Brian L. and Carole J. Nahey - Page 4

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          managerial, and administrative functions in a real-time manner.             
          Upon installation, this system would have given Wehr a competitive          
          edge in its marketplace, increasing its revenues and profits.               
               Pursuant to the terms of the contract, which were negotiated           
          by petitioner on behalf of Wehr, Xerox agreed to complete the               
          project by December 31, 1984.  During the period in which Xerox was         
          to implement and install the new system, Xerox allowed Wehr to run          
          its (Wehr's) information services systems on Xerox's computers in           
          California on a fee-for-service basis of approximately $70,000 per          
          month.                                                                      
               From the inception of the project, Xerox fell behind schedule          
          and missed target dates.  Wehr responded to Xerox's missed target           
          dates by withholding payment of the monthly fee for using Xerox's           
          computer services in California. In January 1985, at which time             
          Wehr estimated that only 1 to 2 percent of the required services            
          had been performed, Xerox warned Wehr that its continued failure to         
          pay would result in the termination of all services.  Nonetheless,          
          Wehr still refused to pay, and Xerox terminated all services.  At           
          that time, Wehr allegedly owed $652,984.33 to Xerox.                        
               On February 11, 1985, Wehr filed a lawsuit against Xerox in            
          the United States District Court for the Eastern District of                
          Wisconsin, alleging breach of contract, intentional fraud and               
          misrepresentation, and negligent misrepresentation.  Although no            
          specific amount of damages was stated, the complaint alleged that           





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