1

6
IN THE CIRCUIT COURT FOR THE STATE OF OREGON
7
FOR THE COUNTY OF YAMHILL
8

9 BRETT BAKER, in his capacity as

Trustee of the George Kenneth Austin, Jr. Case No. __________________
10 Trust U/A/D 1/30/09,
COMPLAINT
11 Plaintiff,
(Declaratory Relief)
12 v.
NOT SUBJECT TO MANDATORY
13 G. KENNETH AUSTIN III, individually ARBITRATION
and in his capacity as Trustee of the
14 Joan D. Austin Share C Trust U/A/D Filing fee: $265 (ORS 21.135)
1/30/09, the G. Kenneth Austin III Trust
15 U/A/D 10/21/14, and the George Kenneth
Austin, Jr. 2014 Annuity Trust I; LONI L.
16 PARRISH, individually and in her
capacity as Trustee of the Joan D. Austin
17 Share C Trust U/A/D 1/30/09, the Loni L.
Parrish Trust U/A/D 01/02/13, and the
18 George Kenneth Austin, Jr. 2014 Annuity
Trust I; SCOTT N. PARRISH,
19 individually and in his capacity as Trustee
of the Scott N. Parrish Irrevocable Trust
20 U/A/D 07/02/12, the Loni L. Parrish 2016
Annuity Trust I, the Loni L. Parrish 2016
21 Annuity Trust II, and the Loni L. Parrish
2016 Annuity Trust III; and CELIA S.
22 AUSTIN, individually and in her capacity
as Trustee of the G. Kenneth Austin III
23 2016 Annuity Trust I, the G. Kenneth
Austin III 2016 Annuity Trust II, and the
24 G. Kenneth Austin III 2016 Annuity Trust
III,
25
Defendants.
26
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1 Plaintiff Brett Baker, in his capacity as Trustee of the George Kenneth Austin, Jr. Trust

2 U/A/D 1/30/09 (“Plaintiff”), hereby alleges as set forth in this complaint against each of the

3 following defendants:

4 G. Kenneth Austin III (“Ken III”), individually and in his capacity as Trustee of the
5 G. Kenneth Austin III Trust U/A/D 10/21/14 (“Ken III’s Trust”), and as Co-Trustee of each of
6 the Joan D. Austin Share C Trust U/A/D 1/30/09 (“Joan Austin’s Share C Trust”) and the
7 George Kenneth Austin, Jr. 2014 Annuity Trust I (“Ken Austin’s 2014 GRAT”);
8
Loni L. Parrish (“Loni”), individually and in her capacity as Trustee of the Loni
9
L. Parrish Trust U/A/D 01/02/13 (“Loni’s Trust”), and as Co-Trustee of each of Joan Austin’s
10
Share C Trust and Ken Austin’s 2014 GRAT;
11
Scott N. Parrish (“Scott”), individually and in his capacity as Trustee of each of the
12
Scott N. Parrish Irrevocable Trust U/A/D 07/02/12 (“Scott’s Trust”), the Loni L. Parrish 2016
13
Annuity Trust I (“Loni’s GRAT I”), the Loni L. Parrish 2016 Annuity Trust II (“Loni’s GRAT
14
II”), and the Loni L. Parrish 2016 Annuity Trust III (“Loni’s GRAT III” and collectively with
15
Loni’s GRAT I and Loni’s GRAT II, “Loni’s GRATs”); and
16
Celia S. Austin (“Celia”), individually and in her capacity as Trustee of each of the
17
G. Kenneth Austin III 2016 Annuity Trust I (“Ken III’s GRAT I”), the G. Kenneth Austin III
18
2016 Annuity Trust II (“Ken III’s GRAT II”) and the G. Kenneth Austin III 2016 Annuity
19
Trust III (“Ken III’s GRAT III” and collectively with Ken III’s GRAT I and Ken III’s
20
GRAT II, “Ken III’s GRATs”).
21

22 Ken III, Loni, Scott, and Celia are in their personal and other indicated capacities referred

23 to herein collectively as the “Defendants” and individually as a “Defendant.”

24 //

25 //
26
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1 PARTIES, JURISDICTION AND VENUE

2 1.

