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MAD CATZ INTERACTIVE INC DEF 14A 2011

Documents found in this filing:

  1. Def 14A
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def14a
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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO.___)

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

     
þ   Definitive Proxy Statement
o   Preliminary Proxy Statement
o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o   Definitive Additional Materials
o   Soliciting Material Pursuant to §240.14a-12

 

Mad Catz Interactive, Inc.


(Name of Registrant as Specified In Its Charter)

 


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

         
þ   No fee required.
o   Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
    (1)   Title of each class of securities to which transaction applies:


    (2)   Aggregate number of securities to which transaction applies:


    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):


    (4)   Proposed maximum aggregate value of transaction:


    (5)   Total fee paid:


o   Fee paid previously with preliminary materials.
o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
    (1)   Amount Previously Paid:


    (2)   Form, Schedule or Registration Statement No.:


    (3)   Filing Party:


    (4)   Date Filed:



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(MADCATZ LOGO)
 
July 15, 2011
 
Dear Fellow Shareholder:
 
You are cordially invited to attend our Annual and Special Meeting of Shareholders on Thursday, August 18, 2011, at 10:00 a.m., Pacific Time at Mad Catz, Inc.’s offices located at 7480 Mission Valley Road, Suite 101, San Diego, California, 92108.
 
The business to be conducted at the Annual and Special Meeting is explained in the accompanying Notice of Annual and Special Meeting of Shareholders and Management Proxy Circular and Proxy Statement. At the Annual and Special Meeting, we will also discuss our results for the past year.
 
Whether or not you attend the Annual and Special Meeting, it is important that your shares be represented and voted at the Annual and Special Meeting. Please complete, sign and date your proxy card today and return it in the envelope provided. If you decide to attend the Annual and Special Meeting and you are a registered shareholder, you will be able to vote in person, even if you have previously submitted your proxy.
 
Thank you for your continued support.
 
Sincerely,
 
-s- Darren Richardson
 
Darren Richardson
President and Chief Executive Officer


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MAD CATZ INTERACTIVE, INC.
7480 MISSION VALLEY ROAD, SUITE 101
SAN DIEGO, CALIFORNIA 92108
 
 
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 18, 2011
 
 
The 2011 Annual and Special Meeting of Shareholders (the “Meeting”) of Mad Catz Interactive, Inc. (the “Company”) will be held at Mad Catz, Inc.’s offices located at 7480 Mission Valley Road, Suite 101, San Diego, California, 92108, on Thursday, August 18, 2011, beginning at 10:00 a.m., Pacific Time. The purposes of the Meeting are to:
1. Receive the Annual Report of the Company containing the consolidated annual financial statements for the year ended March 31, 2011 and the auditor’s report thereon;
2. Elect four directors of the Company to serve until the Annual Meeting of Shareholders to be held in 2012 and until their respective successors are elected and qualified;
3. Appoint KPMG LLP as the Independent Registered Public Accounting Firm and Auditor of the Company and to authorize the Board of Directors to fix the Independent Registered Public Accounting Firm and Auditor’s remuneration;
4. Consider and, if deemed advisable, approve (with or without variation) a special resolution authorizing an amendment to the Company’s Articles to effect, at the discretion of the Board of Directors, a reverse stock split of the Company’s currently issued and outstanding Common Stock at a ratio within the range of one post-split share for every three pre-split shares to one post-split share for every five pre-split shares, with the final decision whether to proceed with the reverse stock split and the exact ratio and timing of the reverse stock split to be determined by the Board of Directors, in its discretion, if at all, prior to March 31, 2012;
5. Consider, and, if deemed advisable, approve an amendment to the Mad Catz Interactive, Inc. Stock Option Plan — 2007, as amended (the “2007 Plan”), to increase the number of shares reserved and authorized for issuance thereunder by 3,000,000 shares;
6. Consider, and, if deemed advisable, approve a resolution confirming By-law Number 3, which amends By-law Number 2 of the Company, to increase the quorum requirements for meetings of shareholders of the Company to a minimum of 2 persons, being either shareholders or proxyholders, holding or representing, in the aggregate not less than a majority of the votes entitled to be cast at the meeting; and
7. Transact such other business as may properly come before the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 11, 2011 as the record date for determining the shareholders entitled to notice of and to vote at the Meeting and any adjournment or postponement thereof.
These items of business, including the nominees for director, are more fully described in the Management Proxy Circular and Proxy Statement accompanying this notice.
Whether or not you plan to attend the Meeting, we encourage you to vote your shares by proxy. This will ensure the presence of a quorum at the Meeting. Voting by proxy will not limit your right to change your vote or to attend the Meeting.
 
BY ORDER OF THE BOARD OF DIRECTORS
 
-s- Darren Richardson
 
Darren Richardson
President and Chief Executive Officer
 
July 15, 2011
 
 
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2011 ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 18, 2011.
 
THE MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT AND THE ANNUAL REPORT ARE AVAILABLE AT https://materials.proxyvote.com/556162.
 


 

 
 
         
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(MADCATZ LOGO)
 
MAD CATZ INTERACTIVE, INC.
7480 MISSION VALLEY ROAD, SUITE 101
SAN DIEGO, CALIFORNIA 92108
 
 
 
MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT FOR
THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 18, 2011
 
 
 
This Management Proxy Circular and Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Mad Catz Interactive, Inc. (the “Company,” “Mad Catz,” “we” or “us”) of proxies from the holders of shares of Common Stock of the Company to be voted at the Annual and Special Meeting of Shareholders to be held on Thursday, August 18, 2011, beginning at 10:00 a.m., Pacific Time, at Mad Catz, Inc.’s offices located at 7480 Mission Valley Road, Suite 101, San Diego, California, 92108 (the “Meeting”). This Management Proxy Circular and Proxy Statement, the proxy card, and our Annual Report will first be mailed to shareholders entitled to vote at the Meeting on or about July 18, 2011. All dollar references in this Management Proxy Circular and Proxy Statement are in U.S. dollars unless otherwise indicated.
 
 
Q: What is the purpose of the Meeting?
 
A: The Meeting is being held to receive our Annual Report containing the consolidated financial statements for the year ended March 31, 2011 and the auditor’s report thereon and to consider and vote upon (1) the election of four directors to serve until the next Annual Meeting of Shareholders in 2012 and until their successors are duly elected; (2) the appointment of KPMG LLP as our Independent Registered Public Accounting Firm and Auditor and the authorization of the Board to fix the remuneration of the Independent Registered Public Accounting Firm and Auditor; (3) the approval of a special resolution authorizing an amendment to our Articles to effect, at the discretion of the Board of Directors, a reverse stock split of our currently issued and outstanding Common Stock at a ratio within the range of one post-split share for every three pre-split shares to one post-split share for every five pre-split shares, with the final decision whether to proceed with the reverse stock split and the exact ratio and timing of the reverse stock split to be determined by the Board of Directors, in its discretion, if at all, prior to March 31, 2012; (4) the approval of an amendment to the Mad Catz Interactive, Inc. Stock Option Plan — 2007 to increase the number of shares reserved and authorized for issuance thereunder; and (5) the approval of a resolution to confirm By-law Number 3, which increases the quorum requirements for meetings of the shareholders. The Board knows of no other business that will be presented for consideration at the Meeting. In


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addition, management will report on the Company’s performance during fiscal year 2011 and respond to questions from shareholders.
 
Q: What is the Board’s Recommendation?
 
A: The Board’s recommendations are set forth together with a description of the proposals in this Management Proxy Circular and Proxy Statement. In summary, the Board recommends that you vote:
 
• FOR the election of the four directors named in this Management Proxy Circular and Proxy Statement to serve until the Meeting of Shareholders in 2012 and until their successors are duly elected and qualified (see page 6);
 
• FOR the appointment of KPMG LLP as our Independent Registered Public Accounting Firm and Auditor and the authorization of the Board to fix the remuneration of the Independent Registered Public Accounting Firm and Auditor (see page 9);
 
• FOR the approval of a special resolution authorizing an amendment to our Articles to effect, at the discretion of the Board of Directors, a reverse stock split of our currently issued and outstanding Common Stock at a ratio within the range of one post-split share for every three pre-split shares to one post-split share for every five pre-split shares, with the final decision whether to proceed with the reverse stock split and the exact ratio and timing of the reverse stock split to be determined by the Board of Directors, in its discretion, if at all, prior to March 31, 2012 (see page 9);
 
• FOR the approval of an amendment to the Mad Catz Interactive, Inc. Stock Option Plan — 2007 to increase the number of shares reserved and authorized for issuance thereunder by 3,000,000 shares (see page 15); and
 
• FOR the approval of a resolution confirming By-law Number 3, which amends By-law Number 2 of the Company, to increase the quorum requirements for meetings of shareholders of the Company to a minimum of 2 persons, being either shareholders or proxyholders, holding or representing, in the aggregate not less than a majority of the votes entitled to be cast at the meeting (see page 20).
 
Q: Who is entitled to vote at the Meeting?
 
A: Only holders of record of shares of Common Stock as of the close of business on July 11, 2011, the record date fixed by the Board (the “Record Date”), will be entitled to receive notice of and to vote at the Meeting. As of July 11, 2011, there were 63,442,296 shares of Common Stock issued and outstanding.
 
Q: What shares can I vote?
 
A: You may vote all shares of Mad Catz Common Stock owned by you as of the close of business on the Record Date. You may cast one vote per share that you held on the Record Date. A list of shareholders entitled to vote at the Meeting will be available during ordinary business hours at Mad Catz, Inc.’s offices located at 7480 Mission Valley Road, Suite 101, San Diego, California 92108 for a period of at least 10 days prior to the Meeting and at the Meeting.
 
Q: How can I vote my shares at the Meeting?
 
A: If your shares are registered directly in your name with our transfer agent, Computershare Trust Company of Canada, you are considered the “shareholder of record” with respect to those shares and the proxy materials and proxy card are being sent directly to you by Mad Catz. As the shareholder of record, you have the right to vote in person at the Meeting. If you choose to do so, you can bring the enclosed proxy card or vote at the Meeting. Most of our shareholders hold their shares through a broker, bank or other nominee (that is, in “street name”) rather than directly in their own name. If you hold your shares in street name, your broker, bank or other nominee is forwarding the proxy materials to you, together with a voting instruction card. Because a beneficial owner is not the shareholder of record, you may not vote these shares in person at the Meeting unless you obtain a “legal proxy” from the broker, bank or other nominee that holds your shares, giving you the right to vote the shares at the Meeting. Even if you plan


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to attend the Meeting, we recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Meeting. The shares represented by proxy at the Meeting will be voted or withheld from voting in accordance with the instructions of the shareholder granting such proxy on any ballot which may be called for. If the shareholder specifies a choice with respect to any matter to be acted upon, the shares subject to such proxy will be voted accordingly.
 
Applicable regulatory policy requires your broker to seek voting instructions from you in advance of the Meeting. Every broker has its own mailing procedures and provides its own return instructions, which you should carefully follow in order to ensure that your shares are voted at the Meeting. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Communication Solutions, Canada (“Broadridge”). Broadridge mails a Voting Information Form instead of the form of proxy. You are asked to complete and return the Voting Information Form to Broadridge by mail or facsimile. Alternately, you can call the toll-free telephone number noted on your Voting Information Form to vote your shares. If you receive a Voting Information Form from Broadridge, it cannot be used as a proxy to vote shares directly at the Meeting because the proxy must be returned to Broadridge in advance of the Meeting in order to have the shares voted.
 
Q: How will my shares be voted if I return a blank proxy card?
 
A: If you are a shareholder of record, and you sign and return a proxy card without giving specific voting instructions, your shares will be voted “FOR” the election, as directors of the Company, of the four nominees named in this Management Proxy Circular and Proxy Statement, “FOR” the appointment of KPMG LLP as our Independent Registered Public Accounting Firm and Auditor and the authorization of the Board to fix the remuneration of the Independent Registered Public Accounting Firm and Auditor, “FOR” the approval of a special resolution authorizing an amendment to our Articles to effect, at the discretion of the Board of Directors, a reverse stock split of our currently issued and outstanding Common Stock at a ratio within the range of one post-split share for every three pre-split shares to one post-split share for every five pre-split shares, with the final decision whether to proceed with the reverse stock split and the exact ratio and timing of the reverse stock split to be determined by the Board of Directors, in its discretion, if at all, prior to March 31, 2012, “FOR” approval of an amendment to the Mad Catz Interactive, Inc. Stock Option Plan — 2007 to increase the number of shares reserved and authorized for issuance thereunder, and “FOR” approval of a resolution confirming By-law Number 3, which amends By-law Number 2 of the Company, to increase the quorum requirements for meetings of shareholders of the Company. If you hold your shares in street name and do not provide your broker with voting instructions (including by returning a blank voting instruction card), your shares may constitute “broker non-votes.” Generally, broker non-votes occur when a broker is not permitted to vote on a specific matter without instructions from the beneficial owner and instructions are not given. Shares that are the subject of a broker non-vote with respect to a proposal on a non-routine matter will not be counted as a vote “cast” for or against the proposal.
 
Q: How can I vote my shares without attending the Meeting?
 
A: Whether you are the shareholder of record or hold your shares in street name, you may direct your vote without attending the Meeting by completing and mailing your proxy card in the enclosed pre-paid envelope or completing and returning the Voting Instruction Form in accordance with the instructions contained therein. Each shareholder has the right to appoint a person or company to represent the shareholder at the Meeting other than the person or company, if any, designated on the proxy card. A shareholder desiring to appoint some other person (who need not be a shareholder of the Company) to represent him, her or it at the Meeting may do so either by inserting such other person’s name in the blank space provided in the proxy card or by completing another proxy card and in either case by delivering, at any time up to and including the second business day preceding the day of the Meeting or any adjournment thereof, the completed proxy card addressed to the Corporate Secretary of the Company, c/o Computershare Trust Company of Canada, Attention Proxy Department, 100 University Avenue, 9th Floor, North Tower, Toronto, Ontario, Canada, M5J 2Y1, or to the Chairman or the Corporate Secretary of the Company at the beginning of the Meeting or any adjournment thereof. If your shares are held in


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street name, carefully follow the corresponding instructions in the Voting Instruction Form. Also, your Voting Instruction Form may contain instructions from your broker, bank or nominee that allow you to vote your shares using the Internet or by telephone. Please consult with your broker, bank or nominee if you have any questions regarding the electronic voting of shares held in street name.
 
