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 17 th 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:
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1.
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CUSTOMER:
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SOCIAL SECURITY
ADMINISTRATION
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PROJECT:
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SECURITY SERVICES
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LOCATION:
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BALTIMORE, MD (METRO
“WEST” FACILITY)
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NUMBER:
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SSA-RFP-06-1014
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2.
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CUSTOMER:
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SOCIAL SECURITY
ADMINISTRATION
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PROJECT:
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SECURITY SERVICES
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LOCATION:
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WILKES BARRE, PA
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NUMBER:
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SSA-RFP-06-1019
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3.
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CUSTOMER:
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US ARMY AVIATION & MISSILE
COMMAND
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PROJECT:
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SECURITY SERVICES
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LOCATION:
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BRANDYWINE, MD
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NUMBER:
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W31P4Q-06-Q-0004
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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
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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%).
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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 t
