Exhibit 10.5


 


JOINT VENTURE AGREEMENT


 


Between


 


Southeastern Protective Services, Inc.

(SBA Protégé)


 


and


 


Paragon Systems, Inc.

(SBA Mentor)


 


THIS JOINT VENTURE AGREEMENT, hereinafter referred to as the “Agreement”, made and entered into
this 17th day of January
2006 by and between Southeastern Protective Services, (a developmental stage
8(a) firm, hereinafter referred to as “Southeasten”), a South Carolina
Corporation with offices located at 4360 Old York Road, Rock Hill, South
Carolina 29732, and Paragon Systems, Inc., (hereinafter referred to as “Paragon”),
an Alabama Corporation with offices located at 14160 Newbrook Drive, Chantilly,
Virginia 20151, who may hereinafter be collectively referred to as the “Joint
Venturers” and individually as a “Joint Venturer” or “Venturer”. This Agreement
has been formed in accordance with the applicable provisions of the Uniform
Partnership Act.


 


WITNESSETH:


 


WHEREAS, the
Joint Venturers are desirous of associating themselves together for the purpose
of submitting a proposal for entering into a contract for the performance of
certain work as follows:


 


	
  1.

  	
  CUSTOMER:

  	
  SOCIAL SECURITY
  ADMINISTRATION

  
	
   

  	
  PROJECT:

  	
  SECURITY SERVICES

  
	
   

  	
  LOCATION:

  	
  BALTIMORE, MD (METRO
  “WEST” FACILITY)

  
	
   

  	
  NUMBER:

  	
  SSA-RFP-06-1014

  
	
   

  	
   

  	
   

  
	
  2.

  	
  CUSTOMER:

  	
  SOCIAL SECURITY
  ADMINISTRATION

  
	
   

  	
  PROJECT:

  	
  SECURITY SERVICES

  
	
   

  	
  LOCATION:

  	
  WILKES BARRE, PA

  
	
   

  	
  NUMBER:

  	
  SSA-RFP-06-1019

  
	
   

  	
   

  	
   

  
	
  3.

  	
  CUSTOMER:

  	
  US ARMY AVIATION &
  MISSILE COMMAND

  
	
   

  	
  PROJECT:

  	
  SECURITY SERVICES

  
	
   

  	
  LOCATION:

  	
  BRANDYWINE, MD

  
	
   

  	
  NUMBER:

  	
  W31P4Q-06-Q-0004

  



 


1

















 


which
contracts and all plans and specifications, change orders, modifications,
amendments and supplements thereto are hereinafter referred to as the “Security
Services Contract(s)” and the work provided to be done by the Contractor (as
defined in the Contract(s)) under said Security Services Contract(s) is
hereinafter referred to as the “Work”;


 


WHEREAS, it
is the desire of the Joint Venturers to undertake the performance of the
Security Services Contract(s) as Joint Venturers, and to evidence their
understanding with respect to their respective duties and obligations under
their respective rights and interests in the Security Services Contract(s), in
the profits to be derived therefrom, and in the liabilities incurred in
connection therewith;


 


WHEREAS, the
Proposal will state that any contract awarded implementing the Proposal or
modifications thereof pursuant to the RFP will be performed by Southeastern and
Paragon as a Joint Venture;


 


WHEREAS,
during the term of this Agreement, each Joint Venturer shall work exclusively
with the Joint Venture in implementing the purpose set forth herein, shall not
compete directly or indirectly with the Joint Venture, and shall refer any
information which it receives concerning the Security Services Contract(s) to
the Joint Venture.


 


NOW, THEREFORE,
in consideration of the mutual covenants and agreements contained herein and
subject to all of the terms, provisions and conditions hereinafter set forth, IT IS HEREBY AGREED:


 


1.             JOINT VENTURE PURPOSE


 


The
Joint Venturers hereby associate themselves together as joint venturers for the
purpose of proposing, negotiating, entering into and ensuring the performance
of all Work for the Security Services Contract(s). The Joint Venture created
hereunder shall be known as Southeastern Paragon (hereinafter the “Joint
Venture”). The principal place of business and the principal office shall be
established in Maryland.