Q: Can I change my vote or revoke my proxy?
 
A: You may change your vote or revoke your proxy at any time before your proxy is voted at the Meeting. If you are a shareholder of record, you may change your vote or revoke your proxy: (1) by delivering to the Company at Mad Catz Interactive, Inc. c/o McMillan LLP, 181 Bay Street, Suite 4400, Toronto, Ontario, Canada M5J 2T7 (Attention: P. Collins) a written notice of revocation of your proxy on or before August 16, 2011 or to the Chairman of the Meeting on the day of the Meeting; (2) by delivering to the Company an authorized proxy bearing a later date; (3) by attending the Meeting and voting in person; or (4) in any other manner permitted by law. Attendance at the Meeting in and of itself, without voting in person, will not cause your previously granted proxy to be revoked. For shares you hold in street name, you may change your vote by submitting new voting instructions to your broker, bank or other nominee or, if you have obtained a legal proxy from your broker, bank or other nominee giving you the right to vote your shares at the Meeting, by attending the Meeting and voting in person.
 
Q: How many shares must be present or represented to conduct business at the Meeting?
 
A: The quorum requirement for holding the Meeting and transacting business at the Meeting is that at least two persons be present in person, each being a shareholder or representative duly authorized in accordance with the Canada Business Corporations Act entitled to vote thereat or a duly appointed proxy for a shareholder so entitled.
 
Q: What if a quorum is not present at the Meeting?
 
A: Under Canadian law, if a quorum is not present at the opening of the Meeting, the shareholders present may adjourn the Meeting to a fixed time and place, but may not transact any other business. If we propose to have the shareholders vote whether to adjourn the Meeting, the proxy holders will vote all shares for which they have authority in favor of the adjournment.
 
Q: What vote is required to approve each of the proposals?
 
A: Each of the proposals described in this Proxy Statement (other than with respect to the reverse stock split) requires the affirmative vote of a majority of the votes cast on those proposals by the shareholders present (in person or by proxy) and entitled to vote at the Meeting. The proposal to approve a special resolution of shareholders authorizing the reverse stock split requires the affirmative vote of at least two-thirds of the votes cast by the shareholders present (in person or by proxy) and entitled to vote at the Meeting.
 
Q: What happens if additional matters are presented at the Meeting?
 
A: Other than the five proposals described in this Management Proxy Circular and Proxy Statement, we are not aware of any other business to be acted upon at the Meeting. If you grant a proxy, the persons named as proxy holders, Thomas R. Brown, Chairman of the Board, and Darren Richardson, President and Chief Executive Officer, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Meeting.
 
Q: Who will count the votes?
 
A: A representative of the Company will be appointed at the Meeting to tabulate the votes and act as Scrutineer and Inspector of Elections.
 
Q: Where can I find the voting results of the Meeting?
 
A: We will announce preliminary voting results at the Meeting and publish final results in a Current Report on Form 8-K within four business days following the Meeting. In addition, a report of the final votes will be made available at www.sedar.com.


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Q: Who will bear the cost of soliciting votes for the Meeting?
 
A: The solicitation of proxies will be conducted by mail, and the Company will bear all attendant costs. These costs will include the expense of preparing and mailing proxy solicitation materials for the Meeting and reimbursements paid to brokerage firms and others for their expenses incurred in forwarding solicitation materials regarding the Meeting to beneficial owners of our common stock. We may conduct further solicitation personally, telephonically, through the Internet or by facsimile through our officers, directors and employees, none of whom will receive additional compensation for assisting with the solicitation. We may generate other expenses in connection with the solicitation of proxies for the Meeting, which we will pay.
 
Q: May I propose matters for consideration at next year’s Annual Meeting or nominate individuals to serve as directors?
 
A: Yes. If you wish to propose a matter for consideration at next year’s Annual Meeting or if you wish to nominate a person for election as a director of the Company, see the information set forth in “Shareholder Proposals” and “Shareholder Nominations” below.
 
Q: What do I need for admission to the Meeting?
 
A: You are entitled to attend the Meeting only if you are a shareholder of record or a beneficial owner as of July 11, 2011, the Record Date, or you hold a valid proxy for the Meeting. You should be prepared to present photo identification for admittance. If you are the shareholder of record, your name will be verified against the list of shareholders of record prior to your being admitted to the Meeting. If you hold your shares in street name, you should provide proof of beneficial ownership on the Record Date, such as a brokerage account statement showing that you owned Mad Catz stock as of the Record Date, a copy of the Voting Instruction Form provided by your broker, bank or other nominee, or other similar evidence of ownership as of the Record Date. If you do not provide photo identification or comply with the other procedures outlined above upon request, you will not be admitted to the Meeting.


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The Company’s articles of incorporation provide that the Board shall consist of a minimum of three directors and a maximum of 12 directors. The Board currently consists of four members: Messrs. Thomas R. Brown, Darren Richardson, Robert J. Molyneux and William Woodward.
 
The Board has fixed the number of directors to be elected at the Meeting at four. All of the nominees for director are current members of the Board.
 
Each director elected at the Meeting will hold office for a one-year term until the 2012 Annual Meeting of Shareholders or until his successor is duly elected, unless prior thereto the director resigns or the director’s office becomes vacant by reason of death or other cause. If any such person is unable or unwilling to serve as a nominee for the office of director at the date of the Meeting or any postponement or adjournment thereof, the proxies may be voted for a substitute nominee, designated by the proxy holders or by the present Board to fill such vacancy, or for the balance of those nominees named without nomination of a substitute, and the Board may be reduced accordingly. The Board has no reason to believe that any of such nominees will be unwilling or unable to serve if elected as a director.
 
In considering candidates for election to the Board of Directors, the independent members of the Board of Directors seeks to assemble a Board of Directors that, as a whole, possess the appropriate balance of professional, management and industry experience, qualifications, attributes, skills, expertise and involvement in areas that are of importance to our business and professional reputation. The independent Directors also evaluate other board service, business, financial and strategic judgment of potential nominees, and desire to have a Board of Directors that represents a diverse mix of backgrounds, perspectives and expertise that consists of Directors who complement and strengthen the skills of other Directors and who also exhibit integrity, collegiality, sound business judgment and any other qualities that the independent members of the Board of Directors view as critical to effective functioning of the Board of Directors. Each of the nominees for election to the Board of Directors has demonstrated a successful track record of strategic, business and financial planning and operating skills. In addition, each of the nominees for election to the Board has proven experience in management and leadership development and an understanding of operating and corporate governance issues for a multinational public company.
 
The following information is furnished with respect to the Board’s nominees for election as directors of the Company, including the nominee’s position with the Company, tenure as director and age as of July 11, 2011. Stock ownership information is shown under the heading “Security Ownership of Certain Beneficial Owners and Management” and is based upon information furnished by the respective individuals.
 
                     
    Position with the Company and
      Director
Name and Place of Residence
 
Principal Occupation
  Age   Since
 
Thomas R. Brown(1)
  Chairman of the Board, Businessman     60       2006  
Poway, California,
United States
                   
Darren Richardson
  President, Chief Executive Officer and Director     50       2005  
San Diego, California,
United States
                   
Robert J. Molyneux(1)
  Director, Businessman     56       2006  
Toronto, Ontario,
Canada
                   
William Woodward(1)
  Director, Businessman     51       2006  
 Santa Monica, California,
United States
                   
 
 
(1) Member of the Audit Committee.
 
Set forth below is information regarding each of the above named individuals, including a description of his positions and offices held with the Company, a description of his principal occupation and business


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experience during at least the last five years and directorships presently held by him in other companies. The information below includes specific experience, qualifications, attributes or skills of each nominee that led the independent members of the Board of Directors to believe that, as of the date of this proxy statement, that nominee should continue to serve on the Board of Directors. However, each independent Director may have a variety of reasons for believing a particular person would be an appropriate board member, and these views may differ from the views of other independent Directors. For the number of shares of Common Stock beneficially owned, or controlled or directed, directly or indirectly, by each of the above named individuals, see “Security Ownership of Certain Beneficial Owners and Management”.
 
 
Mr. Brown has been a director of the Company since May 2006 and has served as Chairman of the Board since April 2008. Mr. Brown serves as President, Chief Executive Officer and director of LRAD Corporation, a leading innovator of highly intelligible, clear directed acoustic solutions, a position he has held since September 2006. Previously, he served as President of Brown Thompson Executive Search, a financial executive search firm, since April 2005. From April 2001 to September 2004, Mr. Brown was Executive Vice President and Deputy President of the Information Technology division of Sony Electronics, where he was responsible for supply chain operations including Information Technology, Procurement, North American Manufacturing Operations and Finance. He continued to consult with Sony Electronics on its ERP implementation from September 2004 to January 2005. From April 2000 to September 2004, Mr. Brown was concurrently the Executive Vice President and President of Information Technology Division for Sony Electronics, where he was responsible for establishing the North American personal computer division. Mr. Brown holds a Bachelor of Arts degree in Economics from Rutgers University. Mr. Brown is also a certified public accountant. The Company believes that Mr. Brown’s senior management, accounting and financial analysis expertise, including his experience as Chief Executive Officer and interim Chief Financial Officer of LRAD Corporation and his management and financial experience with Sony Electronics in the consumer electronics industry qualify him for service on the Board of Directors.
 
 
Mr. Richardson has been President and Chief Executive Officer of the Company since April 1, 2004, and a director of the Company since 2005. Prior to his appointment as President and Chief Executive Officer, Mr. Richardson served as Executive Vice President of the Company since October 1997 and as President and Chief Operating Officer of Mad Catz, Inc. since September 1999. Mr. Richardson served in several senior management capacities with Games Trader from 1997 until 1999, including Chief Operating Officer, and Vice President of Business Development, responsible for sales and marketing with a focus on new account development. He holds a Master of Business Administration degree from Trinity College, Dublin, and a Bachelor of Commerce degree from the University of Wollongong, Australia. The Company believes that Mr. Richardson’s expertise and experience in the video game industry, as well his as senior management positions with the Company for nearly 13 years, qualify him for service on the Board of Directors.
 
 
Mr. Molyneux has been a director of the Company since June 2006. Mr. Molyneux has been a principal in Imperial Capital Corporation, a private equity buy-out firm based in Toronto, Canada, since September 2004. Previously, Mr. Molyneux was President of Ravenna Capital Corporation, a private merchant banking firm he founded in 1992. Mr. Molyneux holds an Honours Bachelor of Business Administration degree from Wilfrid Laurier University. Mr. Molyneux obtained his chartered accountant license in 1981 and has worked in the financial markets in various roles since 1982, when his chartered accountant license became inactive. The Company believes that Mr. Molyneux’s financial analysis and management expertise, including his senior management roles in investment and private merchant banking, qualify him for service on the Board of Directors.


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Mr. Woodward has been a director of the Company since June 2006. Mr. Woodward has been the Managing Director and a founder of Anthem Venture Partners since 2000. Prior to founding Anthem Venture Partners, Mr. Woodward was a Managing Director of Avalon Investments, an early-stage technology venture capital firm. Mr. Woodward has founded numerous technology companies, including Paracomp, which later became MacroMedia, Inc., one of the largest multimedia software companies in the world at its initial public offering, and Pulse Entertainment, the world’s leading 3D animation engine and tools company for mobile communications. Mr. Woodward sits on the board of directors of several private companies, including Axiom Microdevices, Solarflare, Buzznet, Wavestream and Planet A.T.E., and is Chairman of the Board of Pulse Entertainment. The Company believes that Mr. Woodward’s board and management experience in the consumer products and consumer electronics industries as well as his expertise in technology investment qualify him for service on the Board of Directors.
 
There are no family relationships among any executive officers or directors of the Company.
 
 
To the knowledge of management, none of the nominees for election as a director of the Company:
 
(a) is, at the date of this Management Proxy Circular and Proxy Statement, or has been, within 10 years before the date of this Management Proxy Circular and Proxy Statement, a director, chief executive officer or chief financial officer of any company (including Mad Catz) that,
 
(i) was subject to a cease trade or similar order or an order that denied the company access to any exemption under securities legislation (each an “order”) that was issued while such nominee director was acting in the capacity as director, chief executive officer or chief financial officer; or
 
(ii) was subject to an order that was issued after such nominee director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while such nominee director was acting in the capacity as director, chief executive officer or chief financial officer; or
 
(b) is, at the date of this Management Proxy Circular and Proxy Statement, or has been within 10 years before the date of this Management Proxy Circular and Proxy Statement, a director or executive officer of any company (including Mad Catz) that, while such nominee director was acting in that capacity, or within a year of such nominee director ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or
 
(c) has, within the 10 years before the date of this Management Proxy Circular and Proxy Statement, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the nominee director.
 
To the knowledge of management, none of the nominees for election as a director of the Company has been subject to:
 
(a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or
 
(b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for such nominee director.
 
 
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE DIRECTOR.


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The Board and Audit Committee of the Board of the Company have recommended the accounting firm of KPMG LLP to be appointed as our Independent Registered Public Accounting Firm and Auditor for the fiscal year ending March 31, 2012.
 
Unless authority to vote is withheld, the persons named in the accompanying proxy card intend to vote for the re-appointment of KPMG LLP as our Independent Registered Public Accounting Firm and Auditor for the Company’s fiscal year ending March 31, 2012 and to authorize the Board to fix the remuneration of the Independent Registered Public Accounting Firm and Auditor. KPMG LLP has been our independent auditor and its predecessors for more than ten years.
 
The Audit Committee of the Board may terminate the engagement of KPMG LLP as the Company’s Independent Registered Public Accounting Firm and Auditor without the approval of the shareholders if the Audit Committee determines it is necessary or appropriate to terminate their engagement.
 
A representative of KPMG LLP is expected to attend the Meeting and will have an opportunity to make a statement if he or she desires to do so, and will be available to answer appropriate questions from shareholders.
 
