Jack B. Newhart - Page 3




                                        - 3 -                                         
          Chicken Bar                                                                 
               During 1991, petitioner, Marc Caplan (Mr. Caplan), a friend            
          of petitioner who lived in Lake Oswego, Oregon (Lake Oswego),4              
          and three other individuals incorporated Chicken Bar, Inc.                  
          (Chicken Bar), under the laws of the State of Oregon.  At all               
          relevant times including 1995, Chicken Bar owned and operated a             
          fast food restaurant (Chicken Bar restaurant), located in                   
          Beaverton, which is near Portland.                                          
               At all relevant times including 1995, petitioner owned 35              
          percent, Mr. Caplan owned 35 percent, and three other individuals           
          owned the remaining 30 percent of the stock of Chicken Bar.  The            
          board of directors of Chicken Bar consisted of five members, two            
          of whom were petitioner and Mr. Caplan.5                                    
               Mr. Caplan was the president, and petitioner was the                   
          secretary, of Chicken Bar.  Mr. Caplan, as president, had primary           
          responsibility for the day-to-day management and operations of              
          Chicken Bar, including the Chicken Bar restaurant.6  Petitioner,            

               4Lake Oswego is near Portland, Oregon (Portland), and                  
          Beaverton, Oregon (Beaverton).  In addition to Mr. Caplan,                  
          petitioner had two or three other friends who lived in the                  
          Portland area.                                                              
               5The bylaws of Chicken Bar provided in pertinent part that             
          “The business and affairs of the corporation shall be managed by            
          a Board of Directors who shall exercise or direct the exercise of           
          all corporate powers”.                                                      
               6The bylaws of Chicken Bar provided in pertinent part that             
          the president “shall * * * have general supervision, direction              
                                                             (continued...)           





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