GLOBAL SECURE CORP. INVESTOR RIGHTS AGREEMENT

Exhibit 4.2

GLOBAL SECURE CORP.

INVESTOR RIGHTS AGREEMENT

     This Agreement dated as of August 9, 2005 is entered into by and among Global Secure Corp., a Delaware corporation (the “Company”), and Sky Capital Enterprises Inc., a Delaware corporation (the “Investor”).

Recitals

     WHEREAS, the Investor (and an Affiliated Party) have agreed to loan the Company up to $1,500,000 pursuant to a loan agreement and promissory note (collectively, the “Loan Documents”); and

     WHEREAS, the Investor currently has the right to designate a majority of the Company’s board of directors pursuant to the terms of the Series A Convertible Preferred Stock (the “Shares”); and

     WHEREAS, the Investor previously had certain management approval rights as set forth in the Company’s Amended and Restated Bylaws; and

     WHEREAS, the Investor has agreed to expand the Company’s Board of Directors and to designate and elect new independent members to the Board; and

     WHEREAS, the Investor and the Company have agreed to move the Investor’s management approval rights from the Bylaws into this Agreement; and

     WHEREAS, the Company and the Investor desire to provide for certain arrangements with respect to certain covenants of the Company; and

     WHEREAS, in connection with the foregoing, the Company has entered into a registration rights agreement of even data herewith (“Registration Rights Agreement”);

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the parties hereto agree as follows:

     1. Certain Definitions.

     As used in this Agreement, the following terms shall have the following respective meanings:

          “Affiliated Party” means, with respect to the Investor, any person or entity which, directly or indirectly, controls, is controlled by or is under common control with the Investor, including, without limitation, any general partner, officer or director of the Investor and any venture capital fund now or hereafter existing which is controlled by one or more general partners of, or shares the same management company as, the Investor.

          “Common Stock” means the common stock, $0.0001 par value per share, of the Company.

          “Company” has the meaning ascribed to it in the introductory paragraph hereto.

          “Company Subsidiary” means any entity in which the Company has the power to elect a majority of the directors, managers or similar governing body, or otherwise has the power to direct the business and policies of that entity.

          “Series A Certificate” means the Certificate of Designation of Series A Convertible Preferred Stock filed on April 15, 2003.

          “Sky Stockholders” means the stockholders of the Company set forth on Exhibit A hereto.

     2. Representations and Warranties. The Company represents and warrants that: (a) it is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and is qualified to do business and is in good standing under the laws of every state where its failure to so qualify would have a material and adverse effect on the business, operations, property or other condition of the Company; (b) the execution, issuance and delivery of this Agreement and the Registration Rights Agreement by the Company are within its corporate powers and have been duly authorized, and they are valid, binding and enforceable in accordance with their respective terms, and they are not in violation of law or of the terms of the Company’s Certificate of Incorporation or Bylaws and do not result in the breach of or constitute a default under any indenture, agreement or undertaking to which the Company is a party or by which it or its property may be bound or affected; and (c) to the knowledge of the Company, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Company of this Agreement and the Registration Rights Agreement, except those as have been obtained.

     3. Covenants.

          (a) Negative Covenants. In addition to the voting rights in the Series A Certificate, so long as any Shares are outstanding and have not been converted into Common Stock, the vote or written consent of the holders of a majority of the Shares, voting separately as a class, shall be required for any action or inaction of the Company (or any Company Subsidiary) which involves any of the following:

1. the approval, material modification or amendment of the Company’s annual capital expenditure budget;

2. the approval, material modification or amendment of the Company’s annual operating budget;

3. the incurrence of indebtedness for borrowed money (or the guarantying of indebtedness of another person or entity) in excess of an aggregate of $300,000

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other than a loan from a commercial lender used to repay in full all indebtedness of the Company to the Investor;

4. any merger of the Company (or Company Subsidiary) and any other entity (regardless of which entity survives the merger) or the acquisition by the Company (or Company Subsidiary) of another entity’s assets, except for the purpose of effecting an internal reorganization;

5. the liquidation, dissolution or winding-up of the Company or the sale of all or substantially all of the Company’s assets (or the assets of a Company Subsidiary);

6. the authorization, creation or issuance of any class or series, or any shares of any class of series, of capital stock having any preference or priority over or in parity with the Series A Preferred Stock as to dividends or as to distributions upon liquidation, dissolution or winding up of the Company, or having redemption rights, or anti-dilution protection superior to or in parity with those applicable to the Series A Preferred Stock;

7. amendment of the Certificate of Incorporation or the Bylaws of the Company;

