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EA, through its accounting department, paid EAPR’s invoices by
making wire transfers from EA’s bank account to EAPR’s bank
account in Puerto Rico during the years in issue. After EAPR was
established, substantially all the video games that EA bought for
Sega Genesis systems were manufactured in Puerto Rico. By the
end of 1993, EA stopped buying video games for Sega Genesis
systems from unrelated parties in Asia. The video games in
dispute that EA bought were manufactured in Puerto Rico.
EAPR as lessee entered into a commercial lease (hereinafter
sometimes referred to as the Lease) with Power Parts, Inc.
(hereinafter sometimes referred to as PPI), on June 25, 1992,
relating to a portion of the facilities PPI owned in Santa
Isabel, Puerto Rico. Through 1993, the Lease applied to an area
of 4,500 square feet, which by oral agreement was increased to
6,000 square feet in 1994, and 8,000 square feet in 1995 and
later years. The leased space was segregated from PPI’s
manufacturing operations. The leased space was a room in a
different part of PPI’s building and was protected by EAPR’s
security system, which included video camera surveillance and a
combination lock door entrance. Access to the leased space was
allowed only to EAPR’s manager, EAPR’s CFO, lease employees, and
PPI employees who performed services covered by the Agreement.
The leased space was used exclusively for the manufacture of
video games and for related functions.
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