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Employment Agreement

Employment Agreement

This Agreement is entered into as of June 20th, 2006 by Karen Magee (the Employee) and PLANETOUT INC. (the Company), a Delaware corporation.

1) Duties and Scope of Employment.

a) Position. For the term of her employment under this Agreement (the Employment), the Company agrees to employ the Employee, which, effective as of July 1, 2006, shall be in the position of Chief Executive Officer of the Company or in such other level equivalent or higher-level position as the Company subsequently may assign to the Employee. The Employee shall report to the Companys Board of Directors (the Board) and shall continue to serve throughout the term of this Agreement as a member of the Board. Throughout the term of her employment, Employee shall have such power, authority and responsibility and perform such duties as are prescribed by or under the Bylaws of the Company and as are customarily associated with the position of Chief Executive Officer. Schedule A to this Agreement sets forth particular objectives associated with Employees position, which Employee shall endeavor to meet.

b) Obligations to the Company. During her Employment, the Employee shall devote her full business efforts and time to the Company. During her Employment, the Employee may, during nonworking hours away from the Companys premises, engage in lawful conduct as an employee, consultant or volunteer for an organization other than the Company (Other Work); provided, however, that such Other Work does not include, without limitation, conduct that (i) constitutes a breach of fiduciary duty to the Company, (ii) constitutes a breach of the duty of loyalty to the Company, (iii) constitutes a breach of Employees Proprietary Information and Inventions Agreement with the Company, (iv) constitutes a breach of this Agreement, (v) competes with the Companys business, (vi) knowingly assists any person or entity in competing with the Company, (vii) knowingly assists any person or entity in preparing to compete with the Company, or (viii) assists any person or entity in soliciting any employees or consultants of the Company to leave the Company. In the event that the Employee engages in Other Work, the Employee must, at least five (5) business days prior to engaging in lawful conduct in business activities other than the Companys business, or in material charitable and political activities not directly associated with the Company during nonworking hours away from the Companys premises, notify the Company in writing of the Employees activity and purpose of activity, name of employer (if any) or organization, position with respect to the activity or the entity and any potential conflict that may arise from that activity, including the number of hours spent engaging in such activity that may or will detract from the business of the Company, and the Board shall have the right to approve such Other Work or activities. The Employee shall comply with the Companys policies and rules, as they may be in effect from time to time during her Employment. Notwithstanding the foregoing, the Company acknowledges and approves Employees current role as a member of the board of trustees of Princeton University, and her pursuit of activities in support of that role.

c) No Conflicting Obligations. The Employee represents and warrants to the Company that she is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with her obligations under this Agreement. The Employee represents and warrants that she will not use or disclose, in connection with her employment by the Company, any trade secrets or other proprietary information or intellectual property in which the Employee or any other person other than the Company, has any right, title or interest and that her employment by the Company as contemplated by this Agreement will not infringe or violate the rights of any other person. The Employee represents and warrants to the Company that she has returned all property and confidential information belonging to any prior employer. The Employee agrees to sign the current versions and any future versions of the Companys various agreements related to confidentiality, inventions and related intellectual property matters.

d) Commencement Date, CEO Date and Location. The Employee shall officially commence work for the Company effective as of the date of this Agreement (Commencement Date) and shall commence her duties as the Chief Executive Officer effective on July 1, 2006 (CEO Start Date). The Employee shall be located in the San Francisco office of the Company.

2) Cash and Incentive Compensation.

a) Salary. The Company initially shall pay the Employee as compensation for her services a base salary at a gross annual rate, excluding incentive bonuses that may be approved by the Board, of Three Hundred Ninety Thousand Dollars ($390,000) from the Commencement Date. Such base salary shall be payable in accordance with the Companys standard payroll procedures. (The annual base salary specified in this subsection (a), together with any increases in such compensation that the Company may grant from time to time, is referred to in this Agreement as Base Compensation.) All future changes to compensation will be based on the results of evaluations of the Employees performance, whether such evaluations are performed annually, or more frequently as may be initiated by Employees senior management or the Board; provided, however, that the $390,000 base salary referred to above shall be increased by a minimum of five percent (5%) during each of the first and second twelve (12) month periods following the Commencement Date.

b) Incentive Bonuses. The Employee will be eligible for annual incentive bonuses at a target level of 40% of Base Compensation during the term of this Agreement (Target Level). Incentive bonuses payable for periods from the Commencement Date until December 31, 2007 will be guaranteed and shall be paid at seventy percent (70%) of the Target Level; incentive bonuses payable for calendar year 2008 will be guaranteed and shall be paid at 55% of the Target Level; and incentive bonuses payable for calendar year 2009 will be guaranteed and shall be paid at 40% of the Target Level; provided that the incentive bonus for the period from the Commencement Date through December 31, 2006 shall be pro-rated to reflect the fact that it covers only a portion of a year; and provided further that such guaranteed amount shall be pro-rated (based on number of days employed out of a 365 day year) for any year in which the Employee terminates Employment. Except as specifically set forth above in this paragraph, incentive bonuses shall be awarded based on objective or subjective criteria established in advance by the Board or the Compensation Committee of the Board in its sole discretion (but after consultation with the Employee) and presented to the Employee, and the determinations of the Board with respect to such bonuses shall be in the sole discretion of the Board and shall be final and binding.

c) Performance Bonus Stock. Subject to the approval of the Board, the Company may grant the Employee restricted stock, stock options or other equity securities, from time-to-time, covering the shares of the Companys equity securities. The terms of such grants, options and other equity securities shall be as determined by the Board at the time of any such grant. Such terms shall be provided in writing to the Employee at the time of any such grant. Subject to the approval of the Board, the Employee will be granted on the CEO Start Date 90,000 shares of restricted common stock of the Company, vesting over a period of four (4) years in four annual installments with 1/4th of the shares vesting on the first day following each of the anniversaries of the CEO Start Date on which the Companys trading window opens pursuant to the Companys Insider Trading Policy, unless the trading window does not open during a quarter, in which case such portion of the restricted stock will vest on the last business day immediately preceding the 16th day of the last month of that quarter, in accordance with the Companys 2004 Equity Incentive Plan (the Plan). The restricted stock described above will be subject to the terms and conditions of the Plan. The Company will review the Employee annually for purposes of making additional annual equity grants; provided that such grants shall based on objective or subjective criteria established by the Board or the Compensation Committee of the Board in its sole discretion (but after consultation with the Employee). The determinations of the Board with respect to such grants shall be in the sole discretion of the Board and shall be final and binding.

3) Vacation and Employee Benefits. During her Employment, the Employee shall be eligible for paid time off (PTO) in accordance with the Companys standard policy for similarly situated employees, as it may be amended from time to time, with her initial accrual at the rate of twenty five (25) days per year, accrued hourly in accordance with the Companys payroll practices, with a maximum accrual of twenty five (25) days or two hundred (200) hours. During her Employment, the Employee shall be eligible to participate in any employee benefit plans maintained by the Company for similarly situated employees, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan based on the terms of the plan and Company policy.

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