Investment Research Associates - Page 601




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          Kanter's business contacts, including contacts with the Pritzker            
          family, could be beneficial to Eulich-Management.                           
               Eulich, Kanter, and Connolly decided to organize several               
          entities to further their objectives.  A hotel management company           
          called Gateway Hotel Management Corp. (Gateway Corp.) was                   
          incorporated in 1981.  Another corporation, Essex Hotel                     
          Management Co. (Essex Corp.), was also formed.                              
               A letter from Eulich to Connolly dated October 16, 1981,               
          indicated that Eulich provided $10,000 for the initial                      
          capitalization of Gateway Corp.  The letter also indicated that             
          initially Essex Corp. owned 80 shares (80 percent) of the Gateway           
          Corp. stock, that Connolly owned 20 shares (20 percent), and that           
          Connolly had an option to purchase Essex Corp.'s 80 shares.17               

          17                                                                          
               The letter stated:                                                     
               Per our telephone conversation today, I am enclosing                   
               the following material:                                                
                    1.   Your 20 shares of stock in Gateway                           
                         Hotel Management Company                                     
                         representing 20% of the company.                             
                    2.   A xerox copy of 80 shares of stock owned                     
                         by Essex Hotel Management Company                            
                         representing 80% of the company.                             
                    3.   A copy of the minutes of the first                           
                         meeting of the Board of Gateway - the                        
                         original is being circulated for                             
                         signature and will be sent for signature                     
                         soon.                                                        
                    4.   A xerox copy of your option on the Essex                     
                                                             (continued...)           





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