 


2.             MANAGEMENT


 


The
Joint Venture shall be managed jointly by one representative from each of the
parties to serve on a Management Committee. These persons shall have
responsibility for the routine business affairs of the Joint Venture, and shall
have the authority to:


 


(1)           Execute the Security Services Contract(s);


 


(2)           Execute any amendment or change order to the Security Services Contract(s);


 


(3)           Execute subcontracts, purchase orders and rental agreements; 


 


(4)           Adopt or modify methods of accounting, financial control, or reporting and
scheduling;


 


(5)           Distribute excess working capital funds or net profits according to the
provisions of this Agreement; and


 


(6)           Establish Joint Venture policies and procedures


 


2

















 


The
Management Committee shall direct the conduct of the Security Services
Contract(s), in all respects, through the appointment of a JV Administrator.
The JV Administrator shall perform the day-to-day management and administration
of the Security Services Contract(s) in accordance with all legal and
regulatory requirements, including the Statement of Work for each Service
Contract(s).


 


3.             APPOINTMENT OF PROFITS


 


All
profits (after taxes) and liabilities of the Joint Venture shall be apportioned
between the parties in the following manner: Fifty-One Percent (51%) to
Southeastern and Forty-Nine (49%) to Paragon.


 


4.             SPECIAL BANK ACCOUNT


 


A
bank account shall be opened in the name of the Joint Venture. All Security
Services Contract(s) related payments due to the Joint Venture shall be
deposited to this account. All Security Services Contract(s) related expenses
incurred will be paid from this account. All checks, wires, transfers,
deductions and withdrawals written on this account shall be signed and/or
authorized in writing by both Joint Venturers to this Joint Venture. Each Joint
Venturer hereto agrees to execute and deliver all necessary authorizations as
may be required by any of the depository banks to effect the purposes thereof.
All such funds shall be deemed and are declared to be trust funds of the Joint
Venture and shall not be commingled with any other funds of either of the Joint
Venturers.


 


5.             MAJOR EQUIPMENT, FACILITIES,
&OTHER RESOURCES ITEMIZATION


 


An
itemization of all major equipment, facilities, and other resources to be
provided by each Joint Venturer to the Joint Venture will be completed prior to
contract initiation. This itemized list will include a detailed schedule of the
cost or value of each item. Pursuant to the provisions of Paragraph 14.B hereto
rental of said facilities or equipment furnished by a Joint Venturer to the
Joint Venture shall be credited and paid to the Joint Venturer furnishing said
facilities or equipment.


 


6.             RESPONSIBILITIES OF THE
JOINT VENTURERS


 


The
Joint Venturers shall furnish such parts of their organizations and personnel
as necessary for the performance of the Work, and each Joint Venturer further
expressly agrees that it shall contribute and make available to the Joint
Venture, as far as is reasonably practicable for the performance of the
Contract(s), the utmost skill, experience and knowledge of their respective
organization. It is expressly agreed and understood that Southeastern, the 8(a)
participant, shall perform a significant portion of the Work, and not less than
Fifty-One Percent (51%).


 


3

















 


7.             CONTRACT PERFORMANCE
OBLIGATIONS


 


Both
Joint Venturers of the Joint Venture are obligated to ensure the Security
Services Contract(s) performance and to complete performance despite the
withdrawal of the other Venturer.


 


8.             ACCOUNTING AND OTHER
ADMINISTRATIVE RECORDS


 


All
accounting and other administrative records relating to the Joint Venture shall
be kept at the office of the Joint Venture.


 


For
financial statements and for Federal Income Tax purposes, the earnings of the
Joint Venture shall be determined and reported on the “percentage of completion”
method. The fiscal year of the Joint Venture shall be from January 1 to
December 31. Southeastern shall be designated the Tax Matters Partner as
defined in Section 6231 (a)(7) of the Internal Revenue Code 1986, as amended,
with respect to operations conducted by the Joint Venture. As the Tax Matters
Partner, Southeastern shall comply with the requirements of Sections 6221
through 6232 of said Code and regulations promulgated thereunder.


