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percent interest, and Kanter's entities IRA and Holding Co. held
the remaining 47.5 percent (26.125 percent and 21.375 percent,
respectively).
The Essex partnership entered into "Representation and
Marketing" agreements with Eulich-Management and Gateway Corp.,
effective January 1, 1982. The Eulich-Management/Essex agreement
required Eulich-Management to pay to Essex 30 percent of its
management fees from its operation of the Madison Hotel and 43
percent of the fees from its operation of the Allentown Hilton.
The Gateway Corp./Essex agreement required Gateway Corp. to pay
to Essex 75 percent of Gateway Corp.'s management fees from the
operations of the Gateway Hotel and the Midland Hotel.
The Essex partners agreed that Gateway Corp. and Eulich
Management generally would pay the same amount of fees to the
Essex partnership. The partnership's specified percentage of
fees under each consulting and fee participation agreement could
be adjusted and modified if a significant change occurred with
respect to the compensation that Gateway Corp. or Eulich-
Management received under a particular hotel management contract.
Substantially all of Essex's income came from Gateway Corp. and
Eulich-Management.
From 1982 to 1988, Essex received $1,334,601 in commission
fee payments from Gateway Corp. and $1,563,412 from Eulich-
Management. In 1989, Essex received a total of $293,261 from
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