Exhibit
10.3


 


GAMEFLY, INC.


 


INDEMNIFICATION AGREEMENT


 


This
Indemnification Agreement (this “Agreement”) is made as of
                    ,
by and between GameFly, Inc., a
Delaware corporation (the “Company”), and
                                        
(“Indemnitee”).


 


RECITALS


 


The
Company and Indemnitee recognize the increasing difficulty in obtaining
liability insurance for directors, officers and key employees, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance.  The Company
and Indemnitee further recognize the substantial increase in corporate
litigation in general, subjecting directors, officers and key employees to
expensive litigation risks at the same time as the availability and coverage of
liability insurance has been severely limited. 
Indemnitee does not regard the current protection available as adequate
under the present circumstances, and Indemnitee may not be willing to continue
to serve in Indemnitee’s current capacity with the Company without additional
protection.  The Company desires to
attract and retain the services of highly qualified individuals, such as
Indemnitee, and to indemnify its directors, officers and key employees so as to
provide them with the maximum protection permitted by law.


 


AGREEMENT


 


In
consideration of the mutual promises made in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and Indemnitee hereby agree as follows:


 


1.              Indemnification.


 


(a)           Third-Party Proceedings.  To the fullest
extent permitted by applicable law, the Company shall indemnify Indemnitee, if
Indemnitee was, is or is threatened to be made, a party to or a participant (as
a witness or otherwise) in any Proceeding (other than a Proceeding by or in the
right of the Company to procure a judgment in the Company’s favor), against all
Expenses, judgments, fines and amounts paid in settlement (if such settlement
is approved in advance by the Company, which approval shall not be unreasonably
withheld) actually and reasonably incurred by Indemnitee in connection with
such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company and, in the case of a criminal Proceeding, had no reasonable cause to
believe Indemnitee’s conduct was unlawful.


 


(b)           Proceedings By or in the
Right of the Company.  To the fullest extent permitted by applicable
law, the Company shall indemnify Indemnitee, if Indemnitee was, is or is
threatened to be made a party to or a participant (as a witness or otherwise)
in any Proceeding by or in the right of the Company to procure a judgment in
the Company’s favor, against all Expenses actually and reasonably incurred by
Indemnitee in connection with such Proceeding if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in or not 


 

















 


opposed to the best interests of the Company, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which Indemnitee shall have been finally adjudicated by court order or
judgment to be liable to the Company unless and only to the extent that the
Court of Chancery or the court in which such Proceeding is or was pending shall
determine upon application that, in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which such court shall deem proper.


 


(c)           Success on the Merits.  To the fullest
extent permitted by applicable law and to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any Proceeding referred to
in Section 1(a) or Section 1(b) or the defense of any
claim, issue or matter therein, in whole or in part, the Company shall
indemnify Indemnitee against all Expenses actually and reasonably incurred by
Indemnitee in connection therewith. 
Without limiting the generality of the foregoing, if Indemnitee is
successful on the merits or otherwise as to one or more but less than all
claims, issues or matters in a Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by Indemnitee
in connection with such successfully resolved claims, issues or matters to the fullest
extent permitted by applicable law.  If
any Proceeding is disposed of on the merits or otherwise (including a
disposition without prejudice), without (1) the disposition being adverse
to Indemnitee, (ii) an adjudication that Indemnitee was liable to the
Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication
that Indemnitee did not act in good faith and in a manner Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company, and (v) with
respect to any criminal Proceeding, an adjudication that Indemnitee had
reasonable cause to believe Indemnitee’s conduct was unlawful, Indemnitee shall
be considered for the purposes hereof to have been wholly successful with
respect thereto.


 


(d)           Witness Expenses. 
To the fullest
extent permitted by applicable law and to the extent that Indemnitee is a
witness or otherwise asked to participate in any Proceeding to which Indemnitee
is not a party, the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by Indemnitee in connection with such
Proceeding.


