exhibit c - judiciary of new york
TRANSCRIPT
EXHIBIT C
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
NYSCEF DOC. NO. 858 RECEIVED NYSCEF: 02/08/2017
!FILED: NEW YORK COUNTY CLERK 10/08/2015 07:01 P~ NYSCEF DOC. NO. 402
,..------..:48l533v.l Defense
Exhibit
DTE691C
EXHIBIT A
DTE691C
INDEX NO. 650908/2014
RECEIVED NYSCBF: 10/08/2015
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
NYSCEF DOC. NO. 858 RECEIVED NYSCEF: 02/08/2017
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK
------····--·-·--···--·-··-····-·-----------,
SYBRON CANADA HOLDINGS, INC., Implant Direct Sybron Jntemational, LLC Implant Direct Sybron Manufacturing,LLC Implant Direct Sybron Administration, LLC,
Plaintiffs,
V.
GERALD A. NIZNICK, Implant Direct Int'l, Inc., Implant Direct Mfg., LLC, Mikana Manufactming Company, Inc.,
Defendants.
IMPLANT DIRECT INT'L, INC., Implant Direct Mfg., LLC, Mikana Manufacturing Company, Inc.,
v.
Defendants and Counterclaim Plaintiffs,
SYBRON CANADA HOLDINGS, INC., Implant Direct Sybron Intemational, LLC Implant Direct Sybron Manufacturing, LLC Implant Direct Sybron Administration, LLC,
Plaintiffs and Counterclaim Defendants.
IMPLANT DIRECT lNT'L, JNC., Implant Direct Mfg., LLC, Mikana Manufacturing Company, £nc.
Third Party Plaintiffs,
V.
DANAHER CORPORATION,
Third Defendant.
Index. No. 650908/2014
l1'IRST AMENDED ANSWER OF DEFENDANT GERALD A. NIZNICK
AND
SECOND AMENDED ANSWER WITH FIRST AMENDED COUNTERCLAIMS, SUPPLEMENTAL COUNTERCLAIMS AND THIRD PARTY COMPLAINT OF DEFENDANTS/COUNTERCLAIM PLAINTIFFS/THIRD PARTY PLAINTIFFS IMPLANT DIRECT lNTtL, INC., IMPLANT DIRECT MFG., LLC AND MIKANA MANUFACTURING COMPANY, INC.
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Defendants/Counterclaim Plaintiffsffhird Party Plaintiffs Implant Direct Int'l ("IDI"),
Implant Direct Mfg., LLC ("IDM"), and Mikana Manufach1ring Company, Inc. ("IDA'')
(collectively the "Minority Members") and Defendant Gerald A. Niznick ("Dr. Niznick") (IDI,
IDM, IDA, and Dr. Niznick collectively "Defendants"), by their undersigned counsel, respond to
the First Amended Complaint filed by Plaintiffs and Counterclaim Defendants Implant Direct
Sybron International LLC ("IDSI"), Implant Direct Sybron Manufacturing LLC (''IDSM"),
Implant Direct Sybron Administration LLC ("IDSA") (collectively the "Joint Venture
Companies" or the "JVCs"), and Sybron Canada Holdings, Iric. ("Danaher Sybron") with the
following First Amended Answer of Defendant Gerald A. Niznick and Second Amended Answer
with First Amended Counterclaims, Supplemental Counterclaims and Third Party Complaint
against Danaher Corporation ("Danaher Corporation") of Defendants IDI, IDM and IDA:
ANSWER
1. Deny the allegations of in paragraph 1 of the First Amended Complaint, except
admit that, as of November 2010, IDM manufactured dental implants and related products, IDI
sold those products, and IDA provided, among other things, administrative support to IDM and
lDI.
2. Admit the allegations ofparugraph 2 of the First Amended Complaint.
3. Deny the allegations of paragraph 3 of the First Amended Complaint, except
admit so much thereof which alleges that there arc Operating Agreements and respectfully refer
the Comi to those agreements for lhe terms thereof.
4. · Deny the allegations of paragraph 4 of the First Amended Complaint, except
admit so much thereof which alleges that the Operating Agreements contain terms relating to,
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among other thi11gs, "Call Options," and respectfully refer the Comito those agreements for the
tem1s thereof.
5. Deny the allegations of paragraph 5 of the First Amended Complaint, except
admit that Danaher Corporation's dental platfonn at the time of the acquisition had a global
product distribution network but lacked a meaningful presence in the dental implant industry,
that companies in that dental platfonn helped or offered to help the JVCs with product
registrations in China, Japan, and Russia, and that IDSI entered into a Distribution Agreement
with Sybron Jmplnnt Solutions, a division of Onnco Corporation, on or· about December 30,
2010, to which agreemenUhe Couti is respectfully refened tbr the tetms thereof.
