LIMITED WAIVER TO LOAN AND SECURITY AGREEMENT AND AMENDMENT NO. 3

EXHIBIT 10.29

LIMITED WAIVER
TO
LOAN AND SECURITY AGREEMENT
AND AMENDMENT NO. 3
 

      This Limited Waiver to Loan and Security Agreement and Amendment No. 3 (this “ Waiver ”) is entered into this 9th day of May, 2007, by and among PlanetOut Inc. , a Delaware corporation (“ PlanetOut ”), PlanetOut USA Inc. , a Delaware corporation (“ PlanetOut USA ”), LPI Media Inc. , a Delaware corporation (“ LPI ”), SpecPub, Inc. , a Delaware corporation (“ SpecPub ”), RSVP Productions, Inc., a Delaware corporation (“ RSVP ”), (PlanetOut, PlanetOut USA, LPI, SpecPub, and RSVP are collectively referred to herein as the “ Borrowers ” and individually as a “ Borrower ”), and ORIX Venture Finance LLC (“ Lender ”). Capitalized terms used herein without definition shall have the same meanings given them in the Loan Agreement (as defined below).

Recitals

      A.      Borrowers and Lender have entered into that certain Loan and Security Agreement dated as of September 28, 2006, as amended by Amendment No. 1 to Loan and Security Agreement and Pledge Agreements dated as of November 8, 2006, and Amendment No. 2 to Loan and Security Agreement (“ Amendment No. 2 ”) dated as of February 14, 2007 (as may be amended, restated, or otherwise modified, the “ Loan Agreement ”), pursuant to which the Lender has agreed to extend and make available to Borrower certain advances of money.

      B.      Borrowers have failed to achieve the Minimum EBITDA and Liquidity covenants set forth in Section 6.7 of the Loan Agreement as of March 31, 2007 and the Liquidity covenant as of April 30, 2007 (together, the “ Existing Defaults ”), and have notified Lender that they expect to fail to achieve the Liquidity covenant as of May 31, 2007 (the “ May Liquidity Test ”).

      C.      Borrowers desire that Lender waive the Existing Defaults and the May Liquidity Test upon the terms and conditions more fully set forth herein.

      D.      Subject to the representations and warranties of Borrowers herein and upon the terms and conditions set forth in this Waiver, Lender is willing to provide the limited waiver and amendment contained herein.

Agreement

      NOW, THEREFORE, in consideration of the foregoing Recitals and intending to be legally bound, the parties hereto agree as follows:

      1.       Financial Covenants .   Borrowers acknowledge their failure to achieve Minimum EBITDA for the period tested as of March 31, 2007 as provided for in Section 6.7(a) of the Loan Agreement (the “ EBITDA Event ”) and Minimum Liquidity as provided for in Section 6.7(b) of the Loan Agreement for the periods tested as of the end of each of the months of March and April 2007 (the “ Liquidity Events ”). Borrowers further request that Lender waive compliance by Borrowers with the May Liquidity Test.

      2.       Limited Waiver .   Lender hereby agrees, subject to the terms of Section 3 hereof, to waive (i) the EBITDA Event, (ii) the Liquidity Events and (iii) the May Liquidity Test. Lender further agrees, subject to the terms of Section 3 hereof, to waive any misrepresentation in Section 3(c) of Amendment No. 2 in connection with Borrowers’ failure to disclose the amendment to PlanetOut’s certificate of incorporation filed January 8, 2007.

      3.       Conditions to Limited Waiver .

           3.1      Engagement of Investment Bankers .   Not later than May 15, 2007, Borrowers shall have engaged an investment banking firm for the purpose of raising capital for PlanetOut, and shall have provided evidence of the same to Lender.

           3.2      Establishment of Lockbox .   Not later than May 18, 2007, Borrowers shall have established a lockbox account with a bank to which Account debtors shall be directed to make payment and into which the proceeds of all Accounts shall be deposited, pursuant to a blocked account agreement in such form as Lender may reasonably specify.

           3.3      Term Sheet for Capital Event .   Not later than June 8, 2007, Borrowers shall have received a signed term sheet, reasonably satisfactory to Lender, from one or more investors for the issuance of new equity or subordinated debt in an aggregate gross amount of not less than $15,000,000 (the “ Capital Event ”).

           3.4      Capital Event Closings .   Not later than June 30, 2007, Borrowers shall have (i) obtained a written commitment from one or more investors in the form of one or more subscription or purchase agreements to purchase new equity or subordinated debt issued by PlanetOut in at least the gross amount of $15,000,000, subject only to customary closing conditions, including shareholder approval as may be required, and (ii) closed the issuance of new equity of at least 3,500,000 shares of common stock (on an as-converted basis in the case of convertible subordinated debt) or subordinated debt for gross proceeds of not less than $7,000,000 (the “ Initial Capital Raise ”) and received the proceeds thereof, of which $1,500,000 shall be immediately remitted to Lender for application to amounts due under the Term Loan, in inverse order of maturity. Not later than August 31, 2007, Borrowers shall have closed the issuance of new equity or subordinated debt resulting in gross proceeds of at least an amount equal to $15,000,000 less the amount of gross proceeds from the Initial Capital Raise, and shall have received the proceeds thereof, of which an additional $1,500,000 (for a total of $3,000,000) shall be immediately remitted to Lender for application to amounts due under the Term Loan, in inverse order of maturity.

           3.5      No Prepayments of Indebtedness .   Other than Indebtedness incurred pursuant to the Loan Agreement, Borrowers shall not pay any Indebtedness, including without limitation, the LPI Notes, prior to its due date.

           3.6      Payment of Success Fee .  In the event a Change in Control of PlanetOut occurs, and Lender consents to such Change in Control in accordance with the Loan Agreement, Borrowers shall pay to Lender immediately upon the closing of such Change in Control a fee in the amount of $250,000.

      4.       Amendments .

           4.1      Term Loan Interest .   The first sentence of Section 2.2.1 to the Loan Agreement (Interest Rates) is deleted and replaced in its entirety by the following: “Borrowers shall pay interest to Lender in arrears on each applicable Interest Payment Date, at the following rates: (a) with respect to the Advances, each Advance shall bear interest on the outstanding principal amount thereof from the date when made until paid in full at a rate per annum equal to the Base Rate plus one percent (1.0%), and (b)&nb