TIX CORP DEF 14A 2010
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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12711 Ventura Blvd., Suite 340
Studio City, California 91604
May 27, 2010
You are cordially invited to attend the Annual Meeting of Stockholders of Tix Corporation to be held at 10:00 A.M. local time on July 7, 2010 at Sportsmen’s Lodge, 12825 Ventura Boulevard, Studio City, California 91604.
As more fully described in the attached Notice of Annual Meeting and the accompanying proxy statement, at the Annual Meeting, our stockholders will consider and vote to (i) elect six directors to our Board of Directors, and (ii) ratify the appointment of Weinberg & Company, P. A. as our independent registered public accountant for the fiscal year ending December 31, 2010.
Whether or not you plan to attend the Annual Meeting, please submit your proxy to ensure your representation and the presence of a quorum at the Annual Meeting. Like last year you may submit your proxy over the Internet or by marking, signing, dating and mailing the proxy card if you received a paper copy of the proxy statement.
The Board of Directors recommends that you vote “FOR” the proposals presented in this proxy statement.
12711 Ventura Blvd., Suite 340
Studio City, California 91604
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON July 7, 2010
Notice is hereby given that the 2010 Annual Meeting of Stockholders of Tix Corporation (“Annual Meeting>”), will be held at 10:00 A.M. local time on July 7, 2010 at Sportsmen’s Lodge, 12825 Ventura Boulevard, Studio City, California 91604 for the following purposes:
We have fixed the close of business on May 17, 2010, as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. Only our stockholders of record at the close of business on that date will be entitled to notice of and to vote at the Annual Meeting or any adjournments or postponements thereof. Stockholders are requested to complete, sign, date and mail the enclosed proxy card in the envelope provided. Alternatively, stockholders may vote via the Internet, in accordance with the instructions provided in the attached proxy/voting instruction card.
In accordance with the rules approved by the U.S. Securities and Exchange Commission (“SEC”), we sent a Notice of Internet Availability of Proxy Materials on or about May 27, 2010, and provided access to our proxy materials on the Internet, beginning on May 27, 2010, for the holders of record and beneficial owners of our common stock as of the close of business on the record date.
May 27, 2010
The proxy statement and annual report to stockholders are available online at www.edocumentview.com/TIXC. Your Vote is Important> — Please vote as promptly as possible by using the Internet or by signing, dating, and returning the proxy card if you received a paper copy of this proxy statement. Instructions to vote online are printed directly on the proxy card.
All stockholders are invited to attend the annual meeting in person. Stockholders who vote their proxy online or by executing a proxy card may nevertheless attend the meeting, revoke their proxy, and vote their shares in person.
TABLE OF CONTENTS
12711 Ventura Blvd., Suite 340
Studio City, California 91604
Annual Meeting of Stockholders to Be Held On July 7, 2010
The Annual Meeting
This proxy statement is being furnished to the stockholders of Tix Corporation, a Delaware corporation (the “Company”) in connection with the solicitation of proxies by the Company’s Board of Directors (the “Board>”) for use at the Annual Meeting to be held at 10:00 A.M. local time on July 7, 2010, at Sportsmen’s Lodge, 12825 Ventura Boulevard, Studio City, California 91604, and at any adjournments or postponements thereof.
The purpose of the Annual Meeting is to consider and vote upon the following matters:
Stockholders of the Company as of May 17, 2010, the Record Date, may vote in one of the following three ways: (1) by completing, signing and dating the proxy card, (2) by completing your proxy on the Internet at the website listed on the proxy card or Notice of Internet Availability of Proxy Materials, or (3) in person at the Annual Meeting. It is important that you vote your shares whether or not you attend the meeting in person. If you attend the Annual Meeting, you may vote in person even if you have previously returned your proxy card or completed your proxy on the Internet. Shares represented by proxy will be voted in accordance with the instructions you provide to the individuals named on the proxy.
With regard to the election of directors, votes may be cast in favor of all director nominees, cast in favor of particular director nominees, left blank or withheld. Votes that are left blank will be voted FOR the election of the directors named on the proxy; votes that are withheld are not considered “votes cast” and thus have no effect on the election of directors.
With regard to ratification of the appointment of Weinberg as our independent registered public accounting firm, votes may be cast in favor, cast against, cast as an abstention or left blank. Abstentions will not be included among the shares that are considered to be present and voting on the ratification and, therefore, they will have no effect on the voting for this proposal. Votes that are left blank will be voted FOR the ratification of Weinberg as our independent registered public accounting firm.
With regard to other matters that may properly come before the Annual Meeting, votes will be cast at the discretion of the proxies.
Abstentions may be specified on all proposals, other than the election of directors, and will be counted as present for purposes of determining a quorum. Submitted proxies which are left blank or for which a vote is withheld and broker non-votes will also be counted as present for purposes of determining a quorum. Broker non-votes are shares held by a broker or nominee which are represented at the Annual Meeting, but with respect to which the broker or nominee is not empowered to vote on a particular proposal.
The proxy card is attached as Appendix A to this proxy statement.
The proxy statement for the Annual Meeting and the annual report for the fiscal year ended December 31, 2009 are available at www.edocumentview.com/TIXC.