 


2.              Indemnification Procedure.


 


(a)           Advancement of Expenses.  To the fullest
extent permitted by applicable law, the Company shall advance all Expenses
actually and reasonably incurred by Indemnitee in connection with a Proceeding
within thirty (30) days after receipt by the Company of a statement requesting
such advances from time to time, whether prior to or after final disposition of
any Proceeding.  Such advances shall be
unsecured and interest free and shall be made without regard to Indemnitee’s
ability to repay the Expenses and without regard to Indemnitee’s ultimate
entitlement to indemnification under the other provisions of this
Agreement.  Indemnitee shall be entitled
to continue to receive advancement of Expenses pursuant to this Section 2(a) unless
and until the matter of Indemnitee’s entitlement to indemnification hereunder
has been finally adjudicated by court order or judgment from which no further
right of appeal exists.  Indemnitee
hereby undertakes to repay such amounts advanced only if, and to the extent
that, it ultimately is determined that Indemnitee is not entitled to be
indemnified by the Company under the other provisions of this Agreement.  Indemnitee shall qualify for advances upon
the execution and delivery of this Agreement, which shall constitute the
requisite undertaking with respect to 


 


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repayment of advances made hereunder and no other form
of undertaking shall be required to qualify for advances made hereunder other
than the execution of this Agreement.


 


(b)           Notice and Cooperation by
Indemnitee.  Indemnitee shall promptly notify the Company
in writing upon being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any Proceeding or matter
for which indemnification will or could be sought under this Agreement.  Such notice to the Company shall include a
description of the nature of, and facts underlying, the Proceeding, shall be
directed to the Chief Executive Officer of the Company and shall be given in
accordance with the provisions of Section 13(d) below.  In addition, Indemnitee shall give the
Company such additional information and cooperation as the Company may
reasonably request.  Indemnitee’s failure
to so notify, provide information and otherwise cooperate with the Company
shall not relieve the Company of any obligation which it may have to Indemnitee
under this Agreement, except to the extent that the Company is adversely
affected by such failure.


 


(c)           Determination of
Entitlement.  Notwithstanding any other provision in this
Agreement, no determination as to entitlement to indemnification under this
Agreement shall be required to be made prior to the final disposition of the
Proceeding.  Subject to the foregoing,
promptly after receipt of a statement requesting payment with respect to the
indemnification rights set forth in Section 1, to the extent required by
applicable law, the Company shall take the steps necessary to authorize such
payment in the manner set forth in Section 145 of the General Corporation
Law of Delaware.  If a claim under this
Agreement, under any statute, or under any provision of the Company’s
Certificate of Incorporation or Bylaws providing for indemnification or
advancement of Expenses, is not paid in full by the Company within thirty (30)
days after a written request for payment thereof has first been received by the
Company, Indemnitee may, but need not, at any time thereafter bring an action
against the Company in the Delaware Court of Chancery to recover the unpaid
amount of the claim and, subject to Section 12, Indemnitee shall also be
entitled to be paid for all Expenses actually and reasonably incurred by
Indemnitee in connection with bringing such action.  It shall be a defense to any such action
(other than an action brought to enforce a claim for advancement of Expenses
under Section 2(a)) that Indemnitee has not met the standards of conduct
which make it permissible under applicable law for the Company to indemnify
Indemnitee for the amount claimed.  In
making a determination with respect to entitlement to indemnification
hereunder, the person or persons or entity making such determination shall
presume that Indemnitee is entitled to indemnification under this Agreement and
the Company shall have the burden of proof to overcome that presumption with
clear and convincing evidence to the contrary. 
The termination of any Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that Indemnitee
did not act in good faith and in a manner which Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company, or, in the case
of a criminal Proceeding, that Indemnitee had reasonable cause to believe that
Indemnitee’s conduct was unlawful.  In
addition, it is the parties’ intention that if the Company contests Indemnitee’s
right to indemnification, the question of Indemnitee’s right to indemnification
shall be for the court to decide, and neither the failure of the Company
(including its Board of Directors, any committee or subgroup of the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct required by
applicable law, nor an actual determination by the Company (including 


 


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its Board of Directors, any committee or subgroup of
the Board of Directors, independent legal counsel, or its stockholders) that
Indemnitee has not met such applicable standard of conduct, shall create a
presumption that Indemnitee has or has not met the applicable standard of
conduct.  If any requested determination
with respect to entitlement to indemnification hereunder has not been made
within ninety (90) days after the final disposition of the Proceeding, the
requisite determination that Indemnitee’s entitlement to indemnification shall
be deemed to have been made.


