United Cancer Council, Inc. - Page 9

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               From 1984 until its bankruptcy in 1990, petitioner                     
          maintained its principal office in either Carmel or Indianapolis,           
          Indiana.  As part of the direct mail fundraising campaign                   
          petitioner conducted from 1984 through 1989 pursuant to the                 
          Contract, a Washington, D.C., office mailing address was                    
          maintained for petitioner.  Contributors were directed to send              
          their donations to the Washington, D.C., office mailing address.            
               During 1984 through 1989, about 79.6 million fundraising               
          letters were mailed under the Contract.  Of the 79.6 million                
          letters, about 51.8 million were “prospect letters” and 27.8                
          million were “housefile letters”.  The terms “prospect letter”              
          and “housefile letter” are discussed more fully infra.  The                 
          Contract provided that W&H was to receive as compensation, among            
          other things, mailing fees of $.05 per prospect letter mailed and           
          $.10 per housefile letter mailed.  However, the Contract was a              
          “no-risk” contract for petitioner, in that petitioner was liable            
          to pay fundraising expenses only to the extent proceeds were                
          raised.  If insufficient proceeds were raised to cover the                  
          fundraising expenses, then W&H was liable to pay the excess                 
          fundraising expenses.  During the term of the Contract, W&H                 
          advanced funds to conduct petitioner’s direct mail fundraising              
          campaign and, generally, was paid its fees only after other                 
          fundraising expenses had been paid.  Under the Contract,                    
          petitioner was further guaranteed that, for the first 2 years of            






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