B-168958, MAY 28, 1970, 49 COMP. GEN. 809

B-168958: May 28, 1970

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AFFILIATES OF LARGE BUSINESS CONCERNS ALTHOUGH A CHALLENGE AFTER CONTRACT AWARD TO THE STATUS OF THE SUCCESSFUL CONCERN THAT HAD CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN PURSUANT TO SECTION 1-1.703-1(A) OF THE FEDERAL PROCUREMENT REGULATIONS WAS MADE TOO LATE TO AFFECT THE VALIDITY OF THE AWARD. EVEN THOUGH ITS TERMS MAY HAVE BEEN MODIFIED SUBSEQUENT TO AWARD AND. THE AWARD IS CONSIDERED NOT TO HAVE BEEN MADE TO A SMALL BUSINESS CONCERN. THE INVITATION WAS ISSUED ON OCTOBER 1. BIDS WERE OPENED ON OCTOBER 22. TWO ITEMS WERE COVERED BY THE INVITATION. THE CONTEMPLATED CONTRACT OR CONTRACTS WERE TO BE OF THE REQUIREMENTS TYPE FOR THE PERIOD FROM MARCH 1. OR THE DATE OF AWARD (WHICHEVER WAS LATER) THROUGH JANUARY 31.

B-168958, MAY 28, 1970, 49 COMP. GEN. 809

CONTRACTS -- AWARDS -- SMALL BUSINESS CONCERNS -- SIZE -- AFFILIATES OF LARGE BUSINESS CONCERNS ALTHOUGH A CHALLENGE AFTER CONTRACT AWARD TO THE STATUS OF THE SUCCESSFUL CONCERN THAT HAD CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN PURSUANT TO SECTION 1-1.703-1(A) OF THE FEDERAL PROCUREMENT REGULATIONS WAS MADE TOO LATE TO AFFECT THE VALIDITY OF THE AWARD, ON THE BASIS THAT PRIOR TO AWARD, THE CONCERN HAD ENTERED INTO A BINDING AGREEMENT OF SALE FOR ITS ACQUISITION BY A LARGE BUSINESS CONCERN, TERMINATION OF THE CONTRACT WOULD BE APPROPRIATE. THE RECORD EVIDENCES A VALID AND ENFORCEABLE CONTRACT FOR THE ACQUISITION OF THE SMALL CONCERN HAD COME INTO EXISTENCE BEFORE AWARD, EVEN THOUGH ITS TERMS MAY HAVE BEEN MODIFIED SUBSEQUENT TO AWARD AND, THEREFORE, BCFR 121.3 15(C)(4), DEALING WITH THE NATURE OF CONTROL THROUGH AGREEMENTS TO MERGE, APPLIES TO THE PROCUREMENT, AND THE AWARD IS CONSIDERED NOT TO HAVE BEEN MADE TO A SMALL BUSINESS CONCERN.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, MAY 28, 1970:

BY LETTER DATED FEBRUARY 25, 1970, THE GENERAL COUNSEL FURNISHED OUR OFFICE WITH A REPORT ON THE PROTEST OF THE BERNZOMATIC CORPORATION AGAINST THE AWARD OF A CONTRACT TO THE TURNER CORPORATION UNDER INVITATION FOR BIDS NO. FPNTP-A8-70628-A-10-22-69, ISSUED BY THE FEDERAL SUPPLY SERVICE, REGION 3, WASHINGTON, D.C. THE SMALL BUSINESS ADMINISTRATION (SBA) REPORTED TO OUR OFFICE CONCERNING THIS MATTER ON FEBRUARY 26, 1970, AND AGAIN ON APRIL 10, 1970.

THE INVITATION WAS ISSUED ON OCTOBER 1, 1969, AND BIDS WERE OPENED ON OCTOBER 22, 1969. TWO ITEMS WERE COVERED BY THE INVITATION, THE SECOND BEING A PROPANE GAS TORCH KIT USED FOR SOLDERING AND OTHER PURPOSES. THE CONTEMPLATED CONTRACT OR CONTRACTS WERE TO BE OF THE REQUIREMENTS TYPE FOR THE PERIOD FROM MARCH 1, 1970, OR THE DATE OF AWARD (WHICHEVER WAS LATER) THROUGH JANUARY 31, 1971. WITH RESPECT TO ITEM 2, THE QUANTITY ESTIMATED BY THE GOVERNMENT FOR THE CONTRACT PERIOD WAS 35,200; THE GUARANTEED MINIMUM QUANTITY WAS 5,000 UNITS. PARAGRAPH 21 OF THE INVITATION RESERVED BOTH ITEMS FOR SMALL BUSINESS PARTICIPATION EXCLUSIVELY. THAT PARAGRAPH ALSO CONTAINED THE FOLLOWING "NOTICE CONCERNING SIZE STATUS":