 


The
books of account of the Joint Venture shall be audited by an independent
auditor selected by the Joint Venture, the cost of any such audit to be paid
from the funds of the Joint Venture. The Parties hereby agree that, except for
demonstrable errors, such audit and the accounts rendered pursuant to such
prescribed method accounting shall be final, conclusive, and binding on both of
the Joint Venturers. Upon completion of the Contract(s), all accounts, books,
records, vouchers, contracts and data of the Joint Venture, as the Contractor
relating to the Security Services Contract(s) or its performance shall be kept
and preserved at least for the period, if any prescribed by the Contract(s),
and by law, and for such further period, if any that the Joint Venturers may
determine.


 


The
JV Administrator shall cause to be prepared for delivery to the Joint Venturers
on or before seventy-five (75) days after the end of each fiscal year, at the
expense of the Joint Venture, all federal and any state or local income tax
returns for the Joint Venture for this preceding fiscal year.


 


9.             CONTRACT COMPLETION
REQUIREMENTS


 


Upon
completion of the performance of the Security Services Contract(s), the Joint
Venturers shall settle and adjust all accounts, obligations and liabilities
incurred in connection with the Joint Venture, and after payment or settlement
of all obligations or liabilities shall return all working capital and other
cash funds to the Joint Venturers having contributed such funds, and thereupon
make full and final settlement with each other in such manner that each Joint
Venturer shall receive that percentage of all profits less that percentage of
loss arising in the performance of the Contract(s) as provided for in this
Agreement.


 


The
business of the Joint Venture shall be terminated upon the completion of the


 


4

















 


performance of the Work.


 


Upon
completion of the Security Services Contract(s) by the Joint Venture, the final
original records of the Joint Venture shall be provided to each of the Joint
Venture’s principals.


 


10.          TERMINATION OF THE JOINT VENTURE


 


This
Agreement shall terminate upon the occurrence of either of the following
events:


 


A.            The Security Services Contract(s) is not
awarded to the Joint Venture; or


 


B.            Completion of the Security Services Contracts
and the final distribution of all assets to the parties.


 


11.          ALLOWABLE COSTS


 


A.            Notwithstanding
anything to the contrary in this Agreement, neither of the Joint Venturers
shall be entitled to any compensation other than by participation in the
profits and earnings of the Joint Venture, as herein provided, for services
rendered by it on behalf of the Joint Venture, except those agreed to in
writing and allowed by both Joint Venturers. It is expressly agreed that
the salaries of personnel performing services for the Joint Venture shall be
agreed to in writing and approved by Venturers paid out of the funds of the
Joint Venture. Legal fees incurred in connection with or arising out of the
Work and for accountants and other professional advisors in connection with the
activities of the Joint Venture shall be charged against and paid out of the
funds of the Joint Venture subject to approval of both Venturers.


 


B.            It is anticipated by the Joint Venturers
that, in the performance of the Work, offices and equipment owned by each Joint
Venturer may be used. Each Joint Venturer agrees to rent to the Joint Venture
such of its facilities and equipment as is available and considered by the
Project Manager to be suitable for the performance of the Work. Rental for such
offices and equipment will be on terms to be established in the Contract or as
otherwise agreed upon by the Joint Venturers. Rentals for offices or equipment
furnished by a Joint Venturer shall belong to and be credited and paid to the Joint
Venturer furnishing such offices and equipment. The JV Administrator shall make
known the needs of the Joint Venture to each Joint Venturer in sufficient time
to schedule delivery.


 


12.          INSURANCE


 


The
Joint Venture shall procure all insurance required for the contract and such
excess as the Joint Venture shall agree is needed for the protection of the
Joint Venture and for the protection of Paragon and Southeastern. All such
policies shall be charged against and paid out of the funds of the Joint
Venture subject to approval of the Management Committee.


