Exhibit 10.16


 


COLLATERAL AGENT
AGREEMENT


 


COLLATERAL AGENT AGREEMENT (this “Agreement”)
dated as of February 16, 2006, among Barbara R. Mittman (the “Collateral
Agent”), and the parties identified on Schedule A hereto (each,
individually, a “Lender” and collectively, the “Lenders”), who
hold or will acquire convertible promissory notes issued or to be issued by Aegis
Assessments, Inc. (“Debtor”), a Delaware corporation, at or about the date
of this Agreement as described in the Security Agreement referred to in Section 1(a) below
(collectively herein the “Notes”).


 


WHEREAS, the Lenders have made, are making
and will be making loans to Debtor to be secured by certain collateral; and


 


WHEREAS, it is desirable to provide for
the orderly administration of such collateral by requiring each Lender to
appoint the Collateral Agent, and the Collateral Agent has agreed to accept
such appointment and to receive, hold and deliver such collateral, all upon the
terms and subject to the conditions hereinafter set forth; and


 


WHEREAS, it is desirable to allocate the
enforcement of certain rights of the Lenders under the Notes for the orderly
administration thereof.


 


NOW, THEREFORE, in consideration of the
premises set forth herein and for other good and valuable consideration, the
parties hereto agree as follows:


 


1.                                       Collateral.


 


(a)                                  Contemporaneously
with the execution and delivery of this Agreement by the Collateral Agent and
the Lenders, (i) the Collateral Agent has or will have entered into a
Security Agreement among the Collateral Agent and Debtor (“Security
Agreement”), regarding the grant of a security interest in assets owned by
Debtor (such assets are referred to herein and in the Security Agreement as the
“Collateral”) to the Collateral Agent, for the benefit of the Lenders, [(ii) Debtor
is issuing the Notes to the Lenders pursuant to a “Subscription Agreement”
dated at or about the date of this Agreement. Collectively, the Security
Agreement and may issue additional Notes pursuant to the Subscription
Agreement, the Notes and Subscription Agreement and other agreements referred
to therein are referred to herein as “Borrower Documents”.][SOMETHING
GOT DROPPED HERE]


 


(b)                                 The
Collateral Agent hereby acknowledges that any Collateral held by the Collateral
Agent is held for the benefit of the Lenders in accordance with this Agreement
and the Borrower Documents.  No reference
to the Borrower Documents or any other instrument or document shall be deemed
to incorporate any term or provision thereof into this Agreement unless expressly
so provided.


 


(c)                                  The
Collateral Agent is to distribute in accordance with the Borrower Documents any
proceeds received from the Collateral which are distributable to the Lenders in
proportion to their respective interests in the Obligations as defined in the Borrower
Documents.


 


2.                                       Appointment
of the Collateral Agent.


 


The Lenders hereby appoint the Collateral
Agent (and the Collateral Agent hereby accepts such appointment) to take any
action including, without limitation, the registration of any Collateral in the
name of the Collateral Agent or its nominees prior to or during the continuance
of an Event of Default (as defined in the Borrower Documents), the exercise of
voting rights upon the occurrence and during the


 


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continuance of an Event of Default, the
application of any cash collateral received by the Collateral Agent to the
payment of the Obligations, the making of any demand under the Borrower
Documents, the exercise of any remedies given to the Collateral Agent pursuant
to the Borrower Documents and the exercise of any authority pursuant to the
appointment of the Collateral Agent as an attorney-in-fact pursuant to the
Security Agreement that the Collateral Agent deems necessary or proper for the
administration of the Collateral pursuant to the Security Agreements.  Upon disposition of the Collateral in
accordance with the Borrower Documents, the Collateral Agent shall promptly
distribute any cash or Collateral in accordance with Section 10.4 of the
Security Agreement.  Lenders must notify
Collateral Agent in writing of the issuance of Notes to Lenders by Debtor.  The Collateral Agent will not be required to
act hereunder in connection with Notes the issuance of which was not disclosed
in writing to the Collateral Agent nor will the Collateral Agent be required to
act on behalf of any assignee of Notes without the written consent of
Collateral Agent.