ANY BIDDER WHO HAS A QUESTION AS TO WHETHER HE IS OR IS NOT A SMALL BUSINESS CONCERN SHALL CONTACT THE NEAREST OFFICE OF THE SMALL BUSINESS ADMINISTRATION FOR GUIDANCE AND ASSISTANCE.

THE SMALL BUSINESS REPRESENTATION APPEARING ON PAGE 2 OF THE SOLICITATION IS A MATERIAL REPRESENTATION OF FACT UPON WHICH THE GOVERNMENT RELIES WHEN MAKING AWARD. IF IT IS LATER DETERMINED THAT THE SMALL BUSINESS REPRESENTATION WAS ERRONEOUS, AND THE CONTRACTOR WAS NOT A SMALL BUSINESS CONCERN ON THE DATE OF AWARD OF THIS CONTRACT, THE CONTRACT MAY BE CANCELED BY THE GOVERNMENT AND THE CONTRACTOR CHARGED WITH ANY DAMAGES SUSTAINED BY THE GOVERNMENT AS A RESULT OF SUCH CANCELLATION.

OF THE FIVE BIDS RECEIVED AS TO ITEM 2, TURNER'S WAS THE LOWEST AT $4.32 PER KIT, WHILE THE PROTESTANT'S OFFERED UNIT PRICE WAS $4.38. THE TWO LOW BIDDERS SPECIFIED IDENTICAL DISCOUNT TERMS. TURNER CERTIFIED ITSELF, ON PAGE 2 OF STANDARD FORM (SF) 33, TO BE A SMALL BUSINESS CONCERN. ADDITION, PURSUANT TO ITEM 5 OF SF 33, "AFFILIATION AND IDENTIFYING DATA," TURNER REPRESENTED THAT IT WAS NOT "OWNED OR CONTROLLED BY A PARENT COMPANY." IMMEDIATELY AFTER THE LAST QUOTED LANGUAGE IS THE NOTATION "SEE PAR. 16 ON SF 33A.)." THE CITED PARAGRAPH ON SF 33A STATES AS FOLLOWS: A PARENT COMPANY FOR THE PURPOSE OF THIS OFFER IS A COMPANY WHICH EITHER OWNS OR CONTROLS THE ACTIVITIES AND BASIC BUSINESS POLICIES OF THE OFFEROR. TO OWN ANOTHER COMPANY MEANS THE PARENT COMPANY MUST OWN AT LEAST A MAJORITY (MORE THAN 50 PERCENT) OF THE VOTING RIGHTS IN THAT COMPANY. TO CONTROL ANOTHER COMPANY, SUCH OWNERSHIP IS NOT REQUIRED; IF ANOTHER COMPANY IS ABLE TO FORMULATE, DETERMINE, OR VETO BASIC BUSINESS POLICY DECISIONS OF THE OFFEROR, SUCH OTHER COMPANY IS CONSIDERED THE PARENT COMPANY OF THE OFFEROR. THIS CONTROL MAY BE EXERCISED THROUGH THE USE OF DOMINANT MINORITY VOTING RIGHTS, USE OF PROXY VOTING, CONTRACTUAL ARRANGEMENTS, OR OTHERWISE.

TURNER WAS AWARDED A CONTRACT FOR ITEM 2 ON NOVEMBER 5, 1969. THE NEXT DAY, BERNZOMATIC'S WASHINGTON REPRESENTATIVE RAISED A QUESTION WITH AN OFFICIAL OF THE GENERAL SERVICES ADMINISTRATION (GSA) RELATIVE TO TURNER'S STATUS AS A SMALL BUSINESS. BY LETTER DATED DECEMBER 1, 1969, GSA REQUESTED THE CHICAGO REGIONAL DIRECTOR OF SBA "TO DETERMINE THE VALIDITY OF TURNER CORPORATION CERTIFICATION AS A SMALL BUSINESS CONCERN AND THE DATE THAT THE FIRM BECAME LARGE BUSINESS IF IN FACT IT IS DETERMINED TO BE LARGE BUSINESS." THE CHICAGO REGIONAL OFFICE ISSUED ITS DETERMINATION ON DECEMBER 16, 1969, IN A LETTER TO GSA. THE OPERATIVE PORTION WAS AS FOLLOWS:

IT WAS FOUND THAT THE TURNER CORPORATION HAD LESS THAN 500 EMPLOYEES, INCLUDING ITS AFFILIATES; WAS INDEPENDENTLY OWNED AND OPERATED; AND WAS NOT DOMINANT IN ITS FIELD OF OPERATIONS AT THE TIME OF AWARD OF THE CONTRACT FOR ITEM 2 ON SOLICITATION NO. FPNTP-A8-70628-A-10-22-69 WHICH WAS AWARDED NOVEMBER 5, 1969.

IT WAS ALSO DETERMINED THAT AS OF NOVEMBER 7, 1969, WITH THE ACQUISITION OF THE ASSETS OF TURNER CORPORATION BY OLIN MATHIESON CHEMICAL CORPORATION, 460 PARK AVENUE, NEW YORK, N.Y., THAT TURNER CORPORATION BECAUSE OTHER THAN SMALL BUSINESS FOR THE PURPOSES OF GOVERNMENT PROCUREMENT, INCLUDING ANY FUTURE PROCUREMENTS INVOLVING CLASSIFICATION 3439. DECEMBER 24, 1969. GSA ADVISED BERNZOMATIC OF THIS DETERMINATION IN A LETTER DATED

THE FEDERAL PROCUREMENT REGULATIONS (FPR) PROVIDE THAT, UNLESS THE SBA DETERMINES PURSUANT TO SPECIFIED PROCEDURES THAT A GIVEN BIDDER IS NOT A SMALL BUSINESS CONCERN, THE BIDDER'S REPRESENTATION THAT IT IS A SMALL BUSINESS SHALL BE ACCEPTED BY THE CONTRACTING OFFICER AS CONCLUSIVE. FPR 1-1.703-1(A). PROTEST OF A BIDDER'S SIZE STATUS MAY BE MADE BY ANY OTHER BIDDER BY SENDING A WRITTEN PROTEST TO THE CONTRACTING OFFICER, WHO IS THEN OBLIGATED TO FORWARD THE PROTEST TO THE SBA REGIONAL OFFICE HAVING RESPONSIBILITY FOR THE AREA IN WHICH THE PROTESTED CONCERN IS LOCATED. FPR 1-1.703-2(A). A "PROTEST" IS DEFINED BY FPR 1-1.703-2(B) AS "A CHALLENGE IN WRITING," CONTAINING "THE BASIS FOR THE PROTEST, TOGETHER WITH SPECIFIC DETAILED EVIDENCE SUPPORTING THE PROTESTANT'S CLAIM." IT IS FURTHER PROVIDED THAT:

*** SUCH PROTEST MUST BE RECEIVED BY THE CONTRACTING OFFICER PRIOR TO THE CLOSE OF BUSINESS ON THE 5TH WORKING DAY AFTER BID OPENING DATE *** A PROTEST RECEIVED AFTER AWARD OF A CONTRACT, EVEN THOUGH TIMELY, WILL NOT BE CONSIDERED A "PROTEST" AND WILL BE RETURNED TO THE SENDER WITH AN EXPLANATION OF WHY IT COULD NOT BE ACTED UPON.

INASMUCH AS THE ACTIONS OF THE CONTRACTING OFFICER APPEAR TO HAVE BEEN TAKEN IN CONFORMITY WITH APPLICABLE REGULATIONS, SINCE NO TIMELY PROTEST WAS MADE BY BERNZOMATIC, AND BECAUSE, IN ANY EVENT, NO APPEAL OF THE DECEMBER 16 DETERMINATION WAS FILED WITHIN THE PERIOD PERMITTED BY FPR 1- 1.703-2(F), THERE IS NO BASIS FOR OUR OFFICE TO INTERPOSE LEGAL OBJECTION TO THE CONTRACT AWARDED TO TURNER. SEE, E.G., B 166583, AUGUST 18, 1969, AND B-167021, AUGUST 19, 1969. HOWEVER, WE BELIEVE THAT THE RECORD BEFORE OUR OFFICE CONSTITUTES SUFFICIENT JUSTIFICATION FOR THE ADMINISTRATIVE TERMINATION OF THE TURNER CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT. IN THIS CONNECTION, WE ARE ENCLOSING A COPY OF THE APRIL 10 LETTER TOGETHER WITH COPIES OF THE THREE SBA OPINIONS CITED THEREIN FROM THE GENERAL COUNSEL OF SBA TO OUR OFFICE.