3 Plaintiff is a resident of Oregon. At all times material, Plaintiff was, and was acting

4 within the scope of his authority as, Trustee of the George Kenneth Austin, Jr. Trust U/A/D

5 1/30/09 (“Ken Austin’s Trust”), executed and certified within Yamhill County, Oregon, and as

6 the Personal Representative of the Estate of George Kenneth Austin, Jr. (“Ken Austin’s

7 Estate”), Yamhill County Case No. 19PB03986. Plaintiff is also the Manager and President of

8 Austin Industries LLC, the family office operated for the benefit of family members of George

9 Kenneth Austin, Jr. (“Ken Austin”). Austin Industries LLC is involved under the supervision of

10 Plaintiff in the administration of Ken Austin’s Trust and Ken Austin’s Estate. Plaintiff brings

11 this action to implement the testamentary intent of Ken Austin, and to ensure that A-dec, Inc.

12 continues to be controlled consistent with the wishes of Ken Austin.

13 2.

14 Upon information and belief, Defendant Ken III is a resident of Oregon. At all times

15 material, Ken III was acting individually and within the scope of his authority as Trustee of

16 Ken III’s Trust and as Co-Trustee of each of Joan Austin’s Share C Trust and Ken Austin’s 2014

17 GRAT, each of which was executed and certified in Yamhill County, Oregon.

18 3.

19 Upon information and belief, Defendant Loni is a resident of Oregon. At all times

20 material, Loni was acting individually and within the scope of her authority as Trustee of Loni’s

21 Trust, and as Co-Trustee of each of Joan Austin’s Share C Trust and Ken Austin’s 2014 GRAT,

22 each of which was executed and certified in Yamhill County, Oregon.

23 4.

24 Upon information and belief, Defendant Scott is a resident of Oregon. At all times

25 material, Scott Parrish was acting individually and within the scope of his authority as Trustee of

26
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1 Scott’s Trust and each of Loni’s GRATs, each of which was executed and certified in Yamhill

2 County, Oregon.

3 5.

4 Upon information and belief, Defendant Celia is a resident of Oregon. At all times

5 material, Celia was acting individually and within the scope of her authority as Trustee of each

6 of Ken III’s GRATs, each of which was executed and certified in Yamhill County, Oregon.

7 6.

8 This Court has subject matter jurisdiction by virtue of its general jurisdiction and its

9 jurisdiction over the parties. Furthermore, this Court has subject matter jurisdiction pursuant to

10 ORS 28.010. Venue is proper in this action because it arises from acts and omissions occurring

11 in Yamhill County, Oregon, and this action relates generally to a domestic corporation with its

12 principal place of business in Yamhill County. In addition, all Defendants in this action reside in

13 Yamhill County.

14 FACTUAL BACKGROUND

15 7.

16 A-dec, Inc., also known as the Austin Dental Equipment Company (“A-dec” or the

17 “Company”), is a dental office furniture and equipment manufacturer based in Newberg, Oregon.

18 It is one of the largest dental equipment manufacturers in the world, with approximately 1,300

19 employees at its Newberg, Oregon headquarters.

20 8.

21 A-dec was founded in 1964 by Ken Austin and his wife Joan D. Austin (“Joan Austin”)

22 (collectively, the “Founders”). A-dec was incorporated in Oregon in 1966 with the Founders as

23 the only shareholders of the Company.

24 9.

25 Ken Austin and Joan Austin are the parents of Ken III and Loni. In 2005, Ken III and

26 Loni each received one share in A-dec from each of the Founders, and the Founders, Ken III
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1 and Loni executed a Voting and Shareholders Agreement, dated August 18, 2005 (“Voting and

2 Shareholders Agreement”). From 2005 through 2009, the Company’s 950 outstanding shares

3 of common stock were owned as follows:

