8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 5, 2016

MAD CATZ INTERACTIVE, INC.

(Exact Name of Registrant as Specified in Charter)

Canada	001-14944	N/A
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

10680 Treena Street, Suite 500

San Diego, California 92131

(Address of Principal Executive Offices)

(858) 790-5008

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14.a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement

On February 5, 2016, Mad Catz Interactive, Inc. (the “Company”) and its subsidiaries Mad Catz Inc. (“MCI”) and 1328158 Ontario Inc. (“MCC”), entered into a Third Amendment (the “Amendment”) to that certain Loan and Security Agreement (the “Loan Agreement”) between the Company, MCI, MCC, the Lenders party thereto and NewStar Business Credit LLC (“NSBC”), dated June 30, 2015. The Amendment, which is effective February 5, 2016, resets the EBITDA covenants, as defined, for December 2015 – February 2016, based on revised forecasts, and contains other conditions, including payment of a twenty thousand dollar ($20,000) amendment fee to NSBC, representations and warranties, and provisions that the Company believes are usual and customary for credit arrangements similar to those contemplated by the Amendment.

The foregoing description of the material terms of the Amendment is qualified in its entirety by reference to the full text of such Amendment, a copy of which is attached hereto as Exhibit 10.1

Item 2.02. Results of Operations and Financial Condition

The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition,” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

On February 9, 2016, the Company issued a press release announcing its financial results for its fiscal third quarter ended December 31, 2015. A copy of the press release is attached hereto as Exhibit 99.2.

The information contained in this Current Report, including the exhibit, shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 2.05. Costs Associated with Exit or Disposal Activities

On February 5, 2016, the Company’s Board of Directors (“Board”) approved a restructuring plan in order to lower operating costs, increase efficiencies and better align the Company’s workforce with the needs of the business. The plan consists of a reduction in the number of Company positions across the organization equal to approximately 37% of its total workforce. As a result of the reductions, the Company expects to record cash restructuring charges during the fourth quarter of fiscal 2016, comprising primarily of severance and benefits afforded to terminated employees, of approximately $3.0 million. The Company anticipates that the actions associated with the reductions will be substantially completed by the end of the fiscal fourth quarter of 2016.

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

Departures

Departure of Thomas Brown

On February 5, 2016, Thomas R. Brown resigned from the Board for personal reasons. Mr. Brown also was Chairman of the Board and a member of the Company’s Audit Committee. Mr. Brown’s decision was not the result of any disagreement with the Company or the Board.

Departure of Darren Richardson

On February 5, 2016, as part of the Company’s restructuring plan noted above, Darren Richardson agreed to resign from his position as President and Chief Executive Officer of the Company and as a member of the Board. Mr. Richardson’s decision was not the result of any disagreement with the Company or the Board.

In connection with his departure from the Company, and in accordance with that certain Amended and Restated Employment Agreement, dated April 22, 2014, between the Company and Mr. Richardson, Mr. Richardson is entitled to receive from the Company severance benefits equal to (a) two (2) years of base salary paid over twelve (12) months and according to the Company’s normal payroll practice, (b) if other executive officers receive bonuses for the fiscal year in which Mr. Richardson is terminated, then a pro rata share of the bonus that would have been received by Mr. Richardson for such fiscal year, and (c) continued medical and health benefits for Mr. Richardson and his family for two (2) years following termination or until Mr. Richardson is eligible to receive substantially the same medical and health benefits from another employer, whichever occurs first. Mr. Richardson will also receive such benefits as are required under applicable law. The Company’s severance obligations are subject to receipt of a release of claims from Mr. Richardson.

During the Company’s review and analysis surrounding its restructuring plan and, in part as a result of the agreed resignation of Mr. Richardson, it was discovered that due to an inadvertent clerical error a draft, non-final version of Mr. Richardson’s Amended and Restated Employment Agreement was attached as Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014. A copy of the correct final version of Mr. Richardson’s Amended and Restated Employment Agreement, which is consistent with the Company’s prior disclosure regarding its employment arrangements with Mr. Richardson, is attached hereto as Exhibit 10.2.

Departure of Whitney Peterson

On February 5, 2016, as part of the Company’s restructuring plan noted above, Whitney Peterson agreed to resign from his position as Senior Vice President of Business Affairs, General Counsel, and Corporate Secretary of the Company. Mr. Peterson’s decision was not the result of any disagreement with the Company or the Board.

In connection with his departure from the Company, and in accordance with that certain Amended and Restated Employment Agreement, dated April 22, 2014, between the Company and Mr. Peterson, Mr. Peterson is entitled to receive from the Company severance benefits equal to (a) eighteen (18) months of base salary paid over twelve (12) months and according to the Company’s normal payroll practice, (b) if other executive officers receive bonuses for the fiscal year in which Mr. Peterson is terminated, then a pro rata share of the bonus that would have been received by Mr. Peterson for such fiscal year, and (c) continued medical and health benefits for Mr. Peterson and his family for two (2) years following termination or until Mr. Peterson is eligible to receive substantially the same medical and health benefits from another employer, whichever occurs first. Mr. Peterson will also receive such benefits as are required under applicable law. The Company’s severance obligations are subject to receipt of a release of claims from Mr. Peterson.

Appointments

Appointment of Karen McGinnis

On February 5, 2016, the Company appointed Karen McGinnis as President and Chief Executive Officer and the Board also appointed Ms. McGinnis as a director of the Company, effective as of that day.

Ms. McGinnis, age 49, has served as the Company’s Chief Financial Officer since June 2013, when she joined the Company. Prior to joining the Company, Ms. McGinnis served as Chief Accounting Officer of Cymer, Inc. from November 2009 through May 2013. Prior to joining Cymer, Ms. McGinnis was Chief Accounting Officer for Insight Enterprises, Inc., from September 2006 until March 2009, and its Senior Vice President of Finance from 2001 through September 2006. Ms. McGinnis is a certified public accountant and received her bachelor’s degree in accounting from the University of Oklahoma. The Company believes that Ms. McGinnis’ expertise and experience in senior accounting and management positions with publicly traded companies, as well as her experience as Chief Financial Officer with the Company since 2013, qualify her for service on the Board.

The Company is not aware of any related person transaction, directly or indirectly, with or involving Ms. McGinnis within the scope of Item 404(a) of Regulation S-K or otherwise.

In connection with her appointment as President and Chief Executive Officer, Ms. McGinnis entered into an Employment Agreement with the Company, the terms of which are more fully detailed below.

Appointment of David McKeon

On February 5, 2016, the Company appointed David McKeon as Chief Financial Officer of the Company, effective as of that day. Mr. McKeon will replace Ms. McGinnis as Chief Financial Officer of the Company.

Mr. McKeon, age 43, has served as the Company’s Vice President, Corporate Controller since August 2014, when he joined the Company. Prior to joining the Company, Mr. McKeon worked in various finance and accounting positions at Cymer LLC, an ASML Company, and its predecessor company, for over nineteen years, most recently serving as its Senior Director and Global Accounting Controller since 2007. Mr. McKeon is a certified management accountant and received his bachelor’s degree in accounting from San Diego State University.

The Company is not aware of any related person transaction, directly or indirectly, with or involving Mr. McKeon within the scope of Item 404(a) of Regulation S-K or otherwise.

In connection with his appointment as Chief Financial Officer, Mr. McKeon entered into an Employment Agreement with the Company, the terms of which are more fully detailed below.

Appointment of Tyson Marshall

On February 5, 2016, the Company appointed Tyson Marshall as General Counsel and Corporate Secretary, effective as of that day. Mr. Marshall will replace Mr. Peterson in this role.

Mr. Marshall, age 41, has served as the Company’s Associate General Counsel since March 2013, when he joined the Company. Prior to joining the Company, Mr. Marshall spent over ten years in private practice, including eight years with the international, full-service law firm Morrison & Foerster as a member of that firm’s Securities Litigation Enforcement and White Collar Defense group. Before joining Morrison, Mr. Marshall was a securities and IP litigator at Fish & Richardson, an intellectual property and commercial litigation firm. Mr. Marshall earned his law degree, magna cum laude, from the University of San Diego School of Law. Mr. Marshall is admitted to practice in California, before the U.S. District Courts for the Central and Southern Districts of California and Eastern District of Texas, and Ninth Circuit U.S. Court of Appeals.

The Company is not aware of any related person transaction, directly or indirectly, with or involving Mr. Marshall within the scope of Item 404(a) of Regulation S-K or otherwise.

In connection with his appointment as General Counsel and Corporate Secretary, Mr. Marshall entered into an Employment Agreement with the Company, the terms of which are more fully detailed below.

Appointment of Andrew Young

On February 5, 2016, the appointed Andrew Young as Chief Technology Officer, effective as of that day. The Chief Technology Officer position is a newly-created position with the Company.

Mr. Young, age 49, has served as the Company’s Vice President, Product Development, since September 2008 and became an Officer in November 2012. Prior to joining the Company, Mr. Young spent eleven years with Saitek PLC in various Engineering Management positions and was Director of Engineering, Quality and Manufacturing Operations for Saitek upon its acquisition by the Company. Prior to that, Mr. Young held various Design positions with Penny & Giles, a global company that specialized in control systems for the aerospace, military and commercial sectors. Mr. Young is a fully qualified Mechanical Engineer with post graduate qualifications with the Open University (U.K.) & Harvard Business School in Manufacturing Management and Strategic Marketing Management.

The Company is not aware of any related person transaction, directly or indirectly, with or involving Mr. Young within the scope of Item 404(a) of Regulation S-K or otherwise.

In connection with his appointment as Chief Technology Officer, Mr. Young entered into an Employment Agreement with the Company, the terms of which are more fully detailed below.

A copy of the Company’s press release announcing the resignations of Messrs. Brown, Richardson, and Peterson, and the appointments of Ms. McGinnis and Messrs. McKeon, Marshall, and Young is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

Compensatory Arrangements

On February 5, 2016, the Company entered into Employment Agreements (the “Employment Agreements”) with each of Karen McGinnis, David McKeon, Tyson Marshall, and Andrew Young (each an “Executive Officer” and collectively the “Executive Officers”). Ms. McGinnis’ Employment Agreement and Mr. Young’s Employment Agreement, as more fully detailed below, supersede and replace in all respects those certain Amended and Restated Employment Agreements, dated April 22, 2014, between the Company and Ms. McGinnis and between the Company and Mr. Young, which agreements are attached as Exhibit 10.29 and Exhibit 10.32, respectively, to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014.

Pursuant to the Employment Agreements, Karen McGinnis will serve as the Company’s President and Chief Executive Officer, David McKeon will serve as the Company’s Chief Financial Officer, Tyson Marshall will serve as the Company’s General Counsel and Corporate Secretary, and Andrew Young will serve as the Company’s Chief Technology Officer. Each of the Employment Agreements is effective as of February 5, 2016, has an initial one (1)-year term and automatically renews for successive one (1) year periods unless earlier terminated in accordance with the terms provided therein. The annual base salary of each of the Executive Officers under the Employment Agreements will be $375,000 for Ms. McGinnis, $225,000 for Mr. McKeon, $200,000 for Mr. Marshall, and £160,000 for Mr. Young. Ms. McGinnis’ Employment Agreement also provides for a signing bonus of $25,000. Each Executive Officer’s annual base salary is subject to review and adjustment by the Company’s Board of Directors in its reasonable discretion. Under the Employment Agreements, each Executive Officer is also eligible to participate in such other incentive compensation programs as may be in effect from time to time for the Company’s senior executive officers and in such health, retirement, insurance, paid time off and other benefits programs and policies as are offered by the Company.

Under the Employment Agreements, each Executive Officer’s employment with the Company is “at will” and may be terminated by the Company or the respective Executive Officer without any breach of the Employment Agreement. Each Employment Agreement

provides that if the agreement is terminated by the Executive Officer for “good reason” or by the Company without “cause,” as such terms are defined in each Employment Agreement, each terminated Executive Officer will be entitled to receive from the Company severance benefits equal to eighteen (18) months of base salary paid over twelve (12) months and according to the Company’s normal payroll practice, (b) if other executive officers receive bonuses for the fiscal year in which an Executive Officer is terminated, then a pro rata share of the bonus that would have been received by such Executive Officer for such fiscal year, and (c) continued medical and health benefits for the Executive Officer and his or her family for two (2) years following termination or until the Executive Officer is eligible to receive substantially the same medical and health benefits from another employer, whichever occurs first. The terminated Executive Officer will also receive such benefits as are required under applicable law. The Company’s severance obligations are also subject to receipt of a release of claims from the terminated Executive Officer.

If an Executive Officer’s employment with the Company is terminated within the period of three (3) months prior to a “change of control,” as defined in the Employment Agreements, or within twelve (12) months following a “change in control,” the terminated executive officer will be entitled to receive (a) a lump sum payment in cash equal to eighteen (18) months of the applicable executive officer’s base salary, (b) the target bonus for the fiscal year in which the termination occurred, (c) continued medical and health benefits for the Executive Officer and his or her family for two (2) years following termination or, until the Executive Officer is eligible to receive medical and health benefits from another employer, whichever occurs first and (d) full vesting of all unvested stock options and restricted stock held by the Executive Officer and continue exercisability of stock options until the earlier of the first anniversary of the date of termination and the original expiry date of such options (disregarding early termination provisions).

The Employment Agreements impose confidentiality obligations, contain various restrictive covenants (such as non-competition, non-solicitation and non-disparagement obligations), and contain other terms and conditions commonly contained in employment agreements for executive officers.

The foregoing summary of the Employment Agreements does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Employment Agreements, which are attached as Exhibits 10.3, 10.4, 10.5, 10.6 to this report and are incorporated herein by reference.

On February 8, 2016, the Company issued a press release regarding the management changes described above, which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

10.1	Third Amendment to Loan and Security Agreement dated February 5, 2016, by Mad Catz, Inc., Mad Catz Interactive, Inc., and 1328158 Ontario Inc. in favor of NewStar Business Credit, LLC.
10.2	Amended and Restated Employment Agreement effective April 22, 2014, by and between Mad Catz Interactive, Inc. and Darren Richardson.
10.3	Employment Agreement effective February 5, 2016, by and between Mad Catz Interactive, Inc. and Karen McGinnis.
10.4	Employment Agreement effective February 5, 2016, by and between Mad Catz Interactive, Inc. and David McKeon
10.5	Employment Agreement effective February 5, 2016, by and between Mad Catz Interactive, Inc. and Tyson Marshall.
10.6	Employment Agreement effective February 5, 2016, by and between Mad Catz Interactive, Inc. and Andrew Young.
99.1	Press Release, dated February 8, 2016, issued by Mad Catz Interactive, Inc.
99.2	Press Release, dated February 9, 2016, issued by Mad Catz Interactive, Inc., furnished pursuant to Items 2.02 and 5.02 of Form 8-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 9, 2016	MAD CATZ INTERACTIVE, INC.
	By:	/s/ DAVID MCKEON
	Name:	David McKeon
	Its:	Chief Financial Officer

EX-10.1

Exhibit 10.1

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) executed as of February 5, 2016, and effective at the Effective Time, is by and among: (a) MAD CATZ, INC., a Delaware corporation (together with its successors and permitted assigns, the “Borrower”), (b) MAD CATZ INTERACTIVE INC., a Canadian corporation, and 1328158 ONTARIO INC., an Ontario corporation, each as a Guarantor and collectively with the Borrower, the Credit Parties (c) the undersigned lenders party hereto (collectively, the “Lenders” and each a “Lender”) and (d) NEWSTAR BUSINESS CREDIT, LLC, a Delaware limited liability company, as administrative agent for the Lenders (in such capacity, and including its successors and permitted assigns, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Credit Parties, the Lenders and Administrative Agent entered into that certain Loan and Security Agreement dated as of June 30, 2015 (as heretofore amended, supplemented or otherwise modified, the “Original Loan Agreement”, and as amended hereby, the “Loan Agreement”), for the purposes and consideration therein expressed, pursuant to which the Lenders became obligated to make Loans to the Borrowers as therein provided; and

WHEREAS, the Credit Parties, the Lenders and the Administrative Agent desire to amend the Original Loan Agreement as provided herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Original Loan Agreement, in consideration of the loans which may hereafter be made by the Lenders to the Borrowers, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

ARTICLE I

Definitions and References

Section 1.1 Terms Defined in the Original Loan Agreement. Unless the context otherwise requires or unless otherwise expressly defined herein, the terms defined in the Original Loan Agreement shall have the same meanings whenever used in this Amendment.

ARTICLE II

Amendments to Original Loan Agreement

Section 2.1 Amendments to Financial Covenants. Section 9.14(a) of the Original Loan Agreement is hereby amended and restated to read as follows:

“(a) EBITDA for Parent and its consolidated Subsidiaries, for any Fiscal Month of Parent, determined as of the last day of such Fiscal Month, shall not be less than the required amount set forth in the following table for the applicable period set forth opposite thereto:

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Applicable Fiscal Month	Required Minimum EBITDA
December 2015	($1,000,000)
January 2016	($2,300,000)
February 2016	($7,000,000)
Each Fiscal Month thereafter	the Specified EBITDA for such Fiscal Month”

ARTICLE III

Conditions of Effectiveness

Section 3.1 Effective Time. This Amendment is effective as of the date first written above once the following conditions precedent have been satisfied in full (the “Effective Time”):

(a) Administrative Agent shall have received, at Administrative Agent’s office, a duly executed counterpart of this Amendment from each Credit Party;

(b) Administrative Agent shall have received, in immediately available funds, an amendment fee equal to $20,000; and

(c) No Default or Event of Default shall have occurred and be continuing.

ARTICLE IV

Representations and Warranties

Section 4.1 Representations and Warranties of Credit Parties. In order to induce Administrative Agent and the Lenders to enter into this Amendment, each Credit Party hereby represents and warrants to Administrative Agent and the Lenders that:

(a) The representations and warranties contained in Article VII of the Original Loan Agreement are true and correct in all material respects at and as of the Effective Time; provided, however, those representations and warranties containing a reference to a particular date shall continue to be qualified by reference to such date;

(b) It is duly authorized to execute and deliver this Amendment and is duly authorized to borrow and perform its obligations under the Loan Agreement and the other Loan Documents. It has duly taken all corporate action necessary to authorize the execution and delivery of this Amendment and to authorize the performance of the obligations of such Credit Party hereunder;

(c) The execution and delivery by it of this Amendment, the performance by it of its obligations hereunder and the consummation of the transactions contemplated hereby do not and will not conflict with, violate or constitute a breach or default under (i) any provision of

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Applicable Law applicable or binding upon it, except where such conflict, violation, breach or default reasonably would not be expected to result in a Material Adverse Effect, (ii) its organizational documents, (iii) any agreement or instrument to which it is a party or which is otherwise binding upon it, or (iv) any material judgment, license, order or permit applicable to or binding upon it;

(d) Except for those which have been duly obtained, no consent, approval, exemption, authorization or other action by, notice to, or filing with any Governmental Authority or third party is required in connection with the execution and delivery by such Credit Party of this Amendment or to consummate the transactions contemplated hereby; and

(e) When duly executed and delivered, this Amendment will constitute a legal, valid and binding obligation of each Credit Party, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to enforcement of creditors’ rights.

ARTICLE V

Miscellaneous

Section 5.1 Ratification of Agreement. The Original Loan Agreement as hereby amended is hereby ratified and confirmed in all respects. Any reference to the Loan Agreement in any Loan Document shall be deemed to refer to the Original Loan Agreement, as amended by this Amendment. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Administrative Agent or Lenders under the Loan Agreement or any other Loan Document nor constitute a waiver of any provision of the Loan Agreement or any other Loan Document.

Section 5.2 Survival of Agreements. All representations, warranties, covenants and agreements of the Credit Parties herein shall survive the execution and delivery of this Amendment and the performance hereof, and shall further survive until all of the Obligations are paid in full. All statements and agreements contained in any certificate or instrument delivered by any Credit Party hereunder or under the Loan Agreement to Administrative Agent shall be deemed to constitute representations and warranties by, or agreements and covenants of, such Credit Party under this Amendment and under the Loan Agreement.

Section 5.3 Loan Document. This Amendment is a Loan Document, and all provisions in the Loan Agreement pertaining to Loan Documents apply hereto.

Section 5.4 Governing Law. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES.

Section 5.5 Counterparts; Fax. This Amendment may be executed in any number of counterparts and signature pages may be detached from multiple separate counterparts and attached to the same document. A telecopy or other electronic transmission of any such executed counterpart signature page shall be deemed valid as an original.

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THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

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IN WITNESS WHEREOF, this Amendment is executed as of the date first above written.

CREDIT PARTIES:
MAD CATZ, INC., as Borrower
By:	/s/ Darren Richardson
Name:	Darren Richardson
Title:	President & CEO

1328158 ONTARIO INC., as a Guarantor and a Credit Party
By:	/s/ Darren Richardson
Name:	Darren Richardson
Title:	President & CEO

MAD CATZ INTERACTIVE, INC. as a Guarantor and a Credit Party
By:	/s/ Darren Richardson
Name:	Darren Richardson
Title:	President & CEO

Signature Page

ADMINISTRATIVE AGENT, SWING LENDER AND LENDER:
NEWSTAR BUSINESS CREDIT, LLC
By:	/s/ Greg Gentry
Name:	Greg Gentry
Title:	SVP

Signature Page

EX-10.2

Exhibit 10.2

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (the “Agreement”), entered into on April 22, 2014 (the “Effective Date”), is made by and between Darren Richardson (the “Executive”) and Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (together with any of its subsidiaries and affiliates as may employ the Executive from time to time, and any successor(s) thereto, the “Company”).

RECITALS

A. The Company desires to assure itself of the continued services of the Executive by engaging the Executive to perform services under the terms hereof.

B. The Executive desires to continue to provide services to the Company on the terms herein provided.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows:

1. Certain Definitions.

(a) “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act of 1933, as amended from time to time.

(b) “Agreement” shall have the meaning set forth in the preamble hereto.

(c) “Annual Base Salary” shall have the meaning set forth in Section 3(a).

(d) “Board” shall mean the Board of Directors of the Company or any successor governing body.

(e) The Company shall have “Cause” to terminate the Executive’s employment hereunder upon: (i) the Executive’s willful failure to substantially perform the duties set forth herein (other than any such failure resulting from the Executive’s Disability); (ii) the Executive’s willful failure to carry out, or comply with, in any material respect, any lawful directive of the Board; (iii) the Executive’s commission at any time of any act or omission that results in, or may reasonably be expected to result in, a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude; (iv) the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities hereunder; (v) the Executive’s commission at any time of any act of fraud, embezzlement, misappropriation, material misconduct, conversion of assets of the Company, or breach of fiduciary duty against the Company (or any predecessor thereto or successor thereof); or (vi) the Executive’s material breach of this Agreement or other agreements with the Company (including,

without limitation, any breach of the restrictive covenants of any such agreement); and which, in the case of clauses (i), (ii) and (vi), continues beyond fourteen (14) days after the Company has provided the Executive written notice of such failure or breach (to the extent that, in the reasonable judgment of the Board, such failure or breach can be cured by the Executive).

(f) “Change of Control” shall mean:

(i) The members of the Board at the beginning of any consecutive 12-calendar-month period (the “Incumbent Directors”) cease for any reason other than due to death to constitute at least a majority of the members of the Board; provided that any director whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the members of the Board then still in office who were members of the Board at the beginning of such 12-calendar-month period, shall be deemed to be an Incumbent Director.