THE HISTORY OF THE RELATIONSHIP BETWEEN TURNER AND THE OLIN CORPORATION MAY BE SKETCHED AS FOLLOWS. ON JULY 24, 1969, TURNER'S BOARD OF DIRECTORS ADOPTED RESOLUTION NO. 416, CONCERNING "A STOCK FOR ASSETS REORGANIZATION PLAN." IN BRIEF, THE RESOLUTION RECOMMENDED TO THE CORPORATE SHAREHOLDERS THAT, SUBJECT TO A FAVORABLE VOTE OF THE SHAREHOLDERS AND SUBJECT ALSO TO THE NEGOTIATION OF A DEFINITE AGREEMENT BETWEEN TURNER AND OLIN, THE CORPORATION SELL TO OLIN SUBSTANTIALLY ALL OF ITS ASSETS, BUSINESS, AND GOODWILL, IN CONSIDERATION OF OLIN'S ASSUMPTION OF TURNER'S LIABILITIES AND OF THE TRANSFER OF OLIN COMMON STOCK TO TURNER SHAREHOLDERS. ADDITION, THE PRESIDENT AND CHAIRMAN OF THE BOARD OF TURNER WERE AUTHORIZED AND DIRECTED:

*** TO EXECUTE AND DELIVER IN THE NAME AND ON BEHALF OF THE CORPORATION A CERTAIN PRELIMINARY LETTER OF INTENT SUBSTANTIALLY IN THE LETTER FORM DATED JULY --, 1969, FROM OLIN TO THE CORPORATION, CIRCULATED AMONG THE DIRECTORS PROVIDING FOR THE SALE OF SUBSTANTIALLY ALL OF THE ASSETS, BUSINESS AND GOOD WILL OF THE CORPORATION, FOR THE CONSIDERATION DESCRIBED HEREINABOVE, AND THAT THE PROPER OFFICERS OF THE CORPORATION ARE FURTHER AUTHORIZED AND DIRECTED TO EXECUTE AND DELIVER IN THE NAME AND ON BEHALF OF THE CORPORATION ANY AND ALL PAPERS AND DOCUMENTS NECESSARY OR DESIRABLE AND TO TAKE ALL PROCEEDINGS AND DO ALL ACTS OR THINGS THAT MAY BE NECESSARY OR DESIRABLE TO COMPLY WITH THE PROVISIONS OF THAT LETTER OF INTENT OR WHICH OTHERWISE MAY BE NECESSARY OR DESIRABLE TO CARRY OUT AND COMPLETE THIS TRANSACTION ***

IT WAS ALSO RESOLVED THAT SUCH SALE WOULD BE SUBMITTED TO A VOTE AT THE ANNUAL SHAREHOLDER MEETING IN SEPTEMBER 1969. MOREOVER, RESOLUTION NO. 417, RELATING TO THE QUESTION OF THE DISSOLUTION OF TURNER CORPORATION, WAS ADOPTED BY THE BOARD OF DIRECTORS ON JULY 24, 1969; HOWEVER, THE RECORD IN OUR OFFICE DOES NOT INCLUDE A COPY OF THAT RESOLUTION.

IT FURTHER APPEARS THAT ON AUGUST 12, 1969, TURNER'S PRESIDENT EXECUTED A LETTER OF INTENT SETTING FORTH IN GENERAL TERMS THE "TENTATIVE UNDERSTANDING" OF TURNER AND OLIN AS TO THE PROPOSED SALE. THIS ACTION WAS RATIFIED BY THE BOARD OF DIRECTORS ON SEPTEMBER 10, 1969.