 


3.                                       Action by
the Majority in Interest.


 


(a)                                  Certain
Actions.  Each of the Lenders
covenants and agrees that only a Majority in Interest shall have the right, but
not the obligation, to undertake the following actions (it being expressly
understood that less than a Majority in Interest hereby expressly waive the
following rights that they may otherwise have under the Borrower Documents):


 


(i)                                     Acceleration.  If an Event of Default occurs, after the
applicable cure period, if any, a Majority in Interest may, on behalf of all
the Lenders, instruct the Collateral Agent to provide to Debtors notice to cure
such default and/or declare the unpaid principal amount of the Notes to be due
and payable, together with any and all accrued interest thereon and all costs
payable pursuant to such Notes;


 


(ii)                                  Enforcement.  Upon the occurrence of any Event of Default
after the applicable cure period, if any, a Majority in Interest may instruct
the Collateral Agent to proceed to protect, exercise and enforce, on behalf of
all the Lenders, their rights and remedies under the Borrower Documents against
Debtors, and such other rights and remedies as are provided by law or equity;


 


(iii)                               Waiver of
Past Defaults.  A Majority in Interest
may instruct the Collateral Agent to waive any Event of Default by written
notice to Debtors, and the other Lenders; and


 


(iv)                              Amendment.  A Majority in Interest may instruct the
Collateral Agent to waive, amend, supplement or modify any term, condition or
other provision in the Notes or Borrower Documents in accordance with the terms
of the Notes or Borrower Documents so long as such waiver, amendment,
supplement or modification is made with respect to all of the Notes and with
the same force and effect with respect to each of the Lenders.


 


(b)                                 Permitted
Subordination.  A Majority in Interest
may instruct the Collateral Agent to agree to subordinate any Collateral to any
claim and may enter into any agreement with Debtors to evidence such
subordination; provided, however, that subsequent to any such
subordination, each Note shall remain pari  passu with the other
Notes held by the Lenders.


 


(c)                                  Further
Actions.  A Majority in Interest
may instruct the Collateral Agent to take any action that it may take under
this Agreement by instructing the Collateral Agent in writing to take such
action on behalf of all the Lenders.


 


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(d)                                 Majority
in Interest.  For so long as any
obligations remain outstanding on the Notes, Majority in Interest for the
purposes of this Agreement and the Security Agreement shall mean Lenders who
hold not less than sixty-five percent (65%) of the outstanding principal amount
of the Notes.


 


4.                                       Power of
Attorney.


 


(a)                                  To
effectuate the terms and provisions hereof, the Lenders hereby appoint the
Collateral Agent as their attorney-in-fact (and the Collateral Agent hereby
accepts such appointment) for the purpose of carrying out the provisions of
this Agreement including, without limitation, taking any action on behalf of,
or at the instruction of, the Majority in Interest at the written direction of
the Majority in Interest and executing any consent authorized pursuant to this
Agreement and taking any action and executing any instrument that the
Collateral Agent may deem necessary or advisable (and lawful) to accomplish the
purposes hereof.


 


(b)                                 All acts
done under the foregoing authorization are hereby ratified and approved and
neither the Collateral Agent nor any designee nor agent thereof shall be liable
for any acts of commission or omission, for any error of judgment, for any
mistake of fact or law except for acts of gross negligence or willful
misconduct.


 


(c)                                  This
power of attorney, being coupled with an interest, is irrevocable while this
Agreement remains in effect.


 


5.                                       Expenses
of the Collateral Agent. 
The Lenders shall pay any and all reasonable costs and expenses incurred
by the Collateral Agent, including, without limitation, reasonable costs and
expenses relating to all waivers, releases, discharges, satisfactions,
modifications and amendments of this Agreement, the administration and holding
of the Collateral, insurance expenses, and the enforcement, protection and
adjudication of the parties’ rights hereunder by the Collateral Agent,
including, without limitation, the reasonable disbursements, expenses and fees
of the attorneys the Collateral Agent may retain, if any, each of the foregoing
in proportion to their holdings of the Notes.