(ii) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d–3 promulgated under the Exchange Act) of fifty percent (50%) or more of the stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of the Company (irrespective of whether at the time stock of any class or classes of the Company shall have or might have voting power by reason of the happening of any contingency); provided, however, that for purposes of this subsection (f), the following acquisitions will not constitute a Change of Control: (A) any acquisition directly from the Company; (B) any acquisition by the Company or a subsidiary of the Company; or (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company.

(iii) The consummation of a merger or consolidation involving the Company if the stockholders owning the capital and profits (“ownership interests”) of the Company immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power or ownership interests of the Company, or the entity resulting from such merger or consolidation, in substantially the same proportion as their ownership of the combined voting power or ownership interests outstanding immediately before such merger or consolidation.

(iv) There shall occur (A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportion as their ownership of the Company immediately prior to such sale or (B) the approval by stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company.

(v) The dissolution or the complete or partial liquidation of the Company.

In all cases, the determination of whether a Change of Control has occurred shall be made in accordance with Section 409A.

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(g) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(h) “Company” shall, except as otherwise provided in Section 7(j), have the meaning set forth in the preamble hereto.

(i) “Date of Termination” shall mean (i) if the Executive’s employment is terminated due to the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated for any other reason, the date indicated in the Notice of Termination (or the date specified by the Company pursuant to Section 4(b) in connection with a termination by the Executive).

(j) “Disability” shall mean any medically determinable physical or mental impairment that renders the Executive physically or mentally unable regularly to perform his or her duties hereunder for a period in excess of one hundred twenty (120) consecutive days or more than one hundred eighty (180) days in any consecutive twelve (12) month period, as determined by a physician jointly selected by the Company and the Executive.

(k) “Effective Date” shall have the meaning set forth in the preamble hereto.

(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(m) “Executive” shall have the meaning set forth in the preamble hereto.

(n) “Extension Term” shall have the meaning set forth in Section 2(b).

(o) “First Payment Date” shall have the meaning set forth in Section 5(b)(iii).

(p) The Executive shall have “Good Reason” to terminate the Executive’s employment hereunder after the occurrence of one or more of the following conditions without the Executive’s written consent: (i) a material diminution in the Executive’s authority, duties, or responsibilities, as described herein. For the avoidance of any doubt, being asked to assume the duties of a CEO, CFO or General Counsel in a privately held company shall constitute a material diminution of the Executive’s authority, duties or responsibilities having had that authority, duties or responsibilities in a publicly traded company; (ii) a material diminution in the Executive’s Annual Base Salary as described herein; (iii) a material reduction in the package of benefits and incentives, taken as a whole, provided to the Executive (except that employee contributions may be raised to the extent of any cost increases imposed by third parties) or any action by the Company which would materially and adversely affect the Executive’s participation or reduce the Executive’s benefits under any such plans, except to the extent that such benefits and incentives of all other executive officers of the Company are similarly reduced (iv) a material change in the geographic location at which the Executive must perform the Executive’s services hereunder. For the avoidance of any doubt, an increases in the Executive’s one-way commute distance by more than fifty (50) miles from his or her then principal residence shall constitute a material change in the geographic location at which the Executive must perform the Executive’s services hereunder; or (v) any other action or inaction that constitutes a material breach of this Agreement by the Company; and which, in the case of any of the foregoing, continues beyond thirty (30) days

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after the Executive has provided the Company written notice that the Executive believes in good faith that such condition giving rise to such claim of Good Reason has occurred, so long as such notice is provided within ninety (90) days after the initial existence of such condition.

(q) “Independent Directors” shall mean the independent members of the Board.

(r) “Installment Payments” shall have the meaning set forth in Section 5(b)(iii).

(s) “Introductory Period” shall have the meaning set forth in Section 5(b)(iii).

(t) “Notice of Termination” shall have the meaning set forth in Section 4(b).

(u) “Person” shall mean any individual, natural person, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), incorporated or unincorporated association, governmental authority, firm, society or other enterprise, organization or other entity of any nature.

(v) “Proprietary Information” shall have the meaning set forth in Section 7(d).

(w) “Release” shall have the meaning set forth in Section 5(b)(iii).

(x) “Restricted Period” shall mean the period from the Effective Date through the end of the Severance Period.

(y) “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.

(z) “Severance Payment” shall have the meaning set forth in Section 5(b)(i).

(aa) “Severance Period” shall mean if the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason, the period beginning on the Date of Termination and ending on the first (1^st) anniversary of the Date of Termination.

(bb) “Term” shall have the meaning set forth in Section 2(b).

2. Employment.

(a) In General. The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 2(b), in the position set forth in Section 2(c), and upon the other terms and conditions herein provided. The terms and conditions herein provided supersede in their entirety any contradictory terms and conditions in any employee manual, plan, policy, program or other arrangement maintained by the Company. To the extent a term or condition is not detailed herein, the employee manuals, plans, policies, programs or other arrangements maintained by the Company shall govern.

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(b) Term of Employment. The term of employment under this Agreement (the “Term”) shall be for the period beginning on the Effective Date and ending on the first (1st) anniversary of the Effective Date, unless earlier terminated as provided in Section 4. The Term shall automatically be extended for successive one (1) year periods (each, an “Extension Term” and, collectively with the Term, the “Term”), unless earlier terminated as provided in Section 4.

(c) Position and Duties. During the Term, the Executive: (i) shall serve as President and Chief Executive Officer of the Company, with responsibilities, duties and authority customary for such position, subject to direction by the Board of Directors of the Company; (ii) shall report directly to the Board of Directors of the Company; (iii) shall devote substantially all the Executive’s working time and efforts to the business and affairs of the Company and its subsidiaries, provided that the Executive may (i) serve on corporate, civic, charitable, industry or professional association boards or committees, subject to the Board’s prior written consent in the case of any such board or committee that relates directly or indirectly to the business of the Company or its subsidiaries (which consent shall not unreasonably be withheld), (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions and (iii) manage his personal investments, so long as none of such activities meaningfully interferes with the performance of the Executive’s duties and responsibilities hereunder, or involves a conflict of interest with the Executive’s duties or responsibilities hereunder or a breach of the covenants contained in Section 7; and (iv) agrees to observe and comply with the Company’s rules and policies as adopted by the Company from time to time, which have been made available to the Executive.

3. Compensation.

(a) Annual Base Salary. During the Term, the Executive shall receive a base salary at a rate of $423,295 per annum, which shall be paid in accordance with the customary payroll practices of the Company, subject to review and adjustment by the Board in its reasonable discretion (the “Annual Base Salary”).

(b) Other Incentive Plans, Benefits and Perquisites. The Executive shall be offered additional employee benefits and perquisites the Company and the Executive negotiate in good faith. The Executive also shall be eligible to participate in such other incentive compensation programs in accordance with their terms as the Company may have in effect from time to time for its senior executive officers and all compensation and other entitlements earned thereunder shall be in addition to, and shall not in any way reduce, the amount payable to the Executive as Annual Base Salary.

(c) Health, Welfare and Retirement Plans; Vacation. To the extent the Executive meets the eligibility requirements for such arrangements, plans or programs, the Executive shall be entitled to:

(i) participate in such health (medical, hospital and/or dental) insurance (“Medical and Health Benefits”), retirement, life insurance, disability insurance, flexible benefits arrangements and accident insurance plans and programs as are maintained in effect from time to time by the Company for its senior executive officers;

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(ii) participate in other non-duplicative benefit programs which the Company may from time to time offer generally to senior executive officers of the Company; and

(iii) take vacations and be entitled to sick leave in accordance with the Company’s Paid Time Off (“PTO”) policy, except that Executive will accrue 160 hours of PTO per year for his or her first five (5) years of service with the Company. Thereafter, the Executive will receive 40 additional hours of PTO for every additional 5 years of service; provided however, that the total amount of PTO that Executive can accrue during one year shall be capped at 240 hours.

(d) For the sake of clarity, the Company may modify its health, welfare, retirement and other benefit plans and vacation and sick leave policies from time to time and the Executive’s rights under these plans are subject to change in the event of any such modifications, provided that he will receive the benefits generally provided to other senior executive officers of the Company.

(e) Business Expenses. During the Term, the Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of the Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures.

4. Termination.

(a) Basis for Termination. The Executive’s employment hereunder is “at-will” and may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement upon the death or Disability of the Executive, with or without Cause, and with or without Good Reason. Executive’s “at-will” status cannot be modified by oral agreement; any modification to this Agreement must be in writing.

(b) Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive under this Section 4 (other than a termination by reason of the Executive’s death) shall be communicated by a written notice to the other party hereto: (i) indicating in reasonable detail the basis for the termination, and (ii) specifying a Date of Termination which, if submitted by the Executive, shall be at least thirty (30) days following the date of such notice (a “Notice of Termination”); provided, however, that in the event that the Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, accelerate the Date of Termination to any date that occurs following the date of Company’s receipt of such Notice of Termination (even if such date is prior to the date specified in such Notice of Termination). A Notice of Termination submitted by the Company may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion. The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive hereunder or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder.

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5. Company Obligations upon Termination of Employment.

(a) In General. Upon a termination of the Executive’s employment for any reason, the Executive (or the Executive’s estate) shall be entitled to receive: (i) any portion of the Executive’s Annual Base Salary through the Date of Termination not theretofore paid, (ii) any expenses owed to the Executive under Section 3(e), and (iii) any amount arising from the Executive’s participation in, or benefits under, any incentive compensation plans, employee benefit plans, programs or arrangements under Section 3(b) or 3(c), which amounts shall be payable in accordance with the terms and conditions of any such incentive compensation plans, employee benefit plans, programs or arrangements. Except as otherwise set forth in Section 5(b) or 6(a) below, the payments and benefits described in this Section 5(a) shall be the only payments and benefits payable in the event of the Executive’s termination of employment for any reason.

(b) Severance Payment.

(i) Notwithstanding anything to the contrary in this Agreement, in the event the Executive’s employment shall be terminated by the Company or by the Executive’s resignation for any reason within the first ninety (90) days of initial employment with the Company (the “Introductory Period”), then Executive shall be entitled to receive only the payments and benefits described in Section 5(a) above.

(ii) In the event the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason after completion of the Introductory Period, then, in addition to the payments and benefits described in Section 5(a) above, the Company shall, during the Severance Period, pay to the Executive in equal installments, an amount equal to 24 months of Executive’s Annual Base Salary in effect at the Date of Termination (the “Severance Payment”); and (2) to the extent that bonuses are paid to other Senior Executives for the fiscal year in which the Date of Termination occurs, then Executive shall be entitled to a pro-rata share of his or her bonus; and (3) for a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of Medical and Health benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits, to the extent that reasonably similar medical and health benefits are available to the Executive pursuant to such employer-provided plan. The Company may satisfy its obligations under this Section 5(b)(ii), by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or his family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by Section 5(b)(ii)(3), the Company shall pay for reasonably similar medical and health benefits during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in Section 5(b)(ii)(3).

(iii) The Severance Payment shall be in lieu of notice or any other severance benefits to which the Executive might otherwise be entitled. Notwithstanding anything herein to the contrary, (A) no portion of the Severance Payment shall be paid unless, on or prior to the thirtieth (30^th) day following the Date of Termination, the Executive timely executes a general waiver and release of claims agreement substantially in the form attached hereto as Exhibit A (the

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“Release”), which Release shall not have been revoked by the Executive prior to the expiration of the period (if any) during which any portion of such Release is revocable under applicable law, and (B) as of the first date on which the Executive violates any covenant contained in Section 7, any remaining unpaid portion of the Severance Payment shall thereupon be forfeited. Subject to the provisions of Section 9, the Severance Payment shall be paid in equal installments during the Severance Period, at the same time and in the same manner as the Annual Base Salary would have been paid had the Executive remained in active employment during the Severance Period, in accordance with the Company’s normal payroll practices in effect on the Date of Termination; provided that any installment that would otherwise have been paid prior to the first normal payroll payment date occurring on or after the thirtieth (30^th) day following the Date of Termination (such payroll date, the “First Payment Date”) shall instead be paid on the First Payment Date. In no event shall any Severance Payment be made prior to the thirtieth (30^th) day following the Date of Termination. For purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), the Executive’s right to receive the Severance Payment in the form of installment payments (the “Installment Payments”) shall be treated as a right to receive a series of separate payments and, accordingly, each Installment Payment shall at all times be considered a separate and distinct payment.

(c) The provisions of this Section 5 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program or other arrangement maintained by the Company.

6. Change of Control.

(a) Termination in the Event of a Change of Control. If, during the fifteen (15) month period beginning three (3) months prior to a Change of Control and ending twelve (12) months after such Change of Control, the Company terminates Executive’s employment without Cause, or Executive terminates his or her employment for Good Reason, then the Company shall pay or provide the benefits set forth in Section 5(a) and subsections (i), (ii), and (iii) below.

(i) The Company shall pay to Executive in a lump sum in cash, within thirty days after the Date of Termination, the aggregate of the following amounts: (1) two times the Executive’s Annual Base Salary in effect on the Date of Termination plus (2) the Executive’s target bonus for the fiscal year in which the Date of Termination occurs.

(ii) For a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of all employee Medical and Health Benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits to the extent that new employer’s plan provides reasonably similar medical and health benefits. If applicable, the Company may satisfy its obligations under this Section 6(a)(ii), in part, by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or his family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by this Section 6(a)(ii), the Company shall pay for reasonably similar medical and health benefits

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during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in this Section 6(a)(ii).

(iii) As of the Date of Termination, all unvested stock options held by Executive shall become fully vested and exercisable and shall remain exercisable until the earlier of: (A) first anniversary of the Date of Termination; or (B) the date on which the option would have expired by its original terms (disregarding any early termination due to Executive’s separation from service). All restricted stock awards held by Executive, if applicable, shall become fully vested and no longer subject to repurchase or forfeiture; and restricted stock units held by Executive, if applicable, shall become fully vested. Any performance-based equity awards shall vest at the target performance level.

(b) Limitation on Change of Control Payments and Benefits. Notwithstanding anything in this Agreement to the contrary, if any of the payments or benefits to be made or provided in connection with the Agreement, together with any other payments or benefits which the Executive has the right to receive from the Company or any entity which is a member of an “affiliated group” (as defined in section 1504(a) of the Code without regard to section 1504(b) of the Code) of which the Company is a member constitute an “excess parachute payment” (as defined in section 280G(b) of the Code), the payments or benefits to be made or provided in connection with this Agreement will be reduced to the extent necessary to prevent any portion of such payments or benefits from becoming nondeductible by the Company pursuant to section 280G of the Code or subject to the excise tax imposed under section 4999 of the Code. The determination as to whether any such decrease in the payments or benefits to be made or provided in connection with this Agreement is necessary must be made in good faith by a nationally recognized accounting firm (the “Accounting Firm”), and such determination will be conclusive and binding upon Executive and the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Executive will have the right to review and comment on any calculations prepared by the Accounting Firm. In addition, if and to the extent such right would not cause any payment or benefit to be subject to any adverse tax consequences under section 409A of the Code (including as a result of any “substitution” within the meaning of Treas. Reg. §1.409A-3(f)), Executive will have the right to designate the particular payments or benefits that are to be reduced or eliminated.

(c) Treatment of Unvested Stock in Stock Acquisition. For avoidance of doubt, in the event the Executive is terminated in connection with a Change of Control transaction in which the Company’s stock is acquired for cash or cash equivalents, Executive shall have the same right to participate in the Change of Control transaction with respect to any unvested shares held by Executive as the Company’s stockholders have generally with respect to shares of stock that are not subject to vesting.

7. Restrictive Covenants. In consideration of the Executive’s employment or continued employment with the Company and the Severance Payment, the Executive agrees to comply with the following restrictive covenants:

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(a) The Executive shall not, at any time during the Restricted Period, directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership, business or entity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in (either directly or through any subsidiary or Affiliate thereof) any business or activity (i) relating to (A) the design, manufacture, marketing, sale or distribution of video game platforms and accessories for videogame platforms, personal computer, Mac, iPod or other mobile devices or (B) the development of flight simulation hardware, which competes with the business of the Company or any entity owned by the Company, or (ii) which the Company or any of its Affiliates has taken active steps to engage in or acquire, but only if the Executive directly or indirectly engages in, has any equity interest in, or manages or operates, such business or activity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise). Notwithstanding the foregoing, the Executive shall be permitted to acquire a passive stock or equity interest in such a business; provided that such stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business.

(b) The Executive shall not, at any time during the Restricted Period, directly or indirectly, either for himself or on behalf of any other entity, (i) recruit or otherwise solicit or induce any employee, customer, subscriber or supplier of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company, or (ii) hire, or cause to be hired, any person who was employed by the Company at any time during the twelve (12)-month period immediately prior to the Date of Termination or who thereafter becomes employed by the Company.

(c) The provisions contained in Sections 7(a) and 7(b) may be altered and/or waived to be made less restrictive on the Executive with the prior written consent of the Board or the Independent Directors.

(d) Except as the Executive reasonably and in good faith determines to be required in the faithful performance of the Executive’s duties hereunder or in accordance with Section 7(f), the Executive shall, during the Term and after the Date of Termination, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any person, firm, corporation or other entity, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. The Executive’s obligation to maintain and not use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any Proprietary Information after the Date of Termination will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of the Executive’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company. The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and

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affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).

(e) Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products or processes.

(f) The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company (if lawfully permitted to do so) the earliest possible notice thereof, and shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought, and shall assist such counsel in resisting or otherwise responding to such process. The Executive may also disclose Proprietary Information if: (i) in the reasonable written opinion of counsel for the Executive furnished to the Company, such information is required to be disclosed for the Executive not to be in violation of any applicable law or regulation or (ii) the Executive is required to disclose such information in connection with the enforcement of any rights under this Agreement or any other agreements between the Executive and the Company.

(g) The Executive agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, equity holders or Affiliates, either orally or in writing, at any time; provided that the Executive may confer in confidence with the Executive’s legal representatives, make truthful statements to any government agency in sworn testimony, or make truthful statements as otherwise required by law. The Company agrees that, upon the termination of the Executive’s employment hereunder, it shall advise its directors and executive officers not to disparage the Executive, either orally or in writing, at any time; provided that they may confer in confidence with the Company’s and their legal representatives and make truthful statements as required by law.

(h) Prior to accepting other employment or any other service relationship during the Restricted Period, the Executive shall provide a copy of this Section 7 to any recruiter who assists the Executive in obtaining other employment or any other service relationship and to any employer or person with which the Executive discusses potential employment or any other service relationship.

(i) In the event the terms of this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

(j) As used in this Section 7, the term “Company” shall include the Company, its parent, related entities, and any of its direct or indirect subsidiaries.

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8. Injunctive Relief. The Executive recognizes and acknowledges that a breach of the covenants contained in Section 7 will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in Section 7, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.

9. Section 409A.

(a) General. The parties hereto acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to the Executive under Section 409A, the Company reserves the right to (without any obligation to do so or to indemnify the Executive for failure to do so) (i) adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect) that it determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and to avoid less favorable accounting or tax consequences for the Company and/or (ii) take such other actions it determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder. Notwithstanding anything herein to the contrary, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Executive or any other individual to the Company or any of its Affiliates, employees or agents.

(b) Separation from Service under Section 409A; Section 409A Compliance. Notwithstanding anything herein to the contrary: (i) no termination or other similar payments and benefits hereunder shall be payable unless the Executive’s termination of employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) if the Executive is deemed at the time of the Executive’s separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of any termination or other similar payments and benefits to which the Executive may be entitled hereunder (after taking into account all exclusions applicable to such payments or benefits under Section 409A) is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of such payments and benefits shall not be provided to the Executive prior to the earlier of (x) the expiration of the six (6)-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Department of Treasury Regulations issued under Section 409A) or (y) the date of the Executive’s death; provided that upon the earlier of such dates, all payments and benefits deferred pursuant to this Section 9(b)(ii) shall be paid in a lump sum to the Executive, and any remaining payments and benefits due hereunder shall be provided as otherwise specified herein; (iii) the determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of the Executive’s separation from service shall be

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made by the Company in accordance with the terms of Section 409A (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto); (iv) to the extent that any Installment Payments under this Agreement are deemed to constitute “nonqualified deferred compensation” within the meaning of Section 409A, for purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), each such payment that the Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment; (v) to the extent that any reimbursements or corresponding in-kind benefits provided to the Executive under this Agreement are deemed to constitute “deferred compensation” under Section 409A, such reimbursements or benefits shall be provided reasonably promptly, but in no event later than December 31 of the year following the year in which the expense was incurred, and in any event in accordance with Section 1.409A-3(i)(1)(iv) of the Department of Treasury Regulations; and (vi) the amount of any such payments or expense reimbursements in one calendar year shall not affect the expenses or in-kind benefits eligible for payment or reimbursement in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

10. Assignment and Successors. The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of the Company, by merger or otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its Affiliates. The Executive may not assign the Executive’s rights or obligations under this Agreement to any individual or entity. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.

11. Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of California, without reference to the principles of conflicts of law of California or any other jurisdiction, and where applicable, the laws of the United States.

12. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Notices. Any notice, request, claim, demand, document and other communication hereunder to any party hereto shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telex, telecopy, or certified or registered mail, postage prepaid, to the following address (or at any other address as any party hereto shall have specified by notice in writing to the other party hereto):

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If to the Company:

Mad Catz Interactive, Inc.

7480 Mission Valley Road, Suite 101

San Diego, California 92108

Attn: General Counsel

Facsimile: (619) 683-9839

with a copy to:

Durham Jones & Pinegar, P.C.

192 East 200 North, Third Floor

St. George, Utah 84770

Attn: Joshua E. Little

Facsimile: (435) 628-1610

If to the Executive, at the address set forth on the signature page hereto.

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

15. Entire Agreement. This Agreement (together with any other agreements and instruments contemplated hereby or referred to herein) is intended by the parties hereto to be the final expression of their agreement with respect to the employment of the Executive by the Company and may not be contradicted by evidence of any prior or contemporaneous agreement (including, without limitation, any term sheet or offer letter). The parties hereto further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

16. Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of the Company and approved by the Board, which expressly identifies the amended provision of this Agreement. By an instrument in writing similarly executed and approved by the Board, the Executive or a duly authorized officer of the Company may waive compliance by the other party or parties hereto with any provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure to comply or perform. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

17. No Inconsistent Actions. The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

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18. Construction. This Agreement shall be deemed drafted equally by both of the parties hereto. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party hereto shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

19. Arbitration. Any dispute or controversy based on, arising under or relating to this Agreement shall be settled exclusively by final and binding arbitration, conducted before a single neutral arbitrator in San Diego, California in accordance with the rules and procedures of JAMS, by a neutral arbitrator who is mutually agreeable to the parties hereto, or appointed by JAMS if the parties cannot agree. Arbitration may be compelled, and judgment may be entered on the arbitration award in any court having jurisdiction; provided, however, that the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Section 7, and the Executive hereby consents that such restraining order or injunction may be granted without requiring the Company to post a bond. The arbitrator shall be entitled to award any relief available in a court of law. Each party shall bear its own costs and attorneys’ fees in connection with arbitration; provided that the parties shall bear equally the cost of the arbitrator and JAMS’ administrative fees.

20. Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

21. Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement, any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

22. Absence of Conflicts; Executive Acknowledgement. The Executive hereby represents that from and after the Effective Date the performance of the Executive’s duties hereunder will not breach any other agreement to which the Executive is a party. The Executive acknowledges that the Executive has read and understands this Agreement, is fully aware of its

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legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on the Executive’s own judgment.

23. Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto which shall have accrued prior to such expiration or termination.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

COMPANY		EXECUTIVE
By:	/s/ Karen McGinnis		/s/ Darren Richardson
	Karen McGinnis		Darren Richardson
	Chief Financial Officer
			Address:

[SIGNATURE PAGE TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT]

EXHIBIT A

Form of Release

Darren Richardson (the “Executive”) agrees for the Executive, the Executive’s spouse and child or children (if any), the Executive’s heirs, beneficiaries, devisees, executors, administrators, attorneys, personal representatives, successors and assigns, hereby forever to release, discharge, and covenant not to sue Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (the “Company”), and any of its past, present, or future parent, affiliated, related, and/or subsidiary entities, and all of the past and present directors, shareholders, officers, general or limited partners, employees, agents, and attorneys, and agents and representatives of such entities, and employee benefit plans in which the Executive is or has been a participant by virtue of his employment with the Company (collectively, the “Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected, which the Executive has or may have had against such Releasees based on any events or circumstances arising or occurring on or prior to the date this release (the “Release”) is executed, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever, (a) the Executive’s employment with the Company or its subsidiaries or the termination thereof or (b) the Executive’s status at any time as a holder of any securities of the Company, and any and all claims arising under federal, state, or local laws relating to employment, or securities, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, claims of any kind that may be brought in any court or administrative agency, any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, and similar state or local statutes, ordinances, and regulations; provided, however, notwithstanding anything to the contrary set forth herein, that this Release shall not extend to (i) benefit claims under employee pension or welfare benefit plans in which the Executive is a participant by virtue of his employment with the Company or its subsidiaries, (ii) any rights under that certain Amended and Restated Employment Agreement, dated as of April 22, 2014, by and between the Company and the Executive, (iii) any rights of indemnification the Executive may have under any written agreement between the Executive and the Company (or its affiliates), the Company’s Articles of Incorporation, its Bylaws, any applicable statute or common law, or pursuant to any applicable insurance policy, (iv) unemployment compensation, (v) contractual rights to vested equity awards, (vi) COBRA benefits and (viii) any rights that may not be waived as a matter of law.

The Executive understands that this Release includes a release of claims arising under the Age Discrimination in Employment Act (ADEA). The Executive understands and warrants that he has been given a period of 45 days to review and consider this Release. The Executive further warrants that he understands that he may use as much or all of his 45-day period as he wishes before signing, and warrants that he has done so. The Executive further warrants that he understands that, with respect to the release of age discrimination claims only, he/ has a period of

seven days after executing on the second signature line below to revoke the release of age discrimination claims by notice in writing to the Company.

The Executive is hereby advised to consult with an attorney prior to executing this Release. By his signature below, the Executive warrants that he has had the opportunity to do so and to be fully and fairly advised by that legal counsel as to the terms of this Release.

ACKNOWLEDGEMENT (AS TO ALL CLAIMS

OTHER THAN AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of his choosing, signifies his agreement to the terms of this Release (other than as it relates to age discrimination claims) by his signature below.

/s/ Darren Richardson	February 5, 2016
Darren Richardson	Date

ACKNOWLEDGEMENT (AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of his choosing, signifies his agreement to the terms of this Release (as it relates to age discrimination claims) by his signature below.

/s/ Darren Richardson	February 5, 2016
Darren Richardson	Date

EX-10.3

Exhibit 10.3

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”), entered into on February 5, 2016 (the “Effective Date”), is made by and between Karen McGinnis (the “Executive”) and Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (together with any of its subsidiaries and affiliates as may employ the Executive from time to time, and any successor(s) thereto, the “Company”).

RECITALS

A. The Company desires to assure itself of the continued services of the Executive by engaging the Executive to perform services under the terms hereof.

B. The Executive desires to continue to provide services to the Company on the terms herein provided.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows:

1. Certain Definitions.

(a) “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act of 1933, as amended from time to time.

(b) “Agreement” shall have the meaning set forth in the preamble hereto.

(c) “Annual Base Salary” shall have the meaning set forth in Section 3(a).

(d) “Board” shall mean the Board of Directors of the Company or any successor governing body.

(e) The Company shall have “Cause” to terminate the Executive’s employment hereunder upon: (i) the Executive’s willful failure to substantially perform the duties set forth herein (other than any such failure resulting from the Executive’s Disability); (ii) the Executive’s willful failure to carry out, or comply with, in any material respect, any lawful directive of the Board; (iii) the Executive’s commission at any time of any act or omission that results in, or may reasonably be expected to result in, a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude; (iv) the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities hereunder; (v) the Executive’s commission at any time of any act of fraud, embezzlement, misappropriation, material misconduct, conversion of assets of the Company, or breach of fiduciary duty against the Company (or any predecessor thereto or successor thereof); or (vi) the Executive’s material breach of this Agreement or other agreements with the Company (including,

without limitation, any breach of the restrictive covenants of any such agreement); and which, in the case of clauses (i), (ii) and (vi), continues beyond fourteen (14) days after the Company has provided the Executive written notice of such failure or breach (to the extent that, in the reasonable judgment of the Board, such failure or breach can be cured by the Executive).

(f) “Change of Control” shall mean:

(i) The members of the Board at the beginning of any consecutive 12-calendar-month period (the “Incumbent Directors”) cease for any reason other than due to death to constitute at least a majority of the members of the Board; provided that any director whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the members of the Board then still in office who were members of the Board at the beginning of such 12-calendar-month period, shall be deemed to be an Incumbent Director.

(ii) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d–3 promulgated under the Exchange Act) of fifty percent (50%) or more of the stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of the Company (irrespective of whether at the time stock of any class or classes of the Company shall have or might have voting power by reason of the happening of any contingency); provided, however, that for purposes of this subsection (f), the following acquisitions will not constitute a Change of Control: (A) any acquisition directly from the Company; (B) any acquisition by the Company or a subsidiary of the Company; or (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company.

(iii) The consummation of a merger or consolidation involving the Company if the stockholders owning the capital and profits (“ownership interests”) of the Company immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power or ownership interests of the Company, or the entity resulting from such merger or consolidation, in substantially the same proportion as their ownership of the combined voting power or ownership interests outstanding immediately before such merger or consolidation.

(iv) There shall occur (A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportion as their ownership of the Company immediately prior to such sale or (B) the approval by stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company.

(v) The dissolution or the complete or partial liquidation of the Company.

In all cases, the determination of whether a Change of Control has occurred shall be made in accordance with Section 409A.

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(g) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(h) “Company” shall, except as otherwise provided in Section 7(j), have the meaning set forth in the preamble hereto.

(i) “Date of Termination” shall mean (i) if the Executive’s employment is terminated due to the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated for any other reason, the date indicated in the Notice of Termination (or the date specified by the Company pursuant to Section 4(b) in connection with a termination by the Executive).

(j) “Disability” shall mean any medically determinable physical or mental impairment that renders the Executive physically or mentally unable regularly to perform his or her duties hereunder for a period in excess of one hundred twenty (120) consecutive days or more than one hundred eighty (180) days in any consecutive twelve (12) month period, as determined by a physician jointly selected by the Company and the Executive.

(k) “Effective Date” shall have the meaning set forth in the preamble hereto.

(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(m) “Executive” shall have the meaning set forth in the preamble hereto.

(n) “Extension Term” shall have the meaning set forth in Section 2(b).

(o) “First Payment Date” shall have the meaning set forth in Section 5(b)(ii).

(p) The Executive shall have “Good Reason” to terminate the Executive’s employment hereunder after the occurrence of one or more of the following conditions without the Executive’s written consent: (i) a material diminution in the Executive’s authority, duties, or responsibilities, as described herein. For the avoidance of any doubt, being asked to assume the duties of a CEO, CFO or General Counsel in a privately held company shall constitute a material diminution of the Executive’s authority, duties or responsibilities having had that authority, duties or responsibilities in a publicly traded company; (ii) a material diminution in the Executive’s Annual Base Salary as described herein; (iii) a material reduction in the package of benefits and incentives, taken as a whole, provided to the Executive (except that employee contributions may be raised to the extent of any cost increases imposed by third parties) or any action by the Company which would materially and adversely affect the Executive’s participation or reduce the Executive’s benefits under any such plans, except to the extent that such benefits and incentives of all other executive officers of the Company are similarly reduced (iv) a material change in the geographic location at which the Executive must perform the Executive’s services hereunder. For the avoidance of any doubt, an increases in the Executive’s one-way commute distance by more than fifty (50) miles from his or her then principal residence shall constitute a material change in the geographic location at which the Executive must perform the Executive’s services hereunder; or (v) any other action or inaction that constitutes a material breach of this Agreement by the Company; and which, in the case of any of the foregoing, continues beyond thirty (30) days

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after the Executive has provided the Company written notice that the Executive believes in good faith that such condition giving rise to such claim of Good Reason has occurred, so long as such notice is provided within ninety (90) days after the initial existence of such condition.

(q) “Independent Directors” shall mean the independent members of the Board.

(r) “Installment Payments” shall have the meaning set forth in Section 5(b)(ii).

(s) “Notice of Termination” shall have the meaning set forth in Section 4(b).

(t) “Person” shall mean any individual, natural person, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), incorporated or unincorporated association, governmental authority, firm, society or other enterprise, organization or other entity of any nature.

(u) “Proprietary Information” shall have the meaning set forth in Section 7(d).

(v) “Release” shall have the meaning set forth in Section 5(b)(ii).

(w) “Restricted Period” shall mean the period from the Effective Date through the end of the Severance Period.

(x) “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.

(y) “Severance Payment” shall have the meaning set forth in Section 5(b)(i).

(z) “Severance Period” shall mean if the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason, the period beginning on the Date of Termination and ending on the first (1^st) anniversary of the Date of Termination.

(aa) “Term” shall have the meaning set forth in Section 2(b).

2. Employment.

(a) In General. The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 2(b), in the position set forth in Section 2(c), and upon the other terms and conditions herein provided. The terms and conditions herein provided supersede in their entirety any contradictory terms and conditions in any employee manual, plan, policy, program or other arrangement maintained by the Company. To the extent a term or condition is not detailed herein, the employee manuals, plans, policies, programs or other arrangements maintained by the Company shall govern.

(b) Term of Employment. The term of employment under this Agreement (the “Term”) shall be for the period beginning on the Effective Date and ending on the first (1st)

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anniversary of the Effective Date, unless earlier terminated as provided in Section 4. The Term shall automatically be extended for successive one (1) year periods (each, an “Extension Term” and, collectively with the Term, the “Term”), unless earlier terminated as provided in Section 4.

(c) Position and Duties. During the Term, the Executive: (i) shall serve as President and Chief Executive Officer of the Company, with responsibilities, duties and authority customary for such position, subject to direction by the Board of Directors of the Company; (ii) shall report directly to the Board of Directors of the Company; (iii) shall devote substantially all the Executive’s working time and efforts to the business and affairs of the Company and its subsidiaries, provided that the Executive may (i) serve on corporate, civic, charitable, industry or professional association boards or committees, subject to the Board’s prior written consent in the case of any such board or committee that relates directly or indirectly to the business of the Company or its subsidiaries (which consent shall not unreasonably be withheld), (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions and (iii) manage her personal investments, so long as none of such activities meaningfully interferes with the performance of the Executive’s duties and responsibilities hereunder, or involves a conflict of interest with the Executive’s duties or responsibilities hereunder or a breach of the covenants contained in Section 7; and (iv) agrees to observe and comply with the Company’s rules and policies as adopted by the Company from time to time, which have been made available to the Executive.

3. Compensation.

(a) Annual Base Salary. During the Term, the Executive shall receive a base salary at a rate of $375,000 per annum, which shall be paid in accordance with the customary payroll practices of the Company, subject to review and adjustment by the Board in its reasonable discretion (the “Annual Base Salary”).

(b) The Company shall pay the Executive a signing bonus of $25,000 upon the execution of this Agreement.

(c) Other Incentive Plans, Benefits and Perquisites. The Executive shall be offered additional employee benefits and perquisites the Company and the Executive negotiate in good faith. The Executive also shall be eligible to participate in such other incentive compensation programs in accordance with their terms as the Company may have in effect from time to time for its senior executive officers and all compensation and other entitlements earned thereunder shall be in addition to, and shall not in any way reduce, the amount payable to the Executive as Annual Base Salary.

(d) Health, Welfare and Retirement Plans; Vacation. To the extent the Executive meets the eligibility requirements for such arrangements, plans or programs, the Executive shall be entitled to:

(i) participate in such health (medical, hospital and/or dental) insurance (“Medical and Health Benefits”), retirement, life insurance, disability insurance, flexible benefits arrangements and accident insurance plans and programs as are maintained in effect from time to time by the Company for its senior executive officers;

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(ii) participate in other non-duplicative benefit programs which the Company may from time to time offer generally to senior executive officers of the Company; and

(iii) take vacations and be entitled to sick leave in accordance with the Company’s Paid Time Off (“PTO”) policy, except that Executive will accrue 160 hours of PTO per year for his or her first five (5) years of service with the Company. Thereafter, the Executive will receive 40 additional hours of PTO for every additional 5 years of service; provided however, that the total amount of PTO that Executive can accrue during one year shall be capped at 240 hours.

(e) For the sake of clarity, the Company may modify its health, welfare, retirement and other benefit plans and vacation and sick leave policies from time to time and the Executive’s rights under these plans are subject to change in the event of any such modifications, provided that she will receive the benefits generally provided to other senior executive officers of the Company.

(f) Business Expenses. During the Term, the Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of the Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures.

4. Termination.

(a) Basis for Termination. The Executive’s employment hereunder is “at-will” and may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement upon the death or Disability of the Executive, with or without Cause, and with or without Good Reason. Executive’s “at-will” status cannot be modified by oral agreement; any modification to this Agreement must be in writing.

(b) Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive under this Section 4 (other than a termination by reason of the Executive’s death) shall be communicated by a written notice to the other party hereto: (i) indicating in reasonable detail the basis for the termination, and (ii) specifying a Date of Termination which, if submitted by the Executive, shall be at least thirty (30) days following the date of such notice (a “Notice of Termination”); provided, however, that in the event that the Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, accelerate the Date of Termination to any date that occurs following the date of Company’s receipt of such Notice of Termination (even if such date is prior to the date specified in such Notice of Termination). A Notice of Termination submitted by the Company may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion. The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive hereunder or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder.

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5. Company Obligations upon Termination of Employment.

(a) In General. Upon a termination of the Executive’s employment for any reason, the Executive (or the Executive’s estate) shall be entitled to receive: (i) any portion of the Executive’s Annual Base Salary through the Date of Termination not theretofore paid, (ii) any expenses owed to the Executive under Section 3(f), and (iii) any amount arising from the Executive’s participation in, or benefits under, any incentive compensation plans, employee benefit plans, programs or arrangements under Section 3(c) or 3(d), which amounts shall be payable in accordance with the terms and conditions of any such incentive compensation plans, employee benefit plans, programs or arrangements. Except as otherwise set forth in Section 5(b) or 6(a) below, the payments and benefits described in this Section 5(a) shall be the only payments and benefits payable in the event of the Executive’s termination of employment for any reason.

(b) Severance Payment.

(i) In the event the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason, then, in addition to the payments and benefits described in Section 5(a) above, the Company shall, during the Severance Period, pay to the Executive in equal installments, an amount equal to 18 months of Executive’s Annual Base Salary in effect at the Date of Termination (the “Severance Payment”); and (2) to the extent that bonuses are paid to other Senior Executives for the fiscal year in which the Date of Termination occurs, then Executive shall be entitled to a pro-rata share of his or her bonus; and (3) for a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of Medical and Health benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits, to the extent that reasonably similar medical and health benefits are available to the Executive pursuant to such employer-provided plan. The Company may satisfy its obligations under this Section 5(b)(i), by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or her family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by Section 5(b)(i)(3), the Company shall pay for reasonably similar medical and health benefits during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in Section 5(b)(i)(3).

(ii) The Severance Payment shall be in lieu of notice or any other severance benefits to which the Executive might otherwise be entitled. Notwithstanding anything herein to the contrary, (A) no portion of the Severance Payment shall be paid unless, on or prior to the thirtieth (30^th) day following the Date of Termination, the Executive timely executes a general waiver and release of claims agreement substantially in the form attached hereto as Exhibit A (the “Release”), which Release shall not have been revoked by the Executive prior to the expiration of the period (if any) during which any portion of such Release is revocable under applicable law, and (B) as of the first date on which the Executive violates any covenant contained in Section 7, any remaining unpaid portion of the Severance Payment shall thereupon be forfeited. Subject to the provisions of Section 9, the Severance Payment shall be paid in equal installments during the Severance Period, at the same time and in the same manner as the Annual Base Salary would have

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been paid had the Executive remained in active employment during the Severance Period, in accordance with the Company’s normal payroll practices in effect on the Date of Termination; provided that any installment that would otherwise have been paid prior to the first normal payroll payment date occurring on or after the thirtieth (30^th) day following the Date of Termination (such payroll date, the “First Payment Date”) shall instead be paid on the First Payment Date. In no event shall any Severance Payment be made prior to the thirtieth (30^th) day following the Date of Termination. For purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), the Executive’s right to receive the Severance Payment in the form of installment payments (the “Installment Payments”) shall be treated as a right to receive a series of separate payments and, accordingly, each Installment Payment shall at all times be considered a separate and distinct payment.

(c) The provisions of this Section 5 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program or other arrangement maintained by the Company.

6. Change of Control.

(a) Termination in the Event of a Change of Control. If, during the fifteen (15) month period beginning three (3) months prior to a Change of Control and ending twelve (12) months after such Change of Control, the Company terminates Executive’s employment without Cause, or Executive terminates his or her employment for Good Reason, then the Company shall pay or provide the benefits set forth in Section 5(a) and subsections (i), (ii), and (iii) below.

(i) The Company shall pay to Executive in a lump sum in cash, within thirty days after the Date of Termination, the aggregate of the following amounts: (1) one and one half times the Executive’s Annual Base Salary in effect on the Date of Termination plus (2) the Executive’s target bonus for the fiscal year in which the Date of Termination occurs.

(ii) For a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of all employee Medical and Health Benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits to the extent that new employer’s plan provides reasonably similar medical and health benefits. If applicable, the Company may satisfy its obligations under this Section 6(a)(ii), in part, by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or his family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by this Section 6(a)(ii), the Company shall pay for reasonably similar medical and health benefits during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in this Section 6(a)(ii).

(iii) As of the Date of Termination, all unvested stock options held by Executive shall become fully vested and exercisable and shall remain exercisable until the earlier of: (A) first anniversary of the Date of Termination; or (B) the date on which the option would have expired by its original terms (disregarding any early termination due to Executive’s

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separation from service). All restricted stock awards held by Executive, if applicable, shall become fully vested and no longer subject to repurchase or forfeiture; and restricted stock units held by Executive, if applicable, shall become fully vested. Any performance-based equity awards shall vest at the target performance level.

(b) Limitation on Change of Control Payments and Benefits. Notwithstanding anything in this Agreement to the contrary, if any of the payments or benefits to be made or provided in connection with the Agreement, together with any other payments or benefits which the Executive has the right to receive from the Company or any entity which is a member of an “affiliated group” (as defined in section 1504(a) of the Code without regard to section 1504(b) of the Code) of which the Company is a member constitute an “excess parachute payment” (as defined in section 280G(b) of the Code), the payments or benefits to be made or provided in connection with this Agreement will be reduced to the extent necessary to prevent any portion of such payments or benefits from becoming nondeductible by the Company pursuant to section 280G of the Code or subject to the excise tax imposed under section 4999 of the Code. The determination as to whether any such decrease in the payments or benefits to be made or provided in connection with this Agreement is necessary must be made in good faith by a nationally recognized accounting firm (the “Accounting Firm”), and such determination will be conclusive and binding upon Executive and the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Executive will have the right to review and comment on any calculations prepared by the Accounting Firm. In addition, if and to the extent such right would not cause any payment or benefit to be subject to any adverse tax consequences under section 409A of the Code (including as a result of any “substitution” within the meaning of Treas. Reg. §1.409A-3(f)), Executive will have the right to designate the particular payments or benefits that are to be reduced or eliminated.

(c) Treatment of Unvested Stock in Stock Acquisition. For avoidance of doubt, in the event the Executive is terminated in connection with a Change of Control transaction in which the Company’s stock is acquired for cash or cash equivalents, Executive shall have the same right to participate in the Change of Control transaction with respect to any unvested shares held by Executive as the Company’s stockholders have generally with respect to shares of stock that are not subject to vesting.

7. Restrictive Covenants. In consideration of the Executive’s employment or continued employment with the Company and the Severance Payment, the Executive agrees to comply with the following restrictive covenants:

(a) The Executive shall not, at any time during the Restricted Period, directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership, business or entity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in (either directly or through any subsidiary or Affiliate thereof) any business or activity (i) relating to (A) the design, manufacture, marketing, sale or distribution of video game platforms and accessories for videogame platforms, personal computer, Mac, iPod or other mobile devices or (B) the

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development of flight simulation hardware, which competes with the business of the Company or any entity owned by the Company, or (ii) which the Company or any of its Affiliates has taken active steps to engage in or acquire, but only if the Executive directly or indirectly engages in, has any equity interest in, or manages or operates, such business or activity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise). Notwithstanding the foregoing, the Executive shall be permitted to acquire a passive stock or equity interest in such a business; provided that such stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business.

(b) The Executive shall not, at any time during the Restricted Period, directly or indirectly, either for himself or on behalf of any other entity, (i) recruit or otherwise solicit or induce any employee, customer, subscriber or supplier of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company, or (ii) hire, or cause to be hired, any person who was employed by the Company at any time during the twelve (12)-month period immediately prior to the Date of Termination or who thereafter becomes employed by the Company.

(c) The provisions contained in Sections 7(a) and 7(b) may be altered and/or waived to be made less restrictive on the Executive with the prior written consent of the Board or the Independent Directors.

(d) Except as the Executive reasonably and in good faith determines to be required in the faithful performance of the Executive’s duties hereunder or in accordance with Section 7(f), the Executive shall, during the Term and after the Date of Termination, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any person, firm, corporation or other entity, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. The Executive’s obligation to maintain and not use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any Proprietary Information after the Date of Termination will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of the Executive’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company. The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).

(e) Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or

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any other documents concerning the Company’s customers, business plans, marketing strategies, products or processes.

(f) The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company (if lawfully permitted to do so) the earliest possible notice thereof, and shall, as much in advance of the return date as possible, make available to the Company and its counsel the documents and other information sought, and shall assist such counsel in resisting or otherwise responding to such process. The Executive may also disclose Proprietary Information if: (i) in the reasonable written opinion of counsel for the Executive furnished to the Company, such information is required to be disclosed for the Executive not to be in violation of any applicable law or regulation or (ii) the Executive is required to disclose such information in connection with the enforcement of any rights under this Agreement or any other agreements between the Executive and the Company.

(g) The Executive agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, equity holders or Affiliates, either orally or in writing, at any time; provided that the Executive may confer in confidence with the Executive’s legal representatives, make truthful statements to any government agency in sworn testimony, or make truthful statements as otherwise required by law. The Company agrees that, upon the termination of the Executive’s employment hereunder, it shall advise its directors and executive officers not to disparage the Executive, either orally or in writing, at any time; provided that they may confer in confidence with the Company’s and their legal representatives and make truthful statements as required by law.

