X0303 4 2010-10-06 0 0000897893 PEERLESS SYSTEMS CORP PRLS 0001399386 Bandera Partners LLC 50 BROAD STREET, SUITE 1820 NEW YORK NY 10004 0 0 1 0 0001465992 Bandera Master Fund LP 50 BROAD STREET, SUITE 1820 NEW YORK NY 10004 1 0 0 0 0001427289 Bylinsky Gregory 50 BROAD STREET, SUITE 1820 NEW YORK NY 10004 1 0 1 0 0001427290 Gramm Jefferson 50 BROAD STREET, SUITE 1820 NEW YORK NY 10004 1 0 1 0 0001483607 Shpiz Andrew 50 BROAD STREET, SUITE 1820 NEW YORK NY 10004 0 0 1 0 Common Stock 2010-10-06 4 M 0 10000 1.95 A 3629320 I See footnotes Common Stock 2010-10-06 4 M 0 10000 1.95 A 3639320 I See footnotes Options to Acquire Common Stock (Right to Buy) 1.95 2010-10-06 4 M 0 10000 0 D 2019-06-05 Common Stock 10000 50000 I See footnotes Options to Acquire Common Stock (Right to Buy) 1.95 2010-10-06 4 M 0 10000 0 D 2019-06-05 Common Stock 10000 40000 I See footnotes This report is filed jointly by Bandera Partners LLC ("Bandera Partners"), Bandera Master Fund L.P. ("Bandera Master Fund"), Gregory Bylinsky, Jefferson Gramm and Andrew Shpiz. Mr. Bylinsky and Mr. Gramm were nominated by the Issuer for election to the Issuer's board of directors at the Issuer's 2009 annual meeting of stockholders pursuant to the Nomination Agreement, dated May 14, 2009, by and among the Issuer, on the one hand, and Bandera Partners, Bandera Master Fund, Bandera Partners Management LLC, Mr. Bylinsky and Mr. Gramm, on the other hand, and Mr. Bylinsky and Mr. Gramm were reelected as directors at the Issuer's 2010 annual meeting of stockholders. Bandera Master Fund may be deemed a "director by deputization" of the Issuer by virtue of the fact that Mr. Bylinsky and Mr. Gramm serve as directors of the Issuer as reelected nominees of Bandera Master Fund. (continued in footnote 2) Mr. Bylinsky and Mr. Gramm will hold any stock, stock options, restricted stock or stock units or other rights to purchase or receive stock issued to them as compensation for their services as directors of the Issuer (the "Master Fund Securities") as nominees, and for the benefit, of Bandera Master Fund. (continued in footnote 3) Bandera Partners is the investment manager of Bandera Master Fund and may be deemed to have beneficial ownership of the Master Fund Securities and other shares of common stock of the Issuer directly owned by Bandera Master Fund (collectively with the Master Fund Securities, the "Master Fund Shares") by virtue of the sole and exclusive authority granted to Bandera Partners by Bandera Master Fund to vote and dispose of the Master Fund Shares. Mr. Bylinsky, Mr. Gramm and Mr. Shpiz may also be deemed to have beneficial ownership of the Master Fund Shares in their capacities as Managing Partners, Managing Directors and Portfolio Managers of Bandera Partners. Each of Bandera Partners, Mr. Bylinsky, Mr. Gramm and Mr. Shpiz disclaims beneficial ownership of the Master Fund Shares except to the extent of its or his pecuniary interest therein pursuant to Rule 16a-1(a)(2). Twenty-five percent (25%) of the shares subject to such options vested and became exercisable on June 5, 2010 (the completion of one year of service measured from the grant date). One thousand two hundred fifty (1,250) shares subject to such options vested and became exercisable on July 5, 2010, one thousand two hundred fifty (1,250) shares subject to such options vested and became exercisable on August 5, 2010, one thousand two hundred fifty (1,250) shares subject to such options vested and became exercisable on September 5, 2010, and one thousand two hundred fifty (1,250) shares subject to such options vested and became exercisable on October 5, 2010. The balance of the shares subject to such options shall vest and become exercisable in a series of thirty-two (32) successive equal monthly installments upon completion of each additional month of service as a Board member. Options to acquire 30,000 shares of Common Stock were received in connection with Mr. Bylinsky's election as a director of the Issuer on June 5, 2009. Options to acquire 30,000 shares of Common Stock were received in connection with Mr. Gramm's election as a director of the Issuer on June 5, 2009. /s/ Gregory Bylinsky - Managing Director, On behalf of Bandera Partners LLC 2010-10-08 /s/ Gregory Bylinsky - On behalf of Bandera Master Fund L.P., as Managing Director of its General Partner, Bandera Partners Management LLC 2010-10-08 /s/ Gregory Bylinsky 2010-10-08 /s/ Jefferson Gramm 2010-10-08 /s/ Andrew Shpiz 2010-10-08