Document:

Exhibit
10.2

 

GAMEFLY, INC.

 

2010 OMNIBUS EQUITY INCENTIVE
PLAN

 

(AS ADOPTED FEBRUARY 9, 2010)

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  1.

  	
  INTRODUCTION

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2.

  	
  ADMINISTRATION

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Committee
  Composition

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Committee
  Responsibilities

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Non-Officer
  Grants

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3.

  	
  SHARES AVAILABLE FOR GRANTS

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Basic
  Limitation

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Annual
  Increase in Shares

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Shares
  Returned to Reserve

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Dividend
  Equivalents

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4.

  	
  GENERAL

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Eligibility

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Incentive
  Stock Options

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Other
  Grants

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Restrictions
  on Shares

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Beneficiaries

  	
  3

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Performance
  Conditions

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5.

  	
  OPTIONS

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Stock
  Option Agreement

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Number
  of Shares

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Exercise
  Price

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Exercisability
  and Term

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Modification
  or Assumption of Options

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Buyout
  Provisions

  	
  4

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  Assignment
  or Transfer of Options

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6.

  	
  PAYMENT FOR OPTION SHARES

  	
  5

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  General
  Rule

  	
  5

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Surrender
  of Stock

  	
  5

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Exercise/Sale

  	
  5

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Promissory
  Note

  	
  5

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Other
  Forms of Payment

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7.

  	
  STOCK APPRECIATION RIGHTS

  	
  5

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  SAR
  Agreement

  	
  5

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Number
  of Shares

  	
  6

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Exercise
  Price

  	
  6

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Exercisability
  and Term

  	
  6

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  Exercise
  of SARs

  	
  6

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  Modification
  or Assumption of SARs

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8.

  	
  RESTRICTED SHARES

  	
  7

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Restricted
  Stock Agreement

  	
  7

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Payment
  for Awards

  	
  7

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Vesting
  Conditions

  	
  7

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Voting
  and Dividend Rights

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9.

  	
  STOCK UNITS

  	
  7

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Stock
  Unit Agreement

  	
  7

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Payment
  for Awards

  	
  8

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Vesting
  Conditions

  	
  8

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Voting
  and Dividend Rights

  	
  8

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Form
  and Time of Settlement of Stock Units

  	
  8

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Death
  of Recipient

  	
  8

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Creditors’
  Rights

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10.

  	
  PROTECTION AGAINST DILUTION

  	
  9

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Adjustments

  	
  9

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Dissolution
  or Liquidation

  	
  9

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Change
  in Control

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11.

  	
  AWARDS UNDER OTHER PLANS

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12.

  	
  PAYMENT OF DIRECTOR’S FEES IN SECURITIES

  	
  11

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Effective
  Date

  	
  11

  
	
   

  	
   

  	
   

  
	
  12.2

  	
  Elections
  to Receive NSOs, Restricted Shares or Stock Units

  	
  11

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  12.3

  	
  Number
  and Terms of NSOs, Restricted Shares or Stock Units

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  13.

  	
  LIMITATION ON RIGHTS

  	
  11

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Retention
  Rights

  	
  11

  
	
   

  	
   

  	
   

  
	
  13.2

  	
  Stockholders’
  Rights

  	
  12

  
	
   

  	
   

  	
   

  
	
  13.3

  	
  Regulatory
  Requirements

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  14.

  	
  WITHHOLDING TAXES

  	
  12

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  General

  	
  12

  
	
   

  	
   

  	
   

  
	
  14.2

  	
  Share
  Withholding

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  15.

  	
  FUTURE OF THE PLAN

  	
  12

  
	
   

  	
   

  	
   

  
	
  15.1

  	
  Term
  of the Plan

  	
  12

  
	
   

  	
   

  	
   

  
	
  15.2

  	
  Amendment
  or Termination

  	
  12

  
	
   

  	
   

  	
   

  
	
  15.3

  	
  Stockholder
  Approval

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16.

  	
  DEFINITIONS

  	
  13

  

 

iii

 

GAMEFLY, INC.

2010 OMNIBUS EQUITY INCENTIVE
PLAN

 

ARTICLE 1.   INTRODUCTION.

 

The Plan was adopted by the
Board effective as of the IPO Date.  The
purpose of the Plan is to promote the long-term success of the Company and the
creation of stockholder value by (a) encouraging Employees, Outside Directors
and Consultants to focus on critical long-range objectives, (b) encouraging the
attraction and retention of Employees, Outside Directors and Consultants with exceptional
qualifications and (c) linking Employees, Outside Directors and Consultants
directly to stockholder interests through increased stock ownership.  The Plan seeks to achieve this purpose by
providing for Awards in the form of Restricted Shares, Stock Units, Options
(which may constitute ISOs or NSOs) or stock appreciation rights.

 

The Plan shall be governed
by, and construed in accordance with, the laws of the State of Delaware (except
their choice-of-law provisions).

 

ARTICLE
2.   ADMINISTRATION

 

2.1                               Committee
Composition.  The
Compensation Committee of the Board shall administer the Plan.  The Committee shall consist exclusively of
members of the Board, who shall be appointed by the Board.  In addition, each member of the Committee
shall meet the following requirements:

 

(a)                                  Any listing
standards prescribed by the principal securities market on which the Company’s
equity securities are traded;

 

(b)                                 Such
requirements as the Internal Revenue Service may establish for outside
directors acting under plans intended to qualify for exemption under section 162(m)(4)(C)
of the Code;

 

(c)                                  Such
requirements as the Securities and Exchange Commission may establish for
administrators acting under plans intended to qualify for exemption under Rule 16b-3
(or its successor) under the Exchange Act; and

 

(d)                                 Any other
requirements imposed by applicable law, regulations or rules.

