C.E. John Properties 65 LLC's Defenses and Counterclaims regarding Besaw's restaurant lawsuit

Randolph C. Foster, OSB No. [email protected] Edward A. Piper, OSB No. [email protected] STOEL RIVES LLP900 SW Fifth Avenue, Suite 2600Portland, OR 97204Telephone: (503) 224-3380Facsimile: (503) 220-2480

Attorneys for DefendantC.E. John Properties 65, LLC

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

TUATARA ENTERPRISES, INC., dba Case No.: 3:15-cv-00749-BRBESAW'S, an Oregon corporation,

Plaintiff,

v.

C.E. JOHN PROPERTIES 65, LLC, anOregon limited liability company,

Defendant.

C.E. JOHN PROPERTIES 65, LLC'SANSWER, DEFENSES AND

COUNTERCLAIMS

ANSWER

For its answer to the allegations in Plaintiff's Complaint, C.E. John Properties 65, LLC

("C.E. John") admits, denies and alleges as set out below. Unless otherwise indicated, the

numbered paragraphs 1-55 of this Answer respond to the corresponding numbered paragraphs of

Plaintiff's Complaint, e.g., Answer paragraph 1 responds to Complaint paragraph 1.

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Case 3:15-cv-00749-BR Document 6 Filed 05/08/15 Page 1 of 65

1. Admits that there is a justiciable controversy existing between the parties as more

particularly alleged in C.E. John's First Counterclaim and denies the balance of the allegations in

paragraph 1 of Plaintiff's Complaint.

2. Admits that there is a justiciable controversy existing between the parties as more

particularly alleged in C.E. John's First Counterclaim and that the controversy involves

Plaintiff's threat to operate a restaurant under the Besaw's name following termination of the

current Lease Agreement between the parties in violation of the Lease Agreement's provisions

governing continued use of the Besaw's name, and denies the balance of the allegations in

paragraph 2 of Plaintiffs Complaint.

3. Admits that there is a justiciable controversy existing between the parties as to

their respective rights in the use of the Besaw's name upon termination of the Lease Agreement

as more particularly alleged in C.E. John's First Counterclaim, and denies the balance of the

allegations in paragraph 3 of Plaintiffs Complaint.

4. Denies the allegations in paragraph 4 of Plaintiffs Complaint.

5. Admits that if the Court has subject matter jurisdiction under the Lanham Act,

then venue is proper in this district as alleged in paragraph 5 of Plaintiffs Complaint.

6. Admits that this Court has personal jurisdiction over C.E. John as alleged in


7. Admits that Plaintiff is an Oregon corporation with its principal place of business

in Oregon.

8. Admits that C.E. John is an Oregon limited liability company with its

headquarters in the state of Washington.


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9. Admits that various persons and entities have operated the restaurant facilities at

the Besaw's building location (2301 NW Savier Street, Portland, Oregon) (the "Besaw's

building"); admits that any restaurant that has been operated at the Besaw's building over the last

100 years has been called or known as "Besaw's" or "Besaw's Caf"; admits that there have

been periods of time when the restaurant facilities were not being operated at the Besaw's

building; and alleges that any lessee/operator of the restaurant at the Besaw's building only used

the name "Besaw's" with permission of the building/restaurant owner independent of the

Besaw's building's owner and only for the term of the governing lease. Except as admitted

above, C.E. John denies the balance of the allegations in paragraph 9 of Plaintiff's Complaint.

10. C.E. John is without sufficient information to admit or deny the allegations in

paragraph 10 regarding the alleged purchase of a restaurant by Besaw's Caf, Inc. ("BCI"), but

admits that a partnership called Jones Group Associates ("JGA") owned the Besaw's building

prior to selling the building to C.E. John in 2011, and that prior to C.E. John's acquisition of the

Besaw's building, JGA entered into a Lease Agreement with BCI under which BCI was

authorized to operate the restaurant at the building and to use the Besaw's name for the

restaurant operations as permitted by the Lease Agreement. A true copy of the JGA/BCI Lease

Agreement that was assumed by C.E. John as part of the 2011 acquisition of the Besaw's

building (the "Lease Agreement") is attached to this Answer as Exhibit 1. The Lease

Agreement includes a pre-printed form, an addendum, a guarantee from the owners of BCI and a

memorandum extending the lease term. Except as admitted above, C.E. John denies the balance

of the allegations in paragraph 10 of Plaintiffs Complaint.

11. Admits that BCI and JGA executed the March 20, 2005 Lease Agreement and

admits that the Lease Agreement contains provisions governing the tenant's use of the Besaw's


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name (and any variation) during and after the term of the Lease Agreement. Specifically,

paragraph 27 of the Lease Agreement, titled "Name," provides:

It is hereby agreed that the name "Besaw's" or "Besaw's Caf" orany variation of the name "Besaw's" shall at all times be andremain the sole and exclusive property of lessor. Lessor grants tolessee the right to use the name "Besaw's Caf" at the locationknown as 2301 NW Savier St, solely in conjunction with lessee'srestaurant at that address, for the term of the lease, as extended,and not otherwise. The name may be used in all normal activitiesassociated with the operation of the proposed restaurant as anallowed use under the terms of the lease and any extensionsthereof; however, the right to use the name shall terminate with thetermination of the lease.

Paragraph 32.3 of the Lease Agreement, titled "Trade Name," also addresses use of the Besaw's

name and provides:

In addition to the provisions of paragraph 27, [I]essee agrees upontermination of lease that the trade name "Besaw's" or "Besaw'sCaf" or any variation of the name Besaw's shall revert to lessorand that lessee will discontinue to use trade name "Besaw's" or"Besaw's Caf" or any variation of "Besaw's" and will executeany documents to transfer trade name to lessor including"Besaw's" or "Besaw's Caf" or any variation thereof. Lesseefurther agrees to change its corporate name to a name other than"Besaw's["] or "Besaw's Caf, Inc." or any variation thereof upontermination of the lease or in the event that [I]essee is no longerleasing the above described premises.

Except as admitted above, denies the allegations in paragraph 11 of Plaintiff's Complaint.

12. Denies the allegations in paragraph 12 of Plaintiff's Complaint. While JGA did

not employ persons to run the restaurant facilities that it had invested in remodeling and restoring

when it acquired the building in the early 1990s, the various lessee/operators were approved by

JGA.

13. Denies the allegations in paragraph 13 of Plaintiff's Complaint.




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16. C.E. John is without sufficient knowledge or information to admit or deny the

allegations in paragraph 16 of Plaintiffs Complaint, but admits that Plaintiff succeeded to BCI's

operation of the restaurant at the Besaw's building, that around June 2005 BCI assigned the

Lease Agreement to Plaintiff, and that Plaintiff accepted the assignment of the rights and

obligations under the Lease Agreement. Except as admitted above, C.E. John denies the balance


17. Admits that through three documents each titled "Assignment and Assumption of

Lease," and each effective June 23, 2005, BCI assigned its rights and obligations as lessee under

the Lease Agreement and related lease agreements to Plaintiff. The assignment agreements

between BCI and Plaintiff each governed different aspects of the Besaw's buildingthe

restaurant facilities, the patio and the parking lot. The assignment governing the restaurant

portion of the leased property (the "2005 Restaurant Assignment") and the Lease Agreement,

together with JGA's consent to that assignment, are attached as Exhibit 2. Sections 7.4-7.6 of

the 2005 Restaurant Assignment between BCI and Plaintiff state:

7.4. Assigning party [BCI] shall discontinue use of the tradename, Besaw's or Besaw's Caf, to assuming party andassigning party will notify assuming party and Landlord ofits new corporate name.

7.5 The trade name "Besaw's" or Besaw's Caf or variationthereof shall remain the property of [JGA] pursuant toparagraph 27 of the lease.

7.6 [Plaintiff] shall be allowed to use the trade name as long asit leases the above-described premises.

Except as admitted above, denies the balance of the allegations in paragraph 17 of Plaintiff s

Complaint.

18. C.E. John is without information sufficient to admit or deny when Plaintiff began

operating the restaurant at the Besaw's building, but admits that it happened sometime in 2005.


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19. Admits that JGA continued as the owner and landlord of the Besaw's building

and restaurant facilities until JGA sold the property to C.E. John in 2011, and denies the balance

of the allegations in paragraph 19 of Plaintiff's Complaint.

20. Admits the allegations in paragraph 20 of Plaintiff's Complaint and states further

that the deed was in furtherance of a transaction evidenced by a Purchase and Sale Agreement

dated February 11, 2011, as amended (the "2011 Sale Agreement"). Through the 2011 Sale

Agreement, C.E. John purchased the Besaw's building, all rights in the Besaw's name and other

property from JGA, and succeeded to all of JGA's rights under the Lease Agreement. The actual

execution of the 2011 Sale Agreement took place on or about November 16, 2011.