NO MATTER WHAT METHOD YOU ULTIMATELY DECIDE TO USE TO VOTE YOUR SHARES, WE URGE YOU TO VOTE PROMPTLY.
Record Date; Shares Entitled To Vote; Vote Required To Approve The Transaction
The Board has fixed the close of business on May 17, 2010 (the “Record Date>”), as the date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. On the Record Date, 31,123,357 shares of our common stock, par value $0.08 per share (“Common Stock>”) were issued and outstanding out of 100,000,000 shares authorized, and pursuant to our Bylaws, each outstanding share of Common Stock is entitled to one vote on each matter submitted to vote at a meeting of our stockholders. Stockholders do not have cumulative voting rights.
A majority of the issued and outstanding shares of Common Stock entitled to vote, represented either in person or by proxy, is necessary to constitute a quorum for the transaction of business at the Annual Meeting. In the absence of a quorum, the Annual Meeting may be postponed from time to time until stockholders holding the requisite number of shares of our Common Stock are represented in person or by proxy. Each holder of record of shares of our Common Stock is entitled to cast, for each share registered in his or her name, one vote per proposal described in this proxy statement.
Solicitation, Voting and Revocation Of Proxies
This solicitation of proxies is being made by our Board, and our Company will pay the entire cost of preparing, assembling, printing, and distributing these proxy materials. The solicitation of proxies or votes may be made in person, by telephone or by electronic communications by directors, officers and employees of our Company, who will not receive any additional compensation for such solicitation activities. We also will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our stockholders.
Shares of our Common Stock represented by a proxy properly signed and received at or prior to the Annual Meeting, unless properly revoked, will be voted in accordance with the instructions on the proxy. A stockholder may revoke any proxy given pursuant to this solicitation by: (i) delivering to our corporate secretary, prior to or at the Annual Meeting, a written notice revoking the proxy (or voting via the Internet); (ii) delivering to our corporate secretary, at or prior to the Annual Meeting, a duly executed proxy relating to the same shares and bearing a later date; or (iii) voting in person at the Annual Meeting. Attendance at the Annual Meeting will not, in and of itself, constitute a revocation of a proxy. All written notices of revocation and other communications with respect to the revocation of a proxy should be addressed to:
12711 Ventura Blvd., Suite 340
Studio City, California 91604
Attention: Corporate Secretary
Our Board of Directors is not aware of any business to be acted upon at the Annual Meeting other than consideration of the proposals described herein.
Like last year, in addition to marking, signing, dating and mailing the proxy card if you received a paper copy of the proxy statement, you may vote over the Internet. Voting via the Internet is fast, convenient and your vote is immediately confirmed and tabulated. If you choose to vote via the Internet, instructions to do so are set forth on the proxy card. If you own your shares in your own name, you can vote via the Internet in accordance with the instructions provided on the proxy card or Notice of Internet Availability of Proxy Materials. If your shares are held in “street name” by a bank, broker or other nominee, you can also vote via the Internet by following the voting instructions provided by your bank, broker or other nominee. You may need to contact your bank or broker to vote.>
If you vote via the Internet, you do not have to mail in your proxy card, but your vote must be received by 1:00 a.m., Central Time, on July 7, 2010.
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT AND ANNUAL MEETING
PROPOSAL I – ELECTION OF DIRECTORS
Our Board currently has six directors, including four independent directors, as defined by the applicable listing requirements of the NASDAQ Stock Market. The Board proposes that the following six nominees, all of whom currently serve on the Board, be elected as directors to serve for a term ending on the date of the next annual meeting of stockholders and until their successors are duly elected and qualified. The Board’s Nomination and Governance Committee has approved and recommended for election as directors at the Annual Meeting the nominees described in this proxy statement.
Each of the nominees has consented to serve if elected. If any of them becomes unavailable to serve as a director, the Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Board. There is no other family relationship between any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer. The affirmative vote of a plurality of the shares of Common Stock represented at the Annual Meeting is required to elect each director.
The biographies and work experience of each of our nominees for directors is set forth under “Directors, Executive Officers, Promoters and Control Persons” beginning on page 9 of this proxy statement.
Vote Required and Recommendation of Board of Directors
Our Bylaws provide that directors are elected by a plurality of the votes cast by shares entitled to vote at such election of directors. In addition, applicable Securities and Exchange Commission voting requirements hold that stockholders have two voting choices for the election of directors: “FOR” or “WITHHOLD.” You may choose to vote “FOR” or “WITHHOLD” with respect to all of the nominees or any specific nominee(s). Stockholders entitled to vote at the Annual Meeting have the right to cast, in person or proxy, all of the votes to which the stockholder’s shares are entitled for each of the nominees. Under the plurality standard, the only votes that count when director votes are being tabulated are “FOR” votes. “WITHHOLD “ votes have no effect. Thus, a director-nominee could be elected by a single “FOR” vote. Unless otherwise instructed on your proxy, your shares will be voted “FOR” the election of both nominees. If you do not vote for a particular nominee, or if your broker does not vote your shares of common stock held in “street name,” or if you withhold authority for one or all nominees, your vote will not count either “FOR” or “AGAINST” the nominee, although it will be counted for purposes of determining whether there is a quorum present at the meeting.