8. any increase or decrease in the size of the Company’s Board of Directors;

9. the issuance of any equity securities (including in an initial public offering) or the issuance of securities exchangeable or exercisable for, or convertible into equity securities, other than pursuant to the 2005 Incentive Stock Plan of the Company;

10. any amendment of the 2005 Incentive Stock Plan of the Company;

11. the payment of any dividends or distributions on shares of Common Stock of the Company;

12. the redemption, retirement or purchase or other acquisition of any shares of the Company’s capital stock;

13. any agreement or transaction (including without limitation compensation arrangements): (i) by or among the Company (or any Company Subsidiary) and any of the Company’s (or any Company Subsidiary’s) officers or directors or managers (or an affiliate of any officer, director or manager); or (ii) by or among the Company (or any Company Subsidiary) and any individual (or entity in which any such person owns a beneficial interest) related by blood, adoption or marriage to any of the Company’s (or any Company Subsidiary’s) officers or directors or managers;

14. any increase in the authorized number of shares of Series A Convertible Preferred Stock;

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15. any transaction that alone or together with a series of transactions would cause the mandatory conversion of the Series A Convertible Preferred Stock into Common Stock.

     (b) Affirmative Covenants.

1. Investor.

a) Subject to the Investor’s continuing right to designate and elect a majority of the members of the Company’s Board of Directors, the Investor agrees (i) upon satisfactory arrangements being made between each resigning director and the Company to compensate such resigning director for such director’s past service on the Board and other services that such director may have provided to the Company, to cause its current designees (other than Xxxxxxx Xxxxx) to the Company’s Board of Directors to resign concurrent with the closing of an initial public offering by the Company, and (ii) to take all actions necessary to amend the Company’s Bylaws to remove the management approval rights in Article III, Section 14 thereof.

b) If the Investor exercises its right to prevent the issuance of Common Stock in the Company’s initial public offering and such veto occurs after “red xxxxxxx” prospectuses have been printed, the Investor agrees to reimburse the Company to the extent the Company is obligated to reimburse the underwriters for their reasonable expenses incurred in the offering; provided, however, that the Investor shall have no such obligation to reimburse the Company unless all of the following conditions are satisfied: (i) the actual offering price to the public would have been within or above the price range in the printed “red xxxxxxx” prospectuses, (ii) each of the Sky Stockholders was given the opportunity to sell up to 25% of the shares of Company Common Stock held by such Sky Stockholder in the firm commitment portion of the initial public offering, (iii) the registered broker-dealer affiliate of the Investor was given the opportunity (unless prohibited by applicable law or by the lead underwriters in their discretion) to participate as an underwriter in the offering, and (iv) such affiliate was given the opportunity (unless prohibited by applicable law or by the lead underwriters in their discretion) to be named as an underwriter on the front cover of the prospectus.

2. Company. So long as any Shares are outstanding and have not been converted into Common Stock, the Company covenants and agrees that it will perform and observe the following covenants and provisions and will cause each Company Subsidiary to perform and observe such of the following covenants and provisions as are applicable to such Company Subsidiary:

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a) Take all actions necessary to enforce the Investor’s continuing right to designate and elect a majority of the members of the Company’s Board of Directors as set forth in Section 3 of the Series A Certificate.

b) Take all actions necessary to cause each Company Subsidiary to comply with the negative covenants in Section 3(a).

(c) Inspection and Observation.

1. The Company shall permit the Investor, or any authorized representative thereof, to visit and inspect the properties of the Company, including its corporate and financial records, and to discuss its business and finances with officers of the Company, during normal business hours following reasonable notice and as often as may be reasonably requested.

2. The Company will permit the Investor to designate one person to attend all meetings of the Board of Directors of the Company as an observer, and shall provide the Investor with such notice and other information with respect to such meetings (and any written consents) as are delivered to the directors of the Company at the same time such documents are sent to the directors.

(d) Termination of Covenants. This Agreement and all of the Investor’s rights and the Company’s obligations hereunder shall terminate upon the conversion of all Shares into Common Stock.

     4. Transfers of Rights. This Agreement, and the rights and obligations of the Investor hereunder, may not be assigned by the Investor to any other person or entity.

     5. General.

          (a) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

          (b) Specific Performance. In addition to any and all other remedies that may be available at law in the event of any breach of this Agreement, the Investor shall be entitled to specific performance of the agreements and obligations of the Company hereunder and to such other injunctive or other equitable relief as may be granted by a court of competent jurisdiction.

