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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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