(h) Prior to accepting other employment or any other service relationship during the Restricted Period, the Executive shall provide a copy of this Section 7 to any recruiter who assists the Executive in obtaining other employment or any other service relationship and to any employer or person with which the Executive discusses potential employment or any other service relationship.

(i) In the event the terms of this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

(j) As used in this Section 7, the term “Company” shall include the Company, its parent, related entities, and any of its direct or indirect subsidiaries.

8. Injunctive Relief. The Executive recognizes and acknowledges that a breach of the covenants contained in Section 7 will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in Section 7, in addition to any other

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remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.

9. Section 409A.

(a) General. The parties hereto acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to the Executive under Section 409A, the Company reserves the right to (without any obligation to do so or to indemnify the Executive for failure to do so) (i) adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect) that it determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and to avoid less favorable accounting or tax consequences for the Company and/or (ii) take such other actions it determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder. Notwithstanding anything herein to the contrary, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Executive or any other individual to the Company or any of its Affiliates, employees or agents.

(b) Separation from Service under Section 409A; Section 409A Compliance. Notwithstanding anything herein to the contrary: (i) no termination or other similar payments and benefits hereunder shall be payable unless the Executive’s termination of employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) if the Executive is deemed at the time of the Executive’s separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of any termination or other similar payments and benefits to which the Executive may be entitled hereunder (after taking into account all exclusions applicable to such payments or benefits under Section 409A) is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of such payments and benefits shall not be provided to the Executive prior to the earlier of (x) the expiration of the six (6)-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Department of Treasury Regulations issued under Section 409A) or (y) the date of the Executive’s death; provided that upon the earlier of such dates, all payments and benefits deferred pursuant to this Section 9(b)(ii) shall be paid in a lump sum to the Executive, and any remaining payments and benefits due hereunder shall be provided as otherwise specified herein; (iii) the determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of the Executive’s separation from service shall be made by the Company in accordance with the terms of Section 409A (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto); (iv) to the extent that any Installment Payments under this Agreement are deemed to constitute “nonqualified deferred compensation” within the meaning of Section 409A, for purposes of Section 409A (including, without limitation, for purposes of Section

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1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), each such payment that the Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment; (v) to the extent that any reimbursements or corresponding in-kind benefits provided to the Executive under this Agreement are deemed to constitute “deferred compensation” under Section 409A, such reimbursements or benefits shall be provided reasonably promptly, but in no event later than December 31 of the year following the year in which the expense was incurred, and in any event in accordance with Section 1.409A-3(i)(1)(iv) of the Department of Treasury Regulations; and (vi) the amount of any such payments or expense reimbursements in one calendar year shall not affect the expenses or in-kind benefits eligible for payment or reimbursement in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

10. Assignment and Successors. The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of the Company, by merger or otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its Affiliates. The Executive may not assign the Executive’s rights or obligations under this Agreement to any individual or entity. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.

11. Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of California, without reference to the principles of conflicts of law of California or any other jurisdiction, and where applicable, the laws of the United States.

12. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Notices. Any notice, request, claim, demand, document and other communication hereunder to any party hereto shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telex, telecopy, or certified or registered mail, postage prepaid, to the following address (or at any other address as any party hereto shall have specified by notice in writing to the other party hereto):

If to the Company:

Mad Catz Interactive, Inc.

10680 Treena Street, Suite 500

San Diego, California 92131

Attn: General Counsel

Facsimile: (858) 790-5018

If to the Executive, at the address set forth on the signature page hereto.

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14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

15. Entire Agreement. This Agreement (together with any other agreements and instruments contemplated hereby or referred to herein) is intended by the parties hereto to be the final expression of their agreement with respect to the employment of the Executive by the Company and may not be contradicted by evidence of any prior or contemporaneous agreement (including, without limitation, any term sheet or offer letter). The parties hereto further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

16. Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of the Company and approved by the Board, which expressly identifies the amended provision of this Agreement. By an instrument in writing similarly executed and approved by the Board, the Executive or a duly authorized officer of the Company may waive compliance by the other party or parties hereto with any provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure to comply or perform. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

17. No Inconsistent Actions. The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

18. Construction. This Agreement shall be deemed drafted equally by both of the parties hereto. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party hereto shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

19. Arbitration. Any dispute or controversy based on, arising under or relating to this Agreement shall be settled exclusively by final and binding arbitration, conducted before a single

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neutral arbitrator in San Diego, California in accordance with the rules and procedures of JAMS, by a neutral arbitrator who is mutually agreeable to the parties hereto, or appointed by JAMS if the parties cannot agree. Arbitration may be compelled, and judgment may be entered on the arbitration award in any court having jurisdiction; provided, however, that the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Section 7, and the Executive hereby consents that such restraining order or injunction may be granted without requiring the Company to post a bond. The arbitrator shall be entitled to award any relief available in a court of law. Each party shall bear its own costs and attorneys’ fees in connection with arbitration; provided that the parties shall bear equally the cost of the arbitrator and JAMS’ administrative fees.

20. Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

21. Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement, any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

22. Absence of Conflicts; Executive Acknowledgement. The Executive hereby represents that from and after the Effective Date the performance of the Executive’s duties hereunder will not breach any other agreement to which the Executive is a party. The Executive acknowledges that the Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on the Executive’s own judgment.

23. Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto which shall have accrued prior to such expiration or termination.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

COMPANY		EXECUTIVE
By:	/s/ John Nyholt		/s/ Karen McGinnis
	John Nyholt		Karen McGinnis
	Chairman
			Address:

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

EXHIBIT A

Form of Release

Karen McGinnis (the “Executive”) agrees for the Executive, the Executive’s spouse and child or children (if any), the Executive’s heirs, beneficiaries, devisees, executors, administrators, attorneys, personal representatives, successors and assigns, hereby forever to release, discharge, and covenant not to sue Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (the “Company”), and any of its past, present, or future parent, affiliated, related, and/or subsidiary entities, and all of the past and present directors, shareholders, officers, general or limited partners, employees, agents, and attorneys, and agents and representatives of such entities, and employee benefit plans in which the Executive is or has been a participant by virtue of her employment with the Company (collectively, the “Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected, which the Executive has or may have had against such Releasees based on any events or circumstances arising or occurring on or prior to the date this release (the “Release”) is executed, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever, (a) the Executive’s employment with the Company or its subsidiaries or the termination thereof or (b) the Executive’s status at any time as a holder of any securities of the Company, and any and all claims arising under federal, state, or local laws relating to employment, or securities, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, claims of any kind that may be brought in any court or administrative agency, any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, and similar state or local statutes, ordinances, and regulations; provided, however, notwithstanding anything to the contrary set forth herein, that this Release shall not extend to (i) benefit claims under employee pension or welfare benefit plans in which the Executive is a participant by virtue of her employment with the Company or its subsidiaries, (ii) any rights under that certain Employment Agreement, dated as of February 5, 2016, by and between the Company and the Executive, (iii) any rights of indemnification the Executive may have under any written agreement between the Executive and the Company (or its affiliates), the Company’s Articles of Incorporation, its Bylaws, any applicable statute or common law, or pursuant to any applicable insurance policy, (iv) unemployment compensation, (v) contractual rights to vested equity awards, (vi) COBRA benefits and (viii) any rights that may not be waived as a matter of law.

The Executive understands that this Release includes a release of claims arising under the Age Discrimination in Employment Act (ADEA). The Executive understands and warrants that she has been given a period of 21 days to review and consider this Release. The Executive further warrants that she understands that she may use as much or all of her 21-day period as she wishes before signing, and warrants that she has done so. The Executive further warrants that she understands that, with respect to the release of age discrimination claims only, she has a period of

seven days after executing on the second signature line below to revoke the release of age discrimination claims by notice in writing to the Company.

The Executive is hereby advised to consult with an attorney prior to executing this Release. By her signature below, the Executive warrants that she has had the opportunity to do so and to be fully and fairly advised by that legal counsel as to the terms of this Release.

ACKNOWLEDGEMENT (AS TO ALL CLAIMS

OTHER THAN AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of her choosing, signifies her agreement to the terms of this Release (other than as it relates to age discrimination claims) by her signature below.

Karen McGinnis Date

ACKNOWLEDGEMENT (AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of her choosing, signifies her agreement to the terms of this Release (as it relates to age discrimination claims) by her signature below.

Karen McGinnis Date

EX-10.4

Exhibit 10.4

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”), entered into on February 5, 2016 (the “Effective Date”), is made by and between David McKeon (the “Executive”) and Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (together with any of its subsidiaries and affiliates as may employ the Executive from time to time, and any successor(s) thereto, the “Company”).

RECITALS

A. The Company desires to assure itself of the continued services of the Executive by engaging the Executive to perform services under the terms hereof.

B. The Executive desires to continue to provide services to the Company on the terms herein provided.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows:

1. Certain Definitions.

(a) “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act of 1933, as amended from time to time.

(b) “Agreement” shall have the meaning set forth in the preamble hereto.

(c) “Annual Base Salary” shall have the meaning set forth in Section 3(a).

(d) “Board” shall mean the Board of Directors of the Company or any successor governing body.

(e) The Company shall have “Cause” to terminate the Executive’s employment hereunder upon: (i) the Executive’s willful failure to substantially perform the duties set forth herein (other than any such failure resulting from the Executive’s Disability); (ii) the Executive’s willful failure to carry out, or comply with, in any material respect, any lawful directive of the Board; (iii) the Executive’s commission at any time of any act or omission that results in, or may reasonably be expected to result in, a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude; (iv) the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities hereunder; (v) the Executive’s commission at any time of any act of fraud, embezzlement, misappropriation, material misconduct, conversion of assets of the Company, or breach of fiduciary duty against the Company (or any predecessor thereto or successor thereof); or (vi) the Executive’s material breach of this Agreement or other agreements with the Company (including,

without limitation, any breach of the restrictive covenants of any such agreement); and which, in the case of clauses (i), (ii) and (vi), continues beyond fourteen (14) days after the Company has provided the Executive written notice of such failure or breach (to the extent that, in the reasonable judgment of the Board, such failure or breach can be cured by the Executive).

(f) “Change of Control” shall mean:

(i) The members of the Board at the beginning of any consecutive 12-calendar-month period (the “Incumbent Directors”) cease for any reason other than due to death to constitute at least a majority of the members of the Board; provided that any director whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the members of the Board then still in office who were members of the Board at the beginning of such 12-calendar-month period, shall be deemed to be an Incumbent Director.

(ii) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d–3 promulgated under the Exchange Act) of fifty percent (50%) or more of the stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of the Company (irrespective of whether at the time stock of any class or classes of the Company shall have or might have voting power by reason of the happening of any contingency); provided, however, that for purposes of this subsection (f), the following acquisitions will not constitute a Change of Control: (A) any acquisition directly from the Company; (B) any acquisition by the Company or a subsidiary of the Company; or (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company.

(iii) The consummation of a merger or consolidation involving the Company if the stockholders owning the capital and profits (“ownership interests”) of the Company immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power or ownership interests of the Company, or the entity resulting from such merger or consolidation, in substantially the same proportion as their ownership of the combined voting power or ownership interests outstanding immediately before such merger or consolidation.

(iv) There shall occur (A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportion as their ownership of the Company immediately prior to such sale or (B) the approval by stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company.

(v) The dissolution or the complete or partial liquidation of the Company.

In all cases, the determination of whether a Change of Control has occurred shall be made in accordance with Section 409A.

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(g) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(h) “Company” shall, except as otherwise provided in Section 7(j), have the meaning set forth in the preamble hereto.

(i) “Date of Termination” shall mean (i) if the Executive’s employment is terminated due to the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated for any other reason, the date indicated in the Notice of Termination (or the date specified by the Company pursuant to Section 4(b) in connection with a termination by the Executive).

(j) “Disability” shall mean any medically determinable physical or mental impairment that renders the Executive physically or mentally unable regularly to perform his or her duties hereunder for a period in excess of one hundred twenty (120) consecutive days or more than one hundred eighty (180) days in any consecutive twelve (12) month period, as determined by a physician jointly selected by the Company and the Executive.

(k) “Effective Date” shall have the meaning set forth in the preamble hereto.

(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(m) “Executive” shall have the meaning set forth in the preamble hereto.

(n) “Extension Term” shall have the meaning set forth in Section 2(b).

(o) “First Payment Date” shall have the meaning set forth in Section 5(b)(ii).

(p) The Executive shall have “Good Reason” to terminate the Executive’s employment hereunder after the occurrence of one or more of the following conditions without the Executive’s written consent: (i) a material diminution in the Executive’s authority, duties, or responsibilities, as described herein. For the avoidance of any doubt, being asked to assume the duties of a CEO, CFO or General Counsel in a privately held company shall constitute a material diminution of the Executive’s authority, duties or responsibilities having had that authority, duties or responsibilities in a publicly traded company; (ii) a material diminution in the Executive’s Annual Base Salary as described herein; (iii) a material reduction in the package of benefits and incentives, taken as a whole, provided to the Executive (except that employee contributions may be raised to the extent of any cost increases imposed by third parties) or any action by the Company which would materially and adversely affect the Executive’s participation or reduce the Executive’s benefits under any such plans, except to the extent that such benefits and incentives of all other executive officers of the Company are similarly reduced (iv) a material change in the geographic location at which the Executive must perform the Executive’s services hereunder. For the avoidance of any doubt, an increases in the Executive’s one-way commute distance by more than fifty (50) miles from his or her then principal residence shall constitute a material change in the geographic location at which the Executive must perform the Executive’s services hereunder; or (v) any other action or inaction that constitutes a material breach of this Agreement by the Company; and which, in the case of any of the foregoing, continues beyond thirty (30) days

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after the Executive has provided the Company written notice that the Executive believes in good faith that such condition giving rise to such claim of Good Reason has occurred, so long as such notice is provided within ninety (90) days after the initial existence of such condition.

(q) “Independent Directors” shall mean the independent members of the Board.

(r) “Installment Payments” shall have the meaning set forth in Section 5(b)(ii).

(s) “Notice of Termination” shall have the meaning set forth in Section 4(b).

(t) “Person” shall mean any individual, natural person, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), incorporated or unincorporated association, governmental authority, firm, society or other enterprise, organization or other entity of any nature.

(u) “Proprietary Information” shall have the meaning set forth in Section 7(d).

(v) “Release” shall have the meaning set forth in Section 5(b)(ii).

(w) “Restricted Period” shall mean the period from the Effective Date through the end of the Severance Period.

(x) “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.

(y) “Severance Payment” shall have the meaning set forth in Section 5(b)(i).

(z) “Severance Period” shall mean if the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason, the period beginning on the Date of Termination and ending on the first (1^st) anniversary of the Date of Termination.

(aa) “Term” shall have the meaning set forth in Section 2(b).

2. Employment.

(a) In General. The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 2(b), in the position set forth in Section 2(c), and upon the other terms and conditions herein provided. The terms and conditions herein provided supersede in their entirety any contradictory terms and conditions in any employee manual, plan, policy, program or other arrangement maintained by the Company. To the extent a term or condition is not detailed herein, the employee manuals, plans, policies, programs or other arrangements maintained by the Company shall govern.

(b) Term of Employment. The term of employment under this Agreement (the “Term”) shall be for the period beginning on the Effective Date and ending on the first (1st)

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anniversary of the Effective Date, unless earlier terminated as provided in Section 4. The Term shall automatically be extended for successive one (1) year periods (each, an “Extension Term” and, collectively with the Term, the “Term”), unless earlier terminated as provided in Section 4.

(c) Position and Duties. During the Term, the Executive: (i) shall serve as Chief Financial Officer of the Company, with responsibilities, duties and authority customary for such position, subject to direction by the CEO of the Company; (ii) shall report directly to the CEO of the Company; (iii) shall devote substantially all the Executive’s working time and efforts to the business and affairs of the Company and its subsidiaries, provided that the Executive may (i) serve on corporate, civic, charitable, industry or professional association boards or committees, subject to the Board’s prior written consent in the case of any such board or committee that relates directly or indirectly to the business of the Company or its subsidiaries (which consent shall not unreasonably be withheld), (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions and (iii) manage his personal investments, so long as none of such activities meaningfully interferes with the performance of the Executive’s duties and responsibilities hereunder, or involves a conflict of interest with the Executive’s duties or responsibilities hereunder or a breach of the covenants contained in Section 7; and (iv) agrees to observe and comply with the Company’s rules and policies as adopted by the Company from time to time, which have been made available to the Executive.

3. Compensation.

(a) Annual Base Salary. During the Term, the Executive shall receive a base salary at a rate of $225,000 per annum, which shall be paid in accordance with the customary payroll practices of the Company, subject to review and adjustment by the Board in its reasonable discretion (the “Annual Base Salary”).

(b) Other Incentive Plans, Benefits and Perquisites. The Executive shall be offered additional employee benefits and perquisites the Company and the Executive negotiate in good faith. The Executive also shall be eligible to participate in such other incentive compensation programs in accordance with their terms as the Company may have in effect from time to time for its senior executive officers and all compensation and other entitlements earned thereunder shall be in addition to, and shall not in any way reduce, the amount payable to the Executive as Annual Base Salary.

(c) Health, Welfare and Retirement Plans; Vacation. To the extent the Executive meets the eligibility requirements for such arrangements, plans or programs, the Executive shall be entitled to:

(i) participate in such health (medical, hospital and/or dental) insurance (“Medical and Health Benefits”), retirement, life insurance, disability insurance, flexible benefits arrangements and accident insurance plans and programs as are maintained in effect from time to time by the Company for its senior executive officers;

(ii) participate in other non-duplicative benefit programs which the Company may from time to time offer generally to senior executive officers of the Company; and

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(iii) take vacations and be entitled to sick leave in accordance with the Company’s Paid Time Off (“PTO”) policy, except that Executive will accrue 160 hours of PTO per year for his or her first five (5) years of service with the Company. Thereafter, the Executive will receive 40 additional hours of PTO for every additional 5 years of service; provided however, that the total amount of PTO that Executive can accrue during one year shall be capped at 240 hours.

(d) For the sake of clarity, the Company may modify its health, welfare, retirement and other benefit plans and vacation and sick leave policies from time to time and the Executive’s rights under these plans are subject to change in the event of any such modifications, provided that he will receive the benefits generally provided to other senior executive officers of the Company.

(e) Business Expenses. During the Term, the Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of the Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures.

4. Termination.

(a) Basis for Termination. The Executive’s employment hereunder is “at-will” and may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement upon the death or Disability of the Executive, with or without Cause, and with or without Good Reason. Executive’s “at-will” status cannot be modified by oral agreement; any modification to this Agreement must be in writing.

(b) Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive under this Section 4 (other than a termination by reason of the Executive’s death) shall be communicated by a written notice to the other party hereto: (i) indicating in reasonable detail the basis for the termination, and (ii) specifying a Date of Termination which, if submitted by the Executive, shall be at least thirty (30) days following the date of such notice (a “Notice of Termination”); provided, however, that in the event that the Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, accelerate the Date of Termination to any date that occurs following the date of Company’s receipt of such Notice of Termination (even if such date is prior to the date specified in such Notice of Termination). A Notice of Termination submitted by the Company may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion. The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive hereunder or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder.

5. Company Obligations upon Termination of Employment.

(a) In General. Upon a termination of the Executive’s employment for any reason, the Executive (or the Executive’s estate) shall be entitled to receive: (i) any portion of the

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Executive’s Annual Base Salary through the Date of Termination not theretofore paid, (ii) any expenses owed to the Executive under Section 3(e), and (iii) any amount arising from the Executive’s participation in, or benefits under, any incentive compensation plans, employee benefit plans, programs or arrangements under Section 3(b) or 3(c), which amounts shall be payable in accordance with the terms and conditions of any such incentive compensation plans, employee benefit plans, programs or arrangements. Except as otherwise set forth in Section 5(b) or 6(a) below, the payments and benefits described in this Section 5(a) shall be the only payments and benefits payable in the event of the Executive’s termination of employment for any reason.

(b) Severance Payment.

(i) In the event the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason, then, in addition to the payments and benefits described in Section 5(a) above, the Company shall, during the Severance Period, pay to the Executive in equal installments, an amount equal to 18 months of Executive’s Annual Base Salary in effect at the Date of Termination (the “Severance Payment”); and (2) to the extent that bonuses are paid to other Senior Executives for the fiscal year in which the Date of Termination occurs, then Executive shall be entitled to a pro-rata share of his or her bonus; and (3) for a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of Medical and Health benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits, to the extent that reasonably similar medical and health benefits are available to the Executive pursuant to such employer-provided plan. The Company may satisfy its obligations under this Section 5(b)(i), by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or his family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by Section 5(b)(i)(3), the Company shall pay for reasonably similar medical and health benefits during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in Section 5(b)(i)(3).

(ii) The Severance Payment shall be in lieu of notice or any other severance benefits to which the Executive might otherwise be entitled. Notwithstanding anything herein to the contrary, (A) no portion of the Severance Payment shall be paid unless, on or prior to the thirtieth (30^th) day following the Date of Termination, the Executive timely executes a general waiver and release of claims agreement substantially in the form attached hereto as Exhibit A (the “Release”), which Release shall not have been revoked by the Executive prior to the expiration of the period (if any) during which any portion of such Release is revocable under applicable law, and (B) as of the first date on which the Executive violates any covenant contained in Section 7, any remaining unpaid portion of the Severance Payment shall thereupon be forfeited. Subject to the provisions of Section 9, the Severance Payment shall be paid in equal installments during the Severance Period, at the same time and in the same manner as the Annual Base Salary would have been paid had the Executive remained in active employment during the Severance Period, in accordance with the Company’s normal payroll practices in effect on the Date of Termination; provided that any installment that would otherwise have been paid prior to the first normal payroll payment date occurring on or after the thirtieth (30^th) day following the Date of Termination (such

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payroll date, the “First Payment Date”) shall instead be paid on the First Payment Date. In no event shall any Severance Payment be made prior to the thirtieth (30^th) day following the Date of Termination. For purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), the Executive’s right to receive the Severance Payment in the form of installment payments (the “Installment Payments”) shall be treated as a right to receive a series of separate payments and, accordingly, each Installment Payment shall at all times be considered a separate and distinct payment.

(c) The provisions of this Section 5 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program or other arrangement maintained by the Company.

6. Change of Control.

(a) Termination in the Event of a Change of Control. If, during the fifteen (15) month period beginning three (3) months prior to a Change of Control and ending twelve (12) months after such Change of Control, the Company terminates Executive’s employment without Cause, or Executive terminates his or her employment for Good Reason, then the Company shall pay or provide the benefits set forth in Section 5(a) and subsections (i), (ii), and (iii) below.

(i) The Company shall pay to Executive in a lump sum in cash, within thirty days after the Date of Termination, the aggregate of the following amounts: (1) one and one half times the Executive’s Annual Base Salary in effect on the Date of Termination plus (2) the Executive’s target bonus for the fiscal year in which the Date of Termination occurs.

(ii) For a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of all employee Medical and Health Benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits to the extent that new employer’s plan provides reasonably similar medical and health benefits. If applicable, the Company may satisfy its obligations under this Section 6(a)(ii), in part, by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or his family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by this Section 6(a)(ii), the Company shall pay for reasonably similar medical and health benefits during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in this Section 6(a)(ii).

