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Any accounting records concerning Proz' purchase and sale of
the telecommunications equipment have at all times been
maintained by RTS. Proz never monitored payments on the
petitioner telecommunications installment note. Proz relied on
Sha-Li to manage the flow of all payments between Proz,
petitioner, and RTS. Proz never monitored or questioned Sha-Li's
management of the payments.
Lease by Petitioner to RTS
Pursuant to an agreement of lease between petitioner and RTS
dated December 30, 1982 (the RTS lease), petitioner leased the
computer equipment to RTS. The RTS lease commenced on
December 30, 1982, and, subject to earlier termination, has a
term of approximately 144 months. The RTS lease calls for
payments of "Fixed Rent" identical with the payments called for
under both the Proz telecommunications installment note and the
petitioner telecommunications installment note: (1) An initial
payment of $2,212.70 on December 31, 1982, (2) monthly payments
of $34,296.96 for the next 24 months, and (3) monthly payments of
$49,206.16 for the next 120 months. Pursuant to the RTS lease,
RTS 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. In addition, the RTS lease provided for
indemnification of the lessor (petitioner) as follows:
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