21. Admits that as part of the transaction evidenced by the 2011 Sale Agreement, C.E.

John assumed the Lease Agreement. A copy of the 2011 Lease Assumption agreement is

attached as Exhibit 3. The 2011 Lease Assumption provides, in part:

1. Assignment. On and as of the Effective Date, Assignor[JGA] hereby assigns, transfers and conveys to Assignee [C.E.John] all of Assignor's rights and interests as lessor in, to andunder leases of the Property, including without limitation andwithout warranty and indemnification all of Assignor's rights inand to the trade names of "Besaw's" and "Besaw's Caf" under thelease between Assignor and Tuatara Enterprises, Inc. Assignorfurther quitclaims and assigns to Assignee any rights Assignor mayotherwise have in and to such trade names.

Through Exhibit 3 and the 2011 Sale Agreement, C.E. John became the landlord under the Lease

Agreement with Plaintiff.


23. C.E. John is without sufficient information to admit or deny the allegations in

paragraph 23 of Plaintiff's Complaint, but admits that Plaintiff currently provides breakfast,

lunch and dinner service and further admits that the name "Besaw's" is well-known in the

Portland area and is associated with the building at 2301 NW Savier Street and that restaurantPage 6 - C.E. JOHN PROPERTIES 65, LLC'S ANSWER, DEFENSES AND

COUNTERCLAIMS

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operations have been conducted there for over 100 years exclusively under the Besaw's name.

C.E. John is the current owner of the Besaw's building, Besaw's restaurant facilities, the

Besaw's name used in connection with that property and the rights retained under the Lease

Agreement regarding use of the Besaw's name upon termination of Plaintiff's operation of the

Besaw's restaurant facilities on May 31, 2015.

24. C.E. John denies the allegations in paragraph 24 of Plaintiff's Complaint but

admits that the name "Besaw's" is well-known in the Portland area and has been associated with

the building and restaurant located at 2301 NW Savier Street for over 100 years.

25. Admits that the Lease Agreement expires on May 31, 2015 and denies the balance


26. Admits that C.E. John intends to continue to cause the restaurant at the Besaw's

building to be operated under the Besaw's name by a tenant/operator, and denies the balance of

the allegations in paragraph 26 of Plaintiffs Complaint.

27. Admits the allegations contained in the first sentence of paragraph 27 of

Plaintiffs Complaint; admits that C.E. John advised the U.S. Patent and Trademark Office that

the Besaw's mark had been used in commerce since 1903 by C.E. John or its predecessors in

interest (or their authorized tenant operators); admits that C.E. John provided the U.S. Patent and

Trademark Office with a copy of the menu from the restaurant being operated subject to the

Lease Agreement; and, based on information and belief, admits that the menu was developed for

use by Plaintiff. Except as admitted above, C.E. John denies the remaining allegations in


28. Admits the allegations in paragraph 28 of Plaintiffs Complaint.


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29. Admits that Plaintiff sent a letter to C.E. John on or about March 20, 2015

demanding that C.E. John withdraw its federal trademark application for "Besaw's." Except as

admitted above, C.E. John denies the remaining allegations in paragraph 29 of Plaintiff's

Complaint.

30. Admits that C.E. John responded to Plaintiff's March 20 demand letter, and that

C.E John rejected Plaintiff's demand and reminded Plaintiff of C.E. John's rights and Plaintiff's

obligations under the Lease Agreement, including the obligation that Plaintiff cease use of the

names "Besaw's" or "Besaw's Caf" at the termination of the Lease Agreement on May 31,

2015 and that any and all rights that Plaintiff had in the name will be transferred to C.E. John at

that time. Except as admitted above, denies the remaining allegations in paragraph 30 of

Plaintiff's Complaint.

31. Admits the allegations in paragraph 31 of Plaintiff's Complaint.

32. Based on Plaintiff's public announcements about its future business plans, which

appear in part to be designed to gain free advertising for Plaintiff's new restaurant while also

creating and animosity directed toward C.E. John and any future operator of the

restaurant at the Besaw's building, admits the allegations of paragraph 32 of Plaintiff's

Complaint.

33. Admits that there exists an actual controversy between the parties concerning

their respective rights to use the Besaw's name upon termination of the Lease Agreement

effective May 31, 2015, but denies that an adjudication of trademark rights is necessary to

resolve the dispute as suggested by the allegations in paragraph 33 of Plaintiff's Complaint. The

Lease Agreement provides that Plaintiff must cease use of "Besaw's" upon termination of the

Lease Agreement and transfer to C.E. John any and all rights (including trademark rights) that


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Plaintiff may have to "Besaw's," "Besaw's Caf" or any variation. The enforcement of these

contract obligations will render Plaintiff's trademark claims moot and Plaintiff will lack

standing.

34. C.E. John is without sufficient knowledge to admit or deny the allegations in

paragraph 34 of Plaintiff's Complaint, but admits that the parties' dispute over their respective

rights and obligations under the Lease Agreement is ripe for adjudication and that Plaintiff is

actively planning to breach its obligations under the Lease Agreement by opening and operating

in close proximity to the Besaw's building a restaurant that Plaintiff intends to call "Besaw's."


36. Admits that there is an actual and justiciable controversy between the parties

regarding their respective rights and obligations under the Lease Agreement regarding use of the

Besaw's name following expiration of the Lease Agreement on May 31, 2015, and otherwise

denies the allegations in paragraph 36 of Plaintiffs Complaint.

37. Paragraph 37 of Plaintiff's Complaint incorporates the allegations in paragraphs

1-36 of the Complaint. In response, C.E. John realleges the admissions, denials and allegations

of paragraphs 1-36 of this Answer.

38. Admits that C.E. John advised Plaintiff that Plaintiff's continued use of the

Besaw's name following expiration of the Lease Agreement will violate C.E. John's legal rights

under the Lease Agreement and otherwise, and admits that C.E. John advised Plaintiff that C.E.

John would reluctantly seek the assistance of the courts if Plaintiff failed to honor its obligations

under the Lease Agreement regarding use of the Besaw's name and the transfer to C.E. John of

any and all rights Plaintiff may have or claim in the name at the time of termination. Except as

admitted above, denies the allegations in paragraph 38 of Plaintiff's Complaint.


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49. Paragraph 49 of Plaintiff's Complaint incorporates the allegations in paragraphs

1-37 and 39-45 of the Complaint. In response, C.E. John realleges the admissions, denials and

allegations in this Answer corresponding to those numbered paragraphs of the Complaint.

50. Admits that C.E. John intends to continue restaurant and food service operations

at the Besaw's building and associated property through a lease or other operating agreement that

permits the tenant operator to use the Besaw's name only during the term of the lease, that

ensures ultimate rights to use of the Besaw's name remain with C.E. John, and that requires the

tenant to assign to C.E. John upon termination of the lease any rights the tenant may acquire or

claim in the Besaw's name during the term of the lease.


52. Admits the allegations in paragraph 52 of Plaintiff's Complaint.




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55. Denies the allegations in paragraph 55 of Plaintiff's Complaint. Except as

expressly admitted above, denies each and every other allegation in Plaintiff's Complaint.

Without assuming Plaintiffs burden of pleading or proof as to any claim or issue for

which Plaintiff has such burden as a matter of law or procedure, C.E. John asserts the following

defenses and counterclaims:

FIRST DEFENSE(Noninfringement/Standing)

56. C.E. John has not infringed, contributed to the infringement of or actively induced

others to infringe upon any trademark or other interest that Plaintiff has or may have in

"Besaw's" or any variation. Rather, as alleged above, as between Plaintiff and C.E. John, C.E.

John enjoys the exclusive right to use the name Besaw's or any variation. To the extent Plaintiff

has or claims any right to use of "Besaw's" or any variation, Plaintiff is prohibited upon

termination of the Lease Agreement from using the Besaw's name or logo (or any variation) for

any purpose and, at that time, is required to transfer to C.E. John any and all rights Plaintiff may

have in the name, logo or any variation.

SECOND DEFENSE(Estoppel)

57. In an estoppel certificate dated June 16, 2011 that it executed and delivered to

C.E. John (the "Estoppel Certificate"), Plaintiff affirmed and represented to C.E. John that the

Lease Agreement was in full force and effect and had not been modified, changed, altered or

amended in any respect; that the landlord had not waived any right granted in the Lease

Agreement; that tenant had no existing defenses against the landlord's enforcement of the Lease

Agreement; and that the Estoppel Certificate was given with the understanding that C.E. John

would rely on the truth of the matters stated in the Estoppel Certificate in connection with the


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transaction between the landlord (JGA) and C.E. John. A copy of the Estoppel Certificate is

attached as Exhibit 4.