6. Deny the allegations of paragraph 6 of the First Amended Complaint, except
admit that Dr. Niznick had and has substantial technical expertise in and knowledge apout the
dental implant industry, that he was president of the JVCs from January 1, 2011 through
November 30,2013, and that he served as a member ofthe JVCs' Board of Managers.
7. Deny the allegations ofparagraph 7 ofthe First Amended Complaint
8. Deny the allegations of paragraph 8 of the First Amended Complaint, except
admit that the Board initiated an investigation through an outside counsel investigator into a
purported complaint about Dr. Niznick's relationship with a female employee, and that Dr.
Niznick voted against conducting the investigation and Danaher Sybron's Board managers voted
to proceed with it.
9. Deny the allegations of paragraph 9 of the First Amended Complaint, except
admit that Tom Stratton succeeded Dr. Niznick as president of the JVCs, and that Dr. Niznick
had lunch with five director-level employees of the JVCs shortly after Stratton succeeded him.
10. Deny the allegations of paragraph 10 of the First Amended Complaint.
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11. Deny the allegations of paragraph ll of the First Amended Complaint, except
admit that Dr. Niznick stated in substance at an August 2013 Board meeting that Konheim would
not continue working for the JVCs if Dr. Niznick ceased to be employed there.
12. Deny the allegations of paragraph 12 of the First Amended Complaint, except
admit that as of the date of the First Amended Complaint the JVCs occupied a building in
Valencia, Califomia and a building in Calabasas, California, and that Dr. Niznick, inhis capacity
as trustee of certain family trusts, gave notice, through counsel, of rescission of the lease
extensions granted in October 2013.
13. Deny the allegations of paragraph 13 of the First Amended Complaint.
14. Deny the allegations of paragraph 14 of the First Amended Complaint.
15. Deny the allegations of paragraph 15 of the First Amended Complaint, except
admit that after Ms. Coletti stated in substance at the November 26,2013 Board meeting that the
investigation had concluded and the claims had not been validated, Dr. Niznick made a comment
in jest about the matter.
16. State that the allegations of paragraph 1 G of the First Amended Complaint state
legal conclusions and describe the relief sought, to which no response is required, and its
allegations are therefor denied.
17. State that the allegations of paragraph 17 of the First Amended Complaint state a
legal conclusion and describe the relief sought, to which no response is required, and its
allegations are theret(n· denied.
18. State that the allegations of paragraph 18 of the First Amended Complaint
describe the relief sought, to which no response is required.
19. Deny the a1legations of paragraph 19 of the First Amended Complaint.
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20. Deny knowledge and infom1ation sufficient to form a belief as to the truth .of the
allegations set forth in paragraph 20 of the First Amended Complaint, except admit, upon
infonnation and belief, that Danaher Sybron is a Delaware corporation.
21. Admit the allegations of paragraph 21 of the First Amended Complaint.
22. Admit the allegations of paragraph 22 of the Fh"st Amended Complaint.
23. Admit the allegations of paragraph 23 of the First Amended Complaint
24. Admit the allegations of paragraph 24 of the First Amended Complaint.
25. Deny the allegations of paragraph 25 of the First Amended Complaint, except
admit that IDI is a Nevada corporation, with its principal place of business in Nevada, that Dr.
Niznick is the settlor and trustee of the Niznick 2004 Grandchildren's Tmst and the Gerald A.
Niznick Family Trust u/d/t November 2, 2001 (collectively the "Niznick Family Trusts"), and
that the Niznick Family Trusts own all ofiDI's issued and outstanding shares.
26. Deny the allegations of paragraph 26 of the First Amended Complaint, except
admit that IDA is a California corporation, with its principal place of business in Califomia.
27. Deny the allegations of paragraph 27 of the First Amended Complaint; except
admit that IDM is a Nevada limited liability company and that the Niznick Family Tntsts own all
ofiDM's issued and outstanding shares.
28. Deny the allegations of paragraph 28 of the First Amended Complaint, except to
the extent they set forth legal conclusions to which no response is required and the allegations of
which are therefor denied.
29. Deny the allegations of paragraph 29 of the First Amended Complaint.
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30. Deny the allegations of paragraph 30 of the First Amended Complaint, except
admit that IDI, IDM and IDA own 25% membership interests in IDSI, IDSM and IDSA,
respectively.
