**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 intothis 17th day of January2006 by and between Southeastern Protective Services, (a developmental stage8(a) firm, hereinafter referred to as “Southeasten”), a South CarolinaCorporation with offices located at 4360 Old York Road, Rock Hill, SouthCarolina 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 “JointVenturers” and individually as a “Joint Venturer” or “Venturer”. This Agreementhas been formed in accordance with the applicable provisions of the UniformPartnership Act.

 

**WITNESSETH:**

 

**WHEREAS**, theJoint Venturers are desirous of associating themselves together for the purposeof submitting a proposal for entering into a contract for the performance ofcertain 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

----

 

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

 

**WHEREAS**, itis the desire of the Joint Venturers to undertake the performance of theSecurity Services Contract(s) as Joint Venturers, and to evidence theirunderstanding with respect to their respective duties and obligations undertheir respective rights and interests in the Security Services Contract(s), inthe profits to be derived therefrom, and in the liabilities incurred inconnection therewith;

 

**WHEREAS**, theProposal will state that any contract awarded implementing the Proposal ormodifications thereof pursuant to the RFP will be performed by Southeastern andParagon as a Joint Venture;

 

**WHEREAS**,during the term of this Agreement, each Joint Venturer shall work exclusivelywith the Joint Venture in implementing the purpose set forth herein, shall notcompete directly or indirectly with the Joint Venture, and shall refer anyinformation which it receives concerning the Security Services Contract(s) tothe Joint Venture.

 

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

 

**1.****            ****JOINT VENTURE PURPOSE**

 

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

 

**2.****            ****MANAGEMENT**

 

TheJoint Venture shall be managed jointly by one representative from each of theparties to serve on a Management Committee. These persons shall haveresponsibility for the routine business affairs of the Joint Venture, and shallhave 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 andscheduling;

 

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

 

(6)           Establish Joint Venture policies and procedures

 

2

----

 

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

 

**3.****            ****APPOINTMENT OF PROFITS**

 

Allprofits (after taxes) and liabilities of the Joint Venture shall be apportionedbetween the parties in the following manner: Fifty-One Percent (51%) toSoutheastern and Forty-Nine (49%) to Paragon.

 

**4.****            ****SPECIAL BANK ACCOUNT**

 

Abank account shall be opened in the name of the Joint Venture. All SecurityServices Contract(s) related payments due to the Joint Venture shall bedeposited to this account. All Security Services Contract(s) related expensesincurred will be paid from this account. All checks, wires, transfers,deductions and withdrawals written on this account shall be signed and/orauthorized in writing by both Joint Venturers to this Joint Venture. Each JointVenturer hereto agrees to execute and deliver all necessary authorizations asmay 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 JointVenture and shall not be commingled with any other funds of either of the JointVenturers.

 

**5.****            ****MAJOR EQUIPMENT, FACILITIES,&OTHER RESOURCES ITEMIZATION**

 

Anitemization of all major equipment, facilities, and other resources to beprovided by each Joint Venturer to the Joint Venture will be completed prior tocontract initiation. This itemized list will include a detailed schedule of thecost or value of each item. Pursuant to the provisions of Paragraph 14.B heretorental of said facilities or equipment furnished by a Joint Venturer to theJoint Venture shall be credited and paid to the Joint Venturer furnishing saidfacilities or equipment.

 

**6.****            ****RESPONSIBILITIES OF THEJOINT VENTURERS**

 

TheJoint Venturers shall furnish such parts of their organizations and personnelas necessary for the performance of the Work, and each Joint Venturer furtherexpressly agrees that it shall contribute and make available to the JointVenture, as far as is reasonably practicable for the performance of theContract(s), the utmost skill, experience and knowledge of their respectiveorganization. It is expressly agreed and understood that Southeastern, the 8(a)participant, shall perform a significant portion of the Work, and not less thanFifty-One Percent (51%).

 

3

----

 

**7.****            ****CONTRACT PERFORMANCEOBLIGATIONS**

 

BothJoint Venturers of the Joint Venture are obligated to ensure the SecurityServices Contract(s) performance and to complete performance despite thewithdrawal of the other Venturer.

 

**8.****            ****ACCOUNTING AND OTHERADMINISTRATIVE****RECORDS**

 

Allaccounting and other administrative records relating to the Joint Venture shallbe kept at the office of the Joint Venture.

 

Forfinancial statements and for Federal Income Tax purposes, the earnings of theJoint Venture shall be determined and reported on the “percentage of completion”method. The fiscal year of the Joint Venture shall be from January 1 toDecember 31. Southeastern shall be designated the Tax Matters Partner asdefined 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 MattersPartner, Southeastern shall comply with the requirements of Sections 6221through 6232 of said Code and regulations promulgated thereunder.