ON OCTOBER 17, 1969, THE TURNER BOARD OF DIRECTORS UNANIMOUSLY CONSENTED TO A RESOLUTION IN WHICH IT WAS DEEMED ADVISABLE TO PROCEED WITH THE PROPOSED SALE ON A MODIFIED BASIS. THE BOARD ALSO RECOMMENDED THE SALE AND DIRECTED THE SUBMISSION THEREOF TO A VOTE OF THE SHAREHOLDERS AT THE ANNUAL MEETING "ON OCTOBER 29, 1969, OR ANY ADJOURNMENT THEREOF." THE OCTOBER 17 RESOLUTION ALSO AUTHORIZED EITHER THE CHAIRMAN OF THE BOARD OR THE PRESIDENT "TO NEGOTIATE AND EXECUTE A DEFINITIVE AGREEMENT ON BEHALF OF THE CORPORATION IN ACCORDANCE WITH THE FOREGOING AND THAT THE AUTHORITY GRANTED ***IN RESOLUTION 416 IS HEREBY CONFIRMED." IT WAS ALSO RESOLVED THAT THE QUESTION OF DISSOLUTION BE PRESENTED TO A VOTE OF THE SHAREHOLDERS AT THE OCTOBER 29 MEETING; FURTHERMORE, THE AUTHORITY GRANTED TO THE OFFICERS BY RESOLUTION 417 WAS CONFIRMED. FINALLY, IT WAS RESOLVED BY THE BOARD OF DIRECTORS THAT:

***SUBJECT TO THE COMPLETION OF THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THE ABOVE RESOLUTIONS, THE BOARD OF DIRECTORS DIRECTS THE SUBMISSION OF THE FOLLOWING RESOLUTION TO A VOTE OF THE SHAREHOLDERS AT THE SAME MEETING ***

RESOLVED, THAT ARTICLE FIRST OF THE ARTICLES OF INCORPORATION OF TURNER CORPORATION BE AMENDED TO READ:

"THE NAME OF THE CORPORATION IS HVE CORPORATION."

THE MINUTES OF THE 1969 ANNUAL SHAREHOLDER MEETING OF THE TURNER CORPORATION DISCLOSE THAT THE MEETING TOOK PLACE ON OCTOBER 29, 1969. THREE PERTINENT RESOLUTIONS WERE UNANIMOUSLY ADOPTED BY THE SHAREHOLDERS ON THAT OCCASION. EACH IS SET FORTH HEREIN ONLY INSOFAR AS IS NECESSARY. THE FIRST OF THE THREE BEGAN WITH A RECITATION OF THE FACTS AS OUTLINED ABOVE. IT THEN STATES:

WHEREAS, SUCH AGREEMENT AND PLAN OF REORGANIZATION WAS EXECUTED ON BEHALF OF TURNER ON OCTOBER 28, 1969, AND HAS BEEN DELIVERED TO OLIN ON THE CONDITION THAT OLIN ACT THEREON NO LATER THAN OCTOBER 30, 1969 ***

IT IS HEREBY RESOLVED, THAT TURNER CORPORATION SELL SUBSTANTIALLY ALL OF ITS ASSETS TO OLIN CORPORATION ON THE TERMS AND CONDITIONS SET FORTH IN A CERTAIN AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF OCTOBER 28, 1969, BETWEEN TURNER AND OLIN AND HAROLD V. ENGH, AS GUARANTOR SHAREHOLDER FOR (DELETED) SHARES OF OLIN COMMON STOCK $5.00 PAR VALUE (ADJUSTED TO ACCOUNT FOR CASH TO BE WITHHELD BY TURNER) AND AN ASSUMPTION BY OLIN OF SUBSTANTIALLY ALL OF THE LIABILITIES OF TURNER; AND

IT IS FURTHER RESOLVED, THAT THE BOARD OF DIRECTORS MAY, IN ITS DISCRETION AUTHORIZE THE PRESIDENT OR THE CHAIRMAN OF THE BOARD OF DIRECTORS TO AGREE TO MODIFY ANY OF THE TERMS AND CONSIDERATIONS OF SUCH AGREEMENT AND PLAN OF REORGANIZATION AS THE BOARD MAY DEEM TO BE IN THE INTERESTS OF THE SHAREHOLDERS OF TURNER CORPORATION AS A WHOLE.

IT IS FURTHER RESOLVED, THAT THE PROPER OFFICERS OF THE CORPORATION BE, AND THEY HEREBY ARE, AUTHORIZED TO EXECUTE AND FILE ALL DOCUMENTS AND DO ALL OTHER ACTS REQUIRED TO EFFECTUATE THE PURPOSES OF THE ABOVE RESOLUTIONS.