(iii) As of the Date of Termination, all unvested stock options held by Executive shall become fully vested and exercisable and shall remain exercisable until the earlier of: (A) first anniversary of the Date of Termination; or (B) the date on which the option would have expired by its original terms (disregarding any early termination due to Executive’s separation from service). All restricted stock awards held by Executive, if applicable, shall become fully vested and no longer subject to repurchase or forfeiture; and restricted stock units held by Executive, if applicable, shall become fully vested. Any performance-based equity awards shall vest at the target performance level.

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(b) Limitation on Change of Control Payments and Benefits. Notwithstanding anything in this Agreement to the contrary, if any of the payments or benefits to be made or provided in connection with the Agreement, together with any other payments or benefits which the Executive has the right to receive from the Company or any entity which is a member of an “affiliated group” (as defined in section 1504(a) of the Code without regard to section 1504(b) of the Code) of which the Company is a member constitute an “excess parachute payment” (as defined in section 280G(b) of the Code), the payments or benefits to be made or provided in connection with this Agreement will be reduced to the extent necessary to prevent any portion of such payments or benefits from becoming nondeductible by the Company pursuant to section 280G of the Code or subject to the excise tax imposed under section 4999 of the Code. The determination as to whether any such decrease in the payments or benefits to be made or provided in connection with this Agreement is necessary must be made in good faith by a nationally recognized accounting firm (the “Accounting Firm”), and such determination will be conclusive and binding upon Executive and the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Executive will have the right to review and comment on any calculations prepared by the Accounting Firm. In addition, if and to the extent such right would not cause any payment or benefit to be subject to any adverse tax consequences under section 409A of the Code (including as a result of any “substitution” within the meaning of Treas. Reg. §1.409A-3(f)), Executive will have the right to designate the particular payments or benefits that are to be reduced or eliminated.

(c) Treatment of Unvested Stock in Stock Acquisition. For avoidance of doubt, in the event the Executive is terminated in connection with a Change of Control transaction in which the Company’s stock is acquired for cash or cash equivalents, Executive shall have the same right to participate in the Change of Control transaction with respect to any unvested shares held by Executive as the Company’s stockholders have generally with respect to shares of stock that are not subject to vesting.

7. Restrictive Covenants. In consideration of the Executive’s employment or continued employment with the Company and the Severance Payment, the Executive agrees to comply with the following restrictive covenants:

(a) The Executive shall not, at any time during the Restricted Period, directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership, business or entity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in (either directly or through any subsidiary or Affiliate thereof) any business or activity (i) relating to (A) the design, manufacture, marketing, sale or distribution of video game platforms and accessories for videogame platforms, personal computer, Mac, iPod or other mobile devices or (B) the development of flight simulation hardware, which competes with the business of the Company or any entity owned by the Company, or (ii) which the Company or any of its Affiliates has taken active steps to engage in or acquire, but only if the Executive directly or indirectly engages in, has any equity interest in, or manages or operates, such business or activity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or

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otherwise). Notwithstanding the foregoing, the Executive shall be permitted to acquire a passive stock or equity interest in such a business; provided that such stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business.

(b) The Executive shall not, at any time during the Restricted Period, directly or indirectly, either for himself or on behalf of any other entity, (i) recruit or otherwise solicit or induce any employee, customer, subscriber or supplier of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company, or (ii) hire, or cause to be hired, any person who was employed by the Company at any time during the twelve (12)-month period immediately prior to the Date of Termination or who thereafter becomes employed by the Company.

(c) The provisions contained in Sections 7(a) and 7(b) may be altered and/or waived to be made less restrictive on the Executive with the prior written consent of the Board or the Independent Directors.

(d) Except as the Executive reasonably and in good faith determines to be required in the faithful performance of the Executive’s duties hereunder or in accordance with Section 7(f), the Executive shall, during the Term and after the Date of Termination, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any person, firm, corporation or other entity, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. The Executive’s obligation to maintain and not use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any Proprietary Information after the Date of Termination will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of the Executive’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company. The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).

(e) Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products or processes.

(f) The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company (if lawfully permitted to do so) the earliest possible notice thereof, and shall, as much in advance of the return date as possible, make available to the

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Company and its counsel the documents and other information sought, and shall assist such counsel in resisting or otherwise responding to such process. The Executive may also disclose Proprietary Information if: (i) in the reasonable written opinion of counsel for the Executive furnished to the Company, such information is required to be disclosed for the Executive not to be in violation of any applicable law or regulation or (ii) the Executive is required to disclose such information in connection with the enforcement of any rights under this Agreement or any other agreements between the Executive and the Company.

(g) The Executive agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, equity holders or Affiliates, either orally or in writing, at any time; provided that the Executive may confer in confidence with the Executive’s legal representatives, make truthful statements to any government agency in sworn testimony, or make truthful statements as otherwise required by law. The Company agrees that, upon the termination of the Executive’s employment hereunder, it shall advise its directors and executive officers not to disparage the Executive, either orally or in writing, at any time; provided that they may confer in confidence with the Company’s and their legal representatives and make truthful statements as required by law.

(h) Prior to accepting other employment or any other service relationship during the Restricted Period, the Executive shall provide a copy of this Section 7 to any recruiter who assists the Executive in obtaining other employment or any other service relationship and to any employer or person with which the Executive discusses potential employment or any other service relationship.

(i) In the event the terms of this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

(j) As used in this Section 7, the term “Company” shall include the Company, its parent, related entities, and any of its direct or indirect subsidiaries.

8. Injunctive Relief. The Executive recognizes and acknowledges that a breach of the covenants contained in Section 7 will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in Section 7, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.

9. Section 409A.

(a) General. The parties hereto acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and incorporate the terms and

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conditions required by, Section 409A. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to the Executive under Section 409A, the Company reserves the right to (without any obligation to do so or to indemnify the Executive for failure to do so) (i) adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect) that it determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and to avoid less favorable accounting or tax consequences for the Company and/or (ii) take such other actions it determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder. Notwithstanding anything herein to the contrary, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Executive or any other individual to the Company or any of its Affiliates, employees or agents.

(b) Separation from Service under Section 409A; Section 409A Compliance. Notwithstanding anything herein to the contrary: (i) no termination or other similar payments and benefits hereunder shall be payable unless the Executive’s termination of employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) if the Executive is deemed at the time of the Executive’s separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of any termination or other similar payments and benefits to which the Executive may be entitled hereunder (after taking into account all exclusions applicable to such payments or benefits under Section 409A) is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of such payments and benefits shall not be provided to the Executive prior to the earlier of (x) the expiration of the six (6)-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Department of Treasury Regulations issued under Section 409A) or (y) the date of the Executive’s death; provided that upon the earlier of such dates, all payments and benefits deferred pursuant to this Section 9(b)(ii) shall be paid in a lump sum to the Executive, and any remaining payments and benefits due hereunder shall be provided as otherwise specified herein; (iii) the determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of the Executive’s separation from service shall be made by the Company in accordance with the terms of Section 409A (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto); (iv) to the extent that any Installment Payments under this Agreement are deemed to constitute “nonqualified deferred compensation” within the meaning of Section 409A, for purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), each such payment that the Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment; (v) to the extent that any reimbursements or corresponding in-kind benefits provided to the Executive under this Agreement are deemed to constitute “deferred compensation” under Section 409A, such reimbursements or benefits shall be provided reasonably promptly, but in no event later than December 31 of the year following the year in which the expense was incurred, and in any event in accordance with Section 1.409A-3(i)(1)(iv) of the Department of

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Treasury Regulations; and (vi) the amount of any such payments or expense reimbursements in one calendar year shall not affect the expenses or in-kind benefits eligible for payment or reimbursement in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

10. Assignment and Successors. The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of the Company, by merger or otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its Affiliates. The Executive may not assign the Executive’s rights or obligations under this Agreement to any individual or entity. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.

11. Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of California, without reference to the principles of conflicts of law of California or any other jurisdiction, and where applicable, the laws of the United States.

12. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Notices. Any notice, request, claim, demand, document and other communication hereunder to any party hereto shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telex, telecopy, or certified or registered mail, postage prepaid, to the following address (or at any other address as any party hereto shall have specified by notice in writing to the other party hereto):

If to the Company:

Mad Catz Interactive, Inc.

10680 Treena Street, Suite 500

San Diego, California 92131

Attn: General Counsel

Facsimile: (858) 790-5018

If to the Executive, at the address set forth on the signature page hereto.

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

15. Entire Agreement. This Agreement (together with any other agreements and instruments contemplated hereby or referred to herein) is intended by the parties hereto to be the final expression of their agreement with respect to the employment of the Executive by the

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Company and may not be contradicted by evidence of any prior or contemporaneous agreement (including, without limitation, any term sheet or offer letter). The parties hereto further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

16. Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of the Company and approved by the Board, which expressly identifies the amended provision of this Agreement. By an instrument in writing similarly executed and approved by the Board, the Executive or a duly authorized officer of the Company may waive compliance by the other party or parties hereto with any provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure to comply or perform. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

17. No Inconsistent Actions. The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

18. Construction. This Agreement shall be deemed drafted equally by both of the parties hereto. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party hereto shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

19. Arbitration. Any dispute or controversy based on, arising under or relating to this Agreement shall be settled exclusively by final and binding arbitration, conducted before a single neutral arbitrator in San Diego, California in accordance with the rules and procedures of JAMS, by a neutral arbitrator who is mutually agreeable to the parties hereto, or appointed by JAMS if the parties cannot agree. Arbitration may be compelled, and judgment may be entered on the arbitration award in any court having jurisdiction; provided, however, that the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Section 7, and the Executive hereby consents that such restraining order or injunction may be granted without requiring the Company to post a

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bond. The arbitrator shall be entitled to award any relief available in a court of law. Each party shall bear its own costs and attorneys’ fees in connection with arbitration; provided that the parties shall bear equally the cost of the arbitrator and JAMS’ administrative fees.

20. Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

21. Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement, any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

22. Absence of Conflicts; Executive Acknowledgement. The Executive hereby represents that from and after the Effective Date the performance of the Executive’s duties hereunder will not breach any other agreement to which the Executive is a party. The Executive acknowledges that the Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on the Executive’s own judgment.

23. Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto which shall have accrued prior to such expiration or termination.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

COMPANY		EXECUTIVE
By:	/s/ Karen McGinnis	/s/ David McKeon
	Karen McGinnis	David McKeon
	President & CEO
		Address:

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

EXHIBIT A

Form of Release

David McKeon (the “Executive”) agrees for the Executive, the Executive’s spouse and child or children (if any), the Executive’s heirs, beneficiaries, devisees, executors, administrators, attorneys, personal representatives, successors and assigns, hereby forever to release, discharge, and covenant not to sue Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (the “Company”), and any of its past, present, or future parent, affiliated, related, and/or subsidiary entities, and all of the past and present directors, shareholders, officers, general or limited partners, employees, agents, and attorneys, and agents and representatives of such entities, and employee benefit plans in which the Executive is or has been a participant by virtue of his employment with the Company (collectively, the “Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected, which the Executive has or may have had against such Releasees based on any events or circumstances arising or occurring on or prior to the date this release (the “Release”) is executed, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever, (a) the Executive’s employment with the Company or its subsidiaries or the termination thereof or (b) the Executive’s status at any time as a holder of any securities of the Company, and any and all claims arising under federal, state, or local laws relating to employment, or securities, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, claims of any kind that may be brought in any court or administrative agency, any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, and similar state or local statutes, ordinances, and regulations; provided, however, notwithstanding anything to the contrary set forth herein, that this Release shall not extend to (i) benefit claims under employee pension or welfare benefit plans in which the Executive is a participant by virtue of his employment with the Company or its subsidiaries, (ii) any rights under that certain Employment Agreement, dated as of February 5, 2016, by and between the Company and the Executive, (iii) any rights of indemnification the Executive may have under any written agreement between the Executive and the Company (or its affiliates), the Company’s Articles of Incorporation, its Bylaws, any applicable statute or common law, or pursuant to any applicable insurance policy, (iv) unemployment compensation, (v) contractual rights to vested equity awards, (vi) COBRA benefits and (viii) any rights that may not be waived as a matter of law.

The Executive understands that this Release includes a release of claims arising under the Age Discrimination in Employment Act (ADEA). The Executive understands and warrants that he has been given a period of 21 days to review and consider this Release. The Executive further warrants that he understands that he may use as much or all of his 21-day period as he wishes before signing, and warrants that he has done so. The Executive further warrants that he understands that, with respect to the release of age discrimination claims only, he has a period of

seven days after executing on the second signature line below to revoke the release of age discrimination claims by notice in writing to the Company.

The Executive is hereby advised to consult with an attorney prior to executing this Release. By his signature below, the Executive warrants that he has had the opportunity to do so and to be fully and fairly advised by that legal counsel as to the terms of this Release.

ACKNOWLEDGEMENT (AS TO ALL CLAIMS

OTHER THAN AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of his choosing, signifies his agreement to the terms of this Release (other than as it relates to age discrimination claims) by his signature below.

David McKeon Date

ACKNOWLEDGEMENT (AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of his choosing, signifies his agreement to the terms of this Release (as it relates to age discrimination claims) by his signature below.

David McKeon Date

EX-10.5

Exhibit 10.5

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”), entered into on February 5, 2016 (the “Effective Date”), is made by and between Tyson Marshall (the “Executive”) and Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (together with any of its subsidiaries and affiliates as may employ the Executive from time to time, and any successor(s) thereto, the “Company”).

RECITALS

A. The Company desires to assure itself of the continued services of the Executive by engaging the Executive to perform services under the terms hereof.

B. The Executive desires to continue to provide services to the Company on the terms herein provided.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows:

1. Certain Definitions.

(a) “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act of 1933, as amended from time to time.

(b) “Agreement” shall have the meaning set forth in the preamble hereto.

(c) “Annual Base Salary” shall have the meaning set forth in Section 3(a).

(d) “Board” shall mean the Board of Directors of the Company or any successor governing body.

(e) The Company shall have “Cause” to terminate the Executive’s employment hereunder upon: (i) the Executive’s willful failure to substantially perform the duties set forth herein (other than any such failure resulting from the Executive’s Disability); (ii) the Executive’s willful failure to carry out, or comply with, in any material respect, any lawful directive of the Board; (iii) the Executive’s commission at any time of any act or omission that results in, or may reasonably be expected to result in, a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude; (iv) the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities hereunder; (v) the Executive’s commission at any time of any act of fraud, embezzlement, misappropriation, material misconduct, conversion of assets of the Company, or breach of fiduciary duty against the Company (or any predecessor thereto or successor thereof); or (vi) the Executive’s material breach of this Agreement or other agreements with the Company (including,

without limitation, any breach of the restrictive covenants of any such agreement); and which, in the case of clauses (i), (ii) and (vi), continues beyond fourteen (14) days after the Company has provided the Executive written notice of such failure or breach (to the extent that, in the reasonable judgment of the Board, such failure or breach can be cured by the Executive).

(f) “Change of Control” shall mean:

(i) The members of the Board at the beginning of any consecutive 12-calendar-month period (the “Incumbent Directors”) cease for any reason other than due to death to constitute at least a majority of the members of the Board; provided that any director whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the members of the Board then still in office who were members of the Board at the beginning of such 12-calendar-month period, shall be deemed to be an Incumbent Director.

(ii) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d–3 promulgated under the Exchange Act) of fifty percent (50%) or more of the stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of the Company (irrespective of whether at the time stock of any class or classes of the Company shall have or might have voting power by reason of the happening of any contingency); provided, however, that for purposes of this subsection (f), the following acquisitions will not constitute a Change of Control: (A) any acquisition directly from the Company; (B) any acquisition by the Company or a subsidiary of the Company; or (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company.

(iii) The consummation of a merger or consolidation involving the Company if the stockholders owning the capital and profits (“ownership interests”) of the Company immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power or ownership interests of the Company, or the entity resulting from such merger or consolidation, in substantially the same proportion as their ownership of the combined voting power or ownership interests outstanding immediately before such merger or consolidation.

(iv) There shall occur (A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportion as their ownership of the Company immediately prior to such sale or (B) the approval by stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company.

(v) The dissolution or the complete or partial liquidation of the Company.

In all cases, the determination of whether a Change of Control has occurred shall be made in accordance with Section 409A.

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(g) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(h) “Company” shall, except as otherwise provided in Section 7(j), have the meaning set forth in the preamble hereto.

(i) “Date of Termination” shall mean (i) if the Executive’s employment is terminated due to the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated for any other reason, the date indicated in the Notice of Termination (or the date specified by the Company pursuant to Section 4(b) in connection with a termination by the Executive).

(j) “Disability” shall mean any medically determinable physical or mental impairment that renders the Executive physically or mentally unable regularly to perform his or her duties hereunder for a period in excess of one hundred twenty (120) consecutive days or more than one hundred eighty (180) days in any consecutive twelve (12) month period, as determined by a physician jointly selected by the Company and the Executive.

(k) “Effective Date” shall have the meaning set forth in the preamble hereto.

(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(m) “Executive” shall have the meaning set forth in the preamble hereto.

(n) “Extension Term” shall have the meaning set forth in Section 2(b).

(o) “First Payment Date” shall have the meaning set forth in Section 5(b)(ii).

(p) The Executive shall have “Good Reason” to terminate the Executive’s employment hereunder after the occurrence of one or more of the following conditions without the Executive’s written consent: (i) a material diminution in the Executive’s authority, duties, or responsibilities, as described herein. For the avoidance of any doubt, being asked to assume the duties of a CEO, CFO or General Counsel in a privately held company shall constitute a material diminution of the Executive’s authority, duties or responsibilities having had that authority, duties or responsibilities in a publicly traded company; (ii) a material diminution in the Executive’s Annual Base Salary as described herein; (iii) a material reduction in the package of benefits and incentives, taken as a whole, provided to the Executive (except that employee contributions may be raised to the extent of any cost increases imposed by third parties) or any action by the Company which would materially and adversely affect the Executive’s participation or reduce the Executive’s benefits under any such plans, except to the extent that such benefits and incentives of all other executive officers of the Company are similarly reduced (iv) a material change in the geographic location at which the Executive must perform the Executive’s services hereunder. For the avoidance of any doubt, an increases in the Executive’s one-way commute distance by more than fifty (50) miles from his or her then principal residence shall constitute a material change in the geographic location at which the Executive must perform the Executive’s services hereunder; or (v) any other action or inaction that constitutes a material breach of this Agreement by the Company; and which, in the case of any of the foregoing, continues beyond thirty (30) days

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after the Executive has provided the Company written notice that the Executive believes in good faith that such condition giving rise to such claim of Good Reason has occurred, so long as such notice is provided within ninety (90) days after the initial existence of such condition.

(q) “Independent Directors” shall mean the independent members of the Board.

(r) “Installment Payments” shall have the meaning set forth in Section 5(b)(ii).

(s) “Notice of Termination” shall have the meaning set forth in Section 4(b).

(t) “Person” shall mean any individual, natural person, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), incorporated or unincorporated association, governmental authority, firm, society or other enterprise, organization or other entity of any nature.

(u) “Proprietary Information” shall have the meaning set forth in Section 7(d).

(v) “Release” shall have the meaning set forth in Section 5(b)(ii).

(w) “Restricted Period” shall mean the period from the Effective Date through the end of the Severance Period.

(x) “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.

(y) “Severance Payment” shall have the meaning set forth in Section 5(b)(i).

(z) “Severance Period” shall mean if the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason, the period beginning on the Date of Termination and ending on the first (1^st) anniversary of the Date of Termination.

(aa) “Term” shall have the meaning set forth in Section 2(b).

2. Employment.

(a) In General. The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 2(b), in the position set forth in Section 2(c), and upon the other terms and conditions herein provided. The terms and conditions herein provided supersede in their entirety any contradictory terms and conditions in any employee manual, plan, policy, program or other arrangement maintained by the Company. To the extent a term or condition is not detailed herein, the employee manuals, plans, policies, programs or other arrangements maintained by the Company shall govern.

(b) Term of Employment. The term of employment under this Agreement (the “Term”) shall be for the period beginning on the Effective Date and ending on the first (1st)

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anniversary of the Effective Date, unless earlier terminated as provided in Section 4. The Term shall automatically be extended for successive one (1) year periods (each, an “Extension Term” and, collectively with the Term, the “Term”), unless earlier terminated as provided in Section 4.

(c) Position and Duties. During the Term, the Executive: (i) shall serve as General Counsel and Secretary of the Company, with responsibilities, duties and authority customary for such position, subject to direction by the CEO of the Company; (ii) shall report directly to the CEO of the Company; (iii) shall devote substantially all the Executive’s working time and efforts to the business and affairs of the Company and its subsidiaries, provided that the Executive may (i) serve on corporate, civic, charitable, industry or professional association boards or committees, subject to the Board’s prior written consent in the case of any such board or committee that relates directly or indirectly to the business of the Company or its subsidiaries (which consent shall not unreasonably be withheld), (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions and (iii) manage his personal investments, so long as none of such activities meaningfully interferes with the performance of the Executive’s duties and responsibilities hereunder, or involves a conflict of interest with the Executive’s duties or responsibilities hereunder or a breach of the covenants contained in Section 7; and (iv) agrees to observe and comply with the Company’s rules and policies as adopted by the Company from time to time, which have been made available to the Executive.

3. Compensation.

(a) Annual Base Salary. During the Term, the Executive shall receive a base salary at a rate of $200,000 per annum, which shall be paid in accordance with the customary payroll practices of the Company, subject to review and adjustment by the Board in its reasonable discretion (the “Annual Base Salary”).

(b) Other Incentive Plans, Benefits and Perquisites. The Executive shall be offered additional employee benefits and perquisites the Company and the Executive negotiate in good faith. The Executive also shall be eligible to participate in such other incentive compensation programs in accordance with their terms as the Company may have in effect from time to time for its senior executive officers and all compensation and other entitlements earned thereunder shall be in addition to, and shall not in any way reduce, the amount payable to the Executive as Annual Base Salary.

(c) Health, Welfare and Retirement Plans; Vacation. To the extent the Executive meets the eligibility requirements for such arrangements, plans or programs, the Executive shall be entitled to:

(i) participate in such health (medical, hospital and/or dental) insurance (“Medical and Health Benefits”), retirement, life insurance, disability insurance, flexible benefits arrangements and accident insurance plans and programs as are maintained in effect from time to time by the Company for its senior executive officers;

(ii) participate in other non-duplicative benefit programs which the Company may from time to time offer generally to senior executive officers of the Company; and

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(iii) take vacations and be entitled to sick leave in accordance with the Company’s Paid Time Off (“PTO”) policy, except that Executive will accrue 160 hours of PTO per year for his or her first five (5) years of service with the Company. Thereafter, the Executive will receive 40 additional hours of PTO for every additional 5 years of service; provided however, that the total amount of PTO that Executive can accrue during one year shall be capped at 240 hours.

(d) For the sake of clarity, the Company may modify its health, welfare, retirement and other benefit plans and vacation and sick leave policies from time to time and the Executive’s rights under these plans are subject to change in the event of any such modifications, provided that he will receive the benefits generally provided to other senior executive officers of the Company.

(e) Business Expenses. During the Term, the Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of the Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures.

4. Termination.

(a) Basis for Termination. The Executive’s employment hereunder is “at-will” and may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement upon the death or Disability of the Executive, with or without Cause, and with or without Good Reason. Executive’s “at-will” status cannot be modified by oral agreement; any modification to this Agreement must be in writing.

