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Brett Baker and the heirs to the dental manufacturing company signal they are working toward a settlement

GRAPHIC FILE PHOTO - A-dec is Newberg's largest employer with more than 1,000 employees locally.

The parties in a battle for control of the board directing the future of Newberg's largest employer have reached a tentative agreement to settle their differences out of court.

Last fall, Brett Baker, trustee of A-dec Inc. founder Ken Austin Jr.'s trust and the contested chairman of the board of directors, sought an injunction in Yamhill County Circuit Court that would not only keep the opposition from removing him from the board and deny his voting rights, but also from taking the company in a different direction from a business standpoint.

The opposition -- primarily Austin's heirs Loni Austin Parrish, A-dec President Scott Parrish, Ken Austin III and Celia Austin – had filed a motion to dismiss the injunction, as well as demanding that Baker name the company itself in seeking the injunction, arguing that the company deserved the right to defend itself against Baker's claims.

Judge Ladd Wiles agreed with the family and ordered that A-dec be named in the plea for injunction, but he had yet to reconvene court to determine the validity of Baker's claims when the parties released a joint statement that could potentially put the issue to rest.

"The parties to the current litigation in Yamhill County Circuit Court have agreed to settle the issues pending before that court and are working to formalize the details of a comprehensive agreement," the statement from Baker, A-dec and the Parrish family said. "The parties to the litigation may provide additional information regarding the settlement at a later date, but have no further comment at this time."

The statement was released in late February and neither side has elaborated on the settlement since.

At issue is control of one of the world's largest dental manufacturing companies, one that employs more than 1,000 people locally, 1,300 worldwide and had gross sales topping $375 million in 2018.

The struggle between the two parties escalated in September, a few months after the death of Ken Austin Jr., co-founder of the company with his late wife, Joan, in the 1960s. Baker had attempted to name two new directors and dismiss two others, including Scott Parrish. The heirs argued that since Austin's death there had been a "change of control" of the company, including a redistribution of voting shares, that forbade Baker from holding sway over the composition or direction of the board.

Baker responded by seeking relief in the courts, arguing that Ken Austin Jr. had named him trustee of both his and his wife's trusts and with that designation control of what is called the "Class A Voting Common Stock" that allows him to lead the board.

Both parties' counsels appeared before Judge Ladd Wiles on Nov. 22 to address, primarily, Baker's claim for injunctive relief.

"For several years prior to his death, Ken Austin considered how the company should be governed after his death and who he wanted to hold the majority voting interest that he held in his own trust," said Thomas Johnson, an attorney for the law firm of Perkins Coie, representing Baker. "Although he loved his two children and he had been very generous to them throughout his lifetime, ultimately he decided to give a trusted colleague, Brett Baker, the authority and the responsibility to vote his majority interest."

Johnson explained that his contention is that Baker remains a director and Scott Parrish has been removed from the board as of Sept. 25. He adds that Ken Austin Jr. was deliberate in his actions following his wife's death, buying 115 shares from her trust to ensure that he retain the 51 percent of voting stock necessary to control the company. He further argued that the company's articles of incorporation clearly say that owners of Class B non-voting stock, which the heirs hold the majority of, are not allowed to vote on company matters.

Matt Donohue, an attorney for the Portland law firm of Holland & Knight and counsel for the heirs, characterized the struggle between the plaintiffs and the defendants in simpler terms.

"A-dec is a family …," he said during the hearing. "The ultimate trial on the merits in this litigation brought by Brett Baker is whether A-dec will remain in family control as its founders and the A-dec bylaws intended or not. Now, we don't know why in the last 18 months of his life, Ken Jr. apparently made changes to some of his trust documents or, more importantly, why Brett Baker never told the family or the company about those changes."

Were the case to progress to a trial, Donohue said, the defense would reveal the background of how the case came to this point.

Donohue insisted that the changes to Austin's trust do not affect the governance of the company and that Loni Parrish and Ken Austin III have now been granted control and voting rights, allowing only them to elect or terminate members of the board and amend the company's bylaws.

"But here today," Dononhue said, "the stakes for the motion for preliminary injunction are equally high because granting the motion today would provide Brett Baker unchecked power that he does not have ... If the court were to grant the motion for a preliminary injunction, Brett Baker will change the bylaws. The entire board of A-dec will be reconstituted. A-dec management will leave. A-dec will lose its identity and its business will be immensely damaged."

Ultimately, the question of who will call the shots on the company's board of directors would have come down to a change of control document formulated years ago and not clarified before the elder Austin's demise.

"Ultimately, if there's no change of control, then Mr. Baker's position is correct," Wiles said.

Donohue argued that if the court determined there was no change of control, that only the original Class A voting shares matter, "then you have to go back and examine the world that existed at the time of Joan's death. Because a change of control would have occurred, in our view, at the time of her death."

Business briefs

Air and space museums closed due to virus outbreak

McMINNVILLE – Evergreen Aviation and Space Museum officials announce March 18 that the facility would be closed until further notice due to health concerns brought about by spread of the COVID-19 virus.

"In the interest of public health and safety, we are suspending normal museum operations," John Rasmussen, executive director, said last week. "We are complying with the governor's request to help limit exposure to the COVID-19 virus, especially among the most vulnerable in our community and beyond."

Rasmussen said the organization will monitor developments related to the virus and made future decisions based on recommendations from public health agencies ranging from the U.S. Centers for Disease Control to Oregon Health Authority and the Yamhill County Public Health Department.

For more information and updates, visit www.evergreenmuseum.org/covid19-updates.


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