 


13.          LIABILITIES AND OBLIGATIONS


 


Subject
to provisions of Paragraph 15 (Nature of Agreement) and Paragraph 17


 


5

















 


(Successors and Assigns),
neither of the Joint Venturers shall make commitments of any kind whatsoever,
or incur obligations or liabilities binding upon themselves, the Joint Venture
or the other Joint Venturer, or make disbursements of funds, without first obtaining
the express written consent or approval of both Joint Venturers to any such
commitment, obligation, liability, or disbursement, and no commitment made or
obligation or liability assumed by any Joint Venturer shall be binding upon any
other Joint Venturer hereto who has not first expressly approved and consented
to such commitment, obligation or liability; provided, however, that the
provisions hereof shall in no matter restrict or impair the authority herein
delegated to the JV Administrator in connection with the management of the
Security Services Contract(s).


 


Except
as otherwise provided in this Agreement, neither of the Joint Venturers shall
engage in any of the following acts without the prior written consent of the
other Joint Venturer:


 


A.       Pledge the credit of the Joint Venture in any way except in the
ordinary course of Joint Venture business;


 


B.        Make an assignment for the benefit creditors;


 


C.        Release, assign or transfer a Joint Venture claim, security, commodity,
or any other asset belonging to the Joint Venture;


 


D.       Compromise or release any debt due the Joint Venture except upon
receipt of full payment;


 


E.        Borrow any money in the name of the Joint Venture or lend any money belonging
to the Joint Venture;


 


F.        Submit a Joint Venture claim or liability to arbitration or reference,
or confess a judgment against the Joint Venture; or


 


G.        Sell or assign its share in the Joint Venture or in the profits or
working fund capital, other than to the other Joint Venturer.


 


14.          NO AGENCY OR PARTNERSHIP


 


Nothing
in this Agreement shall make or constitute any Joint Venturer the agent or
representative of any other Joint Venturer except to the extent herein
expressly provided. This Agreement and the covenants and agreement herein
contained shall apply only to the performance of the Contract(s) and to no
other work. Neither Joint Venturer shall have any power to bind the other Joint
Venturer except as expressly set forth in this Agreement.


 


15.          NATURE OF AGREEMENT


 


It
is specifically understood and agreed that this Agreement extends only to the


 


6

















 


Work
described herein, and the relationship between the parties shall be limited to
the performance of the Security Services

Contract(s) in accordance with the terms of this Agreement. This Agreement
shall be construed and deemed to be a joint venture for the sole purposes of
the Security Services Contract(s). In no event shall this Agreement extend to,
be construed, or constitute the Joint Venturers to be partners, or constitute
either of them the agent of the other Joint Venturer, except as herein
specifically provided.


 


It
is further understood and agreed that the parties to this Joint Venture
Agreement shall have the right at all times to engage in other business and ventures
for their own respective profit. The parties shall devote such time and
attention to the business of the joint venture as is necessary to perform the
obligations of the Security Services Contract(s).


 


16.          INFORMATION


 


A.            The Joint Venturers shall exchange such
information, data, and plans as are specifically required for each Joint
Venture to perform its obligations under this Agreement.


 


B.            To protect the concepts and ideas of the
Joint Venturers hereto, each party shall comply with the Non-Disclosure
requirements set forth at attachment A hereto, and incorporated herein by
reference.


 


C.            No publicity or advertising relating to this Agreement,
the Proposal submitted or contract awarded under the Security Services
Contract(s) shall be released without the approval in writing of both Joint
Venturers. Neither Joint Venturer shall be precluded from revealing the
contents of this Agreement to the Customer, the Joint Venturers’ independent
auditors, or authorized government agencies, or as may be required by law.


 


17.          SUCCESSORS AND ASSIGNS


 


This
Agreement shall inure to the benefit of and be binding upon the Joint Venturers
hereto, their successors, trustees, assigns, heirs, administrators and legal
representatives; provided, however, that the interest of any Joint Venture
hereto in this Agreement is not assignable without the express written consent
of the Joint Venturers hereto.


