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petitioner, and Sha-Li. Proz never monitored or questioned Sha-
Li's management of the payments.
Lease by Petitioner to Sha-Li
Pursuant to an agreement of lease between petitioner and
Sha-Li dated as of June 30, 1979 (the Sha-Li lease), petitioner
leased the computer equipment to Sha-Li. The Sha-Li lease
commenced as of July 1, 1979, and had a term of 96 months.
"Fixed rent" was set at $6,928.79 a month. Pursuant to the
Sha-Li lease, Sha-Li was responsible during the term of the lease
for all risk of physical damage to, or loss or destruction of,
the computer equipment, unless caused by petitioner's willful
misconduct or negligence. Also pursuant to the Sha-Li lease,
Sha-Li agreed to indemnify, hold harmless, and defend petitioner
against certain losses, liabilities, claims, and other risks
arising from or in connection with, among other things, (1) any
default by Sha-Li under the Sha-Li lease and (2) any claim by
"the holders of the Lien". The term "Lien" is defined in the
Sha-Li lease to include the term "Lien" as defined in the Proz
computer purchase agreement. In the Proz computer purchase
agreement, the term "Lien" is defined as: "The security interest
in favor of * * * [MHLC], and the assignment of payments due
under the * * * [BNY leases] to * * * [MHLC] * * * ".
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