 

2.2                               Committee
Responsibilities.  The
Committee shall (a) select the Employees, Outside Directors and Consultants who
are to receive Awards under the Plan, (b) determine the type, number, vesting
requirements and other features and conditions of such Awards, (c) amend any
outstanding Awards, (d) accelerate the vesting or extend the post-termination
exercise term of Awards at any time and under such terms and conditions as it
deems appropriate, (e) correct any defect, supplying any omission or
reconciling any inconsistency in 

 

 

the Plan or any agreement evidencing an Award, (f) interpret the Plan, (g)
make all other decisions relating to the operation of the Plan, (h) adopt such
plans or subplans as may be deemed necessary or appropriate to provide for the
participation by service providers of the Company, its Parent, Subsidiaries and
Affiliates who reside outside of the U.S., which plans and/or subplans shall be
attached hereto as Appendices and (i) carry out any other duties delegated to
it by the Board under the Plan.  The
Committee may adopt such rules or guidelines as it deems appropriate to
implement the Plan.  The Committee’s
determinations under the Plan shall be final and binding on all persons.

 

2.3                               Non-Officer
Grants.  The Board may also appoint
additional committees of the Board composed of one or more directors of the
Company.  The additional committees need
not satisfy the requirements of Section 2.1. 
Such committees may (a) administer the Plan with respect to Employees
and Consultants who are not Outside Directors and are not considered executive
officers of the Company under section 16 of the Exchange Act, (b) grant Awards
under the Plan to such Employees and Consultants and (c) determine all features
and conditions of such Awards.  Within
the limitations of this Section 2.3, any reference in the Plan to the Committee
shall include these additional committees to whom the Board has delegated the
required authority under this Section 2.3.

 

ARTICLE 3.   SHARES
AVAILABLE FOR GRANTS.

 

3.1                               Basic
Limitation.  Common
Shares issued pursuant to the Plan may be authorized but unissued shares or
treasury shares.  The aggregate number of
Common Shares issued under the Plan shall not exceed (a) 1,500,000 plus (b) the
additional Common Shares described in Sections 3.2 and 3.3.  The number of Common Shares that are subject
to Awards outstanding at any time under the Plan shall not exceed the number of
Common Shares that then remain available for issuance under the Plan.  All Common Shares available under the Plan
may be issued upon the exercise of ISOs. 
The limitations of this Section 3.1 and Section 3.2 shall be subject to
adjustment pursuant to Article 10.

 

3.2                               Annual
Increase in Shares.  As of the
first day of each fiscal year of the Company, commencing on April 1, 2011
through April 1, 2017, the aggregate number of Common Shares that may be issued
under the Plan shall automatically increase by a number equal to the lowest of (a)
4% of the total number of Common Shares then outstanding, (b) 1,250,000 Common
Shares or (c) the number determined by the Board.

 

3.3                               Shares
Returned to Reserve.  If Options,
SARs or Stock Units are forfeited or terminate for any other reason before
being exercised or settled, then the Common Shares subject to such Options,
SARs or Stock Units shall again become available for issuance under the
Plan.  If SARs are exercised, then only the
number of Common Shares (if any) actually issued in settlement of such SARs
shall reduce the number available under Section 3.1 and the balance shall again
become available for issuance under the Plan. 
If Stock Units are settled, then only the number of Common Shares (if
any) actually issued in settlement of such Stock Units shall reduce the number
available under Section 3.1 and the balance shall again become available for
issuance under the Plan.  If Restricted
Shares or Common Shares issued upon the exercise of Options are reacquired by
the Company pursuant to a forfeiture provision or for any other reason, then
such Common Shares shall again become available for issuance under the Plan.

 

2

 

3.4                               Dividend
Equivalents.  Any
dividend equivalents paid or credited under the Plan shall not be applied
against the number of Common Shares that may be issued under the Plan, whether
or not such dividend equivalents are converted into Stock Units.

 

ARTICLE 4.   GENERAL.

 

4.1                               Eligibility. 
Only
Employees, Outside Directors, and Consultants shall be eligible to participate
in the Plan.

 

4.2                               Incentive
Stock Options.  Only
Employees who are common-law employees of the Company, a Parent or a Subsidiary
shall be eligible for the grant of ISOs. 
In addition, an Employee who owns more than 10% of the total combined
voting power of all classes of outstanding stock of the Company or any of its
Parents or Subsidiaries shall not be eligible for the grant of an ISO unless
the additional requirements set forth in section 422(c)(5) of the Code are
satisfied.

 

4.3                               Other
Grants.  Only Employees, Outside
Directors and Consultants shall be eligible for the grant of Restricted Shares,
Stock Units, NSOs or SARs.

 

4.4                               Restrictions
on Shares.  Any Shares
issued pursuant to an Award shall be subject to such rights of repurchase and
other transfer restrictions as the Committee may determine, in its sole
discretion.  Such restrictions shall
apply in addition to any restrictions that may apply to holders of Shares
generally and shall also comply to the extent necessary with applicable
law.  In no event shall the Company be
required to issue fractional Shares under this Plan.

 

4.5                               Beneficiaries.  Unless stated otherwise in an agreement
evidencing an Award and then only to the extent permitted by applicable law, a
Participant may designate one or more beneficiaries with respect to an Award by
timely filing the prescribed form with the Company.  A beneficiary designation may be changed by
filing the prescribed form with the Company at any time before the
Participant’s death.  If no beneficiary
was designated or if no designated beneficiary survives the Participant, then
after a Participant’s death any vested Award(s) shall be transferred or
distributed to the Participant’s estate.

