. Persons/Assets Retained, Employed, Compensated or Used.

The information set forth in the section of the Offer to Purchase entitled “Introduction” and Sections 10, 12 and 18—“Background of the Offer; Past Contacts or Negotiations with Peerless,” “Purpose of the Offer; Plans for Peerless” and “Fees and Expenses” of the Offer to Purchase is incorporated herein by reference.

Item 10. Financial Statements.

Not applicable.

Item 11. Additional Information.

(a)(1) The information set forth in Sections 8, 10 and 12—“Certain Information Concerning Parent and Purchaser,” “Background of the Offer; Past Contacts or Negotiations with Peerless” and “Purpose of the Offer; Plans for Peerless” of the Offer to Purchase is incorporated herein by reference.

(a)(2), (3) The information set forth in Sections 12, 15 and 16—“Purpose of the Offer; Plans for Peerless,” “Certain Conditions of the Offer” and “Certain Legal Matters; Regulatory Approvals” of the Offer to Purchase is incorporated herein by reference.

(a)(4) The information set forth in Sections 9, 13 and 16—“Source and Amount of Funds,” “Certain Effects of the Offer” and “Certain Legal Matters; Regulatory Approvals” of the Offer to Purchase is incorporated herein by reference.

(a)(5) The information set forth in Section 16—“Certain Legal Matters; Regulatory Approvals” of the Offer to Purchase is incorporated herein by reference.

Item 12. Exhibits.

See Exhibit Index.

Item 13. Information Required by Schedule 13E-3.

Not applicable.

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SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: January 13, 2015	mobius acquisition, LLC

	By:	/s/ Lodovico de Visconti
	Name:	Lodovico de Visconti
	Title:	Managing Member

	MOBIUS ACQUISITION MERGER SUB, INC.

	By:	/s/ Lodovico de Visconti
	Name:	Lodovico de Visconti
	Title:	Chief Executive Officer

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EXHIBIT INDEX


(a)(1)(A)		Offer to Purchase, dated January 13, 2015
(a)(1)(B)		Form of Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number (TIN) on Substitute Form W-9)
(a)(1)(C)		Form of Notice of Guaranteed Delivery
(a)(1)(D)		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(1)(E)		Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(1)(F)		Form of summary advertisement, published January 13, 2015 in The Investor’s Business Daily
(a)(5)		Press Release issued by Peerless on December 22, 2014⁽¹⁾
(b)(1)		Secured Loan agreement between Parent and Tray3, LLC, dated November 19, 2014
(b)(2)		Unsecured Loan agreement between Parent and Tray3, LLC, dated November 19, 2014
(b)(3)		Funding Commitment Letter by Tray3, LLC to Parent and Purchaser, dated December 22, 2014
(b)(4)		Guaranty by Tray3, LLC in favor of Peerless, dated December 22, 2014
(d)(1)		Agreement and Plan of Merger, by and among Purchaser, Parent and Peerless, dated as of December 22, 2014⁽²⁾
(d)(2)		Confidentiality Agreement, dated as of June 18, 2014, by and between Peerless and LCV Capital Management, LLC
(g)		Not applicable
(h)		Not applicable

⁽¹⁾	Incorporated by reference to Exhibit 99.1 to the Form 8-K filed by Peerless on December 24, 2014.

⁽²⁾	Incorporated by reference to Exhibit 2.1 to the Form 8-K filed by Peerless on December 24, 2014.

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Exhibit (a)(1)(A)

OFFER TO PURCHASE FOR CASH

All Outstanding Shares of Common Stock

PEERLESS SYSTEMS CORPORATION

a Delaware corporation

$7.00 Net Per Share

MOBIUS ACQUISITION MERGER SUB INC.

a wholly owned subsidiary of

MOBIUS ACQUISITION, LLC

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 p.m., NEW YORK CITY TIME, ON FEBRUARY 11, 2015, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED.

Mobius Acquisition Merger Sub, Inc., a Delaware corporation (which we refer to as the “Purchaser”) and a wholly owned subsidiary of Mobius Acquisition, LLC, a Delaware limited liability company (which we refer to as the “Parent”) is offering to purchase all of the outstanding shares of common stock, par value $0.001 per share (each, a “Share” and collectively, the “Shares”), of Peerless Systems Corporation, a Delaware corporation (which we refer to as “Peerless” or the “Company”), at a purchase price of $7.00 per Share (the “Offer Price”), net to the seller in cash, without interest thereon and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in this Offer to Purchase (this “Offer to Purchase”) and in the related Letter of Transmittal (the “Letter of Transmittal” which, together with this Offer to Purchase and other related materials, as each may be amended or supplemented from time to time, constitutes the “Offer”).

The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of December 22, 2014 (as it may be amended from time to time, the “Merger Agreement”), by and among Parent, Purchaser and Peerless. The Merger Agreement provides, among other things, that immediately following the consummation of the Offer and subject to the satisfaction or waiver of certain conditions and without a stockholder vote to adopt the Merger Agreement or effect the Merger in accordance with Section 251(h) of the Delaware General Corporation Law (the “DGCL”), Purchaser will be merged with and into Peerless (the “Merger”), with Peerless continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Parent. In the Merger, each Share issued and outstanding immediately prior to the effective time of the Merger, other than (i) each Share held by the Company as treasury stock or held by any subsidiary of the Company, Parent or Purchaser (including as a result of the exercise of the Top-Up Option (as defined below) by Purchaser, if applicable), and (ii) Shares owned by stockholders who validly exercise appraisal rights under Delaware law with respect to such Shares, will be automatically converted into the right to receive the Offer Price, without interest thereon and less any applicable withholding taxes. As a result of the Merger, Peerless will cease to be a publicly traded company and will become wholly owned by Parent. Under no circumstances will interest be paid on the purchase price for Shares, regardless of any extension of the Offer or any delay in making payment for Shares.

The Offer is conditioned upon, among other things, (a) the satisfaction of the Minimum Tender Condition, (as described below) and (b) that no Governmental Authority (as defined below) having enacted, issued, promulgated, enforced or entered any law or order which has the effect of enjoining or otherwise prohibiting the making of the Offer or the consummation of the Offer or the Merger. The Minimum Tender Condition requires that the number of Shares validly tendered in accordance with the terms of the Offer and not validly withdrawn (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee) on or prior to 11:59 p.m., New York City time, on February, 11, 2015 (the “Expiration Time,” unless Purchaser shall have extended the period during which the Offer is open in accordance with the Merger Agreement, in which event “Expiration Time” shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire) which, together with any Shares then owned by Parent and its subsidiaries, shall equal at least a majority of the outstanding Shares on a fully-diluted basis as of the Expiration Time. “Governmental Authority” shall mean any United States (federal, state or local), foreign or supranational government, or any governmental, regulatory, judicial or administrative authority, agency or commission. The Offer also is subject to other customary conditions as described in the Offer to Purchase. See Section 15 — “Certain Conditions of the Offer.” There is no financing condition to the Offer.

After careful consideration, the Company’s board of directors has, among other things, unanimously (i) resolved that the Merger Agreement and the transactions contemplated thereby are fair to, advisable and in the best interests of, the Company and the Company’s stockholders, (ii) approved and adopted the Merger Agreement (including the plan of merger described therein), (iii) resolved that the plan of merger contained in the Merger Agreement, and the transactions contemplated by the Merger Agreement, including the Offer and the Merger, are adopted and approved and declared advisable under the DGCL and the certificate of incorporation and bylaws of the Company, and (iv) recommended that the Company’s stockholders accept the Offer and tender their Shares pursuant to the Offer.

A summary of the principal terms of the Offer appears on pages (i) through (vii). You should read this entire Offer to Purchase carefully before deciding whether to tender your Shares in the Offer.

The Information Agent for the Offer is:

MacKenzie Partners, Inc.

105 Madison Avenue

New York, NY 10016

Shareholders may call toll free: 1 (800) 322-2885

Banks and Brokers may call collect: (212) 929-5500

January 13, 2015

IMPORTANT

If you desire to tender all or any portion of your Shares to Purchaser pursuant to the Offer, you should either (a) complete and sign the Letter of Transmittal for the Offer, which is enclosed with this Offer to Purchase, in accordance with the instructions contained in the Letter of Transmittal, and mail or deliver the Letter of Transmittal (or a manually executed facsimile thereof) and any other required documents to Continental Stock Transfer & Trust, in its capacity as depositary for the Offer (which we refer to as the “Depositary”), and either (i) deliver the certificates for your Shares to the Depositary along with the Letter of Transmittal (or a manually executed facsimile thereof) or (ii) tender your Shares by book-entry transfer by following the procedures described in Section 3 — “Procedures for Accepting the Offer and Tendering Shares” in each case prior to 11:59 p.m., New York City time, on February 11, 2015 (the “Expiration Time”), unless we extend the Offer, or (b) request that your broker, dealer, commercial bank, trust company or other nominee effect the transaction for you. If you hold Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact that institution in order to tender your Shares to Purchaser pursuant to the Offer. If you are a record holder but your stock certificate is not available or you cannot deliver it to the Depositary before the Offer expires, you may be able to tender your Shares using the enclosed Notice of Guaranteed Delivery (See Section 3 — “Procedures for Accepting the Offer and Tendering Shares” for further details).

* * * * *

Questions and requests for assistance should be directed to the Information Agent (as described herein) at its address and telephone numbers set forth below and on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the related Letter of Transmittal, the Notice of Guaranteed Delivery and other materials related to the Offer may also be obtained for free from the Information Agent. Additionally, copies of this Offer to Purchase, the related Letter of Transmittal, the Notice of Guaranteed Delivery and any other material related to the Offer may be obtained at the website maintained by the Securities and Exchange Commission (the “SEC”) at www.sec.gov. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance.

This Offer to Purchase and the related Letter of Transmittal contain important information and you should read both carefully and in their entirety before making a decision with respect to the Offer.

The Offer has not been approved or disapproved by the SEC or any state securities commission nor has the SEC or any state securities commission passed upon the fairness or merits of, or upon the accuracy or adequacy of, the information contained in this Offer to Purchase. Any representation to the contrary is unlawful.

Table of Contents

		Page

SUMMARY TERM SHEET		i

INTRODUCTION		1

THE TENDER OFFER		3

1.	Terms of the Offer.	3

2.	Acceptance for Payment and Payment for Shares.	5

3.	Procedures for Accepting the Offer and Tendering Shares.	6

4.	Withdrawal Rights.	8

5.	Certain United States Federal Income Tax Consequences.	8

6.	Price Range of Shares; Dividends.	11

7.	Certain Information Concerning Peerless.	11

8.	Certain Information Concerning Parent and Purchaser.	12

9.	Source and Amount of Funds.	13

10.	Background of the Offer; Past Contacts or Negotiations with Peerless.	14

11.	The Merger Agreement; Other Agreements.	15

12.	Purpose of the Offer; Plans for Peerless.	28

13.	Certain Effects of the Offer.	30

14.	Dividends and Distributions.	30

15.	Certain Conditions of the Offer.	30

16.	Certain Legal Matters; Regulatory Approvals.	31

17.	Appraisal Rights.	32

18.	Fees and Expenses.	33

19.	Miscellaneous.	33

SCHEDULE I		I-1

SUMMARY TERM SHEET

The information contained in this summary term sheet is a summary only and is not meant to be a substitute for the more detailed description and information contained in this Offer to Purchase, the related Letter of Transmittal and other related materials. You are urged to read carefully this Offer to Purchase, the Letter of Transmittal and other related materials in their entirety. Parent and Purchaser (each as defined below) have included cross-references in this summary term sheet to other sections of this Offer to Purchase where you will find more complete descriptions of the topics mentioned below. The information concerning Peerless (as defined below) contained herein and elsewhere in this Offer to Purchase has been taken from or is based upon publicly available documents or records of Peerless on file with the United States Securities and Exchange Commission (the “SEC”) or other public sources at the time of the Offer (as defined below). Parent and Purchaser have not independently verified the accuracy and completeness of such information. Parent and Purchaser have no knowledge that would indicate that any statements contained herein relating to Peerless provided to Parent and Purchaser, or taken from or based upon such documents and records filed with the SEC, are untrue or incomplete in any material respect.


Securities Sought		All issued and outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Peerless Systems Corporation (“Peerless” or the “Company”).
Price Offered Per Share		$7.00 (the “Offer Price”), net to the seller in cash, without interest thereon and less any applicable withholding taxes.
Scheduled Expiration of Offer		11:59 p.m., New York City time, on February 11, 2015, unless the Offer (as defined below) is extended or earlier terminated. See Section 1 — “Terms of the Offer.”
Purchaser		Mobius Acquisition Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Mobius Acquisition, LLC, a Delaware limited liability company.

Who is offering to buy my Shares?

Mobius Acquisition Merger Sub, Inc., or “Purchaser,” a wholly owned subsidiary of Mobius Acquisition, LLC, or “Parent,” is offering to purchase for cash all of the outstanding Shares. Purchaser is a Delaware corporation which was formed for the sole purpose of making the Offer and completing the process by which Purchaser will be merged with and into Peerless, with Peerless being the surviving corporation. Parent is a Delaware limited liability company. See the “Introduction” and Section 8 — “Certain Information Concerning Parent and Purchaser.”

Unless the context indicates otherwise, in this Offer to Purchase, we use the terms “us,” “we” and “our” to refer to Purchaser and, where appropriate, Parent. We use the term “Parent” to refer to Mobius Acquisition, LLC alone, the term “Purchaser” to refer to Mobius Acquisition Merger Sub Inc. alone and the term “Peerless” or the “Company” to refer to Peerless Systems Corporation alone.

What are the classes and amounts of securities sought in the Offer?

We are offering to purchase all of the outstanding shares of common stock, par value $0.001 per share, of Peerless on the terms and subject to the conditions set forth in this Offer to Purchase. Unless the context otherwise requires, in this Offer to Purchase we use the term “Offer” to refer to this offer and the term “Shares” to refer to shares of Peerless common stock that are the subject of the Offer. See the “Introduction” to this Offer to Purchase and Section 1 — “Terms of the Offer.”

How many Shares are you offering to purchase in the Offer?

We are making an offer to purchase for cash all of the outstanding Shares on the terms and subject to the conditions set forth in this Offer to Purchase and the related Letter of Transmittal. See the “Introduction” and Section 1 — “Terms of the Offer.”

Why are you making the Offer?

We are making the Offer because we want to acquire the entire equity interest in Peerless. If the Offer is consummated, Parent intends to have Purchaser consummate the Merger (as described below) immediately after consummation of the Offer. Upon consummation of the Merger, Peerless will cease to be a publicly traded company and will be a wholly owned subsidiary of Parent.

How much are you offering to pay and what is the form of payment? Will I have to pay any fees or commissions?

We are offering to pay $7.00 per Share, net to the seller in cash, without interest and less any applicable withholding taxes. If you are the record owner of your Shares and you tender your Shares to us in the Offer, you will not have to pay brokerage fees or commissions. If you own your Shares through a broker or other nominee and your broker or other nominee tenders your Shares on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply. See the “Introduction,” Section 1 — “Terms of the Offer,” and Section 2 — “Acceptance for Payment and Payment for Shares.”

Is there an agreement governing the Offer?

Yes. Parent, Purchaser and Peerless have entered into an Agreement and Plan of Merger, dated as of December 22, 2014 (as it may be amended from time to time, the “Merger Agreement”). The Merger Agreement provides, among other things, for the terms and conditions of the Offer and the subsequent merger of Purchaser with and into Peerless (the “Merger”). If we consummate the Offer and the conditions to the Merger are satisfied or waived, we intend to effect the Merger without a stockholder vote to adopt the Merger Agreement or effect the Merger in accordance with Section 251(h) of the DGCL. See Section 11 — “The Merger Agreement; Other Agreements” and Section 15 — “Certain Conditions of the Offer.”

Will you have the financial resources to make payment? Is the Offer conditioned on you obtaining financing?

Parent will provide Purchaser with sufficient funds to consummate the Offer and the Merger. We estimate that the total amount of cash required to complete the transactions contemplated by the Offer and the Merger, including payment of any fees, expenses and other related amounts incurred in connection with the Offer and the Merger, will be approximately Twenty-One Million Five Hundred Thousand Dollars ($21,500,000), assuming no stock options are exercised between the date of the Merger Agreement and the effective time of the Merger.

Parent expects to fund the purchase price by means of an equity capital contribution to Purchaser. Parent has access to sufficient funds to pay for all Shares accepted for payment in the Offer or to be acquired in the Merger from: (i) cash on hand, and (ii) amounts available for borrowing under delayed draw term loans from Tray 3, LLC, a Delaware limited liability company (“Tray 3”). See Section 9— “Source and Amount of Funds.”

Purchaser’s obligation to consummate the Offer and the Merger pursuant to the Merger Agreement is not conditioned on Purchaser obtaining financing. See Section 9 — “Source and Amount of Funds,” Section 11 — “The Merger Agreement; Other Agreements.”

Is your financial condition relevant to my decision to tender my Shares in the Offer?

We do not think that Purchaser’s financial condition is relevant to your decision whether to tender Shares and accept the Offer because:

•

Purchaser was organized solely in connection with the Offer and the Merger and, prior to the Expiration Time (as defined below), will not carry on any activities other than in connection with the Offer and the Merger;

•

the Offer is being made for all outstanding Shares solely for cash;

•

the Offer is not subject to any financing condition; and

•

if Purchaser consummates the Offer, Purchaser expects to acquire all remaining Shares for the same cash price in the Merger.

See Section 9 — “Source and Amount of Funds” and Section 11 — “The Merger Agreement; Other Agreements.”

How long do I have to decide whether to tender my Shares in the Offer?

You will have until 11:59 p.m., New York City time, on February 11, 2015, unless we extend the Offer pursuant to the terms of the Merger Agreement (such date and time, as it may be extended, the “Expiration Time”) or the Offer is earlier terminated. If you cannot deliver everything required to make a valid tender to Continental Stock Transfer & Trust (the “Depositary”) prior to such time, you may be able to use a guaranteed delivery procedure, which is described in Section 3 — “Procedures for Accepting the Offer and Tendering Shares.”

Acceptance for payment of Shares pursuant to and subject to the conditions of the Offer, which shall occur promptly after the Expiration Time (unless the Offer is terminated), is referred to as the “Offer Closing,” and the date on which such Offer Closing occurs is referred to as the “Offer Closing Date.” The date and time at which the Merger becomes effective is referred to as the “Effective Time.” See Section 1 — “Terms of the Offer,” Section 3 — “Procedures for Accepting the Offer and Tendering Shares,” and Section 11 — “The Merger Agreement; Other Agreements — The Offer” and “— Termination.”

Can the Offer be extended and under what circumstances?

Yes, the Offer can be extended. Specifically, we have agreed in the Merger Agreement that, subject to our right to terminate the Merger Agreement in accordance with its terms, we will:

●

extend the Offer on one or more occasions, in consecutive increments of up to five business days (or such longer period as we may agree with Peerless) each, if, at any then-scheduled expiration of the Offer, any Offer Condition (as defined below) (other than the Minimum Tender Condition (as defined below)) has not been satisfied or waived, until such time as each such condition has been satisfied or waived;

●

extend the Offer for a period of thirty days upon Peerless’ written request for such extension; and

●

extend the Offer for the minimum period required by any rule, regulation, interpretation or position of the SEC or its staff or of NASDAQ applicable to the Offer.

In addition, if, at any then-scheduled expiration of the Offer, each Offer Condition (other than the Minimum Tender Condition) has been satisfied or waived and the Minimum Tender Condition has not been satisfied, then we may and, if Peerless requests, we must, extend the Offer by increments of five business days for up to twenty business days (or such longer period as Peerless requests or approves).

Notwithstanding the foregoing, under no circumstances will we be required to extend the Offer beyond April 30, 2015. See Section 1 — “Terms of the Offer” of this Offer to Purchase for more details on our ability to extend the Offer and Section 11 — “The Merger Agreement; Other Agreements — The Offer” and “— Termination” for more details on termination of the Offer or the Merger Agreement.

How will I be notified if the Offer is extended?

If we extend the Offer, we will inform the Depositary of any extension and will issue a press release announcing the extension not later than 9:00 a.m., New York City time, on the next business day after the day on which the Offer was scheduled to expire. See Section 1 — “Terms of the Offer.”

What are the conditions to the Offer?

The Offer is conditioned upon the following (collectively, the “Offer Conditions”):

●

there shall have been validly tendered and not validly withdrawn by the Expiration Time that number of Shares (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee) which, when added to the Shares already owned by Parent or any of its subsidiaries, would represent at least a majority of the Shares outstanding on a fully-diluted basis as of the expiration of the Offer (the “Minimum Tender Condition”); and

●

none of the following conditions shall have occurred and be continuing as of the expiration of the Offer:

●

a Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order which has the effect of enjoining or otherwise prohibiting the making of the Offer or the consummation of the Offer or the Merger;

●

any of the representations and warranties of Peerless set forth in Article III of the Merger Agreement shall not be true and correct in all material respects as of the expiration of the Offer (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except for such failures to be true and correct as have not caused a Company Material Adverse Effect (as defined in the Merger Agreement);

iii

●

Peerless shall have failed to perform or comply in all material respects with its obligations required to be performed or complied with by it under the Merger Agreement, except for such failures to perform or comply as have not caused a Company Material Adverse Effect; or

●

the Merger Agreement shall have been terminated in accordance with its terms.

The foregoing conditions are in addition to, and not a limitation of, the rights of Parent and Purchaser to extend, terminate or modify the Offer pursuant to the terms and conditions of the Merger Agreement.

Subject to the applicable rules and regulations of the SEC, Purchaser expressly reserves the right to waive, in whole or in part, any condition to the Offer or modify the terms of the Offer, except that, without Peerless’ prior written consent, we cannot (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) amend, modify or waive the Minimum Tender Condition, (iv) add to the Offer Conditions or amend, modify or supplement any Offer Condition in any manner adverse to any holder of Shares, (v) except as expressly provided in the Merger Agreement, terminate, extend or otherwise amend or modify the expiration date of the Offer, (vi) change the form of consideration payable in the Offer, (vii) otherwise amend, modify or supplement any of the terms of the Offer in any manner adverse to any holder of Company Common Stock or (viii) provide any “subsequent offering period” within the meaning of Rule 14d-11 promulgated under the Exchange Act. See Section 15 — “Certain Conditions of the Offer.”

Have any Peerless stockholders entered into agreements with Purchaser or its affiliates requiring them to tender their Shares?

No. None of Peerless’ stockholders have entered into agreements with Purchaser or its affiliates that require them to tender their Shares pursuant to the Offer

How do I tender my Shares?

If you hold your Shares directly as the registered owner, you can (i) tender your Shares in the Offer by delivering the certificates representing your Shares, together with a completed and signed Letter of Transmittal and any other documents required by the Letter of Transmittal, to the Depositary or (ii) tender your Shares by following the procedure for book-entry transfer set forth in Section 3 of this Offer to Purchase, no later than the Expiration Time.

If you are the registered owner but your stock certificate or book entry is not available or you cannot deliver or transfer it to the Depositary before the Offer expires, you may be able to obtain three additional trading days to deliver or transfer your Shares by delivering the enclosed Notice of Guaranteed Delivery, properly completed and duly executed, to the Depositary before the Offer expires. See Section 3 — “Procedures for Accepting the Offer and Tendering Shares” for further details. The Letter of Transmittal is enclosed with this Offer to Purchase.

If you hold your Shares in street name through a broker, dealer, commercial bank, trust company or other nominee, you must contact the institution that holds your Shares and give instructions that your Shares be tendered. You should contact the institution that holds your Shares for more details. See Section 3 — “Procedures for Accepting the Offer and Tendering Shares.”

Until what time may I withdraw previously tendered Shares?

You may withdraw your previously tendered Shares at any time prior to the Expiration Time. See Section 4 — “Withdrawal Rights.”

How do I withdraw previously tendered Shares?

To withdraw previously tendered Shares, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to the Depositary while you still have the right to withdraw Shares. If you tendered Shares by giving instructions to a broker, banker or other nominee, you must instruct the broker, banker or other nominee to arrange for the withdrawal of your Shares. See Section 4 — “Withdrawal Rights.”

What does the Peerless board of directors think of the Offer?

After careful consideration, Peerless’ board of directors has, among other things, unanimously (i) resolved that the Merger Agreement and the transactions contemplated thereby are fair to, advisable and in the best interests of, the Company and the Company’s stockholders, (ii) approved and adopted the Merger Agreement (including the plan of merger described therein), (iii) resolved that the plan of merger contained in the Merger Agreement, and the transactions contemplated by the Merger Agreement, including the Offer and the Merger, are adopted and approved and declared advisable under the DGCL and the certificate of incorporation and bylaws of the Company, and (iv) recommended that the Company’s stockholders accept the Offer and tender their Shares pursuant to the Offer.

See the “Introduction” to this Offer to Purchase and Section 10 — “Background of the Offer; Past Contacts or Negotiations with Peerless.” A more complete description of the reasons for Peerless’ board of directors’ approval of the Offer and the Merger is set forth in the Solicitation/Recommendation Statement on Schedule 14D-9 of Peerless (the “Schedule 14D-9”) which Peerless has filed with the SEC.

If the Offer is completed, will Peerless continue as a public company?

No. Immediately following consummation of the Offer and without a stockholder vote to adopt the Merger Agreement or effect the Merger, we expect to complete the Merger in accordance with Section 251(h) of the DGCL, after which Peerless, as the surviving corporation in the Merger, will be a wholly owned subsidiary of Parent and the Shares will cease to be publicly traded. Section 13 — “Certain Effects of the Offer.”

Will the Offer be followed by the Merger if all of the Shares are not tendered in the Offer?

If we acquire at least one Share more than 50% of the Shares on a fully-diluted basis in the Offer then, in accordance with the terms of the Merger Agreement, we will complete the Merger without a vote of the stockholders of Peerless pursuant to Section 251(h) of the DGCL. However, if Parent and Peerless determine that the Merger is ineligible to be effected pursuant to Section 251(h) of the DGCL after consummation of the Offer, then either (i) if Purchaser has acquired at least ninety percent (90%) of the Shares on a fully-diluted basis (whether pursuant to the Offer or after the exercise of the Top-Up Option (as defined below)), we will complete the Merger without a vote of the stockholders of Peerless pursuant to Section 253 of the DGCL or (ii) if Purchaser has not acquired at least ninety percent (90%) of the Shares on a fully diluted basis in the Offer and is unable to exercise the Top-Up Option pursuant to the terms of the Merger Agreement such that a stockholder vote is required in order to consummate the Merger, then Parent and Purchaser will take such actions as are reasonably necessary (including executing and delivering a written consent with respect to any Shares owned by Parent and/or Purchaser) to effect the required stockholder vote by written consent of the stockholders of Peerless and to effect the Merger in compliance with applicable law. Regardless of the manner in which the Merger is finalized as described above, stockholders of Peerless (other than Purchaser): (i) will not be required to vote on the Merger, (ii) will be entitled to appraisal rights under (and subject to) Delaware law if they do not tender Shares in the Offer and (iii) will, if they do not validly exercise appraisal rights under Delaware law, have the right to receive the same cash consideration for their Shares as was payable in the Offer.

If the Minimum Tender Condition is not satisfied, pursuant to the Merger Agreement we are not required to accept the Shares for purchase or consummate the Merger. See Section 11 — “The Merger Agreement; Other Agreements — Merger Agreement—Top-Up Option,” Section 12 — “Purpose of the Offer; Plans for Peerless — Merger Without a Meeting,” and “— Appraisal Rights” and Section 17 — “Appraisal Rights.”

If I decide not to tender, how will the Offer affect my Shares?

If the Offer is consummated and certain other conditions are satisfied, Purchaser will merge with and into Peerless and all of the then outstanding Shares (other than (i) each Share held by the Company as treasury stock or held by any subsidiary of the Company, Parent or Purchaser (including as a result of the exercise of the Top-Up Option (as defined below) by Purchaser, if applicable), and (ii) Shares owned by stockholders who validly exercise appraisal rights under Delaware law with respect to such Shares), will be automatically converted into the right to receive the Offer Price, without interest and less any applicable withholding taxes. If the Minimum Tender Condition is satisfied and we accept and purchase Shares in the Offer, we will effect the Merger without holding a meeting of the stockholders of Peerless. See Section 11 — “The Merger Agreement; Other Agreements,” Section 12 — “Purpose of the Offer; Plans for Peerless — Merger Without a Meeting,” and “—Appraisal Rights” and Section 17 — “Appraisal Rights.”

If the Merger is consummated, Peerless’ stockholders who do not tender their Shares in the Offer will, unless they validly exercise appraisal rights in accordance with Delaware law (as described below), receive the same amount of cash per Share that they would have received had they tendered their Shares in the Offer. Therefore, if the Offer and the Merger are completed, the only differences to you between tendering your Shares and not tendering your Shares in the Offer are that (i) you may be paid earlier if you tender your Shares in the Offer and (ii) appraisal rights will not be available to you if you tender Shares in the Offer but will be available to you in the Merger to the extent validly exercised under Delaware law. See Section 17 — “Appraisal Rights.” See also the “Introduction” to this Offer to Purchase and Section 13 — “Certain Effects of the Offer.”

What is the market value of my Shares as of a recent date?

On December 19, 2014, which was the last trading day prior to public report of the Offer and the Merger, the reported closing sales price of the Shares on the NASDAQ was $5.23. The Offer Price represents a premium of approximately 33.84% over the closing stock price on December 19, 2014. On January 12, 2015, the last full trading day before the commencement of the Offer, the reported closing sales price of the Shares on the NASDAQ was $6.99. See Section 6 — “Price Range of Shares; Dividends.”

If I tender my Shares, when and how will I get paid?

If the conditions to the Offer as set forth in Section 15 — “Certain Conditions of the Offer” are satisfied or waived and Purchaser consummates the Offer and accepts your Shares for payment, we will pay you an amount equal to the number of Shares you tendered multiplied by $7.00 in cash, without interest, less any applicable withholding taxes promptly following expiration of the Offer. See Section 1 — “Terms of the Offer” and Section 2 — “Acceptance for Payment and Payment for Shares.”

What is the “Top-Up Option” and when will it be exercised?

Immediately following the purchase of Shares in the Offer, in accordance with the terms of the Merger Agreement, we will complete the Merger without a vote of the stockholders of Peerless pursuant to Section 251(h) of the DGCL. We do not foresee any reason that would prevent us from completing the Merger pursuant to Section 251(h) of the DGCL following the consummation of the Offer. However, if Parent and Peerless determine that the Merger is not eligible to be effected pursuant to Section 251(h) of the DGCL, and if Purchaser does not acquire at least ninety percent (90%) of the Shares on a fully-diluted basis in the Offer (which would permit us to complete the Merger pursuant to Section 253 of the DGCL), then under the Merger Agreement the Purchaser has been granted an irrevocable option, subject to certain limitations, to purchase from Peerless the lowest number of additional Shares sufficient to cause us to own ninety percent (90%) of the Shares then outstanding on a fully-diluted basis at a price per Share equal to the Offer Price. This option is not exercisable more than once. We refer to this option as the “Top-Up Option.” If the conditions to the exercise of the Top-Up Option contained in the Merger Agreement are not satisfied such that a stockholder vote is required in order to consummate the Merger, then Parent and Purchaser will take such actions as are reasonably necessary (including executing and delivering a written consent with respect to any Shares owned by Parent and/or Purchaser) to effect the required stockholder vote by written consent of the stockholders of Peerless and to effect the Merger in compliance with applicable law. Regardless of the manner in which the Merger is finalized as described above, stockholders of Peerless (other than Purchaser) (i) will not be required to vote on the Merger, (ii) will be entitled to appraisal rights under (and subject to) Delaware law if they do not tender Shares in the Offer and (iii) will, if they do not validly exercise appraisal rights under Delaware law, have the right to receive the same cash consideration for their Shares as was payable in the Offer.

See Section 11 — “The Merger Agreement; Other Agreements — Merger Agreement — Top-Up Option,” Section 12 — “Purpose of the Offer; Plans for Peerless — Merger Without a Meeting” and “— Appraisal Rights” and Section 17 — “Appraisal Rights.”

Will I have appraisal rights in connection with the Offer?

No appraisal rights will be available to you in connection with the Offer. However, holders of Shares will be entitled to appraisal rights in connection with the Merger if they do not tender Shares in the Offer, subject to and in accordance with Delaware law. Holders of Shares must properly perfect their right to seek appraisal under Delaware law in connection with the Merger in order to exercise appraisal rights. See Section 17 — “Appraisal Rights.”

What will happen to my stock options and restricted stock in the Offer?

Pursuant to the Merger Agreement, as of the closing of the Offer each option to purchase Shares (each, a “Company Option”) that is outstanding and unvested immediately prior to the closing of the Offer will become fully vested and exercisable. As of the Effective Time, each Company Option that is outstanding and unexercised will be canceled in consideration for the right to receive cash consideration equal to the product of (i) the total number of Shares previously subject to such Company Option as of immediately prior to the Effective Time; and (ii) the excess, if any, of the Offer Price over the exercise price per Share previously subject to such Company Option, less any required withholding taxes (except that if the exercise price per share of any Company Option is equal to or greater than the per share Offer Price, the Company Option will be cancelled and terminated without any cash payment).

As of the closing of the Offer each share of Peerless’ restricted stock (“Company Restricted Stock”) will fully vest (and the restrictions thereon will lapse). All such vested shares of Company Restricted Stock will be treated identically to all other Shares with respect to the payment of Merger Consideration. See Section 11 — “The Merger Agreement; Other Agreements — Treatment of Company Options and Company Restricted Stock.”

What are the material United States federal income tax consequences of the Offer and the Merger?

If you are a United States Stockholder (as defined in Section 5 — “Certain United States Federal Income Tax Consequences”), the receipt of cash in exchange for your Shares pursuant to the Offer or the Merger generally will be a taxable transaction for United States federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign income or other tax laws.

We urge you to consult your own tax advisor as to the particular tax consequences to you of the Offer and the Merger in light of your particular circumstances, including the consequences under any applicable state, local or foreign income or other tax laws. See Section 5 —“Certain United States Federal Income Tax Consequences” for a more detailed discussion of the tax consequences of the Offer and the Merger.

Who should I call if I have questions about the Offer?

You may call MacKenzie Partners, Inc. at 1 (800) 322-2885 (Toll Free). Banks and brokers may call collect at (212) 929-5500. MacKenzie Partners, Inc. is acting as the information agent for our tender offer. See the back cover of this Offer to Purchase for additional contact information.

vii

To All Holders of Shares of Common Stock of Peerless Systems Corporation:

INTRODUCTION

Mobius Acquisition Merger Sub, Inc., a Delaware corporation (which we refer to as “Purchaser”) and a wholly owned subsidiary of Mobius Acquisition LLC, a Delaware limited liability company (which we refer to as “Parent”) is offering to purchase all of the outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Peerless Systems Corporation, a Delaware corporation (which we refer to as “Peerless” or the “Company”), at a purchase price of $7.00 per Share (the “Offer Price”), net to the seller in cash, without interest thereon and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in this Offer to Purchase (the “Offer to Purchase”) and in the related Letter of Transmittal (the “Letter of Transmittal” which, together with this Offer to Purchase and other related materials, as each may be amended or supplemented from time to time, constitutes the “Offer”).