 

Thebooks of account of the Joint Venture shall be audited by an independentauditor selected by the Joint Venture, the cost of any such audit to be paidfrom the funds of the Joint Venture. The Parties hereby agree that, except fordemonstrable errors, such audit and the accounts rendered pursuant to suchprescribed method accounting shall be final, conclusive, and binding on both ofthe Joint Venturers. Upon completion of the Contract(s), all accounts, books,records, vouchers, contracts and data of the Joint Venture, as the Contractorrelating to the Security Services Contract(s) or its performance shall be keptand 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 maydetermine.

 

TheJV Administrator shall cause to be prepared for delivery to the Joint Venturerson or before seventy-five (75) days after the end of each fiscal year, at theexpense of the Joint Venture, all federal and any state or local income taxreturns for the Joint Venture for this preceding fiscal year.

 

**9.****            ****CONTRACT COMPLETIONREQUIREMENTS**

 

Uponcompletion of the performance of the Security Services Contract(s), the JointVenturers shall settle and adjust all accounts, obligations and liabilitiesincurred in connection with the Joint Venture, and after payment or settlementof all obligations or liabilities shall return all working capital and othercash funds to the Joint Venturers having contributed such funds, and thereuponmake full and final settlement with each other in such manner that each JointVenturer shall receive that percentage of all profits less that percentage ofloss arising in the performance of the Contract(s) as provided for in thisAgreement.

 

Thebusiness of the Joint Venture shall be terminated upon the completion of the

 

4

----

 

performance of the Work.

 

Uponcompletion of the Security Services Contract(s) by the Joint Venture, the finaloriginal records of the Joint Venture shall be provided to each of the JointVenture’s principals.

 

**10.****         ****TERMINATION OF THE JOINT****VENTURE**

 

ThisAgreement shall terminate upon the occurrence of either of the followingevents:

 

A.            The Security Services Contract(s) is notawarded to the Joint Venture; or

 

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

 

**11.****         ****ALLOWABLE COSTS**

 

A.            Notwithstandinganything to the contrary in this Agreement, neither of the Joint Venturersshall be entitled to any compensation other than by participation in theprofits and earnings of the Joint Venture, as herein provided, for servicesrendered by it on behalf of the Joint Venture, except those agreed to inwriting and allowed by both Joint Venturers. It is expressly agreed thatthe salaries of personnel performing services for the Joint Venture shall beagreed to in writing and approved by Venturers paid out of the funds of theJoint Venture. Legal fees incurred in connection with or arising out of theWork and for accountants and other professional advisors in connection with theactivities of the Joint Venture shall be charged against and paid out of thefunds of the Joint Venture subject to approval of both Venturers.

 

B.            It is anticipated by the Joint Venturersthat, in the performance of the Work, offices and equipment owned by each JointVenturer may be used. Each Joint Venturer agrees to rent to the Joint Venturesuch of its facilities and equipment as is available and considered by theProject Manager to be suitable for the performance of the Work. Rental for suchoffices and equipment will be on terms to be established in the Contract or asotherwise agreed upon by the Joint Venturers. Rentals for offices or equipmentfurnished by a Joint Venturer shall belong to and be credited and paid to the JointVenturer furnishing such offices and equipment. The JV Administrator shall makeknown the needs of the Joint Venture to each Joint Venturer in sufficient timeto schedule delivery.

 

**12.****         ****INSURANCE**

 

TheJoint Venture shall procure all insurance required for the contract and suchexcess as the Joint Venture shall agree is needed for the protection of theJoint Venture and for the protection of Paragon and Southeastern. All suchpolicies shall be charged against and paid out of the funds of the JointVenture subject to approval of the Management Committee.

 

**13.****         ****LIABILITIES AND OBLIGATIONS**

 

Subjectto 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 Ventureor the other Joint Venturer, or make disbursements of funds, without first obtainingthe express written consent or approval of both Joint Venturers to any suchcommitment, obligation, liability, or disbursement, and no commitment made orobligation or liability assumed by any Joint Venturer shall be binding upon anyother Joint Venturer hereto who has not first expressly approved and consentedto such commitment, obligation or liability; provided, however, that theprovisions hereof shall in no matter restrict or impair the authority hereindelegated to the JV Administrator in connection with the management of theSecurity Services Contract(s).

 

Exceptas otherwise provided in this Agreement, neither of the Joint Venturers shallengage in any of the following acts without the prior written consent of theother Joint Venturer:

 

A.       Pledge the credit of the Joint Venture in any way except in theordinary 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 uponreceipt of full payment;

 

E.        Borrow any money in the name of the Joint Venture or lend any money belongingto 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 orworking fund capital, other than to the other Joint Venturer.