PROPOSAL II – RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit and Audit Related Fees:
Weinberg & Company, P.A. (“Weinberg”) was the Company’s independent registered public accounting firm for the years ended December 31, 2009, 2008, and 2007. Services provided to the Company by Weinberg with respect to such periods consisted of the audits of the Company’s consolidated financial statements and limited reviews of the condensed consolidated financial statements included in Quarterly Reports on Form 10-Q. Weinberg & Co. also provided audit services with respect to our 2009 and 2008 Sarbanes-Oxley compliance, acquisition audits of Magic Arts & Entertainment, LLC and Exhibit Merchandising, LLC, and the subsequent filing of their financial statements on Form 8-K. Charges by Weinberg with respect to these matters aggregated $420,000, $343,000, and $346,000 respectively, for the years ended December 31, 2009, 2008 and 2007.
Weinberg did not provide any services to the Company with respect to the preparation of corporate income tax returns or tax planning matters.
All Other Fees:
Weinberg did not provide any services with respect to any matters other than those related to audit and audit-related matters.
Weinberg Representatives at Annual Meeting
We expect that a representative of Weinberg will be present at the Annual Meeting. They will be given the opportunity to make a statement if they desire to do so, and they will be available to respond to appropriate questions after the Meeting.
Vote Required and Recommendation of Board of Directors
Under Delaware law, and pursuant to our Bylaws, the proposal to ratify Weinberg as our independent registered public accounting firm for the fiscal year ending December 31, 2010, will be approved by the affirmative vote of a majority of our issued and outstanding shares of Common Stock entitled to vote at meeting, represented in person or by proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF WEINBERG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As used in this section, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as consisting of sole or shared voting power (including the power to vote or direct the vote) and/or sole or shared investment power (including the power to dispose of or direct the disposition of) with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable.
As of May 17, 2010, the Company had a total of 31,123,357 shares of common stock issued and outstanding, which is the only issued and outstanding voting equity security of the Company.
The following table sets forth, as of May 17, 2010: (a) the names and addresses of each beneficial owner of more than five percent (5%) of the Company’s common stock known to the Company, the number of shares of common stock beneficially owned by each such person, and the percent of the Company’s common stock so owned; and (b) the names and addresses of each director and executive officer, the number of shares of common stock beneficially owned, and the percentage of the Company’s common stock so owned, by each such person, and by all directors and executive officers of the Company as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
The following table and text set forth the names and ages of all directors and executive officers of the Company as of May 17, 2010. The Board of Directors is comprised of only one class. All of the directors will serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. There are no family relationships among directors and executive officers. There are no arrangements or understandings between any two or more of the Company’s directors or executive officers.
As a condition to the Closing, of the Company’s acquisition of Exhibit Merchandising, LLC (EM) the Company entered into a Voting Agreement with Joseph Marsh, a former owner of EM pursuant to which, for a period of four years, Mr. Marsh granted the Company, through its board of directors, the right to vote all of his shares, including the shares acquired pursuant to the Asset Purchase Agreement. As of the date hereof, such shares total 4,650,301.
Also provided herein is a brief description of the business experience of each director and executive officer during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the Federal securities laws.
None of the Company’s directors or executive officers has, during the past ten years, (1) had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) been convicted in a criminal proceeding or subject to a pending criminal proceeding; (3) been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; or (4) been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission, to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Biographies of Directors and Executive Officers:
Mitch Francis founded Tix Corporation in 1993 and has been the Chairman of the Board of Directors and Chief Executive Officer since its inception. Tix Corporation is publicly traded on the NASDAQ stock exchange under the symbol TIXC. Mr. Francis is an innovative leader whose inventions have yielded two United States patents with another three inventions patent- pending. All of these inventions have contributed to the unique businesses and success of Tix Corporation. Mr. Francis was one of the first real estate majors in the United States at the University of Colorado and developed numerous shopping centers, office buildings and condominium projects. The Company believes that Mr. Francis’ qualifications to serve on the Board include his long tenure as our Chief Executive Officer and Chairman during which time he gained a unique and extensive understanding of the Company and its long-term strategy. Additionally, his real estate expertise has been a valuable asset to the Company in identifying and negotiating its retail facilities which have been a significant element of Tix Corporation’s success.
Kimberly Simon has been employed by the Company for over twelve years. Ms. Simon started her career with the Company in September 1997 as the general manager of the Company’s Las Vegas ride simulator facility. Effective March 1, 2007, Ms. Simon was promoted to Chief Operating Officer and is responsible for all day-to-day operations. Prior to joining the Company, Ms. Simon gained managerial experience with several national companies. Ms. Simon graduated from Northern Illinois University with a Bachelor’s Degree.
From December 2007 until joining the Company, on March 29, 2010, Mr. Handy was a consultant to several public companies involved in the entertainment industry in the areas of business development and SEC reporting and compliance. From 2002 to 2007, Mr. Handy held positions of increasing responsibility, including Senior Vice President, Chief Financial Officer and Corporate Secretary of SM&A, a former publicly traded professional services firm. Previous to his employment with SM&A, Mr. Handy held various management roles in high technology manufacturing and service companies, including working abroad for a U.S. high technology manufacturer. Mr. Handy also served as Senior Auditor, Business Advisory and Audit Services, for Deloitte & Touche LLP.