 
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDER APPROVAL OF THE RE-APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND AUDITOR AND THE AUTHORIZATION OF THE BOARD TO FIX THE REMUNERATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND AUDITOR.
 
PROPOSAL 3
AMENDMENT TO ARTICLES TO EFFECT A
REVERSE STOCK SPLIT OF THE COMMON STOCK
 
General
 
The Board of Directors has approved, and is hereby soliciting shareholder approval of, a special resolution authorizing an amendment to our Articles to effect, at the discretion of the Board of Directors, a reverse stock split (also known as a stock consolidation) of our currently issued and outstanding Common Stock at a ratio within the range of one post-split share for every three pre-split shares to one post-split share for every five pre-split shares, with the final decision whether to proceed with the reverse stock split and the exact ratio and timing of the reverse stock split to be determined by the Board of Directors, in its discretion, if at all, prior to March 31, 2012.
 
Purpose of the Reverse Stock Split
 
The Board believes that the reverse stock split is beneficial to the Company and its shareholders for the following reasons:
 
NASDAQ Listing.  The Company has submitted an application to list its Common Stock on the Nasdaq Capital Market. Among other initial listing requirements, Nasdaq requires a stock price of at least $4.00 per share. Our Common Stock, which is currently listed on the Toronto Stock Exchange and the NYSE Amex under the symbol “MCZ”, does not meet this requirement. The Board of Directors has determined that a reverse stock split of our issued and outstanding shares of Common Stock would be a suitable action to achieve a stock price of $4 per share or more. The closing price of our common stock on July 11, 2011 was $1.44 per share.


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Potential for increased institutional investor interest, more attractive share price.  A sustained higher per share price of the Common Stock, which may result from a reverse stock split, could heighten the interest of the financial community in the Company and broaden the pool of investors that may consider investing in the Company, potentially increasing the trading volume and liquidity of the Common Stock. As a matter of policy, many institutional investors are prohibited from purchasing stocks below certain minimum price levels. In addition, brokers often discourage their customers from purchasing such stocks. To the extent that the price per share of the Common Stock remains at a higher per share price as a result of the reverse stock split, some of these concerns may be ameliorated.
 
Reduced shareholder transaction costs and Company fees.  Many investors pay commissions based on the number of shares of Common Stock traded when they buy or sell Common Stock. If the share price was higher, these investors would pay lower commissions to trade a fixed dollar amount of Common Stock than they would if the share price was lower. In addition, the Company also believes that the reverse stock split may also reduce certain of its ongoing costs, such as the listing and transfer agent fees.
 
Certain Risks Associated with the Reverse Stock Split
 
There can be no assurance that we will be able to meet all of the requirements for listing our Common Stock on the Nasdaq Capital Market or to meet the continued listing standards of the Nasdaq Capital Market after a reverse stock split.
 
The Nasdaq Capital Market has several other initial listing requirements applicable to the listing of the Common Stock and to continue as a listed company thereafter. While the Company believes it currently meets these standards (other than the minimum bid price requirement described above), we cannot assure you that our Common Stock will be accepted for listing on the Nasdaq Capital Market following the reverse stock split or that it will maintain compliance with all of the requirements to remain listed. Moreover, there can be no assurance that the market price of the Common Stock after the reverse stock split will adjust to reflect the decrease in Common Stock outstanding or that the market price following a reverse stock split will either exceed or remain in excess of the current market price.
 
If the reverse stock split is implemented, the resulting per-share price may not attract institutional investors or investment funds and may not satisfy the investing guidelines of these investors, and consequently, the trading liquidity of Common Stock may not improve.
 
While the Company believes that a higher share price may help generate investor interest in the Common Stock, the reverse stock split may not result in a share price that will attract institutional investors or investment funds or satisfy the investing guidelines of institutional investors or investment funds. A decline in the market price of the Common Stock after the reverse stock split may result in a greater percentage decline than would occur in the absence of the reverse stock split. If the reverse stock split is implemented and the market price of the Common Stock declines, the percentage decline may be greater than would occur in the absence of the reverse stock split. The market price of the Common Stock is also based on the Company’s performance and other factors, which are unrelated to the number of shares of Common Stock outstanding.
 
The reverse stock split may result in some shareholders owning “odd lots” that may be more difficult to sell or require greater transaction costs per share to sell.
 
The reverse stock split may result in some shareholders owning “odd lots” of less than 100 shares of Common Stock on a post-split basis. Odd lots may be more difficult to sell, or require greater transaction costs per share to sell, than Common Stock in “board lots” of even multiples of 100 shares.
 
Board Discretion to Implement the Reverse Stock Split
 
The Board of Directors believes that shareholder approval of a range of reverse-split ratios (rather than a single exchange ratio) is in the best interests of our shareholders because it provides the Board of Directors with the flexibility to achieve the desired results of the reverse stock split and because it is not possible to predict market conditions at the time the reverse stock split would be implemented. If shareholders approve this proposal, the Board of Directors would carry out a reverse stock split only upon the Board of Directors’


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determination that a reverse stock split would be in the best interests of the shareholders at that time. The Board of Directors would then set the ratio for the reverse stock split within the range approved by shareholders and in an amount it determines is advisable and in the best interests of the shareholders considering relevant market conditions at the time the reverse stock split is to be implemented. In determining the ratio, following receipt of shareholder approval, the Board of Directors may consider, among other things:
 
  •  the historical prices and trading volume of the Common Stock;
 
  •  the then-prevailing trading price and trading volume of the Common Stock and the anticipated impact of the reverse stock split on the trading market for the Common Stock;
 
  •  the outlook for the trading price of the Common Stock;
 
  •  threshold prices of brokerage houses or institutional investors that could impact their ability to invest or recommend investments in the Common Stock;
 
  •  our ability to maintain compliance with the listing requirements of the Nasdaq Capital Market; and
 
  •  prevailing general market and economic conditions.
 
The Board of Directors intends to select a reverse stock split ratio that it believes would be most likely to achieve the anticipated benefits of the reverse stock split described above.
 
Effect on Existing Common Stock
 
If the reverse stock split is implemented, the number of shares of Common Stock issued and outstanding will be reduced from 63,442,296 shares (as of July 11, 2011) to between 12,688,459 shares and 21,147,432 shares, depending on which exchange ratio is ultimately effected. Except for the change resulting from the adjustment for fractional shares (described below), the change in the number of shares of Common Stock outstanding that will result from the reverse stock split will not affect any shareholder’s percentage ownership in the Company.
 
The Company’s Articles permit it to authorize and issue an unlimited number of shares of Common Stock without obtaining shareholder approval. Unlike companies with a limited number of authorized shares, which are able to issue more shares without shareholder approval following a reverse stock split because the reverse stock split reduces the outstanding number of shares without reducing the authorized number of shares, the Company will have the same ability to authorize and issue shares without obtaining shareholder approval following the reverse stock split as it currently has. Future issuances of Common Stock could have the effect of diluting the earnings per share and book value per share, as well as the stock ownership and voting rights, of the currently outstanding Common Stock. The Company does not have any plan, commitment, arrangement, understanding or agreement regarding the issuance of Common Stock after the reverse stock split.
 
In addition, because the Company’s Articles permit it to authorize and issue an unlimited number of shares of Common Stock without obtaining shareholder approval, the Company does not believe that the reverse stock split will have an anti-takeover effect. As described above, companies with a limited number of authorized shares are able, following a reverse stock split, to issue more shares than prior to the reverse stock split without shareholder approval, which increased the ability of these companies to make it more difficult to complete a change of control or takeover transaction by issuing dilutive shares. Because the Company is permitted to authorize and issue an unlimited number of shares of Common Stock without obtaining shareholder approval, the reverse stock split will not increase or decrease the Company’s ability to issue dilutive shares without shareholder approval in an effort to prevent a change of control or takeover transaction.
 
Effect on Equity Compensation Plans
 
The number of shares of Common Stock issuable upon the exercise of options and warrants to acquire shares of Common Stock, and the exercise price thereof, will be adjusted proportionately to reflect the reverse stock split.


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Effective Date
 
If the reverse stock split is implemented, the Company will file a Certificate of Amendment with the Director under the Canada Business Corporations Act. The reverse stock split becomes effective upon (or at such later time as may be set forth in the Certificate of Amendment) such filing of the Certificate of Amendment. No further action on the part of shareholders would be required to either effect or abandon the reverse stock split. If the Board of Directors does not implement the reverse stock split prior to March 31, 2012, the authority granted in this proposal to implement the reverse stock split will terminate. The Board of Directors reserves its right to elect not to proceed and abandon the reverse stock split if it determines, in its sole discretion, that this proposal is no longer in the best interests of our shareholders.
 
Mechanics of the Reverse Stock Split
 
Exchange of Stock Certificates
 
If the reverse stock split is implemented, each certificate representing pre-split shares will, until surrendered and exchanged as described below, for all corporate purposes, be deemed to represent, respectively, only the number of post-split shares.
 
Accompanying this Management Proxy Circular and Proxy Statement is the form of Letter of Transmittal which must be used in forwarding certificates for surrender and exchange for certificates representing the number of shares of Common Stock the holder is entitled to receive as a consequence of the reverse stock split. The Letter of Transmittal includes instructions specifying other details of the exchange.
 
If the proposed reverse stock split is approved by shareholders and implemented, the Company will publicly announce the effective date of the reverse stock split and the reverse stock split ratio selected. Following such announcements, shareholders are encouraged to deliver a completed Letter of Transmittal and relevant certificates representing the pre-reverse-split shares to Computershare Trust Company of Canada (the “Depositary”) at the address specified in the Letter of Transmittal, whereupon new share certificates representing the post reverse-split shares will be forwarded to those shareholders without charge.
 
The method chosen for delivery of share certificates and Letters of Transmittal to the Depositary is the responsibility of the shareholder and neither the Depositary nor the Company will have any liability in respect of share certificates and/or Letters of Transmittal which are not actually received by the Depositary.
 
No delivery of post-split share certificates will be made until the shareholder has surrendered to the Depositary the current share certificates together with a completed and executed Letter of Transmittal, whereupon the shareholder will receive in exchange therefor certificates representing the number of shares of Common Stock following the reverse stock split to which the holder is entitled. No shareholder will be required to pay a transfer or other fee to exchange his, her or its certificates. Shareholders should not send in certificates until the Company announces that the reverse-split has become effective. In connection with the reverse stock split, the CUSIP for the Common Stock will change from its current CUSIP number. This new CUSIP number will appear on any new stock certificates issued representing post-split shares.
 
Shareholders should not destroy any share certificate(s) and should not submit any share certificate(s) until following the announcement by the Company of the completion of the reverse split.
 
Effect on Registered “Book-entry” Holders of Common Stock
 
Holders of Common Stock may hold some or all of their Common Stock electronically in book-entry form (“street name”) under the direct registration system for securities. These shareholders will not have stock certificates evidencing their ownership. They are, however, provided with a statement reflecting the number of shares of Common Stock registered in their accounts.
 
If you hold registered Common Stock in book-entry form, you do not need to take any action to receive your post-split shares, if applicable. If you are entitled to post-split shares, a transaction statement will


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automatically be sent to your address of record indicating the number of shares of Common Stock you hold following the reverse stock split.
 
Fractional Shares
 
No fractional shares will be issued. As set forth in the special resolution, any fractional share resulting from the reverse stock split will be rounded up to the next whole share.
 
No Dissent Rights
 
Under, the Canada Business Corporations Act, our shareholders are not entitled to dissent rights with respect to the reverse stock split, and we will not independently provide shareholders with any such right.
 
Accounting Matters
 
The per share net income or loss of our Common Stock, for all periods, will be restated because there will be fewer outstanding shares of Common Stock of the Company.
 
U.S. Federal Income Tax Considerations
 
The following is a summary of certain material U.S. federal income tax consequences of the proposed reverse stock split to U.S. Holders (as defined below). The following does not purport to be a complete discussion of all of the possible U.S. federal income tax consequences of the reverse stock split and is included for general information only. It does not address any U.S. state, local, estate, gift, or non-U.S. income or other tax consequences. It addresses only U.S. Holders who hold the pre-split shares and post-split shares as capital assets. It does not address U.S. Holders subject to special rules, such as financial institutions, regulated investment companies, personal holding companies, tax-exempt organizations, insurance companies, dealers in securities, foreign stockholders, persons that own or have owned (directly, indirectly or constructively) 5% or more, by voting power or value, of the outstanding equity interests of the Company, U.S. Holders who hold the pre-split shares as part of a straddle, hedge or conversion transaction, U.S. Holders who are subject to the alternative minimum tax provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Holders who hold options or warrants to acquire Common Stock, or U.S. Holders who acquired their pre-split shares pursuant to the exercise of employee stock options, warrants or otherwise as compensation. This summary assumes that the Company will not be and has never been a “passive foreign investment company” within the meaning of Section 1297 of the Code. This summary is based upon the Code, applicable U.S. Treasury Regulations promulgated thereunder, judicial authority and current administrative rulings, all as in effect on the date of this proxy statement. Changes to the laws could alter the tax consequences described below, possibly retroactively. We have not obtained a ruling from the Internal Revenue Service (the “IRS”) or an opinion of legal or tax counsel with respect to the consequences of the reverse stock split. The tax treatment of a U.S. Holder may vary depending upon his, her or its particular facts and circumstances. Each U.S. Holder is advised to consult his, her or its tax advisor as to his, her or its own situation.
 
This discussion does not address the U.S. federal income tax considerations of the proposed reverse stock split to an entity that is a partnership for U.S. federal income tax purposes, or the partners of such partnership. Partnerships and partners should consult their own tax advisors.
 
For purposes of this summary, a “U.S. Holder” is a beneficial owner of Common Stock that, for U.S. federal income tax purposes, is (a) an individual who is a citizen or resident of the United States, (b) a corporation, or other entity classified as a corporation for U.S. federal income tax purposes, that is treated, for U.S. federal income tax purposes, as being created or organized in or under the laws of the United States, any state in the U.S. or the District of Columbia, (c) an estate if the income of the estate is subject to U.S. federal income tax regardless of the source of the income, or (d) a trust if (i) the trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust.


