EXHIBIT 10.1


 


MANAGEMENT CONSULTING AGREEMENT


 


This Management Consulting
Agreement (“Agreement”) is entered into this 30th day of May, 2003, by and
between PurchaseSoft,
Inc., a corporation organized and existing under the laws of the
State of Delaware and having a principal place of business at 7514 Girard Ave
Ste 1440, La Jolla, CA 92037 (“Client”), and Steven A. Flagg, an
individual having a principal place of business at 7514 Girard Ave Ste 1440, La
Jolla, CA 92037 (“Consultant”).


 


1.  Performance by Consultant


 


Consultant agrees to provide
management consulting services to Client as may be necessary to completely
discharge the duties of the offices of President and Chief Executive Officer
for PurchaseSoft, Inc. Consultant agrees to spend his time on the affairs of
the Company to the extent necessary to discharge the responsibilities attendant
to these offices, to use his reasonable best efforts to perform faithfully and
efficiently such responsibilities.


 


2.  Payment for
Services


 


a. 
Fees, Price Protection. 
Client agrees to pay Consultant for the management consulting services
as follows:


 


	
  1.

  	
   

  	
  Company will pay a
  commission of 10% of revenue per month from software licenses, upgrades,
  maintenance, hosting and professional services, however, such revenue will
  not include revenue from acquired operations for which compensation is
  determined under 2.a 2. below. 
  Compensation under this paragraph shall be limited to a maximum of
  $10,000 per month.  Commission is
  calculated on revenue as recorded in the Company’s accounting records under
  GAAP and is payable by the 10th of the following month.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Company will pay a
  management fee of $10,000 at closing and $3,000 per month thereafter for each
  acquisition completed by the Company provided the aggregate value of the
  acquisition at closing is over $500,000. 
  Monthly fee is payable by the 10th of the following month.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Company will pay a
  commission of 2% on the net proceeds received by the Company from any debt or
  equity financing transaction completed whose aggregate value exceeds
  $100,000.  The maximum paid under this
  provision will be $50,000 per transaction. 
  Payment will be due within five days of the receipt of funds by the
  Company.

  



 


The total fees paid under
2.a.1 and 2.a.2 above shall be limited to a maximum of $15,000 per month.  The fees as specified herein are the total
fees and charges for the services and will not be increased during the term of
this Agreement except as the parties may agree in writing.


 


b. 
Out-of-Pocket Expenses. 
Consultant shall be reimbursed for all reasonable out-of-pocket expenses
including, but not limited to, meals, suitable short-term housing, and
transportation expenses such as gas and mileage. Consultant shall follow
Client’s standard practices in the submission of all claims for reimbursement.


 

















 


c.  Grant of Non-Statutory Stock Option. 
None.


 


3.  Rights in Data and
Works


 


a.  Ownership. 
Consultant agrees that Client is the owner of all right, title and
interest in all computer programs, including any source code, object code,
enhancements and modifications, all files, including input and output
materials, all documentation related to such computer programs and files, all
media upon which any such computer programs, files and documentation are
located (including tapes, disks and other storage media) and all related
material that are used by, developed for, or paid for by Client in connection
with the performance of any services provided by Consultant before or after the
date set forth above.


 


b.  Proprietary Rights. 
In no way limiting Section 3.a above, Consultant agrees that all
copyrights and other proprietary rights in computer programs, files,
documentation, and related materials that are paid for by Client or developed by
Consultant in connection with this Agreement are owned by Client and Consultant
hereby assigns to Client all right, title and interest in such copyrights and
other proprietary rights.


 


4.  Termination


 


a.  Commencement and Renewal. 
This Agreement shall commence on the date set forth above and shall
remain in effect for one year. 
Thereafter, this Agreement shall be renewed automatically without
interruption for successive one (1) year terms at the same terms, conditions
and prices as set forth herein except that there shall be no additional grants
of options to purchase stock without separate Board action.  After the initial one year term, either
party may notify the other party, in writing, of its election not to renew, in
which event this Agreement will terminate one hundred eighty (180) days after
receipt of such notice.  This Agreement
may be renewed with revised terms, conditions and prices only upon written
agreement of both parties.


 


b.  Termination.  Either
party, upon giving written notice to the other party, may terminate this Agreement:


 


i.  if the other party or its employees, consultants or other agents
violate any provision of this Agreement and the violation is not remedied
within thirty (30) days of the party’s receipt of written notice of the violation;


 


ii.  if at any time after the commencement of the
Services, Client, in its reasonable judgment, determines that such services are
inadequate, unsatisfactory, or substantially nonconforming to the
specifications, descriptions, warranties, or representations contained herein
and the problem is not remedied within thirty (30) days of the party’s receipt
of written notice describing the problem; or


 


In the event that any of the
above events occurs to a party, that party shall immediately notify the other
party of its occurrence.