 

4.6                               Performance
Conditions.  The
Committee may, in its discretion, include performance conditions in an
Award.  If performance conditions are
included in Awards to Covered Employees and such Awards are intended to qualify
as “performance-based compensation” under Code Section 162(m), then such Awards
will be subject to the achievement of Performance Goals with respect to a
Performance Period established by the Committee.  Such Awards shall be granted and administered
pursuant to the requirements of Code Section 162(m).  Before any Shares underlying an Award or any
Award payments are released to a Covered Employee with respect to a Performance
Period, the Committee shall certify in writing that the Performance Goals for
such Performance Period have been satisfied. 
Awards with performance conditions that are granted to Participants who
are not Covered Employees need not comply with the requirements of Code Section
162(m).

 

3

 

ARTICLE 5.   OPTIONS.

 

5.1                               Stock
Option Agreement.  Each grant
of an Option under the Plan shall be evidenced by a Stock Option Agreement
between the Optionee and the Company. 
Such Option shall be subject to all applicable terms of the Plan and may
be subject to any other terms that are not inconsistent with the Plan.  The Stock Option Agreement shall specify
whether the Option is an ISO or an NSO. 
The provisions of the various Stock Option Agreements entered into under
the Plan need not be identical.  Options
may be granted in consideration of a reduction in the Optionee’s other
compensation.

 

5.2                               Number
of Shares.  Each Stock
Option Agreement shall specify the number of Common Shares subject to the
Option and shall provide for the adjustment of such number in accordance with Article
10.  Options granted to an Optionee in a
single fiscal year of the Company shall not cover more than 300,000 Common
Shares, except that Options granted to a new Employee in the fiscal year of the
Company in which his or her Service commences may cover up to 600,000 Common
Shares.  The limitations set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 10.

 

5.3                               Exercise
Price.  Each Stock Option Agreement
shall specify the Exercise Price, which shall not be less than 100% of the Fair
Market Value of a Common Share on the date of grant.  The preceding sentence shall not apply to
Options granted pursuant to an assumption of, or substitution for, another
option in a manner that would satisfy the requirements of section 424(a) of the
Code, whether or not such section is applicable.

 

5.4                               Exercisability
and Term.  Each Stock
Option Agreement shall specify the date or event when all or any installment of
the Option is to become exercisable.  The
Stock Option Agreement shall also specify the term of the Option; provided that
the term of an ISO shall in no event exceed 10 years from the date of
grant.  A Stock Option Agreement may
provide for accelerated exercisability in the event of the Optionee’s death,
disability or retirement or other events and may provide for expiration prior
to the end of its term in the event of the termination of the Optionee’s
Service.  Options may be awarded in
combination with SARs, and such an Award may provide that the Options will not
be exercisable unless the related SARs are forfeited.

 

5.5                               Modification
or Assumption of Options. 
Within the limitations of the Plan, the Committee may modify, reprice,
extend or assume outstanding options or may accept the cancellation of
outstanding options (whether granted by the Company or by another issuer) in
return for the grant of new options for the same or a different number of
shares and at the same or a different exercise price.  The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair his or her rights or obligations under such Option.

 

5.6                               Buyout
Provisions.  The
Committee may at any time (a) offer to buy out for a payment in cash or cash
equivalents an Option previously granted or (b) authorize an Optionee to elect
to cash out an Option previously granted, in either case at such time and based
upon such terms and conditions as the Committee shall establish.

 

4

 

5.7                               Assignment
or Transfer of Options.  No
Option or interest therein shall be transferred, assigned, pledged or
hypothecated by the Optionee during his or her lifetime, whether by operation
of law or otherwise, or be made subject to execution, attachment or similar
process, other than (i) by will or by the laws of descent and distribution, or (ii)
in the case of an NSO, as otherwise expressly permitted by the Committee
including, if so permitted, pursuant to a transfer to such Optionee’s Immediate
Family.  An Option may be exercised,
subject to the terms of the Plan and the applicable Stock Option Agreement,
only by the Optionee, the guardian or legal representative of the Optionee, a
beneficiary designated pursuant to Section 4.5, or any person to whom such
Option is transferred pursuant to this paragraph.

 

ARTICLE 6.   PAYMENT
FOR OPTION SHARES.

 

6.1                               General
Rule.  The entire Exercise Price of
Common Shares issued upon exercise of Options shall be payable in cash or cash
equivalents at the time when such Common Shares are purchased, except that the
Committee at its sole discretion may accept payment of the Exercise Price in
any other form(s) described in this Article 6. 
However, if the Optionee is an Outside Director or executive officer of
the Company, he or she may pay the Exercise Price in a form other than cash or
cash equivalents only to the extent permitted by section 13(k) of the Exchange
Act.

 

6.2                               Surrender
of Stock.  With the
Committee’s consent, all or any part of the Exercise Price may be paid by
surrendering, or attesting to the ownership of, Common Shares that are already
owned by the Optionee.  Such Common
Shares shall be valued at their Fair Market Value on the date when the new
Common Shares are purchased under the Plan.

 

6.3                               Exercise/Sale.  With the Committee’s consent, all or any part
of the Exercise Price and any withholding taxes may be paid by delivering (on a
form prescribed by the Company) an irrevocable direction to a securities broker
approved by the Company to sell all or part of the Common Shares being
purchased under the Plan and to deliver all or part of the sales proceeds to
the Company.

 

6.4                               Promissory
Note.  With the Committee’s consent,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) a promissory note.

 

6.5                               Other
Forms of Payment.  With the
Committee’s consent, all or any part of the Exercise Price and any withholding
taxes may be paid in any other form that is consistent with applicable laws,
regulations and rules.

 

ARTICLE 7.   STOCK
APPRECIATION RIGHTS.

 

7.1                               SAR
Agreement.  Each grant
of an SAR under the Plan shall be evidenced by an SAR Agreement between the
Optionee and the Company.  Such SAR shall
be subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. 
The provisions of the various SAR Agreements entered into under the Plan
need not be identical.  SARs may be
granted in consideration of a reduction in the Optionee’s other compensation.