 


(d)           Payment Directions.  To the extent
payments are required to be made hereunder, the Company shall, in accordance
with Indemnitee’s request (but without duplication), (i) pay such Expenses
on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount
sufficient to pay such Expenses, or (c) reimburse Indemnitee for such
Expenses.


 


(e)           Notice to Insurers.  If, at the
time of the receipt of a notice of a claim pursuant to Section 2(b) hereof,
the Company has director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such Proceeding to the insurers
in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such Proceeding in accordance
with the terms of such policies.


 


(f)            Defense of Claim and
Selection of Counsel.  In the event the Company shall be obligated
under Section 2(a) hereof to advance Expenses with respect to any
Proceeding, the Company, if appropriate, shall be entitled to assume the
defense of such Proceeding, with counsel reasonably acceptable to Indemnitee,
upon the delivery to Indemnitee of written notice of its election so to
do.  After delivery of such notice,
approval of such counsel by Indemnitee and the retention of such counsel by the
Company, the Company will not be liable to Indemnitee under this Agreement for
any fees of counsel subsequently incurred by Indemnitee with respect to the
same Proceeding, provided that (i) Indemnitee shall have the right to
employ counsel in any such Proceeding at Indemnitee’s expense; and (ii) if
(A) the employment of counsel by Indemnitee has been previously authorized
by the Company, (B) Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and Indemnitee in the conduct
of any such defense or (C) the Company shall not, in fact, have employed
counsel to assume the defense of such Proceeding, then the fees and expenses of
Indemnitee’s counsel shall be at the expense of the Company.  In addition, if there exists a potential, but
not an actual conflict of interest between the Company and Indemnitee, the
actual and reasonable legal fees and expenses incurred by Indemnitee for
separate counsel retained by Indemnitee to monitor the Proceeding (so that such
counsel may assume Indemnitee’s defense if the conflict of interest between the
Company and Indemnitee becomes an actual conflict of interest) shall be deemed
to be Expenses that are subject to indemnification hereunder.  The existence of an actual or potential
conflict of interest, and whether such conflict may be waived, shall be
determined pursuant to the rules of attorney professional conduct and
applicable law.  The Company shall not be
required to obtain the consent of Indemnitee for the settlement of any
Proceeding the Company has undertaken to defend if the Company assumes full and
sole responsibility for each such settlement; provided, however, that the
Company shall be required to obtain Indemnitee’s prior written approval, which
shall not be unreasonably withheld, before entering into any settlement which (1) does
not grant Indemnitee a complete release of liability, 


 


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(2) would impose any penalty or limitation on
Indemnitee, or (3) would admit any liability or misconduct by Indemnitee.


 


3.              Additional Indemnification
Rights.


 


(a)           Scope. 
Notwithstanding any other provision of this Agreement, the Company
hereby agrees to indemnify Indemnitee to the fullest extent permitted by law,
notwithstanding that such indemnification is not specifically authorized by the
other provisions of this Agreement, the Company’s Certificate of Incorporation,
the Company’s Bylaws or by statute.  In
the event of any change, after the date of this Agreement, in any applicable
law, statute, or rule which expands the right of a Delaware corporation to
indemnify a member of its board of directors or an officer, such changes shall
be deemed to be within the purview of Indemnitee’s rights and the Company’s
obligations under this Agreement.  In the
event of any change in any applicable law, statute or rule which narrows
the right of a Delaware corporation to indemnify a member of its board of
directors or an officer, such changes, to the extent not otherwise required by
such law, statute or rule to be applied to this Agreement shall have no
effect on this Agreement or the parties’ rights and obligations hereunder.