 


6.                                       Reliance
on Documents and Experts. 
The Collateral Agent shall be entitled to rely upon any notice, consent,
certificate, affidavit, statement, paper, document, writing or communication
(which may be by telegram, cable, telex, telecopier, or telephone) reasonably
believed by it to be genuine and to have been signed, sent or made by the
proper person or persons, and upon opinions and advice of its own legal
counsel, independent public accountants and other experts selected by the
Collateral Agent.


 


7.                                       Duties of
the Collateral Agent; Standard of Care.


 


(a)                                  The
Collateral Agent’s only duties are those expressly set forth in this Agreement,
and the Collateral Agent hereby is authorized to perform those duties in
accordance with commercially reasonable practices.  The Collateral Agent may exercise or
otherwise enforce any of its rights, powers, privileges, remedies and interests
under this Agreement and applicable law or perform any of its duties under this
Agreement by or through its officers, employees, attorneys, or agents.


 


(b)                                 The
Collateral Agent shall act in good faith and with that degree of care that an
ordinarily prudent person in a like position would use under similar
circumstances.


 


(c)                                  Any funds
held by the Collateral Agent hereunder need not be segregated from other funds
except to the extent required by law. 
The Collateral Agent shall be under no liability for interest on any
funds received by it hereunder.


 


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8.                                       Resignation.  The Collateral Agent may resign and be
discharged of its duties hereunder at any time by giving written notice of such
resignation to the other parties hereto, stating the date such resignation is
to take effect.  Within five (5) days
of the giving of such notice, a successor collateral agent shall be appointed
by the Majority in Interest; provided, however, that if the
Lenders are unable so to agree upon a successor within such time period, and
notify the Collateral Agent during such period of the identity of the successor
collateral agent, the successor collateral agent may be a person designated by
the Collateral Agent, and any and all fees of such successor collateral agent
shall be the joint and several obligation of the Lenders.  The Collateral Agent shall continue to serve
until the effective date of the resignation or until its successor accepts the
appointment and receives the Collateral held by the Collateral Agent but shall
not be obligated to take any action hereunder. 
The Collateral Agent may deposit any Collateral with the Supreme Court
of the State of New York for New York County or any such other court in New
York State that accepts such Collateral.


 


9.                                       Exculpation.  The Collateral Agent and its officers,
employees, attorneys and agents, shall not incur any liability whatsoever for
the holding or delivery of documents or the taking of any other action in
accordance with the terms and provisions of this Agreement, for any mistake or
error in judgment, for compliance with any applicable law or any attachment,
order or other directive of any court or other authority (irrespective of any
conflicting term or provision of this Agreement), or for any act or omission of
any other person engaged by the Collateral Agent in connection with this
Agreement, unless occasioned by the exculpated person’s own gross negligence or
willful misconduct; and each party hereto hereby waives any and all claims and
actions whatsoever against the Collateral Agent and its officers, employees,
attorneys and agents, arising out of or related directly or indirectly to any
or all of the foregoing acts, omissions and circumstances.


 


10.                                 Indemnification.  The Lenders hereby agree to indemnify,
reimburse and hold harmless the Collateral Agent and its directors, officers,
employees, attorneys and agents, jointly and severally, from and against any
and all claims, liabilities, losses and expenses that may be imposed upon,
incurred by, or asserted against any of them, arising out of or related directly
or indirectly to this Agreement or the Collateral, except such as are
occasioned by the indemnified person’s own gross negligence or willful
misconduct.


 


11.                                 Miscellaneous.


 


(a)                                  Rights
and Remedies Not Waived. 
No act, omission or delay by the Collateral Agent shall constitute a
waiver of the Collateral Agent’s rights and remedies hereunder or
otherwise.  No single or partial waiver
by the Collateral Agent of any default hereunder or right or remedy that it may
have shall operate as a waiver of any other default, right or remedy or of the
same default, right or remedy on a future occasion.


 


(b)                                 Governing
Law.  This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York  without regard to conflicts of laws
that would result in the application of the substantive laws of another
jurisdiction.


 


(c)                                  Waiver of
Jury Trial and Setoff; Consent to Jurisdiction; Etc.