(b) Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive under this Section 4 (other than a termination by reason of the Executive’s death) shall be communicated by a written notice to the other party hereto: (i) indicating in reasonable detail the basis for the termination, and (ii) specifying a Date of Termination which, if submitted by the Executive, shall be at least thirty (30) days following the date of such notice (a “Notice of Termination”); provided, however, that in the event that the Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, accelerate the Date of Termination to any date that occurs following the date of Company’s receipt of such Notice of Termination (even if such date is prior to the date specified in such Notice of Termination). A Notice of Termination submitted by the Company may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion. The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive hereunder or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder.

5. Company Obligations upon Termination of Employment.

(a) In General. Upon a termination of the Executive’s employment for any reason, the Executive (or the Executive’s estate) shall be entitled to receive: (i) any portion of the

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Executive’s Annual Base Salary through the Date of Termination not theretofore paid, (ii) any expenses owed to the Executive under Section 3(e), and (iii) any amount arising from the Executive’s participation in, or benefits under, any incentive compensation plans, employee benefit plans, programs or arrangements under Section 3(b) or 3(c), which amounts shall be payable in accordance with the terms and conditions of any such incentive compensation plans, employee benefit plans, programs or arrangements. Except as otherwise set forth in Section 5(b) or 6(a) below, the payments and benefits described in this Section 5(a) shall be the only payments and benefits payable in the event of the Executive’s termination of employment for any reason.

(b) Severance Payment.

(i) In the event the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason, then, in addition to the payments and benefits described in Section 5(a) above, the Company shall, during the Severance Period, pay to the Executive in equal installments, an amount equal to 18 months of Executive’s Annual Base Salary in effect at the Date of Termination (the “Severance Payment”); and (2) to the extent that bonuses are paid to other Senior Executives for the fiscal year in which the Date of Termination occurs, then Executive shall be entitled to a pro-rata share of his or her bonus; and (3) for a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of Medical and Health benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits, to the extent that reasonably similar medical and health benefits are available to the Executive pursuant to such employer-provided plan. The Company may satisfy its obligations under this Section 5(b)(i), by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or his family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by Section 5(b)(i)(3), the Company shall pay for reasonably similar medical and health benefits during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in Section 5(b)(i)(3).

(ii) The Severance Payment shall be in lieu of notice or any other severance benefits to which the Executive might otherwise be entitled. Notwithstanding anything herein to the contrary, (A) no portion of the Severance Payment shall be paid unless, on or prior to the thirtieth (30^th) day following the Date of Termination, the Executive timely executes a general waiver and release of claims agreement substantially in the form attached hereto as Exhibit A (the “Release”), which Release shall not have been revoked by the Executive prior to the expiration of the period (if any) during which any portion of such Release is revocable under applicable law, and (B) as of the first date on which the Executive violates any covenant contained in Section 7, any remaining unpaid portion of the Severance Payment shall thereupon be forfeited. Subject to the provisions of Section 9, the Severance Payment shall be paid in equal installments during the Severance Period, at the same time and in the same manner as the Annual Base Salary would have been paid had the Executive remained in active employment during the Severance Period, in accordance with the Company’s normal payroll practices in effect on the Date of Termination; provided that any installment that would otherwise have been paid prior to the first normal payroll payment date occurring on or after the thirtieth (30^th) day following the Date of Termination (such

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payroll date, the “First Payment Date”) shall instead be paid on the First Payment Date. In no event shall any Severance Payment be made prior to the thirtieth (30^th) day following the Date of Termination. For purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), the Executive’s right to receive the Severance Payment in the form of installment payments (the “Installment Payments”) shall be treated as a right to receive a series of separate payments and, accordingly, each Installment Payment shall at all times be considered a separate and distinct payment.

(c) The provisions of this Section 5 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program or other arrangement maintained by the Company.

6. Change of Control.

(a) Termination in the Event of a Change of Control. If, during the fifteen (15) month period beginning three (3) months prior to a Change of Control and ending twelve (12) months after such Change of Control, the Company terminates Executive’s employment without Cause, or Executive terminates his or her employment for Good Reason, then the Company shall pay or provide the benefits set forth in Section 5(a) and subsections (i), (ii), and (iii) below.

(i) The Company shall pay to Executive in a lump sum in cash, within thirty days after the Date of Termination, the aggregate of the following amounts: (1) one and one half times the Executive’s Annual Base Salary in effect on the Date of Termination plus (2) the Executive’s target bonus for the fiscal year in which the Date of Termination occurs.

(ii) For a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of all employee Medical and Health Benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits to the extent that new employer’s plan provides reasonably similar medical and health benefits. If applicable, the Company may satisfy its obligations under this Section 6(a)(ii), in part, by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or his family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by this Section 6(a)(ii), the Company shall pay for reasonably similar medical and health benefits during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in this Section 6(a)(ii).

(iii) As of the Date of Termination, all unvested stock options held by Executive shall become fully vested and exercisable and shall remain exercisable until the earlier of: (A) first anniversary of the Date of Termination; or (B) the date on which the option would have expired by its original terms (disregarding any early termination due to Executive’s separation from service). All restricted stock awards held by Executive, if applicable, shall become fully vested and no longer subject to repurchase or forfeiture; and restricted stock units held by Executive, if applicable, shall become fully vested. Any performance-based equity awards shall vest at the target performance level.

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(b) Limitation on Change of Control Payments and Benefits. Notwithstanding anything in this Agreement to the contrary, if any of the payments or benefits to be made or provided in connection with the Agreement, together with any other payments or benefits which the Executive has the right to receive from the Company or any entity which is a member of an “affiliated group” (as defined in section 1504(a) of the Code without regard to section 1504(b) of the Code) of which the Company is a member constitute an “excess parachute payment” (as defined in section 280G(b) of the Code), the payments or benefits to be made or provided in connection with this Agreement will be reduced to the extent necessary to prevent any portion of such payments or benefits from becoming nondeductible by the Company pursuant to section 280G of the Code or subject to the excise tax imposed under section 4999 of the Code. The determination as to whether any such decrease in the payments or benefits to be made or provided in connection with this Agreement is necessary must be made in good faith by a nationally recognized accounting firm (the “Accounting Firm”), and such determination will be conclusive and binding upon Executive and the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Executive will have the right to review and comment on any calculations prepared by the Accounting Firm. In addition, if and to the extent such right would not cause any payment or benefit to be subject to any adverse tax consequences under section 409A of the Code (including as a result of any “substitution” within the meaning of Treas. Reg. §1.409A-3(f)), Executive will have the right to designate the particular payments or benefits that are to be reduced or eliminated.

(c) Treatment of Unvested Stock in Stock Acquisition. For avoidance of doubt, in the event the Executive is terminated in connection with a Change of Control transaction in which the Company’s stock is acquired for cash or cash equivalents, Executive shall have the same right to participate in the Change of Control transaction with respect to any unvested shares held by Executive as the Company’s stockholders have generally with respect to shares of stock that are not subject to vesting.

7. Restrictive Covenants. In consideration of the Executive’s employment or continued employment with the Company and the Severance Payment, the Executive agrees to comply with the following restrictive covenants:

(a) The Executive shall not, at any time during the Restricted Period, directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership, business or entity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in (either directly or through any subsidiary or Affiliate thereof) any business or activity (i) relating to (A) the design, manufacture, marketing, sale or distribution of video game platforms and accessories for videogame platforms, personal computer, Mac, iPod or other mobile devices or (B) the development of flight simulation hardware, which competes with the business of the Company or any entity owned by the Company, or (ii) which the Company or any of its Affiliates has taken active steps to engage in or acquire, but only if the Executive directly or indirectly engages in, has any equity interest in, or manages or operates, such business or activity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or

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otherwise). Notwithstanding the foregoing, the Executive shall be permitted to acquire a passive stock or equity interest in such a business; provided that such stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business.

(b) The Executive shall not, at any time during the Restricted Period, directly or indirectly, either for himself or on behalf of any other entity, (i) recruit or otherwise solicit or induce any employee, customer, subscriber or supplier of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company, or (ii) hire, or cause to be hired, any person who was employed by the Company at any time during the twelve (12)-month period immediately prior to the Date of Termination or who thereafter becomes employed by the Company.

(c) The provisions contained in Sections 7(a) and 7(b) may be altered and/or waived to be made less restrictive on the Executive with the prior written consent of the Board or the Independent Directors.

(d) Except as the Executive reasonably and in good faith determines to be required in the faithful performance of the Executive’s duties hereunder or in accordance with Section 7(f), the Executive shall, during the Term and after the Date of Termination, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any person, firm, corporation or other entity, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. The Executive’s obligation to maintain and not use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any Proprietary Information after the Date of Termination will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of the Executive’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company. The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).

(e) Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products or processes.

(f) The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company (if lawfully permitted to do so) the earliest possible notice thereof, and shall, as much in advance of the return date as possible, make available to the

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Company and its counsel the documents and other information sought, and shall assist such counsel in resisting or otherwise responding to such process. The Executive may also disclose Proprietary Information if: (i) in the reasonable written opinion of counsel for the Executive furnished to the Company, such information is required to be disclosed for the Executive not to be in violation of any applicable law or regulation or (ii) the Executive is required to disclose such information in connection with the enforcement of any rights under this Agreement or any other agreements between the Executive and the Company.

(g) The Executive agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, equity holders or Affiliates, either orally or in writing, at any time; provided that the Executive may confer in confidence with the Executive’s legal representatives, make truthful statements to any government agency in sworn testimony, or make truthful statements as otherwise required by law. The Company agrees that, upon the termination of the Executive’s employment hereunder, it shall advise its directors and executive officers not to disparage the Executive, either orally or in writing, at any time; provided that they may confer in confidence with the Company’s and their legal representatives and make truthful statements as required by law.

(h) Prior to accepting other employment or any other service relationship during the Restricted Period, the Executive shall provide a copy of this Section 7 to any recruiter who assists the Executive in obtaining other employment or any other service relationship and to any employer or person with which the Executive discusses potential employment or any other service relationship.

(i) In the event the terms of this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

(j) As used in this Section 7, the term “Company” shall include the Company, its parent, related entities, and any of its direct or indirect subsidiaries.

8. Injunctive Relief. The Executive recognizes and acknowledges that a breach of the covenants contained in Section 7 will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in Section 7, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.

9. Section 409A.

(a) General. The parties hereto acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and incorporate the terms and

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conditions required by, Section 409A. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to the Executive under Section 409A, the Company reserves the right to (without any obligation to do so or to indemnify the Executive for failure to do so) (i) adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect) that it determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and to avoid less favorable accounting or tax consequences for the Company and/or (ii) take such other actions it determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder. Notwithstanding anything herein to the contrary, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Executive or any other individual to the Company or any of its Affiliates, employees or agents.

(b) Separation from Service under Section 409A; Section 409A Compliance. Notwithstanding anything herein to the contrary: (i) no termination or other similar payments and benefits hereunder shall be payable unless the Executive’s termination of employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) if the Executive is deemed at the time of the Executive’s separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of any termination or other similar payments and benefits to which the Executive may be entitled hereunder (after taking into account all exclusions applicable to such payments or benefits under Section 409A) is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of such payments and benefits shall not be provided to the Executive prior to the earlier of (x) the expiration of the six (6)-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Department of Treasury Regulations issued under Section 409A) or (y) the date of the Executive’s death; provided that upon the earlier of such dates, all payments and benefits deferred pursuant to this Section 9(b)(ii) shall be paid in a lump sum to the Executive, and any remaining payments and benefits due hereunder shall be provided as otherwise specified herein; (iii) the determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of the Executive’s separation from service shall be made by the Company in accordance with the terms of Section 409A (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto); (iv) to the extent that any Installment Payments under this Agreement are deemed to constitute “nonqualified deferred compensation” within the meaning of Section 409A, for purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), each such payment that the Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment; (v) to the extent that any reimbursements or corresponding in-kind benefits provided to the Executive under this Agreement are deemed to constitute “deferred compensation” under Section 409A, such reimbursements or benefits shall be provided reasonably promptly, but in no event later than December 31 of the year following the year in which the expense was incurred, and in any event in accordance with Section 1.409A-3(i)(1)(iv) of the Department of

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Treasury Regulations; and (vi) the amount of any such payments or expense reimbursements in one calendar year shall not affect the expenses or in-kind benefits eligible for payment or reimbursement in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

10. Assignment and Successors. The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of the Company, by merger or otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its Affiliates. The Executive may not assign the Executive’s rights or obligations under this Agreement to any individual or entity. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.

11. Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of California, without reference to the principles of conflicts of law of California or any other jurisdiction, and where applicable, the laws of the United States.

12. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Notices. Any notice, request, claim, demand, document and other communication hereunder to any party hereto shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telex, telecopy, or certified or registered mail, postage prepaid, to the following address (or at any other address as any party hereto shall have specified by notice in writing to the other party hereto):

If to the Company:

Mad Catz Interactive, Inc.

10680 Treena Street, Suite 500

San Diego, California 92131

Attn: General Counsel

Facsimile: (858) 790-5018

If to the Executive, at the address set forth on the signature page hereto.

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

15. Entire Agreement. This Agreement (together with any other agreements and instruments contemplated hereby or referred to herein) is intended by the parties hereto to be the final expression of their agreement with respect to the employment of the Executive by the

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Company and may not be contradicted by evidence of any prior or contemporaneous agreement (including, without limitation, any term sheet or offer letter). The parties hereto further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

16. Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of the Company and approved by the Board, which expressly identifies the amended provision of this Agreement. By an instrument in writing similarly executed and approved by the Board, the Executive or a duly authorized officer of the Company may waive compliance by the other party or parties hereto with any provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure to comply or perform. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

17. No Inconsistent Actions. The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

18. Construction. This Agreement shall be deemed drafted equally by both of the parties hereto. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party hereto shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

19. Arbitration. Any dispute or controversy based on, arising under or relating to this Agreement shall be settled exclusively by final and binding arbitration, conducted before a single neutral arbitrator in San Diego, California in accordance with the rules and procedures of JAMS, by a neutral arbitrator who is mutually agreeable to the parties hereto, or appointed by JAMS if the parties cannot agree. Arbitration may be compelled, and judgment may be entered on the arbitration award in any court having jurisdiction; provided, however, that the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Section 7, and the Executive hereby consents that such restraining order or injunction may be granted without requiring the Company to post a

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bond. The arbitrator shall be entitled to award any relief available in a court of law. Each party shall bear its own costs and attorneys’ fees in connection with arbitration; provided that the parties shall bear equally the cost of the arbitrator and JAMS’ administrative fees.

20. Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

21. Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement, any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

22. Absence of Conflicts; Executive Acknowledgement. The Executive hereby represents that from and after the Effective Date the performance of the Executive’s duties hereunder will not breach any other agreement to which the Executive is a party. The Executive acknowledges that the Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on the Executive’s own judgment.

23. Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto which shall have accrued prior to such expiration or termination.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

COMPANY		EXECUTIVE
By:	/s/ Karen McGinnis	/s/ Tyson Marshall
	Karen McGinnis	Tyson Marshall
	President & CEO
		Address:

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

EXHIBIT A

Form of Release

Tyson Marshall (the “Executive”) agrees for the Executive, the Executive’s spouse and child or children (if any), the Executive’s heirs, beneficiaries, devisees, executors, administrators, attorneys, personal representatives, successors and assigns, hereby forever to release, discharge, and covenant not to sue Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (the “Company”), and any of its past, present, or future parent, affiliated, related, and/or subsidiary entities, and all of the past and present directors, shareholders, officers, general or limited partners, employees, agents, and attorneys, and agents and representatives of such entities, and employee benefit plans in which the Executive is or has been a participant by virtue of his employment with the Company (collectively, the “Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected, which the Executive has or may have had against such Releasees based on any events or circumstances arising or occurring on or prior to the date this release (the “Release”) is executed, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever, (a) the Executive’s employment with the Company or its subsidiaries or the termination thereof or (b) the Executive’s status at any time as a holder of any securities of the Company, and any and all claims arising under federal, state, or local laws relating to employment, or securities, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, claims of any kind that may be brought in any court or administrative agency, any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, and similar state or local statutes, ordinances, and regulations; provided, however, notwithstanding anything to the contrary set forth herein, that this Release shall not extend to (i) benefit claims under employee pension or welfare benefit plans in which the Executive is a participant by virtue of his employment with the Company or its subsidiaries, (ii) any rights under that certain Employment Agreement, dated as of February 5, 2016, by and between the Company and the Executive, (iii) any rights of indemnification the Executive may have under any written agreement between the Executive and the Company (or its affiliates), the Company’s Articles of Incorporation, its Bylaws, any applicable statute or common law, or pursuant to any applicable insurance policy, (iv) unemployment compensation, (v) contractual rights to vested equity awards, (vi) COBRA benefits and (viii) any rights that may not be waived as a matter of law.

The Executive understands that this Release includes a release of claims arising under the Age Discrimination in Employment Act (ADEA). The Executive understands and warrants that he has been given a period of 21 days to review and consider this Release. The Executive further warrants that he understands that he may use as much or all of his 21-day period as he wishes before signing, and warrants that he has done so. The Executive further warrants that he understands that, with respect to the release of age discrimination claims only, he has a period of

seven days after executing on the second signature line below to revoke the release of age discrimination claims by notice in writing to the Company.

The Executive is hereby advised to consult with an attorney prior to executing this Release. By his signature below, the Executive warrants that he has had the opportunity to do so and to be fully and fairly advised by that legal counsel as to the terms of this Release.

ACKNOWLEDGEMENT (AS TO ALL CLAIMS

OTHER THAN AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of his choosing, signifies his agreement to the terms of this Release (other than as it relates to age discrimination claims) by his signature below.

Tyson Marshall Date

ACKNOWLEDGEMENT (AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of his choosing, signifies his agreement to the terms of this Release (as it relates to age discrimination claims) by his signature below.

Tyson Marshall Date

EX-10.6

Exhibit 10.6

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”), entered into on February 5, 2016 (the “Effective Date”), is made by and between Andrew Young (the “Executive”) and Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (together with any of its subsidiaries and affiliates as may employ the Executive from time to time, and any successor(s) thereto, the “Company”).

RECITALS

A. The Company desires to assure itself of the continued services of the Executive by engaging the Executive to perform services under the terms hereof.

B. The Executive desires to continue to provide services to the Company on the terms herein provided.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below the parties hereto agree as follows:

1. Certain Definitions.

(a) “Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act of 1933, as amended from time to time.

(b) “Agreement” shall have the meaning set forth in the preamble hereto.

(c) “Annual Base Salary” shall have the meaning set forth in Section 3(a).

(d) “Board” shall mean the Board of Directors of the Company or any successor governing body.

(e) The Company shall have “Cause” to terminate the Executive’s employment hereunder upon: (i) the Executive’s willful failure to substantially perform the duties set forth herein (other than any such failure resulting from the Executive’s Disability); (ii) the Executive’s willful failure to carry out, or comply with, in any material respect, any lawful directive of the Board; (iii) the Executive’s commission at any time of any act or omission that results in, or may reasonably be expected to result in, a conviction, plea of no contest, plea of nolo contendere, or imposition of unadjudicated probation for any felony or crime involving moral turpitude; (iv) the Executive’s unlawful use (including being under the influence) or possession of illegal drugs on the Company’s premises or while performing the Executive’s duties and responsibilities hereunder; (v) the Executive’s commission at any time of any act of fraud, embezzlement, misappropriation, material misconduct, conversion of assets of the Company, or breach of fiduciary duty against the Company (or any predecessor thereto or successor thereof); or (vi) the Executive’s material breach of this Agreement or other agreements with the Company (including,

without limitation, any breach of the restrictive covenants of any such agreement); and which, in the case of clauses (i), (ii) and (vi), continues beyond fourteen (14) days after the Company has provided the Executive written notice of such failure or breach (to the extent that, in the reasonable judgment of the Board, such failure or breach can be cured by the Executive).

(f) “Change of Control” shall mean:

(i) The members of the Board at the beginning of any consecutive 12-calendar-month period (the “Incumbent Directors”) cease for any reason other than due to death to constitute at least a majority of the members of the Board; provided that any director whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the members of the Board then still in office who were members of the Board at the beginning of such 12-calendar-month period, shall be deemed to be an Incumbent Director.

(ii) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d–3 promulgated under the Exchange Act) of fifty percent (50%) or more of the stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of the Company (irrespective of whether at the time stock of any class or classes of the Company shall have or might have voting power by reason of the happening of any contingency); provided, however, that for purposes of this subsection (f), the following acquisitions will not constitute a Change of Control: (A) any acquisition directly from the Company; (B) any acquisition by the Company or a subsidiary of the Company; or (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company.

(iii) The consummation of a merger or consolidation involving the Company if the stockholders owning the capital and profits (“ownership interests”) of the Company immediately before such merger or consolidation do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power or ownership interests of the Company, or the entity resulting from such merger or consolidation, in substantially the same proportion as their ownership of the combined voting power or ownership interests outstanding immediately before such merger or consolidation.

(iv) There shall occur (A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportion as their ownership of the Company immediately prior to such sale or (B) the approval by stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company.

(v) The dissolution or the complete or partial liquidation of the Company.

In all cases, the determination of whether a Change of Control has occurred shall be made in accordance with Section 409A.

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(g) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(h) “Company” shall, except as otherwise provided in Section 7(j), have the meaning set forth in the preamble hereto.

(i) “Date of Termination” shall mean (i) if the Executive’s employment is terminated due to the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated for any other reason, the date indicated in the Notice of Termination (or the date specified by the Company pursuant to Section 4(b) in connection with a termination by the Executive).

(j) “Disability” shall mean any medically determinable physical or mental impairment that renders the Executive physically or mentally unable regularly to perform his or her duties hereunder for a period in excess of one hundred twenty (120) consecutive days or more than one hundred eighty (180) days in any consecutive twelve (12) month period, as determined by a physician jointly selected by the Company and the Executive.

(k) “Effective Date” shall have the meaning set forth in the preamble hereto.

(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(m) “Executive” shall have the meaning set forth in the preamble hereto.

(n) “Extension Term” shall have the meaning set forth in Section 2(b).

(o) “First Payment Date” shall have the meaning set forth in Section 5(b)(ii).

(p) The Executive shall have “Good Reason” to terminate the Executive’s employment hereunder after the occurrence of one or more of the following conditions without the Executive’s written consent: (i) a material diminution in the Executive’s authority, duties, or responsibilities, as described herein. For the avoidance of any doubt, being asked to assume the duties of a CEO, CFO or General Counsel in a privately held company shall constitute a material diminution of the Executive’s authority, duties or responsibilities having had that authority, duties or responsibilities in a publicly traded company; (ii) a material diminution in the Executive’s Annual Base Salary as described herein; (iii) a material reduction in the package of benefits and incentives, taken as a whole, provided to the Executive (except that employee contributions may be raised to the extent of any cost increases imposed by third parties) or any action by the Company which would materially and adversely affect the Executive’s participation or reduce the Executive’s benefits under any such plans, except to the extent that such benefits and incentives of all other executive officers of the Company are similarly reduced (iv) a material change in the geographic location at which the Executive must perform the Executive’s services hereunder. For the avoidance of any doubt, an increases in the Executive’s one-way commute distance by more than fifty (50) miles from his or her then principal residence shall constitute a material change in the geographic location at which the Executive must perform the Executive’s services hereunder; or (v) any other action or inaction that constitutes a material breach of this Agreement by the Company; and which, in the case of any of the foregoing, continues beyond thirty (30) days

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after the Executive has provided the Company written notice that the Executive believes in good faith that such condition giving rise to such claim of Good Reason has occurred, so long as such notice is provided within ninety (90) days after the initial existence of such condition.