31. Defendants deny the allegations of paragraph 31 of the First Amended Complaint,
except admit that the Calabasas and Valencia buildings are owned by the Niznick Family Trusts.
32. Defendants deny the allegations of paragraph 32 of the First Amended Complaint.
33. State that the allegations of paragraph 33 of the First Amended Complaint set
forth legal conclusions, to which no response is required, and its allegations are therefor denied.
34. State that the allegations of paragraph 34 of the First Amended Complaint set
fotth legal conclusions, to which no response is required, and its allegations are therefor denied.
35. Deny the allegations of paragraph 35 of the First Amended Complaint, except
admit that historically an adult replacing a lost tooth was forced to choose between either a fixed
bridge anchored to adjacent teeth or removable dentures that rested on the gums, and that dental
implants have emerged as another option that is often more desirable.
36. Deny the allegations of paragraph 36 of the First Amended Complaint, except
admit that Dr. Niznick founded the business, known as Implant Direct, carried on by the
Minority Members, that IDI was engaged in the manufacture of dental implants and related
products, that IDI was engaged in the sale ofthese products, and that IDA provided, among other
things, administrative support to IDM and IDI.
37. Deny the allegations of paragmph 37 of the First Amended Complaint, except
admit that prior to Danaher Sybron's acquisition of an interest in the business carried on by the
Minority Members, they were successful and captured a certain percentage of the global dental
implant market over their first tour years and deny knowledge and infom1ation sufficient to
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DTE691 C-007
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fom1 a belief as to the truth of the allegation about capturing "approximately 4%" of the above
referenced market.
38. Deny the allegations of paragraph 38 of the First Amended Complaint, except
admit that Danaher Corporation's dental platfom1, sometimes refe1red to as the KaYo Kerr
Group, consists of a number of dental companies that, taken together, serve most dental practices
in the world and that on November 17, 2010, Danaher, agreed to purchase 75% of the
membership iJ1terests in the JVCs for $225 million pursuant to the terms of the Transaction
Agreement.
39. Deny the allegations of paragraph 39 of the First Amended Complaint, except
admitthat, to effectuate the purchase by Danaher Corporation's subsidiary (Danaher Sybron) of
a controlling interest in the JVCs, the parties to the Transaction Agreement took the steps
contemplated by that agreement, that companies in Danaher Corporation's dental platform
helped the JVCs with product registrations in China, Japan, and Russia, and that IDSI entered
into a Distribution Agreement with Sybron Implant Solutions, a division of Onnco Corporation,
on or about December 30, 2010, to which agreement the Court is respectfully refetred for the
tenns thereof.
40. Deny the allegations of paragraph 40 of the First Amended Complaint, except
admit so much thereof which alleges the existence of the Transaction Agreement, to which the
Court is respectfully rderred for the terms thereof.
41. Deny the allegations of paragraph 41 of the First Amended Complaint, except so
much thereof which alleges the existence of the Operating Agreements, and respectfully refer the
Couti to those agreements for the tenns thereof.
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DTE691 C-008
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NYSCEF DOC. NO. 858 RECEIVED NYSCEF: 02/08/2017
42. Deny the allegations of paragraph 42 of the First Amended Complaint, except
admit so much thereof that alleges the existence of the Operating Agreements, and respectfully
refer the Court to those agreements for the terms thereof.
43. Deny the allegations of paragraph 43 of the First Amended Complaint, except
admit so much thereof that alleges the existence of the Operating Agreements and respectfully
refer the CoUlt to those agreements for the tmms thereof.
44. Deny the allegations of paragraph 44 of the First Amended Complaint, except
admit so much thereof that alleges the existence of the Operating Agreements and respectfully
refer the Court to those agreements for the tenns thereof.
45. Deny the allegations of paragraph 45 of the First Amended Complaint, except
admit so much thereof that alleges the existence of the Operating Agreements and respectfully
refer the Court to those agreements for the tetms thereof.
46. Deny the allegations of paragraph 46 of the First Amended Complaint, except
admit so much thereof that alleges the existence of the Operating Agreements and respectfully
refer the Court to those agreements for the te1ms thereof.
47. Deny the allegations of paragraph 47 of the First Amended Complaint, except
admit so much thereof that alleges the existence of the Operating Agreements and respectfully
refer the Court to those agreements for the tenns thereof.
48. Deny the allegations of paragraph 48 of the First Amended Complaint, except
admit so much thereof that alleges the existence of the Operating Agreements and respectfully
refer the Court to those at,:rreements for the terms thereof.