We are making this Offer pursuant to an Agreement and Plan of Merger, dated as of December 22, 2014 (as it may be amended from time to time, the “Merger Agreement”), by and among Parent, Purchaser and Peerless. The Merger Agreement provides, among other things, that following the consummation of the Offer and subject to the satisfaction or waiver of certain conditions, Purchaser will be merged with and into Peerless (the “Merger”), with Peerless continuing as the surviving corporation (which we refer to as the “Surviving Corporation”) in the Merger and a wholly owned subsidiary of Parent. The closing of the Merger is the “Merger Closing” and the date of the Merger Closing is the “Merger Closing Date.” In the Merger, each Share issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than (i) each Share held by the Company as treasury stock or held by any subsidiary of the Company, Parent or Purchaser (including as a result of the exercise of the Top-Up Option (as defined below) by Purchaser, if applicable), and (ii) Shares owned by stockholders who validly exercise appraisal rights under Delaware law with respect to such Shares) will be automatically converted into the right to receive $7.00, without interest thereon and less any applicable withholding taxes. In addition, in connection with the Merger, holders of outstanding options to purchase Shares (“Company Options”) may be entitled to receive a payment with respect to such options upon consummation of the Merger, and holders of outstanding shares of Peerless restricted common stock (“Company Restricted Stock”) which have not vested will be entitled to receive a payment therefor upon consummation of the Merger, in each case as provided in the Merger Agreement. As a result of the Merger, Peerless will cease to be a publicly traded company and will become wholly owned by Parent. Under no circumstances will interest be paid on the purchase price for Shares, regardless of any extension of the Offer or any delay in making payment for Shares.

The Merger Agreement is more fully described in Section 11 — “The Merger Agreement; Other Agreements.”

Tendering stockholders who are record owners of their Shares and who tender directly to Continental Stock Transfer & Trust (the “Depositary”) will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares through a broker, banker or other nominee should consult such institution as to whether it charges any service fees or commissions.

The Offer is conditioned upon, among other things, (a) the satisfaction of the Minimum Tender Condition and (b) no Governmental Authority having enacted, issued, promulgated, enforced or entered any law or order which has the effect of enjoining or otherwise prohibiting the making of the Offer or the consummation of the Offer or the Merger. The Minimum Tender Condition requires that the number of Shares validly tendered in accordance with the terms of the Offer and not validly withdrawn (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee) on or prior to 11:59 p.m., New York City time, on February 11, 2015 (the “Expiration Time,” unless Purchaser shall have extended the period during which the Offer is open, in which event “Expiration Time” shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire) which, together with any Shares then owned by Parent and its subsidiaries, shall equal at least a majority of the outstanding Shares on a fully-diluted basis as of the Expiration Time. “Governmental Authority” shall mean any United States (federal, state or local), foreign or supranational government, or any governmental, regulatory, judicial or administrative authority, agency or commission. The Offer also is subject to other customary conditions as described in the Offer to Purchase. See Section 15 —“Certain Conditions of the Offer.” There is no financing condition to the Offer.

A more complete description of Peerless’ board of director’s reasons for authorizing and approving the Merger Agreement and the transactions contemplated thereby (the “Transactions”), including the Offer and the Merger, is set forth in Peerless’ Solicitation/Recommendation Statement on Schedule 14D-9 (together with any exhibits and annexes attached thereto, the “Schedule 14D-9”) that is being furnished to stockholders in connection with the Offer. Peerless is required under the rules of the SEC to file its Solicitation/Recommendation Statement with the SEC on Schedule 14D-9 no later than ten (10) business days from the date of this Offer to Purchase, setting forth the recommendation of Peerless’s board of directors with respect to the Offer and the reasons for such recommendation and furnishing certain additional related information. Stockholders should carefully read the information set forth in the Schedule 14D-9, including the information set forth under the sub-headings “Background of the Offer and Merger” and “Reasons for Recommendation.”

Peerless has advised Parent that, as of December 22, 2014, (i) 2,701,364 Shares were issued and outstanding (which number includes 70,066 unvested shares of Company Restricted Stock that are not eligible to be tendered in the Offer) and (ii) 371,000 Shares were authorized and reserved for issuance pursuant to outstanding Company Options, all of which Company Options have an exercise price lower than the Offer Price. Assuming that no additional Company Options are granted after December 22, 2014, and that all Company Options outstanding as of December 22, 2014 are exercised, there would be 3,072,364 Shares outstanding on a fully diluted basis and the Minimum Tender Condition would be satisfied if at least 1,536,183 Shares are validly tendered and not validly withdrawn on or prior to the Expiration Time.

Pursuant to the Merger Agreement, the board of directors of Purchaser at the Effective Time shall, from the Effective Time, be the directors of the Surviving Corporation and the officers of Peerless at the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation.

This Offer to Purchase does not constitute a solicitation of proxies, and Purchaser is not soliciting proxies in connection with the Transactions. If the Minimum Tender Condition is satisfied and Purchaser consummates the Offer, Purchaser intends to effect the Merger without a stockholder vote to adopt the Merger Agreement or effect the Merger in accordance with Section 251(h) of the DGCL.

Certain United States federal income tax consequences of the sale of Shares pursuant to the Offer and the exchange of Shares in the Merger are described in Section 5 — “Certain United States Federal Income Tax Consequences.”

This Offer to Purchase and the related Letter of Transmittal contain important information that should be read carefully before any decision is made with respect to the Offer.

THE TENDER OFFER

1. Terms of the Offer.

Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), we will accept for payment and promptly pay for all Shares validly tendered prior to the Expiration Time and not properly withdrawn as permitted under Section 4 — “Withdrawal Rights.” The term “Expiration Time” means 11.59 p.m., New York City time, on February 11, 2015, unless Purchaser has extended the Offer, in which event the term “Expiration Time” shall mean the latest time and date at which the Offer, as so extended by Purchaser, will expire.

Acceptance for payment of Shares pursuant to and subject to the conditions of the Offer, which shall occur promptly after the expiration of the Offer unless we extend the Offer pursuant to the terms of the Merger Agreement, is referred to as the “Offer Closing,” and the date on which such Offer Closing occurs is referred to as the “Offer Closing Date.” The time at which the Merger becomes effective is referred to as the “Effective Time.”

The Offer is conditioned upon the following (collectively, the “Offer Conditions”):

●

none of the following conditions shall have occurred and be continuing as of the expiration of the Offer:

●

the Merger Agreement shall have been terminated in accordance with its terms.

Subject to Purchaser’s right to terminate the Merger Agreement in accordance with its terms, Purchaser is required to:

●

extend the Offer on one or more occasions, in consecutive increments of up to five business days (or such longer period as Parent and Peerless may agree) each, if, at any then-scheduled expiration of the Offer, any Offer Condition (as defined below) (other than the Minimum Tender Condition (as defined below)) has not been satisfied or waived, until such time as each such condition has been satisfied or waived;

●

extend the Offer for a period of thirty days upon Peerless’ written request for such extension; and

●

extend the Offer for the minimum period required by any rule, regulation, interpretation or position of the SEC or its staff or of NASDAQ applicable to the Offer.

In addition, if, at any then-scheduled expiration of the Offer, each Offer Condition (other than the Minimum Tender Condition) has been satisfied or waived and the Minimum Tender Condition has not been satisfied, then Purchaser may and, if Peerless requests, Purchaser must, extend the Offer by increments of five business days for up to twenty business days (or such longer period as Peerless requests or approves). Notwithstanding the foregoing, under no circumstances will Purchaser be required to extend the Offer beyond April 30, 2015.

Subject to the applicable rules and regulations of the SEC, Purchaser expressly reserves the right to waive, in whole or in part, any condition to the Offer or modify the terms of the Offer; provided, however, that, without the consent of Peerless, Purchaser cannot: (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) amend, modify or waive the Minimum Tender Condition, (iv) add to the Offer Conditions or amend, modify or supplement any Offer Condition in any manner adverse to any holder of Shares, (v) except as expressly provided in the Merger Agreement, terminate, extend or otherwise amend or modify the Expiration Time, (vi) change the form of consideration payable in the Offer, (vii) otherwise amend, modify or supplement any of the terms of the Offer in any manner adverse to any holder of Shares or (viii) provide any subsequent offering period. Any extension, delay, termination or amendment of the Offer will be followed as promptly as practicable by public announcement thereof, and such announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Time. Without limiting the manner in which Purchaser may choose to make any public announcement, it currently intends to make announcements regarding the Offer by issuing a press release and making any appropriate filing with the SEC.

If we extend the Offer, are delayed in our acceptance for payment of or payment (whether before or after our acceptance for payment for Shares) for Shares or are unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to our rights under the Offer and the Merger Agreement, the Depositary may retain tendered Shares on our behalf, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described under Section 4 —“Withdrawal Rights.”

However, our ability to delay the payment for Shares that we have accepted for payment is limited by Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which requires us to promptly pay the consideration offered or return the securities deposited by or on behalf of stockholders promptly after the termination or withdrawal of the Offer.

If we make a material change in the terms of the Offer or the information concerning the Offer or if we waive a material condition of the Offer, we will disseminate additional tender offer materials and extend the Offer if and to the extent required by Rules 14d-4(d)(1), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the Offer or information concerning the Offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the terms or information changes. We understand that in the SEC’s view, an offer should remain open for a minimum of five business days from the date the material change is first published, sent or given to stockholders, and with respect to a change in price or a change in percentage of securities sought, a minimum ten (10) business day period generally is required to allow for adequate dissemination to stockholders and investor response. The requirement to extend the Offer will not apply to the extent that the number of business days remaining between the occurrence of the change and the then-scheduled Expiration Time equals or exceeds the minimum extension period that would be required because of such amendment.

If, on or before the Expiration Time, we increase the consideration being paid for Shares accepted for payment in the Offer, such increased consideration will be paid to all stockholders whose Shares are purchased in the Offer, whether or not such Shares were tendered before the announcement of the increase in consideration.

We expressly reserve the right, in our sole discretion, subject to the terms and conditions of the Merger Agreement and the applicable rules and regulations of the SEC, not to accept for payment any Shares if, at the Expiration Time, any of the conditions to the Offer have not been satisfied. See Section 15 — “Certain Conditions of the Offer.” Under certain circumstances, we may terminate the Merger Agreement and the Offer. See Section 11 — “The Merger Agreement; Other Agreements — Merger Agreement — Termination.”

Immediately following the purchase of Shares in the Offer, in accordance with the terms of the Merger Agreement, we will complete the Merger without a vote of the stockholders of Peerless pursuant to Section 251(h) of the DGCL. We do not foresee any reason that would prevent us from completing the Merger pursuant to Section 251(h) of the DGCL. However, if Parent and Peerless determine that the Merger is ineligible to be effected pursuant to Section 251(h) of the DGCL after consummation of the Offer, then either: (i) if Purchaser has acquired at least ninety percent (90%) of the Shares on a fully-diluted basis (whether pursuant to the Offer or after the exercise of the Top-Up Option (as defined below)), we will complete the Merger without a vote of the stockholders of Peerless pursuant to Section 253 of the DGCL or (ii) if Purchaser has not acquired at least ninety percent (90%) of the Shares on a fully diluted basis in the Offer and is unable to exercise the Top-Up Option pursuant to the terms of the Merger Agreement such that a stockholder vote is required in order to consummate the Merger, then Parent and Purchaser will take such actions as are reasonably necessary (including executing and delivering a written consent with respect to any Shares owned by Parent and/or Purchaser) to effect the required stockholder vote by written consent of the stockholders of Peerless and to effect the Merger in compliance with applicable law. Regardless of the manner in which the Merger is finalized as described above, stockholders of Peerless (other than Purchaser): (i) will not be required to vote on the Merger, (ii) will be entitled to appraisal rights under (and subject to) Delaware law if they do not tender Shares in the Offer and (iii) will, if they do not validly exercise appraisal rights under Delaware law, have the right to receive the same cash consideration for their Shares as was payable in the Offer. See Section 17 —“Appraisal Rights.”

Peerless has provided us with Peerless’ stockholder list and security position listings for the purpose of disseminating this Offer to Purchase, the related Letter of Transmittal and other related materials to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on Peerless’ stockholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of Shares.

2. Acceptance for Payment and Payment for Shares.

Subject to the satisfaction or waiver of all the conditions to the Offer set forth in Section 15 — “Certain Conditions of the Offer,” on the terms of and subject to the conditions to the Offer, promptly after the Expiration Time, we will accept for payment, and pay for, all Shares validly tendered to us in the Offer and not validly withdrawn on or prior to the Expiration Time. Subject to compliance with Rule 14e-1(c) under the Exchange Act, we expressly reserve the right to delay payment for Shares in order to comply in whole or in part with any applicable law. See Section 16 — “Certain Legal Matters; Regulatory Approvals.”

In all cases, we will pay for Shares tendered and accepted for payment pursuant to the Offer only after timely receipt by the Depositary of: (i) (A) the certificates evidencing such Shares (the “Share Certificates”) or (B) confirmation of a book entry transfer of such Shares (a “Book-Entry Confirmation”) into the Depositary’s account at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in Section 3 — “Procedures for Accepting the Offer and Tendering Shares,” (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent’s Message (as described below) in lieu of the Letter of Transmittal and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when Share Certificates or Book-Entry Confirmations with respect to Shares are actually received by the Depositary.

The term “Agent’s Message” means a message, transmitted by DTC to and received by the Depositary and forming a part of a Book-Entry Confirmation, that states that DTC has received an express acknowledgment from the participant in DTC tendering the Shares that are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against such participant.

On the terms of and subject to the conditions to the Offer, promptly after the Expiration Time, we will accept for payment, and pay for, all Shares validly tendered to us in the Offer and not validly withdrawn on or prior to the Expiration Time. For purposes of the Offer, we will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn as, if and when we give oral or written notice to the Depositary of our acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the Offer Price for such Shares with the Depositary, which will act as paying agent for tendering stockholders for the purpose of receiving payments from us and transmitting such payments to tendering stockholders whose Shares have been accepted for payment. If we extend the Offer, are delayed in our acceptance for payment of Shares or are unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to our rights under the Offer and the Merger Agreement, the Depositary may retain tendered Shares on our behalf, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described herein under Section 4 — “Withdrawal Rights” and as otherwise required by Rule 14e-1(c) under the Exchange Act. Under no circumstances will we pay interest on the purchase price for Shares by reason of any extension of the Offer or any delay in making such payment for Shares.

If any tendered Shares are not accepted for payment for any reason pursuant to the terms and conditions of the Offer, or if Share Certificates are submitted evidencing more Shares than are tendered, Share Certificates evidencing unpurchased Shares will be returned, without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer into the Depositary’s account at DTC pursuant to the procedure set forth in Section 3 — “Procedures for Accepting the Offer and Tendering Shares,” such Shares will be credited to an account maintained at DTC), promptly following the expiration or termination of the Offer.

3. Procedures for Accepting the Offer and Tendering Shares.

Valid Tenders. In order for a stockholder to validly tender Shares pursuant to the Offer, the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message in lieu of the Letter of Transmittal) and any other documents required by the Letter of Transmittal must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either (A) the Share Certificates evidencing tendered Shares must be received by the Depositary at such address, (B) such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Time, or (C) you must comply with the guaranteed delivery procedures set forth below.

Book-Entry Transfer. The Depositary will establish an account with respect to the Shares at DTC for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of DTC may make a book-entry delivery of Shares by causing DTC to transfer such Shares into the Depositary’s account at DTC in accordance with DTC’s procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at DTC, either the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent’s Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Time or the guaranteed delivery procedure described below must be complied with. Delivery of documents to DTC does not constitute delivery to the Depositary.

Guaranteed Delivery. If you wish to tender Shares pursuant to the Offer and cannot deliver such Shares and all other required documents to the Depositary by the Expiration Time or cannot complete the procedure for delivery by book-entry transfer on a timely basis, you may nevertheless tender such Shares if all of the following conditions are met:

•

such tender is made by or through an Eligible Institution (as defined below);

•

a properly completed and duly executed Notice of Guaranteed Delivery in the form provided by us with this Offer to Purchase is received by the Depositary (as provided below) by the Expiration Time; and

•

the certificates for all such validly tendered Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary’s account at the Book-Entry Transfer Facility), together with a properly completed and duly executed Letter of Transmittal together with any required signature guarantee (or an Agent’s Message) and any other required documents, are received by the Depositary within three (3) trading days after the date of execution of the Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution (as defined below) in the form set forth in such Notice.

Guarantee of Signatures. No signature guarantee is required on the Letter of Transmittal: (i) if the Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section 3, includes any participant in DTC’s systems whose name appears on a security position listing as the owner of the Shares) of the Shares tendered therewith, unless such registered holder has completed either the box entitled “Special Payment Instructions” or the box entitled “Special Delivery Instructions” on the Letter of Transmittal or (ii) if the Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a member in good standing of the Securities Transfer Agents Medallion Program or any other “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 of the Exchange Act (each an “Eligible Institution” and collectively “Eligible Institutions”). In all other cases, all signatures on a Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a Share Certificate is registered in the name of a person or persons other than the signer of the Letter of Transmittal, or if payment is to be made or delivered to, or a Share Certificate not accepted for payment or not tendered is to be issued in, the name of a person other than the registered holder, then the Share Certificate must be endorsed or accompanied by duly executed stock powers, in either case signed exactly as the name of the registered holder appears on the Share Certificate, with the signature on such Share Certificate or stock powers guaranteed by an Eligible Institution as provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.

Notwithstanding any other provision of this Offer to Purchase, payment for Shares accepted pursuant to the Offer will in all cases only be made after timely receipt by the Depositary of: (i) (A) Share Certificates evidencing such Shares or (B) Book-Entry Confirmation of a book-entry transfer of such Shares into the Depositary’s account at DTC pursuant to the procedures set forth in this Section 3, (ii) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent’s Message in lieu of the Letter of Transmittal and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when Share Certificates or Book—Entry Confirmations with respect to Shares are actually received by the Depositary.

The method of delivery of Share Certificates, the Letter of Transmittal, the Notice of Guaranteed Delivery and all other required documents, including delivery through DTC, is at the option and risk of the tendering stockholder, and the delivery of all such documents will be deemed made (and the risk of loss and the title of Share Certificates will pass) only when actually received by the Depositary (including, in the case of a book-entry transfer, receipt of a Book-Entry Confirmation). If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery prior to the Expiration Time.

Irregularities. The tender of Shares pursuant to any one of the procedures described above will constitute the tendering stockholder’s acceptance of the Offer, as well as the tendering stockholder’s representation and warranty that such stockholder has the full power and authority to tender and assign the Shares tendered, as specified in the Letter of Transmittal. Our acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and us upon the terms and subject to the conditions of the Offer (and if the Offer is extended or amended, the terms of or the conditions to any such extension or amendment).

Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by us, in our sole discretion. We reserve the absolute right to reject any and all tenders determined by us not to be in proper form or the acceptance for payment of which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any defect or irregularity in the tender of any Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been waived or cured within such time as Purchaser shall determine. None of Purchaser, the Depositary, MacKenzie Partners, Inc. (the “Information Agent”) or any other person will be under any duty to give notice of any defects or irregularities in tenders or incur any liability for failure to give any such notice. Any determination made by us with respect to the terms and conditions of the Offer may be challenged by Peerless’ stockholders, to the extent permitted by law, and are subject to review by a court of competent jurisdiction.

Appointment. By executing the Letter of Transmittal as set forth above, the tendering stockholder will irrevocably appoint designees of Purchaser as such stockholder’s attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such stockholder’s rights with respect to the Shares tendered by such stockholder and accepted for payment by Purchaser and with respect to any and all other Shares or other securities or rights issued or issuable in respect of such Shares. All such powers of attorney and proxies will be considered irrevocable and coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, we accept for payment Shares tendered by such stockholder as provided herein. Upon such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such Shares or other securities or rights will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given by such stockholder (and, if given, will not be deemed effective). The designees of Purchaser will thereby be empowered to exercise all voting and other rights with respect to such Shares and other securities or rights, including, without limitation, in respect of any annual, special or adjourned meeting of Peerless’ stockholders, actions by written consent in lieu of any such meeting or otherwise, as they in their sole discretion deem proper. We reserve the right to require that, in order for Shares to be deemed validly tendered, immediately upon our acceptance for payment of such Shares, Purchaser or its designees must be able to exercise full voting, consent and other rights with respect to such Shares and other related securities or rights, including voting at any meeting of Peerless’ stockholders.

Information Reporting and Backup Withholding. Payments made to stockholders of Peerless in the Offer or the Merger generally will be subject to information reporting and may be subject to backup withholding at a 28% rate. To avoid backup withholding, United States Stockholders (as defined in Section 5 — “Certain United States Federal Income Tax Consequences”) that do not otherwise establish an exemption should complete and return the Form W-9 included in the Letter of Transmittal, certifying that such stockholder is a United States person within the meaning of Section 7701(a)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), the taxpayer identification number provided is correct, and that such stockholder is not subject to backup withholding. Non-United States Stockholders (as defined in Section 5 — “Certain United States Federal Income Tax Consequences”) should submit an appropriate and properly completed Internal Revenue Service (“IRS”) Form W-8 in order to avoid backup withholding. Non-United States Stockholders should consult a tax advisor to determine which Form W-8 is appropriate.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a stockholder’s United States federal income tax liability, provided the required information is timely furnished in the appropriate manner to the IRS.

4. Withdrawal Rights.

Except as otherwise provided in this Section 4, tenders of Shares made pursuant to the Offer are irrevocable.

Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Time.

For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the serial numbers shown on such Share Certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3 — “Procedures for Accepting the Offer and Tendering Shares,” any notice of withdrawal must also specify the name and number of the account at DTC to be credited with the withdrawn Shares.

Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in Section 3 — “Procedures for Accepting the Offer and Tendering Shares” at any time prior to the Expiration Time.

Purchaser will determine, in its sole discretion, all questions as to the form and validity (including time of receipt) of any notice of withdrawal, and such determination will be final and binding. No withdrawal of Shares shall be deemed to have been properly made until all defects and irregularities have been cured or waived. None of Purchaser, Parent or any of their respective affiliates or assigns, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give such notification.

5. Certain United States Federal Income Tax Consequences.

The following is a summary of certain United States federal income tax consequences of the Offer and the Merger to stockholders of Peerless whose Shares are tendered and accepted for payment pursuant to the Offer or whose Shares are converted into the right to receive cash in the Merger. It does not address tax consequences applicable to holders of Company Options. The summary is for general information only and does not purport to consider all aspects of United States federal income taxation that might be relevant to stockholders of Peerless. The summary is based on current provisions of the Code, existing, proposed and temporary regulations thereunder and administrative and judicial interpretations thereof, all of which are subject to change, possibly with retroactive effect. We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary, and no assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation.

The summary applies only to stockholders of Peerless in whose hands Shares are capital assets within the meaning of Section 1221 of the Code. This summary does not address foreign, state or local tax consequences of the Offer or the Merger, nor does it purport to address the United States federal income tax consequences of the transactions to stockholders who will actually or constructively own any stock of Peerless following the Offer and the Merger or to special classes of taxpayers (e.g., small business investment companies, regulated investment companies, real estate investment trusts, controlled foreign corporations, passive foreign investment companies, cooperatives, banks and certain other financial institutions, insurance companies, tax-exempt organizations, retirement plans, stockholders that are, or hold Shares through, partnerships or other pass-through entities for United States federal income tax purposes, United States persons whose functional currency is not the United States dollar, dealers in securities or foreign currency, traders that mark-to-market their securities, expatriates and former long-term residents of the United States, persons subject to the alternative minimum tax, stockholders holding Shares that are part of a straddle, hedging, constructive sale or conversion transaction, and stockholders who received Shares in compensatory transactions, pursuant to the exercise of employee stock options, stock purchase rights, or stock appreciation rights, as restricted stock, or otherwise as compensation). In addition, this summary does not address taxes other than United States federal income taxes.

For purposes of this summary, the term “United States Stockholder” means a beneficial owner of Shares that, for United States federal income tax purposes, is: (i) an individual citizen or resident of the United States, (ii) a corporation, or an entity treated as a corporation for United States federal income tax purposes, created or organized under the laws of the United States, or of any state or the District of Columbia, (iii) an estate, the income of which is subject to United States federal income tax regardless of its source or (iv) a trust, if (A) a United States court is able to exercise primary supervision over the trust’s administration and one or more United States persons, within the meaning of Section 7701(a)(30) of the Code, have authority to control all of the trust’s substantial decisions or (B) the trust has validly elected to be treated as a United States person for United States federal income tax purposes. The term “Non-United States Stockholder” means a beneficial owner of Shares that, for United States federal income tax purposes, is an individual, corporation, estate or trust that is not a United States Stockholder.

If a partnership, or another entity treated as a partnership for United States federal income tax purposes, holds Shares, the tax treatment of the partnership and its partners or members generally will depend upon the status of the partner or member and the partnership’s activities. Accordingly, partnerships or other entities treated as partnerships for United States federal income tax purposes that hold Shares, and partners or members in those entities, are urged to consult their tax advisors regarding the specific United States federal income tax consequences to them of the Offer and the Merger.

THIS DISCLOSURE IS FOR INFORMATION PURPOSES ONLY AND IS NOT INTENDED AS TAX ADVICE. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER ANY OTHER U.S. FEDERAL TAX LAWS (SUCH AS ESTATE AND GIFT TAX LAWS), THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, OR ANY APPLICABLE TAX TREATY.

Consequences to United States Stockholders. The exchange of Shares for cash pursuant to the Offer or the Merger will be a taxable transaction to United States Stockholders for United States federal income tax purposes. In general, a United States Stockholder who exchanges Shares for cash pursuant to the Offer or the Merger will recognize gain or loss for United States federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received (determined before the deduction, if any, of any withholding taxes) and the United States Stockholder’s adjusted tax basis in the Shares exchanged. Such gain or loss will be long-term capital gain or loss if a United States Stockholder’s holding period for such Shares is more than one year. Long-term capital gain recognized by an individual is generally taxable at a reduced rate. In the case of Shares that have been held for one year or less, capital gain on the sale or exchange of such Shares generally will be subject to United States federal income tax as short-term capital gains, which are taxed at ordinary income tax rates. The deductibility of capital losses is subject to certain limitations. Under certain circumstances, a newly effective federal Medicare tax of 3.8% may apply on the amount of gain (in addition to any long- or short-term capital gain tax) to a United States Stockholder that is an individual, estate or trust.

Gain or loss will be determined separately for each block of Shares (that is, Shares acquired at the same cost in a single transaction) tendered pursuant to the Offer or exchanged for cash pursuant to the Merger.

Backup Withholding and Information Reporting. Payments to a U.S. Stockholder in connection with the Offer or the Merger may be subject to backup withholding tax unless such U.S. Stockholder (i) provides a correct TIN (which, for an individual U.S. Stockholder, is the U.S. Stockholder’s social security number) and any other required information, or (ii) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact, and otherwise complies with applicable requirements of the backup withholding rules. See Section 3 — “Procedures for Accepting the Offer and Tendering Shares.” A U.S. Stockholder that does not provide a correct TIN may be subject to penalties imposed by the IRS. Backup withholding does not constitute an additional tax. Any amounts withheld under the backup withholding rules may be allowable as a refund or credit against the U.S. Stockholder’s United States federal income tax liability, provided that the required information is given to the IRS in a timely manner. Each U.S. Stockholder should consult its tax advisor as to such U.S. Stockholder’s qualification for exemption from backup withholding and the procedure for obtaining such exemption.

Consequences to Non-United States Stockholders. Except as described in the discussion in Section 3 — “Procedures for Accepting the Offer and Tendering Shares,” a Non-United States Stockholder generally will not be subject to United States federal income tax in connection with the exchange of Shares for cash pursuant to the Offer or the Merger, unless:

•

any gain is effectively connected with the Non-United States Stockholder’s conduct of a trade or business within the United States and, if subject to an applicable tax treaty, is attributable to a permanent establishment or fixed base maintained by the Non-United States Stockholder in the United States;

•

in the case of an individual, the Non-United States Stockholder has been present in the United States for at least 183 days or more in the taxable year of disposition (and certain other conditions are satisfied); or

•

Peerless is or has been a “United States real property holding corporation” (“USRPHC”), for United States federal income tax purposes, at any time during the shorter of the five-year period ending on the date of the disposition and the Non-United States Stockholder’s holding period for its Shares and, if the Shares are “regularly traded on an established securities market” (“regularly traded”), the Non-United States Stockholder held, directly or indirectly, at any time during such period, more than five percent (5%) of the issued and outstanding Shares.

Income that is effectively connected with the conduct of a United States trade or business by a Non-United States Stockholder generally will be subject to regular United States federal income tax in the same manner as if it were realized by a United States Stockholder. In addition, if such Non-United States Stockholder is a corporation, any effectively connected earnings and profits (subject to adjustments) may be subject to a branch profits tax at a rate of thirty percent (30%) (or such lower rate as is provided by an applicable income tax treaty).

If an individual Non-United States Stockholder is present in the United States for at least 183 days during the taxable year of disposition, the Non-United States Stockholder may be subject to a flat tax rate of thirty percent (30%) (or a lower applicable treaty rate) on any United States-source gain derived from the sale, exchange, or other taxable disposition of Shares (other than gain effectively connected with a United States trade or business), which may be offset by United States-source capital losses.

The determination of whether Peerless is a USRPHC depends on the fair market value of its United States real property interests relative to the fair market value of its other trade or business assets and its foreign real property interests. No determination has been made as to whether Peerless is or has been a USRPHC for United States federal income tax purposes during the time period described in the third bullet point above. However, so long as the Shares are considered to be “regularly traded” (as described in the third bullet point above) at any time during the calendar year, a Non-United States Stockholder generally will not be subject to tax on any gain recognized on the exchange of Shares pursuant to the Offer or the Merger, unless the Non-United States Stockholder owned (actually or constructively) more than five percent (5%) of the total outstanding Shares at any time during the applicable period described in the third bullet point above. A Non-United States Stockholder may, under certain circumstances, be subject to withholding in an amount equal to ten percent (10%) of the gross proceeds on the sale or disposition of Shares. However, as we believe that the Shares are regularly traded, no withholding should be required under these rules upon the exchange of Shares pursuant to the Offer or the Merger. A Non-United States Stockholder who owns (actually or constructively) more than 5% of the total outstanding Shares should consult its tax advisor concerning the United States federal income tax consequences to it if Peerless were determined to be a USRPHC.

Backup Withholding and Information Reporting. Payments to a non-U.S. Stockholder in connection with the Offer or Merger may be subject to backup withholding tax unless such non-U.S. Stockholder furnishes the required certification as to its non-United States status by providing the applicable Form W-8 or by otherwise establishing that such non-U.S. Stockholder is not subject to backup withholding. See Section 3 — “Procedures for Accepting the Offer and Tendering Shares.” Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a holder’s United States federal income tax liability provided the required information is timely furnished to the IRS. Each non-U.S. Stockholder should consult its tax advisor as to such non-U.S. Stockholder’s qualification for exemption from backup withholding and the procedure for obtaining such exemption.

6. Price Range of Shares; Dividends.

According to Peerless’ Annual Report on Form 10-K for the fiscal year ended January 31, 2014 (the “Form 10-K”), the Shares trade on the NASDAQ Capital Market under the symbol “PRLS.” The following table sets forth, for the periods indicated, the high and low prices per Share as reported in the Form 10-K with respect to periods through January 31, 2014 and as reported by published financial sources for periods starting February 1, 2014.

The following table sets forth, for the periods indicated, the high and low sale prices per Share for each quarterly period within the three preceding fiscal years, as reported on the NASDAQ.

	High		Low
Year Ended January 31, 2013
First Quarter	$	4.15	$	3.65
Second Quarter		4.00		3.65
Third Quarter		4.00		3.60
Fourth Quarter		3.74		3.36
Year Ended January 31, 2014
First Quarter	$	3.54	$	3.15
Second Quarter		3.90		3.32
Third Quarter		3.80		3.55
Fourth Quarter		3.73		3.56
Year Ending January 31, 2015
First Quarter	$	3.80	$	3.60
Second Quarter		3.79		3.39
Third Quarter		5.54		3.53
Fourth Quarter (through December 22, 2014)	$	5.45	$	4.40

On December 19, 2014, the last full trading day prior to the first public announcement of a proposal by Parent to acquire Peerless, the reported closing sales price per Share on the NASDAQ was $5.23 per Share. On January 12, 2015, the last full trading day prior to the commencement of the Offer, the reported closing sales price per Share on the NASDAQ was $6.99 per Share. Stockholders are urged to obtain a current market quotation for the Shares.

Peerless has not paid a dividend on the Shares during either of the fiscal years ended January 31, 2013 or January 31, 2014, or in the fiscal year ending January 31, 2015, through December 22, 2014.

7. Certain Information Concerning Peerless.

The following description of Peerless and its business has been taken from Peerless’ Annual Report on Form 10-K for the fiscal year ended January 31, 2014, and is qualified in its entirety by reference to such report.

Peerless is a Delaware corporation with its principal executive offices located at 1055 Washington Blvd., 8th Floor, Stamford, Connecticut 06901. Peerless’ telephone number at such principal executive offices is (203) 350-0040.

Peerless licenses imaging and networking technologies to the digital document markets, which include original equipment manufacturers (“OEMs”) of color and monochrome printers and multifunction office products. Peerless licenses software-based imaging and networking technology for controllers in embedded, attached and stand-alone digital document products such as printers, copiers and multifunction products of OEMs. Peerless was incorporated in California in 1982 and reincorporated in Delaware in September 1996.

Available Information. Peerless is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is obligated to file reports and other information with the SEC relating to its business, financial condition and other matters. Certain information, as of particular dates, concerning Peerless’ business, principal physical properties, capital structure, material pending litigation, operating results, financial condition, directors and officers (including their remuneration and stock options granted to them), the principal holders of Peerless’ securities, any material interests of such persons in transactions with Peerless, and other matters is required to be disclosed in proxy statements and periodic reports distributed to Peerless’ stockholders and filed with the SEC. Such reports, proxy statements and other information should be available for inspection at the public reference room at the SEC’s office at 100 F Street, NE, Washington, DC 20549. Copies may be obtained by mail, upon payment of the SEC’s customary charges, by writing to its principal office at 100 F Street, NE, Washington, DC 20549. Further information on the operation of the SEC’s Public Reference Room in Washington, DC can be obtained by calling the SEC at 1 (800) SEC-0330. The SEC also maintains an Internet web site that contains reports, proxy statements and other information about issuers, such as Peerless, who file electronically with the SEC. The address of that site is http://www.sec.gov.