(q) “Independent Directors” shall mean the independent members of the Board.

(r) “Installment Payments” shall have the meaning set forth in Section 5(b)(ii).

(s) “Notice of Termination” shall have the meaning set forth in Section 4(b).

(t) “Person” shall mean any individual, natural person, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), incorporated or unincorporated association, governmental authority, firm, society or other enterprise, organization or other entity of any nature.

(u) “Proprietary Information” shall have the meaning set forth in Section 7(d).

(v) “Release” shall have the meaning set forth in Section 5(b)(ii).

(w) “Restricted Period” shall mean the period from the Effective Date through the end of the Severance Period.

(x) “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.

(y) “Severance Payment” shall have the meaning set forth in Section 5(b)(i).

(z) “Severance Period” shall mean if the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason, the period beginning on the Date of Termination and ending on the first (1^st) anniversary of the Date of Termination.

(aa) “Term” shall have the meaning set forth in Section 2(b).

2. Employment.

(a) In General. The Company shall employ the Executive and the Executive shall enter the employ of the Company, for the period set forth in Section 2(b), in the position set forth in Section 2(c), and upon the other terms and conditions herein provided. The terms and conditions herein provided supersede in their entirety any contradictory terms and conditions in any employee manual, plan, policy, program or other arrangement maintained by the Company. To the extent a term or condition is not detailed herein, the employee manuals, plans, policies, programs or other arrangements maintained by the Company shall govern.

(b) Term of Employment. The term of employment under this Agreement (the “Term”) shall be for the period beginning on the Effective Date and ending on the first (1st)

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anniversary of the Effective Date, unless earlier terminated as provided in Section 4. The Term shall automatically be extended for successive one (1) year periods (each, an “Extension Term” and, collectively with the Term, the “Term”), unless earlier terminated as provided in Section 4.

(c) Position and Duties. During the Term, the Executive: (i) shall serve as Chief Technology Officer of the Company, with responsibilities, duties and authority customary for such position, subject to direction by the CEO of the Company; (ii) shall report directly to the CEO of the Company; (iii) shall devote substantially all the Executive’s working time and efforts to the business and affairs of the Company and its subsidiaries, provided that the Executive may (i) serve on corporate, civic, charitable, industry or professional association boards or committees, subject to the Board’s prior written consent in the case of any such board or committee that relates directly or indirectly to the business of the Company or its subsidiaries (which consent shall not unreasonably be withheld), (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions and (iii) manage his personal investments, so long as none of such activities meaningfully interferes with the performance of the Executive’s duties and responsibilities hereunder, or involves a conflict of interest with the Executive’s duties or responsibilities hereunder or a breach of the covenants contained in Section 7; and (iv) agrees to observe and comply with the Company’s rules and policies as adopted by the Company from time to time, which have been made available to the Executive.

3. Compensation.

(a) Annual Base Salary. During the Term, the Executive shall receive a base salary at a rate of £160,000 per annum, which shall be paid in accordance with the customary payroll practices of the Company, subject to review and adjustment by the Board in its reasonable discretion (the “Annual Base Salary”).

(b) Other Incentive Plans, Benefits and Perquisites. The Executive shall be offered additional employee benefits and perquisites the Company and the Executive negotiate in good faith. The Executive also shall be eligible to participate in such other incentive compensation programs in accordance with their terms as the Company may have in effect from time to time for its senior executive officers and all compensation and other entitlements earned thereunder shall be in addition to, and shall not in any way reduce, the amount payable to the Executive as Annual Base Salary.

(c) Health, Welfare and Retirement Plans; Vacation. To the extent the Executive meets the eligibility requirements for such arrangements, plans or programs, the Executive shall be entitled to:

(i) participate in such health (medical, hospital and/or dental) insurance (“Medical and Health Benefits”), retirement, life insurance, disability insurance, flexible benefits arrangements and accident insurance plans and programs as are maintained in effect from time to time by the Company for its senior executive officers;

(ii) participate in other non-duplicative benefit programs which the Company may from time to time offer generally to senior executive officers of the Company; and

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(iii) take vacations and be entitled to sick leave in accordance with the Company’s Paid Time Off (“PTO”) policy, except that Executive will accrue 160 hours of PTO per year for his or her first five (5) years of service with the Company. Thereafter, the Executive will receive 40 additional hours of PTO for every additional 5 years of service; provided however, that the total amount of PTO that Executive can accrue during one year shall be capped at 240 hours.

(d) For the sake of clarity, the Company may modify its health, welfare, retirement and other benefit plans and vacation and sick leave policies from time to time and the Executive’s rights under these plans are subject to change in the event of any such modifications, provided that he will receive the benefits generally provided to other senior executive officers of the Company.

(e) Business Expenses. During the Term, the Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of the Executive’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and procedures.

4. Termination.

(a) Basis for Termination. The Executive’s employment hereunder is “at-will” and may be terminated by the Company or the Executive, as applicable, without any breach of this Agreement upon the death or Disability of the Executive, with or without Cause, and with or without Good Reason. Executive’s “at-will” status cannot be modified by oral agreement; any modification to this Agreement must be in writing.

(b) Notice of Termination. Any termination of the Executive’s employment by the Company or by the Executive under this Section 4 (other than a termination by reason of the Executive’s death) shall be communicated by a written notice to the other party hereto: (i) indicating in reasonable detail the basis for the termination, and (ii) specifying a Date of Termination which, if submitted by the Executive, shall be at least thirty (30) days following the date of such notice (a “Notice of Termination”); provided, however, that in the event that the Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, accelerate the Date of Termination to any date that occurs following the date of Company’s receipt of such Notice of Termination (even if such date is prior to the date specified in such Notice of Termination). A Notice of Termination submitted by the Company may provide for a Date of Termination on the date the Executive receives the Notice of Termination, or any date thereafter elected by the Company in its sole discretion. The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive hereunder or preclude the Company or the Executive from asserting such fact or circumstance in enforcing the Company’s or the Executive’s rights hereunder.

5. Company Obligations upon Termination of Employment.

(a) In General. Upon a termination of the Executive’s employment for any reason, the Executive (or the Executive’s estate) shall be entitled to receive: (i) any portion of the

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Executive’s Annual Base Salary through the Date of Termination not theretofore paid, (ii) any expenses owed to the Executive under Section 3(e), and (iii) any amount arising from the Executive’s participation in, or benefits under, any incentive compensation plans, employee benefit plans, programs or arrangements under Section 3(b) or 3(c), which amounts shall be payable in accordance with the terms and conditions of any such incentive compensation plans, employee benefit plans, programs or arrangements. Except as otherwise set forth in Section 5(b) or 6(a) below, the payments and benefits described in this Section 5(a) shall be the only payments and benefits payable in the event of the Executive’s termination of employment for any reason.

(b) Severance Payment.

(i) In the event the Executive’s employment shall be terminated by the Company without Cause or by the Executive’s resignation for Good Reason, then, in addition to the payments and benefits described in Section 5(a) above, the Company shall, during the Severance Period, pay to the Executive in equal installments, an amount equal to 18 months of Executive’s Annual Base Salary in effect at the Date of Termination (the “Severance Payment”); and (2) to the extent that bonuses are paid to other Senior Executives for the fiscal year in which the Date of Termination occurs, then Executive shall be entitled to a pro-rata share of his or her bonus; and (3) for a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of Medical and Health benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits, to the extent that reasonably similar medical and health benefits are available to the Executive pursuant to such employer-provided plan. The Company may satisfy its obligations under this Section 5(b)(i), by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or his family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by Section 5(b)(i)(3), the Company shall pay for reasonably similar medical and health benefits during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in Section 5(b)(i)(3).

(ii) The Severance Payment shall be in lieu of notice or any other severance benefits to which the Executive might otherwise be entitled. Notwithstanding anything herein to the contrary, (A) no portion of the Severance Payment shall be paid unless, on or prior to the thirtieth (30^th) day following the Date of Termination, the Executive timely executes a general waiver and release of claims agreement substantially in the form attached hereto as Exhibit A (the “Release”), which Release shall not have been revoked by the Executive prior to the expiration of the period (if any) during which any portion of such Release is revocable under applicable law, and (B) as of the first date on which the Executive violates any covenant contained in Section 7, any remaining unpaid portion of the Severance Payment shall thereupon be forfeited. Subject to the provisions of Section 9, the Severance Payment shall be paid in equal installments during the Severance Period, at the same time and in the same manner as the Annual Base Salary would have been paid had the Executive remained in active employment during the Severance Period, in accordance with the Company’s normal payroll practices in effect on the Date of Termination; provided that any installment that would otherwise have been paid prior to the first normal payroll payment date occurring on or after the thirtieth (30^th) day following the Date of Termination (such

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payroll date, the “First Payment Date”) shall instead be paid on the First Payment Date. In no event shall any Severance Payment be made prior to the thirtieth (30^th) day following the Date of Termination. For purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), the Executive’s right to receive the Severance Payment in the form of installment payments (the “Installment Payments”) shall be treated as a right to receive a series of separate payments and, accordingly, each Installment Payment shall at all times be considered a separate and distinct payment.

(c) The provisions of this Section 5 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program or other arrangement maintained by the Company.

6. Change of Control.

(a) Termination in the Event of a Change of Control. If, during the fifteen (15) month period beginning three (3) months prior to a Change of Control and ending twelve (12) months after such Change of Control, the Company terminates Executive’s employment without Cause, or Executive terminates his or her employment for Good Reason, then the Company shall pay or provide the benefits set forth in Section 5(a) and subsections (i), (ii), and (iii) below.

(i) The Company shall pay to Executive in a lump sum in cash, within thirty days after the Date of Termination, the aggregate of the following amounts: (1) one and one half times the Executive’s Annual Base Salary in effect on the Date of Termination plus (2) the Executive’s target bonus for the fiscal year in which the Date of Termination occurs.

(ii) For a period of two years following the Date of Termination, the Company shall continue to provide or pay the cost of all employee Medical and Health Benefits to Executive and/or Executive’s family. If the Executive becomes reemployed with another employer during such period and is eligible to receive employee medical and health benefits under another employer provided plan, the Company shall not be obligated to continue to provide the Medical and Health benefits to the extent that new employer’s plan provides reasonably similar medical and health benefits. If applicable, the Company may satisfy its obligations under this Section 6(a)(ii), in part, by paying the applicable premiums for continuation coverage pursuant to COBRA for Executive and/or his family, for as long as such COBRA coverage is available under the law; provided however, that if any COBRA coverage cannot be extended the full two years required by this Section 6(a)(ii), the Company shall pay for reasonably similar medical and health benefits during the period beginning when COBRA coverage ceases and the end of the two year period as set forth in this Section 6(a)(ii).

(iii) As of the Date of Termination, all unvested stock options held by Executive shall become fully vested and exercisable and shall remain exercisable until the earlier of: (A) first anniversary of the Date of Termination; or (B) the date on which the option would have expired by its original terms (disregarding any early termination due to Executive’s separation from service). All restricted stock awards held by Executive, if applicable, shall become fully vested and no longer subject to repurchase or forfeiture; and restricted stock units held by Executive, if applicable, shall become fully vested. Any performance-based equity awards shall vest at the target performance level.

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(b) Limitation on Change of Control Payments and Benefits. Notwithstanding anything in this Agreement to the contrary, if any of the payments or benefits to be made or provided in connection with the Agreement, together with any other payments or benefits which the Executive has the right to receive from the Company or any entity which is a member of an “affiliated group” (as defined in section 1504(a) of the Code without regard to section 1504(b) of the Code) of which the Company is a member constitute an “excess parachute payment” (as defined in section 280G(b) of the Code), the payments or benefits to be made or provided in connection with this Agreement will be reduced to the extent necessary to prevent any portion of such payments or benefits from becoming nondeductible by the Company pursuant to section 280G of the Code or subject to the excise tax imposed under section 4999 of the Code. The determination as to whether any such decrease in the payments or benefits to be made or provided in connection with this Agreement is necessary must be made in good faith by a nationally recognized accounting firm (the “Accounting Firm”), and such determination will be conclusive and binding upon Executive and the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Executive will have the right to review and comment on any calculations prepared by the Accounting Firm. In addition, if and to the extent such right would not cause any payment or benefit to be subject to any adverse tax consequences under section 409A of the Code (including as a result of any “substitution” within the meaning of Treas. Reg. §1.409A-3(f)), Executive will have the right to designate the particular payments or benefits that are to be reduced or eliminated.

(c) Treatment of Unvested Stock in Stock Acquisition. For avoidance of doubt, in the event the Executive is terminated in connection with a Change of Control transaction in which the Company’s stock is acquired for cash or cash equivalents, Executive shall have the same right to participate in the Change of Control transaction with respect to any unvested shares held by Executive as the Company’s stockholders have generally with respect to shares of stock that are not subject to vesting.

7. Restrictive Covenants. In consideration of the Executive’s employment or continued employment with the Company and the Severance Payment, the Executive agrees to comply with the following restrictive covenants:

(a) The Executive shall not, at any time during the Restricted Period, directly or indirectly engage in, have any equity interest in, or manage or operate any person, firm, corporation, partnership, business or entity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or otherwise) that engages in (either directly or through any subsidiary or Affiliate thereof) any business or activity (i) relating to (A) the design, manufacture, marketing, sale or distribution of video game platforms and accessories for videogame platforms, personal computer, Mac, iPod or other mobile devices or (B) the development of flight simulation hardware, which competes with the business of the Company or any entity owned by the Company, or (ii) which the Company or any of its Affiliates has taken active steps to engage in or acquire, but only if the Executive directly or indirectly engages in, has any equity interest in, or manages or operates, such business or activity (whether as director, officer, employee, agent, representative, partner, security holder, consultant or

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otherwise). Notwithstanding the foregoing, the Executive shall be permitted to acquire a passive stock or equity interest in such a business; provided that such stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business.

(b) The Executive shall not, at any time during the Restricted Period, directly or indirectly, either for himself or on behalf of any other entity, (i) recruit or otherwise solicit or induce any employee, customer, subscriber or supplier of the Company to terminate its employment or arrangement with the Company, or otherwise change its relationship with the Company, or (ii) hire, or cause to be hired, any person who was employed by the Company at any time during the twelve (12)-month period immediately prior to the Date of Termination or who thereafter becomes employed by the Company.

(c) The provisions contained in Sections 7(a) and 7(b) may be altered and/or waived to be made less restrictive on the Executive with the prior written consent of the Board or the Independent Directors.

(d) Except as the Executive reasonably and in good faith determines to be required in the faithful performance of the Executive’s duties hereunder or in accordance with Section 7(f), the Executive shall, during the Term and after the Date of Termination, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any person, firm, corporation or other entity, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. The Executive’s obligation to maintain and not use, disseminate, disclose or publish, or use for the Executive’s benefit or the benefit of any person, firm, corporation or other entity, any Proprietary Information after the Date of Termination will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of the Executive’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company. The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).

(e) Upon termination of the Executive’s employment with the Company for any reason, the Executive will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products or processes.

(f) The Executive may respond to a lawful and valid subpoena or other legal process but shall give the Company (if lawfully permitted to do so) the earliest possible notice thereof, and shall, as much in advance of the return date as possible, make available to the

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Company and its counsel the documents and other information sought, and shall assist such counsel in resisting or otherwise responding to such process. The Executive may also disclose Proprietary Information if: (i) in the reasonable written opinion of counsel for the Executive furnished to the Company, such information is required to be disclosed for the Executive not to be in violation of any applicable law or regulation or (ii) the Executive is required to disclose such information in connection with the enforcement of any rights under this Agreement or any other agreements between the Executive and the Company.

(g) The Executive agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, equity holders or Affiliates, either orally or in writing, at any time; provided that the Executive may confer in confidence with the Executive’s legal representatives, make truthful statements to any government agency in sworn testimony, or make truthful statements as otherwise required by law. The Company agrees that, upon the termination of the Executive’s employment hereunder, it shall advise its directors and executive officers not to disparage the Executive, either orally or in writing, at any time; provided that they may confer in confidence with the Company’s and their legal representatives and make truthful statements as required by law.

(h) Prior to accepting other employment or any other service relationship during the Restricted Period, the Executive shall provide a copy of this Section 7 to any recruiter who assists the Executive in obtaining other employment or any other service relationship and to any employer or person with which the Executive discusses potential employment or any other service relationship.

(i) In the event the terms of this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

(j) As used in this Section 7, the term “Company” shall include the Company, its parent, related entities, and any of its direct or indirect subsidiaries.

8. Injunctive Relief. The Executive recognizes and acknowledges that a breach of the covenants contained in Section 7 will cause irreparable damage to the Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in Section 7, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.

9. Section 409A.

(a) General. The parties hereto acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and incorporate the terms and

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conditions required by, Section 409A. Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts payable hereunder will be immediately taxable to the Executive under Section 409A, the Company reserves the right to (without any obligation to do so or to indemnify the Executive for failure to do so) (i) adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect) that it determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and to avoid less favorable accounting or tax consequences for the Company and/or (ii) take such other actions it determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder. Notwithstanding anything herein to the contrary, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Executive or any other individual to the Company or any of its Affiliates, employees or agents.

(b) Separation from Service under Section 409A; Section 409A Compliance. Notwithstanding anything herein to the contrary: (i) no termination or other similar payments and benefits hereunder shall be payable unless the Executive’s termination of employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) if the Executive is deemed at the time of the Executive’s separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of any termination or other similar payments and benefits to which the Executive may be entitled hereunder (after taking into account all exclusions applicable to such payments or benefits under Section 409A) is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of such payments and benefits shall not be provided to the Executive prior to the earlier of (x) the expiration of the six (6)-month period measured from the date of the Executive’s “separation from service” with the Company (as such term is defined in the Department of Treasury Regulations issued under Section 409A) or (y) the date of the Executive’s death; provided that upon the earlier of such dates, all payments and benefits deferred pursuant to this Section 9(b)(ii) shall be paid in a lump sum to the Executive, and any remaining payments and benefits due hereunder shall be provided as otherwise specified herein; (iii) the determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of the Executive’s separation from service shall be made by the Company in accordance with the terms of Section 409A (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto); (iv) to the extent that any Installment Payments under this Agreement are deemed to constitute “nonqualified deferred compensation” within the meaning of Section 409A, for purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), each such payment that the Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment; (v) to the extent that any reimbursements or corresponding in-kind benefits provided to the Executive under this Agreement are deemed to constitute “deferred compensation” under Section 409A, such reimbursements or benefits shall be provided reasonably promptly, but in no event later than December 31 of the year following the year in which the expense was incurred, and in any event in accordance with Section 1.409A-3(i)(1)(iv) of the Department of

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Treasury Regulations; and (vi) the amount of any such payments or expense reimbursements in one calendar year shall not affect the expenses or in-kind benefits eligible for payment or reimbursement in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

10. Assignment and Successors. The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of the Company, by merger or otherwise, and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its Affiliates. The Executive may not assign the Executive’s rights or obligations under this Agreement to any individual or entity. This Agreement shall be binding upon and inure to the benefit of the Company, the Executive and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.

11. Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of California, without reference to the principles of conflicts of law of California or any other jurisdiction, and where applicable, the laws of the United States.

12. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13. Notices. Any notice, request, claim, demand, document and other communication hereunder to any party hereto shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telex, telecopy, or certified or registered mail, postage prepaid, to the following address (or at any other address as any party hereto shall have specified by notice in writing to the other party hereto):

If to the Company:

Mad Catz Interactive, Inc.

10680 Treena Street, Suite 500

San Diego, California 92131

Attn: General Counsel

Facsimile: (858) 790-5018

If to the Executive, at the address set forth on the signature page hereto.

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

15. Entire Agreement. This Agreement (together with any other agreements and instruments contemplated hereby or referred to herein) is intended by the parties hereto to be the final expression of their agreement with respect to the employment of the Executive by the

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Company and may not be contradicted by evidence of any prior or contemporaneous agreement (including, without limitation, any term sheet or offer letter). The parties hereto further intend that this Agreement shall constitute the complete and exclusive statement of its terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

16. Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Executive and a duly authorized officer of the Company and approved by the Board, which expressly identifies the amended provision of this Agreement. By an instrument in writing similarly executed and approved by the Board, the Executive or a duly authorized officer of the Company may waive compliance by the other party or parties hereto with any provision of this Agreement that such other party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure to comply or perform. No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

17. No Inconsistent Actions. The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement. Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

18. Construction. This Agreement shall be deemed drafted equally by both of the parties hereto. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any party hereto shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (a) the plural includes the singular and the singular includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

19. Arbitration. Any dispute or controversy based on, arising under or relating to this Agreement shall be settled exclusively by final and binding arbitration, conducted before a single neutral arbitrator in San Diego, California in accordance with the rules and procedures of JAMS, by a neutral arbitrator who is mutually agreeable to the parties hereto, or appointed by JAMS if the parties cannot agree. Arbitration may be compelled, and judgment may be entered on the arbitration award in any court having jurisdiction; provided, however, that the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Section 7, and the Executive hereby consents that such restraining order or injunction may be granted without requiring the Company to post a

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bond. The arbitrator shall be entitled to award any relief available in a court of law. Each party shall bear its own costs and attorneys’ fees in connection with arbitration; provided that the parties shall bear equally the cost of the arbitrator and JAMS’ administrative fees.

20. Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

21. Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement, any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

22. Absence of Conflicts; Executive Acknowledgement. The Executive hereby represents that from and after the Effective Date the performance of the Executive’s duties hereunder will not breach any other agreement to which the Executive is a party. The Executive acknowledges that the Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on the Executive’s own judgment.

23. Survival. The expiration or termination of the Term shall not impair the rights or obligations of any party hereto which shall have accrued prior to such expiration or termination.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written.

COMPANY		EXECUTIVE
By:	/s/ Karen McGinnis	/s/ Andrew Young
	Karen McGinnis President & CEO	Andrew Young
		Address:

[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]

EXHIBIT A

Form of Release

Andrew Young (the “Executive”) agrees for the Executive, the Executive’s spouse and child or children (if any), the Executive’s heirs, beneficiaries, devisees, executors, administrators, attorneys, personal representatives, successors and assigns, hereby forever to release, discharge, and covenant not to sue Mad Catz Interactive, Inc., a corporation existing under the federal laws of Canada (the “Company”), and any of its past, present, or future parent, affiliated, related, and/or subsidiary entities, and all of the past and present directors, shareholders, officers, general or limited partners, employees, agents, and attorneys, and agents and representatives of such entities, and employee benefit plans in which the Executive is or has been a participant by virtue of his employment with the Company (collectively, the “Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected, which the Executive has or may have had against such Releasees based on any events or circumstances arising or occurring on or prior to the date this release (the “Release”) is executed, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever, (a) the Executive’s employment with the Company or its subsidiaries or the termination thereof or (b) the Executive’s status at any time as a holder of any securities of the Company, and any and all claims arising under federal, state, or local laws relating to employment, or securities, including without limitation claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, claims of any kind that may be brought in any court or administrative agency, any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act, and similar state or local statutes, ordinances, and regulations; provided, however, notwithstanding anything to the contrary set forth herein, that this Release shall not extend to (i) benefit claims under employee pension or welfare benefit plans in which the Executive is a participant by virtue of his employment with the Company or its subsidiaries, (ii) any rights under that certain Employment Agreement, dated as of February 5, 2016, by and between the Company and the Executive, (iii) any rights of indemnification the Executive may have under any written agreement between the Executive and the Company (or its affiliates), the Company’s Articles of Incorporation, its Bylaws, any applicable statute or common law, or pursuant to any applicable insurance policy, (iv) unemployment compensation, (v) contractual rights to vested equity awards, (vi) COBRA benefits and (viii) any rights that may not be waived as a matter of law.