 

5

 

7.2                               Number
of Shares.  Each SAR
Agreement shall specify the number of Common Shares to which the SAR pertains
and shall provide for the adjustment of such number in accordance with Article 10.  SARs granted to an Optionee in a single
fiscal year shall in no event pertain to more than 300,000 Common Shares,
except that SARs granted to a new Employee in the fiscal year of the Company in
which his or her Service commences may pertain to a maximum of 600,000 Common
Shares.  The limitations set forth in the
preceding sentence shall be subject to adjustment in accordance with Article 10.

 

7.3                               Exercise
Price.  Each SAR Agreement shall
specify the Exercise Price, which shall in no event be less than 100% of the
Fair Market Value of a Common Share on the date of grant.  The preceding sentence shall not apply to
SARs granted pursuant to an assumption of, or substitution for, another SAR in
a manner that would satisfy the requirements of section 424(a) of the Code if
such section were applicable.

 

7.4                               Exercisability
and Term.  Each SAR
Agreement shall specify the date when all or any installment of the SAR is to
become exercisable and/or may include time-based vesting or performance-based
vesting (including Performance Goals pursuant to Section 4.6).  The SAR Agreement shall also specify the term
of the SAR, which shall not exceed ten (10) years from the date of grant.  An SAR Agreement may provide for accelerated
exercisability in the event of the Optionee’s death, disability or retirement
or other events and may provide for expiration prior to the end of its term in
the event of the termination of the Optionee’s Service.  SARs may be awarded in combination with
Options or Restricted Shares, and such an Award may provide that the SARs will
not be exercisable unless the related Options or Restricted Shares are
forfeited.  An SAR may be included in an
ISO only at the time of grant but may be included in an NSO at the time of
grant or thereafter, but not later than six months before the expiration of
such NSO.  Notwithstanding any other
provision of the Plan or the SAR Agreement, no SAR can be exercised after the
expiration date provided in the applicable SAR Agreement.

 

7.5                               Exercise
of SARs.  Upon exercise of an SAR, the
Optionee (or any person having the right to exercise the SAR after his or her
death) shall receive from the Company (a) Common Shares, (b) cash or (c) a
combination of Common Shares and cash, as the Committee shall determine.  The amount of cash and/or the Fair Market
Value of Common Shares received upon exercise of SARs shall, in the aggregate,
be equal to the amount by which the Fair Market Value (on the date of
surrender) of the Common Shares subject to the SARs exceeds the Exercise
Price.  If, on the date when an SAR
expires, the Exercise Price is less than the Fair Market Value on such date but
any portion of such SAR has not been exercised or surrendered, then such SAR
shall automatically be deemed to be exercised as of such date with respect to
such portion.  An SAR Agreement may also
provide for an automatic exercise of the SAR on an earlier date.

 

7.6                               Modification
or Assumption of SARs. 
Within the limitations of the Plan, the Committee may modify, reprice,
extend or assume outstanding SARs or may accept the cancellation of outstanding
SARs (whether granted by the Company or by another issuer) in return for the
grant of new SARs for the same or a different number of shares and at the same
or a different exercise price.  The
foregoing notwithstanding, no modification of an SAR shall, 

 

6

 

without the consent of the Optionee, alter or impair his or her rights
or obligations under such SAR.

 

ARTICLE 8.  RESTRICTED
SHARES.

 

8.1                               Restricted
Stock Agreement.  Each grant
of Restricted Shares under the Plan shall be evidenced by a Restricted Stock
Agreement between the recipient and the Company.  Such Restricted Shares shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan.  The
provisions of the various Restricted Stock Agreements entered into under the
Plan need not be identical.

 

8.2                               Payment
for Awards.  Restricted
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
property, full-recourse promissory notes, past services and future
services.  If the Participant is an
Outside Director or executive officer of the Company, he or she may pay for
Restricted Shares with a promissory note only to the extent permitted by
section 13(k) of the Exchange Act.

 

8.3                               Vesting
Conditions.  Each Award
of Restricted Shares may or may not be subject to vesting.  Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Restricted
Stock Agreement.  The Committee may
include among such conditions the requirement that the performance of the
Company or a business unit of the Company for a specified period of one or more
fiscal years equal or exceed a target determined in advance by the
Committee.  The Committee shall determine
such performance.  Such target may be
based on one or more of the criteria set forth in the Performance Goals.  The Committee shall identify such target not
later than the 90th day of such period.  In no event shall more than 300,000
Restricted Shares that are subject to performance-based vesting conditions be
granted to any Participant in a single fiscal year of the Company, except that
up to 600,000 Restricted Shares subject to performance-based vesting conditions
may be granted to a new Employee in the fiscal year of the Company in which his
or her Service commences.  The
limitations set forth in the preceding sentence shall be subject to adjustment
in accordance with Article 10.  A
Restricted Stock Agreement may provide for accelerated vesting in the event of
the Participant’s death, disability or retirement or other events.

 

8.4                               Voting
and Dividend Rights.  The holders
of Restricted Shares awarded under the Plan shall have the same voting, dividend
and other rights as the Company’s other stockholders.  A Restricted Stock Agreement, however, may
require that any cash dividends paid on Restricted Shares (a) be accumulated
and paid when such Restricted Shares vest or (b) be invested in additional Restricted
Shares.  Such additional Restricted
Shares shall be subject to the same conditions and restrictions as the Award
with respect to which the dividends were paid.

 

ARTICLE 9.  STOCK
UNITS.