 


(i)                                     In any
litigation in any court with respect to, in connection with, or arising out of
this Agreement or any instrument or document delivered pursuant to this
Agreement, or the validity, protection, interpretation, collection or
enforcement hereof or thereof, or any other claim or dispute howsoever arising,
between the Collateral Agent and the Lenders or any Lender, then each Lender,
to the


 


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fullest extent it may legally do so, (A) waives
the right to interpose any setoff, recoupment, counterclaim or cross-claim in
connection with any such litigation, irrespective of the nature of such setoff,
recoupment, counterclaim or cross-claim, unless such setoff, recoupment,
counterclaim or cross-claim could not, by reason of any applicable federal or
state procedural laws, be interposed, pleaded or alleged in any other action;
and (B) WAIVES TRIAL BY JURY IN
CONNECTION WITH ANY SUCH LITIGATION AND ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.  EACH LENDER AGREES THAT THIS SECTION 11(c) IS
A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGE THAT THE
COLLATERAL AGENT WOULD NOT ENTER THIS AGREEMENT IF THIS SECTION 11(c) WERE
NOT PART OF THIS AGREEMENT.


 


(ii)                                  Each
Lender irrevocably consents to the exclusive jurisdiction of any State or
Federal Court located within the County of New York, State of New York, in
connection with any action or proceeding arising out of or relating to this
Agreement or any document or instrument delivered pursuant to this Agreement or
otherwise.  In any such litigation, each
Lender waives, to the fullest extent it may effectively do so, personal service
of any summons, complaint or other process and agrees that the service thereof
may be made by certified or registered mail directed to such Lender at its
address for notice determined in accordance with Section 11(e) hereof.  Each Lender hereby waives, to the fullest
extent it may effectively do so, the defenses of forum non conveniens and
improper venue.


 


(d)                                 Admissibility
of this Agreement.  Each of the Lenders
agrees that any copy of this Agreement signed by it and transmitted by
telecopier for delivery to the Collateral Agent shall be admissible in evidence
as the original itself in any judicial or administrative proceeding, whether or
not the original is in existence.


 


(e)                                  Address
for Notices. Any notice or other communication under the provisions of this
Agreement shall be given in writing and delivered in person, by reputable
overnight courier or delivery service, by facsimile machine (receipt confirmed)
with a copy sent by first class mail on the date of transmissions, or by
registered or certified mail, return receipt requested, directed to such party’s
addresses set forth below (or to any new address of which any party hereto
shall have informed the others by the giving of notice in the manner provided
herein):


 


In the case of the Collateral Agent, to
her at:


 


Barbara R. Mittman, Esq.


Grushko & Mittman, P.C.


551 Fifth Avenue, Suite 1601


New York, NY 10176


Fax: (212) 697-3575


 


With a copy to:


 


Grushko & Mittman, P.C.


551 Fifth Avenue, Suite 1601


New York, New York 10176


Fax: (212) 697-3575


 


In the case of the Lenders, to:


 


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To the address and telecopier number set
forth on


Schedule A hereto.


 


In the case of Debtor, to:


 


Aegis
Assessments, Inc.


7975
N. Hayden Road, Suite D363


Scottsdale, Arizona 85258


Attn: Eric D. Johnson, CEO


Fax: (480) 778-1310


 


With a copy by telecopier only to:


 


Rogers &
Theobald LLP

The Camelback Esplanade


2425 East Camelback Road, Suite 850


Phoenix, Arizona 85016


Attn: Daniel M. Mahoney, Esq.


Fax: (602) 852-5570


 


(f)                                    Amendments
and Modification; Additional Lender. 
No provision hereof shall be modified, altered, waived or limited except
by written instrument expressly referring to this Agreement and to such
provision, and executed by the parties hereto. 
Any transferee of a Note who acquires a Note after the date hereof will
become a party hereto by signing the signature page and sending an
executed copy of this Agreement to the Collateral Agent and receiving a signed
acknowledgement from the Collateral Agent.


 


(g)                                 Fee.  Upon the occurrence of an Event of Default,
the Lenders collectively shall pay the Collateral Agent the sum of $10,000 to
apply against an hourly fee of $350 to be paid to the Collateral Agent by the
Lenders for services rendered pursuant to this Agreement.  All payments due to the Collateral Agent
under this Agreement including reimbursements must be paid when billed.  The Collateral Agent may refuse to act on
behalf of or make a distribution to any Lender who is not current in payments
to the Collateral Agent.  Payments
required pursuant to this Agreement shall be pari  passu to the
Lenders’ interests in the Notes.  The
Collateral Agent is hereby authorized to deduct any sums due the Collateral
Agent from Collateral in the Collateral Agent’s possession.