 


(b)           Nonexclusivity.  The
indemnification provided by this Agreement shall not be deemed exclusive of any
rights to which Indemnitee may be entitled under the Company’s Certificate of
Incorporation, its Bylaws, any agreement, any vote of stockholders or
disinterested members of the Company’s Board of Directors, the General
Corporation Law of Delaware, or otherwise, both as to action in Indemnitee’s
official capacity and as to action in another capacity while holding such
office.


 


(c)           Interest on Unpaid Amounts.  If any payment
to be made by the Company to Indemnitee hereunder is delayed by more than
ninety (90) days from the date the duly prepared request for such payment is
received by the Company, interest shall be paid by the Company to Indemnitee at
the legal rate under Delaware law for amounts which the Company indemnifies or
is obligated to indemnify for the period commencing with the date on which
Indemnitee actually incurs such Expense or pays such judgment, fine or amount
in settlement and ending with the date on which such payment is made to
Indemnitee by the Company.


 


(d)           Third-Party
Indemnification.  The Company hereby acknowledges that
Indemnitee has or may from time to time obtain certain rights to
indemnification, advancement of expenses and/or insurance provided by one or
more third parties (collectively, the “Third-Party Indemnitors”).  The Company hereby agrees that it is the
indemnitor of first resort (i.e., its
obligations to Indemnitee are primary and any obligation of the Third-Party
Indemnitors to advance expenses or to provide indemnification for the same
expenses or liabilities incurred by Indemnitee are secondary), and that the
Company will not assert that the Indemnitee must seek expense advancement or
reimbursement, or indemnification, from any Third-Party Indemnitor before the
Company must perform its expense advancement and reimbursement, and
indemnification obligations, under this Agreement.  No advancement or payment by the Third-Party
Indemnitors on behalf of Indemnitee with respect to any claim for which
Indemnitee has sought indemnification from the Company shall affect the
foregoing.  The Third-Party Indemnitors
shall be subrogated to the extent of such advancement or payment to all of the
rights of recovery which Indemnitee would have had against the Company if the
Third-Party 


 


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Indemnitors had not advanced or paid any amount to or
on behalf of Indemnitee.  If for any
reason a court of competent jurisdiction determines that the Third-Party
Indemnitors are not entitled to the subrogation rights described in the
preceding sentence, the Third-Party Indemnitors shall have a right of contribution
by the Company to the Third-Party Indemnitors with respect to any advance or
payment by the Third-Party Indemnitors to or on behalf of the Indemnitee.


 


4.              Partial Indemnification.  If Indemnitee
is entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of the Expenses, judgments, fines or amounts paid
in settlement, actually and reasonably incurred in connection with a
Proceeding, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion of such Expenses, judgments,
fines and amounts paid in settlement to which Indemnitee is entitled.


 


5.              Director and Officer
Liability Insurance.


 


(a)           D&O Policy.  The Company
shall, from time to time, make the good faith determination whether or not it
is practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing the directors and
officers of the Company with coverage for losses from wrongful acts, or to
ensure the Company’s performance of its indemnification obligations under this
Agreement.  Among other considerations,
the Company will weigh the costs of obtaining such insurance coverage against
the protection afforded by such coverage. 
In all policies of director and officer liability insurance, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company’s directors, if Indemnitee is a director; or of the Company’s officers,
if Indemnitee is not a director of the Company but is an officer; or of the
Company’s key employees, if Indemnitee is not an officer or director but is a
key employee.  Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided
by such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a
parent or subsidiary of the Company.


 


(b)           Tail Coverage.  In the event
of a Change of Control or the Company’s becoming insolvent (including being
placed into receivership or entering the federal bankruptcy process and the
like), the Company shall maintain in force any and all insurance policies then
maintained by the Company in providing insurance (directors’ and officers’
liability, fiduciary, employment practices or otherwise) in respect of
Indemnitee, for a period of six years thereafter.


