Exhibit 10.28

May 30, 2002

Mr. Brian Cowley
[address]

Dear Brian:

I am pleased to offer you a fulltime, regular position with LookSmart, Ltd. (the
“Company”).  You have an outstanding skill set which I believe will enable you
to play an important role in the success of the Company.  This letter confirms
our offer and sets out the specified details of employment.  Other terms
required to be observed by law also apply.

Your position will be Senior Vice President, Business Development.  In this
position you will be reporting directly to me.  The key functional areas that
you will be responsible to lead include:

 

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Developing new distribution partnerships for the Company

 

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Managing and growing existing distribution partnerships

 

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Leading the Business Development Team

Your start date will be June 5, 2002.  This offer is contingent upon the
satisfactory results of our background check.

Your compensation on joining will be US$225,000 per annum.  In addition, your
incentive compensation at 100% of “plan” will be $125,000.  Earned incentive
compensation will be paid on a semi-annual basis, based on your achievement of
approved semi-annual performance targets that are mutually developed by the two
of us.  These targets will include measures of total number of paid clicks, paid
clicks/url, and average distribution cost as a percentage of revenue.

Upon employment, you will also be eligible to enroll in the Company’s benefits
package.  If you enroll, the effective date of your coverage will be your date
of hire.  In addition, upon employment you will be eligible to participate in
the Company’s 401(k) Plan.  In the current Plan, the Company will match your
contribution dollar for dollar up to 5%.  You are also eligible to enroll in the
Company’s Employee Stock Purchase Plan, which allows employees to purchase
Company stock at a discount.  You should note that the Company may modify
salaries and benefits from time to time, as it deems necessary.

As an employee of the US Company, you are entitled to vacation, holiday, sick
and funeral leave.  Current policy consists of ten (10) days per annum vacation
leave, twelve (12) holidays,

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two (2) floating holidays, eight (8) days per annum sick leave (additional leave
at discretion of manager) and two (2) days funeral leave.

Stock Options

At the first LookSmart Board of Directors’ meeting following your date of hire,
we will recommend that you be granted 750,000 stock options (the “Option
Shares”).  The exercise price for your Option Shares will be the closing price
of LookSmart, Ltd. stock as quoted on the NASDAQ exchange on the day prior to
the Board of Directors’ approval of your grant.  The Option Shares will vest
over a period of three years, with 250,000 options vesting upon the one-year
anniversary of your employment and 20,833 options vesting each month thereafter
until all remaining Option Shares are vested.  Such Option Shares will be
subject to terms and conditions of the Company’s Stock Option Plan and Stock
Option Agreements, such Agreements to be consistent with the terms outlined in
this letter.  I am happy to provide you with a copy of the Plan. 

Termination; At-Will Employment

You should be aware that your employment with the Company is for no specified
period and constitutes at-will employment.  As a result you are free to resign
at any time for any reason or no reason, similarly the Company is free to
terminate its employment relationship with you at any time, with or without
cause, and with or without notice.

Severance

If you are terminated without “cause” or voluntarily resign for “good reason”
(as defined below), the Company will provide you with a severance package
consisting of: (a) 3/12ths of your then current annual base salary and incentive
compensation at 100% of “plan”, payable in one lump sum within five (5) business
days of the termination, and (b) up to ninety (90) days of continued benefits
coverage from the date of the termination.

Solely for the purpose of this severance provision, the following shall
constitute “cause”:  That is, if you

 

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are convicted of, or plead nolo contendere to, any felony or other offense
involving moral turpitude or any crime related to your employment, or commit any
act of personal dishonesty resulting in personal enrichment in respect of your
relationship with the Company or any subsidiary or affiliate or otherwise
detrimental to the Company in any material respect;

 

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fail to perform your duties to the Company in good faith and to the best of your
ability;

 

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willfully disregard, or fail to follow instructions from the Company’s senior
management to do any legal act related to the Company’s business after notice to
you and 10 days’ opportunity to cure such conduct;

 

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exhibit habitual drunkenness or engage in substance abuse which in any way
materially affects your ability to perform your duties and obligations to the
Company;

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commit any material violation of any state or federal law relating to the
workplace environment; or

 

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terminate or lose, through no fault or derogation of duty on the part of the
Company, of your employment authorization from the U.S. Immigration and
Naturalization Service or the U.S. Department of State reflecting a right to
work in the United States.