 


(h)                                 Counterparts/Execution.  This Agreement may be executed in any number
of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.


 


(i)                                     Successors
and Assigns.  Whenever in this
Agreement reference is made to any party, such reference shall be deemed to
include the successors, assigns, heirs and legal representatives of such
party.  No party hereto may transfer any
rights under this Agreement, unless the transferee agrees to be bound by, and
comply with all of the terms and provisions of this Agreement, as if an
original signatory hereto on the date hereof.


 


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(j)                                     Captions:
Certain Definitions. 
The captions of the various sections and paragraphs of this Agreement
have been inserted only for the purposes of convenience; such captions are not
a part of this Agreement and shall not be deemed in any manner to modify,
explain, enlarge or restrict any of the provisions of this Agreement.  As used in this Agreement the term “person”
shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.


 


(k)                                  Severability.  In the event that any term or provision of
this Agreement shall be finally determined to be superseded, invalid, illegal
or otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability (i) by or before that authority
of the remaining terms and provisions of this Agreement, which shall be enforced
as if the unenforceable term or provision were deleted, or (ii) by or
before any other authority of any of the terms and provisions of this
Agreement.


 


(l)                                     Entire
Agreement.  This Agreement contains
the entire agreement of the parties and supersedes all other agreements and
understandings, oral or written, with respect to the matters contained herein.


 


(m)                               Schedules.  The Collateral Agent is authorized to annex
hereto any schedules referred to herein.


 


[THIS SPACE INTENTIONALLY LEFT BLANK]


 


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IN
WITNESS WHEREOF, the parties hereto have caused this Collateral Agent Agreement
to be signed, by their respective duly authorized officers or directly, as of
the date first written above.


 


	
  “LENDERS”

  
	
   

  	
   

  
	
   

  	
   

  
	
   /s/ Konrad Ackerman

  	
   

  	
   /s/ Harborview Master Fund LP

  	
   

  
	
  ALPHA CAPITAL AKTIENGESELLSCHAFT

  	
  HARBORVIEW
  MASTER FUND LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   /s/ DKR
  Soundshore Oasis Holding Fund Ltd.

  	
   

  	
   

  
	
  DKR
  SOUNDSHORE OASIS HOLDING FUND LTD.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ Barbara Mittman

  	
   

  
	
   

  	
  BARBARA
  R. MITTMAN - Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged:

  	
   

  
	
   

  	
   

  
	
  AEGIS
  ASSESSMENT INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Richard Reincke

  	
   

  	
   

  
	
   

  	
  Name: Richard Reincke

  	
   

  	
   

  
	
   

  	
  Title: President

  	
   

  	
   

  
							



 


 


This Collateral Agent Agreement may be signed by
facsimile signature and delivered by confirmed facsimile transmission.


 


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SCHEDULE A TO COLLATERAL AGENT AGREEMENT


 


	
  LENDER

  	
   

  	
  PRINCIPAL AMOUNT OF NOTES

  	
   

  
	
  ALPHA CAPITAL
  AKTIENGESELLSCHAFT

  Pradafant 7

  9490 Furstentums

  Vaduz, Lichtenstein

  Fax: 011-42-32323196

  	
   

  	
  $

  	
  250,000.00

  	
   

  
	
  HARBORVIEW MASTER FUND
  LP

  850- Third Avenue Suite 1801

  New York, NY 10022

  Fax: (646) 218-1401

  	
   

  	
  $

  	
  125,000.00

  	
   

  
	
  DKR SOUNDSHORE OASIS
  HOLDING FUND LTD.

  C/o DKR Capital Partners, L.P.

  1281 East Main Street

  Stamford, CT 06902

  Fax: (203) 674-4737

  	
   

  	
  $

  	
  125,000.00

  	
   

  
	
  TOTAL

  	
   

  	
  $

  	
  500,000.00

  	
   

  



 


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