58. C.E. John reasonably relied on the representations of Plaintiff in the Estoppel

Certificate in proceeding with the acquisition of the Besaw's building and restaurant and

assuming the rights and obligations of JGA in the Lease Agreement.

59. Plaintiff should be estopped from denying its obligations upon termination of the

Lease Agreement to (i) cease use of the Besaw's name or any variation upon termination of the

Lease Agreement and (ii) transfer to C.E. John any and all rights that Plaintiff may have or claim

in the Besaw's name or any variation.

FIRST COUNTERCLAIM AND THIRD DEFENSE(Breach of Contract)

60. C.E. John incorporates and realleges its admissions, denials and allegations in

paragraphs 1-59 as though fully set forth herein.

61. This Court has subject matter jurisdiction over this First Counterclaim under 28

U.S.C. 1367, because it arises out of the same property, agreements, and other transactions and

occurrences that are the subject matter of Plaintiff's Complaint, and is so related to Plaintiff s

claims that it forms part of the same case or controversy.

62. Venue in this judicial district is proper under 28 U.S.C. 1391(b)(1) because

Plaintiff is an Oregon corporation with its principal place of business in Oregon.

63. The Lease Agreement originally entered into by BCI and JGA is a valid and

enforceable contract.

64. Through the 2005 Restaurant Assignment and other associated transaction

documents regarding the Besaw's building and related property, all of which became effective on

June 23, 2005, Plaintiff assumed all of BCI's rights and duties under the Lease Agreement,


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including, but not limited to, those rights and obligations related to use of the Besaw's name

during and after the term of the Lease Agreement.

65. When it assumed the rights and obligations under the Lease Agreement from BCI,

Plaintiff reaffirmed the provisions of the Lease Agreement providing that JGA remained the sole

owner of all right, title and interest in the Besaw's name. As more specifically alleged in

paragraph 17 of this Answer, sections 7.4-7.6 of the 2005 Restaurant Assignment reaffirmed that

Tuatara Enterprises, Inc. was only permitted to use the Besaw's name (or any variation) during

the term of the Lease Agreement.

66. Through the 2011 Sale Agreement transaction, C.E. John fully assumed all of

JGA's rights and duties under the Lease Agreement, including, but not limited to, those rights

and obligations related to the use of "Besaw's."

67. Additionally, in connection with the 2011 Sale Agreement, Plaintiff provided

JGA and C.E. John with the Estoppel Certificate.

68. The Lease Agreement permits Plaintiff to use the Besaw's name only for as long

as it operates the restaurant in the Besaw's building pursuant to the Lease Agreement.

69. Specifically, paragraphs 27 and 32.3 of the Lease Agreement (which are set out in

their entirety in paragraph 11 of this Answer) expressly prohibit Plaintiff from using the Besaw's

name for any other purpose or at any other time, and require Plaintiff to transfer whatever rights

it may have in the Besaw's name to C.E. John upon termination of the Lease Agreement.

70. Both JGA and C.E. John fully performed and, to the extent necessary, will

continue to fully perform all of their respective obligations under the Lease Agreement, and have

not breached any of those obligations.


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71. Plaintiff has repudiated and breached its obligations under the Lease Agreement

by positively, definitely, absolutely, unconditionally and unequivocally declaring that it will not

honor its obligations to (i) cease all use of the Besaw's name upon termination of the Lease

Agreement and (ii) transfer to C.E. John whatever interest it may have or claim in the Besaw's

name.

72. Plaintiff asserts that it owns all rights in the Besaw's name, that it intends to open

a new restaurant near the Besaw's building following the termination of the Lease Agreement

and that it will call the new restaurant "Besaw's." Plaintiff also has engaged in a public relations

campaign designed to undermine C.E. John and any future operator of the restaurant facilities at

the Besaw's building. Plaintiff has falsely represented to the public that it owns the Besaw's

name and that it has the right to continued use of that name following termination of the Lease

Agreement. It has also falsely stated that C.E. John refused to negotiate a new lease or lease

extension with Plaintiff and somehow failed to deal with Plaintiff in good faith.

73. Additionally, Plaintiff has filed two federal trademark applications claiming that it

owns the Besaw's nameone for the name itself (Appl. No. 86567183), and another for a logo

derived from the historic sign on the Besaw's building that incorporates the Besaw's name

(Appl. No. 6567209). Plaintiff has also filed an Oregon state trademark registration for the

Besaw's name (Registration No. 43686), claiming that Plaintiff owns the Besaw's name.

74. Plaintiff's repudiation and breach are material, and thus constitute a total breach

of the Lease Agreement, because the Lease Agreement's terms concerning the Besaw's name go

to the substance of the agreement, and because Plaintiff's breach of those terms defeats an

essential object and premise of the Lease Agreement to permit Plaintiff, as a tenant operator, to

operate the restaurant for a limited time and subject to the conditions in the Lease Agreement


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concerning use of the Besaw's name, which name has been intimately associated with the

Besaw's building and restaurant facilities and their owners for over 100 years.

75. As a result of Plaintiff's breach of the Lease Agreement, C.E. John has suffered

and will suffer irreparable harm to the value of its goodwill associated with the Besaw's building

and restaurant facilities and business. However, such damages would be very difficult to

quantify or prove with reasonably certainty and C.E. John is without an adequate remedy at law.

76. C.E. John is entitled to declaration of rights under the Lease Agreement.

Specifically, the Court should declare that upon and after termination of the Lease Agreement,

Plaintiff has no further right to use the Besaw's name, whether in a trademark sense or as the

name of a restaurant or other business, and that Plaintiff is obliged to transfer and assign to C.E.

John any and all right, title or interest that Plaintiff may have or claim in the Besaw's name or

any variation, whether in connection with providing restaurant services or for any other purpose.

77. In addition, C.E. John is entitled to an order mandating Plaintiff to specifically

perform its obligations under the Lease Agreement related to the name Besaw's and any

variation. Specifically, the Court should:

77.1 Order Plaintiff to cease any and all trademark, trade name, business name

or similar use of "Besaw's" or any variation upon termination of the Lease Agreement.

77.2 Order Plaintiff to assign to C.E. John all right, title and interest in the

Besaw's name, including, without limitation, all right, title and interest in the Besaw's logo, the

internet domain name "www.besaws.com," all of Plaintiffs pending federal trademark

applications related to the Besaw's name and Plaintiffs current state registration of the Besaw's

name.


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(a) Alternative to the relief requested in paragraph 77.2 above, in the event

such relief is not granted, the Court should compel Plaintiff to immediately cancel or abandon all

right, title and interest in "Besaw's" or any variation, including, without limitation, all of

Plaintiff's federal trademark applications concerning the Besaw's name or logo, its state

registration of the Besaw's name and its registration of the internet domain name

"www.besaws.com."

78. C.E. John also is entitled to a preliminary and permanent injunction ordering

Plaintiff, and all those acting in concert with it, to:

78.1 Refrain from using the Besaw's name, the Besaw's logo, and any and all

variations thereof for any purpose, including, without limitation, for any restaurant or hospitality

business or service, as a trade name or trademark, and from maintaining "www.besaws.com" as

an internet domain name for any purpose.

78.2 Refrain from filing, prosecuting or maintaining any and all federal or state

trademark applications or registrations that relate to the Besaw's name, including, without

limitation, (i) federal trademark applications (#86567183 and #86567209), which currently are

pending in the U.S. Patent and Trademark Office, and (ii) the registration with the Oregon

Secretary of State (#43686).

79. C.E. John is entitled to an award of its attorneys' fees under terms of the Lease

Agreement on page 4: "[i]n case suit or action is instituted to enforce compliance with any of the

terms, covenants or conditions of this lease . . . the losing party agrees to pay the prevailing

party's reasonable attorney fees incurred throughout such proceeding, including at trial, on

appeal, and for post-judgment collection." The Lease Agreement further provides that "[Ole

lessee agrees to pay and discharge all lessor's costs and expenses, including lessor's reasonable


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attorney's fees that shall arise from enforcing any provision or covenants of this lease even

though no suit or action is instituted."

80. Additionally, paragraph 6.7 of the 2005 Restaurant Assignment executed by C.E.

John's predecessor in interest provides that "[i]f any arbitration or litigation is instituted to

interpret, enforce or rescind this Assignment . . . the prevailing party on a claim will be entitled

to recover with respect to the claim, in addition to any other relief awarded, the prevailing party's

reasonable attorney's fees and other fees, costs, and expenses of every kind[.]"