Solely for the purposes of this paragraph regarding severance and the paragraph
regarding accelerated vesting below, the following shall constitute “good
reason”:  That is, if you voluntarily cease employment with the Company due to
(i) a significant change or reduction in your job duties or a significant
reduction in your cash compensation, or (ii) a change in your job location of
more than 50 miles from its previous location in connection with a Change in
Control.

Accelerated Vesting

Solely for the purpose of this paragraph regarding accelerated vesting, “Change
of Control” shall mean the sale of all or substantially all of the assets of the
Company, or the acquisition of the Company by another entity by means of
consolidation or merger pursuant to which the then current stockholders of the
Company shall hold less than Fifty Percent (50%) of the voting power of the
surviving corporation; provided, however, that a reincorporation of the Company
in another jurisdiction shall not constitute a “Change of Control.”

If within your first 12 months of employment (1) there is a “Change of Control”
event and (2) you are terminated “without cause” by the surviving corporation,
or (3) you voluntarily resign for “good reason” (as defined above), then 1/36th
of the Option Shares multiplied by the number of complete months you have been
employed by the Company, plus an additional 12/36ths of the Option Shares shall
vest and become immediately exercisable.

If after your first 12 months of employment (1) there is a “Change of Control”
event and (2) you are terminated “without cause” by the surviving corporation,
or (3) you voluntarily resign for “good reason” (as defined above), then
12/36ths of the Option Shares shall vest and become immediately exercisable,
except that if there are fewer than 12/36ths of the Option Shares unvested, then
all remaining unvested Option Shares shall vest and become immediately
exercisable.

In addition, if (1) there is a “Change of Control” event and (2) you are
terminated “without cause” by the surviving corporation, or (3) you voluntarily
resign for “good reason” (as defined above), then the time during which you may
exercise your Option Shares will be extended to one year.

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Confidential Information

Given the high value of information in this market, it is essential that during
your employment and at any time thereafter, you do not disclose any confidential
information relating to the Company’s operations except as may be necessary for
the proper performance of your duties.  By signing this letter, you also agree
to sign a separate Employment, Confidential Information and Arbitration
Agreement.

Other

The Company, at its own expense, agrees to defend you and hold you harmless
against any action brought against you or the Company relating to your
employment with the Company, to the same extent as the Company has agreed to
indemnify its other officers.

This offer of employment is contingent upon presenting, in accordance with the
immigration Reform and Control Act of 1986, verification of your identity and
your legal right to work in the United States.  In the event you do not possess,
or are unable to obtain authorization to accept employment in the U.S., our
offer of employment is withdrawn.

It is important that you bring the appropriate documentation for verification
with you on your first day of employment, as you cannot be put on the LookSmart
payroll until it is received. The required documentation is described in the
enclosed package.

You are required to observe at all times all LookSmart policies and procedures
(including, but not limited to, those provided to you before your starting
date).  In accordance with LookSmart’s philosophy, these policies and procedures
are formulated for the efficient and fair administration of employment matters
and may be varied from time to time.

In the event of any dispute or claim relating to or arising out of our
employment relationship, you and the Company agree that all such disputes,
including but not limited to, claims of harassment, discrimination and wrongful
termination, shall be settled by arbitration held in San Francisco County,
California, under the Arbitration Rules set forth in California Code of Civil
Procedure Section 1280, et seq., including section 1283.05, (the “Rules”) and
pursuant to California law.  A copy of the Rules is available for your review
prior to signing this Agreement.

We look forward to you joining us, not just for your outstanding qualifications
for this particular position, but because we hope that you may become part of a
core team driving LookSmart’s development.

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In order to make this a valid agreement, we ask that you complete the following
acknowledgment, initial each page of this letter and fax it to me at (415)
348-7034.  Please send the original signed letter to me at your convenience or
bring it on your first day of employment.  If you require clarification of any
matter, please feel free to contact me.

Sincerely,

/s/ JASON KELLERMAN

 

 

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Jason Kellerman
Chief Operating Officer

 

Accepted and agreed to by:

/s/ BRIAN COWLEY

Date: _____________

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Brian Cowley

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