Talley Industries, Inc. and Consolidated Subsidiaries - Page 11




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               labor mischarging that may have occurred prior to                      
               December 20, 1984 and shall release Stencel from any                   
               liability to the United States for:                                    
                         (1) any and all possible violations of                       
                    the False Claims Act * * *;                                       
                         (2) any and all possible violations of                       
                    the Truth in Negotiations Act * * *;                              
                    [Emphasis added.]                                                 
          Mr. Kilberg's letter included a third numbered paragraph                    
          describing the releases of liability set forth in the first and             
          second numbered paragraphs.  Mr. Kilberg's letter also included a           
          statement that the offer was intended to represent double                   
          damages.                                                                    
               By letter dated February 7, 1986, Ms. Branda rejected Mr.              
          Kilberg's $2 million settlement offer but made a counteroffer to            
          settle the matter for $2.5 million (with an offset for the                  
          $600,000 that Stencel had already paid under the interim                    
          agreement).  Ms. Branda's letter stated in pertinent part:                  
                    Stencel's offer has been carefully considered by                  
               this office, the Navy's Office of General Counsel, the                 
               Defense Contract Audit Agency, and Defense Contract                    
               Administration Services in Atlanta.  While we believe                  
               that the offer is made in good faith, we cannot accept                 
               its terms.  However, I am prepared to make the                         
               following counter offer, subject to final Department                   
               approval:                                                              
                         1. Stencel agrees to pay to the United                       
                    States the sum of $2,500,000, inclusive of                        
                    the $600,000 paid to the Navy pursuant to the                     
                    agreement dated January 14, 1986; [Emphasis                       
                    added.]                                                           








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