4
Shareholder Number of Shares
5
Ken Austin 473
6
Joan Austin 473
7
Ken III 2
8
Loni 2
9
Total 950
10
10.
11
On January 30, 2009, Ken Austin established Ken Austin’s Trust, for which he served as
12
the original Trustee. On April 15, 2009, Ken Austin transferred his 473 shares of common stock
13
of A-dec to Ken Austin’s Trust.
14
11.
15
On January 30, 2009, Joan Austin established the Joan D. Austin Trust U/A/D 1/30/09
16
(“Joan Austin’s Trust”), for which she served as the original Trustee. On April 15, 2009, Joan
17
Austin transferred her 473 shares of common stock of A-dec to Joan Austin’s Trust.
18
12.
19
On December 13, 2010, the Board of Directors and shareholders of the Company
20
approved a plan of recapitalization that provided for two classes of common stock. Under the
21
plan, the Company’s authorized capital stock was increased from 2,000 shares of common stock
22
to 20,000 shares of Class A Voting Common Stock and 200,000 shares of Class B Nonvoting
23
Common Stock. In exchange for each share of previously outstanding common stock, each
24
existing shareholder received 10 shares of Class A Voting Common Stock and 100 shares of
25
Class B Nonvoting Common Stock. The Company’s Articles of Incorporation were duly
26
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1 amended to reflect the new dual-class capital structure. Article III of the Articles of

2 Incorporation, as so amended, provides, inter alia, that: “The Class B Nonvoting Common Stock

3 shall not be entitled to vote on any matter or to receive any notice of meetings of shareholders,

4 except as otherwise required by law. Except for these limitations of the rights of the Class B

5 Nonvoting Common Stock, the Class A Voting Common Stock and Class B Nonvoting Common

6 Stock are identical.” As a result of the Recapitalization, the Company had 104,500 outstanding

7 shares of the common stock (9,500 shares of Class A Voting Common Stock and 95,000 shares

8 of Class B Nonvoting Common Stock) that were held as follows:

10
Shareholder Number of Shares
11 Class A Voting Class B Nonvoting
Common Stock Common Stock
12
Ken Austin’s Trust 4,730 47,300
13
Joan Austin’s Trust 4,730 47,300
14
Ken III 20 200
15
Loni 20 200
16
Total 9,500 95,000
17

18 13.
19 In 2010 and 2012 Ken Austin and Joan Austin each established grantor retained annuity
20 trusts (“GRATs”) whose remainder beneficiaries were Ken III and Loni and transferred some of
21 their shares of the Company’s Class B Nonvoting Common Stock to these GRATs. In 2012
22 Ken Austin and Joan Austin also made outrights gifts of Class B Nonvoting Common Stock to
23 Ken III and Loni and a gift of Class B Nonvoting Common Stock to Scott in trust through the
24 establishment of Scott’s Trust.
25 //
26
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1 14.

2 On June 5, 2013, Joan Austin passed away at her Newberg home at the age of 81, and

3 Ken Austin succeeded her as Trustee of Joan Austin’s Trust. Under Joan Austin’s estate plan set

4 forth in Joan Austin’s Trust, the bulk of Joan Austin’s estate was directed to Joan Austin’s

5 Share C Trust, a new trust provided for in Joan Austin’s Trust that was initially funded in 2014.

6 Ken Austin was the original Trustee of Joan Austin’s Share C Trust and its beneficiary during his

7 lifetime.

8 15.

9 After Joan Austin’s death, there were a number of transfers of shares of Class A Voting

10 Common Stock and Class B Nonvoting Common Stock into and between various trusts. These

11 included transfers by or to Joan Austin’s Trust, Joan Austin’s Share C Trust, Ken Austin’s Trust

12 and GRATs established by Ken Austin and Joan Austin (including GRATs established by Ken

13 Austin in 2013 and 2014 following Joan Austin’s death), and transfers by Ken III and Loni of all

14 of their shares to Ken III’s Trust and Loni’s Trust, respectively. For the GRATs established by

15 Ken Austin and Joan Austin in 2010 and 2012, each named the other as the initial Trustee of

16 such GRATs, with Ken III and Loni named as successor Co-trustees. For the GRATs

17 established by Ken Austin in 2013 and 2014 after Joan Austin’s death, Ken III and Loni were

18 named by Ken Austin as the initial Co-Trustees.

19 16.

20 Also after Joan Austin’s death, GRATs established by either Ken Austin or Joan Austin

21 began terminating and distributing to Ken III and Loni, as the remaindermen, shares of Class B

22 Nonvoting Common Stock. Shares distributed to Ken III and Loni as remaindermen of these

23 GRATs were transferred into Ken III’s Trust and Loni’s Trust, respectively. In 2016, Ken III

24 and Loni each transferred shares of Class B Nonvoting Common Stock held in their trusts to

25 GRATs established by them whose Trustees were their respective spouses, Celia and Scott, and

26
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1 whose remaindermen were their respective children (i.e., the grandchildren of Ken Austin and

2 Joan Austin).

3 17.

