Exhibit 10.4
CHANGE IN CONTROL SEVERANCE AGREEMENT
This
Change in Control Severance Agreement (this “
Agreement ”), dated as of February 26, 2008 (the
“ Effective Date ”) is made by and among
Peerless Systems Corporation (“ Peerless ”), T1
Delaware Corporation, a Delaware corporation and wholly owned
subsidiary of Peerless (the “ Company ”) and
Andrew Lombard (the “ Executive ”).
WHEREAS,
Executive shall serve as President of the Company pursuant to an
Employment Agreement between Executive and the Company of even date
herewith (the “ Employment Agreement ”) and
incorporated by reference herein; and
WHEREAS,
the Board of Directors of Peerless (the “ Board
”) has determined that it is in the best interests of
Peerless and the Company to institute formalized severance
arrangements for certain of the executives of Peerless and the
Company, including the Executive.
NOW,
THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Company and the Executive hereby agree as
follows:
Section 1. Definitions .
For
purposes of this Agreement, the following capitalized terms have
the meanings set forth below:
“
Cause ” shall have the meaning ascribed to it in the
Employment Agreement.
“
Change in Control ” shall mean (i) the
acquisition by any person, entity or group (other than Peerless,
its subsidiaries or any employee benefit plan of Peerless) of fifty
percent (50%) or more of the combined voting power of the then
outstanding securities of Peerless, (ii) the involuntary
replacement or termination without cause, at any time during the
period of two consecutive years subsequent to the Effective Date of
this Agreement, of the Chief Executive Officer of Peerless or three
(3) or more members of the incumbent Board, (iii) the
consummation by Peerless of a merger, consolidation, reorganization
or business combination of Peerless, a sale or other disposition of
all or substantially all of the assets of Peerless or the
acquisition of assets or stock of another entity, in each case
other than a transaction in which the voting securities of Peerless
immediately prior thereto continue to represent at least fifty
percent (50%) of the combined voting power of the outstanding
voting securities of the surviving entity immediately after such
transaction, or (iv) a liquidation or dissolution of Peerless.
For avoidance of doubt, the consummation of the proposed sale of
intellectual property and certain other assets of Peerless to
Kyocera-Mita Corporation, as announced on January 10, 2008,
shall not be deemed a Change in Control.
“
Code ” shall mean the Internal Revenue Code of 1986,
as amended.
“
Covered Termination ” shall mean (i) a
termination of the Executive’s employment by the Company
without Cause, (ii) the Executive’s resignation of
employment with the Company for Good Reason, or (iii) a
termination of employment by reason of the Executive’s death
or Disability.
“
Disability ” shall have the meaning ascribed to it in
the Employment Agreement.
“
Effective Date of Termination ” shall have the meaning
ascribed to it in the Employment Agreement.
“
Excise Tax ” shall mean the excise tax imposed by
Section 4999 of the Code, together with any interest or
penalties imposed with respect to such excise tax.
“
Good Reason ” shall have the meaning ascribed to it in
the Employment Agreement.
“General
Release ” shall mean a release substantially in the
form attached hereto as Exhibit A .
Section 2. Term of Agreement .
The
term of this Agreement shall commence on the Effective Date and
continue as long as Executive is employed by the Company.
Section 3. Severance Benefits in Connection with a Change
in Control .
If a
Change in Control of Peerless occurs during the term of this
Agreement and there is a Covered Termination of the
Executive’s employment within eighteen (18) months
following the Change in Control, then Peerless and the Company
shall provide the Executive with the following payments and
benefits:
(a)
Cash Payments . The Company or Peerless, jointly and
severally, shall be responsible to pay the Executive, (i) on
the effective date of termination, the full amount of any earned
but unpaid base salary through the Effective Date of Termination at
the rate in effect on such date, plus (ii) in accordance with
the following paragraph, an amount equal to the Executive’s
annual base salary as in effect immediately prior to the Effective
Date of Termination or the Change in Control (subpart (ii) of
this sentence only, the “ Termination Payment
”).
Notwithstanding
anything in this Agreement to the contrary, (i) the Company or
Peerless shall have no obligation to pay the Severance Amount
unless on or after the date of “separation from
service,” within the meaning of Section 409A(a)(2)(A)(i)
(“Code Section 409A”) of the Internal Revenue Code
of 1986, as amended (“Separation from Service”),
Executive executes and delivers to the Company a full general
release of claims (excluding claims for amounts payable under this
Agreement), in substantially the form attached hereto as
Exhibit A (the “General Release”), against
the Company and the Related Entities and their respective officers,
directors, employees and agents, (ii) The Company shall pay
the Termination Payment and provide any benefits as herein agreed
beginning on the tenth (10 th ) business day
following the receipt of the General Release , and (iii) the
Termination Payment and all other obligations of the Company and
Peerless shall be extinguished if such General Release is not
executed and delivered to the Company within seven
(7) business days of the effective date of termination, the
date of “Separation from Service”.
(b)
Vesting of Stock Options . Notwithstanding the provisions of
that certain Stock Option Agreement between Executive and Peerless
executed concurrently with this Agreement, all unvested stock
options thereunder shall immediately vest and become exercisable in
full as of the Effective Date of Termination, to be exercised in
accordance with the terms of the 2005 Incentive Award Plan and such
Stock Option Agreement.
(c)
Restricted Stock .
Pursuant to the provisions of the
Restricted Stock and Repurchase Agreement between