81. Accordingly, C.E. John is entitled to an award of reasonable attorneys' fees and

costs, including those fees incurred prior to the time Plaintiff filed this lawsuit.

SECOND COUNTERCLAIM(Trademark InfringementLanham Act Section 43(a) (15 U.S.C. 1125(a)))

In the event that the Court finds that the adjudication of the parties' respective rights and

obligations under the Lease Agreement does not resolve the parties' dispute and render

consideration of Plaintiff's trademark infringement claims allegations unnecessary, C.E. John

asserts the following alternative counterclaim:



83. This Court has subject matter jurisdiction over this Second Counterclaim under 28

U.S.C. 1331 because it concerns a question of federal law.

84. C.E. John owns all rights in the Besaw's name and the goodwill associated with

the restaurant services and operations at the Besaw's building. C.E. John and its predecessors in

interest have deliberately and continuously used the Besaw's name since at least the early 1990s

in operating, either directly or through the use of tenant restaurant operators, a restaurant known

as "Besaw's" located in the Besaw's building. Restaurant operations at the Besaw's building


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have been conducted, off and on, since approximately 1903, and always under the Besaw's

name.

85. The Besaw's name is widely known in Portland, Oregon and has led the public to

identify the Besaw's name exclusively with the Besaw's building and the Besaw's building's

restaurant facilities and operations owned by C.E. John and its predecessors in interest. The

Besaw's building is a historic location that has housed a restaurant or similar establishment off

and on for over 100 years.

86. Any right, title or interest that Plaintiff may currently have in the Besaw's name is

governed by the Lease Agreement, which permits Plaintiff to use the Besaw's name only in

connection with its operation of the restaurant at the Besaw's building and only until the

termination of the Lease Agreement. When the Lease Agreement terminates on May 31, 2015,

Plaintiff's right to use the Besaw's name will terminate, and Plaintiff will have no further or

continuing right to use the Besaw's name for any trademark or commercial purpose.

87. Plaintiffs current public relations campaign and its stated intention to use the

Besaw's name for a new restaurant near the Besaw's building are wrongful, and are likely to

cause confusion and mistake among consumers, and to deceive consumers as to the ownership,

affiliation, connection and association of Besaw's with Plaintiff and its new restaurant, or with

C.E. John and the restaurant operations at the Besaw's building.

88. Through its conduct as alleged above, Plaintiff has violated and, unless restrained,

will continue to violate Section 43(a) of the Lanham Act (15 U.S.C. 1125(a)).

89. Plaintiffs misuse of the Besaw's name has caused and will continue to cause

C.E. John to sustain substantial damage, loss and injury, in an amount that is not currently

capable of being ascertained. C.E. John has no adequate remedy at law.


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90. Because of the willful nature of Plaintiff's conduct in the face of the clear

language of the Lease Agreement, the Court should declare that this is an exceptional case and

that C.E. John is entitled to an award of attorneys' fees under 15 U.S.C. 1117(a).

THIRD COUNTERCLAIM(Cancellation of Oregon Trademark RegistrationORS 647.075)

In the event that the Court finds that the adjudication of the parties' respective rights and

obligations under the Lease Agreement does not resolve the parties' dispute regarding Plaintiffs

state trademark registration, C.E. John asserts the following alternative counterclaim:



92. This Court has subject matter jurisdiction over this Third Counterclaim under 28

U.S.C. 1367, because it arises out of the same property, agreements, and other transactions and

occurrences that are the subject matter of Plaintiffs Complaint, and is so related to Plaintiffs

claims that it forms part of the same case or controversy.

93. Plaintiff filed an Oregon state trademark registration for the Besaw's name

(#43686), claiming that Plaintiff owns the Besaw's name.

94. Plaintiff is not the owner of the Besaw's name and is obliged under the Lease

Agreement to cease all use of the name after May 31, 2015. Plaintiff acquired only a limited,

temporary right to use the Besaw's name for the duration of the Lease Agreement and solely in

connection with its restaurant operations at the Besaw's building pursuant to, and subject to the

terms of, the Lease Agreement. C.E. John and its predecessors were and remain the sole owners

of all right, title and interest in the Besaw's name and to its use in connection with restaurant

operations in the Portland metropolitan area, at least, and in connection with conducting leasing

operations and development at the Besaw's building.


7894656550017800-00212


95. In connection with its registration of "Besaw's" with the Oregon Secretary of

State as an Oregon trademark, Plaintiff represented that it "own[s] the mark, the mark is in use,

and no other person has registered the mark with the federal government or in Oregon or has the

right to use the mark or a mark that so resembles the mark as to be likely to cause confusion or

mistake or deceive when applied to the goods or services of the other person."

96. At the time Plaintiff registered "Besaw's" as a trademark with the Oregon

Secretary of State, (i) Plaintiff was aware that C.E. John was the true owner of all right, title and

interest in the Besaw's name, (ii) Plaintiff was aware of its obligations under the Lease

Agreement to cease all use of the Besaw's name upon the Lease Agreement's termination, and to

convey whatever rights it may have or claim in the name to C.E. John, and (iii) Plaintiff was

aware that C.E. John previously had filed an application to register "Besaw's" with the U.S.

Patent and Trademark Office (Appl. No. 86518024).

97. Notwithstanding the foregoing, Plaintiff filed its registration and made the

representations above with the intent that the Oregon Secretary of State rely on them. The

Oregon Secretary of State did rely on Plaintiff's representations, which, on information and

belief, it had no reason to believe were false, by registering Besaw's as a trademark in Plaintiff's

name.

98. Pursuant to ORS 647.075, C.E. John is entitled to an order (i) finding that Plaintiff

is not the owner of the Besaw's name and that Plaintiffs registration of that name with the

Oregon Secretary of State was obtained fraudulently, and (ii) ordering cancellation of Plaintiffs

state registration of the Besaw's name. Alternatively, C.E. John is entitled to an order requiring

Plaintiff to assign to C.E. John the state registration or, alternatively, to withdraw and cancel its

state trademark registration of "Besaw's."


78946565.50017800-00212


PRAYER FOR RELIEF

WHEREFORE, the Court should enter judgment in favor of C.E. John as follows:

1. Dismissing Plaintiff's claims with prejudice;

2. Declaring that upon and after termination of the Lease Agreement, Plaintiff has

no right to use the Besaw's name or any variation, whether in a trademark sense, as a trade name,

as the name of a restaurant or other business, or for any other commercial purpose, and that

Plaintiff is obliged to transfer and assign to C.E. John any and all right, title or interest that

Plaintiff may have or claim in the Besaw's name or any variation, whether in connection with

providing restaurant services or for any other purpose;

3. Ordering Plaintiff to perform its obligations under the Lease Agreement related to

the Besaw's name and all variations. Specifically,

3.1 Ordering Plaintiff to cease use of "Besaw's" (or any variation) upon and

after termination of the Lease Agreement.

3.2 Ordering Plaintiff to assign to C.E. John (in a form of document

reasonably satisfactory to C.E. John) all right, title and interest that Plaintiff may have in the

Besaw's name, including, without limitation, all right, title and interest in the Besaw's logo, the

internet domain name "www.besaws.com," all of Plaintiffs pending federal trademark

applications related to the Besaw's name or logo and Plaintiffs current Oregon state registration

of the Besaw's name.

(a) In the alternative to the relief requested in paragraph 3.2 of this Prayer,

and in the event such relief is not granted, the Court should order Plaintiff to immediately cancel

or abandon all of its claimed interests in the Besaw's name, including, without limitation, its


78946565.50017800-00212


federal trademark applications concerning the Besaw's name and logo, its state registration of the

Besaw's name and its registration of the internet domain name "www.besaws.com;"

4. Entering a preliminary and permanent injunction restraining Plaintiff, and all

those acting in concert with Plaintiff, from:

4.1 Using the Besaw's name, the Besaw's logo, and any and all variations

thereof for any purpose, including, without limitation, for any restaurant or hospitality business

or service, or as a trade name or trademark, and from maintaining the "wwvv.besaws.com" as an

internet domain name for any purpose.

4.2 Filing, prosecuting or maintaining any and all federal or state trademark

applications or registrations that relate to the Besaw's name or any variation, including without

limitation, (i) federal trademark applications #86567183 and #86567209, which currently are

pending in the U.S. Patent and Trademark Office, and (ii) Plaintiff's "Besaw's" trademark

registration with the Oregon Secretary of State (#43686);

5. Requiring Plaintiff to file with this Court (with a copy to C.E. John) a report, in

writing and under oath, setting forth in detail the manner and form in which it has complied with

the orders of the Court, which report must be filed and served within 30 days after entry of the

Court's judgment;


78946565.5 0017800-00212


6. Awarding C.E. John its reasonable attorneys' fees and costs, together with its

costs and disbursements; and

7. Awarding C.E. John such other and further relief as the Court may deem just and

proper.