 

9.1                               Stock
Unit Agreement.  Each grant
of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement
between the recipient and the Company. 
Such Stock Units shall be subject to all applicable terms of the Plan
and may be subject to any other terms that are not inconsistent with the
Plan.  The provisions of the various
Stock Unit Agreements 

 

7

 

entered into under the Plan need not be identical.  Stock Units may be granted in consideration
of a reduction in the recipient’s other compensation.

 

9.2                               Payment
for Awards.  To the
extent that an Award is granted in the form of Stock Units, no cash
consideration shall be required of the Award recipients.

 

9.3                               Vesting
Conditions.  Each Award
of Stock Units may or may not be subject to vesting.  Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Stock Unit
Agreement.  The Committee may include
among such conditions the requirement that the performance of the Company or a
business unit of the Company for a specified period of one or more fiscal years
equal or exceed a target determined in advance by the Committee.  The Committee shall determine such
performance.  Such target may be based on
one or more of the criteria set forth in the Performance Goals.  The Committee shall identify such target not
later than the 90th day of such period.  In no event shall more than 300,000 Stock
Units that are subject to performance-based vesting conditions be granted to
any Participant in a single fiscal year of the Company, except that up to
600,000 Stock Units subject to performance-based vesting conditions may be
granted to a new Employee in the fiscal year of the Company in which his or her
Service commences.  The limitations set
forth in the preceding sentence shall be subject to adjustment in accordance
with Article 10.  A Stock Unit Agreement
may provide for accelerated vesting in the event of the Participant’s death,
disability or retirement or other events.

 

9.4                               Voting
and Dividend Rights.  The holders
of Stock Units shall have no voting rights. 
Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to dividend
equivalents.  Such right entitles the
holder to be credited with an amount equal to all cash dividends paid on one
Common Share while the Stock Unit is outstanding.  Dividend equivalents may be converted into
additional Stock Units.  Settlement of
dividend equivalents may be made in the form of cash, in the form of Common
Shares, or in a combination of both. 
Prior to distribution, any dividend equivalents that are not paid shall
be subject to the same conditions and restrictions as the Stock Units to which
they attach.

 

9.5                               Form and
Time of Settlement of Stock Units.  Settlement of vested Stock Units may be made
in the form of (a) cash, (b) Common Shares or (c) any combination of both, as
determined by the Committee.  The actual
number of Stock Units eligible for settlement may be larger or smaller than the
number included in the original Award, based on predetermined performance
factors.  Methods of converting Stock
Units into cash may include (without limitation) a method based on the average
Fair Market Value of Common Shares over a series of trading days.  Vested Stock Units may be settled in a lump
sum or in installments.  The distribution
may occur or commence when all vesting conditions applicable to the Stock Units
have been satisfied or have lapsed, or it may be deferred to any later date.  The amount of a deferred distribution may be
increased by an interest factor or by dividend equivalents.  Until an Award of Stock Units is settled, the
number of such Stock Units shall be subject to adjustment pursuant to Article 10.

 

9.6                               Death
of Recipient.  Any Stock
Units Award that becomes payable after the recipient’s death shall be
distributed to the recipient’s beneficiary or beneficiaries.  Each 

 

8

 

recipient of a Stock Units Award under the Plan shall designate one or
more beneficiaries for this purpose by filing the prescribed form with the
Company.  A beneficiary designation may
be changed by filing the prescribed form with the Company at any time before
the Award recipient’s death.  If no
beneficiary was designated or if no designated beneficiary survives the Award
recipient, then any Stock Units Award that becomes payable after the
recipient’s death shall be distributed to the recipient’s estate.

 

9.7                               Creditors’
Rights.  A holder of Stock Units shall
have no rights other than those of a general creditor of the Company.  Stock Units represent an unfunded and
unsecured obligation of the Company, subject to the terms and conditions of the
applicable Stock Unit Agreement.

 

ARTICLE 10.  PROTECTION
AGAINST DILUTION.

 

10.1                        Adjustments.  In the event of a subdivision of the
outstanding Common Shares, a stock split, a reverse stock split, a declaration
of a dividend payable in Common Shares or a combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, or any other increase or decrease in the number of
issued Common Shares effected without receipt of consideration by the Company,
corresponding adjustments shall automatically be made in each of the following:

 

(a)                                  The number of
Options, SARs, Restricted Shares and Stock Units available for future Awards
under Article 3;

 

(b)                                 The limitations
set forth in Sections 5.2, 7.2, 8.3 and 9.3;

 

(c)                                  The number of
Common Shares covered by each outstanding Option and SAR;

 

(d)                                 The Exercise
Price under each outstanding Option and SAR; and

 

(e)                                  The number of
Stock Units included in any prior Award that has not yet been settled.

 

In the event of a
declaration of an extraordinary dividend payable in a form other than Common
Shares in an amount that has a material effect on the price of Common Shares, a
recapitalization, a rights offering, a reorganization, a merger, a spin-off or
a similar occurrence, the Committee shall make such adjustments as it, in its
sole discretion, deems appropriate in one or more of the foregoing, and its
determination shall be final, binding and conclusive.  Except as provided in this Article 10, a
Participant shall have no rights by reason of any issuance by the Company of
stock of any class or securities convertible into stock of any class, any
subdivision or consolidation of shares of stock of any class, the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class.

 

10.2                        Dissolution
or Liquidation.  To the
extent not previously exercised or settled, Options, SARs and Stock Units shall
terminate immediately prior to the dissolution or liquidation of the Company.