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DTE691 C-009
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49. Deny the allegations of paragraph 49 of the First Amended Complaint, except
admit so much thereof as alleges the existence of the Transaction A!,•reement and Operating
Agreements and respectfully refer the Court to those agreements for the terms thereof
50. Deny the allegations of paragraph 50 of the First Amended Complaint, except
admit so much thereof that alleges the existence of the Operating Agreements and respectfully
refer the Court to those agreements for the tem1s thereof.
51. Deny the allegations of paragraph 51 of the First Amended Complaint, except
admit that Dr. Niznick entered into employment agreements with the JVCs in November 201 Ol
April 2011, and November 2011 and respectfully refer the Court to those agreements for the
terms thereof.
52. Deny the allegations of paragraph 52 of the First Amended Complaint.
53. Deny the allegations of paragraph 53 of the First Amended Complaint
54. Deny the allegations of paragraph 54 of the First Amended Complaint.
55. Deny the allegations of paragraph 55 of the First Amended Complaint, except
admit that the Board adopted a protocol in April 2011, to which Dr. Niznick agreed, for, among
other things, procedures for handling investigations of employee complaints and that the terms of
the agreement are set out in the minutes of that meeting, to which the Court is respectfully
referred.
56. Deny the allegations of paragraph 56 of the First Amended Complaint, except
admit that when the Board met on April J 7, 2013, Henk van Duijnhovcn asked Dr. Niznick not
to communicate to any JVC employees that they would be disciplined if they made use of the
Danaher hotline.
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57. Deny the allegations of paragraph 57 of the First Amended Complaint, except
admit that Dr. Niznick's employment with the JVCs ended in November 2013, that the female
subordinate apparently referred to in the First Amended Complaint (Josephine Jurcoane) started
at Implant Direct in or about 2007 in the customer service depmtment, and that Ms. Jurcoane
rose through the ranks to become a manager and then a director.
58. Deny the allegations of paragraph 58 of the First Amended Complaint, except
admit that Dr. Niznick spent time alone on business trips with various employees, including Ms.
Jurcoane.
59. Deny the allegations ofpata!,'raph 59 of the First Amended Complaint.
60. Deny the allegations of paragraph 60 of the First Amended Complaint, except
admit that Mr. van Duijnhoven informed Dr. Niznick in October 2013 that Danaher had received
an anonymous hotline complaint containing allegations about an inappropriate relationship
between Dr. Niznick and a subordinate, and that Danaher was engaging external counsel to
conduct an investigation.
61. Deny the allegations of paragraph 61 of the First Amended Complaint, except
admit that Dr. Niznick sent an e-mail to Danaher Sybron's Board managers on October 31, 2013
regarding the investigation and his employment, and respectfully refer the Comt to that e-mai.l
for the contents thereof.
62. Deny the allegations of parab'raph 62 of the First Amended Complaint, except
admit that, prior to Board meeting on November 6, 2013, Dr. Niznick contended the
investigation was unnecessary and a waste of time and mone)'> and asserted, on the Minority
Members' behalf, their veto over cetiain transactions.
]()
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DTE691 C-011
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63. Deny the allegations of paragraph 63 of the First Amended Complaint, except
admit that at the November 6, 2013 Board meeting, Dr. Niznick said in substance that he did not
want the investigation to be conducted, that Mr. van Duijnhoven called tor a vote on conducting
an investigation through an outside counsel investigator, that Dr. Niznick voted against the
investigation, and that the Danaher Sybron Board managers voted in favor of wnducting it.
64. Deny the allegations of paragraph 64 of the First Amended Complaint, except
admit that Dr. Niznick stated in substance at the November 6, 2013 Board meeting that the
investigation would expose the JVCs to litigation and was detrimental to the JVCs and the
Minority Members, and moved for a recount
65. Deny the allegations of paragraph 65 of the First Amended Complaint, except
admit that the Board voted a secoild time, that the second vote was 3-l in favor of proceeding
with the investigation, and that Dr. Niznick stated in substance at the November 6, 2013 Board
meeting that he was not obligated to maintain the confidentiality of matters related to the
investigation, and that the possible repercussions of proceeding with the investigation included
his resignation and the resignation of other management personnel.
66. Deny the allegations of paragraph 66 of the First Amended Complaint, except
admit that that Dr. Niznick stated in substance at the November 6, 2.013 Board meeting that if the
Board persisted in conducting an unnecessary investigation the Minority Members would
vigorously assert their legal rights.
