Exhibit
10.38

    

    
      


    

    
      Magnitude
Information Systems, Inc.

    

    
      330 West
38th
nStreet

    

    
      New York,
New York 10018

    

    
      


    

    
      June 1,
2009

    

    
      


    

    
      Andre S.
Scholz

    

    
      Heinrich-Längerer-Strasse
10

    

    
      71229
Leonberg

    

    
      Germany

    

    
      


    

    
      Dear Mr.
Scholz:

    

    
      


    

    
      This
letter shall serve as a Consulting Agreement (the “Agreement”) pursuant to which
Magnitude Information Systems, Inc. (“Magnitude”) and its wholly owned
subsidiary, Kiwibox Media, Inc. (“Kiwibox”) (sometimes Kiwibox and Magnitude are
collectively referred to as the "Company", “we” or “us”) engages you
(''Consultant") to render specified professional management and technology
development services.

    

    
      


    

    
      1. Appointment: The
Company hereby appoints Consultant, and Consultant agrees to such appointment,
to render services as the Chief Technology Officer of Magnitude and to serve as
the President and Chief Executive Officer of Kiwibox. Consultant shall render
such services diligently and to the best of his ability, under the direction and
supervision of the President and Chief Executive Officer of Magnitude and shall
use his best efforts to promote the interests and goodwill of the Company.
Consultant shall render such services during the Term at the Company’s principal
place of business or at such other place of business as may be determined by the
mutual agreement between the Consultant and the Company. Consultant shall have
those duties and powers as generally pertain to each of the offices of which he
holds, as the case may be, subject to the control of the Company, and to report
directly to the President/CEO of Magnitude and to the respective Boards of
Directors of Magnitude and Kiwibox.

    

    
      


    

    2. Term: The “Term” of
this Agreement shall commence as of May 14, 2009 and shall continue through the
next twelve (12) months, unless further extended by mutual agreement of the
parties (the "Term").  The Company can terminate this Agreement, under
certain circumstances for “Cause”, with written notice to
you.  Termination for "Cause" shall mean termination of this Agreement
because Consultant is subject to (a) a conviction of or plea of guilty or nolo contendere by Employee
to a felony, or any crime involving fraud, securities laws violations,
embezzlement or moral turpitude; (b) the refusal by Consultant to perform his
material duties and obligations hereunder or to follow the proper instructions
of the Company; (c) Consultant's willful or intentional misconduct in the
performance of his/her duties and obligations; (d) if Consultant or any member
of his/her family makes any personal profit arising out of or in connection with
a transaction to which the Company is a party or with which it is associated
without making disclosure to and obtaining the prior written consent of the
independent members of the Board; or (e) the entry by the Securities and
Exchange Commission or a self-regulatory organization of a consent decree
relating to a securities law violation by Consultant. The written notice given
hereunder by the Company to Consultant shall specify in reasonable detail the
cause for termination. For purposes of this/her Agreement, "family" shall mean
"immediate family" as defined in the rules of the Securities and Exchange
Commission

    


    
      3. Compensation: In
consideration of the Consultant’s agreement to render the services set forth
herein and his commitment to provide such services, the Consultant will receive
(1) 500,000 restricted common shares of Magnitude, and (2) 100,000 restricted
common shares of Magnitude for each month of service, and (3) a monthly
consulting fee of $20,000 (in this amount all cash expenses for traveling,
accommodations etc. are included).

    

    
      


      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    
      4. Assignment:
Consultant may not assign any of its rights, duties or obligations under this
Agreement without the prior written consent of the Company.

    

    
      


    

    
      5. Consultant
Representations: Consultant agrees and represents: (a) that he is an
independent contractor and not an employee or agent of the Company and that in
acting pursuant to this engagement it will not legally bind or obligate the
Company in any manner whatsoever; and (b) that the execution and delivery of his
performance under this Agreement shall not violate or breech any agreement,
contract or obligation currently in existence between the Consultant and any
third party.