 


6.              Severability.  Nothing in
this Agreement is intended to require or shall be construed as requiring the
Company to do or fail to do any act in violation of applicable law.  The Company’s inability, pursuant to court
order, to perform its obligations under this Agreement shall not constitute a
breach of this Agreement.  If this
Agreement or any portion hereof shall be invalidated on any ground by any court
of competent jurisdiction, then the Company shall nevertheless indemnify
Indemnitee to the full extent permitted by any applicable 


 


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portion of this Agreement that shall not have been
invalidated, and the balance of this Agreement not so invalidated shall be
enforceable in accordance with its terms.


 


7.              Exclusions.  Any other
provision herein to the contrary notwithstanding, the Company shall not be
obligated pursuant to the terms of this Agreement:


 


(a)           Claims Initiated by
Indemnitee.  To indemnify or advance Expenses to
Indemnitee with respect to Proceedings initiated or brought voluntarily by
Indemnitee and not by way of defense, except with respect to Proceedings
brought to establish, enforce or interpret a right to indemnification under
this Agreement or any other statute or law or otherwise as required under Section 145
of the General Corporation Law of Delaware, but such indemnification or
advancement of Expenses may be provided by the Company in specific cases if the
Board of Directors finds it to be appropriate; provided, however, that the
exclusion set forth in the first clause of this subsection shall not be deemed
to apply to any investigation initiated or brought by Indemnitee to the extent
reasonably necessary or advisable in support of Indemnitee’s defense of a
Proceeding to which Indemnitee was, is or is threatened to be made, a party;


 


(b)           Lack of Good Faith.  To indemnify
Indemnitee for any Expenses incurred by Indemnitee with respect to any
Proceeding instituted by Indemnitee to establish, enforce or interpret a right
to indemnification under this Agreement or any other statute or law or
otherwise as required under Section 145 of the General Corporation Law of
Delaware, if a court of competent jurisdiction determines that each of the
material assertions made by Indemnitee in such proceeding was not made in good
faith or was frivolous;


 


(c)           Insured Claims.  To indemnify
Indemnitee for Expenses to the extent such Expenses have been paid directly to
Indemnitee by an insurance carrier under an insurance policy maintained by the
Company; or


 


(d)           Certain Exchange Act
Claims.  To indemnify Indemnitee in connection with
any claim made against Indemnitee for (i) an accounting of profits made
from the purchase and sale (or sale and purchase) by Indemnitee of securities
of the Company within the meaning of Section 16(b) of the Exchange
Act or any similar successor statute or any similar provisions of state statutory
law or common law, or (ii) any reimbursement of the Company by Indemnitee
of any bonus or other incentive-based or equity-based compensation or of any
profits realized by Indemnitee from the sale of securities of the Company, as
required in each case under the Exchange Act (including any such reimbursements
that arise from an accounting restatement of the Company pursuant to Section 304
of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the
payment to the Company of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley
Act); provided, however, that to the fullest extent permitted by applicable law
and to the extent Indemnitee is successful on the merits or otherwise with
respect to any such Proceeding, the Expenses actually and reasonably incurred
by Indemnitee in connection with any such Proceeding shall be deemed to be
Expenses that are subject to indemnification hereunder.


 


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8.              Contribution Claims.


 


(a)           If the indemnification provided in Section 1
is unavailable in whole or in part and may not be paid to Indemnitee for any
reason other than those set forth in Section 7, then in respect to any
Proceeding in which the Company is jointly liable with Indemnitee (or would be
if joined in such Proceeding), to the fullest extent permitted by applicable
law, the Company, in lieu of indemnifying Indemnitee, shall pay, in the first
instance, the entire amount incurred by Indemnitee, whether for Expenses,
judgments, fines or amounts paid in settlement, in connection with any
Proceeding without requiring Indemnitee to contribute to such payment, and the
Company hereby waives and relinquishes any right of contribution it may have at
any time against Indemnitee.