67. Deny the allegations of paragraph 67 of the First Amended Complaint, except
admit that at the November 26, 2013 Board meeting the Board voted to appoint Tom Stratton
("Stratton"), then IDSl's Vice President of Global Sales, as president of JDSl and IDSA, and that
Stratton's first fom1al day as president of the JVCs was December l, 2013.
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68. Deny the allegations of paragraph 68 of the First Amended Complaint, except
admit that prior to Stratton's appointment Dr. Niznick made complimentary statements about
Stratton, including a statement in Dr. Niznick's October 31, 2013 email to Danaher Sybron's
Board managers, and respectfully refer the Court to that e-mail for the contents thereof.
69. Deny the allegations of paragraph 69 of the First Amended Complaint.
70. Deny the allegations of paragraph 70 of the First Amended Complaint, except
admit that Dr. Niznick voted in favor of Stratton's appointment as president at the November 26~
2013 Board meeting and made a motion to appoint Mr. van Duijnhoven to make the decision as
to whetherStratton should be appointed as IDSM's president too.
71. Deny the allegations of paragraph 71 of the First Amended Complaint, except
admit that Mr. van Duijnhoven recommended at the November 26, 2013 Board meeting that the
Board appoint Carlos Moran ("Moran"), who worked for Onnco (a Danaher Corporation
affiliate), as IDSM's Vice President, that Dr. Niznick voted against the appointment, that Dr.
Niznick asserted the Minority Members' veto right as to Moran's appointment, and that Dr.
Niznick stated he would withdraw the Minodty Members' veto if Mr. van Duijnhoven made the
decision to appoint Stratton as IDSM's pre.sident.
72. Deny the allegations of paragraph 72 of the First Amended Complaint, except
admit that the day after the November 26, 2013 Board meeting, the JVCs announced to their
employees that Stratton would replace Dr. Niznick a:s presi{knt of the JVCs, that Dr. Niznick
recommended to Stratton that Wayne Smith and John McLachlan should report directly to
Stratton, and that Mr. van Duijnhoven and Stratton decided that Smith and McLachlan would
report to Moran.
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73. Deny the allegations of paragraph 73 of the First Amended Complaint, except
admit that Dr. Niznick and Stratton had a text message exchange on November 27, 2013
, regarding Smith and McLachlan reporting to Moran, and respectfully re:ter the Court to that
exchange for the contents thereof.
74. Deny the allegations of paragraph 74 of the First Amended Complaint, except
admit that Dr. Niznick's employment with the JVCs tenninated on November 30, 2013, that his
. knowledge and expertise regarding dental implants remained valuable, and that IDSI entered into
a Consulting Agreement with Dr. Niznick on December 20, 2013, to which the Court is
respectfully referred for the tenns thereof.
75. Deny the allegations of paragraph 75 of the First Amended Complaint, except
admit that IDSI entered into a Consulting Agreement with Dr. Niznick on December 20, 2013, to
which the Court is respectfully referred for the terms thereof.
76. Deny the allegations of parat,>raph 76 of the First Amended Complaint, except
admit that IDSI entered into a Consulting Agreement with Dr. Niznick on December 20, 2013, to
which the Comt is respectfully referred for the terms thereof.
77. Deny the allegations of parat,>raph 77 of the First Amended Complaint, except
admit that IDSI entered into a Consulting Agreement with Dr. Niznick on December 20, 2013, to
which the Court is respectfully referred for the terms thereof.
78. Deny the allegations of paragraph 78 of the First Amended Complaint, except
admit that on December 20, 2013 the parties to the Operating Agreements signed a Third
Am.endment to Operating Agreements, to which the Court is respectfully referred for the terms
thereof.
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DTE691C-014
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79. Deny the allegations of para~:,'Taph 79 of the First Amended Complaint, except
admit that the Third Amendment and Consulting Agreement contain terms relating to the
tennination of the Uf,'reements, to which agreements the Court is respectfully refetwd for the
tem1s thereof.
80. Deny the allegations of paragraph 80 of the First Amended Complaint.
81. Deny the allegations of paragraph 81 of the First Amended Complaint, except
admit that on or about Stratton's second day as president, Dr. Niznick invited to lunch five
directors who worked at the JVCs' Valencia, Calitornia location, and that some of these directors
had worked for the Minority Members for a number of years, and deny knowledge and
information sufficient to fonn a belief as to the truth of the allegation regarding the expectations
of the five directors as to the purpose of the lunch.
82. Deny the allegations of paragraph 82 of the First Amended Complaint, except
admit that four of the directors who attended the December 2 lunch are still employed by the
JVCs and that, at the December 2 lunch, Dr. Niznick stated in substance that Stratton had a
degree in public relations and would do what Danaher wanted him to do.