THE SECOND RESOLUTION READS IN MATERIAL PART AS FOLLOWS:

WHEREAS, SUCH AGREEMENT AND PLAN OF REORGANIZATION WAS EXECUTED ON BEHALF OF TURNER ON OCTOBER 28, 1969, AND HAS BEEN DELIVERED TO OLIN ON THE CONDITION THAT OLIN ACT THEREON NO LATER THAN OCTOBER 30, 1969 ***

IT IS THEREFORE RESOLVED, THAT PROMPTLY AFTER RECEIPT OF THE SHARES OF OLIN COMMON STOCK TO WHICH TURNER SHALL BE ENTITLED AT THE CLOSING OF THE PURCHASE BY OLIN AND SALE BY TURNER OF SUBSTANTIALLY ALL OF TURNER'S PROPERTY AND ASSETS, ALL SUCH NEWLY ACQUIRED OLIN SHARES, OTHER THAN SUCH AS ARE PLACED IN ESCROW, BE DISTRIBUTED TO THE SHAREHOLDERS OF TURNER IN THE RATIO OF THE NUMBER OF SHARES OWNED BY ANY SHAREHOLDER WHO DOES NOT HAVE SUCH RIGHTS BEARS TO THE TOTAL NUMBER OF OUTSTANDING SHARES OF TURNER ((DELETED)); AND

IT IS FURTHER RESOLVED, THAT A PLAN OF LIQUIDATION BE, AND IT HEREBY IS, FORMULATED TO EFFECT LIQUIDATION OF THE ASSETS AND DISSOLUTION OF TURNER, AS FOLLOWS: ***

THE LAST RESOLUTION INCLUDES THE FOLLOWING RELEVANT LANGUAGE:

IT IS THEREFORE RESOLVED:PROVIDED THAT OLIN AND TURNER SHALL HAVE COMPLETED THE CLOSING CONTEMPLATED BY THE AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF OCTOBER 28, 1969, THAT ARTICLE FIRST OF THE ARTICLES OF INCORPORATION OF TURNER CORPORATION BE, AND THEY ARE HEREBY AMENDED, EFFECTIVE AS AT THE COMPLETION OF THE CLOSING, TO READ AS FOLLOWS: "THE NAME OF THE CORPORATION IS

HVE CORPORATION."

THE AGREEMENT DATED OCTOBER 28, 1969, IS A 46-PAGE TYPEWRITTEN DOCUMENT. CERTAIN HANDWRITTEN MODIFICATIONS THERETO HAVE BEEN MADE; THESE ALTERATIONS ARE INITIALED, BUT ARE UNDATED. THE FIRST PARAGRAPH OF THE AGREEMENT READS:

AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF OCTOBER 28, 1969, AMONG TURNER CORPORATION, AN ILLINOIS CORPORATION (HEREIN CALLED TURNER), AND HAROLD V. ENGH, BEING A SHAREHOLDER AND CHAIRMAN OF THE BOARD OF DIRECTORS OF TURNER (HEREIN CALLED GUARANTOR SHAREHOLDER), AND OLIN CORPORATION, A VIRGINIA CORPORATION (HEREIN CALLED OLIN). THE SIGNATURE PAGE IS SIGNED AND ATTESTED BY OFFICIALS OF TURNER AND OLIN; THE SIGNATURES APPEAR IMMEDIATELY BENEATH THIS LANGUAGE:

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE EXECUTED AND DELIVERED AS OF THE DATE FIRST ABOVE WRITTEN.

IN A LETTER DATED DECEMBER 11, 1969, TO AN OFFICIAL OF THE CHICAGO REGIONAL OFFICE OF SBA, THE PERSON WHO WAS PRESIDENT OF THE TURNER CORPORATION DURING THE PERIOD INVOLVED HERE ADVANCED TWO REASONS WHY HE BELIEVED TURNER HAD NOT YET BECOME LARGE BUSINESS AS OF NOVEMBER 5, 1969: THE AGREEMENT WAS NOT A "MERGER," AND THE AGREEMENT WAS NOT IN FACT EXECUTED UNTIL LATE IN THE AFTERNOON OF NOVEMBER 7. SPECIFICALLY, THE LETTER MADE THESE TWO POINTS:

FIRSTLY, THE AGREEMENT ATTACHED IS NOT AN AGREEMENT TO MERGE TURNER AND OLIN; IT IS AN AGREEMENT WHEREBY TURNER WAS TO SELL SUBSTANTIALLY ALL OF ITS ASSETS TO OLIN IN CONSIDERATION FOR COMMON STOCK OF OLIN AND THE ASSUMPTION BY OLIN OF CERTAIN TURNER LIABILITIES. THE TRANSACTION WAS NOT A "MERGER" IN ANY LEGAL SENSE. ***