4 Ken Austin, as the Founder Shareholder, terminated the Voting and Shareholders

5 Agreement on May 1, 2018 by Amendment No. 3 to the Voting and Shareholders Agreement.

6 18.

7 On May 1, 2019, Ken Austin passed away at the age of 87. Immediately prior to his

8 death, Ken Austin was the Trustee of both Ken Austin’s Trust and Joan Austin’s Share C Trust

9 that between them held over 99% of the outstanding Class A Voting Common Stock. Under the

10 terms of Ken Austin’s Trust, Ken Austin’s death caused Plaintiff to succeed Ken Austin as

11 Trustee of Ken Austin’s Trust, and, under the terms of Joan Austin’s Share C Trust, Ken

12 Austin’s death caused Ken III and Loni, as Co-Trustees, to succeed Ken Austin as Trustee of

13 Joan Austin’s Share C Trust.

14 19.

15 Immediately following Ken Austin’s death on May 1, 2019, the outstanding shares of the

16 Company’s Class A Voting Common Stock and Class B Nonvoting Common Stock were held as

17 follows:

18
//
19

20 //

21
//
22

23 //

24
//
25

26 //
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1 Class A Class B
Shareholder Voting Nonvoting Total Shares
2 Shares Shares
Ken III and Loni, Co-Trustees of
3 Joan Austin’s Share C Trust 4,615 7,901 12,516
4
Brett Baker, Trustee of Ken Austin’s Trust 4,845 19,101 23,946
Ken III, Trustee of Ken III’s Trust 20 11,142.5 11,162.5
5
Loni, Trustee of Loni’s Trust 20 10,270.5 10,290.5
6 Scott, Trustee of Scott’s Trust 872 872
Ken III and Loni, Co-Trustees of
7 Ken Austin’s 2014 GRAT 3,913 3,913
8
Celia, Trustee of Ken III’s GRAT I 6,006 6,006
Celia, Trustee of Ken III’s GRAT II 7,262 7,262
9
Celia, Trustee of Ken III’s GRAT III 7,632 7,632
10 Scott, Trustee of Loni’s GRAT I 6,006 6,006
Scott, Trustee of Loni’s GRAT II 7,262 7,262
11
Scott, Trustee of Loni’s GRAT III 7,632 7,632
12 Totals 9,500 95,000 104,500
13
20.
14
As Trustee of Ken Austin’s Trust, Plaintiff holds the majority of the Class A Voting
15
Common Stock of the Company, and, thus, a majority of all voting rights of all outstanding
16
shares of the Company. Holders of Class B Nonvoting Common Stock have never voted shares
17
in the context of any corporate action, nor have such holders ever been entitled to vote such
18
shares under the terms of the Articles of Incorporation or otherwise, consistent with applicable
19
law.
20
21.
21
A regular meeting of the Board of Directors of A-dec was scheduled for August 29, 2019.
22
At that meeting, Defendants asserted, for the first time, that a “Change of Control” of A-dec had
23
occurred upon Ken Austin’s death under the terms of the previously terminated Voting and
24
Shareholders Agreement. Defendants also contended for the first time that they were entitled to
25
elect the Board of Directors, and to otherwise exercise control of A-dec.
26
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1 22.

2 Plaintiff (who was elected a director of A-dec in October 2016) was present along with

3 directors Ken III, Loni, Scott, and two outside directors (Steven D. Pratt and Megan F. Clubb) at

4 the August 29, 2019 Board meeting. Plaintiff objected at the Board meeting to the assertion that

5 a Change of Control had occurred.

6 23.

7 On September 13, 2019, Plaintiff delivered to the corporate secretary a Request for

8 Special Meeting for the purpose of considering and voting on various outstanding corporate

9 matters, including the election of two new directors, the amendment of A-dec’s bylaws, and on

10 the removal of Scott Parrish and Megan F. Clubb as directors of the Company, to be scheduled

11 for 10:00 a.m. on September 25, 2019. Almost immediately after receiving Plaintiff’s notice,

12 Ken III sent the Company a Request for Special Meeting to be scheduled for 10:00 a.m. on the

13 same day. The purpose of the Ken III requested special shareholder meeting was to consider and

14 vote on the removal of Plaintiff as a director of the Company.