Sources of Information. Except as otherwise set forth herein, the information concerning Peerless contained in this Offer to Purchase has been based upon publicly available documents and records on file with the SEC, including the Form 10-K, and other public sources. The information concerning Peerless taken or derived from such documents and records is qualified in its entirety by reference to Peerless’ public filings with the SEC (which may be obtained and inspected as described above) and should be considered in conjunction with the more comprehensive financial and other information in such reports and other publicly available information. Although we have no knowledge that any such information contains any misstatements or omissions, none of Purchaser, or any of their respective affiliates or assigns, the Information Agent or the Depositary assumes responsibility for the accuracy or completeness of the information concerning Peerless contained in such documents and records or for any failure by Peerless to disclose events which may have occurred or may affect the significance or accuracy of any such information.

8. Certain Information Concerning Parent and Purchaser.

Parent. Parent is a Delaware limited liability company. The principal executive offices of Parent are located at 650 Smithfield Street, Suite 705, Pittsburgh, Pennsylvania 15222. Parent’s telephone number at such principal executive offices is (412) 281-7000.

Purchaser. Purchaser is a Delaware corporation and, to date, has engaged in no activities other than those incident to its formation and to the Offer and the Merger. Purchaser is a wholly owned subsidiary of Parent. The principal executive offices of Purchaser are located at 650 Smithfield Street, Suite 705, Pittsburgh, Pennsylvania 15222 and Purchaser’s telephone number at such principal executive offices is (412) 281-7000.

Upon the completion of the Merger, Purchaser will cease to exist and Peerless will continue as the Surviving Corporation and a wholly owned subsidiary of Parent.

The name, citizenship, business address, present principal occupation or employment and five-year employment history of each of the members, directors and executive officers of Purchaser and Parent are listed in Schedule I to this Offer to Purchase.

During the last five years, none of Purchaser or Parent or, to the best knowledge of Purchaser and Parent, any of the persons listed in Schedule I to this Offer to Purchase: (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining such person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of such laws.

Except as described above, (i) none of Purchaser or Parent or, to the best knowledge of Purchaser and Parent, any of the persons listed in Schedule I to this Offer to Purchase or any majority-owned subsidiary of Purchaser or Parent or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Shares and (ii) none of Purchaser, Parent, or, to the knowledge of Purchaser and Parent, any of the persons or entities referred to in Schedule I hereto nor any director, executive officer or subsidiary of any of the foregoing has effected any transaction in respect of any Shares during the past sixty (60) days.

Except as provided in the Merger Agreement or as otherwise described in this Offer to Purchase, none of Purchaser or Parent or, to the best knowledge of Purchaser and Parent, any of the persons listed in Schedule I to this Offer to Purchase has any contract, arrangement, understanding or relationship with any other person with respect to any securities of Peerless (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss, or the giving or withholding of proxies, consents or authorizations).

Except as set forth in this Offer to Purchase, none of Purchaser or Parent or, to the knowledge of Purchaser and Parent, any of the persons listed in Schedule I hereto, has had any business relationship or transaction with Peerless or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the SEC applicable to the Offer. Except as set forth in this Offer to Purchase, there have been no contacts, negotiations or transactions between Parent or any of its subsidiaries or, to the best knowledge of Purchaser and Parent, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and Peerless or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets during the past two years.

Available Information. Pursuant to Rule 14d-3 under the Exchange Act, we have filed with the SEC a Tender Offer Statement on Schedule TO (the “Schedule TO”), of which this Offer to Purchase forms a part, and exhibits to the Schedule TO. The Schedule TO and the exhibits thereto, as well as other information filed by Purchaser with the SEC, are available for inspection at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information. Copies of such information may be obtainable by mail, upon payment of the SEC’s customary charges, by writing to the SEC at the address above. The SEC also maintains a web site on the Internet at www.sec.gov that contains the Schedule TO and the exhibits thereto and other information that Purchaser has filed electronically with the SEC.

9. Source and Amount of Funds.

Parent will provide Purchaser with sufficient funds to pay for all Shares accepted for payment in the Offer or to be acquired in the Merger. Parent has access to sufficient funds to pay for all Shares accepted for payment in the Offer or to be acquired in the Merger loans from: (i) cash on hand, and (ii) amounts available for borrowing under delayed draw term loans from Tray 3, LLC, a Delaware limited liability company (“Tray 3”). We estimate that the total amount of funds necessary to purchase all issued and outstanding Shares and other equity-based interests of Peerless pursuant to the Offer and the Merger will be approximately Twenty-One Million Five Hundred Thousand Dollars ($21,500,000), assuming no Company Stock Options are exercised between the date of the Merger Agreement and the Effective Time. Parent expects to fund the purchase price by means of an equity capital contribution to Purchaser. In addition to the above-described committed borrowing from Tray 3, Tray 3 has unconditionally guaranteed Parent’s and Purchaser’s obligation to pay for all Shares validly tendered and accepted for payment in the Offer, as well as the consideration to be paid to holders of Shares, Company Options and Company Restricted Stock in connection with the Merger. The Offer is not conditioned upon any financing arrangements.

The loans made by Tray 3 to Parent consist of: (i) a secured delayed draw term loan, upon which Parent may draw an amount up to Fifteen Million Dollars ($15,000,000) (the “Secured Loan”) and (ii) an unsecured delayed draw term loan, upon which Parent may draw an amount up to Seven Million Dollars ($7,000,000) (the “Unsecured Loan”). Both loans have a five-year maturity and interest accrues on the principal amount borrowed under each loan at an annual rate of 9.50%. Purchaser is permitted to make voluntary prepayments on the Secured Loan and Unsecured Loan without penalty. The Secured Loan has a five-year straight line amortization schedule, which applies to half of the principal amount of the loan. There is no scheduled amortization under the Unsecured Loan. The Secured Loan is secured by collateral consisting of all accounts, deposit accounts, documents, equipment, electronic chattel paper, fixtures, general intangibles, goods, instruments, inventory, investment property, letter-of-credit rights, proceeds and supporting obligations of Parent and its subsidiaries. Copies of both the Secured Loan agreement and the Unsecured Loan agreement have been filed as Exhibits (b)(1) and (b)(2) to the Schedule TO and are incorporated herein by reference.

Purchaser believes that the financial condition of Parent, Purchaser and their respective affiliates is not material to a decision by a holder of Shares whether to tender such Shares in the Offer because: (i) Purchaser was organized solely in connection with the Offer and the Merger and, prior to the Expiration Time, will not carry on any activities other than in connection with the Offer and the Merger; (ii) the Offer is being made for all outstanding Shares solely for cash; (iii) if Purchaser consummates the Offer, Purchaser expects to acquire all remaining Shares for the same cash price in the Merger; (iv) the Offer is not subject to any financing condition; and (v) in light of Parent’s financial capacity in relation to the amount of consideration payable in the Offer and as described above and the committed financing from Tray 3, Parent and Purchaser will have sufficient funds immediately available to purchase all validly tendered Shares in the Offer and not properly withdrawn, as well as the consideration to be paid to holders of Shares, Company Options and Company Restricted Stock in connection with the Merger.

See Section 11 — “The Merger Agreement; Other Agreements — Merger Agreement — Termination Fees” and “— Availability of Specific Performance.”

10. Background of the Offer; Past Contacts or Negotiations with Peerless.

Background of the Offer

The following is a description of contacts between and among representatives of Parent and/or Purchaser with representatives of Peerless that resulted in the execution of the Merger Agreement and the agreements related to the Offer.

On March 28, 2014, Lodovico De Visconti (“Mr. De Visconti” or “Parent Representative”) contacted Timothy Brog, Chairman and Chief Executive Officer of Peerless (“Mr. Brog”) to evaluate Peerless’ interest in the potential sale of Peerless to Parent. On April 3, Mr. De Visconti, Mr. Brog and Yi Tsai, Chief Financial Officer of Peerless (“Mr. Tsai” and together with Mr. Brog, “Peerless Senior Management”) continued the discussion regarding Peerless’ interest in a potential sale transaction with Parent pursuant to which Peerless would become wholly-owned by Parent. These discussions included several potential alternative sale scenarios. On April 12, 2014, Parent Representative held a telephone conference call with Peerless Senior Management to discuss Peerless’ business and financial prospects.

On May 26, 2014, Peerless Senior Management communicated to Parent Representative that Peerless was engaged in an acquisition transaction involving another company and that, if Parent would consider a transaction involving an asset purchase of the licensing business of Peerless, Peerless would grant Parent access to certain nonpublic information necessary for Parent to complete its due diligence.

On June 18, Parent and Peerless executed a customary confidentiality agreement in order to allow the parties to exchange information freely in connection with more detailed discussions around a potential sale transaction. After preliminary due diligence review and consideration of Peerless’ business and financial prospects, on June 20, 2014, Parent submitted an offer to Peerless, whereby Parent proposed to acquire 100% of the fully-diluted shares of Peerless for $5.03 per share in cash, subject to the satisfactory completion of certain confirmatory due diligence.

After further discussions with Peerless Senior Management, on July 16, 2014, Parent submitted a revised offer to Peerless, whereby Parent proposed to acquire the assets of the operating business of Peerless for a cash purchase price of $3,357,000, exclusive of Peerless’ cash-on-hand and other working capital assets. On July 22, 2014, Parent Representative held a telephone conference call with Peerless Senior Management to discuss certain aspects of Parent’s offer, including the commitment of Parent’s third-party financing source – at that time, Somerset Trust Bank. In the course of that call Peerless Senior Management requested that Parent simplify the financial terms of its offer and improve its offer price.

On August 7, 2014 Parent submitted a revised offer to Peerless, whereby Parent proposed to acquire the operating business of Peerless for a cash purchase price of $3,600,000, exclusive of all working capital assets and liabilities of Peerless, subject to the satisfactory completion of certain confirmatory due diligence. On August 26, 2014, representatives of Parent held a telephone conference call with Peerless Senior Management to discuss Parent’s due diligence requirements. Subsequently, that day Parent provided Peerless with a complete due diligence data request list via e-mail.

On September 2, 2014, a representative of Parent, Mr. Tony Bonidy (“Mr. Bonidy”) and Parent’s third-party financial advisors – Sisterson & Company LLP – visited Peerless at its headquarters in Stamford, Connecticut. During the meeting Mr. Bonidy and Peerless Senior Management discussed Peerless’ business and financial prospects, while Sisterson & Company LLP reviewed all of the financial and other information with respect to business and financial prospects that was provided by Peerless. On September 4, 2014, Mr. Bonidy informed Peerless Senior Management via electronic communication that Parent’s visit was satisfactory and that no further financial or business information would be necessary at that time. On September 8, 2014, Mr. Bonidy informed Peerless via electronic communication that its ongoing due diligence process was satisfactory to Parent.

On September 15, 2014, Parent Representative held a telephone conference call with Peerless Senior Management to discuss Peerless’ impending completion of its acquisition of Deer Valley Corporation and its potential effect on Parent’s offer. During the call, the participants discussed the possibility of structuring a potential transaction between Parent and Peerless as a tender offer for 100% of Peerless’ shares.

On October 14, 2014, Parent submitted a draft offer to Peerless, whereby Parent would acquire 100% of Peerless’ shares via a public tender offer followed by a merger between Peerless and Parent. Parent informed Peerless that it would inform Peerless Senior Management and board of directors of the proposed tender price as soon as practicable. On October 27, 2014, Parent Representative submitted, via email, proposed drafts of a Merger Agreement to Peerless. On October 29, 2014, Parent Representative held a telephone conference call with Peerless Senior Management to discuss the terms of the proposed Merger Agreement. During the call, Peerless’ management provided feedback to the draft documents and requested that Parent make certain changes to its terms and conditions, including, notably, with respect to the termination fee payable to Peerless under certain circumstances in the event that the Merger Agreement is not completed.

On October 30, 2014, Parent Representative sent a revised draft Merger Agreement to Peerless Senior Management proposing definitive terms for a tender offer followed by a second step merger, including an offer price of $7.00 per share.

On November 3, 2014, Parent Representative held a follow-up telephone conference call with Peerless Senior Management to further discuss the terms of the proposed Merger Agreement. On November 5, 2014, Parent discussed with Peerless certain requested changes made by Peerless and that it hoped to finalize the draft Merger Agreement accordingly. On November 19, 2014, a conference call was held to discuss the draft Merger Agreement. In attendance on the call was Peerless Senior Management, Parent Representative and Mr. Bonidy, a Trustee of Tray 3 LLC (“Tray 3”), which was introduced as an alternative financing source for completion of the proposed transaction. In addition, attorneys at Robinson & Cole for Peerless and Reed Smith for Parent participated. Several aspects of the draft Merger Agreement were discussed on the call, including, but not limited to, mechanics related to the cash-out of option holders, covenants, representations and warranties, as well as a termination fee in the event of Mobius failure to close the tender offer because of a failure to obtain funding or a breach. Also discussed on that call were funding commitments and a guaranty related to Parent’s payment obligations under the Merger Agreement. On November 20, 2014, Reed Smith, on behalf of Parent, sent to Robinson Cole and Peerless Senior Management marked copies of the Merger Agreement with comments, together with a draft funding commitment agreement and guaranty.

On December 4, 2014, Robinson & Cole sent a revised draft of the Merger Agreement to Reed Smith, Peerless Senior Management, Parent Representative and Mr. Bonidy. On December 8, 2014, Robinson & Cole sent comments to the funding commitment agreement and guaranty circulated by Reed Smith on November 20, 2014. On Tuesday December 9, 2014, the parties again participated in a conference call to discuss the Merger Agreement and the related funding documents. The main points of discussion were with respect to representations and warranties by Peerless, covenants with respect to employees and the nature of the guaranty obligations of Tray 3. Participating on the call were Peerless Senior Management, Parent Representative, Mr. Bonidy and attorneys at Robinson & Cole and Reed Smith.

On December 10, 2014, Reed Smith sent comments to the draft Merger Agreement circulated by counsel for Peerless on December 4, 2014, together with comments to the funding commitment agreement and guaranty. Open issues remained, including financial statement representations and warranties by Peerless, the nature of the funding commitment and guaranty and the covenant with respect to the treatment of employees of Peerless post-Closing. On December 18, 2014, Robinson & Cole sent a revised draft of the Merger Agreement, funding commitment agreement and guaranty to Reed Smith, Peerless Senior Management, Parent Representative and Mr. Bonidy. The parties participated in a conference call on the afternoon of December 19, 2014, which was attended by Peerless Senior Management, Mr. Bonidy, Robinson & Cole and Reed Smith. Mr. Brog informed all participants that the board of directors of Peerless would review and consider the Merger Agreement at their scheduled board meeting. Later that afternoon, Reed Smith circulated revised drafts of the funding commitment agreement and guaranty to all participants on the December 19, 2014 call. The next day, Reed Smith circulated a revised draft of the Merger Agreement to all participants on the December 19, 2014 call.

On December 22, 2014, Mr. Brog informed all parties that the board of directors of Peerless had considered and approved the Merger Agreement at their December 21, 2014 meeting. On December 22, 2014, the parties exchanged execution versions of the Merger Agreement, funding commitment agreement and guaranty. They conducted a conference call attended by Peerless Senior Management, Parent Representative, Mr. Bonidy, Robinson & Cole and Reed Smith to discuss the exchange of signatures. Later that afternoon the parties exchanged signatures to finalize the execution of the Merger Agreement. The execution of the Merger Agreement was publicly announced at 4:00 pm EST on December 22, 2014.

Past Contacts, Transactions, Negotiations and Agreements.

For more information on the Merger Agreement and the other agreements between Peerless and Purchaser and their respective related parties, see Section 8 — “Certain Information Concerning Parent and Purchaser,” Section 9 — “Source and Amount of Funds,” and Section 11 — “The Merger Agreement; Other Agreements.”

11. The Merger Agreement; Other Agreements.

For the purposes of this Section 11, capitalized terms used but not defined herein will have the meanings set forth in the Merger Agreement.

Merger Agreement

The following is a summary of material provisions of the Merger Agreement. The following summary does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is filed as Exhibit (d)(1) to the Schedule TO filed with the SEC, and is incorporated herein by reference. For a complete understanding of the Merger Agreement, you are encouraged to read the full text of the Merger Agreement. The Merger Agreement is not intended to provide you with any other factual information about Parent, Purchaser or Peerless. Such information can be found elsewhere in this Offer to Purchase.

The Merger Agreement has been filed solely to inform investors of its terms. The Merger Agreement contains representations, warranties and covenants, which were made only for the purposes of such agreement and as of specific dates, were made solely for the benefit of the parties to the Merger Agreement and are intended not as statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove to be inaccurate. In addition, such representations, warranties and covenants may have been qualified by certain disclosures not reflected in the text of the Merger Agreement and may apply standards of materiality in a way that is different from what may be viewed as material by holders of Shares or other investors in Peerless. The holders of Shares and other investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of Peerless, Parent, Purchaser or any of their respective subsidiaries or affiliates.

The Offer. The Merger Agreement provides that Purchaser will commence the Offer no earlier than January 6, 2015 and no later than January 13, 2015. The obligation of Purchaser to, and of Parent to cause Purchaser to, accept for payment and pay for Shares validly tendered in the Offer is subject to the conditions described in Section 15 — “Certain Conditions of the Offer” (the “Offer Conditions”). Subject to the satisfaction of the Minimum Tender Condition (as defined in Section 15 — “Certain Conditions of the Offer”) and the other Offer Conditions, Purchaser will, and Parent will cause Purchaser to, accept for payment and pay for (subject to any applicable withholding taxes pursuant to the Merger Agreement) all Shares validly tendered and not validly withdrawn pursuant to the Offer promptly after the expiration of the Offer (as it may be extended and re-extended as described below and in compliance with applicable laws) and in any event in compliance with Rule 14e-1(c) under the Exchange Act. The time of such acceptance for payment of Shares is referred to herein as the “Offer Closing.”

Pursuant to the Merger Agreement, Purchaser expressly reserves the right to waive any Offer Conditions or modify the terms of the Offer, except that Peerless’ prior written approval is required for Purchaser to:

•

reduce the number of Shares subject to the Offer;

•

reduce the Offer Price;

•

amend, modify or waive the Minimum Tender Condition;

•

add to the Offer Conditions or, in any manner adverse to any holder of the Shares, amend, modify or supplement any Offer Condition;

•

terminate, extend or otherwise amend or modify the Expiration Time, other than in accordance with the Merger Agreement;

•

change the form of consideration payable in the Offer;

•

otherwise amend, modify or supplement any of the terms of the Offer in any manner adverse to any holder of the Shares; or

•

provide any “subsequent offering period” within the meaning of Rule 14d-11 under the Exchange Act.

The Offer is initially scheduled to expire at 11:59 p.m., New York City time, on the date that is twenty (20) business days following commencement of the Offer, but may be extended and re-extended as described below. The Merger Agreement provides that if at the initial or at any subsequent Expiration Time any Offer Condition (other than the Minimum Tender Condition) is not satisfied or, to the extent waivable in accordance with the terms of the Merger Agreement, has not been waived by Purchaser or Parent, Purchaser will, and Parent will cause Purchaser to, (i) extend the Offer for one or more periods in consecutive increments of up to five (5) business days (or such longer period as the parties to the Merger Agreement may agree), (ii) extend the Offer for a period of thirty (30) days upon receipt from Peerless of a written request for such extension, and (iii) extend the Offer for the minimum period required by any rule, regulation, interpretation or position of the SEC or the staff thereof or the NASDAQ applicable to the Offer; provided, however, that Purchaser is not required to extend the Offer beyond the Termination Date. In addition, the Merger Agreement provides that if at the initial or at any subsequent Expiration Time each Offer Condition (other than the Minimum Tender Condition) shall have been satisfied or waived and the Minimum Tender Condition shall not have been satisfied, Purchaser may, and if requested by Peerless, Purchaser shall, and Parent will cause Purchaser to, extend the Offer for one or more periods in consecutive increments of five (5) business days; provided, however, that Purchaser shall not be required to extend the Offer pursuant to the foregoing by more than twenty (20) business days unless requested or approved by Peerless; provided, further, that Purchaser is not required to extend the Offer beyond the Termination Date.

The Merger Agreement provides that Purchaser shall promptly (and in any event within 24 hours of such termination) irrevocably and unconditionally terminate the Offer if (i) at the initial or any subsequent Expiration Time (a) each condition to the Offer has been satisfied (other than the Minimum Tender Condition), (b) the Minimum Tender Condition shall not have been satisfied and (c) no further extensions or re-extensions of the Offer are permitted under the Merger Agreement or (ii) the Merger Agreement is otherwise terminated pursuant to its terms. If the Offer is terminated or withdrawn by Purchaser or the Merger Agreement is otherwise terminated pursuant to its terms, then Purchaser must promptly return, and shall cause any depositary acting on behalf of Purchaser to return all tendered Shares to the registered holders thereof. The termination of the Offer pursuant to clause (i) of this paragraph is referred to herein as the “Offer Termination.” Pursuant to the Merger Agreement, the Offer Termination will give rise to a right of termination of the Merger Agreement.

The Merger. The Merger Agreement provides that, following completion of the Offer and upon the terms and subject to the conditions set forth in the Merger Agreement, and in accordance with the DGCL, at the Effective Time:

•

Purchaser will be merged with and into Peerless, and the separate existence of Purchaser will cease;

•

Peerless will continue as the Surviving Corporation after the Merger; and

•

the certificate of incorporation of the Surviving Corporation will be amended to be identical to the certificate of incorporation of Purchaser in effect immediately prior to the Effective Time, except that Article I thereof will be amended and restated in its entirety to provide that the name of the corporation shall be “Peerless Systems Corporation,” the bylaws of the Surviving Corporation will be amended to be identical to the bylaws of Purchaser in effect immediately prior to the Effective Time, the directors of the Surviving Corporation will, from and after the Effective Time, be the respective individuals who are directors of Purchaser immediately prior to the Effective Time, and the officers of the Surviving Corporation will, from and after the Effective Time, be the respective individuals who are officers of Peerless immediately prior to the Effective Time.

The respective obligation of each party to complete the Merger is subject to the satisfaction or waiver in writing if permissible under applicable law, at or prior to the Effective Time, of each of the following conditions:

•

no Governmental Entity shall have enacted, issued, promulgated, enforced or entered any law or order that is then in effect and has the effect of enjoining or otherwise prohibiting the making of the Offer or the consummation of the Offer or the Merger;

•

Purchaser shall have accepted for payment all Shares validly tendered and not validly withdrawn pursuant to the Offer; and

•

if (i) Parent and Peerless determine that the Merger is ineligible to be effected pursuant to Section 251(h) of the DGCL, (ii) Purchaser has not acquired at least ninety percent (90%) of the Shares on a fully-diluted basis (whether pursuant to the Offer or after the exercise of the Top-Up Option (defined below)) and (iii) Purchaser is unable to exercise the Top-Up Option pursuant to the terms of the Merger Agreement such that a stockholder vote is required in order to consummate the Merger, then Parent and Purchaser will take such actions as are reasonably necessary (including executing and delivering a written consent with respect to any Shares owned by Parent and/or Purchaser) to effect the required stockholder vote by written consent of the stockholders of Peerless and to effect the Merger in compliance with applicable law.

Effect on Capital Stock. At the Effective Time:

•

each Share issued and outstanding immediately prior to the Effective Time, other than (i) Shares owned by Parent or Purchaser, including as a result of an exercise of the Top-Up Option by Purchaser, if applicable, and Shares owned by Peerless or any of its direct or indirect wholly owned subsidiaries, and in each case not held on behalf of third parties, and (ii) the Shares held by a holder thereof who properly exercised his or her demand for appraisal rights under Section 262 of the DGCL (the “Dissenting Shares”) (each Share described in (i) or (ii) is referred to herein “Excluded Share” and, collectively, “Excluded Shares”), will be converted into the right to receive an amount in cash equal to the Offer Price, subject to any applicable withholding taxes and without interest (the “Per Share Merger Consideration”), and each Share (other than the Excluded Shares) will cease to be outstanding, be canceled and cease to exist, and will thereafter represent only the right to receive the Per Share Merger Consideration, subject to any applicable withholding taxes and without interest;

•

each Excluded Share will cease to be outstanding, be canceled without payment of any consideration therefore and cease to exist; provided, however, that the Dissenting Shares shall thereafter represent the right to receive the payment to which the holder of such Share is entitled under Section 262 of the DGCL; and

•

each share of Purchaser’s common stock issued and outstanding immediately prior to the Effective Time will be converted into one share of common stock, par value $0.01 per share, of the Surviving Corporation and constitute the only shares of capital stock of the Surviving Corporation.

Treatment of Company Options and Company Restricted Stock. Effective as of the Offer Closing, each Company Option that is outstanding and unvested immediately prior to the Offer Closing shall become fully vested and exercisable. The Merger Agreement provides that conditioned upon the occurrence of the Effective Time and without any action on the part of any holder thereof, all outstanding and unexercised Company Options will be canceled, and each former holder of any such canceled Company Option shall be entitled to receive, in consideration of the cancellation of such Company Option, an amount in cash (without interest and subject to deduction for any required withholding tax), equal to the product of: (i) the excess, if any, of the Per Share Merger Consideration over the exercise price of each such Company Option and (ii) the number of the Shares underlying such Company Option; provided, that if the exercise price per share of any such Company Option is equal to or greater than the Offer Price, such Company Option shall be canceled and terminated without any cash payment made in respect thereof. The Merger Agreement provides that Peerless shall take all actions necessary to effect such treatment.

Effective as of the Offer Closing, (i) each share of Company Restricted Stock shall become fully vested and the restrictions thereon shall lapse. All such vested shares of Company Restricted Stock shall be treated identically to all other Shares with respect to the payment of the Merger Consideration. The Merger Agreement provides that Peerless shall take all actions necessary to effect such treatment under Company Stock Plans or other plans or arrangements.

Merger Without a Vote. The Merger Agreement provides that following the Offer, each of the parties shall take all necessary and appropriate actions to cause the Merger to become effective immediately without a vote, in accordance with Section 251(h) of the DGCL. If prior to the Effective Time, Parent and Peerless determine that the Merger is ineligible to be effected pursuant to Section 251(h) of the DGCL and Purchaser has not acquired at least ninety percent (90%) of the Shares on a fully-diluted basis in the Offer, Parent will exercise the Top-Up Option, and then take all necessary and appropriate actions to cause the Merger to become effective as soon as practicable following the closing of the purchase of the Top-Up Shares, without a vote, in accordance with Section 253 of the DGCL. If Purchaser is unable to exercise the Top-Up Option pursuant to the terms of the Merger Agreement such that stockholder vote is required in order to consummate the Merger, then Parent and Purchaser will take such actions as are reasonably necessary (including executing and delivering a written consent with respect to any Shares owned by Parent and/or Purchaser) to effect the required stockholder vote by written consent of the stockholders of Peerless and to effect the Merger in compliance with applicable law.

Top-Up Option. Pursuant to the Merger Agreement, if (i) immediately prior to the Offer Closing, Parent and Peerless determine that the Merger is ineligible to be effected pursuant to Section 251(h) of the DGCL, (ii) all of the Conditions to the Offer have been satisfied or (to the extent permitted) waived, (iii) at the time of exercise of the Top-Up Option, the number of Shares owned by Parent and Purchaser immediately following the Offer Closing does not constitute at least ninety percent (90%) of the number of Shares that are then issued and outstanding, (iv) the exercise of the Top-Up Option would result in Parent or Purchaser owning at least ninety percent (90%) of the number of Shares that are then issued and outstanding upon exercise of the Top-Up Option and (v) the exercise of the Top-Up Option would not violate any applicable Laws, Peerless granted to Purchaser an irrevocable option (the “Top-Up Option”) to purchase at the Offer Price an aggregate number of newly issued, fully paid and non-assessable Shares (the “Top-Up Shares”) equal to the lowest number of Shares that, when added to the number of Shares directly or indirectly owned by Parent and Purchaser at the time of such exercise (after giving effect to the Offer Closing), will constitute ninety percent (90%) of the Shares that are then issued and outstanding; provided, however, that the Top-Up Option may not be exercised to the extent (a) the number of Shares issuable upon exercise of the Top-Up Option would exceed the number of authorized but unissued Shares or Shares held as treasury stock as of immediately prior to the issuance of the Top-Up Shares (giving effect to Shares reserved for issuance as if such Shares were outstanding) or (b) any provision of applicable law has the effect of enjoining or otherwise prohibiting the exercise of the Top-Up Option or the issuance and delivery of the Top-Up Shares.

The aggregate purchase price payable for the Shares being purchased by Purchaser pursuant to the Top-Up Option will be payable, at Purchaser’s option, (i) in cash, by wire transfer of same-day funds or (ii) by executing and delivering to Peerless a promissory note having a principal amount equal to the aggregate purchase price pursuant to the Top-Up Option. The promissory note: (i) will be due on the 1st anniversary of the closing of the purchase of the Shares pursuant to the Top-Up Option, (ii) will bear simple interest of 5% per annum, payable in arrears at the time the promissory note is repaid, (iii) will be full recourse against Parent and Purchaser, (iv) may be prepaid, in whole or in part, at any time without premium or penalty and (v) will have no other material terms.

Representations and Warranties. The Merger Agreement contains various representations and warranties made by Peerless to Parent and representations and warranties made by Parent and Purchaser to Peerless. The assertions embodied in such representations and warranties were made solely for purposes of the Merger Agreement and as of specific dates, were the product of negotiations among Peerless, Parent and Purchaser, and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Merger Agreement, including in a confidential disclosure letter that the parties exchanged in connection with the signing of the Merger Agreement. Such confidential disclosure letter contains information that modifies, qualifies and creates exceptions to such representations. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between Peerless, Parent and Purchaser, rather than establishing matters of fact. Furthermore, the representations and warranties may be subject to standards of materiality applicable to Peerless, Parent and Purchaser that may be different from those which are applicable to Peerless’ stockholders. Additionally, information concerning the subject matter of such representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Peerless’ or Purchaser’s public disclosures. Accordingly, such representations and warranties in the Merger Agreement may not constitute the actual state of facts about Peerless, Parent or Purchaser. Except for the rights of Peerless’ stockholders to receive the Per Share Merger Consideration and for the rights of the holders of Company Options to receive the consideration specified in the Merger Agreement, in each case in accordance with the terms of the Merger Agreement, stockholders and holders of Company Options are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Peerless, Parent or Purchaser or any of their respective subsidiaries or affiliates.

In the Merger Agreement, Peerless has made customary representations and warranties to Parent with respect to, among other things:

	•			corporate matters related to Peerless and its subsidiaries, such as organization, standing, qualification, power and authority;

	•			its and its subsidiaries’ capital structure and equity interests in other persons;

	•			authority relating to the Merger Agreement and the transactions contemplated thereby and required approvals;

•

validity of the Merger Agreement;

		•		governmental filings and certain other governmental and other third-party consents and approvals, and no violations of organizational or governance documents;

		•		its financial statements;

		•		the (i) accuracy and completeness of the documents to be filed by Peerless with the SEC or required to be distributed or otherwise disseminated to Peerless’ stockholders in connection with the Offer, including the Schedule 14D-9, and (ii) the accuracy and completeness of information furnished to Parent or Purchaser specifically for use in the Schedule TO and the documents attached thereto as exhibits thereof (including this Offer to Purchase);

		•		the absence of any claims, actions, suits, proceedings or investigations pending, or to the knowledge of Peerless threatened against Peerless, or any of its assets, as would result, individually or in the aggregate in a Company Material Adverse Effect (as described below);

		•		the absence of certain changes in the Peerless’ business from the date of its most recent quarterly report on Form 10-Q to the date of the Merger Agreement; and

		•		brokers and finders.

Some of the representations and warranties in the Merger Agreement made by Peerless are qualified as to “materiality” or “Company Material Adverse Effect.” For purposes of the Merger Agreement, a “Company Material Adverse Effect” means any change, event, effect, occurrence, state of facts or development that, individually or in the aggregate with all other changes, events, effects, occurrences, state of facts or developments that (a) has a material adverse effect on the business, results of operations, assets or financial condition, in each case, of Peerless and its subsidiaries taken as a whole or (b) prevents, materially impedes or materially delays the consummation of the Transactions. The definition of “Company Material Adverse Effect” excludes from the determination of whether there has been a Company Material Adverse Effect under clause: (a) any changes, events, effects, developments, occurrences, state of facts or developments relating to or attributable to:

(i)

any conditions or changes in general economic or political conditions, or in the financial credit or securities markets in general (including changes in interest rates, exchange rates, stock, bond and/or debt prices) in any country or region in which Peerless or any of its subsidiaries conducts business;

(ii)

any changes, events, effects, occurrences, states of facts or developments that affect the industries in which Peerless or any of its subsidiaries operate;

(iii)

any change in law applicable to Peerless or any of its subsidiaries or any of their respective properties or assets or changes in the United States generally accepted accounting principles (“GAAP”) or rules and policies of the Public Company Accounting Oversight Board;

(iv)

any natural disasters or acts of war, sabotage or terrorism, or armed hostilities, or any escalation or worsening thereof;

(v)

compliance with the terms of, or the taking of any action required by, the Merger Agreement;

	(vi)	the entry into, announcement or pendency of the Merger Agreement, the Offer, the Merger or any other Transaction (including any impact on or disruption in relationships with customers, suppliers, licensors, distributors, employees or other similar relationships);

	(vii)	acts or omissions of Peerless prior to the Effective Time taken pursuant to the Merger Agreement or at the written request of Parent or Purchaser or with the prior written consent of Parent or Purchaser, in each case, in connection with the Transactions or applicable Law; or

(viii)

any actions, suits, claims, hearings, arbitrations, investigations, or other proceedings relating to the Merger Agreement or the Transactions before any governmental authority.

provided, however, that the exceptions set forth above shall only apply to the extent such change, event, effect, development, occurrence, state of facts or development does not disproportionately affect Peerless or its subsidiaries relative to other persons in the industries in which Peerless and its subsidiaries operate.

In the Merger Agreement, each of Parent and Purchaser has made customary representations and warranties to Peerless with respect to:

	•		corporate matters related to Parent and Purchaser, such as organization, standing, qualification, power and authority;

	•		validity of the Merger Agreement;

	•		governmental filings and certain other governmental and other third party consents and approvals, and no violations of organizational or governance documents;

	•		the absence of litigation;

	•		the absence of certain agreements;

	•		financial capability to consummate the Merger;

	•		the accuracy and completeness of information furnished to Peerless, specifically for inclusion in documents filed by Peerless with the SEC or required to be distributed or otherwise disseminated to Peerless’s stockholders in connection with the Offer, including the Schedule 14D-9;

	•		capital structure of Purchaser;

	•		brokers and finders; and

	•		investment intention.

Some of the representations and warranties in the Merger Agreement made by Parent and Purchaser are qualified as to “materiality” or “Parent Material Adverse Effect.” For purposes of the Merger Agreement, a “Parent Material Adverse Effect” means any change, event, effect, development, occurrence, state of facts or development that is materially adverse to the business, results of operations, properties, assets, liabilities or financial condition of Parent and its subsidiaries, taken as a whole which, individually or in the aggregate, would reasonably be expected to prevent or materially delay or impair the ability of Parent to consummate the Offer, the Merger and the other Transactions.

None of the representations or warranties contained in the Merger Agreement survive the consummation of the Merger or the termination of the Merger Agreement.

