Investment Research Associates - Page 604




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          Management managed the Allentown Hilton and the Madison Hotel.              
          Although both were owned by third parties, Prudential had helped            
          finance the construction of the two hotels.  Essex's agreement              
          with Eulich-Management (the Eulich-Management/Essex agreement)              
          required Eulich-Management to pay to Essex 30 percent of its                
          management fees from the operation of the Madison Hotel and 43              
          percent of the fees from the operation of the Allentown Hilton.             
          The agreement with Gateway Corp. (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.                                        
               Employees of Eulich-Management performed record-keeping and            
          reporting services for Gateway Corp.  A number of Eulich-                   
          Management's personnel were instructed to do whatever they could            
          to help Connolly with Gateway Corp.'s operations.  For instance,            
          Eulich-Management employees helped perform the financial and                
          accounting services that Gateway Corp. required in connection               
          with its Gateway and Midland hotel management contracts.  In yet            
          another instance, a Eulich-Management employee helped Connolly              
          with union negotiations.  Also, after Prudential awarded the                
          Midland, Texas, hotel's management contract to Gateway Corp.,               
          Eulich-Management's employees helped Connolly find an on-site               



          (...continued)                                                              
          1982.                                                                       





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