 


c.  Obligations Upon Expiration or Termination.  Upon expiration or termination of this
Agreement, Consultant shall promptly return to Client all computer programs,
files, documentation, media, related material and any other material that,
pursuant to Section 3 above, is owned by Client.  Expiration or termination of this Agreement shall not relieve
either party of its obligations regarding Confidential Information under
Section 5 below.


 


2

















 


5.  Confidential Information


 


a.  Non-Disclosure.  Each
party agrees not to use, disclose, sell, license, publish, reproduce or
otherwise make available the Confidential Information of the other party except
and only to the extent necessary to perform under this Agreement.  Each party agrees to secure and protect the
other party’s Confidential Information in a manner consistent with the
maintenance of the other party’s confidential and proprietary rights in the
information and to take appropriate action by instruction or agreement with its
employees, consultants or other agents who are permitted access to the other
party’s Confidential Information to satisfy its obligations under this Section.


 


b.  Definition. 
“Confidential Information” means a party’s information, not generally
known by non-party personnel, used by the party and which is proprietary to the
party or the disclosure of which would be detrimental to the party.  Confidential Information includes, but is
not limited to, the following types of information (whether or not reduced to
writing or designated as confidential):


 


i.  work product resulting from or related to
Services performed under this Agreement;


 


ii.  a party’s computer software, including
documentation;


 


iii.  a party’s internal personnel, financial, marketing
and other business information and manner and method of conducting business;


 


iv.  a party’s strategic, operations and other
business plans and forecasts;


 


v.  confidential information provided by or regarding a party’s
employees, customers, vendors and other contractors; and


 


6.  Limitation of
Liability


 


In no event shall either of
the parties hereto be liable to the other for the payment of any consequential,
indirect, or special damages, including lost profits.  Client agrees to provide Consultant with coverage as an officer
under its Directors and Officers Liability Insurance Policy with respect to all
services performed by Consultant pursuant to this Agreement.


 


7.  Assignment


 


a.  Consent Required. 
Consultant shall not assign or subcontract the whole or any part of this
Agreement without Client’s prior written consent.


 


b.  Subcontracting.  Any
subcontract made by Consultant with the consent of Client shall incorporate by
reference all the terms of this Agreement. 
Consultant agrees to guarantee the performance of any subcontractor used
in performance of the Services.


 


8.  Other Provisions


 


a.  Status as Independent Contractor.  Consultant and Client are contractors independent of one another
and neither party’s employees will be considered employees of the other party
for any purpose.


 


b.  Applicable Law and Forum. 
This Agreement shall be governed and construed in accordance with the
laws of the State of California without regard to the conflicts of laws or
principles thereof.


 


3

















 


c.  Waiver.  No waiver by
Client of any breach by Consultant of any of the provisions of this Agreement
shall be deemed a waiver of any preceding or succeeding breach of the same or
any other provisions hereof.  No such
waiver shall be effective unless in writing and then only to the extent
expressly set forth in writing.


 


d.  Entire Agreement. 
This Agreement constitutes the entire agreement between Consultant and
Client.


 


e.  Modifications. 
No modification of this Agreement shall be effective unless in writing
and signed by both parties.


 


f.  Severability. If any provision of this Agreement is invalid
or unenforceable under any statute or rule of law, the provision is to that
extent to be deemed omitted and the remaining provisions shall not be affected
in any way.


 


IN WITNESS WHEREOF, and in
acknowledgment that the parties hereto have read and understood each and every
provision hereof, the parties have executed this Agreement on the date first
set forth above.


 


	
  CLIENT:

  
	
   

  
	
  /s/ Thomas B. Marsh

  	
   

  
	
  Signature

  
	
   

  
	
  Thomas B. Marsh

  	
   

  
	
  Name

  
	
   

  
	
  Secretary and Treasurer

  	
   

  
	
  Title

  
	
   

  
	
  7514 Girard Ave Ste 1440

  
	
  La Jolla, CA 92037

  	
   

  
	
  Address

  
	
   

  
	
   

  
	
  CONSULTANT:

  
	
   

  
	
  /s/ Steven A. Flagg

  	
   

  
	
  Signature

  
	
   

  
	
  Steven A. Flagg

  	
   

  
	
  Name

  
	
   

  
	
  7514 Girard Ave Ste 1440

  
	
  La Jolla, CA 92037

  	
   

  
	
  Address

  



 


4