Conduct of Business by Peerless Pending the Merger. Except as permitted by the terms of the Merger Agreement, as set forth in Peerless’ confidential disclosure letter delivered pursuant to the Merger Agreement, as required by applicable law, or unless Parent has otherwise consented in writing, Peerless agrees that, from the date of the Merger Agreement until the Offer Closing, Peerless and its subsidiaries will conduct their respective businesses in the ordinary course of business consistent with past practice and Peerless shall use its reasonable best efforts to maintain its current relationships with its material suppliers, manufacturers, distributors, customers, key executive officers and other key employees.

Without limiting the generality of the foregoing except as permitted by the terms of the Merger Agreement, as set forth in Peerless’s confidential disclosure letter delivered pursuant to the Merger Agreement, as required by applicable law, or unless Parent has otherwise consented in writing, Peerless shall not, and shall not permit any of its subsidiaries to:

•

amend or otherwise change its certificate of incorporation or bylaws or similar organizational documents of any of its subsidiaries;

•

issue, sell, pledge, dispose, encumber, grant, confer or award any shares of Peerless’ or any of its subsidiaries’ capital stock, or any options (excluding any Top-Up Option or Top-Up Shares), warrants, restricted stock units, convertible securities or other rights of any kind to acquire any (or that are valued in reference to) shares of Peerless’ or its subsidiaries’ capital stock or take any action not otherwise contemplated by the Merger Agreement to cause to be exercisable any otherwise unexercisable Company Option under any existing stock plan (except as otherwise required by the terms of any unexercisable Company Option outstanding as of the date of the Merger Agreement); provided, however, that Peerless may (i) issue Shares upon the exercise of Company Options outstanding as of the date of the Merger Agreement, (ii) grant awards under individual employment agreements or offer letters executed prior to the date of the Merger Agreement and (iii) issue Top-Up Shares pursuant to the Merger Agreement;

•

(i) declare, authorize, make or pay any dividend or other distribution, whether in cash, stock, property, or otherwise, other than dividends and distributions paid by any direct or indirect wholly owned subsidiary of Peerless to its parent and other than dividends declared by the board of directors of Peerless prior to the date of the Merger Agreement, but unpaid as of the date of the Merger Agreement, (ii) adjust, split, combine or reclassify any capital stock, voting securities or other equity interests of Peerless or any of its subsidiaries or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock, voting securities or equity interests of Peerless or any of its subsidiaries or (iii) purchase, redeem or otherwise acquire any shares of capital stock, voting securities, other equity interests or obligations convertible into or exchangeable for any shares of capital stock, voting securities or other equity interests of Peerless or any of its subsidiaries or any rights, warrants, calls or options to acquire any such shares of capital stock, voting securities or other equity interests, except for purchases, redemptions or other acquisitions required in connection with the forfeiture, exercise or vesting of any Company Options outstanding as of the date of the Merger Agreement or used after the date of the Merger Agreement in accordance with the Merger Agreement;

•

except as required pursuant to existing written agreements or Company Benefit Plans in effect as of the date hereof or as otherwise required by Law, (i) increase the compensation or other benefits payable or to become payable to employees, directors, executive officers of the Company or any of its subsidiaries, other than, in the case of employees who are neither directors nor officers of the Company or any of its subsidiaries, increases in cash compensation in the ordinary course of business consistent with past practice (including, for this purpose, the normal salary and bonus review process conducted each year), provided that such increases are not material, either individually or in the aggregate, (ii) grant any severance or termination pay to, or enter into or amend any severance agreement with, any director, officer, employee of the Company or any of its subsidiaries other than, in the case of employees who are neither directors nor officers of the Company or any of its subsidiaries, granting any severance or termination pay or entering into any severance agreement in the ordinary course of business consistent with past practice, provided that such pay and agreements are not material, either individually or in the aggregate, (iii) enter into any employment agreement (other than an “at will” agreement that may be terminated by the Company without cost or penalty) with any employee or officer of the Company or any of its subsidiaries (except to the extent necessary to replace a departing employee) other than, in the case of employees who are neither directors nor officers of the Company or any of its subsidiaries, entering into employment agreements with employees who are employed outside the United States in the ordinary course of business consistent with past practice, provided such agreements are not material, either individually or in the aggregate, (iv) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or Company Benefit Plan, (v) amend or modify any outstanding equity award other than to the extent required by the terms of this Agreement, (vi) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement contract or arrangement or Company Benefit Plan, (vii) accelerate the vesting or payment of any compensation or benefit under any Company Benefit Plan other than to the extent expressly required by the terms of this Agreement, or (viii) change any actuarial assumption used to calculate funding obligations with respect to any Company Benefit Plan, except to the extent required by applicable Law, or change the manner in which contributions to any Company Benefit Plan are made or the basis on which such contributions are determined;

•

acquire other companies or organizations, or divisions or assets thereof, other than purchases of inventory or other assets in the ordinary course of business consistent with past practice;

•

other than in the ordinary course of business consistent with past practice (i) sell, lease, license or otherwise encumber or otherwise dispose of or transfer assets with a value in excess of $50,000, or (ii) enter into, modify or amend any material lease of real property;

•

(i) incur or modify the terms of any material indebtedness for borrowed money in excess of $50,000 in the aggregate or guarantee any such indebtedness for any person, (ii) make any loans, advances or capital contributions to, or investments in, any other person (other than Peerless or any of its wholly owned subsidiaries) other than in the ordinary course of business consistent with past practices or (iii) repay, redeem, repurchase or otherwise retire, or otherwise make any payment in respect of, any material indebtedness for borrowed money or any debt securities, or any rights, warrants, calls or options to acquire any debt securities, other than in the ordinary course of business consistent with past practices or as required by their terms in effect on the date of the Merger Agreement;

•

make any capital expenditures which, in the aggregate, are in excess of $50,000;

•

except in the ordinary course of business (i) enter into any agreement that would be considered a material contract as specified in the Merger Agreement (a “Company Material Contract”), (ii) modify any material aspect or material right under any Company Material Contract outside the ordinary course of business or consistent with past practice, (iii) terminate any Company Material Contract or (iv) waive, release, or assign any material rights or claims under any Company Material Contract, which if so entered into, modified, terminated, waived, released or assigned would be materially adverse to the business of Peerless and its subsidiaries, taken as a whole;

•

except as required by GAAP or applicable laws, make any change in accounting methods, principles or practices;

•

adopt a plan of liquidation, dissolution, restructuring, recapitalization or other reorganization;

•

make or change any material tax elections, settle or compromise any material tax liability of Peerless or any subsidiaries, make any material change in any method of tax or financial accounting, file any amendment to an income or other material tax return, waive or extend any statute of limitations in respect of taxes except as required by law, fail to promptly notify Parent of any audit, examination, investigation, written claim or other proceedings by any taxing authority that arises prior to the Effective Time and involves a material amount of taxes; or

•

authorize, commit, resolve or enter into any agreement to do any of the things described in the preceding bullet points.

Access to Information; Confidentiality. Until the Effective Time, and subject to applicable law, applicable contractual restrictions and certain confidentiality obligations, Peerless agrees to provide Parent and Parent’s authorized representatives with reasonable access during normal business hours to Peerless’ and its subsidiaries’ properties, books, contracts, records, agreements and directors, managers, officers, representatives and other information as may be reasonably requested.

Directors’ and Officers’ Indemnification and Insurance. The Merger Agreement provides for certain indemnification rights and customary amounts of Directors’ and Officers’ insurance in favor of Peerless’ and its subsidiaries’ current and former directors, officers or employees.

Appropriate Action; Consent; Filings. Subject to the limitations set forth in this Section (“Appropriate Action; Consent; Filings”), each of the parties to the Merger Agreement has agreed to use its reasonable best efforts to consummate and make effective the Transactions, including: (i) obtaining actions or nonactions, consents and approvals from governmental authorities or other persons necessary in connection with the consummation of the Transactions, and making all necessary registrations and filings (including filings with governmental authorities, if any) and taking all reasonable steps as may be necessary to obtain an approval from, or to avoid an action or proceeding by, any governmental authority or other persons necessary in connection with the consummation of the Transactions, (ii) defending any lawsuits or other legal proceedings, whether judicial or administrative, challenging the Merger Agreement or the consummation of the Transactions performed or consummated by such party in accordance with the terms of the Merger Agreement, including seeking to have any stay or temporary restraining order entered by any court or other governmental authority vacated or reversed and (iii) executing and delivering any additional instruments necessary to consummate the Transactions to be performed or consummated by such party in accordance with the terms of the Merger Agreement and to carry out fully the purposes of the Merger Agreement.

Public Announcements. The parties shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or otherwise making any public statements with respect to the Merger Agreement or the Transactions, and none of the parties shall issue any such press release or make any public statement prior to obtaining the other parties’ consent (which consent shall not be unreasonably withheld, delayed or conditioned).

Go-Shop; Non-Solicitation; Acquisition Proposals. During the period commencing on the date of the Merger Agreement and ending upon the earlier of: (i) the fiftieth (50th) day following the date of the Merger Agreement, (ii) if the Minimum Tender Condition has been satisfied as of the Initial Expiration Date, the next Business Day after the Initial Expiration Time and (iii) if the Minimum Tender Condition has not been satisfied as of the Initial Expiration Time, the next Business Day after the date on which the Company receives written notice from Parent and Acquisition Sub that the Minimum Tender Condition has been satisfied, Peerless and its representatives and subsidiaries shall be permitted to (a) solicit, initiate, encourage, induce and facilitate any inquiry, discussion, offer or request that constitutes, or could reasonably be expected to lead to, a Competing Proposal (as defined below), (b) grant a waiver substantially in the form attached to the Merger Agreement as Exhibit A thereto or terminate any “standstill” or similar obligation of any third party with respect to Peerless or any of its subsidiaries to allow such third party to submit a Competing Proposal (defined below) in compliance with the requirements described in this Section (“Go-Shop; Non-Solicitation; Acquisition Proposals”) and (c) engage in discussions and negotiations with, and furnish non-public information relating to Peerless and its subsidiaries and afford access to the books and records of Peerless and its subsidiaries to any third party in connection with a Competing Proposal or any inquiry, discussion, offer or request that could reasonably be expected to lead to a Competing Proposal; provided, that prior to furnishing such information or affording such access, Peerless has entered into a confidentiality agreement containing terms no less favorable to Peerless than the terms set forth in the confidentiality agreement between Parent and Peerless (the “Acceptable Confidentiality Agreement”) with such third party and has previously provided or made available (or substantially concurrently provides or makes available) such information to Parent. Notwithstanding anything described in this Section (“Go-Shop; Non-Solicitation; Acquisition Proposals”) to the contrary, Peerless shall not, and shall not permit its subsidiaries to, reimburse or agree to reimburse the expenses of any third party (other than Peerless’ representatives) in connection with a Competing Proposal or any inquiry, discussion, offer or request that could reasonably be expected to lead to a Competing Proposal.

Except as permitted by this Section (“Go-Shop; Non-Solicitation; Acquisition Proposals”) and except with an Excluded Party (defined below) (for so long as such person is an Excluded Party), from and after the expiration of the Go-Shop Period Peerless shall, and shall cause each of its directors, officers, representatives and subsidiaries to, immediately cease and cause to be terminated any existing solicitation of, or discussions or negotiations with, any third party relating to a Competing Proposal.

Peerless shall within 1 business day following the expiration of the Go-Shop Period: (i) deliver to Parent a written notice setting forth: (a) the identity of each Excluded Party and (b) the material terms and conditions of the pending Competing Proposal made by such Excluded Party (it being understood that price per share shall be considered a material term of any such pending Competing Proposal) and (ii) deliver to Parent unredacted copies of all proposed transaction documents received by Peerless or any of its representatives from any such Excluded Party or its representatives, including any financing commitments (including redacted fee letters) related thereto. In addition, from and after the expiration of the Go-Shop Period, Peerless shall, as promptly as reasonably practicable, and in any event within 1 business day of receipt by Peerless or any of its representatives of any Competing Proposal or any inquiry or request that could reasonably be expected to lead to any Competing Proposal, (i) deliver to Parent a written notice setting forth: (a) the identity of the third party making such Competing Proposal, inquiry or request and (b) the material terms and conditions of any such Competing Proposal (it being understood that price per share shall be considered a material term of any such Competing Proposal); and (ii) deliver to Parent unredacted copies of all proposed transaction documents received by Peerless or any of its representatives from any such third party or its representatives relating to any such Competing Proposal, including any financing commitments (including redacted fee letters) related thereto. Peerless shall keep Parent reasonably informed of any material amendment or modification of any such Competing Proposal, inquiry or request on a reasonably prompt basis, and in any event within two (2) business days thereof.

Except as expressly permitted by the Merger Agreement, Peerless shall not, and shall cause its directors, officers and subsidiaries not to, and shall cause each of its representatives and its subsidiaries’ representatives not to, from the expiration of the Go-Shop Period until the earlier of the Effective Time or the date, if any, on which the Merger Agreement is terminated in accordance with its terms, directly or indirectly, (i) solicit, initiate, knowingly encourage or knowingly facilitate any inquiry by, discussion with, or offer or request from any third party that constitutes, or could reasonably be expected to lead to, a Competing Proposal, (ii) engage in any discussions or negotiations with (other than to state they are not permitted to engage in discussions or negotiations), or furnish any non-public information relating to Peerless or any of its subsidiaries to, or afford access to the books or records of Peerless or its subsidiaries to, any third party that, to the knowledge of Peerless, is seeking to make, or has made, a Competing Proposal, or (iii) approve, endorse, recommend or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or similar definitive agreement (other than an Acceptable Confidentiality Agreement) with respect to any Competing Proposal (an “Alternative Acquisition Agreement”).

At any time after the expiration of the Go-Shop Period and prior to the Offer Closing, Peerless or its board of directors, directly or indirectly through its representatives, may (i) furnish nonpublic information to any third party making a Competing Proposal (provided, however, that prior to so furnishing such information, Peerless has entered into an Acceptable Confidentiality Agreement with such third party and previously provided such information to Parent) and (ii) engage in discussions or negotiations with such third party with respect to the Competing Proposal, in each case if: (a) such third party has submitted a bona fide written Competing Proposal that did not result from a material breach the Merger Agreement and that the board of directors of Peerless, or any duly authorized committee thereof, determines in good faith, after consultation with its financial and legal advisors, constitutes, or could reasonably be expected to lead to, a Superior Proposal (as defined below) and (b) the board of directors of Peerless, or any duly authorized committee thereof, determines in good faith, after consultation with legal counsel, that failure to take such action would be reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law. Prior to taking any of the actions referred to in this section, Peerless shall notify Parent and Purchaser orally and in writing that it proposes to furnish non-public information and/or enter into discussions or negotiations as provided in this section. Notwithstanding anything to the contrary contained in this Section (“Go Shop; Non-Solicitation; Acquisition Proposals”), prior to the Offer Closing, Peerless shall be permitted to take the actions in the 1st and 4th paragraphs in this Section (“Go Shop; Non-Solicitation; Acquisition Proposals”) (other than clause (iii) of the 4th paragraph except to the extent effected in accordance with the Merger Agreement) and clauses (i) and (ii) of this paragraph with respect to any Excluded Party for so long as such person is an Excluded Party and the restrictions in the 4th paragraph of this Section (“Go Shop; Non-Solicitation; Acquisition Proposals”) (other than in clause (iii) hereof, except to the extent effected in accordance with the Merger Agreement) shall not apply with respect thereto.

Except as expressly permitted by this paragraph, neither the board of directors of Peerless nor any committee thereof shall (i) withhold, withdraw, qualify or modify, or publicly propose to withhold, withdraw, qualify or modify, in a manner adverse to Parent or Purchaser, the Company Recommendation or fail to include the Company Recommendation in the Schedule 14D-9; (ii) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any Competing Proposal (any of the actions described in the preceding clauses (i) and (ii) an “Adverse Recommendation Change”); or (iii) cause or permit Peerless or any of its subsidiaries to enter into any Alternative Acquisition Agreement. Notwithstanding anything to the contrary set forth in the Merger Agreement, at any time prior to the Offer Closing, the board of directors of Peerless shall be permitted (i) to terminate the Merger Agreement pursuant to its terms to enter into a definitive agreement with respect to a Superior Proposal that did not result from a material breach of the Merger Agreement, subject to compliance with the terms and conditions of the Merger Agreement, if the board of directors of Peerless (a) has received a Competing Proposal that, in the good faith determination of the board of directors of Peerless, constitutes a Superior Proposal, after having complied with, and giving effect to all of the adjustments which may be offered by Parent and Purchaser pursuant to the Merger Agreement, and (b) determines in good faith, after consultation with its legal advisors, that failure to take such action would be reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law, or (ii) to effect an Adverse Recommendation Change described in clause (i) of such definition, solely as a result of an Intervening Event, if the board of directors of Peerless determines in good faith, after consultation with its legal advisors, that failure to make an Adverse Recommendation Change would be reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law.

Peerless shall not be entitled to effect an Adverse Recommendation Change or to terminate the Merger Agreement with respect to a Superior Proposal unless (i) Peerless has provided prior written notice at least three (3) full business days in advance (and does not take action until after 12:01 a.m. on the day following such 3rd full business day) (a “Notice of Superior Proposal”) to Parent and Purchaser that Peerless intends to take such action and describing the material terms and conditions of the Superior Proposal that is the basis of such action (including the identity of the third party and unredacted copies of all proposed transaction documents, including any financing commitments and redacted fee letters related thereto), (ii) during the three (3) business day period following Parent’s and Purchaser’s receipt of the Notice of Superior Proposal, Peerless shall, and shall cause its representatives to, negotiate with Parent and Purchaser in good faith (to the extent Parent and Purchaser desire to negotiate) to make such adjustments in the terms and conditions of the Merger Agreement so that such Superior Proposal ceases to constitute a Superior Proposal, (iii) following the end of the three (3) business day period, the board of directors of Peerless shall have determined in good faith, after consultation with its legal and financial advisors and taking into account any changes to the Merger Agreement proposed in writing by Parent and Purchaser in response to the Notice of Superior Proposal or otherwise, that the Superior Proposal giving rise to the Notice of Superior Proposal continues to constitute a Superior Proposal and (iv) in the event of any material amendment to the financial terms or any other material amendment of such Superior Proposal, a new Notice of Superior Proposal shall have been provided by Peerless to Parent and Peerless shall be required to comply again with the requirements of this paragraph, except that references to the three (3) business day period above shall be deemed to be references to a two (2) business day period.

The Merger Agreement provides that nothing contained in the provisions described in this Section (“Go-Shop; Non-Solicitation; Acquisition Proposals”) is deemed to prohibit Peerless or its board from (i) taking and disclosing to Peerless’ stockholders a position with respect to a tender or exchange offer by a Third Party pursuant to Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act (or any similar communication to Peerless’ stockholders), or (ii) making any “stop, look and listen” communication to Peerless’ stockholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act (or any similar communication to Peerless’ stockholders) if the board of directors of Peerless has determined in good faith, after consultation with legal counsel, that the failure to do so would be reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law; provided, however, that any permitted disclosures as described in this paragraph shall not be a basis, in themselves, for Parent to terminate the Merger Agreement on the basis that the board of directors of Peerless has effected an Adverse Recommendation Change.

From the date of the Merger Agreement until the end of the Go-Shop Period, Peerless shall be permitted to grant a Standstill Waiver with respect to Peerless or any of its subsidiaries in compliance with this Section (“Go-Shop; Non-Solicitation; Acquisition Proposals”). After the expiration of the Go-Shop Period, Peerless shall not grant any waiver or release under any “standstill” or similar obligation with respect to Peerless or any of its subsidiaries; provided, however, at any time prior to the Offer Closing, the board of directors of Peerless may grant a waiver or release under any standstill agreement with respect to Peerless or any of its subsidiaries if the board of directors of Peerless, or any duly authorized committee thereof, determines in good faith (after consultation with its outside legal counsel) that the failure to take such action would be reasonably likely to be inconsistent with result in a breach of the directors’ fiduciary duties under applicable law. Except as contemplated by this Section (“Go-Shop; Non-Solicitation; Acquisition Proposals”), Peerless shall use its reasonable best efforts to enforce, and shall not release or permit the release of any third party from, or amend, waive, terminate or modify, and shall not permit the amendment, waiver, termination or modification of, any provision of, any confidentiality or similar agreement to which Peerless or any of its subsidiaries is a party or under which Peerless or any of its subsidiaries has any rights. Peerless shall not, and shall not permit any of its representatives to, enter into any confidentiality agreement subsequent to the date of the Merger Agreement which prohibits Peerless from providing to Parent the information specifically required to be provided to Parent pursuant to this Section (“Go-Shop; Non-Solicitation; Acquisition Proposals”).

For purposes of the Merger Agreement:

“Competing Proposal” shall mean, other than the Transactions, any bona fide written proposal or offer (other than a proposal or offer by Parent, Purchaser or any of its subsidiaries), including any amendments, adjustments, changes, revisions and supplements thereto, from a Third Party relating to (i) a merger, reorganization, sale of assets, share exchange, consolidation, business combination, recapitalization, dissolution, liquidation, joint venture or similar transaction involving the Company or any of its subsidiaries whose assets, individually or in the aggregate, constitute fifteen percent (15%) or more of the consolidated assets of the Company as determined on a book-value basis; (ii) the acquisition (whether by merger, consolidation, equity investment, joint venture or otherwise) by any Third Party of fifteen percent (15%) or more of the assets of the Company and its subsidiaries, taken as a whole as determined on a book-value basis; (iii) the acquisition in any manner, directly or indirectly, by any Third Party of fifteen percent (15%) or more of the issued and outstanding shares of Company Common Stock, or (iv) any purchase, acquisition, tender offer or exchange offer that, if consummated, would result in any Third Party beneficially owning fifteen percent (15%) or more of the Company Common Stock or any class of equity or voting securities of the Company or any of its subsidiaries whose assets, individually or in the aggregate, constitute fifteen percent (15%) or more of the consolidated assets of the Company as determined on a book-value basis.

“Excluded Party” shall mean any person, group of persons or group that includes any person from which the Company received during the Go-Shop Period a written Competing Proposal that: (a) remains pending as of, and shall not have been withdrawn prior to, the expiration of the Go-Shop Period; and (b) the board of directors of the Company determines in good faith during the one (1) Business Day period commencing upon the expiration of the Go-Shop Period, after consultation with the Company’s financial and legal advisors, constitutes or could reasonably be expected to lead to a Superior Proposal; provided, however, that a person that is an Excluded Party shall cease to be an Excluded Party upon the withdrawal, termination or expiration of such Competing Proposal (as it may be amended, adjusted, changed, revised, extended and supplemented).

“Superior Proposal” means a written Competing Proposal (with all percentages in the definition of Competing Proposal increased to 50%) made by a third party on terms that the board of directors of Peerless determines in good faith, after consultation with Peerless’ financial and legal advisors is more favorable to Peerless’ stockholders from a financial point of view than the terms of the Offer or the Merger (after giving effect to all adjustments to the terms thereof which may be offered by Parent in writing).

Termination. The Merger Agreement may be terminated at any time prior to the Effective Time as follows:

•

by mutual written consent of each of Parent and Peerless;

•

by either Parent or Peerless, if:

•

the Offer Closing shall not have occurred on or before April 30, 2015, (the “Termination Date”) or the Offer is terminated or withdrawn pursuant to its terms and the terms of the Merger Agreement without any Shares being purchased thereunder; provided, however, that the right to terminate the Merger Agreement for the foregoing reason shall not be available to a party whose failure to fulfill in any material respect its obligations under the Merger Agreement has been the cause of, or resulted in such events; or

•

(i) a law shall have been enacted, entered or promulgated prohibiting or making illegal the consummation of the Offer or the Merger on the terms contemplated by the Merger Agreement or (ii) any governmental authority of competent jurisdiction shall have issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting any of the Transactions, and such order or other action shall have become final and non-appealable; provided, however, that the right to terminate the Merger Agreement under clause (ii) of this bullet point shall not be available to a party if the issuance of such final, non-appealable order was primarily due to the failure of such party, and in the case of Parent, including the failure of Purchaser, to perform any of its obligations under the Merger Agreement;

•	by Peerless if:

•		Parent or Purchaser shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in the Merger Agreement, which breach or failure to perform cannot be cured on or before the Termination Date or, if curable, is not cured by Parent within (i) ten (10) days of receipt by Parent of written notice of such breach or failure or (ii) any shorter period of time that remains between the date Peerless provides written notice of such breach and the Termination Date; provided, however, that Peerless shall not have the foregoing termination right if the Offer Closing shall have occurred;

•		prior to the Offer Closing (i) the board of directors of Peerless has determined to enter into a definitive agreement with respect to a Superior Proposal to the extent permitted by, and subject to the terms and conditions described above in the Section “Acquisition Proposals;” and (ii) that an Intervening Event has occurred;

•		all of the conditions to consummation of the Merger have been satisfied (other than those conditions that by their nature are to be satisfied by actions taken at the Merger Closing), and Parent and Purchaser fail to consummate the Merger within three (3) Business Days following the date the Merger Closing should have occurred; provided, however, that during such period of three (3) Business Days following the date the Merger Closing should have occurred pursuant to the Merger Agreement and for twenty-four (24) hours thereafter, no party shall be entitled to terminate this Agreement pursuant to this paragraph; or

•		all the Offer Conditions shall have been satisfied or waived as of the expiration of the Offer and (y) Parent shall have failed to consummate the Offer within three (3) Business Days in accordance with the Merger Agreement

•	by Parent, if:

•		Peerless shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in this Agreement, which breach or failure to perform (A) would result in a failure of any Merger Condition, and (B) cannot be cured on or before the Termination Date or, if curable, is not cured by the Company within (1) thirty (30) days of receipt by the Company of written notice of such breach or failure or (2) any shorter period of time that remains between the date Parent provides written notice of such breach and the Termination Date, provided, however, that Parent shall not have the right to terminate this Agreement pursuant to this section : (A) the Offer Closing shall have occurred or (B) Parent or Purchaser is then in material breach of any of its representations, warranties, covenants or agreements set forth in the Merger Agreement;

•		Peerless shall have materially breached the Go-Shop provision; provided, however, that Parent shall not have the right to terminate the Agreement if the Offer Closing shall have occurred; or

•

(i) the board of directors of the Company shall have effected an Adverse Recommendation Change or shall have failed to publicly reaffirm the Company Recommendation within ten (10) Business Days of receipt of a written request by Parent to provide such reaffirmation following the public announcement of a Competing Proposal (provided, however, that (I) such ten (10) Business Day period shall be extended for an additional five (5) Business Days following any material modification to such Competing Proposal occurring after receipt of Parent’s written request; (II) and such reaffirmation may include such additional disclosures as the board of directors of the Company determines, in good faith, after consultation with legal counsel, would reasonably be necessary to satisfy the fiduciary duties of the board of directors of the Company or comply with applicable Law); or (ii) the Company enters into an Alternative Acquisition Agreement; provided, however, that Parent shall not have the right to terminate this Agreement pursuant to this section if the Offer Closing shall have occurred.

Effect of Termination. If the Merger Agreement is terminated and the Merger abandoned as described in the above Section “Termination”, written notice thereof shall be given to the other parties specifying the provisions of the Merger Agreement pursuant to which the termination is made and the basis thereof, and the Merger Agreement shall become null and void and of no effect with no liability to any person on the part of any party to the Merger Agreement (or any of its representatives), subject to certain exceptions specified in the Merger Agreement, including, without limitation, the applicable remedies described below in the Section “Termination Fees” and the Confidentiality Agreement (as described below in the Section “Confidentiality Agreement”), which will survive termination of the Merger Agreement in accordance with their terms.

Termination Fees.

If, due to a condition or Peerless action or inaction, Parent, while not in material breach of any of its obligations of the Merger Agreement, terminates the Merger Agreement pursuant to the terms of the Merger Agreement permitting termination by the Parent because Peerless entered into an Alternative Acquisition Agreement, the parties agree that Parent shall have suffered a loss of an incalculable nature and amount, unrecoverable in law, and Peerless shall pay to Parent a equal to the amount of Expenses incurred by Parent and/or Purchaser, but in any event not to exceed Two Hundred Thousand Dollars ($200,000) (the “Company Termination Fee”), provided that (i) in no event shall such condition, action or inaction causing the Company Termination Fee to become due and payable manifest or occur after the Termination Date; (ii) in no event shall the Company Termination Fee become due and payable if the Merger Agreement is terminated by the written mutual consent of the parties or if Parent or Purchaser has breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in the Merger Agreement or the Merger Agreement is terminated for any reason other than because Peerless entered into an Alternative Acquisition Agreement; and (iii) in no event shall Peerless be required to pay the Company Termination Fee on more than one occasion. The Company Termination Fee shall be payable in immediately available funds by wire transfer no later than three (3) Business Days after such termination.

If, due to a condition, or an action or inaction by Parent or Purchaser, Peerless, while not in material breach of any of its obligations under the terms of the Merger Agreement, terminates the Merger Agreement pursuant to the terms of the Merger Agreement permitting termination by Peerless, the parties agree that Peerless shall have suffered a loss of an incalculable nature and amount, unrecoverable in law, and Parent shall pay to Peerless a fee of Six Million Dollars ($6,000,000) (the “Parent Termination Fee”), provided that (i) in no event shall such condition, action or inaction causing Parent Termination Fee to become due and payable manifest or occur after the Termination Date; (ii) in no event shall the Parent Termination Fee become due and payable if this Agreement is terminated by the written mutual consent of the parties, the Peerless board has determined to enter into a definitive agreement with respect to a Superior Proposal, or if Peerless has breached of failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in the Merger Agreement; and (iii) in no event shall Parent be required to pay the Parent Termination Fee on more than one occasion. The Parent Termination Fee shall be payable in immediately available funds by wire transfer no later than three (3) Business Days after such termination.

Availability of Specific Performance. The parties to the Merger Agreement agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties to the Merger Agreement do not perform the provisions of the Merger Agreement in accordance with its specified terms or otherwise breach such provisions, and agree that they shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity in any such event and prior to the valid exercise of any termination right by the parties as described above in the Section “Termination Fees.”

Expenses. Pursuant to the Merger Agreement, other than as otherwise described above in the Section “Termination Fees,” all expenses incurred in connection with the Merger Agreement and the Transactions shall be paid by the party incurring such expenses.

Governing Law. The Merger Agreement is governed by the laws of the State of Delaware.

12. Purpose of the Offer; Plans for Peerless.

Purpose of the Offer. The purpose of the Offer is for Purchaser to acquire control of, and the entire equity interest in, Peerless. The Offer, as the first step in the acquisition of Peerless, is intended to facilitate the acquisition of all outstanding Shares. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. If the Offer is successful, Purchaser intends to consummate the Merger immediately following the Offer Closing.

If you sell your Shares in the Offer, you will cease to have any equity interest in Peerless or any right to participate in its earnings and future growth. If you do not tender your Shares, but the Merger is consummated, you also will no longer have an equity interest in Peerless. Similarly, after selling your Shares in the Offer or the subsequent Merger, you will not bear the risk of any decrease in the value of Peerless.

Merger Without a Meeting. If the Offer is consummated, we do not anticipate seeking the approval of Peerless’ remaining public shareholders before effecting the Merger. Section 251(h) of the DGCL provides that following consummation of successful tender offer for a public corporation, and subject to certain statutory provisions, if the acquirer holds at least the amount of shares of each class of stock of the target corporation that would otherwise be required to approve a merger for the target corporation, and the other stockholders receive the same consideration for their stock in the merger as was payable in the tender offer, the acquirer can effect a merger without the action of the other stockholders of the target corporation. Accordingly, if we consummate the Offer, we intend to effect the closing of the Merger without a vote of the stockholders of Peerless in accordance with Section 251(h) of the DGCL. Section 253 of the DGCL provides that if a parent company owns at least ninety percent (90%) of the outstanding shares of each class of stock of a subsidiary, the parent company can effect a short form merger with that subsidiary without the action of the other stockholders of the subsidiary. Accordingly, the Merger Agreement provides that if (i) Parent and Peerless determine that the Merger is ineligible to be effected pursuant to Section 251(h) of the DGCL and Purchaser has not acquired at least ninety percent (90%) of the Shares on a fully-diluted basis in the Offer and (ii) Purchaser is unable to exercise the Top-Up Option pursuant to the terms of the Merger Agreement such that a stockholder vote is required in order to consummate the Merger, then Parent and Purchaser will take such actions as are reasonably necessary (including executing and delivering a written consent with respect to any Shares owned by Parent and/or Purchaser) to effect the required stockholder vote by written consent of the stockholders of Peerless and to effect the Merger in compliance with applicable law.

Appraisal Rights. Under the DGCL, holders of Shares do not have appraisal rights as a result of the Offer. In connection with the Merger, however, stockholders of Peerless will have the right to demand appraisal of their Shares under the DGCL. Stockholders who comply with the applicable statutory procedures under the DGCL will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash. Any such judicial determination of the fair value of the Shares could be based upon considerations other than or in addition to the price per Share paid in the Merger and the market value of the Shares. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other things, that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered in an appraisal proceeding. Stockholders should recognize that the value so determined could be higher or lower than the price per Share paid pursuant to the Offer or the consideration per Share to be paid in the Merger. Moreover, Purchaser may argue in an appraisal proceeding that, for purposes of such a proceeding, the fair value of the Shares is less than the price paid in the Offer or the Merger. Stockholders also should note that investment banking opinions as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the Offer or the Merger, are not opinions as to, and do not otherwise address, fair value under Section 262 of the DGCL.

Plans for Peerless. It is expected that, initially following the Merger, the business and operations of Peerless will, except as set forth in this Offer to Purchase, be continued substantially as they are currently being conducted. Parent will continue to evaluate the business and operations of Peerless during the pendency of the Offer and after the consummation of the Offer and the Merger and will take such actions as it deems appropriate under the circumstances then existing. Thereafter, Parent intends to review such information as part of a comprehensive review of Peerless’ business, operations, capitalization and management with a view to optimizing development of Peerless’ potential.

To the knowledge of Purchaser and Parent, except for certain agreements described in the Schedule 14D-9 between Peerless and its executive officers and directors, no employment, equity contribution or other agreement, arrangement or understanding between any executive officer or director of Peerless, on the one hand, and Parent, Purchaser, any of their affiliates or Peerless, on the other hand, existed as of the date of this Offer to Purchase, and neither the Offer nor the Merger is conditioned upon any executive officer or director of Peerless entering into any such agreement, arrangement or understanding.

It is possible that certain members of Peerless’ current management team will enter into new employment arrangements with the Surviving Corporation after the completion of the Offer and the Merger. Such arrangements may include the right to purchase or participate in the equity of Purchaser or its affiliates. Any such arrangements with the existing management team are currently expected to be entered into after the completion of the Offer and will not become effective until after the Merger is completed, if at all. There can be no assurance that any parties will reach an agreement on any terms, or at all.