Joseph Marsh was elected as a director of the Company effective July 8, 2009. Mr. Marsh has produced and promoted concerts, theatricals and family shows worldwide for the last 20 years. Currently, Mr. Marsh is an investor in the exhibits of “King Tutankhamen” and ”Diana: a Celebration”, a showcase of the life and works of Diana, Princess of Wales. Mr. Marsh continues to produce David Copperfield worldwide and is active in the national tour of Lord of the Dance. Mr. Marsh is currently involved in the production of shows throughout North America including The Magic of David Copperfield, Michael Flatley’s Lord of the Dance, Jesus Christ Superstar, Bob the Builder Live, Mannheim Steamroller, and 101 Dalmatians The Musical. Mr. Marsh is also a partner in the Stonebridge project in Cleveland, Ohio, and his management company owns and manages over 200,000 square feet of commercial property, 1,000 acres of developable land and two large housing developments. The Company believes that Mr. Marsh’s qualifications to serve on the Board include his extensive business experience in the production, promotion and financing of entertainment properties.
Benjamin Frankel has been a director of the Company since March 17, 1995. Mr. Frankel is a certified public accountant and was a partner in the accounting firm of Frankel, Lodgen, Lacher, Golditch, Sardi & Howard and its predecessors from 1965 through 2005. In 2006, Mr. Frankel left his former firm and formed Frankel, LoPresti & Co., an accountancy corporation. The Company believes that Mr. Frankel’s qualifications to serve on the Board include his long tenure on the Board and extensive experience in the fields of finance, business transactions and public company oversight.
Norman Feirstein has been a director of the Company since March 17, 1995. Mr. Feirstein practiced law as a sole practitioner from 1978 until July 1993. Mr. Feirstein currently practices law as the Law Offices of Norman Feirstein. The Company believes that Mr. Feinstein’s qualifications to serve on the Board include his long tenure on the Board and extensive experience as a lawyer and in the field of public company oversight.
Sam Georges joined the Company as a director in February 2007. Mr. Georges is the Chief Executive Officer and President of various entities affiliated with Anthony Robbins, and has worked with Mr. Robbins since 1993. Mr. Georges also serves as a director of many of the same privately-held companies affiliated with Anthony Robbins. The Company believes that Mr. George’s qualifications to serve on the Board include his tenure on the Board and extensive experience in the fields of law, finance and business transactions.
Andrew Pells was elected as a Director of the Company effective July 2, 2007. From 1990 to December 2003, Mr. Pells served as an executive of Hotels.com and its predecessors in various management capacities. From January 1, 2004 to the present, Mr. Pells has been an independent consultant to the Internet/Travel Industry. The Company believes that Mr. Pells’ qualifications to serve on the Board include his tenure on the Board and extensive experience in the hospitality field.
Compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended:
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities to file various reports with the Securities and Exchange Commission concerning their holdings of, and transactions in, securities of the Company. Copies of these filings must be furnished to the Company.
To the Company’s knowledge based solely on its review of the copies of the Section 16(a) reports furnished to the Company and written representations to the Company that no other reports were required, the Company believes that all individual filing requirements applicable to the Company’s directors, executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities complied with Section 16(a) during 2009.
Board Leadership Structure:
Our Bylaws provide our Board with flexibility to combine or separate the positions of Chairman of the Board and Chief Executive Officer. Currently, Mr. Francis serves as both Chairman of the Board and Chief Executive Officer. Our Board does not currently have a lead independent director. Our Board has determined that this structure is the most effective leadership structure for our company at this time. The Board believes that Mr. Francis is the director best situated to identify strategic opportunities for our company and focus the activities of the Board due to his full-time commitment to the business and long tenure with our company. The Board also believes that Mr. Francis’ service as both Chairman of the Board and Chief Executive Officer promotes effective execution of our business strategy and facilitates information flow between management and the Board. Our Board has determined that maintaining the independence of a majority of our directors helps maintain the Board’s independent oversight of management. In addition, our Audit, Compensation and Nominating Committees, which oversee critical matters such as our accounting principles, financial reporting practices and system of disclosure controls and internal controls over financial reporting, our executive compensation program and the selection and evaluation of our directors and director nominees, each consist entirely of independent directors.
The Board is actively involved in the oversight of risks, including credit risk, liquidity risk and operational risk, that could affect our business. The Board does not have a standing risk management committee, but administers this oversight function directly through the Board as a whole, as well as through committees of the Board. For example, the Audit Committee assists the Board in its risk oversight function by reviewing and discussing with management our accounting principles, financial reporting practices and system of disclosure controls and internal controls over financial reporting. The Nominating Committee assists the Board in its risk oversight function by considering risks related to our director nominee evaluation process. The Compensation Committee assists the Board in its risk oversight function by considering risks relating to the design of our executive compensation programs and arrangements. The full Board considers strategic risks and opportunities and receives reports from the committees regarding risk oversight in their areas of responsibility as necessary. We believe our Board leadership structure facilitates the division of risk management oversight responsibilities among the Board committees and enhances the Board’s efficiency in fulfilling its oversight function with respect to different areas of our business risks and our risk mitigation practices.
Family Relationships among Directors and Executive Officers:
There were no family relationships among directors and executive officers during the years ended December 31, 2009, 2008 and 2007.