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The reverse stock split is intended to constitute a reorganization within the meaning of Section 368 of the Code. Assuming that the reverse stock split is not undertaken as part of a plan to increase any stockholder’s proportionate ownership of the Company and that the reverse stock split qualifies as a reorganization, a U.S. Holder generally should not recognize gain or loss as a result of the reverse stock split. The aggregate tax basis of the Common Stock received by such U.S. Holder in the reverse stock split should be equal to the aggregate tax basis of the pre-split shares exchanged therefor (including any portion of the U.S. Holder’s tax basis allocated to fractional shares). The holding period of the post-split shares received should include the holding period of the pre-split shares exchanged therefor.
 
The Company should not recognize any gain or loss as a result of the reverse stock split.
 
The Company’s view regarding the tax consequences of the proposed reverse stock split is not binding on the IRS or the courts. ACCORDINGLY, EACH U.S. HOLDER SHOULD CONSULT WITH HIS, HER OR ITS OWN TAX ADVISER WITH RESPECT TO ALL OF THE POTENTIAL TAX CONSEQUENCES TO HIM, HER OR IT OF THE REVERSE STOCK SPLIT.
 
Certain Canadian Federal Income Tax Considerations
 
The following is a summary of the principal Canadian federal income tax consequences generally applicable to a shareholder who, for purposes of the Income Tax Act (Canada) (the “Tax Act”) and at all relevant times, holds Common Stock as capital property and who is not affiliated with, and deals at arm’s length with, the Company. Generally, the Common Stock will be considered to be capital property of a shareholder provided that they are not held in the course of carrying on a business or in connection with an adventure or concern in the nature of trade. Certain shareholders who are residents in Canada, for purposes of the Tax Act, and who might not otherwise be considered to hold their Common Stock as capital property may, in certain circumstances, be entitled to have the Common Stock and all other “Canadian securities,” as defined in the Tax Act, treated as capital property by making the irrevocable election permitted by subsection 39(4) of the Tax Act. This summary is not applicable to a shareholder: (i) that is a “financial institution” for the purposes of the mark-to market rules contained in the Tax Act; (ii) that is a “specified financial institution” or “restricted financial institution” as defined in the Tax Act; (iii) an interest in which is or would constitute a “tax shelter investment” as defined in the Tax Act, or (iv) that reports its Canadian tax results in a currency other than the Canadian currency. Such shareholders are advised to consult their own tax advisors. This summary also does not address any tax considerations relevant to the acquisition, holding or disposition of Common Stock, other than those Canadian federal income tax issues that are directly the consequence of the proposed reverse stock split.
 
The summary is based on the current provisions of the Tax Act and the regulations thereunder, which are herein referred to as the Regulations, and the current administrative practices and assessing policies of the Canada Revenue Agency (“CRA”) published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act and the Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof and assumes that all such proposed amendments will be enacted in the form proposed. This summary does not otherwise take into account or anticipate any change in law, or administrative practices and assessing policies, whether by legislative, government or judicial decision or action.
 
This summary is of a general nature only and is not intended to be, and should not be construed as, legal or tax advice to any particular shareholder. This summary is not exhaustive of all Canadian federal income tax considerations and does not take into account provincial, territorial or foreign tax considerations, which may vary from the Canadian federal income tax considerations described herein. Shareholders are advised to consult their own tax advisors with regard to their particular circumstances.
 
Under the current administrative practices and assessing policies of the CRA, a shareholder will not be considered to have disposed of his, her or its Common Stock for Canadian federal income tax purposes solely as a result of the reverse stock split. Consequently, the reverse stock split will not result in the realization of any gain or loss by a shareholder. In general, for a shareholder that holds Common Stock as capital property, the aggregate adjusted cost base of the Common Stock held by such shareholder immediately after the reverse


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stock split will be the same as the aggregate adjusted cost base of the Common Stock held by such shareholder immediately before the reverse stock split.
 
Resolution
 
In order to effect the reverse stock split, the following special resolution of shareholders must be passed by the affirmative vote of at least two-thirds of the votes cast by the shareholder present (in person or by proxy) and entitled to vote at the Meeting.
 
“RESOLVED, AS A SPECIAL RESOLUTION OF SHAREHOLDERS THAT:
 
1. The Company be and is hereby authorized to amend the Articles of the Company, if and when the Board of Directors shall deem appropriate to do so, but in any event no later than March 31, 2012, to consolidate the total number of issued and outstanding common shares of the Company on the basis of a consolidation ratio to be determined in the sole and absolute discretion of the Board of Directors of the Company, but not to be less than one (1) post-consolidation share for every three (3) pre-consolidation shares issued and outstanding but not to exceed one (1) post-consolidation share for every five (5) pre-consolidation shares issued and outstanding, in each case immediately prior to the date that a Certificate of Amendment is issued by the Director appointed pursuant to the Canada Business Corporations Act, (the “Share Consolidation”);
 
2. No fractional shares shall be issued in connection with the Share Consolidation and any fractional share resulting from the Share Consolidation will be rounded up to the next whole share, all as now fully described in the Management Proxy Circular and Proxy Statement of the Company;
 
3. The Board of Directors of the Company, in its sole discretion, be and is hereby authorized to implement the Share Consolidation;
 
4. Any director or officer of the Company be and hereby is, authorized and empowered, acting for, in the name of and on behalf of the Company, to do all things and execute all instruments necessary or desirable to give effect to this special resolution including, without limitation, to execute, under seal of the Company or otherwise, and to deliver Articles of Amendment, to the Director under the Canada Business Corporations Act; and
 
5. Notwithstanding that this special resolution has been duly passed by the shareholders of the Company, the Board of Directors of the Company hereby is authorized and empowered to revoke this special resolution at any time prior to the issuance of a Certificate of Amendment giving effect to the amendment of the Articles of the Company and to determine not to proceed with the amendment without the further approval of or notice to the shareholders of the Company.”
 
 
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDER APPROVAL OF THE REVERSE STOCK SPLIT RESOLUTION. PROXIES RECEIVED PURSUANT TO THIS SOLICITATION WILL BE VOTED FOR THE APPROVAL OF THE REVERSE STOCK SPLIT RESOLUTION, UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS, HER OR ITS COMMON STOCK ARE TO BE VOTED AGAINST THE APPROVAL OF THE REVERSE STOCK SPLIT RESOLUTION. THE REVERSE STOCK SPLIT RESOLUTION IS A SPECIAL RESOLUTION AS DEFINED IN THE CANADA BUSINESS CORPORATIONS ACT. CONSEQUENTLY, THE REVERSE STOCK SPLIT RESOLUTION WILL REQUIRE THE AFFIRMATIVE VOTE OF AT LEAST TWO-THIRDS OF THE VOTES CAST BY THE SHAREHOLDERS PRESENT (IN PERSON OR BY PROXY) AND ENTITLED TO VOTE AT THE MEETING.


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PROPOSAL 4
AMENDMENT TO THE MAD CATZ INTERACTIVE, INC. STOCK OPTION PLAN — 2007
 
Introduction
 
Shareholders are requested under this Proposal 4 to consider and if appropriate, approve an amendment to the Mad Catz Interactive, Inc. Stock Option Plan, as amended (the “2007 Plan”) to increase the number of shares of common stock reserved and authorized for issuance thereunder by 3,000,000 from 7,300,000 to 10,300,000 shares (the “Plan Amendment”). The Board has adopted, subject to shareholder approval, the Plan Amendment, and it will become effective upon approval by our shareholders. Share amounts in this Proposal 4 are provided on a pre-proposed reverse stock split basis. If, and to the extent that, the reverse stock split described in Proposal 3 is effected, such share amounts will be adjusted accordingly.
 
Of the 7,300,000 shares of common stock currently authorized for issuance in connection with grants made under the 2007 Plan, only 1,050,634 shares remain available for future grants or awards as of June 15, 2011. While some additional shares may become available under the 2007 Plan through employee terminations or option expirations, the number is not expected to be substantial.
 
The Company and the Board believe strongly that the increase of shares issuable under the 2007 Plan is essential to the Company’s continued success. The Company’s employees, consultants and independent Board members are valuable assets. The Board has determined that it is in the best interest of the Company and its shareholders to increase the shares issuable under the 2007 Plan. The Board believes that grants of stock options under the 2007 Plan help create long-term equity participation in the Company and assist in attracting, retaining, motivating and rewarding employees and independent Directors. If shareholders do not approve the amendment, it will not be implemented and the Company will have to limit the number of awards granted in future periods.
 
New Plan Benefits
 
No grants have been made with respect to additional shares of common stock to be reserved for issuance under the 2007 Plan. In addition, the number of shares of common stock that may be granted to executive officers, directors and all employees including non-executive officers is indeterminable at this time, as such grants generally are subject to the discretion of the Board, except that each of the independent directors are automatically awarded options to purchase 25,000 shares of common stock concurrently with each annual meeting of the Company.
 
 
The affirmative vote of the majority of the shares present in person or represented by proxy and voted on the proposal at the Meeting is required to approve the Plan Amendment. Abstentions from voting and broker non-votes will have no effect on the approval or non-approval of this matter since only votes cast either “for” or “against” will be counted in determining whether the Plan Amendment has been approved by a majority of the votes cast thereon.
 
 
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDER APPROVAL OF THE PROPOSED AMENDMENT TO THE MAD CATZ INTERACTIVE, INC. STOCK OPTION PLAN — 2007.
 
Description of the 2007 Plan (including the changes contemplated by the proposed Plan Amendment)
 
The following is a summary of certain principal features of the 2007 Plan, reflecting the proposed amendments described in Proposal 4. The 2007 Plan was attached as Annex A to the Management Proxy Circular and Proxy Statement filed August 19, 2010 on EDGAR in the United States and SEDAR in Canada. No other changes have been or are being proposed to the 2007 Plan.


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The 2007 Plan is currently administered by the Board, although the Board may delegate this authority at a future time to a committee of the Board. Subject to the provisions of the 2007 Plan, the Board (or if authorized by the Board, a committee of the Board) determines, among other things, the persons to whom from time to time awards may be granted, the number of shares subject to each award, share prices, any restrictions or limitations on the awards, and any vesting, exchange, deferral, surrender, cancellation, acceleration, termination, exercise or forfeiture provisions related to the awards. The Board or applicable Board committee may also delegate to the Chief Executive Officer the authority to allocate stock option grants among non-management employees within the terms of reference and scope as determined by the Board or applicable Board committee.
 
 
Persons eligible to participate in the 2007 Plan are directors, officers and employees of or consultants to the Company or of any subsidiary of the Company, as determined by the Board or applicable Board committee who demonstrate the potential of becoming key personnel of, or performing valuable services for the Company or any of its subsidiaries.
 
 
The 2007 Plan currently authorizes up to 7,300,000 shares for issuance. The proposed Plan Amendment would increase the number of shares of common stock reserved and authorized for issuance by 3,000,000 shares, to a total of 10,300,000, being the maximum number of shares that have previously been issued or which could be issuable under the 2007 Plan since its inception in 2007. The number of shares reserved for issuance under the 2007 Plan from time to time is not necessarily reflective of the number of options that are outstanding at any given time because options that are exercised do not replenish the number of shares reserved under the 2007 Plan. Currently the Company has options outstanding under the 2007 Plan to purchase 5,218,868 shares of common stock and options outstanding under the Prior Plan to purchase 1,125,000 shares of common stock.
 
Under the terms of the 2007 Plan, the aggregate number of shares of Common Stock issued to insiders of the Company within any 12-month period, or issuable to insiders of the Company at any time, under the 2007 Plan and any other security-based compensation arrangement of the Company, may not exceed 10% of the total number of issued and outstanding shares of Common Stock of the Company at such time. “Insider” is defined in the 2007 Plan to include directors and senior officers (and their respective associates) of the Company and of certain subsidiaries of the Company. “Share compensation arrangements” is defined under the 2007 Plan as any compensation or incentive mechanism involving the issuance or potential issuance of securities of the Company, including financially assisted share purchases, stock options and stock appreciation rights involving the issuance of authorized but unissued shares of the Company.
 
In addition, to prevent the dilution or enlargement of the rights of holders under the 2007 Plan, the 2007 Plan provides for the adjustment of the terms of the awards or the number of shares reserved for issuance thereunder in the event of any stock split, reverse stock split, stock dividend payable on our shares of common stock, combination or exchange of shares, or other extraordinary event occurring after the grant of an award. Shares of the Company’s common stock that are awarded under the 2007 Plan will be authorized but unissued shares. If any award granted under the 2007 Plan is forfeited or terminated, the shares of common stock reserved for issuance pursuant to the award will be made available for future award grants under the 2007 Plan.
 
 
Stock options, including incentive stock options, as defined under Section 422 of the Internal Revenue Code (the “Code”), and nonqualified stock options may be granted under the 2007 Plan. Stock option grants to members of the Board will, unless otherwise determined by the Board or applicable Board committee, vest and become exercisable immediately after such grant. Stock option grants to persons other than members of


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the Board will, unless otherwise determined by the Board or applicable Board committee, vest and become exercisable as follows: 25% of the shares underlying such option shall vest and become exercisable on the first anniversary of the date of grant and the remainder shall vest and become exercisable in 36 equal monthly installments. The option exercise price of all stock options granted pursuant to the 2007 Plan will be as determined by the Board or applicable Board committee and will equal at least 100% of fair market value of the common stock of the Company on the date of grant. In no circumstances shall the exercise price of an option be less than the closing sale price of the common stock on the Toronto Stock Exchange (or on any other stock exchange on which the Company’s shares are then listed) on the last trading day prior to the effective date of grant. The effective date of grant will not be earlier than the actual date of grant. Stock options granted under the 2007 Plan will have a term for exercise as determined by the Board or applicable Board committee provided that such term will end on or before the tenth anniversary of the effective date of grant. The aggregate fair market value of the shares with respect to which options intended to be incentive stock options are exercisable for the first time by an optionee who is a citizen or resident of the United States in any calendar year may not exceed $100,000.
 