SECONDLY, ALTHOUGH THE AGREEMENT WAS DATED AS OF OCTOBER 28, 1969, IT WAS IN FACT NOT FINALLY EXECUTED UNTIL EARLY IN THE AFTERNOON OF NOVEMBER 7, JUST PRIOR TO THE CLOSING ON THAT DATE. THUS, IN A REAL SENSE, NEITHER OLIN NOR TURNER HAD AN ENFORCEABLE AGREEMENT UNTIL NOVEMBER 7. *** TURNER THEN EMPHASIZED TWO FACETS OF THE AGREEMENTS WHICH WERE "NOT FINALLY RESOLVED" UNTIL THE MORNING OF NOVEMBER 7.

IN A LETTER TO OUR OFFICE DATED MAY 1, 1970, OLIN ARGUED ONLY THE LATTER PROPOSITION. THIS MIGHT BE CONSTRUED AS AN ABANDONMENT OF THE EARLIER POSITION THAT THE TRANSACTION WAS NOT, IN A TECHNICAL LEGAL SENSE, A "MERGER." IF IN FACT OLIN AND TURNER NO LONGER URGE THAT ARGUMENT AS SUPPORTING THE SBA REGIONAL OFFICE DETERMINATION, WE CONSIDER THE POSITION PROPERLY ABANDONED. THE REAL ISSUE UNDER 13 CFR 121.3-2(A) DEFINING THE TERM "AFFILIATES" AND 121.3-15(C)(4) DEALING WITH THE NATURE OF CONTROL THROUGH AGREEMENTS TO MERGE IS WHETHER AS A SUBSTANTIVE MATTER CONTROLLED TURNER ON NOVEMBER 5, 1969, THE DATE OF AWARD. THE LETTERS OLIN, BY VIRTUE OF THE OCTOBER 28 AGREEMENT, DIRECTLY OR INDIRECTLY OF DECEMBER 11 AND MAY 1 BOTH GIVE EXPLICIT RECOGNITION TO THIS FACT. THE FORMAL IDENTIFICATION OF THE TRANSACTION DESCRIBED ABOVE IS OF NO CONSEQUENCE, PROVIDED THE OCTOBER 28 AGREEMENT WOULD SERVE AS A BASIS FOR THE POWER TO CONTROL WHICH WILL CONVERT AN OTHERWISE SMALL BUSINESS IN A LARGE ONE. THIS REGARD, 13 CFR 121.3 15(C)(4) READS AS FOLLOWS:

STOCK OPTIONS, CONVERTIBLE DEBENTURES, AND AGREEMENTS TO MERGE. STOCK OPTIONS AND CONVERTIBLE DEBENTURES EXERCISABLE AT THE TIME OF, OR WITHIN A RELATIVELY SHORT TIME AFTER A SIZE DETERMINATION, AND AGREEMENTS TO MERGE IN THE FUTURE, ARE CONSIDERED AS HAVING A PRESENT EFFECT ON THE POWER TO CONTROL THE CONCERN. THEREFORE, IN MAKING A SIZE DETERMINATION, SUCH OPTIONS, DEBENTURES, AND AGREEMENTS ARE TREATED AS THOUGH THE RIGHTS HELD THEREUNDER HAD BEEN EXERCISED PRIOR TO THE DATE OF THE DETERMINATION.

EXAMPLE. IF, ON THE DATE OF THE DETERMINATION, COMPANY A HOLDS AN OPTION TO PURCHASE A CONTROLLING INTEREST IN COMPANY B AND SUCH OPTION CAN BE EXERCISED AT ANY TIME BY COMPANY A, THE SITUATION IS TREATED AS THOUGH COMPANY A HAD EXERCISED ITS RIGHTS AND HAD BECOME OWNER OF A CONTROLLING INTEREST IN COMPANY B PRIOR TO THE DETERMINATION. FURTHER, IF, AS OF THE DATE OF A DETERMINATION, COMPANY A HAS ENTERED INTO AN AGREEMENT TO MERGE WITH COMPANY B IN THE FUTURE, THE SITUATION IS TREATED AS THOUGH THE MERGER HAD TAKEN PLACE PRIOR TO THE DATE OF THE DETERMINATION.

