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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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