Upon the exercise of a stock option, the purchase price must be paid in full in either cash or its equivalent, or by tendering previously acquired shares of the Company’s common stock with a fair market value at the time of exercise equal to the exercise price (provided such shares have been held for such period of time as may be required by the Board (or the applicable Board committee) in order to avoid adverse accounting consequences) or other property acceptable to the Board (or the applicable Board committee) (including through the delivery of a notice that the participant has placed a market sell order with a broker with respect to shares then issuable upon exercise of the option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the option exercise price, provided that payment of such proceeds is then made to the Company upon settlement of such sale). However, no participant who is a member of the Board or an executive officer of the Company will be permitted to pay the exercise price of an option in any method in violation of Section 13(k) of the Securities Exchange Act of 1934, as amended.
 
The Company does not currently intend to provide financial assistance in connection with the exercise of stock options granted under the 2007 Plan.
 
 
Options granted under the 2007 Plan may only be assigned to: (i) a spouse of the optionee: (ii) a trustee, custodian or administrator acting on behalf of or for the benefit of the optionee or a spouse of the optionee; (iii) a registered retirement savings plan or a registered retirement income fund of the optionee or his or her spouse; (iv) a “holding entity” (as defined in National Instrument 45-106 of the Canadian Securities Administrators) of the optionee or his or her spouse; and (v) the legal personal representatives of a deceased optionee.
 
 
The Company prohibits its directors, officers and employees from trading in its securities with knowledge of any material information concerning the Company which has not been publicly disclosed. As it may be difficult from time to time for an individual to determine if he or she is in possession of material non-public information, the Company identifies certain restricted periods (or “blackout periods”) during which its personnel are not to trade in securities of the Company, which includes exercising stock options. The 2007 Plan permits options that would otherwise expire during or immediately following a blackout period to remain exercisable until the fifth business day following the cessation of such blackout period.
 
 
If an optionee ceases to be a director, officer or employee of, or a consultant to, the Company or any of its subsidiaries, then unless otherwise determined by the Board or applicable Board committee, the option will terminate and cease to be exercisable after 90 days from the earlier of the date on which the optionee ceases


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to be a director, officer, employee or consultant, or the date on which the optionee was given notice of dismissal.
 
 
In the event the Board recommends that shareholders accept or vote in favor of a bona fide offer for the shares of the Company that will result in a change of control of the Company, then all options which are outstanding, although not yet exercisable (vested), will become immediately exercisable, subject to the terms of the 2007 Plan. The Board may, in its discretion, give its express consent to the vesting of options which are outstanding, although not yet exercisable, upon receipt of an offer that it is not prepared to recommend. In addition, all options which are outstanding, although not yet exercisable, will automatically vest and become exercisable immediately prior a change in control transaction.
 
 
The Board may terminate, amend, or modify the 2007 Plan at any time; provided, however, that shareholder approval must be obtained (i) to reduce the exercise price of an option either directly or indirectly including by means of the cancellation of an option and the reissue of a similar option; (ii) to extend the period available to exercise an option beyond the normal expiration date (except in respect of blackout periods as provided in the 2007 Plan); (iii) to increase the levels of insider participation under the 2007 Plan; (iv) to increase the number of shares reserved for issuance under the 2007 Plan (other than pursuant to the provisions of the 2007 Plan); (v) to add any additional categories of persons eligible to receive options under the 2007 Plan; (vi) to increase the number options that may be granted to non-employee directors initially or annually thereafter under the 2007 Plan; and (vii) to amend any assignment rights set forth in the 2007 Plan. All other amendments to the 2007 Plan could be made at the discretion of the Board. For example, the Board’s discretion will include without limitation, authority to make amendments to clarify any ambiguity, inconsistency or omission in the 2007 Plan and other amendments of a clerical or housekeeping nature, to alter the vesting or termination provisions of any option or of the 2007 Plan, to modify the mechanics of exercise, and to add a financial assistance provision.
 
 
The 2007 Plan is intended to conform to the extent necessary with all provisions of the laws, regulations and rules of all public agencies and authorities applicable to the issuance and distribution of shares and to the listing of shares on any stock exchange on with the shares of the Company may be listed. The 2007 Plan will be administered, and options will be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the 2007 Plan and options granted thereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
 
 
The tax consequences of the 2007 Plan under current United States federal law are summarized in the following discussion which deals with the general tax principles applicable to the 2007 Plan, and is intended for general information only. Alternative minimum tax, Canadian tax and state, provincial and local income taxes are not discussed. Tax laws are complex and subject to change and may vary depending on individual circumstances and from locality to locality. The tax information summarized is not tax advice.
 
Incentive Stock Options:  An optionholder recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option qualifying under section 422 of the Code. Optionholders who neither dispose of their shares within two years following the date the option was granted nor within one year following the exercise of the option will normally recognize a capital gain or loss upon a sale of the shares equal to the difference, if any, between the sale price and the purchase price of the shares. If an optionholder satisfies such holding periods, upon a sale of the shares, the Company will not be entitled to any deduction for federal income tax purposes. If an optionholder disposes of shares within two years after the date of grant or within one year after the date of exercise (a “disqualifying disposition”), the difference


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between the fair market value of the shares on the exercise date and the option exercise price (not to exceed the gain realized on the sale if the disposition is a transaction with respect to which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the optionholder upon the disqualifying disposition of the shares generally will result in a deduction by the Company for federal income tax purposes.
 
Nonqualified Stock Options:  Options not designated or qualifying as incentive stock options will be nonqualified stock options having no special tax status. An optionholder generally recognizes no taxable income as the result of the grant of such an option. Upon exercise of a nonqualified stock option, the optionholder normally recognizes ordinary income in the amount of the difference between the option exercise price and the fair market value of the shares on the exercise date. If the optionholder is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonqualified stock option, any gain or loss, based on the difference between the sale price and the fair market value on the exercise date, will be taxed as a capital gain or loss. No tax deduction is available to the Company with respect to the grant of a nonqualified stock option or the sale of the stock acquired pursuant to such grant. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the optionholder as a result of the exercise of a nonqualified stock option.
 
 
The Code allows publicly-held corporations to deduct compensation in excess of $1,000,000 paid to the corporation’s chief executive officer and its four other most highly compensated executive officers if the compensation is payable solely based on the attainment of one or more performance goals and certain statutory requirements are satisfied. The Company intends for stock options granted at fair market value to be deductible by the Company as performance-based compensation not subject to the $1,000,000 limitation on deductibility.
 
 
Shareholders are requested under this Proposal 5 to consider and, if appropriate, to approve a resolution confirming By-law Number 3, a by-law amending By-law Number 2 of the Company. By-law Number 3 was adopted by the Board of Directors on June 13, 2011. By-law Number 3 amends Section 10.10 of By-law No. 2 so as to increase the quorum requirement for meetings of shareholders of the Company. By-law Number 3 provides that the quorum necessary for any meeting of shareholders shall be a minimum of 2 persons, being either shareholders or proxyholders, holding or representing, in the aggregate not less than a majority of the votes entitled to be cast at the meeting. The purpose of the proposed amendment is to conform the Company’s quorum requirements for meetings of shareholders to the Nasdaq Capital Market’s initial listing requirements. As explained in Proposal 3, the Company has submitted an application to list its Common Stock on the Nasdaq Capital Market. The quorum requirements set forth in Section 10.10 of the Company’s current By-law Number 2, do not meet this requirement. The Board of Directors has determined that the proposed amendment will bring the Company’s quorum requirements for shareholder meetings into compliance with the applicable Nasdaq initial listing requirement.
 
The full text of By-law No. 3 is attached as Annex A hereto.
 
 
The affirmative vote of the majority of the shares present in person or represented by proxy and voted on the proposal at the Meeting is required to approve the resolution confirming By-law Number 3. Abstentions from voting and broker non-votes will have no effect on the approval or non-approval of this matter since only votes cast either “for” or “against” will be counted in determining whether the resolution confirming By-Law


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Number 3 has been approved by a majority of the votes cast thereon. In the event that such approval is not forthcoming, By-law No. 3 will cease to be effective as of the date of the Meeting.
 
Resolution
 
The full text of the resolution confirming By-law No. 3 is as follows:
 
“BE IT RESOLVED THAT:
 
1. By-law No. 3, in the form attached as Annex A to the Management Proxy Circular and Proxy Statement for the Annual and Special Meeting of Shareholders of Mad Catz Interactive, Inc. to be held on August 18, 2011 and adopted by the directors of the Company on June 13, 2011, is hereby confirmed as a by-law of the Company.”
 
 
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDER APPROVAL OF THE RESOLUTION CONFIRMING THE ADOPTION OF BY-LAW NUMBER 3.
 


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PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
Audit Fees for Fiscal 2011 and 2010
 
The aggregate fees billed to the Company by KPMG LLP, the Company’s Independent Registered Public Accounting Firm and Auditor, for the fiscal years ended March 31, 2011 and 2010 were as follows:
 
                 
    2011     2010  
 
Audit Fees(1)
  $ 722,000     $ 743,500  
Audit-Related Fees(2)
    5,000        
Tax Fees(3)
  $ 115,900     $ 132,000  
All Other Fees
           
 
 
(1) Audit Fees consist of the audit of our annual financial statements included in the Company’s Annual Report on Form 10-K for its 2011 and 2010 fiscal years, respectively, reviews of interim financial statements and services that are normally provided by the independent auditors in connection with statutory and regulatory filings or engagements for those fiscal years.
 
(2) Audit related fees consist of fees for assurance and related services, such as comfort letters and consents for registration statements.
 
(3) Tax Fees consist of fees for tax compliance services.
 
The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the independence of KPMG LLP and has concluded that the provision of such services is compatible with maintaining the independence of the Company’s auditors.
 
 
The Company’s Audit Committee has established a policy that all audit and permissible non-audit services provided by the independent auditors will be pre-approved by the Audit Committee. These services may include audit services, audit-related services, tax services and other services. The Audit Committee considers whether the provision of each non-audit service is compatible with maintaining the independence of the Company’s auditors. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date.


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Preliminary Note: The following Report of the Audit Committee of the Board does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent specifically incorporated by the Company.
 
The Audit Committee of the Board is composed of three independent directors as required by the listing standards of the American Stock Exchange and by Canadian securities regulatory authorities (“CSA”) and operates under a written charter adopted by the Board. The members of the Audit Committee for fiscal year ended March 31, 2011 were Thomas R. Brown (Chairman), Robert J. Molyneux and William Woodward.
 
Management is responsible for the Company’s internal controls and the financial reporting process. KPMG LLP, the Company’s Independent Registered Public Accounting Firm and Auditor for the fiscal year ended March 31, 2011, is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and for issuing reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes.
 
In this context, the Audit Committee has met and held discussions with management and the independent accountants. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Audit Committee discussed with the independent accountants matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees).
 
The Company’s independent accountants also provided to the Audit Committee the written disclosures required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with the independent accountants that firm’s independence. The Audit Committee also considered whether the provision of non-audit services by the independent accountants is compatible with their independence.
 
Based upon the Audit Committee’s discussion with management and the Company’s Independent Registered Public Accounting Firm and Auditor and the Audit Committee’s review of the representation of management and the report of the independent accountants to the Audit Committee, the Audit Committee recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2011 filed with the Securities and Exchange Commission.
 
The Audit Committee
Thomas R. Brown, Chair
Robert J. Molyneux
William Woodward
 
June 13, 2011


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By virtue of their prior history and business experience, each of Messrs. Brown, Molyneux and Woodward, the current members of the Company’s Audit Committee, have the relevant experience to meaningfully contribute to the Audit Committee. See “Election of Directors” above for a description of the relevant education and experience of the Audit Committee Members.
 
 
The Board has developed corporate governance practices to help it fulfill its responsibility to shareholders to oversee the work of management in the conduct of the Company’s business and to seek to serve the long-term interests of shareholders. The Company’s corporate governance practices are memorialized in our Mandate of the Board of Directors of Mad Catz Interactive, Inc., our Codes of Conduct for Directors and for Employees and the Charter of the Audit Committee of the Board. We continually review these governance practices and update them as necessary to reflect changes in regulatory requirements and evolving oversight practices. These documents are available on our website at www.madcatz.com and upon request in writing to our Secretary, Whitney E. Peterson.
 
 
Our Board consists of four members. Three of our current directors are independent under the requirements set forth in the NYSE Amex listing rules and CSA National Instrument 58-101 — Disclosure of Corporate Governance Practices. For a director to be considered independent, the Board must determine that the director does not have a material relationship with the Company that would interfere with the exercise of independent judgment. The Board has established guidelines to assist it in determining director independence, which conform to the independence requirements of the NYSE Amex listing rules and CSA National Instrument 58-101 — Disclosure of Corporate Governance Practices. In addition to applying these independence guidelines, the Board considers all relevant facts and circumstances in making an independence determination, and not merely from the standpoint of the director, but also from that of persons or organizations with which the director has an affiliation. The Board has determined that Messrs. Brown, Molyneux and Woodward are independent.
 
Board Leadership Structure
 
Leadership of the Company is currently shared between Mr. Brown, Chairman of the Board of Directors, and Mr. Richardson, President and Chief Executive Officer. The Company does not have a formal policy with respect to separation of the offices of Chairman of the Board and Chief Executive Officer, and the Board of Directors believes that flexibility in appointing the Chairman of the Board and Chief Executive Officer allows the Board of Directors to make a determination as to such positions from time to time and in a manner that it believes is in the best interest of the Company and its shareholders. The Board of Directors believes that the current structure is best for the Company because it allows Mr. Richardson to focus on the Company’s day-to-day business, while allowing Mr. Brown to lead the Board of Directors in its primary role of review and oversight of management.
 
 
During fiscal year ended March 31, 2011, our Board held 5 meetings. During fiscal year ended March 31, 2011, all of our directors attended in person or by telephone at least 75% or more of the aggregate number of Board meetings and committee meetings on which they served (during the periods for which they served as such). All directors are strongly encouraged to attend the Annual Meeting of Shareholders, unless attendance would be impracticable or constitute an undue burden. Messrs. Brown, Molyneux and Richardson attended the 2010 Annual Meeting of Shareholders in person and Mr. Woodward participated by telephone.