At the Effective Time, the articles of incorporation of Purchaser and the bylaws of Purchaser, as in effect immediately prior to the Effective Time, will be the articles of incorporation and the bylaws of the Surviving Corporation until thereafter amended as provided by law and such articles of incorporation and bylaws. The directors of Purchaser at the Effective Time will become the directors of the Surviving Corporation and the officers of Peerless at the Effective Time will be the officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed. See Section 11 — “The Merger Agreement; Other Agreements — The Merger Agreement — The Merger.”

Except as set forth in this Offer to Purchase, including as contemplated in this Section 12 — “Purpose of the Offer, Plans for Peerless —Plans for Peerless,” Parent and Purchaser have no present plans or proposals that would relate to or result in (i) any extraordinary corporate transaction involving Peerless or any of its subsidiaries (such as a merger, reorganization, liquidation, relocation of any operations or sale or other transfer of a material amount of assets), (ii) any sale or transfer of a material amount of assets of Peerless or any of its subsidiaries, (iii) any material change in Peerless’ capitalization or dividend policy, (iv) any other material change in Peerless’ corporate structure or business or (v) any material change in the composition of its management or board of directors.

13. Certain Effects of the Offer.

Market for the Shares. If the Offer is successful, there will be no market for the Shares because Purchaser intends to consummate the Merger immediately following the Offer Closing.

Stock Quotation. The Shares are currently listed on the NASDAQ. Immediately following the consummation of the Merger, the Shares will no longer meet the requirements for continued listing on the NASDAQ because the only stockholder will be Purchaser. The NASDAQ requires, among other things, that any listed shares of common stock have at least 400 total stockholders. Immediately following the consummation of the Merger we intend and will cause Peerless to delist the Shares from the NASDAQ.

Margin Regulations. The Shares are currently “margin securities” under the Regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Immediately following the Offer, the Shares would no longer constitute “margin securities” for the purposes of the margin regulations of the Federal Reserve Board and, therefore, could no longer be used as collateral for loans made by brokers.

Exchange Act Registration. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of Peerless to the SEC if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by Peerless to its stockholders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to Peerless, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with stockholders’ meetings and the related requirement of furnishing an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to “going private” transactions. Furthermore, the ability of “affiliates” of Peerless and persons holding “restricted securities” of Peerless to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, may be impaired or eliminated. We intend and will cause Peerless to terminate the registration of the Shares under the Exchange Act as soon after consummation of the Offer as the requirements for termination of registration are met. If the registration of the Shares is not terminated prior to the Merger, the registration of the Shares under the Exchange Act will be terminated following the consummation of the Merger.

14. Dividends and Distributions.

The Merger Agreement provides that from the date of the Merger Agreement to the Effective Time, without the prior written consent of Parent, Peerless will not, and will not allow its wholly owned subsidiaries to, declare, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the capital stock of Peerless or any subsidiary of Peerless.

15. Certain Conditions of the Offer.

For the purposes of this Section 15, capitalized terms used but not defined herein will have the meanings set forth in the Merger Agreement. Notwithstanding any other term of the Offer or the Merger Agreement, Purchaser shall not be required to, and Parent shall not be required to cause Purchaser to, accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange Act (relating to Purchaser’s obligation to pay for or return tendered shares of Peerless common stock promptly after the termination or withdrawal of the Offer), pay for any shares of Peerless common stock tendered pursuant to the Offer if:

(a) there shall not have been validly tendered and not validly withdrawn by the expiration of the Offer that number of Shares (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee) which, when added to the Shares already owned by Parent or any of its subsidiaries, would represent at least a majority of the Shares outstanding on a fully-diluted basis as of the expiration of the Offer (the “Minimum Tender Condition”); or

(b) any of the following conditions shall have occurred and be continuing as of the expiration of the Offer:

(i) a Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order which has the effect of enjoining or otherwise prohibiting the making of the Offer or the consummation of the Offer or the Merger;

(ii) any of the representations and warranties of Peerless set forth in Article III of the Merger Agreement shall not be true and correct in all material respects as of the expiration of the Offer (except to the extent expressly made as of an earlier date, in which case as of such earlier date), except for such failures to be true and correct as have not caused a Company Material Adverse Effect;

(iii) Peerless shall have failed to perform or comply in all material respects with its obligations required to be performed or complied with by it under the Merger Agreement, except for such failures to perform or comply as have not caused a Company Material Adverse Effect; or

(iv) the Merger Agreement shall have been terminated in accordance with its terms.

Prior to the Offer Closing, Peerless shall deliver to Parent a certificate, signed on behalf of Peerless by its chief executive officer, certifying that the conditions set forth in clauses (ii) and (iii) of paragraph (b) above shall have occurred and be continuing as of the expiration of the Offer.

The foregoing conditions shall be in addition to, and not a limitation of, the rights of Parent and Purchaser to extend, terminate or modify the Offer pursuant to the terms and conditions of the Merger Agreement.

The foregoing conditions (other than the Minimum Tender Condition) are for the sole benefit of Parent and Purchaser and, subject to the terms and conditions of this Agreement and applicable Law, may be waived by Parent and Purchaser, in whole or in part, at any time and from time to time in their sole discretion (other than the Minimum Tender Condition). The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.

16. Certain Legal Matters; Regulatory Approvals.

General. Except as otherwise set forth in this Offer to Purchase, based on our review of Peerless’ publicly available SEC filings and other information regarding Peerless, we are not aware of any licenses or other regulatory permits that appear to be material to the business of Peerless and that might be adversely affected by the acquisition of Shares by us pursuant to the Offer or, except as set forth below, of any approval or other action by any governmental, administrative or regulatory agency or authority that would be required for the acquisition or ownership of Shares by us pursuant to the Offer. In addition, except as set forth below, we are not aware of any filings, approvals or other actions by or with any governmental authority or administrative or regulatory agency that would be required for our acquisition or ownership of the Shares. Should any such approval or other action be required, we currently expect that such approval or action, except as described below under “State Takeover Laws,” would be sought or taken. There can be no assurance that any such approval or action, if needed, would be obtained or, if obtained, that it would be obtained without substantial conditions, and there can be no assurance that, in the event that such approvals were not obtained or such other actions were not taken, adverse consequences might not result to Peerless’ or our business or that certain parts of Peerless’ or our business might not have to be disposed of or held separately. In such an event, we may not be required to purchase any Shares in the Offer. See Section 15—“Certain Conditions of the Offer.”

Stockholder Approval Not Required. Section 251(h) of the DGCL provides that stockholder approval of a merger is not required if certain requirements are met, including that (1) the acquiring company consummates a tender offer for any and all of the outstanding common stock of the company to be acquired that, absent Section 251(h) of the DGCL, would be entitled to vote on the merger and (2) following the consummation of such tender offer, the acquiring company owns at least such percentage of the stock of the company to be acquired that, absent Section 251(h) of the DGCL, would be required to adopt the merger. If the Minimum Tender Condition is satisfied and we accept Shares for payment pursuant to the Offer, we will hold a sufficient number of Shares to ensure that Peerless will not be required to submit the adoption of the Merger Agreement to a vote of the stockholders of Peerless. Following the consummation of the Offer, Parent, Purchaser and Peerless will take all necessary and appropriate action to effect the Merger as promptly as practicable without a stockholder vote to adopt the Merger Agreement or effect the Merger in accordance with Section 251(h) of the DGCL.

State Takeover Laws. A number of states (including Delaware, where Peerless is incorporated) have adopted takeover laws and regulations which purport, to varying degrees, to be applicable to attempts to acquire securities of corporations which are incorporated in such states or which have substantial assets, stockholders, principal executive offices or principal places of business therein. In general, Section 203 of the DGCL prevents an “interested stockholder” (including a person who owns or has the right to acquire fifteen percent (15%) or more of a corporation’s outstanding voting stock) from engaging in a “business combination” (defined to include mergers and certain other actions) with a Delaware corporation for a period of three years following the time such person became an interested stockholder unless, among other things, the “business combination” is approved by the board of directors of such corporation prior to such time. No Delaware statute should have the effect of precluding the Offer or the Merger. Purchaser has not attempted to comply with any other state takeover laws in connection with the Offer or the Merger. To the extent that the provisions of other state takeover statutes purport to apply to the Offer or the Merger, Purchaser believes that such laws conflict with federal law and constitute an unconstitutional burden on interstate commerce. Purchaser reserves the right to challenge the validity or applicability of any state law allegedly applicable to the Offer or the Merger (other than the DGCL), and nothing in this Offer to Purchase nor any action taken in connection herewith is intended as a waiver of that right. In the event that it is asserted that one or more takeover statutes apply to the Offer or the Merger, and it is not determined by an appropriate court that such statute or statutes do not apply or are invalid as applied to the Offer or the Merger, as applicable, Purchaser may be required to file certain documents with, or receive approvals from, the relevant state authorities, and Purchaser might be unable to accept for payment or purchase Shares tendered pursuant to the Offer or be delayed in continuing or consummating the Offer. In such case, Purchaser may not be obligated to accept for purchase, or pay for, any Shares tendered. See Section 15—“Certain Conditions of the Offer.”

“Going Private” Transactions. Rule 13e-3 under the Exchange Act is applicable to certain “going private” transactions and may under certain circumstances be applicable to the Merger. However, Rule 13e-3 will be inapplicable if (a) the Shares are deregistered under the Exchange Act prior to the Merger or another business combination or (b) the Merger or other business combination is consummated within one year after the purchase of the Shares pursuant to the Offer and the amount paid per Share pursuant to the Merger or other business combination is at least equal to the amount paid per Share in the Offer. Neither Parent nor Purchaser believes that Rule 13e-3 will be applicable to the Merger.

17. Appraisal Rights.

No appraisal rights are available to the holders of Shares in connection with the Offer. However, if the Merger is effected, the holders of Shares immediately prior to the Effective Time who (i) did not tender their Shares in the Offer, (ii) follow the procedures set forth in Section 262 of the DGCL and (iii) do not thereafter withdraw their demand for appraisal of such Shares or otherwise lose their appraisal rights, in each case in accordance with the DGCL, will be entitled to have their Shares appraised by the Delaware Court of Chancery and receive payment of the “fair value” of such Shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with a fair rate of interest, as determined by such court.

The “fair value” of any Shares could be based upon considerations other than, or in addition to, the price paid in the Offer and the market value of such Shares. Holders of Shares should recognize that the value so determined could be higher or lower than, or the same as, the Offer Price or the consideration payable in the Merger (which is equivalent in amount to the Offer Price). Moreover, we may argue in an appraisal proceeding that, for purposes of such proceeding, the fair value of such Shares is less than such amount.

Under Section 262 of the DGCL, where a merger is approved under Section 251(h), either a constituent corporation before the effective date of the merger, or the surviving corporation within 10 days thereafter, is required to notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of Section 262 of the DGCL. The Schedule 14D-9 will constitute the formal notice of appraisal rights under Section 262 of the DGCL.

As will be described more fully in the Schedule 14D-9, if a stockholder elects to exercise appraisal rights under Section 262 of the DGCL, such stockholder must do all of the following:

●

prior to the later of the consummation of the Offer and 20 days after the mailing of the Schedule 14D-9, deliver to Actuate a written demand for appraisal of Shares held, which demand must reasonably inform Actuate of the identity of the stockholder and that the stockholder is demanding appraisal;

●

not tender their Shares in the Offer; and

●

continuously hold of record Shares from the date on which the written demand for appraisal is made through the Effective Time.

The foregoing summary of the appraisal rights of stockholders under the DGCL does not purport to be a complete statement of the procedures to be followed by stockholders desiring to properly exercise any appraisal rights available thereunder and is qualified in its entirety by reference to Section 262 of the DGCL. The proper exercise of appraisal rights requires strict and timely adherence to the applicable provisions of Delaware law. A copy of Section 262 of the DGCL will be included as Annex B to the Schedule 14D-9.

The information provided above is for informational purposes only with respect to your alternatives if the Merger is effected. If you tender your Shares pursuant to the Offer, you will not be entitled to exercise appraisal rights with respect to your Shares but, instead, subject to the Offer Conditions, you will receive the Offer Price for your Shares.

18. Fees and Expenses.

Parent and Purchaser have retained MacKenzie Partners, Inc. to be the Information Agent and Continental Stock Transfer & Trust to be the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telecopy, telegraph and personal interview and may request banks, brokers, dealers and other nominees to forward materials relating to the Offer to beneficial owners of Shares.

The Information Agent and the Depositary each will receive reasonable and customary compensation for their respective services in connection with the Offer, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under federal securities laws.

Neither Parent nor Purchaser will pay any fees or commissions to any broker or dealer or to any other person (other than to the Depositary and the Information Agent) in connection with the solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. In those jurisdictions where applicable laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by Purchaser.

19. Miscellaneous.

The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In those jurisdictions where applicable laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by Purchaser.

No person has been authorized to give any information or to make any representation on behalf of Parent or Purchaser not contained herein or in the Letter of Transmittal, and, if given or made, such information or representation must not be relied upon as having been authorized. No broker, dealer, bank, trust company, fiduciary or other person shall be deemed to be the agent of Purchaser, the Depositary, or the Information Agent for the purpose of the Offer.

Purchaser has filed with the SEC a Tender Offer Statement on Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, together with exhibits furnishing certain additional information with respect to the Offer, and may file amendments thereto. Peerless is required under the rules of the SEC to file its Solicitation/Recommendation Statement with the SEC on Schedule 14D-9 no later than ten (10) business days from the date of this Offer to Purchase, setting forth the recommendation of Peerless’s board of directors with respect to the Offer and the reasons for such recommendation and furnishing certain additional related information. A copy of such documents, and any amendments thereto, may, when filed, be examined at, and copies may be obtained from, the SEC in the manner set forth under Section 7 — “Certain Information Concerning Peerless” above.

Mobius Acquisition Merger Sub, Inc.

January 13, 2015

SCHEDULE I

INFORMATION CONCERNING MEMBERS OF THE BOARDS OF DIRECTORS AND
THE EXECUTIVE OFFICERS OF PARENT AND PURCHASER

PARENT

Set forth below are the name, business address and current principal occupation or employment, and material occupations, positions, offices or employment for the past five years of each director and executive officer of Parent. Except as otherwise noted, positions specified are positions with Parent.

Name	Address	Principal Occupation or Employment	Citizenship
Directors
None
Executive Officers
Lodovico de Visconti (Managing Member)	Centre City Tower LP, 650 Smithfield Street, Pittsburgh, Pennsylvania 15222	Mr. de Visconti has served as a Managing Director of LCV Capital Management, LLC for the past five (5) years. LCV Capital Management is an investment management company that manages a family of private equity and hedge funds focused on deep value investing.	United States

PURCHASER

Set forth below are the name, business address and current principal occupation or employment, and material occupations, positions, offices or employment for the past five years of each director and executive officer of Purchaser. Except as otherwise noted, positions specified are positions with Parent.

Name	Business Address	Principal Occupation or Employment	Citizenship
Directors
Lodovico de Visconti (Sole Director)	Centre City Tower LP, 650 Smithfield Street, Pittsburgh, Pennsylvania 15222	Mr. de Visconti has served as a Managing Director of LCV Capital Management, LLC for the past five (5) years. LCV Capital Management is an investment management company that manages a family of private equity and hedge funds focused on deep value investing.	United States
Executive Officers
Lodovico de Visconti (Chief Executive Officer)	Centre City Tower LP, 650 Smithfield Street, Pittsburgh, Pennsylvania 15222	Mr. de Visconti has served as a Managing Director of LCV Capital Management, LLC for the past five (5) years. LCV Capital Management is an investment management company that manages a family of private equity and hedge funds focused on deep value investing.	United States

Manually signed facsimiles of the Letter of Transmittal, properly completed, will be accepted. The Letter of Transmittal and certificates evidencing Shares and any other required documents should be sent or delivered by each stockholder or its, his or her broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below:

The Depositary for the Offer is:

Continental Stock Transfer & Trust

By Mail:

By Overnight Courier:

Continental Stock Transfer & Trust Company

17 Battery Place, 8th Floor

New York, NY 10004

Attention: Corporate Actions Department

Tel: (917) 262-2378

Continental Stock Transfer & Trust Company

17 Battery Place, 8th Floor

New York, NY 10004

Attention: Corporate Actions Department

Tel: (917) 262-2378

Questions and requests for assistance may be directed to the Information Agent at its address and telephone numbers set forth below. Requests for copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent. Such copies will be furnished promptly at Purchaser’s expense. Stockholders may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer. Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Information Agent or the Depositary) for soliciting tenders of Shares pursuant to the Offer.

The Information Agent for the Offer is:

MacKenzie Partners, Inc.

105 Madison Avenue

New York, NY 10016

(212) 929-5500 (Call Collect)

Call Toll-Free 1 (800) 322-2885

Exhibit (a)(1)(B)

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

Letter of Transmittal
To Tender Shares of Common Stock
of
PEERLESS SYSTEMS CORPORATION
at
$7.00 Per Share
Pursuant to the Offer to Purchase dated January 13, 2015
by
Mobius Acquisition Merger Sub, Inc.
a wholly owned subsidiary of
Mobius Acquisition, LLC

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M.,
NEW YORK CITY TIME, ON FEBRUARY 11, 2015, UNLESS THE OFFER IS EXTENDED.

The Depositary for the Offer Is:

Continental Stock Transfer & Trust

By Mail:

By Courier

(until 11:59 P.M., New York City time

on February 11, 2015):

Continental Stock Transfer & Trust Company

17 Battery Place, 8th Floor

New York, NY 10004

Attention: Corporate Actions Department

Tel: (917) 262-2378

Continental Stock Transfer & Trust Company

17 Battery Place, 8th Floor

New York, NY 10004

Attention: Corporate Actions Department

Tel: (917) 262-2378

DESCRIPTION OF SHARES TENDERED


Name(s) and Address(es) of Registered Shareholders Please fill in name and address if blank	Share Certificate(s) and Share(s) Tendered
(Letter of Transmittal must be signed by all registered shareholders)	(Please attach additional signed list, if necessary)


	Certificate Number(s) and/or indicate Book-Entry Shares	Total Number of Shares Represented by Certificate(s)	Number of Shares Tendered(1)(2)

Total Shares Tendered

(1)		If Shares are held in book-entry form (including if Shares are Direct Registration Book-Entry Shares), you must indicate the number of Shares you are tendering.
(2)		Unless otherwise indicated, all Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered. See Instruction 4.

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND, IF YOU ARE A U.S. HOLDER, COMPLETE THE SUBSTITUTE FORM W-9 ACCOMPANYING THIS LETTER OF TRANSMITTAL. IF YOU ARE A NON-U.S. HOLDER, YOU MUST OBTAIN AND COMPLETE AN IRS FORM W-8BEN OR OTHER IRS FORM W-8, AS APPLICABLE.

PLEASE READ THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THIS LETTER OF TRANSMITTAL.

IF YOU WOULD LIKE ADDITIONAL COPIES OF THIS LETTER OF TRANSMITTAL OR ANY OF THE OTHER OFFER DOCUMENTS, YOU SHOULD CONTACT THE INFORMATION AGENT, MacKenzie partners, inc., toll-free at 1 (800) 322-2885, or (212) 929-5500 for banks and brokers.

You have received this Letter of Transmittal in connection with the offer of Mobius Acquisition Merger Sub, Inc., a Delaware corporation(“Purchaser”) and a wholly owned subsidiary of Mobius Acquisition, LLC, a Delaware limited liability company (“Parent”), to purchase all issued and outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Peerless Systems Corporation, a Delaware corporation (“Peerless”), at a price of $7.00 per Share, to the seller in cash, without interest thereon and less any required withholding taxes, as described in the Offer to Purchase, dated January 13, 2015.

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You should use this Letter of Transmittal to deliver to Continental Stock Transfer & Trust (the “Depositary”) Shares represented by stock certificates for tender. If you are delivering your Shares by book-entry transfer to an account maintained by the Depositary at The Depository Trust Company (“DTC”), you may use this Letter of Transmittal or you may use an Agent’s Message (as defined in Instruction 2 below). In this document, stockholders who deliver certificates representing their Shares are referred to as “Certificate Stockholders.” Stockholders who deliver their Shares through book-entry transfer are referred to as “Book-Entry Stockholders.” If you hold your Shares in a direct registration account maintained by Peerless’s transfer agent (such shares, “Direct Registration Book-Entry Shares”), in order to validly tender your Direct Registration Book-Entry Shares, you must deliver the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees and any other required documents to the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase by the Expiration Date (as defined in Section 1 of the Offer to Purchase).

If certificates for your Shares are not immediately available or you cannot deliver your certificates and all other required documents to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or you cannot comply with the book-entry transfer procedures on a timely basis, you may nevertheless tender your Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to DTC will not constitute delivery to the Depositary.

☐	CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH DTC AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS THAT ARE PARTICIPANTS IN DTC MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER THROUGH DTC):

Name of Tendering Institution:_________________________________________________________

DTC Participant Number: _____________________________________________________________

Transaction Code Number: ____________________________________________________________

☐	CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.

Name(s) of Registered Owner(s) : _________________________________________________________
Window Ticket Number (if any) or DTC Participant Number : ____________________________________
Date of Execution of Notice of Guaranteed Delivery: __________________________________________
Name of Institution which Guaranteed Delivery: _____________________________________________

NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

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Ladies and Gentlemen:

The undersigned hereby tenders to Mobius Acquisition Merger Sub, Inc., a Delaware corporation (“Purchaser”) and a wholly owned subsidiary of Mobius Acquisition, LLC, a Delaware limited liability company (“Parent”), the above-described shares of common stock, par value $0.001 per share (the “Shares”), of Peerless Systems Corporation, a Delaware corporation (“Peerless”), pursuant to the Offer to Purchase, dated January 13, 2015 (the “Offer to Purchase”), at a price of $7.00 per Share, net to the seller in cash, without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, receipt of which is hereby acknowledged, and this Letter of Transmittal (which, together with the Offer to Purchase, as each may be amended or supplemented from time to time, collectively constitute the “Offer”).

On the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), subject to, and effective upon, acceptance for payment and payment for the Shares validly tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser, all right, title and interest in and to all of the Shares being tendered hereby and any and all dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares on or after February 11, 2015 (collectively, “Distributions”). In addition, the undersigned hereby irrevocably appoints Continental Stock Transfer & Trust (the “Depositary”) the true and lawful agent and attorney-in-fact and proxy of the undersigned with respect to such Shares and any Distributions with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to the fullest extent of such stockholder’s rights with respect to such Shares and any Distributions (a) to deliver any certificates representing Shares (the “Share Certificates”), Direct Registration Book-Entry Shares and any Distributions, or transfer of ownership of such Shares and any Distributions on the account books maintained by the Depository Trust Company (“DTC”) together, in each such case, with all accompanying evidence of transfer and authenticity, to or upon the order of Purchaser, (b) to present such Shares and any Distributions for transfer on the books of Peerless, and (c) to receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and any Distributions, all in accordance with the terms and subject to the conditions of the Offer.

The undersigned hereby irrevocably appoints each of the designees of Purchaser the attorney-in-fact and proxy of the undersigned, each with full power of substitution, to the full extent of such stockholder’s rights with respect to the Shares tendered hereby which have been accepted for payment and with respect to any Distributions. The designees of Purchaser will, with respect to the Shares and any associated Distributions for which the appointment is effective, be empowered to exercise all voting and any other rights of such stockholder, as they, in their sole discretion, may deem proper at any annual, special, adjourned or postponed meeting of Peerless’s stockholders, by written consent in lieu of any such meeting or otherwise. This proxy and power of attorney shall be irrevocable and coupled with an interest in the tendered Shares. Such appointment is effective when, and only to the extent that, Purchaser accepts the Shares tendered with this Letter of Transmittal for payment pursuant to the Offer. Upon the effectiveness of such appointment, without further action, all prior powers of attorney, proxies and consents given by the undersigned with respect to such Shares and any associated Distributions will be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given (and, if given, will not be deemed effective). Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser’s acceptance for payment of such Shares, Purchaser must be able to exercise full voting, consent and other rights, to the extent permitted under applicable law, with respect to such Shares and any associated Distributions, including voting at any meeting of stockholders or executing a written consent concerning any matter.

The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares and any Distributions tendered hereby and, when any of the same are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and the same will not be subject to any adverse claim. The undersigned hereby represents and warrants that the undersigned is the registered owner of the Shares or the Share Certificate(s) have been endorsed to the undersigned in blank or the undersigned is a participant in DTC whose name appears on a security position listing participant as the owner of the Shares. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares and any Distributions tendered hereby and accepted for payment. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of Purchaser any and all Distributions in respect of the Shares tendered hereby and accepted for payment, accompanied by appropriate documentation of transfer and, pending such remittance or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of any such Distributions and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by Purchaser in its sole and absolute discretion.

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It is understood that the undersigned will not receive payment for the Shares unless and until the Shares are accepted for payment and until the Share Certificate(s) owned by the undersigned are, or this Letter of Transmittal tendering any Direct Registration Book-Entry Shares is, received by the Depositary at the address set forth above, together with such additional documents as the Depositary may require, or, in the case of Shares held in book-entry form through DTC, ownership of Shares is validly transferred on the account books maintained by DTC, and until the same are processed for payment by the Depositary. It is understood that the method of delivery of the Shares, the Share Certificate(s) and all other required documents (including delivery through DTC) is at the option and sole risk of the undersigned and that the risk of loss of such Shares, Share Certificate(s) and other documents shall pass only after the Depositary has actually received the Shares or Share Certificate(s) (including, in the case of a book-entry transfer through DTC, by Book-Entry Confirmation (as defined below)).

All authority conferred or agreed to be conferred pursuant to this Letter of Transmittal shall not be affected by, and shall survive, the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, trustees in bankruptcy, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable.

The undersigned understands that the acceptance for payment by Purchaser of Shares tendered pursuant to one of the procedures described in Section 3 of the Offer to Purchase will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer.

Unless otherwise indicated herein under “Special Payment Instructions,” please issue the check for the purchase price in the name(s) of, and/or return any Share Certificate(s) representing Shares not tendered or accepted for payment to, the registered owner(s) appearing under “Description of Shares Tendered.” Similarly, unless otherwise indicated under “Special Delivery Instructions,” please mail the check for the purchase price and/or return any Share Certificate(s) representing Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered owner(s) appearing under “Description of Shares Tendered.” In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or issue any Share Certificate(s) representing Shares not tendered or accepted for payment (and any accompanying documents, as appropriate) in the name of, and deliver such check and/or return such Share Certificate(s) (and any accompanying documents, as appropriate) to, the person or persons so indicated. The undersigned recognizes that Purchaser has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered owner thereof if Purchaser does not accept for payment any of the Shares so tendered.

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SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)

To be completed ONLY if Share Certificate(s) not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be issued in the name of someone other than the undersigned or if Shares tendered by book-entry transfer which are not accepted for payment are to be returned by credit to an account other than that designated above.

Issue to:

Name:		(Please Print)
Address:

		(Include Zip Code)
(Taxpayer Identification or Social Security Number)

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SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)

To be completed ONLY if Share Certificate(s) not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be sent to someone other than the undersigned or to the undersigned at an address other than that shown in the box titled “Description of Shares Tendered” above.

Deliver to:

Name:		(Please Print)
Address:

		(Include Zip Code)

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IMPORTANT—SIGN HERE
(U.S. Holders Please Also Complete the Substitute Form W-9 Below)
(Non-U.S. Holders Please Obtain and Complete IRS Form W-8BEN or Other Applicable IRS Form W-8)

(Signature(s) of Stockholder(s))

Dated:

, 2015

(Must be signed by registered owner(s) exactly as name(s) appear(s) on Share Certificate(s) or on a security position listing or by person(s) authorized to become registered owner(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5. For information concerning signature guarantees, see Instruction 1.)

Name(s):
		(Please Print)
Capacity (full title):
Address:
		(Include Zip Code)
Area Code and Telephone Number:
Tax Identification or Social Security No.:

GUARANTEE OF SIGNATURE(S)
(For use by Eligible Institutions only;
see Instructions 1 and 5)

Place medallion guarantee in space below:

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INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer

1. Guarantee of Signatures. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (which term includes most commercial banks, savings and loan associations and brokerage houses) that is a member in good standing of a recognized Medallion Program approved by The Securities Transfer Association, Inc., including the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program and the Stock Exchanges Medallion Program (each, an “Eligible Institution”). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered owner(s) (which term, for purposes of this document, includes any participant in DTC whose name appears on a security position listing as the owner of the Shares) of Shares tendered herewith and such registered owner has not completed the box titled “Special Payment Instructions” or the box titled “Special Delivery Instructions” on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5.

2. Delivery of Letter of Transmittal and Certificates or Book-Entry Shares. This Letter of Transmittal is to be completed by stockholders if Share Certificate(s) are to be forwarded herewith, if such Shares are Direct Registration Book-Entry Shares or, unless an Agent’s Message is utilized, if tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. A manually signed facsimile of this document may be used in lieu of the original. If your Shares are held as Direct Registration Book-Entry Shares, in order to validly tender your Shares, you must deliver the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees and any other required documents to the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or you must comply with the guaranteed delivery procedures described below. If tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase, in order to validly tender your Shares, confirmation of any book-entry transfer into the Depositary’s account at DTC of Shares tendered by book-entry transfer (“Book-Entry Confirmation”), as well as this Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, unless an Agent’s Message is utilized, and any other required documents must be received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase prior to the Expiration Date, or you must comply with the guaranteed delivery procedures described below. Any other documents required by this Letter of Transmittal, including, in the case of certificated Shares, any Share Certificate(s) to be forwarded herewith, must also be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date. Please do not send your Share Certificate(s) directly to Purchaser or Parent or Peerless.

Stockholders whose Share Certificate(s) are not immediately available or who cannot deliver all other required documents to the Depositary prior to the Expiration Date or who cannot comply with the procedures for book-entry transfer on a timely basis, may nevertheless tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such procedures: (a) a properly completed and duly executed Notice of Guaranteed Delivery in the form provided by Purchaser must be received by the Depositary prior to the Expiration Date and (b) Share Certificate(s) representing all tendered Shares, in proper form for transfer (or a Book-Entry Confirmation with respect to such Shares), as well as a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed with any required signature guarantees (unless, in the case of a book-entry transfer, an Agent’s Message is utilized), and all other documents required by this Letter of Transmittal, must be received by the Depositary within three (3) New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery.

A Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, must accompany each delivery of Share Certificate(s) to the Depositary.

The term “Agent’s Message” means a message, transmitted by DTC to, and received by, the Depositary and forming part of a Book-Entry Confirmation, which states that DTC has received an express acknowledgment from the participant in DTC tendering the Shares which are the subject of such Book-Entry Confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against the participant.

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THE METHOD OF DELIVERY OF THE SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT THE ELECTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. DELIVERY OF ALL SUCH DOCUMENTS WILL BE DEEMED MADE AND RISK OF LOSS OF THE SHARE CERTIFICATE(S) SHALL PASS ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF SUCH DELIVERY IS BY MAIL, WE RECOMMEND THAT ALL SUCH DOCUMENTS BE SENT BY PROPERLY INSURED REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.

No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or a manually signed facsimile thereof), waive any right to receive any notice of the acceptance of their Shares for payment.

The undersigned understands and acknowledges that all questions as to validity, form, eligibility (including time of receipt) and acceptance of any tender of Shares will be determined by Purchaser (which may delegate power in whole or in part to the Depositary) in its sole and absolute discretion, and such determination shall be final and binding on all parties, subject to the right of any such party to dispute such determination in a court of competent jurisdiction. Purchaser reserves the right to waive any irregularities or defects in the surrender of any Shares or Share Certificate(s). A surrender will not be deemed to have been made until all irregularities have been cured or waived. Purchaser and the Depositary shall make reasonable efforts to notify any person of any defect in any Letter of Transmittal submitted to the Depositary.

3. Inadequate Space. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto and separately signed on each page thereof in the same manner as this Letter of Transmittal is signed.

4. Partial Tenders. If fewer than all the Direct Registration Book-Entry Shares held in a direct registration account or fewer than all the Shares evidenced by any Share Certificate delivered to the Depositary are to be tendered, fill in the number of Shares which are to be tendered in the column titled “Number of Shares Tendered” in the box titled “Description of Shares Tendered.” In the case of Shares evidenced by Share Certificates, new certificate(s) for the remainder of the Shares that were evidenced by the old certificate(s) but not tendered will be sent to the registered owner, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Direct Registration Book-Entry Shares held in a direct registration account or Shares represented by Share Certificate(s) delivered to the Depositary will be deemed to have been tendered unless otherwise indicated.

5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered owner(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificate(s) without alteration or any other change whatsoever.

If any Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal.

If any tendered Shares are registered in the names of different holder(s), it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or manually signed facsimiles thereof) as there are different registrations of such Shares.

If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to Purchaser of their authority so to act must be submitted, or in lieu of evidence the signatures must be guaranteed by an Eligible Institution noted; see Instruction 1.

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If this Letter of Transmittal is signed by the registered owner(s) of the Shares listed and transmitted hereby, no endorsements of any Share Certificate(s) or separate stock powers are required unless payment is to be made to, or Share Certificate(s) representing Shares not tendered or accepted for payment are to be issued in the name of, a person other than the registered owner(s). Signatures on such Share Certificate(s) or stock powers must be guaranteed by an Eligible Institution.

If this Letter of Transmittal is signed by a person other than the registered owner(s) of the Share(s) listed, the Share Certificate(s) must be endorsed or accompanied by the appropriate stock powers, in either case, signed exactly as the name or names of the registered owner(s) or holder(s) appear(s) on the Share Certificate(s). Signatures on such Share Certificate(s) or stock powers must be guaranteed by an Eligible Institution.

6. Transfer Taxes. Purchaser will pay any transfer taxes with respect to the transfer and sale of Shares to it or to its order pursuant to the Offer (for the avoidance of doubt, transfer taxes do not include United States federal income or backup withholding taxes). If, however, payment of the purchase price is to be made to, or (in the circumstances permitted hereby) if Share Certificate(s) not tendered or accepted for payment are to be registered in the name of, any person other than the registered owner(s), or if tendered Share Certificate(s) are registered in the name of any person other than the person signing this Letter of Transmittal, the amount of any transfer taxes (whether imposed on the registered owner(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted.

7. Special Payment and Delivery Instructions. If a check is to be issued in the name of, and/or Share Certificate(s) representing Shares not tendered or accepted for payment are to be issued or returned to, a person other than the signer(s) of this Letter of Transmittal or if a check and/or such certificates are to be mailed to a person other than the signer(s) of this Letter of Transmittal or to an address other than that shown in the box titled “Description of Shares Tendered” above, the appropriate boxes on this Letter of Transmittal must be completed. Stockholders delivering Shares tendered hereby or by Agent’s Message by book-entry transfer may request that Shares not purchased be credited to an account as such stockholder may designate in the box titled “Special Payment Instructions” herein. If no such instructions are given, all such Shares not purchased will be returned by crediting the same account as the account from which such Shares were delivered.

8. Requests for Assistance or Additional Copies. Questions or requests for assistance may be directed to the Information Agent at its address and telephone number set forth below or to your broker, dealer, commercial bank, trust company or other nominee. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be obtained from the Information Agent as set forth below, and will be furnished at Purchaser’s expense.