DATED: May 8, 2015. STOEL RIVES LLP

s/ Randolph C. FosterRandolph C. Foster, OSB No. [email protected] Edward A. Piper, OSB No. [email protected] 900 SW Fifth Avenue, Suite 2600Portland, OR 97204Telephone: (503) 224-3380Facsimile: (503) 220-2480



78946565.50017800-00212


CERTIFICATE OF SERVICE

I hereby certify that I served the foregoing C.E. JOHN PROPERTIES 65, LLC'S

ANSWER, DEFENSES AND COUNTERCLAIMS on the following named person(s) on the

date indicated below by

nn notice of electronic filing using theCm/ECF system

Dennis Steinman, OSB No. [email protected] Thomas R. Rask, III, OSB No. 934031traskAkelrun.com Scott J. Aldworth, OSB No. 113123saldworthAkelrun.com Mathew W. Lauritsen, OSB No. 083949mlauritsena,kelrun.com KELL, ALTERMAN & RUNSTEIN, LLP520 SW Yamhill Street, Suite 600Portland, OR 97204Telephone: (503) 222-3531Fax: (503) 227-2980

Attorneys for Plaintiff

DATED: May 8, 2015. STOEL RIVES LLP

s/ Randolph C. FosterRandolph C. Foster, OSB No. 784340randy [email protected] Edward A. Piper, OSB No. 141609ed.piperAstoel.com 900 SW Fifth Avenue, Suite 2600Portland, OR 97204Telephone: (503) 224-3380Facsimile: (503) 220-2480


Page 1 - CERTIFICATE OF SERVICE

78946565.50017800-00212


EXHIBIT1

Exhibit 1 - CE John Properties LLC Answer Page 1 of 25


i FORM No. 812 - LEASE - BUSINESS PROPERTY.

NtEE

COPY STEVENS-NESS LAW PUBLISHING CO.. PORTLAND. OR 97204

THIS INDENTURE OF LEASE, entered into this day of March 2.005

GR ASSOCIATES ASSOCJONES between

hereinafter called the lessor, and BMW'S CAFE

, hereinafter called the lessee,

WITNESSETH: In consideration of the covenants herein, the lessor hereby leases unto the lessee those

certain premises, as is, situated in the City of Ffygt.l.ged , County of ...111,11:Mgraa. and State

of Oregon , hereinafter called. the premises, described as followsl

A portion of the hut14#8 commonly known as "Besaws" located at the Northwest corner

of Northwest .4v ter and Northwest .23rd Ave,, Lot 4, Block 312, COUCHIS ADDITION,also known as 2301 NW Sayer St, Portland, Oregon, the portion of the buildingconstituting the demised premises being shown on .the amp attached hereto as Exhibit A,

and consisting of approxinately 1,500 square feet of main floor space and approximately

576 square feet of basement space,

To Have and to Hold the premises commencing with the 1st day of June 2005

and ending at midnight on the alat day offor the whole term, which lessee agrees to pay, atCity of Portland , State of Oregon

June 1, 2005 through tlay.31, 2006June 1, 2005 through avlay31, 2007June 1, 2007 through 2'!ay'.1, 2008June 1, .2008 through day, 31, 2009.June 1, 2009 through MAy. :31, 2010

Total Dase Pentktriple net)

.N.ay 20.11)forNArbox_Mx..,..1.17

a rental of $-.1.82-416

in the following amounts, to-wit:

mo.

me:. .= $34,284.00==. $35,316.00

mo. = $36,372.00no. = $37,464.001110. = $38,580.00

$182,016.00

97217at the following times and

$2,857.00 per$2,943.00 per$3,031.00 per$3,122.00 Per$3,215.00 per

In consideration of the leasing of the premises and of the mutual agreements herein contained, the parties

agree as follows:



LESSEE'SACCEPTANCEOF LEASEUSE OFPREMISES

(1) The lessee accepts this letting and agrees to pay to the order of the lessor the monthly rentals above stated for thefull term of this lease, in advance, at the times and in the manner aforesaid.

(2a) The lessee shall use the premises during the term of thid lease for the conduct of the following business:Restaurant.

and for no other purpose whatsoever without lessor's written consent.(2b) The lessee will not make any unlawful, improper or offensive use of the premises

' the lessee will not suffer any strip or waste

thereof; the lessee will not permit any objectionable noise or odor to escape or to be emitted from the premises or do anything.or permitanything to be done upon or .about the premises in any way tending to create a nuisance; the lessee will not sell or permit to be sold anyproduct, substance or service upon or about the premises, excepting such as lessee may be licensed by law to sell and as may be hereinexpressly permitted.

(2c) The lessee will not allow the premises at any time to fall into such a state of repair or disorder as to increase the fire hazardthereon; the lessee will not install any power machinery on the premises except under the supervision and with written consent of the lessor;the lessee will not store gasoline or other highly combustible materials on the premises at any time; the lessee will not use the premises insuch a way or for such a purpose that the fire insurance rate on the improvements on the premises is thereby increased or that wouldprevent the lessor from taking advantage of any rulings of any agency of the state in which the premises are situated, or which wouldallow the lessor to obtain reduced premium rates for long term fire insurance policies.

(2d) The lessee shall comply at lessee's own expense with all laws and regulations of any municipal, county, state, federal or otherpublic authority respecting the use of the premises. These include, without limitation, all laws, regulations and ordinances pertaining toair and water quality, Hazardous Materials as herein defined, waste disposal, air emissions, and other environmental matters. As usedherein, Hazardous Material means any hazardous or toxic substance, material, or waste, including but not limited to those substances,materials, and 'waste listed in the U.S. Department of Transportation Hazardous. Materials Table or by the U.S. Environmental ProtectionAgency as hazardous substances and amendments thereto, petroleum products, or such other substances, materials, and waste that are orbecome regulated under any applicable local, state, or federal law.

(2e) The lessee shall regularly occupy and use the premises for the conduct of lessee's business, and shall not abandon or vacate thepremises 'for more than ten days without written approval of lessor.

(2f) Lessee shall not cause or permit any Hazardous Material to be brought upon, kept or used in or about the premises bylessee, its agents, employees, contractors, or invitees without the prior written consent of lessor, which consent will not be unreasonablywithheld so long as lessee demonstrates to lessor's reasonable 'satisfaction that such Hazardous Material is necessary or useful to lessee'sbusiness and will be used, kept, and stored in a manner that will comply at all times with all laws regulating any such Hazardous Materialso brought upon or used or kept on or about the premises.

:UTILITIES (3) The lessee shall pay for all heat, light, water, power, and other services or utilities used in the premises during theterm of this lease.REPAIRS AND (4a) The lessor shall not be required to make any repairs, alterations, additions or improvements to or upon the pram-IMPROVEMENTS ises during the term of this lease, except only those hereinafter specifically provided for; the lessee hereby agrees tomaintain and keep the premises, including all interior and exterior walls and doors, heating, ventilating and cooling systems, interior wiring,plumbing and drain pipes to sewers or septic tank, in good order and repair during the entire term of this lease, at lessee's own cost andexpense, and to replace all glass which may be broken or damaged during the term hereof in the windows and doors of the premises withglass of as good or better quality as that now in use; it is further agreed that the lessee will makp po alterations, additions,qrsimprovementsto or upon the premises without the written consent of the lessor first being obtained. (scont a at raragrapn 19)

(4b) The lessor agrees to make all necessary structural repairs to the building, including exterior walls, foundation, roof, gutters anddownspouts, and the abutting sidewalks. The lessor reserves and at any and all times shall have the right to alter, repair or improve thebuilding of which the premises are a part, or to add thereto, and for that purpose at any' time may erect scaffolding and all other necessarystructures about and upon the premises and lessor and lessor's representatives, contractors and workers for that purpose may enter in orabout the premises with such materialsats lessor may deem ne-Le ssary therefor. and lessee waives any claim to damages includine loss ofbusiness resulting therefrom. excepting therefrom taose aims tor lessor's negi,igent it jury to