 

9

 

10.3                        Change
in Control.  Individual
agreements evidencing Awards may provide for vesting acceleration if the
Company is subject to a Change in Control. 
In addition, in the event that the Company is subject to a Change in
Control, outstanding Options, SARs, Stock Units and Restricted Shares acquired
under the Plan shall be subject to the agreement evidencing the Change in
Control, which need not treat all outstanding Options, SARs or Stock Units (or
portion thereof) in an identical manner. 
Such agreement, without each Participant’s consent, may dispose of
Options, SARs or Stock Units (or portions thereof) that are not vested as of
the effective date of such Change in Control in any manner permitted by
applicable law, including (without limitation) the cancellation of such
Options, SARs or Stock Units (or portions thereof) without the payment of any
consideration.  Such agreement, without
each Participant’s consent, may provide for one or more of the following with
respect to Options, SARs or Stock Units (or portions thereof) granted to each
Participant that are vested and exercisable as of the closing date of such
Change in Control:

 

(a)                                  The
continuation of such outstanding Awards (or portion thereof) by the Company (if
the Company is the surviving corporation).

 

(b)                                 The assumption
of such outstanding Awards (or portion thereof) by the surviving corporation or
its parent, provided that the assumption of Options or SARs shall comply with
section 424(a) of the Code (whether or not the Options are ISOs).

 

(c)                                  The
substitution by the surviving corporation or its parent of new awards for such
outstanding Awards (or portion thereof), provided that the substitution of
Options or SARs shall comply with section 424(a) of the Code (whether or not
the Options are ISOs).

 

(d)                                 The
cancellation of outstanding Options and SARs and a payment to the Participants
equal to the excess of (i) the Fair Market Value of the Common Shares subject
to such Options and SARs as of the closing date of such Change in Control over (ii)
their Exercise Price.  Such payment shall
be made in the form of cash, cash equivalents, or securities of the surviving
corporation or its parent with a Fair Market Value equal to the required
amount.  Such payment may be made in
installments and may be deferred until the date or dates when such Options and
SARs would have become exercisable or such Common Shares would have
vested.  Such payment may be subject to
vesting based on the Participant’s continuing Service, provided that the
vesting schedule shall not be less favorable to the Participant than the
schedule under which such Options and SARs would have become exercisable or
such Common Shares would have vested.  If
the Exercise Price of the Common Shares subject to such Options and SARs
exceeds the Fair Market Value of such Common Shares, then such Options and SARs
may be cancelled without making a payment to the Optionees.  For purposes of this Subsection (d), the Fair
Market Value of any security shall be determined without regard to any vesting
conditions that may apply to such security.

 

10

 

(e)                                  The
cancellation of outstanding Stock Units and a payment to the Participants equal
to the Fair Market Value of the Common Shares subject to such Stock Units as of
the closing date of such Change in Control. 
Such payment shall be made in the form of cash, cash equivalents, or
securities of the surviving corporation or its parent with a Fair Market Value
equal to the required amount.  Such
payment may be made in installments and may be deferred until the date or dates
when such Stock Units would have vested. 
Such payment may be subject to vesting based on the Participant’s
continuing Service, provided that the vesting schedule shall not be less
favorable to the Participant than the schedule under which such Stock Units
would have vested.  For purposes of this
Subsection (e), the Fair Market Value of any security shall be determined
without regard to any vesting conditions that may apply to such security.

 

Immediately following a Change in Control,
all outstanding Options, SARs and Stock Units shall terminate and cease to be
outstanding, except to the extent such Options, SARs and Stock Units (or
portion thereof) have been continued or assumed, as described in Sections 10.3(a)
and/or 10.3(b).

 

ARTICLE 11.  AWARDS
UNDER OTHER PLANS.

 

The Company may grant awards
under other plans or programs.  Such
awards may be settled in the form of Common Shares issued under this Plan.  Such Common Shares shall be treated for all
purposes under the Plan like Common Shares issued in settlement of Stock Units
and shall, when issued, reduce the number of Common Shares available under Article
3.

 

ARTICLE 12.  PAYMENT
OF DIRECTOR’S FEES IN SECURITIES.

 

12.1                        Effective
Date.  No provision of this Article 12
shall be effective unless and until the Board has determined to implement such
provision.

 

12.2                        Elections
to Receive NSOs, Restricted Shares or Stock Units.  An Outside Director may elect to receive his
or her annual retainer payments and/or meeting fees from the Company in the
form of cash, NSOs, Restricted Shares or Stock Units, or a combination thereof,
as determined by the Board.  Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan.  An election under this Article 12 shall be
filed with the Company on the prescribed form.

 

12.3                        Number
and Terms of NSOs, Restricted Shares or Stock Units.  The number of NSOs, Restricted Shares or
Stock Units to be granted to Outside Directors in lieu of annual retainers and
meeting fees that would otherwise be paid in cash shall be calculated in a manner
determined by the Board.  The Board shall
also determine the terms of such NSOs, Restricted Shares or Stock Units.

 

ARTICLE 13.  LIMITATION
ON RIGHTS.

 

13.1                        Retention
Rights.  Neither the Plan nor any Award
granted under the Plan shall be deemed to give any individual a right to remain
an Employee, Outside Director or Consultant. 
The Company and its Parents, Subsidiaries and Affiliates reserve the
right to 

 

11

 

terminate the Service of any Employee, Outside Director or Consultant
at any time, with or without cause, subject to applicable laws, the Company’s
certificate of incorporation and by-laws and a written employment or consulting
agreement (if any).

 

13.2                        Stockholders’
Rights.  A Participant shall have no
dividend rights, voting rights or other rights as a stockholder with respect to
any Common Shares covered by his or her Award prior to the time when a stock
certificate for such Common Shares is issued or, if applicable, the time when
he or she becomes entitled to receive such Common Shares by filing any required
notice of exercise and paying any required Exercise Price.  No adjustment shall be made for cash
dividends or other rights for which the record date is prior to such time,
except as expressly provided in the Plan.