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Time is allotted at the end of each Board meeting for an executive session involving only our independent directors and non-management directors. Thomas R. Brown, Chairman of the Board, acts as presiding director at each executive session.
 
 
The Board has a standing Audit Committee which operates pursuant to a written charter adopted by the Board. The Audit Committee was established in accordance with the requirements of Section 3(a)(58)(A) of the Securities Exchange Act of 1934 and National Instrument 52-110 — Audit Committees. The Audit Committee selects and engages the Company’s independent auditors, reviews the scope of audit engagements, reviews management letters of such auditors and management’s response thereto, approves professional services provided by such auditors, reviews the independence of such auditors, reviews any major accounting changes made or contemplated, considers the range of audit and non-audit fees, reviews the adequacy of the Company’s internal accounting controls and annually reviews its charter and submits any recommended changes to the Board for its consideration. The Audit Committee consists of three members: Thomas R. Brown (Chairman), Robert J. Molyneux and William Woodward. The Board has determined that each member of the Audit Committee is “independent” and meets the financial literacy requirements of the NYSE Amex listing standards, that each member of the Audit Committee meets the enhanced independence standards established by the United States Securities and Exchange Commission (“SEC”) and that Mr. Brown qualifies as an “audit committee financial expert” as that term is defined in the rules and regulations established by the SEC. The Audit Committee held 4 meetings in the fiscal year ended March 31, 2011.
 
Role of Board of Directors in Risk Oversight
 
The Company’s management is primarily responsible to manage risk and inform the Board of Directors regarding the most material risks confronting the Company. The Board of Directors has oversight responsibility of the processes established to monitor and manage such risks. The Board of Directors believes that such oversight function is the responsibility of the entire Board of Directors through frequent reports and discussions at regularly scheduled Board meetings. In addition, the Board has delegated specific risk management oversight responsibility to the Audit Committee and to the independent members of the Board. In particular, the Audit Committee oversees management of risks related to accounting, auditing and financial reporting and maintaining effective internal controls for financial reporting. The independent members of the Board oversee risk management related to the Company’s corporate governance practices and the Company’s executive compensation plans and arrangements. These specific risk categories and the Company’s risk management practices are regularly reviewed by the entire Board of Directors in the ordinary course of regular Board meetings.
 
 
It is the Company’s policy to forward to the directors any shareholder correspondence it receives that is addressed to them. Shareholders who wish to communicate with the directors may do so by sending their correspondence addressed to the director or directors as follows Attn: Corporate Secretary, Mad Catz Interactive, Inc., 7480 Mission Valley Road, Suite 101, San Diego, California 92108.
 
 
The Board performs the functions associated with a nominating committee. The Company’s independent directors make recommendations to the full Board for nominations to fill vacancies on the Board and for selecting the management nominees for the directors to be elected by the Company’s shareholders at each Annual Meeting. The Board believes this process is preferable to a standing nominating committee because it wishes to involve all of its independent directors in the nomination process.


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Although the Board does not have established specific minimum age, education, experience or skill requirements for potential directors or a formal policy regarding diversity, the Board believes that the appropriate mix and a broad diversity of skills, perspectives, experience, age and gender will help to enhance the performance of the Board. The independent directors take into account all factors they consider appropriate in fulfilling their responsibilities to identify and recommend individuals to the Board as director nominees. Those factors may include, without limitation, the following:
 
  •  an individual’s business or professional experience, accomplishments, education, judgment, understanding of the business and the industry in which the Company operates, specific skills and talents, independence, time commitments, reputation, general business acumen and personal and professional integrity or character;
 
  •  the size and composition of the Board and the interaction of its members, in each case with respect to the needs of the Company and its shareholders; and
 
  •  regarding any individual who has served as a director of the Company, his or her past preparation for, attendance at, and participation in meetings and other activities of the Board or its committees and his or her overall contributions to the Board and the Company.
 
 
In making nominations for director, the independent directors identify nominees by first evaluating the current members of the Board willing to continue their service. Current members with qualifications and skills that are consistent with the independent directors’ criteria for Board service are re-nominated. As to new candidates, the independent directors will generally poll the Board members and members of management for recommendations. The independent directors may also review the composition and qualification of the boards of directors of the Company’s competitors, and may seek input from industry experts or analysts. The independent directors evaluate the qualifications, experience and background of potential candidates. In making their determinations, the independent directors evaluate each individual in the context of the Board as a whole, with the objective of assembling a group that can best represent shareholders’ interests through the exercise of sound judgment. After review and deliberation of all feedback and data, the independent directors make recommendations to the Board by a majority vote. Historically, the Board has not relied on third-party search firms to identify director nominees. The Board may in the future choose to engage third-party search firms in situations where particular qualifications are required or where existing contacts are not sufficient to identify an appropriate candidate.
 
The independent directors may use multiple sources for identifying and evaluating nominees for directors, including referrals from the Company’s current directors and management as well as input from third parties, including executive search firms retained by the Board. The independent directors will obtain background information about candidates, which may include information from directors’ and officers’ questionnaires and background and reference checks, and will then interview qualified candidates. The Company’s other directors will also have an opportunity to meet and interview qualified candidates. The independent directors will then determine, based on the background information and the information obtained in the interviews, whether to recommend to the Board that a candidate be nominated to the Board.
 
 
The Board may from time to time consider qualified nominees recommended by shareholders, who may submit recommendations to the Board through a written notice to the Company’s Corporate Secretary at the principal executive offices of the Company, 7480 Mission Valley Road, Suite 101, San Diego, California, within the time frames required by the Company’s bylaws and applicable law as described under “Shareholder Proposals” below. Nominees for director who are recommended by shareholders will be evaluated in the same manner as any other nominee for director.


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The CSA has issued guidelines for effective corporate governance under National Policy 58-201 — Corporate Governance Guidelines (the “CSA Guidelines”). The CSA Guidelines deal with matters such as the constitution and independence of corporate boards, their functions, the effectiveness and education of board members, and other items pertaining to sound corporate governance. The CSA has issued National Instrument 58-101 — Disclosure of Corporate Governance Practices (the “Instrument”) which requires that each reporting issuer disclose, on an annual basis, its approach to corporate governance by disclosing the information required by the Instrument.
 
The Company’s Board has adopted a formal mandate outlining its responsibilities. A copy of the Mandate is appended hereto as Annex B. The Directors’ Code of Conduct and the Code of Conduct for the Company’s employees have also been implemented. The mandate and the codes of conduct, along with the charter of the Company’s Audit Committee, may be viewed on the Company’s website at www.madcatz.com. The Company intends to satisfy the disclosure requirement under Form 8-K regarding (1) any amendments to its Codes of Conduct, or (2) any waivers under its Codes of Conduct relating to the Chief Executive Officer and Chief Financial Officer by posting such information on its website at www.madcatz.com.
 
The Company believes that its corporate governance practices ensure that the business and affairs of the Company are effectively managed so as to enhance shareholder value. The disclosure requirements of the Instrument and a commentary on the Company’s approach with respect to each requirement are set forth below.
 
     
Disclosure Requirements
 
Comments
 
Disclose the identity of directors who are independent.  
Thomas R. Brown
Robert J. Molyneux
William Woodward

For more information about each director nominated for election at the Meeting, please refer to the section entitled “Election of Directors” on page 6 of this Management Proxy Circular and Proxy Statement.
     
Disclose the identity of directors who are not independent, and describe the basis for that determination.   Darren Richardson, the President and Chief Executive Officer of the Company, is considered not independent (as defined in the Instrument), by virtue of his position with the Company. For more information about each director, please refer to the section entitled “Election of Directors” on page 6 of this Management Proxy Circular and Proxy Statement.
     
Disclose whether or not a majority of directors are independent.   The Board is currently composed of four directors, a majority of whom are independent (as defined in the Instrument). After consideration of the criteria set forth in the Instrument, the Board has concluded that three of the current directors are independent. The remaining director is the President and Chief Executive Officer of the Company.
     
If a director is presently a director of another issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.   Thomas R. Brown — LRAD Corporation


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Disclosure Requirements
 
Comments
 
Disclose whether or not the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held since the beginning of the issuer’s most recently completed financial year end.   The Board meets quarterly and at the end of each meeting of the Board, independent directors meet separately without the President and Chief Executive Officer, who is the only non-independent director.
     
Disclose whether or not the chair of the board is an independent director. If the board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his role and responsibilities.  
Thomas R. Brown is the Chairman of the Board and is an independent director.

The Chairman has the responsibility, among other things, of ensuring that the Board discharges its responsibilities effectively. The Chairman acts as a liaison between the Board and the Chief Executive Officer and chairs Board meetings. Further, the Chairman ensures that the non-management members of the Board meet on a regular basis without management being present.
     
Disclose the attendance record of each director for all board meetings held since the beginning of the issuer’s most recently completed financial year.   Darren Richardson — 5 meetings since April 1, 2010.
Thomas R. Brown — 5 meetings since April 1, 2010.
Robert J. Molyneux — 5 meeting since April 1, 2010.
William Woodward — 5 meetings since April 1, 2010.
     
Disclose the text of the board’s written mandate.   Please refer to Annex B for the Board’s written mandate.
     
Disclose whether or not the board has developed written position descriptions for the chair and the chair of each board committee. If the board has not developed written position descriptions for the chair and/or the chair of each board committee, briefly describe how the board delineates the role and responsibilities of each such position.   The Board has developed a written position description for each of the following, as recommended by the CSA Guidelines: Chair of the Board and Chair of the Audit Committee.
     
Disclose whether or not the board and CEO have developed a written position description for the CEO. If the board and CEO have not developed such a position description, briefly describe how the board delineates the role and responsibilities of the CEO.   The Board and the Chief Executive Officer have developed a written position description for the Chief Executive Officer.
     
Briefly describe what measure the board takes to orient new directors regarding:

(i) the role of the board, its committees and its directors, and

(ii) the nature and operation of the issuer’s business.
  There is currently no formal orientation program in place for new members of the Board. The Board as a whole and members of management informally provide such orientation. In addition, new members receive an information package, a tour of the facilities and are provided with the opportunity to interact with and request briefings from other directors and management. In light of the Company’s size, the high level of experience of the members of the Board and the low turnover rate of its members, the Board believes that this approach is practical and effective.

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Disclosure Requirements
 
Comments
 
Briefly discuss what measures, if any, the board takes to provide continuing education for its directors. If the board does not provide continuing education, describe how the board ensures that its directors maintain the skill and knowledge necessary to meet their obligations as directors.   Given the size of the Company and the in-depth collective public company, financial and industry experience of the Board, there is no formal continuing education program in place. Board members are entitled to attend seminars they determine necessary to keep them up-to-date with current issues relevant to their service as directors of the Company. The Company’s independent auditor provides the Board with regular updates on the current state of the rules, regulations, and guidelines that may be applicable to the Company. The Company’s outside SEC counsel also attends Board meetings and provides updates on new laws and rules applicable to the Company.
     
Disclose whether or not the board has adopted a written code for the directors, officers and employees. If the board has adopted a written code:

(i) disclose how a person or company may obtain a copy of the code,

(ii) describe how the board monitors compliance with its code, or if the board does not monitor compliance, explain whether and how the board satisfies itself regarding compliance with its code, and

(iii) provide a cross-reference to any material change report filed since the beginning of the issuer’s most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code.
 
The Board has adopted a written code of conduct for its directors, and a written code of conduct for its employees.

(i) a copy of the Company’s codes of conduct referred to above can be obtained on the Company’s website at www.madcatz.com or, alternatively, by written request to the Corporate Secretary of the Company at 7480 Mission Valley Road, Suite 101, San Diego, California 92108.

(ii) Code of conduct for employees: the Company requires all employees to certify receipt of the code upon acceptance of employment and maintains a copy of the code on its intranet for access by employees. The Company’s human resource department monitors compliance by employees with the code. Depending on the seriousness of the violation, any violation of the code is reported to the employee’s manager, the Company’s General Counsel or to the Company’s Chief Executive Officer.

Code of conduct for directors: The Board as a whole monitors compliance by directors with the code.

(iii) Not applicable.
     
Describe any steps the board takes to ensure directors exercise independent judgment in considering transactions and agreements in respect of which a director or executive officer has a material interest.   Each director and executive officer is required to fully disclose his or her interest in respect of any transaction or agreement to be entered into by the Company. Once such interest has been disclosed, the Board as a whole determines the appropriate level of involvement that the director or executive officer should have in respect of the transaction or agreement.

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Disclosure Requirements
 
Comments
 
Describe any other steps the board takes to encourage and promote a culture of ethical business conduct.  
Management, supported by the Board, has put structures in place to ensure effective communication between the Company and its stakeholders and the public. The Company provides appropriate disclosure as required by law, and legal counsel reviews all press releases and shareholder reports. The Company requires all employees to certify receipt of the Company’s code of conduct upon acceptance of employment and maintains a copy of the code on its intranet for access by employees. The Company’s human resource department monitors compliance by employees with its code of conduct. Each year, the Company’s General Counsel conducts mandatory training of all employees to encourage ethical behavior.

Directors are permitted to contact and engage outside advisors at the expense of the Company.
     
Describe the process by which the board identifies new candidates for board nomination.   The Board assesses each new candidate by considering his or her competencies and skills based on such candidate’s prior service on the boards of other corporations and his or her corporate background. The candidate’s attributes are then considered against the competencies and skills that the Board considers necessary for the Board as a whole to possess and the competencies and skills that each existing member of the Board possesses.
     
Disclose whether or not the board has a nominating committee composed entirely of independent directors.   The Board does not have a standing nominating committee. See “Corporate Governance — Director Nominations”
     
If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.   Not applicable.