 


(b)           With respect to a Proceeding brought
against directors, officers, employees or agents of the Company (other than
Indemnitee), to the fullest extent permitted by applicable law, the Company
shall indemnify Indemnitee from any claims for contribution that may be brought
by any such directors, officers, employees or agents of the Company (other than
Indemnitee) who may be jointly liable with Indemnitee, to the same extent
Indemnitee would have been entitled to such indemnification under this
Agreement if such Proceeding had been brought against Indemnitee.


 


9.              No Imputation.  The knowledge
and/or actions, or failure to act, of any director, officer, agent or employee
of the Company or the Company itself shall not be imputed to Indemnitee for
purposes of determining any rights under this Agreement.


 


10.            Determination of Good
Faith. 
For purposes of any determination of good faith, Indemnitee shall be
deemed to have acted in good faith if Indemnitee’s action is based on the
records or books of account of the Enterprise, including financial statements,
or on information supplied to Indemnitee by the officers of the Enterprise in
the course of their duties, or on the advice of legal counsel for the
Enterprise or the Board of Directors of the Enterprise or any counsel selected
by any committee of the Board of Directors of the Enterprise or on information
or records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser, investment banker, compensation
consultant, or other expert selected with reasonable care by the Enterprise or
the Board of Directors of the Enterprise or any committee thereof.  The provisions of this Section 10 shall
not be deemed to be exclusive or to limit in any way the other circumstances in
which the Indemnitee may be deemed to have met the applicable standard of
conduct.  Whether or not the foregoing
provisions of this Section are satisfied, it shall in any event be
presumed that Indemnitee has at all times acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company.


 


11.            Defined Terms and Phrases.  For purposes
of this Agreement, the following terms shall have the following meanings:


 


(a)           “Beneficial Owner” and “Beneficial
Ownership” shall have the meanings set forth in Rule 13d-3 promulgated
under the Exchange Act as in effect on the date hereof.


 


(b)           “Change of Control” shall be
deemed to occur upon the earliest of any of the following events:


 


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(i)            Acquisition of Stock by Third Party. 
Any Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing fifteen percent (15%) or more of the
combined voting power of the Company’s then outstanding securities entitled to
vote generally in the election of directors, unless (1) the change in the
relative Beneficial Ownership of the Company’s securities by any Person results
solely from a reduction in the aggregate number of outstanding shares of
securities entitled to vote generally in the election of directors, or (2) such
acquisition was approved in advance by the Continuing Directors and such
acquisition would not constitute a Change of Control under part (iii) of
this definition.


 


(ii)           Change in Board of Directors. 
Individuals who, as of the date of this Agreement, constitute the
Company’s Board of Directors (the “Board”), and any new director whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two thirds of the directors then still in
office who were directors on the date of this Agreement (collectively, the “Continuing
Directors”), cease for any reason to constitute at least a majority of the
members of the Board.


 


(iii)          Corporate
Transaction.  The effective date of a reorganization,
merger, or consolidation of the Company (a “Business Combination”), in
each case, unless, following such Business Combination:  (1) all or substantially all of the
individuals and entities who were the Beneficial Owners of securities entitled
to vote generally in the election of directors immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 51% of
the combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors resulting from such
Business Combination (including a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business
Combination, of the securities entitled to vote generally in the election of
directors and with the power to elect at least a majority of the Board or other
governing body of the surviving entity; (2) no Person (excluding any
corporation resulting from such Business Combination) is the Beneficial Owner,
directly or indirectly, of 15% or more of the combined voting power of the then
outstanding securities entitled to vote generally in the election of directors
of such corporation except to the extent that such ownership existed prior to
the Business Combination; and (3) at least a majority of the Board of
Directors of the corporation resulting from such Business Combination were
Continuing Directors at the time of the execution of the initial agreement, or
of the action of the Board of Directors, providing for such Business
Combination.