Person p or . rop 4erty aring therefromLESSOR'S (5) It shall be lawtullor fhe lessor, the lessor s agants and representatives, at any reasonable time to enter into or uponRIGHT OF the premises for the purpose Of examining into the condition thereof, or for any other lawful purpose.ENTRY RIGHT OF (6) The lessee will not assign, transfer, pledge, hypothecate, surrender or dispose of this lease, or any interest herein,ASSIGNMENT sublet, or permit any other person or persons whomsoever to occupy' the premises without the written consent of the

lessor being first obtained in writing; this lease is personal to lessee; lessee's interests, in whole or in part, cannot besold, assigned, transferred, seized or taken by operation at law, or under or by virtue of any execution or legal process, attachment or pro-ceedings instituted 'against the lessee, or under or by virtue of any bankruptcy or insolvency proceedings had in regard to the lessee, or inany other manner, except as above mentioned. 'LIENS (7) The lessee will not permit any lien of any kind, type or description to be placed or imposed upon the improvements

in which the premises are situated, or any part thereof, or the land on which they stand.ICE, SNOW, (8) If the premises are located at street level, then at all times lessee shall keep the sidewalks in front of the premisesDEBRIS free and clear of ice, snow, rubbish, debris and obstruction; and if the lessee occupies the entire building, the lessee will

not permit rubbish, debris, ice or snow to accumulate on the roof of the building so as to stop up or obstruct gutters ordownspouts or cause damage to the roof, and will save harmless and protect the lessor against any injury whether to lessor or to lessor'sproperty or to any other person or property caused by lessee's failure in that regard.OVERLOADING (9) The lessee will not overload the floors of the premises in such a way as to cause any undue or serious stress orOF FLOORS strain upon the building in which the premises are located, or any part thereof, and the lessor shall have the' right, at

any time, to call upon any competent engineer or architect whom the lessor may choose, to decide whether or not thefloors of the premises, or any part thereof, are being overloaded so as to cause any undue or serious stress or strain on the building, or anj'part thereof, and the decision of the engineer or architect shall be final and binding upon the lessee; and in the event that it is theopinion of the engineer or architect that the stress or strain is such as to endanger or injure the building, or any part thereof, then andin that event the lessee agrees immediately to relieve the stress or strain, either by reinforcing the building or by lightening the load whichcauses such stress or strain, in a manner satisfactory to the lessor.ADVERTISING (10) The lessee will not use the outside walls of the premises, or allow signs or devices of any kind to be attachedSIGNS thereto or suspended therefrom, for advertising or displaying the name or business of the lessee or for any purpose

whatsoever without the written consent of the lessor; however, the lessee may make use of the windows of the premisesto display lessee's name and business when the workmanship of such signs shall be of good quality and permanent nature; provided furtherthat the lessee may not suspend or place within said windows or paint thereon any banners, signs, sign-boards or other devices in violationof the intent and meaning of this section,



LIABILITY (11) At all times during the term hereof, the lessee will, at the lessee's own expense, keep in effect and deliver to theINSURANCE lessor liability insurance policies in form, and with an insurer, satisfactory to the lessor. Such policies shall insure boththe lessor and the lessee against all liability for damage to persons or property in, upon, or about the premises. The amount of such insur-

500,000 500,000 ance shall be not less than $ for injury to one person, not less than $ for injuriesto all persons arising out of any single incident, and not less than $ 500, 000 for damage to property, or a combinedsingle limit of not less than $ 500, 000 It shall be the responsibility of lessor to purchase casualty insurance withextended coverage so as to insure any structure on the premises against damage caused by fire or the effects of fire (smoke, heat, meansof extinguishment, etc.), or any other means of loss. It shall be the responsibility of the lessee to insure all of the lessee's belongings uponthe premises, of whatsoever nature, against the same. With respect to these policies, lessee shall cause the lessor to be named as an addi-tional insured party. Lessee agrees to and shall indemnify and hold lessor harmless against any and all claims and demands arising fromthe negligence of the lessee, lessee's officers, agents, invitees and/or employees, as well as those arising from lessee's failure to complywith any covenant of this lease on lessee's part to be performed, and shall at lessee's own expense defend the lessor against any and allsuits or actions arising out (4 such negligence, actual or alleged, and all appeals therefrom and shall satisfy and discharge any judgmentwhich may be awarded against lessor in any such suit or action,

FIXTURES (12) All partitions, plumbing, electrical wiring, additions to or improvements upon the premises, whether installed bythe lessor or lessee, shall be and become a part of the building in which the premises are located as soon as installed and the property ofthe lessor unless otherwise herein provided.LIGHT (13) This lease does not grant any rights of access to light and air over the premises or any adjacent property.AND AIR

DAMAGE BY (14) In the event of the destruction of the improvements in which the premises are located by fire or other casualty,CASUALTY,.FIRE AND either party hereto may terminate this lease as of the date of fire or casualty, provided, however, that in the eventDUTY TOREPAIR ' . of damage to the improvements by fire or other casualty to the extent of 25 per cent or more of the soundvalue thereof, the lessor may or may not elect to repair the same; written notice of lessor's election shall be given, lessee within fifteendays after the occurrence of the damage; if notice is not so given, lessor conclusively shall be deemed to have elected not to repair; in theevent lessor elects not to repair,.then and in that event this leaseshall terminate with the date of the damage; but if the improvementsin which the premises are located be but partially destroyed and the damage so occasioned shall not amount to the extent indicated, above,or if greater than said extent and lessor elects to repair, as aforesaid, then the lessor shall repair the same with all convenient speed andshall have the rightto take possession of and occupy, M the exclusion of the lessee, all or any part thereof in order to make the necessaryrepairs, and the lessee hereby agrees to vacate upon request, all or any part thereof which the lessor may require for the purpose of makingnecessary repairs, and for the period of time between the day of such damage and until such repairs have been substantially completedthere shall be such an abatement of rent as the nature of the injury or damage and its interference with the occupancy of the premises bythe lessee shall warrant; however, if the premises be but slightly injured and the damage so occasioned shall not cause any material inter-ference with the occupation of the premises by lessee, then there shall be no abatement of rent and the lessor shall repair the damagewith all convenient speed. WAIVER OF (15) Neither the lessor nor the lessee shall be liable to the other for loss arising out of damage to or destruction ofSUBROGATIONRIGHTS the premises, or the building or improvement of which the premises are a part or with which they are connected, orthe contents of any thereof, when such loss is caused by any of the perils which are or could be included within or in-sured against by a standard form of fire insurance with extended coverage, including sprinkler leakage insurance, if any. All such claimsfor any and all loss, however caused, hereby are waived. Such absence of liability shall exist whether or not 'the damage or destruction iscaused by the negligence of either lessor or lessee or by any of their respective agents, servants or employees. It is the intention and agree-ment of the lessor and the lessee that the rentals reserved by this lease. have been fixed in contemplation that both parties shall fullyprovide their own insurance protection at their own expense, and that both parties shall look to their respective insurance carriers forreimbursement of any such loss, and further, that the insurance carriers involved shall not be entitled to subrogation under- any circum-stances against any party to this lease. Neither the lessor nor the lessee shall have any interest or claim in the other's insurance policy orpolicies, or the proceds thereof, unless specifically covered therein as a joint assured.EMINENT (16) In case of the condemnation or purchase of all or any substantial part of the premises by any public or privateDOMAIN corporation with the power of condemnation this lease may be terminated, effective on the date possession is taken, byeither party hereto on written notice to the other and in that case the lessee shall not be liable for any rent after the termination date..Lessee shall not be entitled to and hereby expressly waives any right to any part of the condemnation award or purchase price.

. . . . .FOR SALE (17) During the period of 120 days prior to the date above fixed for the termination of this lease, the lessorI ANDFOR RENT herein may post on the premises or in the windows thereof signs of moderate size notifying the public that the premisesSIGNS are "for sale" or "for lease."DELIVERING UP (18) At the expiration of the lease term or upon any sooner termination thereof, the lessee will quit and deliver upPREMISES ONTERMINATION the premises and all future erections or additions to or upon the same, broom-clean, to the lessor or,those having lessor's

estate in the premises, peaceably, quietly, and in as good order and condition, reasonable use and wear thereof, damageby fire, unavoidable casualty and the elements alone excepted, as the same are now in or hereafter may be put in by the lessor.ADDITIONALCOVENANTSOREXCEPTIONS

(19) See addendum to lease for additional lease provisions

Paragraph 4(a) contM

Lessee Sail maintain in 0:)(7)4 condition and repair the heating, ventilating andair conditioning systgru(PV4C) and Lessee shall provide.Lessor.with redeipts.ofmaintenance .service. Lessor ligly..at.Lessor's sole option, contract with aservice.coWany for IT;a4itpgallge o the.gVAC system; in sueh event, the full.

