Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On December 10, 2008, Peerless Systems Corporation (the "Company") entered into an employment agreement (the "Agreement") with Edward Gaughan, its Acting President and Vice President/Head of Sales. Pursuant to the Agreement, Mr. Gaughan will receive an annual salary of $200,000 and will be eligible to receive: (i) retention bonuses of a maximum aggregate amount of $92,500 through May 31, 2010, (ii) performance achievement bonuses of a maximum aggregate amount of $50,000 and (iii) incentive compensation upon the achievement of certain goals. In addition, Mr. Gaughan will be entitled to participate in the Company's medical insurance, retirement and other benefit plans and will receive severance payments, including a lump sum payment equal to nine months base salary, under certain circumstances upon termination of his employment with the Company.

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