 


(iv)          Liquidation. 
The approval by the Company’s stockholders of a complete liquidation of
the Company or an agreement or series of agreements for the sale or disposition
by the Company of all or substantially all of the Company’s assets, other than
factoring the Company’s current receivables or escrows due (or, if such
approval is not required, the decision by the Board to proceed with such a
liquidation, sale or disposition in one transaction or a series of related
transactions).


 


(v)           Other Events. 
There occurs any other event of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a 


 


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response to any similar item or any similar schedule
or form) promulgated under the Exchange Act whether or not the Company is then
subject to such reporting requirement.


 


(c)           “Company” shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that if
Indemnitee is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, trustee, general partner, managing member,
fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in
the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to
such constituent corporation if its separate existence had continued.


 


(d)           “Enterprise” means the Company and
any other enterprise that Indemnitee was or is serving at the request of the
Company as a director, officer, partner (general, limited or otherwise), member
(managing or otherwise), trustee, fiduciary, employee or agent.


 


(e)           “Exchange Act” means the
Securities Exchange Act of 1934, as amended.


 


(f)            “Expenses” shall include all
direct and indirect costs, fees and expenses of any type or nature whatsoever,
including all attorneys’ fees and costs, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, fees of private
investigators and professional advisors, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees, any federal,
state, local or foreign taxes imposed on Indemnitee as a result of the actual
or deemed receipt of any payment under this Agreement (including taxes that may
be imposed upon the actual or deemed receipt of payments under this Agreement
with respect to the imposition of federal, state, local or foreign taxes), fax
transmission charges, secretarial services and all other disbursements,
obligations or expenses in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a witness in,
settlement or appeal of, or otherwise participating in a Proceeding.  Expenses also shall include any of the
forgoing expenses incurred in connection with any appeal resulting from any
Proceeding, including the principal, premium, security for, and other costs
relating to any costs bond, supersedes bond, or other appeal bond or its
equivalent.  Expenses also shall include
any interest, assessment or other charges imposed thereon and costs incurred in
preparing statements in support of payment requests hereunder.  Expenses, however, shall not include amounts
paid in settlement by Indemnitee or the amount of judgments or fines against
Indemnitee.


 


(g)           “Person” shall have the meaning as
set forth in Section 13(d) and 14(d) of the Exchange Act as in
effect on the date hereof; provided, however, that “Person” shall exclude: (i) the
Company; (ii) any direct or indirect majority owned subsidiaries of the
Company; (iii) any employee benefit plan of the Company or any direct or
indirect majority owned subsidiaries of the Company or of any corporation owned,
directly or indirectly, by the Company’s stockholders in substantially the same
proportions as their ownership of stock of the Company (an “Employee Benefit
Plan”); and (iv) any trustee or other fiduciary holding securities
under an Employee Benefit Plan.


 


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(h)           “Proceeding” shall include any
actual, threatened, pending or completed action, suit, arbitration, mediation,
alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether
brought by a third party, a government agency, the Company or its Board of
Directors or a committee thereof, whether in the right of the Company or
otherwise and whether of a civil (including intentional or unintentional tort
claims), criminal, administrative, legislative or investigative (formal or
informal) nature, including any appeal therefrom, in which Indemnitee was, is,
will or might be involved as a party, potential party, non-party witness or
otherwise by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, by reason of any action (or failure to act)
taken by Indemnitee or of any action (or failure to act) on Indemnitee’s part
while acting as a director, officer, employee or agent of the Company, or by
reason of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, partner (general, limited or otherwise), member
(managing or otherwise), trustee, fiduciary, employee or agent of any other
enterprise, in each case whether or not serving in such capacity at the time
any liability or expense is incurred for which indemnification, reimbursement
or advancement of expenses can be provided under this Agreement.


 


(i)            In addition, references to “other
enterprise” shall include another corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan or any other
enterprise; references to “fines” shall include any excise taxes
assessed on Indemnitee with respect to an employee benefit plan; references to “serving
at the request of the Company” shall include any service as a director,
officer, employee or agent of the Company which imposes duties on, or involves
services by Indemnitee with respect to an employee benefit plan, its participants,
or beneficiaries; and if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have
acted in a manner “not opposed to the best interests of the Company” as
referred to in this Agreement; references to “include” or “including”
shall mean include or including, without limitation; and references to
Sections, paragraphs or clauses are to Sections, paragraphs or clauses in this
Agreement unless otherwise specified.