..00st.of-this..serlilce shall he. paid by Lessee as additional .rnt;in equali thl3n installments,



ATTACHMENT PROVIDED, ALWAYS, and then presents are upon these conditions, that (I) if the lessee shall be in arrears in theBANKRUPT payment of rent for a period of feaNdbys after the same becomes due, or (2) if the lessee shall fail or neglect to performDEFAULT or observe any of the covenants and agreements contained herein on 'lessee's part to be done, kept, performed and ob-

served and such default shall continue forLiPikeys or more after written notice of such failure or neglect shall be given

to lessee, or (3) if the lessee shall be declared bankrupt or insolvent according to law, or (4) if any assignment of lessee's property shall be

made for the benefit of creditors, or (5) if on the expiration of this lease lessee fails to surrender possession of the premises, the lessor or

those having lessor's estate in the premises, may terminate this lease and, lawfully, at lessor's option immediately or at any time thereafter,

without demand or notice, enter into and upon the premises and every part thereof and reposses the same, and expel lessee and those

claiming by, through and under lessee and remove lessee's effects at lessee's expense, forcibly it necessary and store the same, all without

being deemed guilty of trespass and without prejudice to any remedy which otherwise might be used for arrears of rent or preceding

breach of covenant.Neither the termination of this lease by forfeiture nor the taking or recovery of possession of the premises shall deprive lessor of

any other action, right, or remedy against lessee for possession, rent or damages, nor shall any omission by lessor to enforce any forfeiture,

right or remedy to which lessor may be entitled be deemed a waiver by lessor of the right to enforce the performance of all terms andconditions of this lease by lessee.

In the event of any re-entry by lessor, lessor may lease or relet the premises in whole or in part to any tenant or tenants who may

be satisfactory to lessor, for any duration, and for the best rent, terms and conditions as lessor may reasonably obtain. Lessor shall apply

the rent received from any such tenant first to the cost of retaking and reletting the premises, including remodeling required to obtain any

such tenant, and then to any arrears of rent and future rent payable under this lease and any other damages to which lessor may be entitled

hereunder.Any property which lessee leaves on the premises after abandonment or expiration of the lease, or for more than ten days after any

termination of the lease by landlord, shall be deemed to have been abandoned, and lessor may remove and sell the property at public or

private sale as lessor sees fit, without being liable for any prosecution therefor or for damages by reason thereof, and the net proceeds of

any such sale shall be applied toward the expenses of landlord and rent. as aforesaid, and the balance of such amounts, if any, shall be

held for and paid to the lessee.

HOLDING In the event the lessee for any reason shall hold over after the expiration of this lease, such holding over shall not beOVER deemed to operate as a renewal or extension of this lease, but shall only create a tenancy at sufferance which maybe terminated at will at any time by the lessor.

ATTORNEY In case suit or action is instituted to enforce compliance with any of the terms, covenants or conditions of this lease,FEES AND or to collect the rental which may become due hereunder, or anCOURT COSTS

y portion thereof, the losing party agrees to pay the pre-vailing party's reasonable attorney .fees incurred throughout such proceeding, including at trial, on appeal, and for post-judgment collection. The lessee agrees to pay and discharge all lessor's costs and expenses, including lessor's reasonable

attorney's fees that shall arise from enforcing any provision or covenants of this lease even though no suit or action is instituted.

Should the lessee be or become the debtor in any bankruptcy proceeding, voluntarily, involuntarily or otherwise, either during the

period this lease is in effect or while there exists any outstanding obligation of the lessee created by this lease in favor of the lessor, the

lessee agrees to pay the lessor's reasonable attorney fees and costs which the lessor may incur as the result of lessor's participation in

such bankruptcy proceedings. It is understood and agreed by both parties that applicable federal bankruptcy law or rules of procedure

may affect, alter, reduce or nullify the attorney fee and cost awards mentioned in the preceding sentence.

WAIVER Any waiver by the lessor of any breach of any covenant herein contained to be kept and performed by the lessee shallnot be deemed or considered as .a continuing waiver, and shall not operate to bar or prevent the lessor from declaring

a forfeiture for any succeeding breach, either of the same condition or covenant or otherwise.

NOTICES Any notice required by the terms of this lease to be given by one party hereto to the other or desired so to be given,shall be sufficient if In4riting,contained in a sealed envelope, allifient first class mail, with postage fully prepaid, and

if intended for the lessor herein, then if addressed to the lessor at :....9.01.1rliarbox,..Dz.....7...#17.,...13.ctrtland..-0R._97217--....... and if intended for the lessee, then if addressed to the

lessee at 2301 Ng Vartland 9721.0. Any suchnotice shall be deemed conclusively to have been delivered tothe addressee forty-eight hours after the deposit thereof in the U.S. Mail.

HEIRS AND All rights, remedies and liabilities herein given to or imposed upon either of the parties hereto shall extend' to, inureASSIGNS to the benefit of and bind, as the circumstances may require, the heirs, successors, personal representatives and so faras this lease is assignable by the terms hereof, to the assigns of such parties.

In construing this lease; it is ._understood tharthe lessor or the lessee may be more.thamone..passon; that if the context so requires,the singular pronoun shall be taken.-to mean and include the, plural, and that generally all grammatical changes shall be made, assumedand implied to make the provisions hereof apply equally to corporations and to individuals.

IN WITNESS WHEREOF, the parties have executed this lease on the day and year first hereinabove written,

aorporation signature being by authority of its Board of Directors. N,

.2 f.4,1( 4e c.

The publisher strongly recommends that both the lessor and the lessee become familiar with the Americans with Disabilities Act of1990, Public Laws 101-336. The Act may impose certain duties and responsibilities upon either or both parties to this lease. Theseduties and responsibilities may include but not be limited to the removal of certain architectural barriers and ensuring that disabledpersons are not denied the opportunity to benefit from the same goods and services as those available to persons without disabili-ties. Under the Act, prohibition against discrimination applies to any person who is the owner, operator, lessor, or lessee of a placeof public accommodation.



ADDENDUM TO LEASEJONES GROUP ASSOCIATES

TOBESAW'S CAF INC.

THIS ADDENDUM, made and entered into concurrent with the Form No. 812 LeaseBusiness Property (the "Form Lease") between the parties is intended to supplement and,where inconsistent, modify the terms of the said form lease.

19. (continued). Payment of Rent. Rent shall be payable on the first day of eachmonth in advance at such place as may be designated by Lessor except that the sum of $3,210for the last month's rent and approximately one month's property taxes and insurance shall beprepaid on June 1, 2005.

20. Security Deposit. To secure Lessee's compliance with all terms of this Lease,Lessee has paid Lessor the additional sum of $1,000 as a deposit, receipt of which is herebyacknowledged. The deposit shall be a debt from Lessor to Lessee, refundable within 30 daysfollowing expiration of the Lease term or other termination not caused by Lessee's default.Lessor shall have the right to offset against such deposit any and all sums owing from Lesseeto Lessor and not paid when due, any damages caused by Lessee's default, the cost of curingany default by Lessee should Lessor elect to do so, and the cost of performing any repair orclean up that is Lessee's responsibility under this Lease. Lessor shall give notice to Lesseeeach time an offset is made and Lessee shall, within 10 days following such a notice, depositwith Lessor a sum equal to the amount of the offset, so that the total deposit amount, net ofoffset, shall remain constant through the Lease term. Lessor shall have no obligation to payinterest upon or maintain said deposit in a separate account, and may co-mingle same.

21. Additional Rent. All taxes and insurance costsand any other sum which lessee isrequired to pay to lessor or third parties by this lease shall be additional monthly rent. Lesseeshall pay all utilities directly to.utility companies.

21.1 Additional Rent/Taxes and Assessments. In addition to basic monthly rent setout above, lessee agrees, during each lease year at the same time as its monthly rent shall bepaid, to pay to lessor as additional monthly rent an amount equal to one-twelfth of 66% of thereal property taxes and special assessments levied against the buirding and/or the land uponwhich it is situated from the lease year, 66% being the approximate percentage of the buildingdevoted to the demised premises under this lease.

In the event a real property tax limitation measure is passed, any substitute taxes, inany name or form, which may be adopted to replace or supplement real property taxes,including but not limited to any tax on leaseholds or rents, shall be considered the equivalentof real property tax for purposes of this section. Lessee shall pay such portion of such taxes,assessments, and charges promptly when they are first due. Lessee's share of real propertytaxes and assessments for the years in which this lease respectively is consummated andthereafter terminates shall be prorated based upon the portion of the tax year for which thislease is in effect. Lessee shall pay all personal property taxes applicable to the leasedpremises and its contents, as and when they are due.

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'In addition to other taxes, Lessee shall pay any taxes, fees or charges levied againstLessor for Lessee's use, occupancy or rental of said premises imposed by any state, county,city or political subdivision.