    

    
      


    

    6. Confidential
Information.

    


    6.1
Consultant shall not, in any manner, for any reasons, either directly or
indirectly, divulge or communicate to any person, firm or corporation, any
confidential information concerning any matters not generally known in the
software/hardware, marketing and development of website business (the "Website
Business") or otherwise made public by Company which affects or relates to
Company's business, finances, marketing and/or operations, research,
development, inventions, products, designs, plans, procedures, or other data
(collectively, "Confidential Information") except in the ordinary course of
business or as required by applicable law. Without regard to whether any item of
Confidential Information is deemed or considered confidential, material, or
important, the parties hereto stipulate that as between them, to the extent such
item is not generally known in the Website Business, such item is important,
material, and confidential and affects the successful conduct of Company's
business and goodwill, and that any breach of the terms of this Section 7.1
shall be a material and incurable breach of this Agreement. Confidential
Information shall not include: information in the public domain other than
because of a breach of this/her Agreement.

    


    Documents

    


    6.2
Consultant further agrees that all documents and materials furnished to
Consultant by Company and relating to Company's business or prospective business
are and shall remain the exclusive property of Company. Consultant shall deliver
all such documents and materials, and all copies thereof and extracts therefrom,
to Company upon demand therefor and in any event upon expiration or earlier
termination of this Agreement.

    


    Inventions
and Intellectual Property

    


    6.3 All
ideas, inventions, and other developments or improvements conceived or reduced
to practice by Consultant, alone or with others, during the Term of this
Agreement, whether or not during working hours, that are within the scope of the
business of Company or that relate to or result from any of Company's work or
projects or the services provided by Consultant to Company pursuant to this
Agreement, shall be the exclusive property of Company. Consultant agrees to
assist Company, at Company's expense, to obtain patents and copyrights on any
such ideas, inventions, writings, and other developments, and agrees to execute
all documents necessary to obtain such patents and copyrights in the name of
Company.

     

    
      
         

      

      
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    Disclosure

    


    6.4
During the Term, Consultant will promptly disclose to the Company full
information concerning any interest, direct or indirect, of Consultant (as
owner, shareholder, partner, lender or other investor, director, officer,
Consultant, consultant or otherwise) or any member of his immediate family in
any business that is reasonably known to Consultant to purchase or otherwise
obtain services or products from, or to sell or otherwise provide services or
products to, the Company or any of their suppliers or customers.

    


    7. Covenant Not to
Compete.

    


    7.1 No
Competitive Activities. During the Term, Consultant shall not engage in any
activates that are competitive with the actual or prospective business of the
Company, including without limitation: (a) engaging directly or indirectly in
any business substantially similar to any business or activity engaged in (or
proposed to be engaged in) by Company, including and not limited to business
that relates to the Website Business; (b) engaging directly or indirectly in any
business or activity competitive with any business or activity engaged in (or
proposed to be engaged in) by Company; (c) soliciting or taking away any
Consultant, Consultant, agent, representative, contractor, supplier, vendor,
customer, franchisee, lender or investor of Company, or attempting to so solicit
or take away; (d) interfering with any contractual or other relationship between
Company and any Consultant, Consultant, agent, representative, contractor,
supplier, vendor, customer, franchisee, lender or investor; or (e) using, for
the benefit of any person or entity other than Company any Confidential
Information of Company.

    


    7.2 The
foregoing covenant prohibiting competitive activities shall survive the
termination of this Agreement, and shall extend, and shall remain enforceable
against Consultant, for the period of two (2) years following the date thisr
Agreement is terminated. In addition, during the two-year period following such
expiration or earlier termination, neither Consultant nor Company shall make or
permit the making of any negative statement of any kind concerning Company or
their affiliates, or their directors, officers or agents or
Consultant.

    


    8. Survival. Except as
otherwise provided, Consultant agrees that the provisions of Articles 6, 7 and 9
shall survive expiration or earlier termination of this Agreement for any
reasons whether voluntary or involuntary, and shall remain in full force and
effect thereafter.

    


    9. Injunctive Relief.
Consultant acknowledges and agrees that the covenants and obligations of
Consultant set forth in Articles 6 and 7 with respect to non-competition,
non-solicitation, confidentiality and the Company's property relate to special,
unique and extraordinary matters and that a violation of any of the terms of
such covenants and obligations will cause the Company irreparable injury for
which adequate remedies are not available at law. Therefore, Consultant agrees
that if Consultant breaches this Agreement than the Company shall be entitled to
apply for an injunction, restraining order or such other equitable relief as a
court of competent jurisdiction as limited by Section 11 may deem necessary or
appropriate to restrain Consultant from committing any violation of the
covenants and obligations referred to in this Article 10. Consultant shall have
the right to appeal from such injunction or order and to seek reconsideration.
These injunctive remedies are cumulative and in addition to any other rights and
remedies the Company may have at law or in equity.