 


12.           Attorneys’ Fees.  In the event
that any Proceeding is instituted by Indemnitee under this Agreement to enforce
or interpret any of the terms hereof, the Company shall indemnify Indemnitee
against all Expenses actually and reasonably incurred by Indemnitee in
connection with such Proceeding, unless a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee as a basis
for such Proceeding were not made in good faith or were frivolous.  In the event of a Proceeding instituted by or
in the name of the Company under this Agreement or to enforce or interpret any
of the terms of this Agreement, the Company shall indemnify Indemnitee against
all Expenses actually and reasonably incurred by Indemnitee in connection with
such Proceeding (including with respect to Indemnitee’s counterclaims and
cross-claims made in such action), unless a court of competent jurisdiction
determines that each of Indemnitee’s material defenses to such action were made
in bad faith or were frivolous.


 


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13.           Miscellaneous.


 


(a)           Governing Law.  This Agreement
and all acts and transactions pursuant hereto and the rights and obligations of
the parties hereto shall be governed, construed and interpreted in accordance
with the laws of the State of Delaware, without giving effect to principles of
conflicts of law.


 


(b)           Entire Agreement; Binding
Effect.  Without limiting any of the rights of
Indemnitee described in Section 3(b), this Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
herein and merges all prior discussions and supersedes any and all previous
agreements between them covering the subject matter herein.  The indemnification provided under this
Agreement applies with respect to events occurring before or after the
effective date of this Agreement, and shall continue to apply even after
Indemnitee has ceased to serve the Company in any and all indemnified
capacities.


 


(c)           Amendments and Waivers.  No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the
parties to this Agreement.  The failure
by either party to enforce any rights under this Agreement shall not be
construed as a waiver of any rights of such party.


 


(d)           Notices.  Any notice,
demand or request required or permitted to be given under this Agreement shall
be in writing and shall be deemed sufficient when delivered personally or sent
by fax or 48 hours after being sent by nationally-recognized courier or
deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party’s address or
fax number as set forth below or as subsequently modified by written notice.


 


(e)           Counterparts.  This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument.


 


(f)            Successors and Assigns.  This Agreement
shall be binding upon the Company and its successors (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company) and assigns,
and inure to the benefit of Indemnitee and Indemnitee’s heirs, executors,
administrators, legal representatives and assigns.  The Company shall require and cause any
successor (whether direct or indirect by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place.


 


(g)           No Employment Rights.  Nothing
contained in this Agreement is intended to create in Indemnitee any right to
continued employment.


 


(h)           Company Position.  The Company
shall be precluded from asserting, in any Proceeding brought for purposes of
establishing, enforcing or interpreting any right to indemnification under this
Agreement, that the procedures and presumptions of this Agreement 


 


12

















 


are not valid, binding and enforceable and shall
stipulate in any such court that the Company is bound by all the provisions of
this Agreement and is precluded from making any assertion to the contrary.


 


(i)            Subrogation.  In the event
of payment under this Agreement, the Company shall be subrogated to the extent
of such payment to all of the rights of recovery of Indemnitee, who shall
execute all documents required and shall do all acts that may be necessary to secure
such rights and to enable the Company to effectively bring suit to enforce such
rights.


 


[Signature
Page Follows]


 


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The
parties have executed this Agreement as of the date first set forth above.


 


	
   

  	
  THE
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  GAMEFLY,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  5340
  Alla Road, Suite 110

  
	
   

  	
  Los
  Angeles CA 90066

  
	
   

  	
   

  
	
   

  	
  Fax:  (310) 202-1228

  
				



 


	
  AGREED
  TO AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  INDEMNITEE:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (PRINT NAME)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  
				



 


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