 

**14.****         ****NO****AGENCY****OR PARTNERSHIP**

 

Nothingin this Agreement shall make or constitute any Joint Venturer the agent orrepresentative of any other Joint Venturer except to the extent hereinexpressly provided. This Agreement and the covenants and agreement hereincontained shall apply only to the performance of the Contract(s) and to noother work. Neither Joint Venturer shall have any power to bind the other JointVenturer except as expressly set forth in this Agreement.

 

**15.****         ****NATURE OF AGREEMENT**

 

Itis specifically understood and agreed that this Agreement extends only to the

 

6

----

 

Workdescribed herein, and the relationship between the parties shall be limited tothe performance of the Security ServicesContract(s) in accordance with the terms of this Agreement. This Agreementshall be construed and deemed to be a joint venture for the sole purposes ofthe Security Services Contract(s). In no event shall this Agreement extend to,be construed, or constitute the Joint Venturers to be partners, or constituteeither of them the agent of the other Joint Venturer, except as hereinspecifically provided.

 

Itis further understood and agreed that the parties to this Joint VentureAgreement shall have the right at all times to engage in other business and venturesfor their own respective profit. The parties shall devote such time andattention to the business of the joint venture as is necessary to perform theobligations of the Security Services Contract(s).

 

**16.****         ****INFORMATION**

 

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

 

B.            To protect the concepts and ideas of theJoint Venturers hereto, each party shall comply with the Non-Disclosurerequirements set forth at attachment A hereto, and incorporated herein byreference.

 

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

 

**17.****         ****SUCCESSORS****AND ASSIGNS**

 

ThisAgreement shall inure to the benefit of and be binding upon the Joint Venturershereto, their successors, trustees, assigns, heirs, administrators and legalrepresentatives; provided, however, that the interest of any Joint Venturehereto in this Agreement is not assignable without the express written consentof the Joint Venturers hereto.

 

**18.****         ****AMENDMENTS**

 

ThisAgreement may be amended by the unanimous written consent of the JointVenturers.

 

**19.****         ****COUNTERPARTS**

 

ThisAgreement, and any amendments hereto, may be executed in Counterparts each ofwhich shall be deemed an original, and such counterparts shall constitute butone and the same instrument.

 

7

----

 

**20.****         ****COST OR PRICING DATA**

 

Inthe event of award of the Contract(s) to the Joint Venture, each Joint Venturershall provide, if required by the provisions of the Solicitation, a StandardForm 1411, Certificate of Current Cost or Pricing Data, or to the JointVenture; however, detailed supporting cost or pricing data will be provideddirectly to the Government.

 

**21.****         ****AUDIT**

 

Nothingcontained in this Agreement shall be construed as giving any Joint Venturer orthe Joint Venture the right to audit the books or records of another JointVenturer.

 

**22.****         ****PROCUREMENT INTEGRITY**

 

Neitherthe Joint Venture nor any Joint Venturer, through its agents, employees,representatives or otherwise shall either directly or indirectly make, give orpromise any payment or other thing of value to any person for a purpose, orcommit any other act, which is unlawful under the laws of the United States.

 

**23.****         ****COMPLIANCE WITH STATE ANDFEDERAL****LAWS**

 

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

 

**24.****          ****CONFLICTS**

 

Itis recognized by the Joint Venturers that, upon execution of the SecurityServices Contract(s) by the Joint Venture, the Joint Venture and each of theJoint Venturers shall be fully bound by all of the terms and conditions of theContract(s) notwithstanding any conflicts that may exist between the provisionsof this Agreement and the Contract(s).

 

**25.****         ****GOVERNING LAW**

 

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

 

8

----

 

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

 

**26.****         ****ARBITRATION OF DISPUTES**

 

Anyclaim or controversy arising out of or relating to this Agreement or the breachthereof shall be settled by arbitration in accordance with commercial Rules ofthe American Arbitration Association in effect at the time a demand forarbitration is filed with such Association: provided, however, nothing hereinshall preclude either from enforcing the non-disclosure provisions set forth inAttachment A in a court of competent jurisdiction, including without limitationseeking injunctive relief. The decision in writing of the arbitrator orarbitrators appointed by such association shall be final and conclusive, andjudgment upon the award rendered by the arbitrator or arbitrators may beentered in any Court of competent jurisdiction. The arbitrator(s) shall havepower 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 tobe legally bound, through their duly authorized representatives, have executedthis 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

----