9. Backup Withholding. In order to avoid U.S. federal “backup withholding,” currently at a rate of twenty-eight percent with respect to cash received in exchange for Shares in the Offer, a stockholder submitting Shares must (a) provide the Depositary with a properly completed Substitute Form W-9, included in this Letter of Transmittal, indicating an exemption from backup withholding and sign such form under penalties of perjury or (b) provide the Depositary with a properly completed IRS Form W-8BEN or other applicable IRS Form W-8, and sign such form under penalties of perjury. IRS Form W-8BEN and other IRS Forms W-8 are available from the Depositary or from the Internal Revenue Service web site, at http://www.irs.gov. Please see “Important Tax Information” below.

10. Lost, Destroyed, Mutilated or Stolen Share Certificate(s). If any Share Certificate has been lost, destroyed, mutilated or stolen, the stockholder should promptly notify the Depositary at (917) 262-2378. The stockholder will then be instructed as to the steps that must be taken in order to replace the Share Certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, mutilated, destroyed or stolen Share Certificate(s) have been followed.

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11. Waiver of Conditions. Subject to the terms and conditions of the Offer and the Merger Agreement (each as defined in the Offer to Purchase) and the applicable rules and regulations of the Securities and Exchange Commission, the conditions of the Offer may be waived by Purchaser in whole or in part at any time and from time to time in its sole discretion.

IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE THEREOF) OR AN AGENT’S MESSAGE, TOGETHER WITH SHARE CERTIFICATE(S) OR BOOK-ENTRY CONFIRMATION OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.

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IMPORTANT TAX INFORMATION

For purposes of this summary, a “U.S. holder” means a citizen or resident of the United States, a domestic partnership (or any other entity or arrangement treated as a partnership for U.S. federal income tax purposes), a domestic corporation (or any other entity or arrangement treated as a corporation for U.S. federal income tax purposes), any estate (other than a foreign estate), and any trust if—(a) a court within the United States is able to exercise primary supervision over the administration of the trust, and (b) one or more United States persons have the authority to control all substantial decisions of the trust.

If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds Shares, the tax treatment of a holder that is a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. Any such holder should consult its own tax advisors regarding the tax consequences of exchanging the Shares pursuant to the Offer or pursuant to the Merger.

A “non-U.S. holder” for purposes of this summary means a beneficial owner of Shares (other than a partnership, including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not a U.S. holder.

Under United States federal income tax laws, as described in more detail hereunder, Purchaser is generally required to report any cash payment made to a holder of Shares surrendered in the Offer to such holder and to the United States Internal Revenue Service (“IRS”) and Purchaser may be required to “backup withhold” at the current rate of twenty-eight percent of any such payment.

To avoid such backup withholding, a U.S. holder whose Shares are submitted herewith should provide the Depositary a properly completed Substitute Form W-9, which is attached hereto, signed under penalties of perjury, including such holder’s correct Taxpayer Identification Number (“TIN”) (generally, such holder’s social security or employer identification number) and certifying that the holder is not subject to backup withholding. A U.S. holder of Shares is required to give the Depositary the correct TIN of the record owner of the Shares being submitted for payment in connection herewith. If the Shares are registered in more than one name or are not registered in the name of the actual owner, please consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the holder does not have a TIN, the holder should write “Applied For” in the space provided for the TIN and the Depositary will retain the backup withholding tax amount until such holder provides the Depositary with its certified TIN. If the holder does not provide the Depositary with a certified TIN within 60 days, the Depositary must backup withhold at the current rate of twenty-eight percent of all cash payments made to the holder.

Certain holders (including, among others, corporations and non-U.S. holders) are exempt from these backup withholding and reporting requirements. Exempt persons who are U.S. holders are not subject to backup withholding and should indicate their exempt status on the Substitute Form W-9 by entering their correct TIN, marking the appropriate box and signing and dating the Substitute Form W-9 in the space provided.

A non-U.S. holder should submit to the Depositary the appropriate version of an IRS Form W-8, properly completed, including certification of such holder’s foreign status, and signed under penalty of perjury. IRS Form W-8BEN is the version of IRS Form W-8 most likely to apply to foreign persons claiming exemption from backup withholding. Non-U.S. holders should carefully read the instructions to IRS Form W-8BEN and, if applicable, complete the required information, sign and date the IRS Form W-8BEN and return the form to the Depositary with the completed Letter of Transmittal. In certain cases, IRS Form W-8BEN may not be the proper IRS form to be completed and returned, depending on the status of the foreign person claiming exemption from backup withholding. If you are a non-U.S. holder, you must complete and return the appropriate version of IRS Form W-8. IRS Form W-8BEN and other IRS Forms W-8 are available from the Depositary or from the IRS web site, at http://www.irs.gov.

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If the Depositary is not provided with a properly completed Substitute Form W-9 or an IRS Form W-8BEN or other applicable IRS Form W-8, the holder may be subject to a $50 penalty imposed by the IRS. In addition, the Depositary may be required to withhold at the current rate of twenty-eight percent of any cash payment made to the holder with respect to Shares submitted in connection herewith as backup withholding. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be refunded or credited against the holder’s United States federal income tax liability, if any, provided that the holder furnishes the required information to the IRS in a timely manner.

Please consult your accountant or tax advisor for further guidance regarding the completion of Substitute Form W-9, IRS Form W-8BEN, or another version of IRS Form W-8 to claim exemption from backup withholding, or contact the Depositary.

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TO BE COMPLETED BY ALL TENDERING U.S. HOLDERS
(See Instruction 9)


PAYOR:

	Name:
Substitute	Address:
Form W-9 Department of the Treasury Internal Revenue Service	Check appropriate box: Individual/Sole Proprietor ☐ Partnership ☐		Corporation ☐ Other (specify) ☐ Exempt from Backup Withholding ☐

	Part I. Please provide your taxpayer identification number in the space at right. If awaiting TIN, write “Applied For” in space at right and complete the Certificate of Awaiting Taxpayer Identification Number below.		SSN: Or EIN:

Request for Taxpayer Identification Number (TIN) and Certification	Part II. For Payees exempt from backup Identification Number on Substitute Form W-9 withholding, see the enclosed “Guideline W-9” and complete as instructed therein.

	Part III. CERTIFICATION Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or, as indicated, I am waiting for a number to be issued to me); (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the IRS that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and (3) I am a U.S. person (including a U.S. resident alien).

	Certification Instructions—You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because you have failed to report all interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2).

Signature		Date

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YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE “APPLIED
FOR” IN PART I
OF THIS SUBSTITUTE FORM W-9

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that, notwithstanding the information I provided in Part III of the Substitute Form W-9 (and the fact that I have completed this Certificate of Awaiting Taxpayer Identification Number), a portion of all payments made to me pursuant to the Offer shall be retained until I provide a Tax Identification Number to the Payor and that, if I do not provide my Taxpayer Identification Number within sixty (60) days, such retained amounts shall be remitted to the IRS as backup withholding.

Signature

Date


NOTE:		FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF A PORTION OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number for the Payee (You) to Give the Payor—Social security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payor.

For this type of account:			Give the name and Social Security number of—
1.	An individual’s account		The individual
2.	Two or more individuals (joint account)		The actual owner of the account or, if combined funds, the first individual on the account(1)
3.	Custodian account of a minor (Uniform Gift to Minors Act)		The minor(2)
4.	(a)	The usual revocable savings trust (grantor is also trustee)	The grantor-trustee(1)
	(b)	So-called trust account that is not a legal or valid trust under state law	The actual owner(1)
5.	Sole proprietorship account or single-owner LLC		The owner(3)

For this type of account:			Give the name and Employer Identification Number of—
6.	A valid trust, estate or pension trust		The legal entity(4)
7.	Corporate account or LLC electing corporate status on IRS Form 8832		The corporation
8.	Partnership account (or multiple-member LLC) held in the name of the business		The partnership
9.	Association, club or other tax-exempt organization account		The organization
10.	A broker or registered nominee		The broker or nominee
11.	Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments		The public entity

(1)

List first and circle the name of the person whose number you furnish. If only one person has a social security number, that person’s number must be furnished.

(2)

Circle the minor’s name and furnish the minor’s social security number.

(3)

Show the name of the owner. You must show your individual name, but you may also enter your business or “doing business as” name. Either your social security number or employer identification number (if you have one) may be used.

(4)

List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.

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GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

Obtaining a Number

If you do not have a taxpayer identification number (“TIN”) you should apply for one immediately. You may obtain Form SS-5, Application for a Social Security Card, at the local office of the Social Security Administration or get this form online at www.socialsecurity.gov. You may obtain Form SS-4, Application for IRS Individual Taxpayer identification Number, from the Internal Revenue Service (“IRS”) by calling 1-800-TAX-FORM (1-800-829-3676) or from the IRS website at www.irs.gov. If you do not have a TIN, write “Applied For” in the space for the TIN.

Payees Exempt from Backup Withholding

Payees specifically exempted from backup withholding on all dividend and interest payments and on broker transactions include the following:

•A corporation.

•A financial institution.

•An organization exempt from tax under Section 501(a), or an individual retirement account, or a custodial account under Section 403(b)(7) if the account satisfies the requirements of Section 401(f)(2).

•The United States or any agency or instrumentality thereof.

•A state, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof.

•An international organization or any agency or instrumentality thereof.

•A dealer in securities or commodities required to register in the United States, the District of Columbia or a possession of the United States.

•A real estate investment trust.

•A common trust fund operated by a bank under Section 584(a).

•An entity registered at all times during the tax year under the Investment Company Act of 1940.

•A foreign central bank of issue.

Certain other payees may be exempt from either dividend and interest payments or broker transactions. You should consult your tax advisor to determine whether you might be exempt from backup withholding. Exempt payees described above should file the Substitute Form W-9 to avoid possible erroneous backup withholding. Complete the Substitute Form W-9 as follows:

ENTER YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” ACROSS THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN THE FORM TO THE PAYOR.

IF YOU ARE A NONRESIDENT ALIEN OR FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, GIVE THE PAYOR THE APPROPRIATE COMPLETED IRS FORM W-8.

Private Act Notice

Section 6109 requires you to provide your correct taxpayer identification number to payors who must report the payments to the IRS. The IRS uses the number for identification purposes and may also provide this information to various government agencies for tax enforcement or litigation purposes. Payors must be given numbers whether or not recipients are required to file tax returns. Payors must generally withhold currently at a rate of twenty-eight percent of any taxable interest, dividend and certain other payments to a payee who does not furnish a TIN to a payor. Certain penalties may also apply.

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Penalties

(1) Penalty for failure to Furnish Taxpayer Identification Number—If you fail to furnish your correct taxpayer identification number to a payor, you are subject to a penalty of $50 for each such failure, unless your failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information with Respect to Withholding—If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.

(3) Criminal Penalty for Falsifying Information—Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX ADVISOR OR
THE INTERNAL REVENUE SERVICE

The Depositary for the Offer Is:

Continental Stock Transfer & Trust

By Mail:

By Courier

(until 11:59 P.M., New York City time

on February 11, 2015):

Continental Stock Transfer & Trust Company

17 Battery Place, 8th Floor

New York, NY 10004

Attention: Corporate Actions Department

Tel: (917) 262-2378

Continental Stock Transfer & Trust Company

17 Battery Place, 8th Floor

New York, NY 10004

Attention: Corporate Actions Department

Tel: (917) 262-2378

Any questions or requests for assistance may be directed to either the Information Agent at the telephone number and address set forth below. Requests for additional copies of the Offer to Purchase and the Letter of Transmittal may be directed to the Information Agent. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.

The Information Agent for the Offer is:

MacKenzie Partners, Inc.

105 Madison Avenue

New York, NY 10016

Shareholders may call toll free: 1 (800) 322-2885

Banks and Brokers may call collect: (212) 929-5500

January 13, 2015

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Exhibit (a)(1)(C)

Notice of Guaranteed Delivery
for
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Peerless Systems Corporation
at
$7.00 Net Per Share
by
Mobius Acquisition Merger Sub, Inc.
a wholly owned subsidiary of
Mobius Acquisition, LLC

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON FEBRUARY 11, 2015, UNLESS THE OFFER IS EXTENDED

Do not use for signature guarantees

This form of notice of guaranteed delivery must be used to accept the Offer to Purchase, dated January 13, 2015 (the “Offer to Purchase”) of Mobius Acquisition Merger Sub, Inc., a Delaware corporation (“Purchaser”) and a wholly owned subsidiary of Mobius Acquisition, a Delaware limited liability company (“Parent”) to purchase all issued and outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Peerless Systems Corporation, a Delaware corporation (“Peerless”), at a price of $7.00 per Share, to the seller in cash (the “Offer Price”), without interest thereon and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”) enclosed herewith, if certificates for Shares and all other required documents cannot be delivered to Continental Stock Transfer & Trust (the “Depositary”) prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), if the procedure for delivery by book-entry transfer cannot be completed prior to the Expiration Date, or if time will not permit all required documents to reach the Depositary prior to the Expiration Date.

Such form may be delivered by hand or transmitted by facsimile transmission or mailed to the Depositary and must include a guarantee by an Eligible Institution (as defined below). See Section 3 of the Offer to Purchase.

The Depositary for the Offer Is:

Continental Stock Transfer & Trust


By Mail:	By Facsimile Transmission:	By Courier (until 11:59 P.M., New York City time on February 11, 2015):

Continental Stock Transfer & Trust Company 17 Battery Place, 8th Floor New York, NY 10004 Attention: Corporate Actions Department Tel: (917) 262-2378	For Eligible Institutions Only: (212) 616-7610 For Confirmation Only Telephone: (917) 262-2378	Continental Stock Transfer & Trust Company 17 Battery Place, 8th Floor New York, NY 10004 Attention: Corporate Actions Department Tel: (917) 262-2378

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal and must be mailed (not faxed) to the Depositary in accordance with the instructions contained in the Letter of Transmittal.

The guarantee on page 4 must be completed.

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Ladies and Gentlemen:

The undersigned hereby tenders to Mobius Acquisition Merger Sub, Inc., a Delaware corporation (“Purchaser”) and a wholly owned subsidiary of Mobius Acquisition, LLC, a Delaware limited liability company (“Parent”), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 13, 2015 (the “Offer to Purchase”), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”), receipt of which is hereby acknowledged, the number of shares of common stock, par value $0.001 per share (the “Shares”), of Peerless Systems Corporation, a Delaware corporation (“Peerless”), indicated below pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
	Number of Shares Tendered:
	Share Certificate Number(s) (if available):


	DTC Participant Number:

	Transaction Code Number:

	Date: , 2015


	Name(s) of Record Owner(s):



	(Please type or print) Address(es):



	(Including Zip Code)
	Area Code and Telephone Number:

	Signature(s):

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GUARANTEE
(Not to be used for signature guarantee)

The undersigned, a member in good standing of a recognized Medallion Program approved by the Securities Transfer Association Incorporated, including the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program and the Stock Exchanges Medallion Program (each, an “Eligible Institution”), hereby guarantees that either the certificates representing the Shares tendered hereby, in proper form for transfer, an indication in the Letter of Transmittal of the tender of Direct Registration Book-Entry Shares (as defined in the Offer to Purchase), or timely confirmation of a book-entry transfer of such Shares into the Depositary’s account at The Depository Trust Company (pursuant to the procedures set forth in Section 3 of the Offer to Purchase), together with a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message (as defined in the Offer to Purchase)) and any other documents required by the Letter of Transmittal, will be received by the Depositary at one of its addresses set forth above within three (3) New York Stock Exchange trading days after the date of execution hereof.

The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal, Share Certificate(s) and/or any other required documents to the Depositary within the time period shown above. Failure to do so could result in a financial loss to such Eligible Institution.

Name of Firm:
Address:	(Including Zip Code)
Area Code and Telephone Number:
Authorized Signature:
Name:	(Please Type or Print)
Title:
Dated:

NOTE:

DO NOT SEND CERTIFICATES REPRESENTING TENDERED SHARES WITH THIS NOTICE. CERTIFICATES REPRESENTING TENDERED SHARES

SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.

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Exhibit (a)(1)(D)

Offer To Purchase For Cash

All Outstanding Shares of Common Stock

Peerless Systems Corporation

a Delaware corporation

$7.00 NET PER SHARE

Pursuant to the Offer to Purchase dated January 13, 2015

Mobius Acquisition Merger Sub, Inc.

a wholly owned subsidiary of

Mobius Acquisition, LLC

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON

FEBRUARY 11, 2015, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED.

January 13, 2015

To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:

We have been engaged by Mobius Acquisition Merger Sub, Inc., a Delaware corporation (which we refer to as “Purchaser”) and a wholly owned subsidiary of Mobius Acquisition, LLC, a Delaware limited liability company (which we refer to as “Parent”), to act as Information Agent in connection with Purchaser’s offer to purchase all of the outstanding shares of common stock, par value $0.001 per share (which we refer to as “Shares”), of Peerless Systems Corporation, a Delaware corporation (which we refer to as “Peerless” or the “Company”), at a purchase price of $7.00 per Share, net to the seller in cash, without interest thereon and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 13, 2015 (which we refer to as the “Offer to Purchase”), and the related Letter of Transmittal (which we refer to as the “Letter of Transmittal” and which, together with the Offer to Purchase and other related materials, each as may be amended or supplemented from time to time, we refer to as the “Offer”) enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whom you hold Shares registered in your name or in the name of your nominee.

Certain conditions to the Offer are described in Section 15 of the Offer to Purchase.

For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents:

1. The Offer to Purchase;

2. The Letter of Transmittal for your use in accepting the Offer and tendering Shares and for the information of your clients, together with the included Internal Revenue Service Form W-9;

3. A form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name the name of your nominee, with space provided for obtaining such clients’ instructions with regard to the Offer;

4. Notice of Guaranteed Delivery with respect to the Shares; and

5. A return envelope addressed to Continental Stock Transfer & Trust (which we refer to as the “Depositary”) for your use only.

We urge you to contact your clients as promptly as possible. Please note that the Offer and withdrawal rights will expire at 11:59 P.M., New York City time, on February 11, 2015, unless the Offer is extended or earlier terminated.

Any extension, delay, termination or amendment of the Offer will be followed as promptly as practicable by public announcement thereof, and such announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date of the Offer.

The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of December 22, 2014 (which we refer to as the “Merger Agreement”), by and among Parent, Purchaser and Peerless. The Merger Agreement provides that, immediately following the consummation of the Offer and subject to satisfaction or waiver of certain conditions, Purchaser will be merged with and into Peerless (which we refer to as the “Merger”), with Peerless continuing after the Merger as the surviving corporation and a wholly owned subsidiary of Parent.

In order for a stockholder to validly tender Shares pursuant to the Offer, the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent’s Message (as defined in the Offer to Purchase) in lieu of the Letter of Transmittal) and any other documents required by the Letter of Transmittal must be received by the Depositary and either (A) the share certificates evidencing tendered Shares must be received by the Depositary or (B) such Shares must be tendered pursuant to the procedure for book-entry transfer described in the Offer to Purchase and a Book-Entry Confirmation (as defined in the Offer to Purchase) must be received by the Depositary, in each case prior to the Expiration Date (as defined in the Offer to Purchase).

Neither Parent nor Purchaser will pay any fees or commissions to any broker or dealer or any other person (other than to the Depositary and Information Agent as described in the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse brokers, dealers, commercial banks and trust companies for customary mailing and handling expenses incurred by them in forwarding materials related to the Offer to their customers. Purchaser will pay all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal.

Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed materials may be obtained from, Continental Stock Transfer & Trust at the address and telephone number set forth on the back cover of the Offer to Purchase.

Very truly yours,

MacKenzie Partners, Inc.

Nothing contained herein or in the enclosed documents shall render you the agent of Purchaser, the Information Agent or the Depositary or any affiliate of any of them or authorize you or any other person to use any document or make any statement on behalf of any of them in connection with the Offer other than the enclosed documents and the statements contained therein.

Exhibit (a)(1)(E)

Offer To Purchase For Cash

All Outstanding Shares of Common Stock

Peerless Systems Corporation

a Delaware corporation

$7.00 NET PER SHARE

Pursuant to the Offer to Purchase dated January 13, 2015

Mobius Acquisition Merger Sub, Inc.

a wholly owned subsidiary of

Mobius Acquisition, LLC

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, AT THE

END OF THE DAY ON FEBRUARY 11, 2015, UNLESS THE OFFER IS EXTENDED OR EARLIER

TERMINATED.

January 13, 2015

To Our Clients:

January 13, 2015

Enclosed for your consideration are the Offer to Purchase, dated January 13, 2015 (which we refer to as the “Offer to Purchase”), and the related Letter of Transmittal (which we refer to as the “Letter of Transmittal” and which, together with the Offer to Purchase and other related materials, as each may be amended or supplemented from time to time, we refer to as the “Offer”) in connection with the offer by Mobius Acquisition Merger Sub, Inc., a Delaware corporation (which we refer to as “Purchaser”) and a wholly owned subsidiary of Mobius Acquisition, LLC, a Delaware limited liability company (which we refer to as “Parent”), to purchase all of the outstanding shares of common stock, par value $0.001 per share (which we refer to as “Shares”), of Peerless Systems Corporation, a Delaware corporation (which we refer to as “Peerless” or the “Company”), at a purchase price of $7.00 per Share, net to the seller in cash, without interest thereon and less any applicable withholding taxes, upon the terms and subject to the conditions of the Offer.

We or our nominees are the holder of record of Shares held for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal accompanying this letter is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account.

We request instructions as to whether you wish us to tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the enclosed Offer to Purchase and the Letter of Transmittal.

Please note carefully the following:

1. The offer price for the Offer is $7.00 per Share, net to you in cash, without interest and less any applicable withholding taxes.

2. The Offer is being made for all of the outstanding Shares.

3. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of December 22, 2014 with any amendments or supplements thereto, which we refer to as the “Merger Agreement”), among Parent, Purchaser and Peerless, pursuant to which, after the completion of the Offer and the satisfaction or waiver of the conditions set forth therein, Purchaser will be merged with and into Peerless, and Peerless will be the surviving corporation (which we refer to as the “Merger”).

4. The Offer and withdrawal rights will expire at 11:59 P.M., New York City time, on February 11, 2015, unless the Offer is extended by Purchaser (we refer to such date and time, as it may be extended in accordance with the terms of the Merger Agreement, the “Expiration Date”) or earlier terminated. Under the terms of the Merger Agreement, and subject to applicable securities laws, rules and regulations:

•

if, at the initial Expiration Date or any later then-scheduled Expiration Date, any condition to the Offer (other than the condition that the number of shares validly tendered in accordance with the terms of the Offer and not validly withdrawn on or prior to the Expiration Date (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee) which, together with any shares then owned by Parent and its subsidiaries, shall equal at least a majority of the outstanding Shares on a fully-diluted basis as of the Expiration Date, which we refer to as the “Minimum Tender Condition”) has not been satisfied or waived, Purchaser must extend the Offer, on one or more occasions, in consecutive increments of up to five (5) business days (or such longer period as the parties may agree) until the condition has been satisfied or waived; and

•

if, at the initial Expiration Date or any later then-scheduled Expiration Date, all conditions to the Offer (other than the Minimum Tender Condition) have been satisfied or waived, Purchaser will extend the Offer in increments of five (5) business days; provided, however, that the maximum number of days that the Offer may be extended pursuant to this sentence is twenty (20) business days unless requested or approved by Peerless;

provided, however, that Purchaser shall not be required to extend the Offer beyond April 30, 2015 and any such extension beyond April 30, 2015 shall be subject to Purchaser’s right to irrevocably and unconditionally terminate the Offer if at the then-scheduled Expiration Date any condition to the Offer has not been satisfied or waived.

5. The Offer is subject to certain conditions described in Section 15 of the Offer to Purchase.

6. Tendering stockholders who are record owners of their Shares and who tender directly to Continental Stock Transfer & Trust (which we refer to as the “Depositary”) will not be obligated to pay brokerage fees, commissions or similar expenses or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes with respect to the purchase of Shares by Purchaser pursuant to the Offer.

7. After careful consideration, the Company’s board of directors has, among other things, unanimously (i) resolved that the Merger Agreement and the transactions contemplated thereby are fair to, advisable and in the best interests of, the Company and the Company’s stockholders, (ii) approved and adopted the Merger Agreement (including the plan of merger described therein), (iii) resolved that the plan of merger contained in the Merger Agreement, and the transactions contemplated by the Merger Agreement, including the Offer and the Merger, are adopted and approved and declared advisable under the DGCL and the certificate of incorporation and bylaws of the Company, and (iv) recommended that the Company’s stockholders accept the Offer and tender their Shares pursuant to the Offer.

If you wish to have us tender any or all of your Shares, then please so instruct us by completing, executing, detaching and returning to us the Instruction Form on the detachable part hereof. An envelope to return your instructions to us is enclosed. If you authorize tender of your Shares, then all such Shares will be tendered unless otherwise specified on the Instruction Form.

Your prompt action is requested. Your Instruction Form should be forwarded to us in ample time to permit us to submit the tender on your behalf before the Expiration Date (as defined in the Offer to Purchase).

The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction.

INSTRUCTION FORM

With Respect to the Offer to Purchase for Cash

All Outstanding Shares of Common Stock

Peerless Systems Corporation

a Delaware corporation

$7.00 NET PER SHARE

Pursuant to the Offer to Purchase dated January 13, 2015

Mobius Acquisition Merger Sub, Inc.

a wholly owned subsidiary of

Mobius Acquisition, LLC

The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated January 13, 2015 (which we refer to as the “Offer to Purchase”), and the related Letter of Transmittal (which we refer to as the “Letter of Transmittal” and which, together with the Offer to Purchase and other related materials, as each may be amended or supplemented from time to time, we refer to as the “Offer”), in connection with the offer by Mobius Acquisition Merger Sub, Inc., a Delaware corporation (which we refer to as “Purchaser”) and a wholly owned subsidiary Mobius Acquisition, LLC, a Delaware limited liability company (which we refer to as “Parent”), to purchase all of the outstanding shares of common stock, par value $0.001 per share (which we refer to as “Shares”), of Peerless Systems Corporation, a Delaware corporation, at a purchase price of $7.00 per Share, net to the seller in cash, without interest and less any applicable withholding taxes, upon the terms and subject to the conditions of the Offer.

The undersigned hereby instruct(s) you to tender to Purchaser the number of Shares indicated below or, if no number is indicated, all Shares held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. The undersigned understands and acknowledges that all questions as to validity, form and eligibility of the surrender of any certificate representing Shares submitted on my behalf will be determined by Purchaser.

ACCOUNT NUMBER: ______________________________

NUMBER OF SHARES BEING TENDERED HEREBY: ____________SHARES*

The method of delivery of this document is at the election and risk of the tendering stockholder. If delivery is by mail, then registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery prior to the Expiration Date (as defined in the Offer to Purchase).

Dated:

Signature(s)

Address:

Please Print Names(s)

(Include Zip Code)

Area code and Telephone No.:

Taxpayer Identification or Social Security No.:

* Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered.

Exhibit (a)(1)(F)

This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below), and the provisions herein are subject in their entirety to the provisions of the Offer (as defined below). The Offer is made solely by the Offer to Purchase, dated January 13, 2015, and the related Letter of Transmittal and any amendments or supplements thereto, and is being made to all holders of Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the securities, “blue sky” or other laws of such jurisdiction or any administrative or judicial action pursuant thereto. In those jurisdictions where applicable laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser (as defined below) by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by Purchaser.

Notice of Offer to Purchase for Cash

All Outstanding Shares of Common Stock

Peerless Systems Corporation

a Delaware corporation

$7.00 Net Per Share

Pursuant to the Offer to Purchase dated January 13, 2015

Mobius Acquisition Merger Sub, Inc.

a wholly owned subsidiary of

Mobius Acquisition, LLC

Mobius Acquisition Merger Sub, Inc., a Delaware corporation (which we refer to as “Purchaser”) and a wholly owned subsidiary of Mobius Acquisition, LLC, a Delaware limited liability corporation (which we refer to as “Parent”), is offering to purchase all of the outstanding shares of common stock, par value $0.001 per share (the “Shares”), of Peerless Systems Corporation, a Delaware corporation (which we refer to as “Peerless”), at a purchase price of $7.00 per Share (the “Offer Price”), net to the seller in cash, without interest thereon and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated January 13, 2015 (the “Offer to Purchase”) and in the related Letter of Transmittal (the “Letter of Transmittal” which, together with the Offer to Purchase and other related materials, as each may be amended or supplemented from time to time, constitutes the “Offer”).

Stockholders of record who tender directly to Continental Stock Transfer & Trust (the “Depositary”) will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in the Letter of Transmittal, stock transfer taxes with respect to the purchase of Shares by Purchaser pursuant to the Offer. Stockholders who hold their Shares through a broker, banker or other nominee should consult such institution as to whether it charges any service fees or commissions.

THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 11:59 P.M., NEW YORK CITY TIME,

ON FEBRUARY 11, 2015, UNLESS THE OFFER IS EXTENDED OR EARLIER TERMINATED.

The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of December 22, 2014 (as it may be amended from time to time, the “Merger Agreement”), by and among Parent, Purchaser and Peerless. The Merger Agreement provides, among other things, that following the consummation of the Offer and subject to the satisfaction or waiver of certain conditions, Purchaser will be merged with and into Peerless (the “Merger”), with Peerless continuing as the surviving corporation in the Merger and a wholly owned subsidiary of Parent. The closing of the Merger is referred to as the “Merger Closing.” Acceptance for payment of Shares pursuant to and subject to the conditions of the Offer, which shall occur promptly following the Expiration Date (as defined below), unless the Offer is terminated in accordance with the conditions of the Offer, is referred to as the “Offer Closing.” In the Merger, each Share issued and outstanding immediately prior to the effective time of the Merger (other than (i) Shares owned by Parent, Purchaser or any other direct or indirect wholly owned subsidiary of Parent, and Shares owned by Peerless or any direct or indirect wholly owned subsidiary of Peerless, and in each case not held on behalf of third parties and (ii) Shares owned by stockholders who validly exercise appraisal rights under Delaware law with respect to such Shares) will be automatically converted into the right to receive the Offer Price, without interest thereon and less any applicable withholding taxes. As a result of the Merger, Peerless will cease to be a publicly traded company and will become wholly owned by Parent. The Merger Agreement is more fully described in the Offer to Purchase. Under no circumstances will interest be paid on the purchase price for Shares, regardless of any extension of the Offer or any delay in making payment for Shares.

The Offer is conditioned upon, among other things, (a) the absence of the termination of the Merger Agreement in accordance with its terms and (b) the satisfaction of (i) the Minimum Tender Condition, (ii) the Governmental Authority Condition. The Minimum Tender Condition requires that the number of Shares validly tendered in accordance with the terms of the Offer and not validly withdrawn (excluding Shares tendered pursuant to guaranteed delivery procedures that have not yet been delivered in settlement or satisfaction of such guarantee) on or prior to 11:59 p.m., New York City time, on February 11, 2015 (the “Expiration Date,” unless Purchaser shall have extended the period during which the Offer is open in accordance with the Merger Agreement, in which event “Expiration Date” shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire) which, together with any Shares then owned by Parent and its subsidiaries, shall equal at least a majority of the outstanding Shares on a fully-diluted basis as of the Expiration Date. The Governmental Authority Condition requires that no governmental authority shall have enacted, issued, promulgated, enforced or entered any law or order which has the effect of enjoining or otherwise prohibiting the making of the Offer or the consummation of the Offer or the Merger. The Offer also is subject to other customary conditions as described in the Offer to Purchase.

After careful consideration, Peerless’s board of directors has unanimously resolved, among other things, to (i) approve and declare advisable the Merger Agreement and the transactions contemplated thereby, (ii) declare that it is in the best interests of the stockholders of the Company that the Company enter into the Merger Agreement and consummate the transactions contemplated by the Merger Agreement on the terms and subject to the conditions set forth in the Merger Agreement and (iii) recommend that the stockholders of the Company accept the Offer and tender their Shares to Purchaser in the Offer.

Purchaser has agreed in the Merger Agreement that, subject to Purchaser’s rights to terminate the Merger Agreement in accordance with its terms:

•

Subject to the applicable rules and regulations of the United States Securities and Exchange Commission (the “SEC”), Purchaser expressly reserves the right to waive, in whole or in part, any condition to the Offer or modify the terms of the Offer; provided, however, that, without the consent of Peerless, Purchaser cannot (i) reduce the number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) amend, modify or waive the Minimum Tender Condition, (iv) add to the Offer conditions or amend, modify or supplement any Offer condition in any manner adverse to any holder of Shares, (v) except as expressly provided in the Merger Agreement, terminate, extend or otherwise amend or modify the expiration date of the Offer, (vi) change the form of consideration payable in the Offer, (vii) otherwise amend, modify or supplement any of the terms of the Offer in any manner adverse to any holder of Shares or (viii) provide any subsequent offering period. Any extension, delay, termination or amendment of the Offer will be followed as promptly as practicable by public announcement thereof, and such announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which Purchaser may choose to make any public announcement, it currently intends to make announcements regarding the Offer by issuing a press release and making any appropriate filing with the SEC.

On the terms of and subject to the conditions to the Offer, promptly after the Expiration Date of the Offer, Purchaser will accept for payment, and pay for, all Shares validly tendered to Purchaser in the Offer and not validly withdrawn on or prior to the Expiration Date. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not properly withdrawn as, if and when Purchaser gives oral or written notice to the Depositary of its acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the Offer Price for such Shares with the Depositary, which will act as paying agent for tendering stockholders for the purpose of receiving payments from Purchaser and transmitting such payments to tendering stockholders whose Shares have been accepted for payment. If Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to their rights under the Offer and the Merger Agreement, the Depositary may retain tendered Shares on its behalf, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described in the Offer to Purchase and as otherwise required by Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under no circumstances will Purchaser pay interest on the purchase price for Shares by reason of any extension of the Offer or any delay in making such payment for Shares.

In all cases, Purchaser will pay for Shares tendered and accepted for payment pursuant to the Offer only after timely receipt by the Depositary of (i)(a) the certificates evidencing such Shares (the “Share Certificates”) or (b) confirmation of a book-entry transfer of such Shares (a “Book-Entry Confirmation”) into the Depositary’s account at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in the Offer to Purchase, (ii) the Letter Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees or, in the case of a book-entry transfer, an Agent’s Message (as described in the Offer to Purchase) in lieu of the Letter of Transmittal and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at different times depending upon when Share Certificates or Book-Entry Confirmations with respect to Shares are actually received by the Depositary. Stockholders who cannot deliver all required documents to the Depositary prior to the expiration of the Offer, may tender Shares by following the procedures for guaranteed delivery set forth in Section 3 of the Offer to Purchase (but such Shares shall not be deemed tendered for purposes of the satisfaction of the Minimum Tender Condition until settlement or satisfaction of such guaranty).

Shares tendered pursuant to the Offer may be withdrawn at any time prior to 11:59 p.m., New York City time, on the Expiration Date. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover page of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such Share Certificates, the serial numbers shown on such Share Certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as described in the Offer to Purchase), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at DTC to be credited with the withdrawn Shares. Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in the Offer to Purchase at any time prior to the Expiration Date.