 

13.3                        Regulatory
Requirements.  Any other
provision of the Plan notwithstanding, the obligation of the Company to issue
Common Shares under the Plan shall be subject to all applicable laws, rules and
regulations and such approval by any regulatory body as may be required.  The Company reserves the right to restrict,
in whole or in part, the delivery of Common Shares pursuant to any Award prior
to the satisfaction of all legal requirements relating to the issuance of such
Common Shares, to their registration, qualification or listing or to an
exemption from registration, qualification or listing.

 

ARTICLE 14.  WITHHOLDING
TAXES.

 

14.1                        General.  To the extent required by applicable federal,
state, local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any
withholding tax obligations that arise in connection with the Plan.  The Company shall not be required to issue
any Common Shares or make any cash payment under the Plan until such
obligations are satisfied.

 

14.2                        Share
Withholding.  To the
extent that applicable law subjects a Participant to tax withholding
obligations, the Committee may permit such Participant to satisfy all or part
of such obligations by having the Company withhold all or a portion of any
Common Shares that otherwise would be issued to him or her or by surrendering
all or a portion of any Common Shares that he or she previously acquired.  Such Common Shares shall be valued at their
Fair Market Value on the date when they are withheld or surrendered.  This Section 14.2 shall apply only to the
minimum extent required by applicable tax laws.

 

ARTICLE 15.  FUTURE
OF THE PLAN.

 

15.1                        Term of
the Plan.  The Plan,
as set forth herein, shall become effective on the IPO Date.  The Plan shall remain in effect until the
earlier of (a) the date when the Plan is terminated under Section 15.2 or (b) the
10th anniversary of the date when the Board adopted
the Plan.

 

15.2                        Amendment
or Termination.  The Board may,
at any time and for any reason, amend or terminate the Plan.  No Awards shall be granted under the Plan
after the termination thereof.  The
termination of the Plan, or any amendment thereof, shall not affect any Award
previously granted under the Plan.

 

12

 

15.3                        Stockholder
Approval.  An
amendment of the Plan shall be subject to the approval of the Company’s
stockholders only to the extent required by applicable laws, regulations or
rules.  However, section 162(m) of the
Code may require that the Company’s stockholders approve:

 

(a)                                  The Plan not
later than the first regular meeting of stockholders that occurs in the fourth
calendar year following the calendar year in which the IPO Date occurred; and

 

(b)                                 The Performance
Goals not later than the first meeting of stockholders that occurs in the fifth
year following the year in which the Company’s stockholders previously approved
such criteria.

 

ARTICLE 16.  DEFINITIONS.

 

16.1                        “Affiliate” means any entity other than a Subsidiary, if the
Company and/or one or more Subsidiaries own not less than 50% of such entity.

 

16.2                        “Award” means any award of an Option, an SAR, a Restricted
Share or a Stock Unit under the Plan.

 

16.3                        “Board” means the Company’s Board of Directors, as
constituted from time to time.

 

16.4                        “Change in Control” means:

 

(a)                                  The
consummation of a merger or consolidation of the Company or any other corporate
reorganization or business combination transaction of the Company with or into
another corporation, entity or person;

 

(b)                                 The sale,
transfer or other disposition of all or substantially all of the Company’s
assets;

 

(c)                                  A change in the
composition of the Board, as a result of which fewer than 50% of the incumbent
directors are directors who either:

 

(i)                                     Had been
directors of the Company on the date 24 months prior to the date of such change
in the composition of the Board (the “Original Directors”); or

 

(ii)                                  Were appointed
to the Board, or nominated for election to the Board, with the affirmative votes
of at least a majority of the aggregate of (A) the Original Directors who were
in office at the time of their appointment or nomination and (B) the directors
whose appointment or nomination was previously approved in a manner consistent
with this Paragraph (ii); or

 

13

 

(d)                                 Any transaction
as a result of which any person is the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing at least 50% of the total voting power represented by the
Company’s then outstanding voting securities. 
For purposes of this Subsection (d), the term “person” shall have the
same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but
shall exclude (i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or of a Parent or Subsidiary and (ii) a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the common stock of
the Company.

 

A transaction shall not
constitute a Change in Control if its sole purpose is to change the state of
the Company’s incorporation or to create a holding company that will be owned
in substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction.

 

16.5                        “Code” means the Internal Revenue Code of 1986, as amended.

 

16.6                        “Committee” means the Compensation Committee of the Board, as
further described in Article 2.

 

16.7                        “Common Share” means one share of the common stock of the
Company.

 

16.8                        “Company” means GameFly, Inc., a Delaware corporation.

 

16.9                        “Consultant” means a consultant or adviser who provides bona
fide services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor.

 

16.10                 “Covered
Employees” means those persons identified by the Company who are or
who may be subject to the limitations of Code Section 162(m).

 

16.11                 “Employee”
means a common-law employee of the Company, a Parent, a Subsidiary or an
Affiliate.

 

16.12                 “Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

16.13                 “Exercise
Price,” in the case of an Option, means the amount for which one
Common Share may be purchased upon exercise of such Option, as specified in the
applicable Stock Option Agreement. 
“Exercise Price,” in the case of an SAR, means an amount, as specified
in the applicable SAR Agreement, which is subtracted from the Fair Market Value
of one Common Share in determining the amount payable upon exercise of such
SAR.

 

16.14                 “Fair Market
Value” means the market price of a Common Share as determined in
good faith by the Committee.  Such
determination shall be conclusive and binding on all persons.  The Fair Market Value shall be determined by
the following:

 

14

 

(i)                     If the Common
Shares are admitted to trading on any established national stock exchange or
market system on the date in question then the Fair Market Value shall be equal
to the closing sales price for such Common Shares as quoted on such national
exchange or system on such date; or

 

(ii)                  if the Common
Shares are admitted to quotation or are regularly quoted by a recognized
securities dealer but selling prices are not reported on the date in question,
then the Fair Market Value shall be equal to the mean between the bid and asked
prices of the Common Shares reported for such date.