83. Deny the allegations of paragraph 83 of the First Amended Complaint, except
admit that Stratton suspended McLachlan and that thereafter McLachlan's employment was
terminated.
84. Deny the allegations of paragraph 84 of the First Amended Complaint, except
admit that Smith gave notice of the tennination of his employment within weeks of Stratton's
appointment.
85. Deny the allegation.s of paragraph 85 of the Pirst Amended Complaint, except
admit that after Ms. Coletti stated in substance at the November 26, 2013 Board meeting that the
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investigation had concluded and the claims had not been validated, Dr. Niznick made a comment
in jest about the matter.
86. Deny the allegations of paragraph 86 of the First Amended Complaint.
87. Deny the allegations of paragraph 87 of the First Amended Complaint, except
admit that, at the December 2 lunch, Dr. Niznick stated in substance that Stratton had a degree in
public relations and would do what Danaher wanted him to clo.
88. Deny the allegations of paragraph 88 of the First Amended Complaint, except
admit that Dr. Niznick, on January 2, 2014, sent an 18-page document to the Danaher Sybron
Board managers, entitled "Request for Emergency Board Meeting," and respectfully refer the
Court to that document for the contents thereof.
89. Deny the allegations of paragraph 89 of the First Amended Complaint, except
admit that a subordinate filed a lawsuit against, among others, IDSA and Danaher Sybron.
90. Deny the allegations of paragraph 90 of the First Amended Complaint, except
admit that Dt. Niznick signed Exhibit B to the Consulting Agreement, on behalf of himself, the
Minority Members, and the Niznick Family Trusts and respectfully refer the CoUit that document
for the tem1s thereof.
91. Deny the allegations of paragraph 91 of the First Amended Complaint, except
admit that the Minority Members, through their counsel, sent a dispute notice to Plaintiffs on
January 9, 2014, and respectfully refer the Court to that notice for the contents thereof.
92. Deny the allegations of paragraph 92 of the First Amended Complaint, except to
the extent that they state a legal conclusion to which no response is required and the allegations
of which arc therefor denied.
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93. Deny the allegations of paragraph 93 of the First Amended Complaint, except
admit that the Minority Members, through their counsel, sent a dispute notice to Plaintiff.'> on
January 9, 2014, and respectfully refer the Court to that notice for the contents thereof.
94. Deny the allegations of paragraph 94 of the First Amended Complaint, except
admit that Dr. Niznick called David Wing on or about January 8, 2014 and that the Minority
Members, through their counsel, sent a dispute notice to Plaintiffs on January 9, 2014, and
respectfully refer the Court to that notice for the contents thereof, and deny knowledge and
infonnation sufficient to fom1 a belief as to the tn1th of the allega'tions regarding what Wing did
after the phone calL
95. Deny the allegations of paragraph 95 ofthe First Amended Complaint.
96. Deny the allegations of paragraph 96 of the First Amended Complaint.
97. Deny the allegations of paragraph 97 of the First Amended Complaint, except
admit that the Gerald A. Niznick Family Trust u/d/t November 6; 2001 entered into a lease
agreement with lDSM with respect to the Calabasas manufacturing facility and an extension of
the term of said lease, that the Niznick 2004 Grandchildren's Trust entered into a lease
agreement with IDSA with respect to the Valencia fadlity and an extension of the tenn of said
lease, to which lease agreements and extensions the Court is respectfully referred for the terms
thereof.
98. Deny the allegations of paragraph 98 of the First Amended Complaint, except
admit that the Minority Members and Dr. Niznick, in his capacity as trustee of the Niznick
Family Trusts sent a Notice of Rescission to Plaintiffs on February 28, 2014, that they filed a
complaint captioned Niznick et al v. Svbron Canada Holding, Inc. et al., Case No. BC538650
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(Los Angeles County Superior Court), and respectfully refer the Court to that notice and
complaint tor the contents thereof.
99. Deny the allegations of paragraph 99 of the First Amended Cotnplaint, except
admit that the JVCs distributed $123,425 to the Minority Members and $370,275 to Danaher in
Febtuary 2014, and that the Operating Agreements and Second Amendment thereto, to which
agreements the Court is respectfully referred for the tenns thereof, contain terms relating to
distributions.
