Investment Research Associates - Page 605




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          manager for that hotel.  Eulich-Management did not charge Gateway           
          Corp. for these services.  IRA and Holding Co., in contrast to              
          Eulich-Management, provided no services to Gateway Corp.                    
               The Essex partners agreed that Gateway Corp. and Eulich-               
          Management generally would pay the same fees to the Essex                   
          partnership.  The partnership's specified percentage of fees                
          under each consulting and fee participation agreement could                 
          easily be adjusted and modified, as each consulting and                     
          participation agreement was cancelable by a 30- to 90-day notice.           
          As a result, if a significant change occurred with respect to the           
          compensation that Gateway Corp. or Eulich-Management received               
          under a particular hotel management contract, an offsetting                 
          change then could be effectuated in the other consulting and fee            
          participation agreements Gateway Corp. and Eulich Management had            
          with Essex.                                                                 
               In late 1983, Eulich-Management received a hotel management            
          contract for Prudential's Hilton-franchised Twin Sixties Hotel at           
          Dallas, Texas.  A new Eulich-Management/Essex agreement was made            
          effective January 1, 1984, whereby Eulich-Management agreed to              
          pay to Essex 70 percent of the fees from the Madison Hotel, 57              
          percent of the fees from Allentown Hilton, and 57 percent of the            
          fees from Twin Sixties.21                                                   

          21                                                                          
               The consulting and participation agreement for the Twin                
          Sixties hotel was entered into to replace the income that Essex             
                                                             (continued...)           





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