Purchaser will determine, in its sole discretion, all questions as to the form and validity (including time of receipt) of any notice of withdrawal. None of Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.

The information required to be disclosed by paragraph (d)(1) of Rule 14d-6 of the General Rules and Regulations under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference.

Peerless has provided Purchaser with Peerless’s stockholder list and security position listings for the purpose of disseminating the Offer to Purchase, the related Letter of Transmittal and other related materials to holders of Shares. The Offer to Purchase and related Letter of Transmittal will be mailed to record holders of Shares whose names appear on Peerless’s stockholder list and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency’s security position listing for subsequent transmittal to beneficial owners of Shares.

The exchange of Shares for cash pursuant to the Offer or the Merger generally will be a taxable transaction to U.S. Holders for United States federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign income tax or other tax laws. See the Offer to Purchase for a more detailed discussion of the tax treatment of the Offer. Each holder of Shares should consult with its tax advisor as to the particular tax consequences to such holder of exchanging Shares for cash in the Offer or the Merger.

The Offer to Purchase and the related Letter of Transmittal and Peerless’s Solicitation/Recommendation Statement on Schedule 14D-9 filed with the SEC in connection with the Offer contain important information. Holders of Shares should carefully read each such document in its entirety before any decision is made with respect to the Offer.

Questions and requests for assistance may be directed to the Information Agent at its address and telephone numbers set forth below. Requests for copies of the Offer to Purchase and the related Letter of Transmittal may be directed to the Information Agent. Such copies will be furnished promptly at Purchaser’s expense. Stockholders may also contact brokers, dealers, commercial banks or trust companies for assistance concerning the Offer. Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Information Agent or the Depositary) for soliciting tenders of Shares pursuant to the Offer.

The Information Agent for the Offer is:

MacKenzie Partners, Inc.

105 Madison Avenue

New York, NY 10016

(212) 929-5500 call collect)

CALL TOLL FREE 1 (800) 322-2885

January 13, 2015

Exhibit (b)(1)

MOBIUS ACQUISITION, LLC

DELAYED DRAW TERM PROMISSORY NOTE

$ 15,000,000.00

November 19, 2014

FOR VALUE RECEIVED, TRAY3, LLC, a Delaware limited liability company (“Lender”) commits to loan to MOBIUS ACQUISITION, LLC, (“Borrower”), an aggregate principal amount not to exceed FIFTEEN MILLION DOLLARS ($15,000,000.00), or such lesser amount that is borrowed under the Loan Draw (the “Principal Amount”) during the period commencing on the date first written above and ending on April 30, 2015 (the “Availability Period”), pursuant to the terms of this Delayed Draw Term Promissory Note (this “Note”).

During the Availability Period, Borrower may request one advance under this Note by providing one (1) day advance notice to Lender including the amount being borrowed, the date of the borrowing and any instructions for distributing the proceeds (the “Loan Draw”).

Borrower unconditionally promises to pay Lender in the manner and at the place hereinafter provided, the Principal Amount in quarterly installments equal to $375,000.00 (or such lesser amount as may be required to provide for payments based on a five (5) year straight line amortization schedule) payable on the first day of the Fiscal Quarter commencing immediately after the Loan Draw and continuing on the first day of each Fiscal Quarter thereafter until November 19, 2019 (the “Maturity Date”) with the final payment of any Principal Amount then due and outstanding (together with any interest accrued thereon and any fees or other expenses due hereunder) on the Maturity Date.

Interest on the Principal Amount shall accrue at a rate per annum equal to nine and one half percent (9.50%). Such interest shall be payable in arrears on the first day of each calendar month and on the Maturity Date, commencing on January 1, 2015 and continuing on the first day of each calendar month thereafter. All computations of interest shall be made by Lender on the basis of a 365/366 day year, for the actual number of days elapsed in the relevant period (including the first day but excluding the last day). In no event shall the interest rate payable on this Note exceed the maximum rate of interest permitted to be charged under applicable law.

As a condition to requesting any Loan Draw: (i) the Borrower shall also have entered into the Warrant Agreement, the Security Agreement and shall have performed its obligations thereunder, and (ii) the Guarantors shall have entered into the Guaranty and Pledge Agreement and each shall have performed its obligations thereunder.

1. Payments. All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the office of Lender located at 120 Millview Drive, Pittsburgh, Pennsylvania 15238-1626, or at such other place as Lender may direct. Whenever any payment on this Note is stated to be due on a day that is not a Business Day, such payment shall instead be made on the next Business Day, and such extension of time shall be included in the computation of interest payable on this Note. Each payment made hereunder shall be credited first to any fees and expenses due and payable hereunder, then to interest then due and the remainder of such payment shall be credited to principal, and interest shall thereupon cease to accrue upon the principal so credited. Each of Lender and any subsequent holder of this Note agrees, by their acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, however, that the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligation of Borrower hereunder with respect to payments of principal or interest on this Note.

2. Prepayments. Borrower shall have the right at any time and from time to time to prepay the principal of this Note in whole or in part, without premium or penalty, upon at least five (5) days’ notice; provided that each such prepayment shall be in a minimum amount of $100,000.00 and integral multiples of $50,000.00 in excess of that amount, or such lesser amount then outstanding. Any prepayment hereunder shall be accompanied by any unpaid interest accrued on the principal amount of the Note being prepaid to the date of prepayment and shall be applied to principal payments in inverse order of maturity.

3. Covenants. Borrower covenants and agrees that until this Note is paid in full it will:

(a) promptly provide to Lender all financial statements and operational information with respect to Borrower and its subsidiaries as Lender may reasonably request;

(b) promptly after the occurrence of an Event of Default or an event, act or condition that, with notice or lapse of time or both, would constitute an Event of Default, provide Lender with a certificate of the chief executive officer or chief financial officer of Borrower specifying the nature thereof and Borrower’s proposed response thereto;

(c) not, and will not permit any of its subsidiaries to, create, assume, guaranty, incur or otherwise become or remain directly or indirectly liable with respect to any indebtedness for borrowed money, without Lender’s prior written consent;

(d) not create or suffer to exist, or permit any of its subsidiaries to create or suffer to exist, any lien, security interest or encumbrance of any kind upon or with respect to any of its assets or properties, whether now owned or hereafter acquired, other than liens in favor of the Lender, without Lender’s prior written consent;

(e) not merge or consolidate with any other Person, or sell, lease or otherwise dispose of all or any substantial part of its property or assets to any other Person outside the ordinary course of business;

(f) deliver to Lender on the date hereof, an executed copy of the Warrant Agreement; and

(g) deliver to Lender on the date hereof an executed copy of the Security Agreement.

4. Representations and Warranties. Borrower hereby represents and warrants to Lender that:

(a) it is (i) a duly organized and validly existing limited liability company, (ii) in good standing or subsisting under the laws of the jurisdiction of its organization, (iii) has the power and authority under its operating agreement to own and operate its properties, to transact the business in which it is now engaged and to execute and deliver this Note and the Warrant Agreement, and (iv) is duly authorized to transact business under the laws of any jurisdiction where so required;

(b) this Note and the Warrant Agreement constitute the duly authorized, legally valid and binding obligation of Borrower, enforceable against Borrower in accordance with their terms;

(c) Guarantors collectively own and control one-hundred percent (100%) of the limited liability company interests of Borrower;

(d) all consents and grants of approval required to have been granted by any Person in connection with the execution, delivery and performance of this Note and the Warrant Agreement have been granted;

(e) the execution, delivery and performance by Borrower of this Note and Warrant Agreement does not and will not (i) violate any law, governmental rule or regulation, court order or agreement to which it is subject or by which its properties are bound or the charter documents or operating agreement of Borrower or (ii) result in the creation of any lien or other encumbrance with respect to the property of Borrower;

(f) there is no action, suit, proceeding or governmental investigation pending or, to the knowledge of Borrower, threatened against Borrower or any of its subsidiaries or any of their respective assets which, if adversely determined, would have a material adverse effect on the business, operations, properties, assets, condition (financial or otherwise) or prospects of Borrower and its subsidiaries, taken as a whole, or the ability of Borrower to comply with its obligations hereunder; and

(g) the proceeds of the loan evidenced by this Note shall be used by Borrower to facilitate the acquisition of stock of Peerless Systems Corporation (“Peerless”) and then complete a merger of Borrower’s subsidiary or subsidiaries with Peerless Systems Corporation (the “Merger”) in accordance with terms reasonably acceptable to Lender in its sole discretion.

5. Events of Default. The occurrence of any of the following events shall constitute an “Event of Default”:

(a) failure of Borrower to pay any principal, interest or any other amount due under this Note when due, whether at stated maturity, by required prepayment, declaration, acceleration or otherwise; or

(b) failure of Borrower or any of the Guarantors to pay, or the default in the payment of, any amount due under or in respect of any promissory note, indenture or other agreement or instrument relating to any indebtedness owing by Borrower or such Guarantors, to which Borrower or Guarantors are a party or by which Borrower or any of its property is bound under which amounts outstanding exceed $25,000.00 beyond any grace period provided; or the occurrence of any other event or circumstance that, with notice or lapse of time or both, would permit acceleration of such indebtedness; or

(c) failure of Borrower to perform or observe any other term, covenant or agreement to be performed or observed by it pursuant to this Note of the Warrant Agreement; or

(d) any representation or warranty made by Borrower to Lender in connection with this Note or the Warrant Agreement shall prove to have been false in any material respect when made; or

(e) any order, judgment or decree entered against Borrower, or any of its subsidiaries, or any Person resulting in the dissolution or split-up of Borrower; or

(f) suspension of the usual business activities of Borrower, or any of its subsidiaries, or the complete or partial liquidation of Borrower’s business; or

(g) (i) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of Borrower, any of its subsidiaries, or any Guarantor in an involuntary case under Title 11 of the United States Code entitled “Bankruptcy” (as now and hereinafter in effect, or any successor thereto, the “Bankruptcy Code”) or any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against Borrower, any of its subsidiaries, or any Guarantor under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Borrower, any of its subsidiaries, or any Guarantor or over all or a substantial part of their property shall have been entered; or the involuntary appointment of an interim receiver, trustee or other custodian of Borrower, any of its subsidiaries, or any Guarantor for all or a substantial part of their property shall have occurred; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Borrower, any of its subsidiaries, or any Guarantor, and, in the case of any event described in this clause (ii), such event shall have continued for 60 days unless dismissed, bonded or discharged; or

(h) an order for relief shall be entered with respect to Borrower, any of its subsidiaries, or any Guarantor or Borrower, any of its subsidiaries, or any Guarantor shall commence a voluntary case under the Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Borrower, any of its subsidiaries, or any Guarantor shall make an assignment for the benefit of creditors; or Borrower, any of its subsidiaries, or any Guarantor shall be unable or fail, or shall admit in writing its inability, to pay its debts as such debts become due; or Guarantors (or any committee thereof) shall adopt any resolution or otherwise authorize action to approve any of the foregoing; or

(i) Borrower or Guarantors shall challenge, or institute any proceedings to challenge, the validity, binding effect or enforceability of this Note, the Warrant Agreement, the Guaranty, the Pledge Agreement or any endorsement of this Note or any other obligation to Lender; or

(j) any provision of this Note, the Warrant Agreement, the Guaranty or the Pledge Agreement or any provision hereof or thereof shall cease to be in full force or effect or shall be declared to be null or void or otherwise unenforceable in whole or in part; or Lender shall not have or shall cease to have a valid and perfected first priority security interest in the collateral described in the Pledge Agreement; or Guarantor or any Person acting by or on behalf of Guarantor shall deny or disaffirm Guarantor’s obligations under the Guaranty; or Guarantor shall default (beyond any applicable grace period) in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Guaranty; or

(k) any Guarantor conveys, sells, leases, licenses, assigns, transfers, or otherwise disposes of any of his or her limited liability company interests of Borrower without first providing the Lender with at least ten (10) days’ notice.

6. Remedies. Upon the occurrence of any Event of Default specified in Section 5(g) or 5(h) above, the principal amount of this Note together with accrued interest thereon shall become immediately due and payable, without presentment, demand, notice, protest or other requirements of any kind (all of which are hereby expressly waived by Borrower). Upon the occurrence and during the continuance of any other Event of Default Lender may, by written notice to Borrower, declare the principal amount of this Note together with accrued interest thereon to be due and payable, and the principal amount of this Note together with such interest shall thereupon immediately become due and payable without presentment, further notice, protest or other requirements of any kind (all of which are hereby expressly waived by Borrower). In either case Lender may, in addition to exercising any other rights and remedies it may have, exercise any rights of setoff available to it at law or equity.

7. Definitions. The following terms used in this Note shall have the following meanings (and any of such terms may, unless the context otherwise requires, be used in the singular or the plural depending on the reference):

“Business Day” means any day other than a Saturday, Sunday or legal holiday under the laws of the Commonwealth of Pennsylvania or any other day on which banking institutions located in such state are authorized or required by law or other governmental action to close.

“Event of Default” means any of the events set forth in Section 5.

“Fiscal Quarter” each being one of the four consecutive means three-month periods comprising the calendar year which shall begin on January 1, April 1, July 1 and October 1 of each such year.

“Guarantors” means Lodovico C. de Visconti, Anthony J. Bonidy, Conner A. Frank and Amanda K. Goodish and his or her permitted successors and assigns under the Guaranty.

“Guaranty” means the Guaranty and Suretyship Agreement dated as of the date hereof by Guarantors in favor of Lender, as the same may be amended, supplemented or otherwise modified from time to time.

“Person” means any individual, partnership, limited liability company, joint venture, firm, corporation, association, bank, trust or other enterprise, whether or not a legal entity, or any government or political subdivision or any agency, department or instrumentality thereof.

“Pledge Agreement” means the Pledge Agreement dated as of the date hereof by and among Lender, and Lodovico C. de Visconti, Anthony J. Bonidy, Connor A. Frank, Thomas A. Bonidy, and Amanda K. Goodish, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Security Agreement” means the Security Agreement dated as of the date hereof by Borrower in favor of Lender, as the same may be amended, restated, supplemented or otherwise modified from time to time.

“Warrant Agreement” means the Warrant Agreement dated as of the date hereof by and between Lender and Borrower, as the same may be amended, restated, supplemented or otherwise modified from time to time.

8. Miscellaneous.

(a) All notices and other communications provided for hereunder shall be in writing (including faxes) and mailed, telecopied, or delivered as follows: if to Borrower, at Centre City Tower, Suite 705, 650 Smithfield Street, Pittsburgh, Pennsylvania, 15222; and if to Lender, at 120 Millview Drive, Pittsburgh, Pennsylvania 15238-1626; or in each case at such other address as shall be designated by Lender or Borrower. All such notices and communications shall, when mailed, faxed or sent by overnight courier, be effective when deposited in the mails, delivered to the overnight courier, as the case may be, or sent by fax. Electronic mail may be used to distribute routine communications; provided that no signature with respect to any notice, request, agreement, waiver, amendment, or other documents may be sent by electronic mail.

(b) Borrower agrees to indemnify Lender against any losses, claims, damages and liabilities and related expenses, including counsel fees and expenses, incurred by Lender arising out of or in connection with or as a result of the transactions contemplated by this Note, including without limitation the acquisition of Peerless and the Merger and the operation of any such subsidiary thereunder, except to the extent that such losses, claims, damages or liabilities result from Lender’s gross negligence or willful misconduct, as finally determined by a court of competent jurisdiction. In particular, Borrower promises to pay all costs and expenses, including reasonable attorneys’ fees, incurred in connection with the collection and enforcement of this Note. In addition to and not in limitation of any rights of set off that Lender or any other holder of this Note may now or hereafter have under applicable law, Lender or such other holder of this Note, upon the occurrence of any Event of Default, is hereby authorized at any time or from time to time, without notice of any kind to Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special, time or demand, provisional or final) and any other indebtedness at any time held or owing by Lender or such other holder (including without limitation by branches and agencies of Lender or such other holder wherever located) to or for the credit or the account of Borrower against and on account of the obligations and liabilities of Borrower to Lender under this Note and all other claims of any nature or description arising out of or connected with this Note, irrespective of whether or not Lender shall have made any demand hereunder and although said obligations, liabilities or claims, or any of them, shall be contingent or unmatured.

(c) No failure or delay on the part of Lender or any other holder of this Note to exercise any right, power or privilege under this Note and no course of dealing between Borrower and Lender shall impair such right, power or privilege or operate as a waiver of any default or an acquiescence therein, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies expressly provided in this Note are cumulative to, and not exclusive of, any rights or remedies that Lender would otherwise have. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of Lender to any other or further action in any circumstances without notice or demand.

(d) Borrower and any endorser of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand and notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder.

(e) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICTS OR CHOICE OF LAWS PRINCIPLES.

(f) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA, AND BY EXECUTION AND DELIVERY OF THIS NOTE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS NOTE. Borrower hereby agrees that service of all process in any such proceeding in any such court may be made by registered or certified mail, return receipt requested, to Borrower at its address set forth below its signature hereto, such service being hereby acknowledged by Borrower to be sufficient for personal jurisdiction in any action against Borrower in any such court and to be otherwise effective and binding service in every respect. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of Lender to bring proceedings against Borrower in the courts of any other jurisdiction.

(g) BORROWER AND, BY THEIR ACCEPTANCE OF THIS NOTE, LENDER AND ANY SUBSEQUENT HOLDER OF THIS NOTE, HEREBY IRREVOCABLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS NOTE AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Borrower and, by their acceptance of this Note, Lender and any subsequent holder of this Note, each (i) acknowledges that this waiver is a material inducement to enter into a business relationship, that the other parties have already relied on this waiver in entering into this relationship, and that each party will continue to rely on this waiver in their related future dealings and (ii) further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS NOTE. In the event of litigation, this provision may be filed as a written consent to a trial by the court.

(h) Borrower hereby waives the benefit of any statute or rule of law or judicial decision which would otherwise require that the provisions of this Note be construed or interpreted most strongly against the party responsible for the drafting thereof.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, Borrower has executed and delivered this Delayed Draw Term Promissory Note as of the date and at the place first above written.

	MOBIUS ACQUISITION, LLC


	By:	/s/ Lodovico C. de Visconti
		Lodovico C. de Visconti
		Manager

[Signature Page to Delayed Draw Term Promissory Note]

Exhibit (b)(2)

MOBIUS ACQUISITION, LLC

DELAYED DRAW TERM PROMISSORY NOTE

$ 7,000,000.00

November 19, 2014

FOR VALUE RECEIVED, TRAY3, LLC, a Delaware limited liability company (“Lender”) commits to loan to MOBIUS ACQUISITION, LLC, (“Borrower”), an aggregate principal amount not to exceed SEVEN MILLION DOLLARS ($7,000,000.00), or such lesser amount that is borrowed under the Loan Draw (the “Principal Amount”) during the period commencing on the date first written above and ending on April 30, 2015 (the “Availability Period”), pursuant to the terms of this Delayed Draw Term Promissory Note (this “Note”).

Borrower unconditionally promises to pay Lender in the manner and at the place hereinafter provided, the Principal Amount in a single installment of the entire Principal Amount then due and outstanding (together with any interest accrued thereon and any fees or other expenses due hereunder) payable on or before the date that is ten (10) Business Days after the Loan Draw (such date, the “Maturity Date”).

Interest on the Principal Amount shall accrue at a rate per annum equal to nine and one half percent (9.50%). Such interest shall be payable on the Maturity Date. All computations of interest shall be made by Lender on the basis of a 365/366 day year, for the actual number of days elapsed in the relevant period (including the first day but excluding the last day). In no event shall the interest rate payable on this Note exceed the maximum rate of interest permitted to be charged under applicable law.

1. Payments; Upfront Fee. (a) All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds at the office of Lender located at 120 Millview Drive, Pittsburgh, Pennsylvania 15238-1626, or at such other place as Lender may direct. Whenever any payment on this Note is stated to be due on a day that is not a Business Day, such payment shall instead be made on the next Business Day, and such extension of time shall be included in the computation of interest payable on this Note. Each payment made hereunder shall be credited first to any fees and expenses due and payable hereunder, then to interest then due and the remainder of such payment shall be credited to principal, and interest shall thereupon cease to accrue upon the principal so credited. Each of Lender and any subsequent holder of this Note agrees, by their acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; provided, however, that the failure to make a notation of any payment made on this Note shall not limit or otherwise affect the obligation of Borrower hereunder with respect to payments of principal or interest on this Note.

(b) Borrower shall pay to Lender an upfront fee equal to $17,500 which shall be calculated as 0.25% per annum of the maximum Principal Amount (the “Upfront Fee”). The Upfront Fee shall be payable in full on the date hereof. The payment of any such Upfront Fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

2. Prepayments. Borrower shall have the right to prepay the entire Principal Amount of this Note at any time prior to the Maturity Date. For the avoidance of doubt, any such prepayment hereunder shall be accompanied by any unpaid interest accrued on the Principal Amount of the Note being prepaid to the date of prepayment and shall be applied to principal payments in inverse order of maturity.

3. Covenants. Borrower covenants and agrees that until this Note is paid in full it will:

(a) promptly provide to Lender all financial statements and operational information with respect to Borrower and its subsidiaries as Lender may reasonably request;

4. Representations and Warranties. Borrower hereby represents and warrants to Lender that:

(a) it is (i) a duly organized and validly existing limited liability company, (ii) in good standing or subsisting under the laws of the jurisdiction of its organization, (iii) has the power and authority under its operating agreement to own and operate its properties, to transact the business in which it is now engaged and to execute and deliver this Note, and (iv) is duly authorized to transact business under the laws of any jurisdiction where so required;

(b) this Note constitutes the duly authorized, legally valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms;

(c) all consents and grants of approval required to have been granted by any Person in connection with the execution, delivery and performance of this Note have been granted;

(d) the execution, delivery and performance by Borrower of this Note and does not and will not (i) violate any law, governmental rule or regulation, court order or agreement to which it is subject or by which its properties are bound or the charter documents or operating agreement of Borrower or (ii) result in the creation of any lien or other encumbrance with respect to the property of Borrower;

(e) there is no action, suit, proceeding or governmental investigation pending or, to the knowledge of Borrower, threatened against Borrower or any of its subsidiaries or any of their respective assets which, if adversely determined, would have a material adverse effect on the business, operations, properties, assets, condition (financial or otherwise) or prospects of Borrower and its subsidiaries, taken as a whole, or the ability of Borrower to comply with its obligations hereunder; and

(f) the proceeds of the loan evidenced by this Note shall be used by Borrower to facilitate the acquisition of stock of Peerless Systems Corporation (“Peerless”) and then complete a merger of Borrower’s subsidiary or subsidiaries with Peerless Systems Corporation (the “Merger”) in accordance with terms reasonably acceptable to Lender in its sole discretion.

5. Events of Default. The occurrence of any of the following events shall constitute an “Event of Default”:

(a) failure of Borrower to pay any principal, interest or any other amount due under this Note when due, whether at stated maturity, by required prepayment, declaration, acceleration or otherwise; or

(b) failure of Borrower to pay, or the default in the payment of, any amount due under or in respect of any promissory note, indenture or other agreement or instrument relating to any indebtedness owing by Borrower, to which Borrower is a party or by which Borrower or any of its property is bound under which amounts outstanding exceed $25,000.00 beyond any grace period provided; or the occurrence of any other event or circumstance that, with notice or lapse of time or both, would permit acceleration of such indebtedness; or

(c) failure of Borrower to perform or observe any other term, covenant or agreement to be performed or observed by it pursuant to this Note; or

(d) any representation or warranty made by Borrower to Lender in connection with this Note shall prove to have been false in any material respect when made; or

(e) any order, judgment or decree entered against Borrower, or any of its subsidiaries, or any Person resulting in the dissolution or split-up of Borrower; or

(f) suspension of the usual business activities of Borrower, or any of its subsidiaries, or the complete or partial liquidation of Borrower’s business; or

(g) (i) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of Borrower or any of its subsidiaries in an involuntary case under Title 11 of the United States Code entitled “Bankruptcy” (as now and hereinafter in effect, or any successor thereto, the “Bankruptcy Code”) or any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against Borrower or any of its subsidiaries under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Borrower or any of its subsidiaries or over all or a substantial part of their property shall have been entered; or the involuntary appointment of an interim receiver, trustee or other custodian of Borrower or any of its subsidiaries for all or a substantial part of their property shall have occurred; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Borrower or any of its subsidiaries, and, in the case of any event described in this clause (ii), such event shall have continued for 60 days unless dismissed, bonded or discharged; or

(h) an order for relief shall be entered with respect to Borrower or any of its subsidiaries; or Borrower or any of its subsidiaries shall commence a voluntary case under the Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Borrower or any of its subsidiaries shall make an assignment for the benefit of creditors; or Borrower or any of its subsidiaries shall be unable or fail, or shall admit in writing its inability, to pay its debts as such debts become due; or

(i) Borrower shall challenge, or institute any proceedings to challenge, the validity, binding effect or enforceability of this Note or any endorsement of this Note or any other obligation to Lender; or

(j) any provision of this Note shall cease to be in full force or effect or shall be declared to be null or void or otherwise unenforceable in whole or in part.

6. Remedies. Upon the occurrence of any Event of Default specified in Section 5(g) or 5(h) above, the Principal Amount of this Note together with accrued interest thereon shall become immediately due and payable, without presentment, demand, notice, protest or other requirements of any kind (all of which are hereby expressly waived by Borrower). Upon the occurrence and during the continuance of any other Event of Default Lender may, by written notice to Borrower, declare the Principal Amount of this Note together with accrued interest thereon to be due and payable, and the Principal Amount of this Note together with such interest shall thereupon immediately become due and payable without presentment, further notice, protest or other requirements of any kind (all of which are hereby expressly waived by Borrower). In either case Lender may, in addition to exercising any other rights and remedies it may have, exercise any rights of setoff available to it at law or equity.

“Event of Default” means any of the events set forth in Section 5.

8. Miscellaneous.

(e) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICTS OR CHOICE OF LAWS PRINCIPLES.

(f) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA, AND BY EXECUTION AND DELIVERY OF THIS NOTE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS NOTE. Borrower hereby agrees that service of all process in any such proceeding in any such court may be made by registered or certified mail, return receipt requested, to Borrower at its address set forth below its signature hereto, such service being hereby acknowledged by Borrower to be sufficient for personal jurisdiction in any action against Borrower in any such court and to be otherwise effective and binding service in every respect. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of Lender to bring proceedings against Borrower in the courts of any other jurisdiction.

(g) BORROWER AND, BY THEIR ACCEPTANCE OF THIS NOTE, LENDER AND ANY SUBSEQUENT HOLDER OF THIS NOTE, HEREBY IRREVOCABLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS NOTE AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Borrower and, by their acceptance of this Note, Lender and any subsequent holder of this Note, each (i) acknowledges that this waiver is a material inducement to enter into a business relationship, that the other parties have already relied on this waiver in entering into this relationship, and that each party will continue to rely on this waiver in their related future dealings and (ii) further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS NOTE. In the event of litigation, this provision may be filed as a written consent to a trial by the court.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, Borrower has executed and delivered this Delayed Draw Term Promissory Note as of the date and at the place first above written.

	MOBIUS ACQUISITION, LLC


	By:	/s/ Lodovico C. de Visconti
		Lodovico C. de Visconti
		Manager

[Signature Page to Delayed Draw Term Promissory Note]

Exhibit (b)(3)

Execution Copy

Tray 3 LLC

120 Millview Drive

Pittsburgh, Pennsylvania 15238-1626

December 22, 2014

Mobius Acquisition, LLC

Mobius Acquisition Merger Sub, Inc.

Centre City Tower, Suite 705

650 Smithfield Street

Pittsburgh, Pennsylvania, 15222

Ladies and Gentlemen:

Reference is made to that certain Agreement and Plan of Merger (the “Merger Agreement”) dated as of the date hereof, by and among Mobius Acquisition, LLC, a Delaware limited liability company (“Parent”), Mobius Acquisition Merger Sub, Inc., a Delaware corporation (“Merger Sub”) and Peerless Systems Corporation, a Delaware corporation (“Company”), pursuant to which (i) Merger Sub has agreed to commence a tender offer for all of the outstanding shares of Company Common Stock (the “Offer”) and (ii) if the Offer is completed on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company with the Company surviving the merger (the “Merger” and together with the Offer, the “Transactions”) on the terms and conditions set forth therein. Capitalized or other terms used and not defined herein but defined in the Merger Agreement shall have the meanings ascribed to them in the Merger Agreement. This letter agreement (this “Agreement”) is being delivered by Tray 3 LLC, a Delaware limited liability company (“Tray 3”), to Parent and Merger Sub in connection with the execution of the Merger Agreement.

1. Commitment. We are pleased to advise you that Tray 3 hereby commits, subject only to the conditions set forth in paragraph 2 of this Agreement, to fund by way of an unsecured loan to Merger Sub, Twenty Two Million Dollars ($22,000,000) (the “Commitment”), solely for the purpose of funding, and to the extent necessary to fund, the Total Transaction Costs, it being understood that Tray 3 shall not under any circumstances be obligated to fund any amounts in excess of the Commitment.

2. The obligation of Tray 3 under this Agreement to fund its Commitment (a) is subject only to (i) the terms of this Agreement and (ii) the satisfaction or waiver by Parent and Merger Sub of all of the Offer Conditions, and (b) will occur, subject to the foregoing clause (a), simultaneous with the Offer Closing.

3. Tray 3 acknowledges that the Company has relied on this Agreement and that the Company is hereby made an express third party beneficiary hereof and is entitled to specifically enforce the obligations of Tray 3 hereunder directly against Tray 3 to cause Tray 3 to fund the total Commitment. Except as set forth in the preceding sentence, the Commitment is solely for the benefit of Parent and Merger Sub and is not intended (expressly or impliedly) to confer any benefits on, or create any rights in favor of, any other Person, other than the Company under the Merger Agreement, who shall be the only third party beneficiary hereof. Nothing set forth in this Agreement contains or gives, or shall be construed to contain or to give, any Person (other than Parent, Merger Sub or the Company), including any Person acting in a representative capacity, any remedies under or by reason of, or any rights to enforce or cause Parent, Merger Sub or the Company to enforce, the commitment set forth herein, nor shall anything in this Agreement be construed, to confer any rights, legal or equitable, in any Person other than Parent, Merger Sub and the Company. This Agreement may not be amended or revoked, and the commitments hereunder may not be amended, waived or terminated, without the written consent of the Company.

Mobius Acquisition, LLC

Mobius Acquisition Merger Sub, Inc.

December 22, 2014

Page 2

4. Tray 3’s obligation to fund its Commitment will terminate automatically and immediately upon the earliest to occur of (a) valid termination of the Merger Agreement in accordance with its terms or the Offer Termination, (b) the commencement of any proceeding by the Company, or any of its affiliates, against any Non-Recourse Party relating to this Agreement, (c) the Offer Closing (at which time such obligation shall be discharged).

5. Concurrently with the execution and delivery of this letter, Tray 3 is executing and delivering to the Company a Guaranty (the “Guaranty”) in form and substance substantially as set forth on Exhibit A attached hereto.

7. Tray 3 hereby represents and warrants as follows:

(a) Tray 3 is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware;

(b) The execution and delivery of this Agreement by Tray 3 and the consummation by Tray 3 of the transactions contemplated hereby have been duly authorized by all necessary corporate or other action on the part of Tray 3 and no other corporate or other proceedings on the part of Tray 3 are necessary to authorize the execution and delivery of this Agreement by Tray 3 or to consummate the transactions contemplated hereby;

(c) This Agreement has been duly executed and delivered by Tray 3 and constitutes the valid and binding obligation of Tray 3, enforceable against Tray 3 in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar Laws affecting creditors' rights generally and by general principles of equity;

Mobius Acquisition, LLC

Mobius Acquisition Merger Sub, Inc.

December 22, 2014

Page 3

(d) The execution, delivery and performance of this Agreement by Tray 3 and the consummation by Tray 3 of the transactions contemplated by this Agreement, do not and will not: (i) contravene or conflict with, or result in any violation or breach of, the certificate of incorporation, by-laws, partnership agreement, operating agreement, or other governing instruments of Tray 3; (ii) conflict with or violate any Law applicable to Tray 3 or any of its properties or assets; (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation, or require any consent, approval or authorization of, or notice to any third party under any contracts, agreements, licenses, notes, bonds, mortgages, indentures, leases or other binding instruments or binding commitments, whether written or oral, to which Tray 3 is a party or otherwise bound; or (iv) result in the creation of any Lien on any of the properties or assets of Tray 3;

(e) No consent, approval, order or authorization of, or registration, declaration or filing with, or notice to any Governmental Authority is required to be obtained or made by Tray 3 in connection with the execution, delivery and performance by Tray 3 of this Agreement or the consummation by Tray 3 of the transactions contemplated hereby; and

(f) Tray 3 has and will have the financial capacity to pay and perform all of its obligations under this Agreement for as long as this Agreement shall remain in effect.

Tray 3 acknowledges that the Company has specifically relied on the accuracy of the representations and warranties contained in this paragraph 7 in entering into the Merger Agreement.

8. This Agreement is being entered into by Parent, Merger Sub and Tray 3 to induce the Company to enter into the Merger Agreement. This Agreement (or any term or condition set forth herein) may not be waived, amended or modified except by an instrument in writing signed by each of the parties hereto (subject to obtaining the prior written consent of the Company as required by the last sentence of paragraph 3). Notwithstanding anything to the contrary set forth herein, neither this Agreement nor the Commitment shall be effective unless the Merger Agreement has been executed and delivered by the parties thereto.

9. Notwithstanding anything that may be expressed or implied in this letter or any document or instrument delivered in connection herewith, Parent and Merger Sub, by its acceptance of the benefits of the Commitment provided herein, covenants, agrees and acknowledges that no Person other than Tray 3 and its successors and permitted assigns shall have any obligation hereunder or in connection with the transactions contemplated hereby and that, notwithstanding that Tray 3 may be a partnership or limited liability company, it has no rights of recovery against and no recourse hereunder or under any documents or instruments delivered in connection herewith shall be had against any former, current or future directors, officers, employees, direct or indirect equityholders, controlling persons, general or limited partners, members, managers, stockholders, incorporators, affiliates, financing sources, attorneys, representatives, agents, or successor or assignee of any of the foregoing (such persons, collectively, but excluding Tray 3 itself, Parent and Merger Sub, the “Non-Recourse Parties”), whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable law, it being agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any Non-Recourse Party under this Agreement or any documents or instrument delivered in connection herewith or in respect of any oral representations made or alleged to be made in connection herewith or therewith or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of such obligations or their creation.

Mobius Acquisition, LLC

Mobius Acquisition Merger Sub, Inc.