Indebtedness of Directors and Executive Officers:
None of the Company’s directors or executive officers or their respective associates or affiliates is indebted to the Company.
Legal Proceedings with Affiliates:
The Company is not involved in any legal proceedings with any director, officer, affiliate or stockholder of the Company.
Code of Ethics:
The Company has adopted a written Code of Ethics that applies to its senior management. A copy of the Company’s Code of Ethics is available on the Company’s website http://www.tixcorp.com or alternatively to any stockholder by addressing a request to the attention of the Secretary of the Company and mailing such request to the Company’s corporate offices. Any amendment to the Code of Ethics or any waiver of the Code of Ethics will be disclosed promptly following the date of such amendment or waiver pursuant to a filing under a Current Report on Form 8-K with the Securities and Exchange Commission.
Selection of Directors:
Selection and Evaluation of Director Candidates. The Nominations and Governance Committee is responsible for identifying candidates for membership on the Board and makes determinations as to whether to recommend such candidates nomination to the Board based on such nominee’s character, judgment, and business and financial experience, as well as their ability to add to the Board’s existing strengths. This assessment typically includes issues of expertise in industries important to us, functional expertise in areas such as marketing, human resources, operations, finance, and information technology and an assessment of an individual’s abilities to work constructively with the existing Board and management, all in the context of an assessment of the perceived needs of the Board at that point in time. The Committee does not have any written specific minimum qualifications or skills that a candidate must meet in order to serve on the Board. The Committee identifies nominees by first evaluating the current members of the Board qualified and willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board does not to wish to continue in service or if the majority of the Board decides not to re-nominate a member for re-election, the Board identifies the desired skills and experience of a new nominee in light of the following criteria. When identifying and evaluating new directors, the Board considers the diversity and mix of the existing Board, including, but not limited to, such factors as: employment experience, public interest considerations and the implementation of our strategic plan. Among other things, when examining a specific candidate’s qualifications, the Board considers: the ability to represent our best interests, existing relationships with us, interest in the affairs and our purpose, the ability to fulfill director responsibilities, leadership skill, integrity, business and financial judgment, ability to develop business for us and the ability to work as a member of a team. The Committee or the Board will consider candidates recommended by stockholders based on the same criteria as discussed above. Stockholders should provide the information set forth below under “STOCKHOLDER PROPOSALS” and follow the instructions set forth therein.
Meetings and Committees of the Board of Directors:
During the year ended December 31, 2009, the Company’s Board of Directors met on three occasions. Additional board actions were taken by unanimous written consent.
The Company has a Nominating Committee of the Board of Directors. The purpose of the Nominating Committee of the Board of Directors of Tix Corporation is to assist the Board in discharging its duties relating to corporate governance and the composition and evaluation of the Board. The members of the Committee are Messrs. Pells, Feirstein and Georges, none of whom is an employee of the Company. Mr. Pells serves as the Chairman of the Committee. Each of the members is an “independent director” under the NASDAQ and Exchange Act rules. Our Nominating Committee held one meeting in 2009.
The Compensation Committee of the Board of Directors consists of three directors of the Company, Andy Pells, Norman Feirstein and Sam Georges, none of whom is an employee of the Company. Mr. Feirstein serves as the Chairman of the Committee. The Compensation Committee reviews the performance of the executive officers of the Company and reviews the compensation programs and agreements for key employees, including salary and bonus levels. Each of the members is an “independent director” under the NASDAQ rules. Our Compensation Committee held one meeting in 2009.
The Audit Committee of the Board of Directors consists of Andy Pells, Norman Feirstein and Sam Georges, none of whom is an employee of the Company. Mr. Georges serves as the Chairman of the Committee. The audit committee reviews, acts on, and reports to the Board of Directors with respect to various auditing and accounting matters, including the selection of the Company’s independent public accountants, the scope of the annual audits, the nature of non-audit services, the fees to be paid to the independent public accountants, the performance of the independent public accountants, and the accounting practices of the Company. Each of the members is an “independent director” under the NASDAQ rules. The Board of Directors has determined that Mr. Georges is an audit committee financial expert as that term is defined in Item 407(d)(5) of the Exchange Act. Our Audit Committee held four meetings in 2009.
For 2009, each of our directors attended 75% or more of the aggregate number of meetings of the Board, and the committee(s) of the Board on which he serves.
Each director is expected to attend and participate in, either in person or by means of telephonic or video conference, all scheduled meetings of the Board and all meetings of the committees of the Board on which such director serves, and all scheduled meetings of stockholders of the Company. All of our current directors are expected to attend the Annual Meeting.
Communications with the Board of Directors
Stockholders may communicate directly with the Board by writing to them at Board of Directors, c/o Corporate Secretary, Tix Corporation, 12001 Ventura Place, Suite 340, Studio City, California 91604. Such communications will be forwarded to the director or directors to whom it is addressed, except for communications that are (1) advertisements or promotional communications, (2) solely related to complaints with respect to ordinary course of business customer service and satisfaction issues, or (3) clearly unrelated to the Company’s business, industry, management or Board or committee matters.
Report of the Audit Committee
The following Report of the Audit Committee shall not be deemed incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent we specifically incorporate it by reference therein.