THE OTHER CONTENTION IS THAT, ALTHOUGH THE AGREEMENT WAS DATED OCTOBER 28, 1969, IT WAS IN FACT NOT FINALLY EXECUTED UNTIL NOVEMBER 7, 1969. OLIN PUT IT ON THE MAY 1 LETTER, "NEITHER OLIN NOR TURNER HAD AN ENFORCEABLE AGREEMENT UNTIL NOVEMBER 7, 1969." YOU WILL NOTE THAT THE SBA GENERAL COUNSEL HAS CONCLUDED THAT HE CANNOT CONCUR IN THIS VIEW OF THE FACTS. WE ARE IN SUBSTANTIAL AGREEMENT WITH THIS OPINION OF THE SBA GENERAL COUNSEL. HOWEVER, THE GENERAL COUNSEL ALSO STATES THAT HE IS UNABLE TO SAY THAT THE CHICAGO REGIONAL OFFICE DETERMINATION LACKS THE SUPPORT OF SUBSTANTIAL EVIDENCE. IN OUR VIEW, THE GREAT PREPONDERANCE OF THE EVIDENCE IN THIS RECORD INDICATES THAT EXECUTION OF THE TURNER-OLIN AGREEMENT OCCURRED ON OCTOBER 28. CORRESPONDINGLY, WE REGARD THE EVIDENCE THAT EXECUTION TOOK PLACE ON NOVEMBER 7 TO BE WITHOUT ANY SIGNIFICANT WEIGHT, AND WE THEREFORE MUST DISAGREE TO THIS EXTENT WITH THE SBA GENERAL COUNSEL.

AN EXHAUSTIVE ANALYSIS OF THE EVIDENCE IS NOT NECESSARY. WE WILL ONLY ILLUSTRATE BY REFERRING TO THE OCTOBER 30, 1969, EDITION OF "OLIN NEWS OF THE WEEK." SEE PAGE 4 OF THE ENCLOSED LETTER. THIS PUBLICATION IS FULLY CONSISTENT WITH THE QUOTED PORTIONS OF THE 46-PAGE CONTRACT AND THE TERMS OF THE RESOLUTIONS ADOPTED AT THE TURNER SHAREHOLDER MEETING ON OCTOBER 29, 1969. IN ADDITION, THE PUBLICATION INDICATES THAT THE LAST ACT NECESSARY TO THE CREATION OF AN AGREEMENT FULLY BINDING ON BOTH CORPORATIONS WAS PERFORMED BY THE OLIN BOARD OF DIRECTORS ON OCTOBER 30, SEVERAL DAYS BEFORE THE AWARD OF THE CONTRACT. ON THE OTHER HAND, WE HAVE ONLY THE STATEMENTS OF TURNER AND OLIN THAT EXECUTION DID NOT TAKE PLACE UNTIL NOVEMBER 7. NEITHER CORPORATION UNDERTOOK TO EXPLAIN THE BASIS FOR SUCH A REPRESENTATION IN LIGHT OF THE CONSISTENT DOCUMENTARY EVIDENCE TO THE CONTRARY.

IN OUR OPINION, THERE WAS IN EXISTENCE NO LATER THAN OCTOBER 30, 1969, A VALID AND ENFORCEABLE CONTRACT BETWEEN TURNER AND OLIN FOR THE ACQUISITION OF TURNER BY OLIN. WHILE IT IS CONCEIVABLE THAT CERTAIN MODIFICATIONS TO THE AGREEMENT WERE MADE SUBSEQUENT TO THE AWARD OF THE CONTRACT HERE IN QUESTION, WITH THE RESULT THAT THE TERMS OF THE NOVEMBER 7 TRANSACTION WERE PERHAPS SLIGHTLY DIFFERENT FROM THE TERMS AS CONTAINED IN THE OCTOBER 28 AGREEMENT, THERE WAS NEVERTHELESS AN AGREEMENT IN EXISTENCE ON THE CRITICAL DATE. CONSEQUENTLY, WE BELIEVE THAT 13 CFR 121.3-15(C)(4) IS APPLICABLE TO THIS CASE AND THAT TURNER WAS NOT A SMALL BUSINESS FOR PURPOSES OF THE INSTANT PROCUREMENT.

IN VIEW OF THE CIRCUMSTANCES SET OUT ABOVE AND IN ORDER TO EFFECTUATE THE INTENT OF THE CONGRESS AS EXPRESSED IN THE SMALL BUSINESS ACT AND IMPLEMENTING REGULATIONS, WE BELIEVE THAT TERMINATION OF THE TURNER CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT WOULD BE APPROPRIATE. ADVICE AS TO THE ACTION TAKEN WOULD BE APPRECIATED.