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Disclosure Requirements
 
Comments
 
Describe the process by which the board determines compensation for the issuer’s directors and officers.   The Company’s executive compensation program is designed and implemented principally by the independent members of the Board with input from a number of sources, including the Company’s Chief Executive Officer and such additional compensation information as the Board deems appropriate. The Board does not delegate, and does not expect to delegate in the future, to management or any other parties, its duties to review the Company’s executive compensation program, which it will review annually. In determining compensation for executive officers, the Board will annually review information which it deems relevant. The Board will also evaluate the Company’s performance and generally determine whether the compensation elements and levels that it provides to its executive officers are appropriate relative to their counterparts, in light of each executive officer’s individual contribution to the Company’s performance. The Board does not believe that it is appropriate to establish compensation levels based on compensation provided by other companies. Instead, the Board relies upon its judgment in making compensation decisions, after reviewing the performance of the Company and carefully evaluating each executive officer’s individual performance and the Company’s performance during the year. The Board, other than the Company’s Chief Executive Officer, directly determines the compensation package provided to the Chief Executive Officer based on the Chief Executive Officer’s individual performance and the performance of the Company, receiving input as it deems appropriate. For executive officers other than the Chief Executive Officer, the Company’s Chief Executive Officer makes recommendations for each individual’s compensation package to the Board. In making these recommendations the Chief Executive Officer considers the individual’s performance, the individual’s contribution to Company performance and input from the Company’s human resources department. The Board discusses these recommendations with the Chief Executive Officer. The Board further reviews and discusses these recommendations in executive session without any members of management present.
     
Disclose whether or not the board has a compensation committee composed entirely of independent directors.   The Board does not have a standing compensation committee.
     
If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.   Not applicable.

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Disclosure Requirements
 
Comments
 
If a compensation consultant or advisor has, at any time since the beginning of the issuer’s most recently completed financial year, been retained to assist in determining compensation for any of the issuer’s directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained. If the consultant or advisor has been retained to perform any other work for the issuer, state that fact and briefly describe the nature of the work.   Not applicable.
     
If the board has standing committees other than the audit, compensation and nominating committees, identify the committees and describe their function.   Not applicable.
     
Disclose whether or not the board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If assessments are not regularly conducted, describe how the board satisfies itself that the board, its committees, and its individual directors are performing effectively.   In order to assess the effectiveness and contribution of the Board and Board committees, the Board reviews, on an annual basis, the size and composition of the Board and Board committees. This review process comprises Board effectiveness, Board and committee structure, Board processes as well as director and committee evaluations.

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As of July 11, 2011, 63,442,296 shares of Common Stock of the Company have been issued and are outstanding as fully paid and non-assessable, and carrying a right to one vote per share. The following table sets forth certain information regarding beneficial ownership of or control or direction, directly or indirectly, over the Company’s Common Stock as of July 11, 2011, by (i) each shareholder known by the Company to be a beneficial owner of more than 5% of any class of the Company’s voting securities or to the knowledge of the Company’s directors and executive officers, any person or company that beneficially owns or controls or directs, directly or indirectly, over 10% or more of the shares of the Company, (ii) each director and director nominee of the Company, (iii) the Chief Executive Officer and each additional executive officer named in the summary compensation table under “Executive Compensation” below and (iv) all directors, director nominees and executive officers of the Company as a group. The Company believes that, except as otherwise noted, each individual named has sole investment and voting power with respect to the shares of Common Stock indicated as beneficially owned by such individual. Unless otherwise indicated, the business address of each named person is c/o Mad Catz, Inc., 7480 Mission Valley Road, Suite 101, San Diego, California 92108.
 
                 
    Number of Shares
       
    Beneficially Owned,
    Percent of
 
    Controlled or Directed,
    Common Stock
 
Beneficial Owner
  Directly or Indirectly(1)     Outstanding(2)  
 
Thomas R. Brown
    325,000       *  
Robert J. Molyneux
    275,000       *  
William Woodward
    225,860       *  
Darren Richardson
    2,158,750       3.2 %
Brian Andersen
    385,833       *
Whitney Peterson
    897,357       1.3 %
All Officers and Directors as a Group (7 persons)
    4,452,801       6.6 %
 
 
Less than one percent.
 
(1) As to each person or group in the table, the table includes the following shares issuable upon exercise of options that are exercisable within 60 days from July 11, 2011: Thomas R. Brown: 225,000; Robert J. Molyneux: 225,000; William Woodward: 100,000; Darren Richardson: 1,293,750; Brian Andersen: 370,833; Whitney Peterson: 289,857; and all executive officers and directors as a group: 2,589,441.
 
(2) Except as otherwise provided, all percentages are calculated based upon the total number of shares outstanding of 63,442,296 shares of the Company as of July 11, 2011, plus the number of options presently exercisable or exercisable within 60 days of July 11, 2011 by the named security holder.


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EXECUTIVE COMPENSATION
 
 
The table below summarizes the total compensation paid or earned by the Company’s Chief Executive Officer, and each of its two other most highly compensated executive officers, the named executive officers, for the fiscal years ended March 31, 2011 and March 31, 2010.
 
                                                 
                Option
  All Other
   
Name and Principal Position
  Year   Salary   Bonus(1)   Awards(2)   Compensation   Total
 
Darren Richardson
    2011     $ 410,598     $ 493,159     $ 58,000     $ 17,500(3 )(4)   $ 979,257  
President, Chief
    2010       398,996       239,398       33,000       16,902(3 )(4)     688,296  
Executive Officer and Director
                                               
Brian Andersen
    2011       238,597       261,557       43,500       1,966 (3)     545,620  
Chief Operating
    2010       160,808       74,200       22,000       12,769 (3)     269,777  
Officer
                                               
Whitney Peterson
    2011       266,954       293,913       43,500       8,751 (4)     613,118  
Vice President
    2010       259,412       129,706       33,000       7,851 (4)     429,969  
and General Counsel
                                               
 
 
(1) Represents bonuses earned during the applicable fiscal year as a result of the Company’s and the individual’s performance.
 
(2) Reflects the aggregate fair value of stock options granted as of the applicable grant date calculated in accordance with FASB ASC Topic 718. The assumptions made in the valuation of the stock awards are discussed in Note 10, “Stock-Based Compensation,” of Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2011.
 
(3) Includes amounts related to an auto allowance.
 
(4) Includes amounts related to 401(k) employer matches.
 
 
Certain of the Company’s executive officers whose compensation is required to be reported in the Summary Compensation Table are parties to written employment agreements with the Company. Among other things, these employment agreements contain severance and other provisions that will provide for payments to the executive officer following termination of employment with the Company. A summary of the employment agreements with our executive officers follows:
 
 
The Company is party to an employment agreement with Mr. Richardson, pursuant to which Mr. Richardson serves as President and Chief Executive Officer of the Company and Mad Catz, Inc. Under the terms of the amended employment agreement, Mr. Richardson’s annual base salary is currently $410,966. The agreement provides for a three-year term and thereafter automatically renews for successive one-year periods unless either party gives prior notice of termination. The agreement has been extended for a one-year period. If, during the term of the agreement, there is a termination of employment without cause or in certain other specified circumstances, Mr. Richardson will be entitled to receive one year’s salary. These specified circumstances include where there has occurred a change of control in the Company or its wholly owned subsidiary Mad Catz, Inc.
 
Brian Andersen
 
The Company is party to an employment agreement with Brian Andersen, pursuant to which Mr. Andersen serves as Chief Operating Officer of the Company and Mad Catz, Inc. Under the terms of the employment agreement, Mr. Andersen’s annual base salary is currently £163,152. The agreement provides for a three-year term and thereafter automatically renews for successive one-year periods unless either party gives prior notice


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of termination. If, during the term of the agreement, there is a termination of employment either without cause or in certain other specified circumstances, Mr. Andersen will be entitled to receive one year’s salary. These specified circumstances include where there has occurred a change of control in Mad Catz or its subsidiary Mad Catz, Inc.
 
 
The Company is party to an employment agreement with Whitney Peterson, pursuant to which Mr. Peterson serves as Vice President Corporate Development and General Counsel of Mad Catz, Inc. Under the terms of the employment agreement, Mr. Peterson’s annual base salary is currently $267,194. The agreement provides for a three-year term and thereafter automatically renews for successive one-year periods unless either party gives prior notice of termination. If, during the term of the agreement, there is a termination of employment either without cause or in certain other specified circumstances, Mr. Peterson will be entitled to receive one year’s salary. These specified circumstances include where there has occurred a change of control in Mad Catz or its subsidiary Mad Catz, Inc.
 
 
The following table contains information regarding unexercised options for each named executive officer outstanding as of March 31, 2011.
 
                                 
    Option Awards  
    Number of Securities
    Number of Securities
             
    Underlying
    Underlying
             
    Unexercised Options     Unexercised Options     Option Exercise
    Option Expiration
 
Name
  Exercisable     Unexercisable     Price     Date  
 
Darren Richardson
    300,000             C$ 0.46       09/20/2016  
      500,000             C$ 0.56       10/13/2016  
      187,500       12,500 (1)     $ 1.23       06/07/2017  
      187,500       112,500 (2)     $ 0.47       09/30/2018  
      56,250       93,750 (3)     $ 0.33       09/02/2019  
            200,000 (4)     $ 0.43       09/16/2020  
Brian Andersen
    25,000             C$ 0.46       09/20/2016  
      50,000             C$ 0.56       10/13/2016  
      121,875       8,125 (1)     $ 1.23       06/07/2017  
      125,000       75,000 (2)     $ 0.47       09/30/2018  
      7,500       62,500 (3)     $ 0.33       09/02/2019  
            150,000 (4)     $ 0.43       09/16/2020  
Whitney Peterson
    60,889       8,125 (1)     $ 1.23       06/07/2017  
      125,000       75,000 (2)     $ 0.47       09/30/2018  
      56,250       93,750 (3)     $ 0.33       09/02/2019  
            150,000 (4)     $ 0.43       09/16/2020  
 
 
(1) Granted on June 7, 2007. Vest 25% on the first anniversary of the grant date and thereafter in 36 equal monthly installments.
 
(2) Granted on September 30, 2008. Vest 25% on the first anniversary of the grant date and thereafter in 36 equal monthly installments.
 
(3) Granted on September 2, 2009. Vest 25% on the first anniversary of the grant date and thereafter in 36 equal monthly installments.
 
(4) Granted on September 16, 2010. Vest 25% on the first anniversary of the grant date and thereafter in 36 equal monthly installments.


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The following table shows all the fees earned or cash paid by the Company during the fiscal year ended March 31, 2011 to the Company’s non-employee directors. No option and restricted stock awards, long-term incentive plan payouts or other types of payments, other than the amount identified in the chart below, were paid to these directors during the fiscal year ended March 31, 2011.
 
                         
    Fees Earned or
    Option
       
Name
  Paid in Cash     Awards(1)     Total  
 
Thomas R. Brown
  $ 93,500     $ 6,750     $ 100,250  
Robert J. Molyneux
    58,500       6,750       65,250  
William Woodward
    59,500       6,750       66,250  
 
 
(1) The amounts in this column reflect the aggregate fair value of stock options granted as of the applicable grant date calculated in accordance with FASB ASC Topic 718. The assumptions made in the valuation of the stock awards are discussed in Note 10, “Stock-Based Compensation,” of Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2011. On March 31, 2011, Thomas Brown had 225,000 outstanding stock option awards, Robert J. Molyneux had 225,000 outstanding stock option awards, and William Woodward had 100,000 outstanding stock option awards.
 
The Company’s non-employee directors receive the following compensation for board service: $50,000 annual retainer; $20,000 additional annual retainer to the Chairman of the Board; and $10,000 additional annual retainer to the Audit Committee chair. In addition, non-employee directors receive $2,500 for each Board meeting attended in person, $500 for each Board meeting attended by telephone that is shorter than two hours and $1,000 for each Board meeting attended by telephone that is longer than two hours. Audit Committee Members also receive $1,500 for each committee meeting attended. Non-employee directors also receive an annual option grant of 25,000 shares of Common Stock.
 
 
The following table sets forth information regarding all of the Company’s equity compensation plans as of March 31, 2011.
 
                         
                Number of Securities
 
                Remaining Available for
 
    Number of Securities to
    Weighted-Average
    Future Issuance Under
 
    be Issued Upon Exercise
    Exercise Price of
    Equity Compensation Plans
 
    of Outstanding Options,
    Outstanding Options,
    (Excluding Securities
 
Plan Category
  Warrants, and Rights     Warrants, and Rights     Reflected In Column (a))  
 
Equity compensation plans approved by security holders
    6,343,868 (1)   $ 0.58       1,050,634  
Equity compensation plans not approved by security holders
    0       0       0  
                         
Total
    6,343,868     $ 0.58       1,050,634  
 
 
(1) Includes 5,218,868 shares underlying options issued pursuant to the Company’s 2007 Stock Option Plan and 1,125,000 shares underlying options issued pursuant to the Company’s Amended and Restated Incentive Stock Option Plan.
 
The Company maintains two stock option plans: the 2007 Stock Option Plan and the Amended and Restated Incentive Stock Option Plan (the “Prior Plan”). The Company’s shareholders approved the 2007 Stock Option Plan at the 2007 annual and special meeting of the Company. The 2007 Stock Option Plan replaced the Prior Plan and no additional options have been or will be granted pursuant to the Prior Plan.


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Options previously granted under the Prior Plan will continue to be outstanding until exercised or terminated in accordance with their terms.
 
2007 Stock Option Plan
 
Please see the description under Proposal 4.
 
 
The Prior Plan authorized the Board to issue options to acquire shares in the Common Stock of the Company to directors, officers and employees of the Company or its subsidiaries and to other persons providing ongoing management or consulting services to the Company or its subsidiaries. The Prior Plan was replaced by the 2007 Stock Option Plan and no further options will be granted under the Prior Plan.
 
The number of shares reserved for issuance to any one person pursuant to options granted under the Prior Plan together with shares reserved for issuance pursuant to other share compensation arrangements, may not exceed 5% of the number of shares of Common Stock then issued.
 
As at July 11, 2011, 1,125,000 shares of Common Stock of the Company were issuable upon the exercise of stock options issued and outstanding under to the Prior Plan, representing 1.8% of the aggregate number of shares of Common Stock of the Company issued and outstanding as of such date.
 
