Derwyn J. Booker - Page 6

          tax opinion, and the lease agreement when making his investment             
          in Encore.                                                                  
               The Encore lease agreement contains a 7-year lease term and            
          provides that petitioner did not have an option to purchase the             
          master recording or to renew the lease agreement at the end of              
          the lease term.  Encore uses a standard master recording lease              
          agreement which it included in all its promotional materials.               
          Petitioner did not modify any of the terms of the lease agreement           
          which he signed.  From Encore’s product catalogue, petitioner               
          chose the master recording “Unity” by the Kingcannon family.                
          Before signing the lease agreement, petitioner did not listen to            
          the master recording, was not acquainted with the artists who               
          recorded the master, and had not previously listened to any of              
          the artists’ recordings.  At no time did petitioner obtain an               
          independent written appraisal of the subject master recording,              
          nor did he obtain an independent written opinion with respect to            
          the profitability of entering into the Encore lease agreement.              
          Encore did provide petitioner with a 1-1/2-page written appraisal           
          dated June 24, 1985.  The appraisal lists the subject master’s              
          value at $500,000.                                                          
               Encore purchased the subject master from the Kingcannon                
          family through the artists’ agent, Gabriel Records.  The purchase           
          price for the subject master was $496,000.  Encore issued a check           
          to Gabriel Records on December 31, 1984, in the amount of $5,208            
          and executed a promissory note for the balance of $490,792.  The            






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