    


    10. Submission to Jurisdiction;
Consent to Service of Process. This Agreement shall be governed in all
respects, by the laws of the State of New Jersey, including validity,
interpretation and effect, without regard to principles of conflicts of law. The
parties hereto irrevocably and unconditionally consent to submit to the
exclusive jurisdiction of the state and federal courts in the State of New
Jersey for any lawsuits, actions or other proceedings arising out of or related
to this/her Agreement and agree not to commence any lawsuit, action or other
proceeding except in such courts. The parties hereto further agree that service
of process, summons, notice or document by mail to their addresses set forth
above shall be effective service of process for any lawsuit, action or other
proceeding brought against them in any such court. The parties hereto
irrevocably and unconditionally waive any objection to the laying of venue of
any lawsuit, action or other proceeding arising out of or related to this
Agreement in such courts, and hereby further irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such lawsuit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.

     

    
      
         

      

      
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      11. Corporate Governance and
Insider Knowledge. In addition to his promises set forth in this
Agreement, Consultant acknowledges that during the Term of this Agreement,
Consultant shall obtain information about the Company and its operations that
shall be considered “material” information, whether positive or negative about
Company’s plans, financial condition, business status, developments or facts;
that, without the express written consent of the President/CEO of Magnitude or
its counsel, Consultant shall not, under any circumstances, disclose to any
person except to the executive officers and members of the Board of Directors of
the Company. Consultant understands that his obligation to maintain the
confidentiality of all such material information about the Company is a standard
requirement of applicable U.S. securities laws. In addition, Consultant further
acknowledges that he shall not purchase or sell, or participate with others in
the purchase or sale, of any securities of the Company during the Term of this
Agreement without the express written approval of the
Company.

    

    
      


    

    
      12. Agreement: This
Agreement may not be amended or modified except in writing and shall be deemed
to have been made and delivered in the State of New Jersey, and this letter and
the transactions contemplated hereby shall be governed as to validity,
interpretation, construction, effect, and in all other respects by the internal
laws of the State of New Jersey.

    

    
      


    

    
      13. Complete Agreement:
This Agreement supercedes and replaces any and all prior consulting agreements,
oral or written, between the parties.

    

    
      


    

    
      14. Indemnification. The
Consultant and the Company hereby agree to defend one another and to indemnify
each other from and against any liability of any nature whatsoever that may
arise out of or as a result of any material misrepresentations or omissions made
in connection with the services rendered under the terms of this Agreement made
by either the Consultant or the Company, as the case may be (the “Indemnifying
Party”). By this indemnification, the Indemnifying Party shall pay, on demand,
to the other party (the “Indemnified Party”) any and all costs, expenses,
judgments, fines, including reasonable attorney’s fees, incurred during any
administrative proceeding or legal process instituted against either the Company
or the Consultant whose material allegations include a claim or claims that the
Indemnifying Party made a material misrepresentation or omission in connection
with the conduct of the services rendered under this
Agreement.

    

    
      


    

    
      If the
foregoing correctly sets forth the understanding and agreements between the
Company and Consultant, Consultant shall indicate so by signing in the space
provided for that purpose below, whereupon this letter shall constitute a
binding agreement as of the date first above written. This agreement is subject
to approval by the Company's Board of Directors.

    

    
      


    

    
      


      
        
           

        

        
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      Magnitude
Information Systems, Inc.

    

    


    


    
      
        
          	
                  By:

                	
                  /s/
      Rudolf Hauke

                	 
	 
      	
                  Rudolf
      Hauke

                	 
	 
      	
                  President
      and CEO

                	 


        

      

    

    
 

    Kiwibox
Media, Inc.

    
 

    
      
        
          	
                  By:

                	
                  /s/
      Rudolf Hauke

                	 
	 
      	
                  Rudolf
      Hauke

                	 
	 
      	
                  President
      and CEO (de facto)

                	 


        

      

    

    


    


    
      
        
          	 
      	
                  Agreed
      to:

                	 
	 
      	
                  Consultant:

                	 
	 
      	
                  Andre
      S. Scholz

                	 
	 
      	
                  Andre
      S. Scholz

                	 


        

      

    

    


    
      
         

      

      
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