100. Deny the allegations of paragraph 100 ofthe First Amended Complaint.
101. Deny the allegations ofparagraph 101 ofthe First Amended Complaint.
l 02. Deny the allegations of paragraph 102 of the First Amended Complaint, except
admit that Dr. Niznick's employment with the JVCs tcm1irtated on November 30, 2013, that the
Danaher Sybron Board managers purported to remove Dr. Niznick n:om the Board on January
29, 2014, that the Minority Members, through their counsel, sent a dispute notice to Plaintiffs on
January 31, 2014, and respectfully refer the Court to that notice for the contents thereof.
103. Deny the allegations of the First Amended Complaint, except admit that the
Minority Members filed a complaint captioned Implant Direct Mfg., et a!. v. Sybron Canada
Holdings, et a/., Case No. BC539077 (Los Angeles County Superior Court) on March 14, 20 J 4
and respectfully refer the Court to that complaint tor the contents thereof.
1 04. Deny the allegations of paragraph 104 of the First Amended Complaint, except
admit that Dr. Niznick's employment with the JVCs terminated on November 30, 2013.
105. Deny the allegations of paragraph 105 of the First Amended Complaint.
I 06. Deny the allegations of paragraph 106 of the First Amended Complaint, except
admit that during early 20 I 4 the parties exchanged dispute notices and responses regarding
17 524520v 5
DTE691 C-018
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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certain disputes that had arisen, and respectfhlly refer the Comi to these notices for the contents
tbcrcoi
107. Deny the allegations of paragraph 107 of the First Amended Complaint, except
admit that they pat1icipated in something called a "mediation" on March 20, 2014 and that no
disputes were resolved or settled at that time.
RESPONDING TO THE FIRST CAUSE OF ACTION
108. As and for their response to paragraph 108 of the First Amended Complaint,
Defendants refer the Court to their responses to paragraphs 1 to 107, which are incmporated
herein by this reference.
109. State that the allegations of paragraph 109 ofthe First Amended Complaint state a
legal conclusion to which no response is required, and its allegations are therefor denied.
110. State that the allegations of paragraph 110 of the First Amended Complaint state a
legal conclusion to which no response is required, and its allegations are therefore denied.
111. Deny the allegations of paragraph 111 of the First Amended Complaint.
112. Deny the allegations of paragraph 112 of the First Amended Complaint, except
admit so much thereof as alleges the existence· of the Operating Agreements, and respectfully
refer the Court to those agreements for the terms thereof.
113. Deny the allegations of paragraph 113 of the First Amended Complaint, except
admit so much thereof as alleges the existence of the Operating Agreements, and respectfully
refer the Court to those agreements for the terms thereof.
114. Deny the allegations of paragraph 1 14 of the First Amended Complaint, except
admit the JVCs sent a Jetter dated January 291 2014 to Defendants' counsel concerning "Cause"
!8 52•1520v.5
DTE691 C-019
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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and that Defendants' counsel sent a letter in response, and respectfully refer the Court to those
letters for the contents thereof.
115. Deny the allegations of paragraph 115 of the First Amended Complaint, except
admit the JVCs sent a letter subsequent to the January 29, 20141etter, and respectfully refer the
Court to that letter for the contents thereof.
J 16. State that the allegations of paragraph 116 of the First Amended Complaint
describe the relief sought, to which no response is required.
RESPONDING TO THE SECOND CAUSE OF ACTION
117. As and for their response to paragraph 117 of the First Amended Complaint,
Defendants refer the Court to their responses to paragraphs I to 116, which are incorporated
herein by this reference.
118. State that the allegations of paragraph 118 of the First Amended Complaint state a
legal conclusion to which no response is required, and its allegations are therefore denied.
119. State that the allegations of paragraph 119 of the First Amended Complaint state a
legal conclusion to which no response is reqllired, and its allegations are therefore denied.
120. Deny the allegation of paragraph 120 of the First Amended Complaint.
121. Deny the allegations of paragraph 121 of the First Amended Complaint, except
admit so much thereof as alleges the existence of the Operating Agreements, and respectfully
refer the Court to those agreements for the terms thereof.
122. Deny the allegations of paragraph 122 of the First Amended Complaint, except
admit so much thereof as alleges the existence of the Employment Ag1·ecmcnt, the Operating
Agreements and amendments thereto, and respectfully refer the Couti to those agreements for the
tenns thereof.