December 22, 2014

Page 4

10. This letter shall be treated as confidential and is being provided to Parent, Merger Sub and the Company solely in connection with its execution of the Merger Agreement. This letter may not be used, circulated, quoted or otherwise referred to in any document, except with the written consent of the undersigned; provided, however, that any of the foregoing may disclose this Agreement (i) to its Affiliates and representatives, (ii) to the extent required by Law or the applicable rules of any national securities exchange and (iii) in connection with any litigation or other proceeding relating to this Agreement or the Merger Agreement

11. The Commitment set forth herein shall not be assignable by Parent or Merger Sub without the prior written consent of Tray 3 and the Company and, if granted, shall not constitute a waiver of this requirement as to any subsequent assignment. No other transfer of any rights or obligations hereunder shall be permitted without the prior written consent of Parent, Merger Sub, Tray 3 and the Company. Any transfer in violation of the preceding sentences shall be null and void.

12. This letter shall be governed by and construed in accordance with the internal laws of the State of Delaware, disregarding any conflicts of law provisions which may require the application of the law of another jurisdiction. Each party to this letter (and beneficiary, if any) pursuing remedies under this letter hereby irrevocably and unconditionally agrees that any action, suit or proceeding, at law or equity, arising out of or relating to the Commitment, this letter or any agreements or transactions contemplated hereby shall only be brought in any federal court or any state court located in Wilmington, Delaware, and hereby irrevocably and unconditionally expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and hereby irrevocably and unconditionally waives (by way of motion, as a defense or otherwise) any and all jurisdictional, venue and convenience objections or defenses that such party may have in such action, suit or proceeding.

Mobius Acquisition, LLC

Mobius Acquisition Merger Sub, Inc.

December 22, 2014

Page 5

13. EACH PARTY TO THIS LETTER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS LETTER OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE, AND ENFORCEMENT HEREOF.

14. This letter may be signed in two or more counterparts, any one of which need not contain the signature of more than one party, but all such counterparts taken together shall constitute one and the same agreement. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by electronic mail delivery of a “.pdf” format (or similar format) data file, shall be treated in all manner and respects as an original agreement or instrument and shall have the same binding legal effect as if it were the original signed version thereof delivered in person. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail transmission of a “.pdf” format (or similar format) data file to deliver a signature to this Agreement or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail transmission of a “.pdf” format (or similar format) data file as a defense to the formation of a contract and each party hereto forever waives any such defense.

15. This letter constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements, written or oral, between them in respect thereof.

* * * * *

If you are in agreement with the terms of this commitment letter, please forward an executed copy of this letter to the undersigned. We appreciate the opportunity to work with you on this transaction.

	Yours sincerely,


	TRAY 3, LLC


	By:	/s/ Tony Bonidy
		Name: Tony Bonidy
		Title: Manager


	By:	/s/ Theresa Clark
		Name: Theresa Clark
		Title: Manager

Accepted and agreed to as of

the date first above written:

MOBIUS ACQUISITION, LLC

By:	/s/ Lodovico C. de Visconti
	Name: Lodovico C. de Visconti
	Title: Chief Executive Officer

MOBIUS ACQUISITION MERGER SUB, INC.

By:	/s/ Lodovico C. de Visconti
	Name: Lodovico C. de Visconti
	Title: President

Exhibit A

Guaranty

(See Attached)

Exhibit (b)(4)

Execution Copy

Guaranty

In consideration of the following premises and for other good and valuable consideration, intending to be legally bound hereby, Tray 3 LLC, a Delaware limited liability company (“Guarantor”), has executed this Guaranty (this “Guaranty”) in favor of Peerless Systems Corporation, a Delaware corporation (the “Company”) under Section 4.14 of the Agreement and Plan of Merger dated on even date herewith (the “Merger Agreement”) by and among Mobius Acquisition, LLC, a Delaware limited liability company (“Parent”), Mobius Acquisition Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (the “Merger Sub”), and the Company, on this 22^nd day of December, 2014.

Pursuant to the Merger Agreement, Merger Sub has agreed to, and Parent has agreed to cause Merger Sub to, (i) commence a tender offer for all of the outstanding shares of Company Common Stock (the “Offer”) and (ii) if the Offer is completed on the terms and subject to the conditions set forth in the Merger Agreement, merge with and into the Company, with the Company surviving the Merger as a wholly owned subsidiary of Parent. Capitalized terms used but not otherwise defined in this Guaranty shall have the meanings ascribed to them in the Merger Agreement.

1. Guaranty. As an inducement to the Company to enter into the Merger Agreement and to consummate the transactions contemplated thereby, Guarantor hereby absolutely, irrevocably and unconditionally guarantees Parent’s and Merger Sub’s obligation to pay the Total Transaction Costs in accordance with the terms of, and subject to the conditions set forth in, the Merger Agreement, including, for the avoidance of doubt, Parent’s and Merger Sub’s payment obligations (if any) pursuant to Section 8.9 of the Merger Agreement (collectively, the “Guaranteed Obligations”). All payments hereunder shall be made in lawful money of the United States in immediately available funds, free and clear of any deduction, offset, defense, claim or counterclaim of any kind.

If Parent or Merger Sub fails to discharge the Guaranteed Obligations when due, the Company may at any time and from time to time, at the Company’s option, take any and all actions available hereunder or under applicable Law to enforce Guarantor’s obligation hereunder in respect of such Guaranteed Obligations. In furtherance of the foregoing, Guarantor acknowledges that the Company may, in its sole discretion, bring and prosecute a separate action or actions against Guarantor for the full amount of Guarantor’s liabilities or obligation hereunder in respect of the Guaranteed Obligations, regardless of whether action is brought against Parent or Merger Sub and whether or not Parent or Merger Sub is joined in any such action or actions. Guarantor acknowledges and agrees that (a) with respect to Parent and Merger Sub, the Company shall have the rights and remedies specified in the Merger Agreement and (b) with respect to Guarantor, the Company shall have the rights and remedies specified in this Guaranty.

2. Nature of Guaranty. This Guaranty is an unconditional guarantee of performance and payment and not merely of collection. Guarantor’s liability hereunder is absolute, unconditional, irrevocable and continuing irrespective of any modification, amendment or waiver of or any consent to departure from the Merger Agreement or the Commitment Letter that may be agreed to by Parent or Merger Sub. Without limiting the foregoing, the Company shall not be obligated to file any claim relating to the Guaranteed Obligations in the event that Parent or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Company to so file shall not affect the Guaranteed Obligations. In the event that any payment hereunder is rescinded or must otherwise be returned for any reason whatsoever, Guarantor shall remain liable hereunder as if such payment had not been made.

3. Changes in Obligations; Certain Waivers. Guarantor agrees that the Company may, in its sole discretion, at any time and from time to time, without notice to or further consent of Guarantor, extend the time of payment or performance of any of the Guaranteed Obligations in connection with any agreement with Parent or Merger Sub for the extension, renewal, payment, compromise, performance, discharge or release of the Guaranteed Obligations, in whole or in part, without in any way impairing or affecting Guarantor’s obligations under this Guaranty or affecting the validity or enforceability of this Guaranty; provided, however, that nothing contained in this Guaranty is intended to modify or supersede the provisions of the Merger Agreement as between the Company, Parent and Merger Sub. Guarantor agrees that the obligations of Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (a) any failure or delay on the part of the Company in asserting any claim or demand or to enforce any right or remedy against Parent or Merger Sub; (b) any change in the time, place or manner of payment or performance of any of the Guaranteed Obligations, or any rescission, waiver, compromise, consolidation or other amendment or modification of any of the terms or provisions of the Merger Agreement (other than amendments to the Guaranteed Obligations or the Commitment Letter) made in accordance with the terms thereof or any agreement evidencing, securing or otherwise executed in connection with any of the Guaranteed Obligations; (c) the addition, substitution or release of any entity or other Person now or hereafter liable with respect to the Guaranteed Obligations; (d) any change in the legal existence, structure or ownership of Parent or Merger Sub or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Merger Agreement; (e) any insolvency, bankruptcy, reorganization or other similar proceeding affecting Parent or Merger Sub or any other Person now or hereafter liable with respect to the Guaranteed Obligations or otherwise interested in the transactions contemplated by the Merger Agreement; (f) the existence of any claim, set-off or other right which Guarantor may have at any time against Parent, Merger Sub or the Company, whether in connection with the Guaranteed Obligations or otherwise; (g) the adequacy of any other means the Company may have of obtaining payment related to the Guaranteed Obligations.

Guarantor acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by the Merger Agreement and that the waivers set forth in this Guaranty are knowingly made in contemplation of such benefits.

Guarantor hereby unconditionally and irrevocably agrees not to assert or exercise any rights that it may now have or hereafter acquire against Parent or Merger Sub that arise from the existence, payment, performance, or enforcement of Guarantor’s obligations under or in respect of this Guaranty or any other agreement in connection therewith, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Company against Parent or Merger Sub, whether or not such claim, remedy or right arises in equity or under contract, statute or common Law, including, without limitation, the right to take or receive from Parent or Merger Sub, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all the Guaranteed Obligations, in the case of monetary obligations, have been paid in full in immediately available funds, or in the case of non-monetary obligations, performed and discharged in full. If any amount shall be paid to Guarantor in violation of the immediately preceding sentence at any time prior to satisfaction in full of all of the Guaranteed Obligations, such amount shall be received and held in trust for the benefit of the Company, shall be segregated from other property and funds of Guarantor and shall forthwith be promptly paid or delivered to the Company in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations, or to be held as collateral for the Guaranteed Obligations thereafter arising.

4. No Waiver; Cumulative Remedies. No failure on the part of the Company to exercise or pursue, and no delay in exercising or pursuing, any right, remedy or power hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Company of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder; nor relieve Guarantor of any liability hereunder. Each and every right, remedy and power hereby granted to the Company or allowed it by Law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Company at any time or from time to time. The Company shall not have any obligation to proceed at any time or in any manner against, or exhaust any or all of the Company’s rights against, Parent, Merger Sub or any other Person now or hereafter liable for any Guaranteed Obligations or interested in the transactions contemplated by the Merger Agreement prior to proceeding against Guarantor hereunder.

5. Representations and Warranties. Guarantor hereby represents and warrants that:

(a) it is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware;

(b) it has all requisite limited liability company power and authority to execute, deliver and perform this Guaranty and the execution, delivery and performance of this Guaranty (i) have been duly authorized by all necessary limited liability company action and (ii) do not and will not (A) result in any breach of or violation of, or default (with or without notice or lapse of time, or both) under, require consent under, or give rise to a right of termination, cancellation, modification, or acceleration of any material obligation or the loss of any material benefit under any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, lease, agreement, contract, permit, franchise, right or license binding on Guarantor or result in the creation of any lien upon any of its properties, assets or rights, or (B) conflict with or result in any violation of or contravene any provision of Guarantor’s certificate of formation, operating agreement or similar organizational documents or any Law binding on Guarantor or any of its property or assets;

(c) all consents, approvals, authorizations, permits of, filings with and notifications to, any Governmental Authority necessary for the due execution, delivery and performance of this Guaranty by Guarantor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required in connection with the execution, delivery or performance of this Guaranty;

(d) this Guaranty constitutes a legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) general equitable principles (whether considered in a proceeding in equity or at law); and

(e) Guarantor has cash on hand and other financial resources immediately available to it in an amount equal to or in excess of the amount necessary for Guarantor to fulfill its Guaranteed Obligations under this Guaranty and such cash on hand and other financial resources shall continue to be immediately available to Guarantor (or its permitted assignee pursuant to Section 6 hereof) for so long as this Guaranty shall remain in effect in accordance with Section 8 hereof.

6. No Assignment. Neither Guarantor nor the Company may assign or delegate their rights, interests or obligations hereunder to any other Person (except by operation of Law) without the prior written consent of the other party hereto. No assignment shall relieve Guarantor of its obligations hereunder. Any attempted assignment in violation of this Section 6 shall be null and void.

7. Notices. All notices and other communications hereunder shall be in writing in the English language and shall be given (a) on the date of delivery if delivered personally, (b) on the first business day following the date of dispatch if delivered by a nationally recognized next-day courier service, (c) on the third business day following the date of mailing if delivered by registered or certified mail (postage prepaid, return receipt requested) or (d) if sent by facsimile transmission, when transmitted and receipt is confirmed. All notices to Guarantor hereunder shall be delivered as set forth below or to such other address or facsimile number as Guarantor shall have notified the Company in a written notice delivered to the Company in accordance with the Merger Agreement:

if to Guarantor:

Tray 3, LLC

c/o LCV Capital Management, LLC

650 Smithfield Street

Suite 705

Pittsburgh, PA 15222

Phone: (267) 281-7000

Email: ldevisconti@lcvcapitalmgmt.com

Attention: Lodovico C. de Visconti

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

Reed Smith LLP

225 Fifth Avenue

Pittsburgh, PA 15222

Phone: (412) 288-3344

Fax: (412) 288-3063

Email: RFrank@reedsmith.com

Attention: Ron Frank

If to the Company, as provided in the Merger Agreement.

8. Continuing Guaranty. Unless otherwise terminated in accordance with this Section 8, this Guaranty may not be revoked or terminated and shall remain in full force and effect and shall be binding on Guarantor, its successors and permitted assigns until the complete and indefeasible payment and satisfaction in full of the Guaranteed Obligations. Notwithstanding the foregoing, this Guaranty shall terminate and Guarantor shall have no further obligations under this Guaranty as of the earliest of: (i) the Effective Time, (ii) the valid termination of the Merger Agreement in accordance with its terms, provided, however, in the case of clause (ii), the Guaranty shall not be terminated in the event that the Company asserts a claim permitted under Section 8.9 of the Merger Agreement (provided that such claim shall set forth in reasonable detail the basis for such claim), in which case the termination date for this Guaranty shall be the earlier of: (a) the date that such claim is finally satisfied or otherwise resolved by agreement of the parties hereto or a final, non-appealable judgment of a Governmental Authority of competent jurisdiction, or (b) if the Company decides to forego its claim under (a) and collect the Parent Termination Fee, the date on which the Company collects such fee.

9. Miscellaneous.

(a) This Guaranty constitutes the entire agreement with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, among Guarantor or any of its Affiliates, on the one hand, and the Company or any of its Affiliates, on the other hand. No modification or waiver of any provision hereof shall be enforceable unless approved by the Company and Guarantor in writing.

(b) Any term or provision of this Guaranty that is invalid or unenforceable in any jurisdiction shall be, as to such jurisdiction, ineffective solely to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. No party hereto shall assert, and each party shall cause its respective Affiliates not to assert, that this Guaranty or any part hereof is invalid, illegal or unenforceable.

(c) The parties hereby agree that their respective representations, warranties and covenants set forth herein are solely for the benefit of the other parties hereto, in accordance with and subject to the terms of this Guaranty, and this Guaranty is not intended to, and does not, confer upon any person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.

(d) The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Guaranty.

(e) All parties acknowledge that each party and its counsel have reviewed this Guaranty and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Guaranty.

(f) In the event that the Company seeks to enforce this Guaranty against Guarantor, (i) Guarantor shall be entitled to assert all defenses to the payment or performance of the Guaranteed Obligations that would be available to Parent or Merger Sub under the Merger Agreement, and (ii) except to the extent expressly provided in this Guaranty and except in the case of an action against Guarantor for a breach of this Guaranty, in no event shall the liability of Guarantor under this Guaranty exceed the liability of the Parent and Merger Sub under the Merger Agreement.

(g) Guarantor may not amend, modify, supplement or assign this Guaranty without the prior written consent of the Company. Waiver of any term or condition of this Guaranty by the Company shall be effective only if in writing and shall not be construed as a waiver of any subsequent breach or failure of the same term or condition, or a waiver of any other term of this Guaranty.

(h) This Guaranty may be executed in one or more counterparts (including by facsimile or electronic transmission), and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

10. Governing Law; Jurisdiction. All disputes, claims or controversies arising out of or relating to this Guaranty, or the negotiation, validity or performance of this Guaranty, or the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its rules of conflict of laws. For purposes of this Guaranty, Guarantor hereby (i) consents to service of process in any legal action, suit or proceeding arising in whole or in part under or in connection with the negotiation, execution and performance of this Guaranty in any manner permitted by Delaware law, (ii) agrees that service of process made in accordance with this Guaranty or made by registered or certified mail, return receipt requested, at its address specified below will constitute good and valid service of process in any such legal action, suit or proceeding and (iii) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such legal action, suit or proceeding any claim that service of process made in accordance with clause (i) or (ii) does not constitute good and valid service of process. Guarantor (a) consents to submit itself to the exclusive personal jurisdiction of the Delaware Court of Chancery, New Castle County, or if that court does not have jurisdiction, a federal court sitting in the State of Delaware in any action or proceeding arising out of or relating to this Guaranty or any of the transactions contemplated by this Guaranty, (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court, (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 not to bring any action or proceeding arising out of or relating to this Guaranty or any of the transactions contemplated by this Guaranty in any other court.

11. WAIVER OF JURY TRIAL. GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS GUARANTY.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, each of the Guarantor and the Company have caused this Guaranty to be executed and delivered as of the date first written above by its officer thereunto duly authorized.

GUARANTOR:

Tray 3 LLC

By:

/s/ Anthony Bonidy

Name: Anthony Bonidy

Title: Manager

By:

/s/ Theresa Clark

Name: Theresa Clark

Title: Manager

COMPANY:

PEERLESS SYSTEMS CORPORATION

By:

/s/ Timothy Brog

Name: Timothy E. Brog
Title: Chief Executive Officer and Chairman of the Board

Exhibit (d)(2)

June 18, 2014

Confidential

LCV Capital Management, LLC

Centre City Tower, Suite 705

650 Smithfield Street

Pittsburgh, Pennsylvania 15222

Attention: Lodovico de Visconti

Ladies and Gentlemen:

In connection with your consideration of a possible negotiated transaction between you and Peerless Systems Corporation (together with its subsidiaries, the “Company”) pursuant to which you or one of your affiliates would enter into a transaction with the Company (the “Transaction”), you have requested information concerning the Company. All such information furnished to you or any of your Representatives (as defined below) by the Company or any of its Representatives, irrespective of the form of communication (whether provided orally or in writing or provided or stored on electronic or magnetic media, film or any other form or media), and whether such information is so furnished before, on or after the date hereof, or information which you or your Representatives otherwise learn or obtain, through observation or through analysis of such information, and all analyses, compilations, data, forecasts, studies, notes, interpretations, memoranda or other documents prepared by you or your Representatives containing or based in whole or in part on any such information is referred to in this agreement as “Evaluation Material.” For the avoidance of doubt, the term “Evaluation Material” shall include any such information with respect to the Company's strategic plans and its directors, officers, subsidiaries, affiliates, joint ventures, designated entities and any third-party confidential information. The term “Evaluation Material” shall not include information that (i) is already in your possession, provided that you do not know or have reason to believe that such information is subject to another confidentiality agreement with, or other obligation of secrecy to, the Company or another party, (ii) becomes generally available to the public other than as a result of a disclosure by you or your Representatives in violation of this agreement, or (iii) becomes available to you on a non-confidential basis from a source other than the Company or its Representatives, provided that you do not know or have reason to believe that such source is bound by a confidentiality agreement with, or other obligation of secrecy to, the Company.

For purposes of this agreement, references herein to “Representatives” in respect of you and your affiliates shall include only your or your applicable affiliate's directors, officers, employees, counsel and accountants and, with the prior written consent of the Company, which consent shall not be unreasonably withheld, consultants, investment bankers, financial advisors and potential sources of debt or equity financing, and “Representatives” in respect of the Company shall include the Company's directors, officers, employees, counsel, accountants, consultants, investment bankers, financial advisors and other agents and representatives.

As a condition to you and your Representatives being furnished Evaluation Material, you agree to treat Evaluation Material that is furnished to you or your Representatives in accordance with the provisions of this agreement and to take or abstain from taking certain other actions set forth herein. You further agree that the Evaluation Material will be used solely for the purpose of evaluating the Transaction, that the Evaluation Material will not be used in any way detrimental to the Company, and that the Evaluation Material will be kept strictly confidential by you and your Representatives; provided, however, that any of the Evaluation Material may be disclosed to your Representatives who need to know such information solely for the purpose of evaluating any such Transaction (it being understood that such Representatives shall be informed by you of the confidential nature of the Evaluation Material, shall be provided with a copy of this agreement and shall agree to adhere to the terms hereof). You agree (i) to undertake reasonable precautions to safeguard and protect the confidentiality of the Evaluation Material that are at least as protective as the precautions undertaken by you with respect to your confidential and competitively valuable business information, (ii) to be responsible for any violation of this agreement by you or any of your Representatives, and (iii) at your sole expense, to take all reasonable measures (including, if necessary, court proceedings) to restrain your Representatives from prohibited or unauthorized disclosure or uses of the Evaluation Material. It is understood and agreed that the Company may, in its discretion, from time to time, determine that disclosure of certain competitively sensitive Evaluation Material to certain of your Representatives may be inappropriate, in which case at the Company's request you shall refrain from disclosing such Evaluation Material to such Representatives.

In addition, except as specifically permitted hereunder, without the prior written consent of the Company, you will not, and will direct your Representatives not to, disclose to any person either (i) the fact that investigations, discussions or negotiations are taking place concerning the Transaction or any of the terms, conditions or other facts with respect to any such Transaction including the status thereof or the identity of the parties thereto, (ii) the existence of this agreement. (iii) any information that would be reasonably likely to enable such other person to identify the Company as a party to any discussions or negotiations with you or (iv) that you have received Evaluation Material (all such information, “Discussion Information”).

In the event that you or any of your Representatives is required by applicable law, rule, regulation or judicial order to disclose or receive a request to disclose all or any part of the information contained in the Evaluation Material or any Discussion Information under the terms of a valid and effective subpoena or other similar request issued by a court of competent jurisdiction or a governmental body, you agree to (i) immediately notify the Company of the existence, terms and circumstances surrounding such requirement or request, (ii) consult with the Company on the advisability of taking legally available steps to resist or narrow such requirement or request and exercise your best efforts to pursue any such steps at the Company's request, and (iii) if, in the opinion of your outside legal counsel, disclosure of such information is legally required, disclose only such portion of the Evaluation Material or Discussion Information which such counsel advises you is legally required to be disclosed and exercise your best efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such disclosed Evaluation Material or Discussion Information.

You hereby acknowledge that you are aware, and you agree that you will advise your Representatives who are informed as to the matters which are the subject of this agreement, that (i) the Evaluation Material and Discussion Information being furnished to you or your Representatives contains or may itself be material, non -public information concerning the Company and (ii) the United States securities laws prohibit any person who has received material, non-public information concerning the Company or the matters which are the subject of this letter from purchasing or selling securities of the Company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities.

Although the Company has endeavored to include in the Evaluation Material information known to it which it believes to be relevant for the purpose of your investigation, you understand and agree that neither the Company nor any of its Representatives has made or makes any express or implied representation or warranty as to the accuracy or completeness of the Evaluation Material. You understand and agree that you are not entitled to rely on the accuracy or completeness of the Evaluation Material and will be entitled to rely solely on such representations and warranties as may be included in any executed definitive agreement with respect to the Transaction, subject to such limitations and restrictions as may be contained therein. You agree that neither the Company nor its Representatives shall have any liability to you or any of your Representatives resulting from the use of the Evaluation Material or any errors therein or omissions therefrom.

In the event that you determine not to proceed with the Transaction, or upon the written request of the Company or its Representatives, you shall promptly redeliver (or destroy and certify such destruction in writing) to the Company all written Evaluation Material and any other written material containing or reflecting any information in the Evaluation Material (regardless of who prepared such Evaluation Material) and will not retain any copies, extracts or other reproductions in whole or in part of such written material. All documents, memoranda, notes and other writings whatsoever prepared by you or your Representatives based on the information in the Evaluation Material shall be destroyed, and such destruction shall be certified in writing to the Company by an authorized officer supervising such destruction. Your and your Representatives' obligations hereunder to destroy Evaluation Material contained in electronic form shall be satisfied by you and your Representatives' deleting such information from your or your Representatives' respective computer systems. Notwithstanding the return or destruction of the Evaluation Material, you and your Representatives shall continue to be bound by the obligations of confidentiality and other obligations and agreements hereunder.

In consideration for being furnished with the Evaluation Material, for a period commencing on the date hereof and terminating eighteen (18) months from the date hereof (such period, the “Standstill Period”), you will not, and will cause each of your affiliates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and your and their respective Representatives and any other agents acting on your or their behalf not to, directly or indirectly, (i) acquire, or propose to acquire, “beneficial ownership” (as defined in Section 13(d) of the Exchange Act) of any equity securities or assets, or rights or options to acquire any such securities or assets (through purchase, exchange, conversion or otherwise), of the Company. including derivative securities representing the right to vote or economic benefits of any such securities, (ii) make, effect or commence any tender or exchange offer, merger or other business combination involving the Company, (iii) commence or complete, or propose to commence or complete, any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company, (iv) make, or in any way participate in, any “solicitation” of proxies to vote or consent, or seek to advise or influence any person with respect to the voting of, any securities of the Company, submit, directly or indirectly, any nomination of directors pursuant to Rule 14a-11 under the Exchange Act or be or become a “participant” in any “election contest” with respect to the Company (all within the meaning of Section 14 of the Exchange Act), (v) form, join or in any way participate in a -group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to, or otherwise act in concert with any person in respect of, any securities of the Company, (vi) otherwise act, alone or in concert with others, to seek representation on or to control or influence the management, board of directors or policies of the Company, (vii) negotiate with or provide any information to any person (other than your Representatives in accordance with this agreement) with respect to, or make any statement or proposal to any person (other than your Representatives in accordance with this agreement) with respect to, or make any public announcement or proposal or offer whatsoever with respect to, or act as a financing source for or otherwise invest in any other persons in connection with, or otherwise solicit, seek or offer to effect any transactions or actions described in the foregoing clauses (i) through (vi), or make any other proposal or statement inconsistent with the terms of this agreement or that otherwise could reasonably be expected to result in a public announcement regarding any such transactions or actions, or (viii) advise, assist or encourage any other persons in connection with any of the foregoing; unless and until, in the case of each of the foregoing clauses (i) through (viii), you have received the prior written invitation or approval of the Company's board of directors to do so. You also agree that during the Standstill Period you will not request that the Company or any of its Representatives amend or waive any provision of this paragraph (including this sentence). You hereby confirm that, as of the date hereof, you are the beneficial owner of 0 shares of the Company's Common Stock, and except for such shares, you do not have, directly or indirectly, beneficial ownership of equity securities, or rights or options to own or acquire any such securities (through purchase, exchange, conversion or otherwise) of the Company. Nothing in this agreement shall prohibit you from the sale of such securities of the Company if required for governmental, regulatory, or compliance purposes, for similar circumstances beyond your control, or from the sale of such securities at the time of an announcement that the Company has reached a definitive agreement with a third person with respect to a business combination transaction that, if consummated would result in a sale of corporate control of the Company.

For a period of eighteen (18) months immediately after the date of this agreement, you agree that you will not, and will cause your Representatives not to, without our prior written consent, such consent not to be unreasonably withheld, directly or indirectly, consult, share or discuss the Evaluation Material or Discussion Information or the Transaction, including without limitation any potential terms of the Transaction or co-investment arrangements or other investment arrangements designed to effect or facilitate the Transaction, or enter into any agreement, arrangement or understanding, or any discussion that might lead to any such agreement, arrangement or understanding, with any third parties (including any co-investor or source of equity financing or any person who you know has agreed to purchase equity in you or any of your affiliates, including portfolio companies, or another legal entity created for the purpose of effecting the Transaction or any other transaction involving the Company).

You further agree not to enter into, directly or indirectly, any contract, agreement, arrangement or understanding with any other person that has or would have the effect of requiring or encouraging such person to provide you with debt or equity financing on an exclusive basis in connection with a Transaction.

For a period of two (2) years immediately after the date of this agreement you agree not to, and to cause your affiliates (including portfolio companies) and your and their Representatives not to, directly or indirectly, solicit for employment or hire any employee of the Company; provided that you and your affiliates and Representatives will not be restricted from making any general solicitation for employees or public advertising of employment opportunities (including through the use of employment agencies) not specifically directed at such persons or restricted from hiring any such person who responds to any such general or public advertising.

You agree that all (i) contacts or communications by you or your Representatives with the Company or its employees regarding the Evaluation Material or a Transaction, (ii) requests for additional Evaluation Material, (iii) requests for facility tours or management meetings, and (iv) discussions or questions regarding procedures shall be made only with Timothy Brog or as he may otherwise direct in writing. Nothing in this agreement shall constitute a grant of authority to you or your Representatives to obtain, remove or copy any particular document or items of information regarding the Company or its affiliates.

Neither this agreement nor any of the rights and/or obligations hereunder may be assigned, by operation of law or otherwise, by you without the prior written consent of the Company, and any attempted assignment or transfer by either party not in accordance herewith shall be null and void. Unless expressly provided for herein, no party or any Representative thereof shall be, or shall hold itself out as being, a representative, agent, or employee of any other party for any purpose whatsoever. This agreement does not benefit or create any legal or equitable right, remedy or claim in or on behalf of any person other than the parties. This agreement and all of its terms and conditions are for the sole and exclusive benefit of the parties and their successors and permitted assigns. Nothing in this agreement is intended to, and this agreement shall not, create a partnership between the parties. Accordingly (i) the rights, obligations and duties of each party in relation to the other parties with respect to the subject matter of this agreement shall be only those contractual rights, obligations and duties that are created by the express terms of this agreement and shall not include any fiduciary or other implied rights, obligations or duties of any kind, (ii) none of the parties shall be authorized to act on behalf of the other parties except as otherwise expressly provided by the terms of this agreement, (iii) none of the parties shall be obligated to any third party for the obligations or liabilities of the other parties. and (iv) in no event shall a party or its affiliates or their representatives have any liability to any other party or its affiliates or their representatives for any special, indirect, incidental or consequential loss or damage whatsoever arising under or incurred in connection with this agreement.

You agree that unless and until a definitive agreement between the Company an d you with respect to any Transaction has been executed and delivered, neither the Company nor you will be under any legal obligation of any kind whatsoever with respect to a Transaction by virtue of this agreement or any written or oral expression with respect to a transaction by the Company, you or any of their respective Representatives except, in the case of this agreement, for the matters specifically agreed to herein, and you hereby waive, in advance, any claims (including, without limitation, breach of contract, tort or otherwise) in connection with any Transaction unless and until you and the Company shall have entered into a definitive agreement with respect thereto. The Company and its Representatives are free as they in their sole discretion shall determine (i) to conduct any process for a Transaction or any other transaction (including negotiating with any of the prospective parties thereto and entering into a definitive agreement with respect to the Transaction without prior notice to you or any other person); (ii) to provide or not provide Evaluation Material to you or your Representatives under this agreement; (iii) to reject any and all proposals made by you or any of your Representatives with regard to a Transaction; and (iv) to terminate discussions and negotiations at any time for any reason or no reason. No representation or warranty (whether express or implied) has been made by the Company or any of its Representatives with respect to the proposed process or the manner in which the proposed process is conducted, and you hereby disclaim any such representation or warranty. Any procedures relating to any process for a Transaction or any other transaction may be changed at any time without notice to you or any other person. None of the Company or any of its Representatives has any legal, fiduciary or other duty to you with respect to the manner in which the proposed process is conducted.

The Company would be irreparably and immediately harmed by, and money damages would not be an adequate remedy for, any breach of this agreement by you or your Representatives. Accordingly, the Company shall be entitled to equitable relief, including injunctive relief and specific performance, in the event of any breach or threatened breach of this agreement, in addition to all other remedies available at law or in equity.

This agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to the conflict of law provisions thereof. You agree that any suit or proceeding arising in respect to this letter will be tried exclusively in the United States District Court for the Southern District of New York or any New York State court sitting in New York City and you agree to submit to the jurisdiction of and to venue in, such courts (and agree not to commence any action, suit, or proceeding relating thereto except in such courts).

You hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit, or proceeding arising out of this agreement in the United States District Court for the Southern District of New York or any New York State court sitting in New York City and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum. Each party hereto irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Letter of Intent. Each of the parties hereto agrees that a final judgment in any lawsuit, action or other proceeding arising out of or relating to this Letter of Intent brought in the courts referred to in the first sentence of this Section 10 shall be conclusive and binding upon each of the parties hereto and may be enforced in any other courts the jurisdiction of which each of the parties is or may be subject to, by suit upon such judgment. You further agree that service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth above shall be effective service of process for any action, suit or proceeding brought against the parties in any such court.

It is understood and agreed that no failure or delay by the Company in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. This agreement contains the entire agreement between you and the Company regarding its subject matter and supersedes all prior agreements, understandings, arrangements and discussions between you and the Company regarding such subject matter.

This agreement may be signed by facsimile and in one or more counterparts, each of which shall be deemed an original but all of which shall be deemed to constitute a single instrument.

If any provision of this agreement is found to violate any statute, regulation, rule, order or decree of any governmental authority, court, agency or exchange such invalidity shall not be deemed to affect any other provision hereof or the validity of the remainder of this agreement, and such invalid provision shall be deemed deleted here from to the minimum extent necessary to cure such violation.

The Evaluation Material shall remain the property of the Company. No rights to use, license or otherwise exploit the Evaluation Material are granted to you or your Representatives, by implication or otherwise, by virtue of this agreement. Neither you nor your Representatives will by virtue of our disclosure of the Evaluation Material and/or your or your Representatives' use of the Evaluation Material acquire any rights with respect thereto, all of which rights shall remain exclusively with the Company.

Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted hereunder shall be in writing and shall he deemed given only if (i) delivered personally, (ii) sent by fax or email, with confirmation of receipt, or (iii) sent by independent overnight delivery service, as follows:

If to the Company:

Peerless Systems Corporation

1055 Washington Blvd, 8th Floor

Stamford, CT 06901

Attention: Timothy Brog

If to you:

LCV Capital Management, LLC

Centre City Tower, Suite 705

650 Smithfield Street

Pittsburgh, Pennsylvania 15222

Attention: Lodovico de Visconti

or to such other address as the addressee may have specified in a notice duly given to the sender as provided herein. Such notice, request, demand, waiver, consent, approval or other communication will be deemed to have been given as of the date so personally delivered, in the case of personal delivery, or on the date shown on the receipt or confirmation therefor in all other cases.

Where the sense requires, words denoting the singular only shall also include the plural and vice versa and references to a gender shall include any other gender. Where an expression is defined, another part of speech or grammatical form of that expression shall have a corresponding meaning. References to “include” and “including” shall be construed without limitation. The parties have each been represented by counsel during the negotiation and execution of this agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. The term “person” as used in this letter agreement shall be broadly interpreted to include, without limitation, any corporation, limited liability company, entity, trust, group, company, partnership or individual.

Except as provided herein, this agreement will terminate two (2) years from the date hereof; provided, that no such termination of this agreement shall relieve you from any liability relating to any breach of this agreement.

	Very truly yours,

	PEERLESS SYSTEMS CORPORATION


	By:	/s/ Timothy E. Brog
		Name: Timothy E. Brog
		Title: Chief Executive Officer

ACKNOWLEDGED AND AGREED

THIS 18^TH DAY OF JUNE 2014:

LCV CAPITAL MANAGEMENT, LLC

By: /s/ Lodovico de Visconti

Name: Lodovico de Visconti

Title: Managing Director

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