The Executive understands that this Release includes a release of claims arising under the Age Discrimination in Employment Act (ADEA). The Executive understands and warrants that he has been given a period of 21 days to review and consider this Release. The Executive further warrants that he understands that he may use as much or all of his 21-day period as he wishes before signing, and warrants that he has done so. The Executive further warrants that he understands that, with respect to the release of age discrimination claims only, he has a period of

seven days after executing on the second signature line below to revoke the release of age discrimination claims by notice in writing to the Company.

The Executive is hereby advised to consult with an attorney prior to executing this Release. By his signature below, the Executive warrants that he has had the opportunity to do so and to be fully and fairly advised by that legal counsel as to the terms of this Release.

ACKNOWLEDGEMENT (AS TO ALL CLAIMS

OTHER THAN AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of his choosing, signifies his agreement to the terms of this Release (other than as it relates to age discrimination claims) by his signature below.

Andrew Young Date

ACKNOWLEDGEMENT (AGE DISCRIMINATION CLAIMS)

The undersigned, having had full opportunity to review this Release with counsel of his choosing, signifies his agreement to the terms of this Release (as it relates to age discrimination claims) by his signature below.

Andrew Young Date

EX-99.1

Exhibit 99.1

MAD CATZ^® ANNOUNCES EXECUTIVE AND BOARD LEADERSHIP CHANGES

San Diego, CA – February 8, 2016 – Mad Catz Interactive, Inc. (“Mad Catz” or the “Company”) (NYSE MKT/TSX: MCZ), today announced several changes to its executive leadership and Board of Directors, effective immediately.

On February 5, 2016, Mr. Thomas Brown resigned from the Company’s Board of Directors, including from his role as Chairman and from his position as a member of the Board’s Audit Committee. The Company’s Board of Directors has named Mr. John Nyholt as Chairman. Mr. Nyholt has been a director of the Company since October 2013.

In addition, the Company’s Board of Directors accepted the resignation of Mr. Darren Richardson from his position as President and Chief Executive Officer and from his seat as a member of the Company’s Board of Directors. Ms. Karen McGinnis, previously the Company’s Chief Financial Officer, has been named President and Chief Executive Officer of Mad Catz and has been appointed to the Company’s Board of Directors.

Replacing Ms. McGinnis, Mr. David McKeon has been appointed Chief Financial Officer. Mr. McKeon previously served as the Company’s Vice President, Corporate Controller.

Further, Mr. Whitney Peterson has resigned as the Company’s Senior Vice President of Business Affairs, General Counsel and Corporate Secretary. He was replaced as General Counsel and Corporate Secretary by Mr. Tyson Marshall, who previously served as Mad Catz’ Associate General Counsel. The Company also named Mr. Andrew Young to the newly created position of Chief Technology Officer. Mr. Young previously served as Vice President, Product Development at Mad Catz.

Ms. Karen McGinnis, commented, “We recognize the tremendous value that Thomas, Darren and Whitney have brought to Mad Catz during their tenure and thank them for their many contributions throughout the years.”

“Looking ahead, we are confident that we have a talented leadership team in place that will enable us to steer the Company on a steady course in its operations and financial performance as we look to grow our business and reward our shareholders.”

As previously announced, the Company will issue its fiscal 2016 third quarter results following the market close on February 9, 2016, and will host a conference call and simultaneous webcast to discuss the results at 5:00 p.m. ET. The call can be accessed by dialing (212) 231-2927.

About Mad Catz

Mad Catz Interactive, Inc. (“Mad Catz”) (NYSE MKT/TSX: MCZ) is a global provider of innovative interactive entertainment products marketed under its Mad Catz^® (gaming), Tritton^® (audio), and Saitek^® (simulation) brands. Mad Catz products cater to passionate gamers across multiple platforms including in-home gaming consoles, handheld gaming consoles, Windows^® PC and Mac^® computers, smart phones, tablets and other mobile devices. Mad Catz distributes its products through its online store as well as distribution via many leading retailers around the globe. Headquartered in San Diego, California, Mad Catz maintains offices in Europe and Asia. For additional information about Mad Catz and its products, please visit the Company’s website at www.madcatz.com.

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Social Media

         

Safe Harbor

Information in this press release that involves the Company’s expectations business prospects, plans, intentions or strategies regarding its future are forward-looking statements that are not facts and that involve substantial risks and uncertainties. You can identify these statements by the use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “goal,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause the Company’s actual future results to differ materially from those expressed in the forward-looking statements set forth in this release are the following: continuing demand by consumers for videogames and accessories; continued financial viability of our largest customers; the ability to maintain or renew the Company’s licenses; competitive developments affecting the Company’s current products; first-party price reductions; availability of capital under our credit facilities; the ability to successfully market both new and existing products domestically and internationally; difficulties or delays in manufacturing; unanticipated product delays; or a downturn in the market or industry. A further list and description of these and other factors, risks, uncertainties and other matters can be found in the Company’s most recent annual report, and any subsequent quarterly reports, filed with the U.S. Securities and Exchange Commission and the Canadian Securities Administrators. The forward-looking statements in this release are based upon information available to the Company as of the date of this release, and the Company assumes no obligation to update any such forward-looking statements as a result of new information or future events or developments, except as may be require by applicable law. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of the future performance of the Company and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.

Contact:
David McKeon	Joseph Jaffoni, Norberto Aja, Jim Leahy
Chief Financial Officer	JCIR
Mad Catz Interactive, Inc.	mcz@jcir.com or (212) 835-8500
dmckeon@madcatz.com or (858) 790-5045

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EX-99.2

Exhibit 99.2

MAD CATZ^® REPORTS FISCAL 2016 THIRD QUARTER FINANCIAL RESULTS

AND ANNOUNCES ADOPTION OF RESTRUCTURING PLAN

San Diego, CA – February 9, 2016 – Mad Catz Interactive, Inc. (“Mad Catz” or the “Company”) (NYSE MKT/TSX: MCZ), today announced financial results for the fiscal 2016 third quarter ended December 31, 2015. Mad Catz also announced the adoption of a Company-wide restructuring plan that includes several executive level and Board of Directors changes as specified in the Company’s previous announcement dated February 8, 2016.

Key Highlights of Fiscal 2016 Third Quarter and Subsequent:

• Fiscal 2016 third quarter net sales increased 114% to $65.0 million, the second highest quarterly net sales in the Company’s history;

• Net sales growth driven by a 391% increase in net sales to the Americas, partially offset by a 6% decrease in net sales to EMEA and a 56% decrease in net sales to APAC;

• Gross margin declined to 17.5% from 26.9% in the prior year quarter;

• Total operating expenses increased 44% from the prior year period to $8.6 million;

• Operating income increased 28% to $2.8 million;

• Diluted net income per share was $0.02 for the fiscal 2016 third quarter, consistent with the prior year;

• Net position of bank loans, less cash and restricted cash, of $17.7 million at December 31, 2015, compared to $12.7 million at September 30, 2015 and $10.7 million at December 31, 2014;

• Sold no shares under the “At-the-Market” (“ATM”) equity offering program;

• Shipped F.R.E.Q.^TE™ 7.1 surround sound gaming headset for Windows PC;

• Announced the Tritton Katana HD 7.1 surround sound gaming headset, a 2016 CES Innovation Award Honoree and the First HDMI™-powered gaming headset for gaming consoles, Windows PC, smart devices and HDMI audio sources;

• Announced the R.A.T. 1 gaming mouse, a 2016 CES Innovation Award Honoree;

• Shipped the stand-alone Rock Band™ 4 Wireless Fender™ Stratocaster™ Guitar Controller and the stand-alone Rock Band™ 4 Triple Cymbals Expansion Kit;

• Announced new range of Street Fighter™ V licensed controllers, including fightsticks, Tournament Edition fightsticks and fightpad controllers;

• Announced the E.S. PRO^1™ Gaming Earbuds specifically designed for eSports gamers;

• Announced that the Company will be the first to offer traditional video game controller hardware for the “Designed for Samsung” program;

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• Announced executive level and Board of Directors changes including the departure of Chairman of the Board, Thomas Brown; President and CEO, Darren Richardson; SVP Business Affairs, General Counsel and Secretary, Whitney Peterson; and, the appointment of John Nyholt as Chairman of the Board; Karen McGinnis as President, CEO and member of the Board of Directors; David McKeon as CFO; Tyson Marshall as General Counsel and Secretary; and Andrew Young as Chief Technology Officer; and,

• The Board of Directors approved a restructuring plan focused on lowering operating costs, increasing efficiencies and better aligning the Company’s resources with its needs and goals.

Summary of Financials

(in thousands, except margins and per share data)

	Three Months Ended December 31,									Nine Months Ended December 31,
	2015			2014			Change			2015			2014			Change
Net sales	$	65,038		$	30,451			114	%	$	116,930		$	69,665			68	%
Gross profit		11,405			8,178			39	%		23,289			19,972			17	%
Total operating expenses		8,584			5,971			44	%		23,371			19,320			21	%
Operating income		2,821			2,207			28	%		(82	)		652			(113	)%
Net income (loss)		1,219			1,358			(10	)%		(4,357	)		(809	)		439	%
Net income (loss) per share, basic and diluted	$	0.02		$	0.02			0	%	$	(0.06	)	$	(0.01	)		500	%
Gross margin		17.5	%		26.9	%		(940	) bps		19.9	%		28.7	%		(880	) bps
Adjusted EBITDA (1)	$	2,950		$	2,713			9	%	$	1,276		$	2,156			(41	)%

(1) Definitions, disclosures and reconciliations regarding non-GAAP financial information are included on page 8.

Commenting on the Company’s fiscal 2016 third quarter results, Karen McGinnis, President and Chief Executive Officer of Mad Catz, said, “Our quarterly net sales were the second highest in the Company’s history reflecting strong Rock Band 4 sales, which were partially offset by continuing softness in sales of our audio and PC gaming products. However, Rock Band sell-through was lower than originally forecast resulting in higher inventory balances as well as lower margins due to increased promotional activity with retailers. Looking ahead, we are confident in our ability to further monetize our diverse range of products and are focused on updating and improving many of our product offerings to better leverage the opportunities we see ahead.”

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Summary of Key Sales Metrics

	Three Months Ended December 31,									Nine Months Ended December 31,
(in thousands)	2015			2014			Change			2015			2014			Change
Net Sales by Geography
Americas	$	47,002		$	9,573			391	%	$	79,003		$	22,281			255	%
EMEA		16,702			17,825			(6	)%		32,000			37,104			(14	)%
APAC		1,334			3,053			(56	)%		5,927			10,280			(42	)%
	$	65,038		$	30,451			114	%	$	116,930		$	69,665			68	%
Sales by Platform as a % of Gross Sales
Next gen consoles (a)		79	%		21	%					71	%		19	%
PC and Mac		14	%		43	%					19	%		44	%
Universal		5	%		25	%					6	%		23	%
Smart devices		2	%		5	%					3	%		8	%
Legacy consoles (b)		0	%		6	%					1	%		6	%
		100	%		100	%					100	%		100	%
Sales by Category as a % of Gross Sales
Specialty controllers		72	%		22	%					67	%		23	%
Audio		16	%		47	%					18	%		43	%
Mice and keyboards		6	%		23	%					8	%		23	%
Accessories		4	%		4	%					3	%		4	%
Games and other		1	%		—	%					2	%		1	%
Controllers		1	%		4	%					2	%		6	%
		100	%		100	%					100	%		100	%
Sales by Brand as a % of Gross Sales
Mad Catz		78	%		34	%					72	%		34	%
Tritton		15	%		44	%					17	%		39	%
Saitek		6	%		17	%					9	%		18	%
Other		1	%		5	%					2	%		9	%
		100	%		100	%					100	%		100	%

(a) Includes products developed for Xbox One, PlayStation 4 and Wii U.

(b) Includes products developed for Xbox 360, PlayStation 3 and Wii.

Restructuring Plan

On February 5, 2016, the Company’s Board of Directors approved a restructuring plan focused on lowering operating costs, increasing efficiencies and better aligning its workforce with the needs of the business. The plan consists of a reduction in the number of positions across the organization equal to approximately 37% of the total workforce and includes changes at the executive level. As a result of these actions, the Company expects to record a pre-tax cash restructuring charge of approximately $3.0 million during the fourth quarter of fiscal 2016, comprised primarily of severance and benefits afforded to terminated employees and executive officers (inclusive of amounts due Messrs. Richardson and Peterson pursuant to their amended and restated employment agreements, dated as of April 22, 2014). The Company anticipates that the actions associated with these headcount reductions will be substantially completed by the end of the fourth quarter of fiscal 2016, and that these actions will result in annual savings in excess of $5.0 million starting in the first quarter of fiscal 2017.

In addition and as announced yesterday on February 8, 2016, the Company’s Board of Directors approved several changes to its executive leadership team and Board of Directors composition, effective immediately. Those changes include:

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Departures

• Thomas Brown resigned from the Company’s Board, including from his roles as Chairman of the Board and member of the Audit Committee;

• Darren Richardson agreed to resign from his position as President and Chief Executive Officer of the Company and as a member of the Company’s Board of Directors; and,

• Whitney Peterson agreed to resign from his position as Senior Vice President of Business Affairs, General Counsel, and Corporate Secretary of the Company.

Appointments

• Mr. John Nyholt as Chairman of the Board. Mr. Nyholt has been a director of the Company since October 2013;

• Karen McGinnis as President and Chief Executive Officer and member of the Company’s Board. Ms. McGinnis was previously Chief Financial Officer of the Company;

• David McKeon as Chief Financial Officer. Mr. McKeon was previously VP, Corporate Controller of the Company;

• Tyson Marshall as General Counsel and Corporate Secretary. Mr. Marshall was previously Associate General Counsel of the Company; and,

• Andrew Young as Chief Technology Officer. Mr. Young was previously Vice President, Product Development of the Company.

Ms. McGinnis, added, “Today, we are announcing a restructuring plan that we strongly believe will enable Mad Catz to be more competitive and increase our focus on operational, technological and commercial actions that will help us achieve our long-term vision. These changes will allow us to operate more effectively and help create an organization that is more agile, able to pursue growth and regain share in our core markets by simplifying our processes and reducing our operating costs, thus increasing our competitiveness and profitability without compromising the quality of our product offering. This realignment of our resources will also enable us to better support strategic initiatives that will make our product slate more competitive, help us gain added consumer interest and create sustainable shareholder value.

“In closing, I’d like to recognize the tremendous value that Thomas, Darren and Whitney have brought to Mad Catz during their tenure, thank them for their many contributions throughout the years and wish them the very best.”

The Company will host a conference call and simultaneous webcast on February 9, 2016, at 5:00 p.m. ET, which can be accessed by dialing (212) 231-2927. Following its completion, a replay of the call can be accessed for 30 days at the Company’s Web site (www.madcatz.com, select “About Us/Investor Relations”) or via telephone at (800) 633-8284 (reservation #21804861) or, for International callers, at (402) 977-9140.

About Mad Catz

Mad Catz Interactive, Inc. (“Mad Catz”) (NYSE MKT/TSX: MCZ) is a global provider of innovative interactive entertainment products marketed under its Mad Catz^® (gaming), Tritton^® (audio), and Saitek^® (simulation) brands. Mad Catz products cater to passionate gamers across multiple platforms including in-home gaming consoles, handheld gaming consoles, Windows^® PC and Mac^® computers, smart phones, tablets and other mobile devices. Mad Catz distributes its products through its online store as well as distribution via many leading retailers around the globe. Headquartered in San Diego, California, Mad Catz maintains offices in Europe and Asia. For additional information about Mad Catz and its products, please visit the Company’s website at www.madcatz.com.

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Social Media

         

Safe Harbor

Information in this press release that involves the Company’s expectations business prospects, plans, intentions or strategies regarding its future are forward-looking statements that are not facts and that involve substantial risks and uncertainties. You can identify these statements by the use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “goal,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause the Company’s actual future results to differ materially from those expressed in the forward-looking statements set forth in this release are the following: continuing demand by consumers for videogames and accessories; continued financial viability of our largest customers; the ability to maintain or renew the Company’s licenses; competitive developments affecting the Company’s current products; first-party price reductions; availability of capital under our credit facilities; ability to timely execute the restructuring plan in a manner that will positively impact our financial condition and results of operations and not disrupt our business operations; the ability to successfully market both new and existing products domestically and internationally; difficulties or delays in manufacturing; unanticipated product delays; or a downturn in the market or industry. A further list and description of these and other factors, risks, uncertainties and other matters can be found in the Company’s most recent annual report, and any subsequent quarterly reports, filed with the U.S. Securities and Exchange Commission and the Canadian Securities Administrators. The forward-looking statements in this release are based upon information available to the Company as of the date of this release, and the Company assumes no obligation to update any such forward-looking statements as a result of new information or future events or developments, except as may be require by applicable law. Forward-looking statements believed to be true when made may ultimately prove to be incorrect. These statements are not guarantees of the future performance of the Company and are subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.

Contact:
David McKeon	Joseph Jaffoni, Norberto Aja, Jim Leahy
Chief Financial Officer	JCIR
Mad Catz Interactive, Inc.	mcz@jcir.com or (212) 835-8500
dmckeon@madcatz.com or (858) 790-5045

- TABLES FOLLOW -

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Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Net sales	$	65,038		$	30,451		$	116,930		$	69,665
Cost of sales		53,633			22,273			93,641			49,693
Gross profit		11,405			8,178			23,289			19,972
Operating expenses:
Sales and marketing		4,865			2,673			12,038			8,562
General and administrative		2,600			2,337			8,132			8,210
Research and development		1,007			852			2,869			2,220
Amortization of intangible assets		112			109			332			328
Total operating expenses		8,584			5,971			23,371			19,320
Operating income (loss)		2,821			2,207			(82	)		652
Other expense:
Interest expense, net		(657	)		(238	)		(1,278	)		(563	)
Foreign currency exchange loss, net		(657	)		(83	)		(750	)		(500	)
Change in fair value of warrant liabilities		1,200			1			283			56
Other income		18			13			40			92
Total other expense		(96	)		(307	)		(1,705	)		(915	)
Income (loss) before income taxes		2,725			1,900			(1,787	)		(263	)
Income tax expense		(1,506	)		(542	)		(2,570	)		(546	)
Net income (loss)	$	1,219		$	1,358		$	(4,357	)	$	(809	)
Net income (loss) per share:
Basic	$	0.02		$	0.02		$	(0.06	)	$	(0.01	)
Diluted	$	0.02		$	0.02		$	(0.06	)	$	(0.01	)
Shares used in per share computations:
Basic		73,469,571			64,488,798			73,469,571			64,240,446
Diluted		73,902,905			64,644,470			73,469,571			64,240,446

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Consolidated Balance Sheets

(in thousands)

(Unaudited)

	December 31, 2015			March 31, 2015
ASSETS
Current assets:
Cash	$	3,986		$	5,142
Restricted cash		5,780			—
Accounts receivable, net		26,944			7,823
Other receivables		1,384			560
Inventories		27,738			15,479
Deferred tax assets		169			2,245
Income taxes receivable		341			967
Prepaid expenses and other current assets		2,707			1,293
Total current assets		69,049			33,509
Deferred tax assets		7,585			7,605
Other assets		606			418
Property and equipment, net		3,682			3,376
Intangible assets, net		2,377			2,584
Total assets	$	83,299		$	47,492
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank loans	$	27,502		$	7,920
Accounts payable		28,351			16,404
Accrued liabilities		12,778			4,196
Notes payable		637			1,015
Income taxes payable		536			141
Total current liabilities		69,804			29,676
Notes payable, less current portion		158			36
Warrant liabilities		904			1,187
Deferred tax liabilities		43			43
Deferred rent		691			762
Total liabilities		71,600			31,704
Shareholders’ equity:
Common stock		63,485			63,128
Accumulated other comprehensive loss		(5,212	)		(5,123	)
Accumulated deficit		(46,574	)		(42,217	)
Total shareholders’ equity		11,699			15,788
Total liabilities and shareholders’ equity	$	83,299		$	47,492

7

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Nine Months Ended December 31,
	2015			2014
Cash flows from operating activities:
Net loss	$	(4,357	)	$	(809	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,711			1,549
Accrued and unpaid interest expense on note payable		—			10
Amortization of deferred financing fees		262			57
Loss on disposal of assets		4			8
Stock-based compensation		357			376
Change in fair value of warrant liabilities		(283	)		(56	)
Provision for deferred income taxes		2,096			114
Changes in operating assets and liabilities:
Accounts receivable		(19,150	)		(7,314	)
Other receivables		(825	)		511
Inventories		(12,277	)		(1,460	)
Prepaid expenses and other current assets		(1,168	)		(49	)
Other assets		114			36
Accounts payable		12,031			2,585
Accrued liabilities		8,698			(292	)
Deferred rent		(71	)		553
Income taxes receivable/payable		1,019			(50	)
Net cash used in operating activities		(11,839	)		(4,231	)
Cash flows from investing activities:
Purchases of intangible assets		(125	)		—
Purchases of property and equipment		(1,600	)		(1,604	)
Net cash used in investing activities		(1,725	)		(1,604	)
Cash flows from financing activities:
Borrowings on bank loans		103,629			53,839
Repayments on bank loans		(84,047	)		(44,824	)
Payment of financing fees		(818	)		(50	)
Changes in restricted cash		(5,780	)		—
Borrowings on notes payable		95			—
Repayments on notes payable		(501	)		(791	)
Proceeds from exercise of stock options		—			236
Payment of expenses related to issuance of common stock		(164	)		—
Net cash provided by financing activities		12,414			8,410
Effects of foreign currency exchange rate changes on cash		(6	)		(181	)
Net increase in cash		(1,156	)		2,394
Cash, beginning of period		5,142			1,496
Cash, end of period	$	3,986		$	3,890

8

Supplementary Data

Adjusted EBITDA (Loss) Reconciliation (non-GAAP)

(in thousands)

(Unaudited)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Net income (loss)	$	1,219		$	1,358		$	(4,357	)	$	(809	)
Adjustments:
Depreciation and amortization		673			440			1,711			1,536
Stock-based compensation		95			136			357			376
Change in fair value of warrant liabilities		(1,200	)		(1	)		(283	)		(56	)
Interest expense, net		657			238			1,278			563
Income tax expense		1,506			542			2,570			546
Adjusted EBITDA	$	2,950		$	2,713		$	1,276		$	2,156

Adjusted EBITDA, a non-GAAP (“Generally Accepted Accounting Principles”) financial measure, represents net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation and change in the fair value of warrant liabilities. Adjusted EBITDA is not intended to represent cash flows for the period, nor is it being presented as an alternative to operating or net income (loss) as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. As defined, Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the method of calculation. Our management believes, however, that in addition to the performance measures found in our financial statements, Adjusted EBITDA is a useful financial performance measurement for assessing our Company’s operating performance. Our management uses Adjusted EBITDA as a measurement of operating performance in comparing our performance on a consistent basis over prior periods, as it removes from operating results the impact of our capital structure, including the interest expense resulting from our outstanding debt, and our asset base, including depreciation and amortization of our capital and intangible assets. In addition, Adjusted EBITDA is an important measure for our lender.

9