The exercise price for any option granted under the Prior Plan is fixed by the Board but in no event can the exercise price be less than the closing price of the Company’s shares on the Toronto Stock Exchange on the last trading day prior to the grant of such option or if there is no closing price, at a price less than the average of the bid and ask prices on the Toronto Stock Exchange on such trading day.
 
The maximum term of any option granted under the Prior Plan is 5 years and the Board may determine the terms of vesting, if any.
 
The participation of insiders of the Company under the Prior Plan is limited such that insiders, collectively, may not hold options or be issued shares within any 12-month period under the Prior Plan or any other share compensation arrangement exceeding 10% of the “outstanding issue” and individually, exceeding 5% of the “outstanding issue”. Outstanding issue is defined as the number of shares of the Company then issued and outstanding less any shares issued within the previous 12 months pursuant to share compensation arrangements.
 
If an optionholder under the Prior Plan ceases to be a director, officer or employee of the Company or any subsidiary or a consultant to the Company or any subsidiary, then all options held by such optionholder terminate and cease to be exercisable 90 days thereafter.
 
Options granted under the Prior Plan are non-assignable and non-transferable by the optionholder except that the personal representatives of a deceased optionholder may exercise an option.
 
 
Except as described below, from April 1, 2010 to the present, there have been no (and there are no currently proposed) transactions in which the amount involved exceeded $120,000 to which the Company or any of its subsidiaries was (or is to be) a participant and in which any executive officer, director, nominee for director, 5% beneficial owner of the Company’s Common Stock or member of the immediate family of any of the foregoing persons had (or will have) a direct or indirect material interest.
 
In April 2011, the Company paid to the holder of the Loan Notes issued in connection with the Company’s acquisition of its Saitek company subsidiaries $14,733,000 which represented repayment in full of all amounts owed under the Loan Notes. The Loan Notes were convertible into shares of the Company’s Common Stock representing more than 5% of the Company’s outstanding stock.


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Each director, executive officer of the Company, and person who owns more than 10% of a registered class of the Company’s equity securities is required by Section 16(a) of the Securities Exchange Act of 1934 to report to the Securities and Exchange Commission (the “SEC”) his or her transactions in the Company’s securities. Regulations promulgated by the SEC require the Company to disclose in this Management Proxy Circular and Proxy Statement any reporting violations with respect to the 2011 fiscal year, which came to the Company’s attention based on a review of the applicable filings required by the SEC to report such status as an officer or director or such changes in beneficial ownership as submitted to the Company. These statements are based solely on a review of the copies of such reports furnished to the Company by its officers, directors and security holders and a representation that such reports accurately reflect all reportable transactions as holdings. The Company believes that its directors and executive officers, and persons who beneficially own more than 10% of a registered class of its equity securities, have complied with all filing requirements of Section 16(a) applicable to such persons for fiscal year ended March 31, 2011.
 
 
Shareholders wishing to submit proposals on matters appropriate for shareholder action to be presented at Mad Catz’ Annual Meeting of Shareholders may do so in accordance with Rule 14a-8 promulgated under the Exchange Act. For such proposals to be included in our proxy materials relating to its 2012 Annual Meeting of Shareholders, all applicable requirements of Rule 14a-8 must be satisfied and such proposals must be received by the Company at its principal executive offices no later than April 1, 2011. Shareholders wishing to bring a proposal before the 2012 Annual Meeting of Shareholders in accordance with Canadian laws must provide written notice of such proposal to our Corporate Secretary at the principal executive offices of the Company no later than April 17, 2012.
 
 
The Board does not intend to bring any other business before the Meeting, and so far as is known to the Board, no matters are to be brought before the Meeting except as specified in the Notice of the Meeting. In addition to the scheduled items of business, the meeting may consider shareholder proposals (including proposals omitted from this Management Proxy Circular and Proxy Statement and form of proxy pursuant to the proxy rules of the SEC) and matters relating to the conduct of the Meeting. As to any other business that may properly come before the Meeting, it is intended that proxies will be voted in respect thereof in accordance with the judgment of the persons voting such proxies.
 
 
Our Annual Report on Form 10-K for the fiscal year ended March 31, 2011, as filed by us with the SEC (excluding exhibits), is a portion of the Annual Report that is being mailed, together with this Management Proxy Circular and Proxy Statement, to all shareholders entitled to vote at the Meeting. However, such Annual Report, including the Annual Report on Form 10-K, is not to be considered part of this proxy solicitation material.
 
COPIES OF THE ANNUAL REPORT ON FORM 10-K (INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES) MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO THE SECRETARY OF THE COMPANY, 7480 Mission Valley Road, Suite 101, San Diego, California 92108. A request for a copy of the Annual Report on Form 10-K must set forth a good-faith representation that the requesting party was either a holder of record or a beneficial owner of Common Stock of the Company on the Record Date. Exhibits to the Form 10-K, if any, will be mailed upon similar request and payment of specified fees to cover the costs of copying and mailing such materials.


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Additional information relating to the Company may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Shareholders may contact the Corporate Secretary of the Company, at 7480 Mission Valley Road, Suite 101, San Diego, California 92108 to obtain, free of charge, copies of the Company’s financial statements and Management’s Discussion and Analysis (“MD&A”). Financial information is provided in the Company’s comparative financial statements and MD&A for the Company’s most recently completed financial year.
 
The contents and sending of this Management Proxy Circular and Proxy Statement have been approved by the Board.
 
By Order of the Board of Directors
 
-s- Darren Richardson
 
Darren Richardson,
President and Chief Executive Officer
 
San Diego, California
July 15, 2011


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Annex A
 
BY-LAW NUMBER 3
A by-law to amend By-Law Number 2 of
 
MAD CATZ INTERACTIVE, INC.
(the “Corporation”)
 
BE IT ENACTED as a by-law of the Corporation as follows:
 
1. Section 10.10 of By-Law Number 2 of the Corporation is hereby repealed in its entirety and replaced with the following provision:
 
“10.10 Quorum
 
A quorum for the transaction of business at any meeting of shareholders shall be two persons present in person, each being a shareholder or representative duly authorized in accordance with the Act entitled to vote thereat or a duly appointed proxy for a shareholder so entitled and holding or representing, in the aggregate, not less than a majority of the votes entitled to be cast at the meeting. If a quorum is present at the opening of the meeting, the shareholders present in person or by proxy may proceed with the business of the meeting even if a quorum is not present throughout the meeting.”
 
ENACTED by the Board of Directors as a by-law of the Corporation this 13th day of June, 2011.


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Annex B
 
 
The Board of Mad Catz Interactive, Inc., (the “Company”) believes that the appropriate mix of skills, experience, age and gender will help to enhance its performance. The Board’s composition should reflect business experience compatible with the Company’s business objectives.
 
 
The Board will be comprised of a minimum of three and a maximum of twelve directors, a majority of whom will be independent1. Following the meeting, the Board will consist of four members. Pursuant to the Canada Business Corporations Act, at least 25% of the directors of the Company must be resident Canadians. The Chair of the Board is an independent director.
 
 
The Board shall meet at least four times annually, or more frequently, as circumstances dictate. In addition, the Board shall hold separate, regularly scheduled meetings of independent directors at which members of management are not present.
 
Position Descriptions
 
The Board shall develop clear position descriptions for directors, including the Chair of the Board and the Chair of each Board committee. Additionally, the Board, together with the Chief Executive Officer (“CEO”), shall develop a clear position description for the CEO, which includes defining management’s responsibilities. The Board shall also develop or approve the corporate goals and objectives that the CEO is responsible for meeting.
 
The Board is elected by the shareholders and represents all shareholders’ interests in continuously creating shareholder value. The following is the mandate of the Board.
 
  •  Advocate and support the best interests of the Company.
 
  •  Review and approve strategic, business and capital plans for the Company and monitor management’s execution of such plans.
 
  •  Review whether specific and relevant corporate measurements are developed and adequate controls and information systems are in place with regard to business performance.
 
  •  Review the principal risks of the Company’s business and pursue the implementation by management of appropriate systems to manage such risks.
 
  •  Monitor progress and efficiency of strategic, business, and capital plans and require appropriate action to be taken when performance falls short of goals.
 
  •  Review measures implemented and maintained by the Company to ensure compliance with statutory and regulatory requirements.
 
  •  Select, evaluate, and compensate the President and CEO.
 
  •  Annually review appropriate senior management compensation programs.
 
  •  Monitor the practices of management against the Company’s disclosure policy to ensure appropriate and timely communication to shareholders of material information concerning the Company.
 
  •  Monitor safety and environmental programs.
 
  •  Monitor the development and implementation of programs for management succession and development.
 
 
1 For the definition of independent director, please see the Glossary of Terms


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  •  Approve selection criteria for new candidates for directorship.
 
  •  Provide new directors with a comprehensive orientation, and provide all directors with continuing education opportunities.
 
  •  Assure shareholders of conformity with applicable statutes, regulations and standards (for example, environmental risks and liabilities, and conformity with financial statements).
 
  •  Regularly conduct assessments of the effectiveness of the Board, as well as the effectiveness and contribution of each Board committee and each individual director.
 
  •  Establish the necessary committees to monitor the Company.
 
  •  Provide advice to and act as a sounding board for the President and CEO.
 
  •  Discharge such other duties as may be required in the good stewardship of the Company.
 
In addressing its mandate, the Board assumes responsibility for the following approvals:
 
Financial Approvals:
 
  •  Strategic plan
 
  •  Annual business and capital plans
 
  •  Annual financial statements and auditors’ report
 
  •  Quarterly earnings and press release
 
  •  Budgeted capital expenditures
 
  •  Unbudgeted capital expenditures in excess of US$1,000,000
 
  •  Acquisitions/divestitures
 
  •  Significant financing or refinancing opportunities
 
  •  Dividend policy
 
  •  Share re-purchase programs
 
  •  Individual operating, real property or capital leases having total commitment in excess of US$1,000,000
 
Human Resources Approvals:
 
  •  Appointment/succession/dismissal of President and CEO
 
  •  Compensation of President and CEO
 
  *    •  Executive compensation arrangements and incentive plans
 
Administration and Compliance Approvals:
 
  •  Appointment of Board Committees and their Chairs
 
  •  Nomination of Directors
 
  *    •  Recommendation of Auditors to the Shareholders
 
  •  Proxy circular
 
  •  Appointment of Chairman
 
  *    •  Major policies
 
 
      * Board may delegate to committees


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MAD CATZ INTERACTIVE, INC.
PROXY
SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION FOR USE
AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON AUGUST 18, 2011
The undersigned shareholder of Mad Catz Interactive, Inc. (the “Corporation”) hereby appoints Thomas R. Brown, Chairman of the Board of Directors, or, failing him, Darren Richardson, President and Chief Executive Officer of the Corporation, or instead of either of the foregoing, _________________________ as proxy of the undersigned with full power of substitution to attend, vote and otherwise act for and on behalf of the undersigned at the above-noted annual and special meeting of shareholders of the Corporation and any adjournment thereof (the “Meeting”) to the same extent and with the same powers as if the undersigned was present at the Meeting, and the person named is specifically directed to vote as indicated herein. The undersigned hereby undertakes to ratify and confirm all the said proxy may do by virtue hereof, and hereby revokes any proxy previously given in respect of the Meeting. Without limiting the general authorization and power hereby given, all of the common shares registered in the name of the undersigned are to be voted as follows:
                     
1.
  Election of Directors.   FOR   WITHHOLD   FOR ALL    
 
 
INSTRUCTIONS: IF YOU MARK THE “FOR ALL EXCEPT” CATEGORY, INDICATE THE NOMINEE(S) AS TO WHICH YOU DESIRE TO WITHHOLD AUTHORITY BY STRIKING A LINE THROUGH SUCH NOMINEE(S) NAME IN THE LIST BELOW:
  ALL

o
  AS TO ALL

o
  EXCEPT

o
   
 
                   
 
            Darren Richardson           Thomas R. Brown                
 
            Robert J. Molyneux          William Woodward                
 
                   
2.
  To appoint KPMG LLP as the Independent Registered Public Accounting Firm and Auditor of the Corporation and to authorize the Board of Directors to fix the Independent Registered Public Accounting Firm and Auditor’s remuneration.   FOR

o
  WITHHOLD

o
       
 
                   
3.
  To approve a special resolution authorizing an amendment to the Corporation’s Articles to effect, at the discretion of the Board of Directors, a reverse stock split of the Corporation’s currently issued and outstanding Common Stock.   FOR

o
  AGAINST

o
       
 
                   
4.
  To approve an amendment to the Mad Catz Interactive, Inc. Stock Option Plan—2007 to increase the number of shares authorized for issuance thereunder.   FOR

o
  AGAINST

o
       
 
                   
5.
  To approve a resolution confirming By-law Number 3 to increase the quorum requirements for meetings of shareholders of the Corporation.   FOR

o
  AGAINST

o
       
DATED the _____ day of __________, 2011.
                         
Signature
      Signature of joint holder, if any       Date        
 
 
 
     
 
     
 
   
Please sign exactly as the shares are issued. When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.
NOTES:
1.   If no choice is specified, the proxy will be VOTED FOR items 1, 2, 3, 4 and 5.
 
2.  
Shareholders are entitled to vote at the Meeting either in person or by proxy. A proxy must be dated and signed by the shareholder or his or her attorney duly authorized in writing or, if the shareholder is a corporation, by an officer or attorney thereof duly authorized. The signature should agree with the name on this proxy. If the proxy is not dated in the above space, it will be deemed to bear the date on which it was mailed by the Corporation.

 


Table of Contents

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3.  
Each shareholder has the right to appoint a person to represent the shareholder at the Meeting other than the persons specified above. Such right may be exercised by inserting in the space provided the name of the person to be appointed, who need not be a shareholder of the Corporation.
 
4.  
This proxy confers authority for the above-named persons to vote in their discretion with respect to amendments or variations to the matters identified in the notice of meeting which accompanied this proxy and with respect to other matters which may properly come before the Meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2011 ANNUAL AND
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 18, 2011
THE MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT AND THE ANNUAL REPORT ARE
AVAILABLE AT https://materials.proxyvote.com/556162

 

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