          (c) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

          (d) Notices. All notices, requests, consents and other communications under this Agreement shall be in writing and shall be deemed delivered (i) three business days after being sent by registered or certified mail, return receipt requested, postage prepaid or (ii) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, in each case to the intended recipient as set forth below:

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If to the Company, at 0000 Xxxxxxxx Xxx. XX, Xxxxx 000, Xxxxxxxxxx, XX 00000, Attention: General Counsel, or at such other address as may have been furnished in writing by the Company to the other parties hereto; or

If to the Investor, at 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx Xxxxxxxx, or at such other address as may have been furnished in writing by the Investor to the other parties hereto, with a copy to Xxxxxxxx X. Xxxxxx, Esq., 000 Xxxx Xxx., Xxxxx 000, Xxxxxxxxxx, XX, 00000.

     Any party may give any notice, request, consent or other communication under this Agreement using any other means (including, without limitation, personal delivery, messenger service, telecopy, first class mail or electronic mail), but no such notice, request, consent or other communication shall be deemed to have been duly given unless and until it is actually received by the party for whom it is intended. Any party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other parties notice in the manner set forth in this Section.

          (e) Complete Agreement. This Agreement and the Registration Rights Agreement constitute the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter.

          (f) Amendments and Waivers. This Agreement may be amended or terminated and the observance of any term of this Agreement may be waived with respect to all parties to this Agreement (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the Investor. The Company shall give prompt written notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination or waiver. Any amendment, termination or waiver effected in accordance with this Section shall be binding on all parties hereto, even if they do not execute such consent. No waivers of or exceptions to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

          (g) Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.

          (h) Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same document. This Agreement may be executed by facsimile signatures.

          (i) Section Headings and References. The section headings are for the convenience of the parties and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties. Any reference in this agreement to a particular section or subsection shall refer to a section or subsection of this Agreement, unless specified otherwise.

(Signature page follows.)

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Executed as of the date first written above.

		COMPANY:
		GLOBAL SECURE CORP.
		By:		/s/ Xxxxx X. Xxxxxx
		Name:		Xxxxx X. Xxxxxx
		Title:		President and CEO
		INVESTOR:
		SKY CAPITAL ENTERPRISES INC.
		By:		/s/ Xxxx X. Xxxxxxx
		Name:		Xxxx X. Xxxxxxx
		Title:		President and CEO

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EXHIBIT A — Sky Stockholders

Xxxxxx Mountain
Xxxxxxx Xxxxx
Xxxxx Xxxx
Xxxxxxx Xxxxx
Xxxxxx & Xxxxxxx Xxx
Xxxxxx Xxxxxxxx
Xxxxxxxxxxx Xxxxxxx
Xxx Xxxx
Xxxxxxx Xxxxxxx
Rosewood Solutions Ltd
X. X. Xxxx
Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxx
Xxxx Xxxxxx
TECC Service Ltd
Xxxxxx Xxxxxxx
Trusttees of S Xxxxxx & Son
Xxxxxxxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxxx Montlake
Xxxxxx Xxxxxxx
Xxxx Xxxxxx
X. Xxxxxx
Xxxx Xxxxxx
X. Xxxxxx
Maarten Xxxxxxx
Euro Log
Xxxxx Xxxxx
Bank SCS Alliance
X. Xxxxxx
Task Force Movement
Xxxxxxx Xxxx
Xxxxxxx Xxxxx
Xxxx Xxxxxx
CGM Properties, Inc.
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxx
Xxxxxxx Xxxxxx
Xxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxx

Xxxxxx Xxxxxx
Xxxxx Xxxxx Xxxxxxxx
Xxxxx Xxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxx
NCL Investment Ltd
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxx
Xxxxxxx Xxxxxx
Mr. Xxxxxx
Xxxxx Xxxxxxxx
Xxxxx & Xxx Xxxxxx
Xxxx Xxxxxxxx
Xxxxxx Xxxxxxx
Xxx Xxxxxx
Xxxxxx Xxxxxxxx
XX Xxxx
Xx. Xxxxxxxx
Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx Pension
Xxxxxx Xxxxxxx
Xxxxxxx O’Xxxxxx
Xxxxxx & Xxxxxx Xxxx
PS Xxxx Business
Xxxx Xxxxxxxxx
Xxxx Xxxxxx
Xxxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxx
JDR Xxxxx
Acacia Carpentry (Xxxxxx Xxxxx)
Xxxxxxxxx Xxxxxxxxx
XX Xxxx
A Xxxxx
XX Xxxxxxxx
Xxxx Xxxxx
Xxxxxxx Plus Product Ltd
Xxxxxxxxx Xxxxxxx (Aresti)
Kenson Contractors
Kenson Plant Hire
Xxxxx Xxxxxxx