15 24.

16 Upon information and belief, Defendants contend that a “Change of Control” occurred

17 upon the death of Ken Austin on the theory that all outstanding shares of the capital stock of the

18 Company are now owned by multiple trusts for the benefit of Ken III, Loni, and their lineal

19 descendants. Defendants appear to believe that they therefore have the ability to exercise control

20 over A-dec, including to add or remove directors, amend the Company’s bylaws, and set the

21 strategy for the Company.

22 25.

23 Alternatively, upon information and belief, Defendants contend that a “Change of

24 Control” occurred on or about March 31, 2017 when they assert the Ken Shareholders and Loni

25 Shareholders collectively held over 50% of all outstanding capital stock of the Company due to

26 various transfers to them of Class B Nonvoting Common Stock.

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1 26.

2 The Company’s Amended and Restated Bylaws adopted on January 30, 2014 (“Bylaws”)

3 define the term “Change of Control” by reference to the Voting and Shareholders Agreement.

4 Under that agreement, a “Change in Control” was defined as “such time, if any, that the Ken

5 Shareholders and the Loni Shareholders collectively own Shares entitling them to exercise more

6 than 50% of voting rights of all outstanding Shares and the Ken Shareholders and the Loni

7 Shareholders, acting collectively, are therefore able to elect the Board.”

8 27.

9 The terms “Ken Shareholders” and “Loni Shareholders” were, in turn, defined by the

10 Voting and Shareholders Agreement as any of the following owning Shares in the Company:

11 First, a “Ken Shareholder” is defined as: (a) Ken III (b) his lineal descendants; and (c) a trust

12 for the benefit of Ken III and/or his lineal descendants, with the G-1 Trusts and certain GRATs

13 expressly excluded. Similarly, a “Loni Shareholder” is defined as: (a) Loni (b) her lineal

14 descendants; and (c) a trust for the benefit of Loni and/or her lineal descendants, with the

15 G-1 Trusts and certain GRATs expressly excluded. For purposes of both definitions, the term

16 “G-1 Trusts” was defined to mean Ken Austin’s Trust and Joan Austin’s Share C Trust, and any

17 other trusts that may succeed either of these trusts and be for the benefit of Ken Austin or for the

18 administration of his estate.

19 28.

20 No “Change of Control” has occurred because the Ken Shareholders and Loni

21 Shareholders do not possess and have never possessed more than 50% of the voting rights of all

22 outstanding shares of the Company. In addition, the Voting and Shareholders Agreement was

23 terminated on May 1, 2018 by Amendment No. 3 to the Voting and Shareholders Agreement.

24 Amendment No. 3 specifically provided that “[n]o Change of Control has occurred as of the date

25 of this Amendment [May 1, 2018].” Furthermore, Defendants’ interpretation of the defined term

26 “Change of Control” is incorrect because Defendants improperly ignore and give no effect to the
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1 phrase “voting rights” in the definition of “Change of Control.” Also, the term “Shares” as

2 defined in the Voting and Shareholders Agreement is not tied to the capital structure existing at

3 the time the Voting and Shareholders Agreement was entered into in 2005. To the contrary, the

4 definition of “Shares” in the Voting and Shareholders Agreement explicitly provided this term

5 shall mean “the shares of capital stock of the Company outstanding at the time the matter has

6 relevance[.]” (emphasis added). The shares of capital stock of the Company outstanding at all

7 times material to this action included a dual-class stock structure with Class A Voting Common

8 Stock having voting rights and Class B Nonvoting Common Stock not entitled to vote.

9 29.