The audit committee of the board of directors has:
In reliance on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the consolidated financial statements audited by Weinberg for the fiscal year ended December 31, 2009 be included in its Annual Report on Form 10-K for such fiscal year.
Audit Committee of the Board of Directors
Sam Georges, Chairman
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
Overview of Executive Compensation Program
The Compensation Committee of our board of directors has responsibility for establishing, implementing and monitoring our executive compensation program philosophy and practices. The Compensation Committee seeks to ensure that the total compensation paid to our named executive officers is fair, reasonable and competitive. Generally, the types of compensation and benefits provided to the named executive officers are similar to those provided to our other officers.
Throughout this Proxy Statement, the individuals included in the Summary Compensation Table are referred to as the “named executive officers.”
Compensation Philosophy and Objectives
The components of our executive compensation consist of salary, annual cash bonuses awarded based on the Compensation Committee’s subjective assessment of each individual executive’s job performance during the past year, stock option grants to provide executives with longer-term incentives, and occasional special compensation awards (either cash or stock options) to reward extraordinary efforts or results.
The Compensation Committee believes that an effective executive compensation program should provide base annual compensation that is reasonable in relation to an individual executive’s job responsibilities and reward the achievement of both annual and long-term strategic goals of our Company. The Compensation Committee uses annual and other periodic cash bonuses to reward an officer’s achievement of specific goals and employee stock options as a retention tool and as a means to align the executive’s long-term interests with those of our stockholders, with the ultimate objective of improving stockholder value. The Compensation Committee evaluates both performance and compensation to maintain our company’s ability to attract and retain excellent employees in key positions and to assure that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of comparable companies. To that end, the Compensation Committee believes executive compensation packages provided by us to our named executive officers should include both cash compensation and stock options.
Because of the size of our Company, the small number of executive officers in our Company, and our company’s financial priorities, the Compensation Committee has decided not to implement or offer any pension benefits, deferred compensation plans, or other similar plans for our named executive officers.
Role of Executive Officers in Compensation Decisions
The Compensation Committee makes all compensation decisions for the named executive officers and approves recommendations regarding equity awards to all of our officers. Decisions regarding the non-equity compensation of our other officers are made by our President and Chief Executive Officer.
The Compensation Committee and the President and Chief Executive Officer annually review the performance of each named executive officer (other than the President and Chief Executive Officer, whose performance is reviewed only by the Compensation Committee). The conclusions reached and recommendations based on these reviews with respect to salary adjustments and annual award amounts, are presented to the Compensation Committee. The Compensation Committee can exercise its discretion in modifying any recommended adjustments or awards to executives.
Setting Executive Compensation
Based on the foregoing objectives, the Compensation Committee has structured the Company’s annual cash and incentive-based cash and non-cash executive compensation to motivate our named executives to achieve the business goals set by the Company, to reward the executives for achieving such goals, and to retain the executives. In doing so, the Compensation Committee historically has not employed outside compensation consultants. The Compensation Committee utilizes data to set compensation for our executive officers at levels targeted at or around a range of compensation amounts provided to executives at comparable companies considering, for each individual, their individual experience level related to their position with us. There is no pre-established policy or target for the allocation between cash and non-cash incentive compensation.
2009 Executive Compensation Components
For 2009, the principal components of compensation for the named executive officers were:
The Company provides named executive officers and other employees with base salary to compensate them for services rendered during the year. Base salary ranges for the named executive officers and are determined for each named executive officer based on his position and responsibility.
During its review of base salaries for executives, the Compensation Committee primarily considers:
Salary levels are typically considered annually as part of the Company’s performance review process, as well as upon a change in job responsibility. Merit-based increases to salaries are based on the Compensation Committee’s assessment of the individual’s performance. Base salaries for the named executive officers in 2009 were increased from the base salaries in effect during the prior year by amounts ranging from 8% to 40%.
Annual and Special Bonuses
The Compensation Committee has not established an incentive compensation program with fixed performance targets. Because we do not generate significant profits, the Compensation Committee bases its discretionary compensation awards on the achievement of milestones, effective fund-raising efforts, and effective management of personnel and capital resources, among other criteria. During 2009, a bonus of $50,000 was paid to each of the named Executive Officers.
Equity Incentive Compensation
As indicated above, the Compensation Committee also aims to encourage the Company’s executive officers to focus on long-term company performance by allocating to them stock options that vest over a period of several years. In 2009, the Compensation Committee granted to Mr. Francis a non-qualified common stock option to purchase 150,000 shares of our common stock at a price of $1.28 per share, which equaled the closing market price on the date of grant. The common stock option vests annually over three years, provided that Mr. Francis continues in our employ. In 2007, the Compensation Committee granted to Ms. Simon a nonqualified common stock option to purchase 300,000 shares of our common stock at a price of $7.00 per share, which equaled the closing market price on the date of grant. The common stock option vests annually over three years, provided that Ms. Simon continues in our employ. In 2007, in connection with the hiring of Matthew Natalizio as Chief Financial Officer, the Compensation Committee granted to Mr. Natalizio common stock options to purchase 340,000 shares of our common stock at a price of $7.00 per share, which equaled the closing market price on the date of grant. In addition, the Compensation Committee also granted to other executives common stock options that had an exercise price equal to the closing market price on the date of grant, and also vest annually over three years, provided that such executives remain in our employ through such annual vesting periods.