Xxxxxx Xxxxxxxx
Xxxxx Xxxx
Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxxxx
X.X. Xxxxx
Xxxx & Xxxxxx Xxxxx
Xxxxxx Xxxxxxxx
Xxxxxx & Xxxxx Xxxxxxxx
Task Force Properties
ABS Pension
S. Wander
W. A. Xxxx
Xxxxxx Xxx
XX Xxxxxxxxxx
Xxxxx X Xxxxxxx
PW Lever
Xxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxx Xxxx
Xxxxx Xxxxxxxx
Xxxxxxx Nind
Xxxxx Xxxxx
Xxxxxx Xxxxxxxx
Xxxxxx X Xxxxxx
Xxxx X Xxxxxx
Xxxxxxx Xxxxxxxx
J Xxxxxx
Xxxxxxx
Xxxxx Xxxxx
Xxxxxx Xxxx
Xxxxxxxx Xxxxxx-Xxxxx
Xxxx & Son Butchers Ltd
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxxx
Xxxxx Xxxx
STO International
Xxxxxx Xxxx
Xxxxx Xxxxxxxx
Xxxx Xxxxx
Golden Sky Partnership
Interbaltic Investments
Xxxx Xxxxxxxxxx
Xxxxx Xxxxxxxx

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Xxx Xxx Xxxx
Xxxxx Xxxxx
Xxxx Xxxxxxxx
Xxxxx Xxxx Ltd
Xxxxxx Xxxxx
Xxxxx Xxxxx
Art Xxxxxxx
Xxxx Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxx
Xxxx Xxxxxx
Xxxxxx Valves Ltd (Xxxxxx)
Xxxxxxx Xxxxxxxx
Xxxx & Co. PLC (Xxxxxx Xxxxxx)
Osen Structures (Xxxx XxXxxxxx)
Xxxxx Xxxxxx
Xxxx Xxxxxxxx
Xxxx Xxxxxxxxxx
Trehaven League Ltd
Xxxx Xxxxxxxxxx
Handano Holding Ltd
Xxxxxx Xxxxx
Xxxxxxx & Xxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxxxx Xxxx
Xxx Xxxxxx
Xxxx & Xxxxxx Xxxxx
Xxxx Xxxxxxxxx
The Xxxx Group
Xxxxxx Xxxxx
Xxxxxx Xxxxxx Xxxxxxx
Xxxx Xxxxxxxx
Xxxxx Needle
Xxxxx Xxxxx
Xxxxxx Xxxxxxx
Xxxx Xxxxx
Grange Property Holdings (Fenwick)
Xxxxxxx & Xxxxx Xxxxx
Xxxxx Xxx Xxxxxxxxxx
Xxxxxxxxx Xxxx
Xxxxx Xxxxxxxx

Xxxxxxx Xxxxxxx
Xx. Xxxxxxx
Xxxx Xxxxxxxx
X’Xxxxxx Construction
Xxxxxxx Xxxxx
Xxxxxxx & Xxxx Xxxxxx
Mr. & Xxx. Xxxxx
Xxxx Xxxxxxx
X. Xxxxxxxx
Xxxxxxx Xxxxx
Xxxxx Xxx
Xxx Xxxxxxxxx
Xxx Xxxxxxxxx Trust 1
Xxx Xxxxx
Xxxxxx Xxxxxxxx
Xxxx Xxxxxxxx
Xxxxxx Xxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx
XX Xxxxx
Xxxxxx Xxxxxx
Xx. XxXxxxx
Xx. XxXxxxx
Mr. Tissiman
Xx. Xxxxxxx
Xx. XxXxxx
Xxxxxx Xxxxxx
Mr. Weatcroft
Xxxxxx Xxxxx
Xxxxxx Xxxxxxx
Xxxxx Xxx
Xxxx Xxxxxxxx
Xxx Xxxxxxxxx Trust
Xxxxxx Xxxxxx
Xxxxx Xxxxxxxx
Rosewood Solutions Ltd
T&S Xxxxxxxxxx
Xxxxxxxxxx Mastrandreas
Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
XX Xxxxx
Xxxxxxx Xxxxx

Xxx Xxxxxx
Albion Drilling
X. Xxxxxxx
Xxxxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxx
Xxxxx & Xxxxxxxxx Xxxxxxxxx
Xxxx Xxxxxxx
Xxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxx
Xxxx Xxxxxxxx
Xxx Xxxxxxxx

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