10 On September 25, 2019, the special meeting of A-dec’s shareholders was held. At that

11 meeting, A-dec’s general counsel (serving as corporate secretary) announced that, following a

12 vote, the proposals introduced by Plaintiff had failed to gain the votes necessary to approve the

13 proposal, despite the fact that Plaintiff voted more than 50% of the Class A Voting Common

14 Stock in favor of Plaintiff’s resolutions. The general counsel further announced that Defendants’

15 proposals passed, and that accordingly Plaintiff had been removed from A-dec’s Board of

16 Directors, despite the fact that Plaintiff voted more than 50% of the Class A Voting Common

17 Stock against Defendants’ resolutions. During the meeting Plaintiff objected to the voting of

18 Class B Common Stock and to the voting results announced by the corporate secretary, stating

19 that because Plaintiff held voting control of the Class A Voting Common Stock, Plaintiff’s

20 proposals had passed and Defendants’ proposals had failed. Immediately following the

21 Shareholder meeting, Defendants improperly caused a statement to be circulated to A-dec

22 employees announcing the termination of Plaintiff from A-dec’s Board of Directors and

23 announcing the election of William Stoller to A-dec’s Board of Directors.

24 30.

25 On September 25, 2019, Plaintiff circulated a Notice of Special Meeting of Board of

26 Directors to those directors that have been properly elected by the holders of more than 50% of
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1 the Class A Voting Common Stock. Defendants’ counsel immediately responded to that Notice

2 by objecting to Plaintiff’s Special Notice and stating that Plaintiff is not a Board member, and

3 that duly elected members of the A-dec Board (Mr. Ronald Greenman and Katherine J. Durant)

4 are also not Board members. Accordingly, as of September 25, 2019 there are two purported

5 Boards of Directors for A-dec: one that has properly been elected by the holders of more than

6 50% of the Class A Voting Common Stock, and one that has been improperly formed by

7 Defendants. At present, the management team of A-dec is conflicted and is currently reporting

8 to Defendants’ improperly constructed Board of Directors as if it were the legitimate Board of

9 Directors. The lack of clarity about the “true” Board of Directors poses a legitimate risk to the

10 welfare of A-dec and its operations.

11 FIRST CLAIM FOR RELIEF

12 (Declaratory Relief)

13 31.

14 Plaintiff incorporates by reference all of the allegations set forth above.

15 32.

16 A justiciable controversy exists between the parties with respect to control of the

17 Company by Plaintiff as Trustee of Ken Austin’s Trust in light of Defendants’ position a Change

18 of Control has occurred with respect to the Company and subsequent actions. Under the

19 circumstances, the Court should construe the relevant documents and applicable law and declare

20 the rights, status and legal relations of the parties thereunder.

21 33.

22 Specifically, the Court should declare that: (a) no Change in Control has occurred; (b) the

23 holders of Class B Nonvoting Common Stock have no right to vote on corporate action; (c) the

24 Ken Shareholders and Loni Shareholders do not control and have never controlled more than

25 50% of the voting rights of all outstanding shares of the Company; (d) the Voting and

26 Shareholders Agreement, and all references thereto in the Bylaws, are null and void with no
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1 force and effect; and (e) that the votes cast by Plaintiff at the September 25, 2019 Shareholder

2 Meeting constituted a majority of votes of those shareholders entitled to vote on A-dec corporate

3 action, and that, accordingly, all actions taken by Plaintiff at the September 25, 2019 Shareholder

4 Meeting are valid and enforceable.

5 34.

6 Plaintiff reserves the right to amend and restate this Complaint to state additional factual

7 allegations and claims as appropriate.

8 PRAYER FOR RELIEF

9 WHEREFORE, Plaintiff demands judgment as follows:

10 1. On the First Claim for Relief, for a declaration of the Court as set forth above;

11 2. For permanent injunctive relief that prohibits Defendants from acting in any

12 manner that is contrary to the First Claim for Relief;

13 3. For all reasonable costs, disbursements and attorney fees incurred herein by

14 Plaintiff, as provided and allowed by ORS 28.100; ORS 20.105; and ORCP 68; and

15 4. For such other relief as the Court may deem reasonable, appropriate or equitable.

16
DATED: September 26, 2019 PERKINS COIE LLP
17

18 By: s/ Thomas R. Johnson

Thomas R. Johnson, OSB No. 010645
19 TRJohnson@perkinscoie.com
Edward Choi, OSB No. 135673
20 EChoi@perkinscoie.com
Kevin R. Schock, OSB No. 181889
21 KSchock@perkinscoie.com
22 1120 N.W. Couch Street, Tenth Floor
Portland, OR 97209-4128
23 Telephone: 503.727.2000
Facsimile: 503.727.2222
24
Attorneys for Plaintiff Brett Baker
25

26
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