21.2 Additional Rent/Utilities. Pursuant to paragraph 3 of the form Lease, .Lesseeshall obtain and pay for in Lessee's name, as additional rent, all necessary utilities for theleased premises, including electrical, gas, water and sewer, garbage, telephone and security,and hereby agrees to indemnify, defend and hold Lessor harmless from all claims arisingtherefrom.

21.3. Additional Rent/Fire Insurance. In addition to basic monthly rent set out above,lessee agrees, during each year at the same time its monthly rent shall be paid, to pay to lessoras additional monthly rent an amount equal to 1/12th of 66% of the lessor's annual fireinsurance premiums for the building in which the leased premises are located.

21.4. Additional Rent/Late Charge. If lessee fails to pay any rent or other paymentrequired by lessee within 10 days of when due, lessor shall have the right to impose a latecharge equal to 10% of the amount not paid; provided that this provision shall not abridge lessor's ability to declare a default for a late payment

22. Acceptance of Premises. In addition to the provisions contained in Paragraph1 of the form Lease, it is understood and agreed that Lessee, upon execution of this lease willbe deemed to have accepted the premises AS IS.. Lessor makes no representations orwarranties to Lessee concerning the condition of the Leased Premises or the applicable uses,variances or permits relating thereto.

23.1 Alterations Prohibited. In addition to the provisions of Paragraph 4 of the formLease, the restriction on alterations and improvements of the Leased Premises by the Lesseewithout the prior written consent of the Lessor shall apply, to all interior design treatmentsmade by the Lessee to the Leased Premises including, without limitation, colors and materialsfor floor, counters, window and wall coverings, including paint, which consent shall not beunreasonably withheld. Lessee may make alterations, changes, additions and improvementsin and to the Leased Premises only according to plans and specifications therefor whichconsent shall first be submitted to and approved in writing by the Lessor. No such work shallbe undertaken until the Lessee shall have submitted the plans and specifications therefor allgovernmental approvals and permits shall have been procured. All such work shall beperformed subject to and in compliance with the requirements of the law and the orders, rules,regulations and requirements of all governmental departments or authorities havingjurisdiction.

23.2 Liability Insurance. At all times when any change or alteration as approved byLessor is in progress, there shall be maintained, at the Lessee's sole expense, general liabilityinsurance for the mutual benefit of the Lessee and Lessor expressly covering the additionalhazards due to the changes or alterations.

23.3 Manner of Work. Any alterations or improvements as approved by Lessorshall be constructed, and all worked performed, in a first-class workmanlike manner, and shallnot weaken or. impair the structural strength or lessen the value of the Leased Premises.

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- -23.4 Ownership of Alterations, Improvements, and Fixtures. This paragraph

modifies and supplements the provisions of paragraph 12 of the form Lease. Except forLessee's trade fixtures, all fixtures, additions, and improvements, including built-in cabinets,counters and shelving, placed upon the Leased Premises during the Lease term, whetherinstalled by Lessor or Lessee, shall, at Lessor's sole option, be and become a part of thebuilding and shall remain affixed thereto at the expiration or termination of the Lease.However, notwithstanding the above, if Lessor so elects, Lessee shall remove any or all ofsaid alterations, improvements, and fixtures so designated by Lessor which would otherwiseremain the property of Lessor, and Lessee shall repair any physical damage resulting 'from theremoval. If Lessee fails to remove such fixtures or to repair the damage resulting therefrom,Lessor may do so and charge the cost to Lessee with interest at the rate of 10% per annumfrom the date of expenditure.

23.5 Removal of Trade Fixtures. Subject to the provision of paragraph 23.6, uponexpiration or termination of the Lease term, Lessee shall remove all Lessee's trade fixturesand repair any physical damage resulting from removal. If Lessee fails to do, so, this shall bean abandonment of the property, and Lessor shall retain the property, and all rights of Lesseewith respect to it shall cease or, by notice in writing given to Lessee within 20 days afterremoval was required, Lessor may elect to hold Lessee to his obligation of removal. If Lessorelects to require Lessee to remove, Lessor may effect the removal and place the property inpublic storage for Lessee's account. Lessee shall be liable to Lessor for the cost of removal,transportation to storage, and storage expenses from the date of expenditure by Lessor.

23.6 Reimbursement for Repairs Assumed. In addition to the provisions ofparagraphs 2 and 4 of the form Lease, if Lessee fails or refuses to make repairs which arerequired thereunder, Lessor may make the repairs which are required thereunder, and chargethe actual costs of repair to Lessee. Such expenditures by Lessor shall be reimbursed byLessee on demand, together with interest at the rate of 10% per annum from the date ofexpenditure by Lessor.

23.7 Liens. Except with respect to activities for which the Lessor is responsible, theLessee shall pay as due all claims for work done on and for services rendered or materialfurnished to the Leased Premises, and shall keep the premises free from any liens. If Lesseefails to pay any such claims or to discharge any lien, Lessor may do so and collect the cost asadditional rent. Any amount so added shall bear interest at the rate of. 10% per annum fromthe date expended by Lessor and shall be payable on demand. Such action by Lessor shall notconstitute a waiver of any right or remedy which Lessor may have on account of Lessee'sdefault from allowing or failing to remove said liens.

23.8 Indemnification of Lessor. Lessee will defend, indemnify and hold Lessorharmless from any liability, loss, or damage Lessor may suffer (including reasonable attorneyfees and expenses) as a result of all claims, demands, costs or damages made against Lessorof any kind whatsoever in connection with or arising out of (1) any violation of law,ordinance or regulation by Lessee, its agents, employees, invitees of visitors, or (2) any injuryor damage occurring to any person or to property of any kind belonging to any person fromany cause or causes whatsoever while on or in any way connected with any portion of theLeased Premises during the lease term, except any claims caused by the negligence of Lessoror Lessor's agents or employees.

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23.9 Lessee's Obligation to Repair. Repair, replacement or restoration of any tradefixtures, inventory and personal property owned by Lessee or any additions, improvements orfixtures installed to or upon the Leased Premises shall be the responsibility of Lesseeregardless of the cause of the damage, unless caused by the negligence of the Lessor, itsagents or employees.

24.1 Security Agreement/Trade Fixtures, Restaurant Equipment and Furnishings/Removal/Remedies. With the exception of Lessee's dishwasher, for valuableconsideration, lessee hereby grants to lessor an exclusive security interest in and to all oflessee's trade fixtures, restaurant equipment and furnishings, now or hereafter acquired(including but not limited to substitutions or replacements for said collateral), all accessionsthereto, and all proceeds thereof which shall be situated within or upon the leaseholdpremises, to secure the payment and performance of all lessee's obligations under this lease, aschedule of said trade fixtures, restaurant equipment, and furnishings being attached hereto asExhibit B.

24.2 Default/Acceleration/Remedies. Time is of the essence hereof. In the event ofany default by Lessee in performance of any obligation enumerated in this Lease, Lessor shallhave each and all of the rights and remedies granted to Lessor by the Uniform CommercialCode of Oregon and by this Lease and may, at Lessor's option, declare all obligationshereunder immediately due and payable without demand or notice to Lessee. All theremedies in the accompanying Lease are cumulative, can be exercised singly, jointly, or inany order, the waiver of one does not waive another, and all such remedies are in addition toany other remedies allowed by law, including any possessory landlord's lien created byOregon Revised Statutes.

24.3 Documents. Lessee shall promptly execute and deliver to lessor all otherdocuments which may be or become necessary to evidence or perfect such security interests,including, without limitation, a detailed description of all such trade fixtures and restaurantequipment and furnishings, after-acquired property, accessions thereto and proceeds thereofand any renewal thereof.

24.4 Warranty by Lessee. With respect to lessee's trade fixtures, restaurantequipment, and furnishings, lessee hereby warrants to lessor that:

I. Lessee's business is in good standing in all applicable jurisdictions;

2. The collateral is owned by lessee and is free of all liens, encumbrances andother security interests and the lessee will defend the security interest of thelessor therein against all other claims and demands; and

3. The lessee has authority and has obtained all consents necessary to incur theobligations secured and to enter into the security agreement.

24.5 Exclusive Security Interest. Lessee hereby agrees that it shall refrain fromgranting any other security interests in and to said trade fixtures, restaurant equipment, andfurnishings and shall not otherwise encumber said collateral during this lease or any extensionthereof.

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25. Removal. Notwithstanding the provisions of paragraph 23.3. above, lessee shallnot remove any trade fixtures, restaurant equipment, or furnishings, after-acquired propertyaccessions thereto or proceeds thereof from the leasehold premises without the prior writtenconsent of the lessor.

26. Signage. Notwithstanding the provisions of Paragraph 10 of the Lease, Lessee'sexterior signage shall conform to a style and size agreed upon by Lessor, wh