 

In each case, the applicable
price shall be the price reported in The Wall Street Journal or such other
source as the Committee deems reliable; provided, however, that if there is no
such reported price for the Common Shares for the date in question, then the
Fair Market Value shall be equal to the price reported on the last preceding
date for which such price exists.  If
neither (i) or (ii) are applicable, then the Fair Market Value shall be
determined by the Committee in good faith on such basis as it deems
appropriate.

 

16.15                 “Immediately
Family” means, except as otherwise defined by the Committee, any
child, sibling, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, sister-in-law, or brother-in-law, including adoptive relationships,
any person sharing the Participant’s household (other than a tenant or
employee), a trust in which these persons have more than fifty percent (50%) of
the beneficial interest, a foundation in which these persons (or the
Participant) own more than fifty percent (50%) or more of the voting interests.

 

16.16                 “IPO Date”
means the effective date of the registration statement filed by the Company
with the Securities and Exchange Commission for its initial offering of Common
Shares to the public.

 

16.17                 “ISO”
means an incentive stock option described in section 422(b) of the Code.

 

16.18                 “NSO”
means a stock option not described in sections 422 or 423 of the Code.

 

16.19                 “Option”
means an ISO or NSO granted under the Plan and entitling the holder to purchase
Common Shares.

 

16.20                 “Optionee”
means an individual, estate or other person holding an Option or SAR.

 

16.21                 “Outside
Director” means a member of the Board who is not an Employee.

 

16.22                 “Parent”
means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than
the 

 

15

 

Company owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.  A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.

 

16.23                 “Participant”
means an individual, estate or other person holding an Award.

 

16.24                 “Performance
Goals” means an objective formula or standard determined by the
Committee with respect to each Performance Period utilizing one or more of the
following factors and any objectively verifiable adjustment(s) thereto permitted
and pre-established by the Committee in accordance with Code Section 162(m):
revenue, operating income, EBITDA and/or net earnings (either before or after
interest, taxes, depreciation and amortization), net income (either before or
after taxes), earnings per share, earnings as determined other than pursuant to
United States generally accepted accounting principles (“GAAP”), return on
gross or net assets, return on equity, return on invested capital, cash flow
(including, but not limited to, operating cash flow and free cash flow),
operating or gross margins, stock price appreciation, total stockholder return,
customer satisfaction metrics, customer count, customer retention, cost per
customer acquisition, and transaction volume, subscriber growth, subscriber
acquisition cost, subscriber churn rate, any of which may be measured with
respect to the Company, or any Subsidiary, affiliate or other business unit of
the Company, either in absolute terms, terms of growth or as compared to any
incremental increase, as compared to results of a peer group.  Awards that are not intended to comply with
Code Section 162(m) may take into account other factors (including subjective
factors).

 

The Committee may, in its
discretion, provide that one or more objectively determinable adjustments shall
be made to one or more of the Performance Goals. Such adjustments may include
one or more of the following: (i) items related to a change in accounting
principle; (ii) items relating to financing activities; (iii) expenses for restructuring
or productivity initiatives; (iv) other non-operating items; (v) items related
to acquisitions; (vi) items attributable to the business operations of any
entity acquired by the Company during the Performance Period; (vii) items
related to the disposal of a business or segment of a business; (viii) items
related to discontinued operations that do not qualify as a segment of a
business under GAAP; (ix) items attributable to any stock dividend, stock
split, combination or exchange of shares occurring during the Performance
Period; or (x) any other items of significant income or expense which are
determined to be appropriate adjustments; (xi) items relating to unusual or
extraordinary corporate transactions, events or developments, (xii) items
related to amortization of acquired intangible assets; (xiii) items that are
outside the scope of the Company’s core, on-going business activities; or (xiv)
items relating to any other unusual or nonrecurring events or changes in
applicable laws, accounting principles or business conditions. For all Awards
intended to comply with Code Section 162(m), such determinations shall be made
within the time prescribed by, and otherwise in compliance with, Section 162(m)
of the Code.

 

16.25                 “Performance
Period” means any period not exceeding seven (7) years as determined
by the Committee, in its sole discretion. 
The Committee may establish different Performance Periods for different
Participants and the Committee may establish concurrent or overlapping
Performance Periods.

 

16

 

16.26                 “Plan”
means this GameFly, Inc. 2010 Omnibus Equity Incentive Plan, as amended from
time to time.

 

16.27                 “Restricted
Share” means a Common Share awarded under the Plan.

 

16.28                 “Restricted
Stock Agreement” means the agreement between the Company and the
recipient of a Restricted Share that contains the terms, conditions and
restrictions pertaining to such Restricted Share.

 

16.29                 “SAR”
means a stock appreciation right granted under the Plan.

 

16.30                 “SAR
Agreement” means the agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining to his or her
SAR.

 

16.31                 “Service”
means service as an Employee, Outside Director or Consultant.

 

16.32                 “Stock Option
Agreement” means the agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining to his or her
Option.

 

16.33                 “Stock Unit”
means a bookkeeping entry representing the equivalent of one Common Share, as
awarded under the Plan.

 

16.34                 “Stock Unit
Agreement” means the agreement between the Company and the recipient
of a Stock Unit that contains the terms, conditions and restrictions pertaining
to such Stock Unit.

 

16.35                 “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.  A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.

 

17Exhibit
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 

 

2

 

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 

 

3

 

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, 

 

4

 

(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 

 

5

 

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 

 

6

 

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.

 

7

 

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:

 

8

 

(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 

 

9

 

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.

 

10

 

(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.

 

11

 

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]

 

13

 

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:

  	
   

  	
   

  
				

 

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00168-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00168-of-00352.parquet"}]]