Retirement Plans, Perquisites and Other Personal Benefits
We have adopted a tax-qualified employee savings and retirement plan, the 401(k) Plan, for eligible United States employees, including our named executive officers. Eligible employees may elect to defer a percentage of their eligible compensation in the 401(k) Plan, subject to the statutorily prescribed annual limit. We may make matching contributions on behalf of all participants in the 401(k) Plan in an amount determined by our board of directors. Matching and profit-sharing contributions, if any, as well as all other contributions are at all times fully vested. We intend the 401(k) Plan, and the accompanying trust, to qualify under Sections 401(k) and 501 of the Internal Revenue Code so that contributions by employees to the 401(k) Plan, and income earned (if any) on plan contributions, are not taxable to employees until withdrawn from the 401(k) Plan, and so that we will be able to deduct our contributions, if any, when made. The trustee under the 401(k) Plan, at the direction of each participant, may invest the assets of the 401(k) Plan in any of a number of investment options.
We do not provide any of our executive officers with any other perquisites or personal benefits, other than benefits that we offer Mr. Francis and Ms. Simon in their employment agreements. As required by Mr. Francis’ employment agreement, during 2009 we paid insurance premiums with respect to life insurance policies for Mr. Francis which had a face value of approximately $5.3 million as of December 31, 2009 and under which Mr. Francis’ designee is the beneficiary. In addition, Mr. Francis receives a car allowance, car insurance, tax preparation, long term disability and health insurance for his spouse. As required by Ms. Simon’s employment agreement, during 2009, we paid a car allowance, car insurance, tax preparation, and medical insurance premiums.
The Compensation Committee has no requirement that each named executive officer maintains a minimum ownership interest in our company.
Our long-term incentive compensation consists solely of periodic grants of stock options to our named executive officers. The stock option program:
We normally grant stock options to new executive officers when they join our company based upon their position with us and their relevant prior experience. The options granted by the Compensation Committee generally vest annually over the first three years of the ten-year option term. Vesting and exercise rights cease upon termination of employment (or, in the case of exercise rights, 90 days thereafter), except in the case of death (subject to a one-year limitation), disability or retirement. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including voting rights and the right to receive dividends or dividend equivalents. In addition to the initial option grants, our Compensation Committee may grant additional options to retain our executives, and reward or provide incentive for the achievement of corporate goals and strong individual performance. Options are granted based on a combination of individual contributions to our company and on general corporate achievements, which may include the attainment of product development milestones and attainment of other annual corporate goals and objectives. On an annual basis, the Compensation Committee assesses the appropriate individual and corporate goals for our new executives and provides additional option grants based upon the achievement by the new executives of both individual and corporate goals. We expect that we will continue to provide new employees with initial option grants in the future to provide long-term compensation incentives and will continue to rely on performance-based and retention grants to provide additional incentives for current employees. Additionally, in the future, the Compensation Committee may consider awarding additional or alternative forms of equity incentives, such as grants of restricted stock, restricted stock units and other performance-based awards.
It is our policy to award stock options at an exercise price equal to The NASDAQ Capital Market’s closing price of our common stock on the date of the grant. In certain limited circumstances, the Compensation Committee may grant options to an executive at an exercise price in excess of the closing price of the common stock on the grant date. The Compensation Committee has never granted options with an exercise price that is less than the closing price of our common stock on the grant date, nor has it granted options which are priced on a date other than the grant date. For purposes of determining the exercise price of stock options, the grant date is deemed to be the first day of employment for newly hired employees, or the date on which the Compensation Committee or the Chief Executive Officer, as applicable, approves the stock option grant to existing employees.
We have no program, practice or plan to grant stock options to our executive officers, including new executive officers, in coordination with the release of material nonpublic information. We also have not timed the release of material nonpublic information for the purpose of affecting the value of stock options or other compensation to our executive officers, and we have no plan to do so. We have no policy regarding the adjustment or recovery of stock option awards in connection with the restatement of our financial statements, as our stock option awards have not been tied to the achievement of specific financial goals.
Tax and Accounting Implications
Deductibility of Executive Compensation
As part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that corporations may not deduct compensation of more than $1,000,000 that is paid to certain individuals. We believe that compensation paid to our executive officers generally is fully deductible for federal income tax purposes.
Accounting for Share-Based Compensation
Beginning on January 1, 2006, we began accounting for share-based compensation in accordance with the authoritative guidance of the Financial Accounting Standards Board. This accounting treatment has not significantly affected our compensation decisions. The Compensation Committee takes into consideration the tax consequences of compensation to the named executive officers, but tax considerations are not a significant part of the company’s compensation policy.
Compensation Committee Report
The compensation committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the compensation committee recommended to the Board that the compensation Discussion and Analysis be included in the Proxy Statement.
The foregoing report of the compensation committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts.
Compensation Committee Interlocks and Insider Participation in Compensation Decisions
There are no “interlocks,” as defined by the SEC, with respect to any member of the Compensation Committee. Messrs. Feirstein, Georges, and Pells served as all of the members of the Compensation Committee during 2009.