 


18.          AMENDMENTS


 


This
Agreement may be amended by the unanimous written consent of the Joint
Venturers.


 


19.          COUNTERPARTS


 


This
Agreement, and any amendments hereto, may be executed in Counterparts each of
which shall be deemed an original, and such counterparts shall constitute but
one and the same instrument.


 


7

















 


20.          COST OR PRICING DATA


 


In
the event of award of the Contract(s) to the Joint Venture, each Joint Venturer
shall provide, if required by the provisions of the Solicitation, a Standard
Form 1411, Certificate of Current Cost or Pricing Data, or to the Joint
Venture; however, detailed supporting cost or pricing data will be provided
directly to the Government.


 


21.          AUDIT


 


Nothing
contained in this Agreement shall be construed as giving any Joint Venturer or
the Joint Venture the right to audit the books or records of another Joint
Venturer.


 


22.          PROCUREMENT INTEGRITY


 


Neither
the Joint Venture nor any Joint Venturer, through its agents, employees,
representatives or otherwise shall either directly or indirectly make, give or
promise any payment or other thing of value to any person for a purpose, or
commit any other act, which is unlawful under the laws of the United States.


 


23.          COMPLIANCE WITH STATE AND
FEDERAL LAWS


 


In
the performance of their duties under this Agreement, and the performance of
the Security Services Contract(s), the parties agree to abide by all
requirements imposed by applicable federal law and regulations and to comply
with all terms, conditions and specifications set forth in the Security
Services Contract(s). The parties further agree to comply with any and all
state and local laws and regulations relating to the Agreement, and their
performance of the Security Services Contract(s), including but not limited to,
the filing of any certification or other document necessary for the
establishment of the Joint Venture.


 


24.           CONFLICTS


 


It
is recognized by the Joint Venturers that, upon execution of the Security
Services Contract(s) by the Joint Venture, the Joint Venture and each of the
Joint Venturers shall be fully bound by all of the terms and conditions of the
Contract(s) notwithstanding any conflicts that may exist between the provisions
of this Agreement and the Contract(s).


 


25.          GOVERNING LAW


 


The
Joint Venture shall exist under and be governed by the laws of the State of
Maryland including, without limitation, the Uniform Partnership Act of the
State of Maryland and shall make any filings or disclosures required by the
laws of Maryland with respect to its use of a fictitious or assumed name and
required by Federal Acquisition Regulations. All claims, questions or issues
relating to the execution,


 


8

















 


validity,
interpretation and performance of this Agreement shall be governed by the laws
of the State of Maryland.


 


26.          ARBITRATION OF DISPUTES


 


Any
claim or controversy arising out of or relating to this Agreement or the breach
thereof shall be settled by arbitration in accordance with commercial Rules of
the American Arbitration Association in effect at the time a demand for
arbitration is filed with such Association: provided, however, nothing herein
shall preclude either from enforcing the non-disclosure provisions set forth in
Attachment A in a court of competent jurisdiction, including without limitation
seeking injunctive relief. The decision in writing of the arbitrator or
arbitrators appointed by such association shall be final and conclusive, and
judgment upon the award rendered by the arbitrator or arbitrators may be
entered in any Court of competent jurisdiction. The arbitrator(s) shall have
power to award to any Joint Venturer to such proceeding such sums for costs,
expenses and attorney’s fees as such arbitrator or arbitrators may deem proper.


 


IN WITNESS WHEREOF, the parties hereto, intending to
be legally bound, through their duly authorized representatives, have executed
this Agreement on the day and year first above written.


 


	
  SOUTHEASTERN PROTECTIVE

  	
   

  	
  PARAGON SYSTEMS, INC.

  
	
  SERVICES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Marty Melton

  	
   

  	
  By:

  	
  /s/ Leslie Kaciban, Jr.

  
	
   

  	
  Marty Melton

  	
   

  	
  Leslie Kaciban, Jr.

  
	
   

  	
  President

  	
   

  	
  President

  
					



 


9