The following table and text sets forth information with respect to the compensation paid to the Company’s senior executive officers during the years ended December 31, 2009, 2008 and 2007. Except as listed below, there are no bonuses, other annual compensation, restricted stock awards or stock options/SARs or any other compensation paid to the named executive officers.
Mr. Ballard and Mr. Boulay are entitled under their respective employment agreements to an annual salary of $185,000. Each of Messrs. Ballard and Boulay are entitled to increases in their annual salaries of at least 3% per annum. For 2008 the salary amount represents salary from March 11, 2008 through December 31, 2008. Other compensation represents the Company’s 401(K) contribution match.
Stock Option and Warrant Grants:
The following table sets forth information as of December 31, 2009 concerning unexercised options and warrants, unvested stock and equity incentive plan awards for the executive officers named in the Summary Compensation Table. For additional information related to stock options and the valuation of stock options, see footnote 11 to the consolidated financial statements.
OUTSTANDING EQUITY AWARDS AT YEAR ENDED DECEMBER 31, 2009
Option and Warrant Exercises and Stock Vested
The following table provides information regarding exercise of stock options and warrants by each of our named executive officers during 2009:
Quantification of Termination Payments and Benefits
The table below reflects the amount of compensation to each of our named executive officers in the event of termination of such executive’s employment without “cause” or his resignation for “good reason,” termination following a change in control, and termination upon the executive’s death or permanent disability. The named executive officers are not entitled to any payments other than accrued compensation and benefits in the event of their voluntary resignation. The amounts shown in the table below assume that such termination was effective as of December 31, 2009, and thus includes amounts earned through such time, and are estimates only of the amounts that would be payable to the executives. The actual amounts to be paid will be determined upon the occurrence of the events indicated.
Beginning in July 2008, members of the Board of Directors who are not employees of the Company receive quarterly payments totaling $25,000 annually and reimbursement for any expenses incurred in attending the meetings. Also, beginning in April 2009, the Chairman of the Audit Committee receives an additional $20,000 annually and the Corporate Secretary receives an additional $6,000 annually. Further, in 2009, Messer Pells, Georges, Frankel, and Feirstein each received 25,000 common stock options with an exercise price of $1.25. In 2008 and 2007, Messrs Pells and Georges each received 25,000 common stock options and 10,000 common stock options, respectively. Directors who are employees of the Company receive no additional compensation for serving on the Board of Directors. The non-employee directors are eligible to participate in the 2004 Directors Option Plan.
Prior to July 2008, members of the Board of Directors who were not employees of the Company received $2,000 for each meeting they attended of the Board of Directors, and reimbursement for any expenses incurred in attending the meetings.
DIRECTOR COMPENSATION TABLE
Long-Term Incentive Plans:
2009 Equity Incentive Plan:
On July 8, 2009, the 2009 Equity Incentive Plan (the “2009 Equity Plan”) for officers, employees and consultants of the Company was approved pursuant to a Joint Written Consent of the Board of Directors and Majority Stockholders of the Company. The 2009 Equity Plan authorized the granting of not more than 3,000,000 restricted shares, stock appreciation rights (“SAR’s”), and incentive and non-qualified stock options to purchase shares of the Company’s common stock. The 2009 Equity Plan provides that stock options or SAR’s granted can be exercisable immediately as of the effective date of the applicable agreement, or in accordance with a schedule or performance criteria as may be set in the applicable agreement. The exercise price for non-qualified stock options or SAR’s would be the amount specified in the agreement, but shall not be less than the fair value of the Company’s common stock at the date of the grant. The exercise price for incentive stock options cannot be less than the fair market value of the Company’s common stock on the date of grant (110% of the fair market value of the Company’s common stock on the date of grant for a stockholder owning in excess of 10% of the Company’s common stock).
During 2009, the Company’s board of directors granted options to purchase 25,000 shares of common stock under the 2009 Equity Plan. Further, options granted to Mr. Natalizio to purchase 340,000 shares of our common stock that were previously not under a Company Plan were transitioned and deemed to be grants under the newly adopted 2009 Equity Plan.
As of December 31, 2009, options to purchase 2,635,000 shares of common stock are reserved for issuance under the 2009 Equity Plan.
2004 Option Plan:
On March 3, 2005, the Company adopted the 2004 Stock Option Plan (the “2004 Option Plan”) for officers and employees of the Company or its subsidiaries. The 2004 Option Plan was approved pursuant to a Joint Written Consent of the Board of Directors and Majority Stockholders of the Company dated September 22, 2004. The 2004 Option Plan authorized the granting of incentive stock options and non-qualified stock options to purchase an aggregate of not more than 960,000 shares of the Company’s common stock. The 2004 Option Plan provided that options granted would generally be exercisable at any time during a ten-year period (five years for a stockholder owning in excess of 10% of the Company’s common stock) and vest one-third in each of the three years following the grant, unless otherwise provided by the plan administrator. The exercise price for non-qualified stock options would not be less than the par value of the Company’s common stock. The exercise price for incentive stock options would not be less than 100% of the fair market value of the Company’s common stock on the date of grant (110% of the fair market value of the Company’s common stock on the date of grant for a stockholder owning in excess of 10% of the Company’s common stock). No option may be exercised during the first six months of its term except in the case of death.