19 52t1520v.5
DTE691 C-020
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
NYSCEF DOC. NO. 858 RECEIVED NYSCEF: 02/08/2017
123. Deny the allegations of patagraph 123 of the First Amended Complaint, except
admit that Dr. Niznick sent an e-mail to Danaher Sybron's Board managers on October 31, 2013
regarding his employment, and respectfully refer the Conrt to that e-mail for the contents thereof
124. Deny the allegations of paragraph 124 of the First Amended Complaint.
125. Deny the allegations of paragraph 125 of the First Amended Complaint.
126. Deny the allegations of paragraph 126 of the First Amended Complaint, except
admit so much thereof as alleges the existence of Exhibit B to the Consulting Agreement, and
respectfully refer the Court to this document for the tertns thereof.
127. Deny the allegations of par'agraph 127 of the First Amended Complaint, except
admit that the Minority Members, through their counsel, sent a dispute notice to Plaintiffs on
January 9, 2014, and respectfully refer the Cou1i to that notice for the contents thereof:
128. Deny the allegations of paragraph 128 of the First Amended Complaint.
129. State that the allegations of paragraph 129 describe the relief sought, to which no
response is required.
RESPONDING TO THE THIRD CAUSE OF ACTION
130. As and for their response to paragraph 130 of the First Amended Complaint,
Defendants refer the Court to their responses to paragraphs 1 to 129, which are incorporated
herein hy this reference.
131. Statc that the allegations of paragraph 119 of the First Amended Complaint state
legal conclusions to which no response is required, and its allegations are therefore denied.
132. Deny the allegations of paragraph I 32 of the First Amended Complaint.
133. Deny the allegations of paragraph 133 of the First Amended Complaint.
1 34. Deny the allegations of paragraph 134 of the First Amended Complaint.
20 'i/4~20v.5
DTE691 C-021
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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135. State that the allegations of paragraph 135 of the First Amended Complaint
describe the relief sought, to which no response is required.
RESPONDING TO THE FOURTH CAUSE OF ACTION
136. State that no response to paragraph 136 of the First Amended Complaint is
required, as the Court dismissed the Fourth Cause of Action of the First Amended Complaint by
order dated February 4, 2015.
137. State that no response to paragraph 137 of the first Amended Complaint is
requited, as the Coud dismissed the Fourth Cause of Action of the First Amended Complaint by
order dated February 4, 2015.
138. State that no response to paragraph 138 of the First Amended Complaint is
required, as the Court dismissed the Fourth Cause of Action of the First Amended Complaint by
order dated Febmary 4, 2015.
13 9. State that no response to paragraph 13 9 of the First Amended Complaint is
required, as the Court disJ.nissed the Fomth Cause of Action of the First Amended Complaint by
order dated Febmary 4, 2015.
140. State that no response to paragraph 140 of the First Amended Complaint is
required, as the Coutt dismissed the Fourth Cause of Action of the First Amended Complaint by
order dated Febmary 4, 2015.
141. State that no response to paragraph 141 of the First Amended Complaint is
required, as the Court dismissed the Fourth Cause of Action of the First Amended Complaint by
order dated february 4, 2015.
21
DTE691 C-022
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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142. State that no response to paragraph 142 of the First Amended Complaint is
required, as the Court dismissed the Fourth Cause of Action of the First Amended Complaint by
order dated February 4, 2015.
143. State that no response to paragraph 143 of the First Amended Complaint is
required, as the Coutt dismissed the Fourth Cause of Action of the First Amended Complaint by
order dated February 4, 2015.
RESPONDING TO THE FIFTH CAUSE OF ACTION
144. State that no response to paragraph 144 of the First Amended Complaint is
required, as Plaintiffs discontinued their fifth cause of action without prejudice by stipulation
dated September 25, 2014.
145. State that no response to paragraph 145 of the First Amended Complaint is
required, as Plaintiffs discontinued their fifth cause of action without prejudice by stipulation
dated September 25, 2014.
146. State that no response to paragraph 146 of the First Amended Complaint is
required, as Plaintiffs discontinued their fifth cause of action without prejudice by stipulation
dated September 25,2014.
147. State that no response to paragraph 147 of the First Amended Complaint is
required, as Plaintiffs discontinued their fifth cause of action without prejudice by stipulation
dated September 25, 2014.
RESPONDING TO THE SIXTH CAUSE O.F ACTION
148. As and for their response to paragraph 148 of the First Amended Complaint,
Defi:mdants refer the Court to their responses to paragraphs 1 to 147, which are incoqJorated
herein by this reference.
52~520v.5
DTE691 C-023
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149. State that the a1legations of paragraph 149 of the First Amended Complaint state
legal conclusions to which no respl.'mse is required, and its allegations are therefore denied.
150. Deny the allegations of paragraph 150 of the First Amended Complaint.
151. Deny the allegations of paragraph 151 of the First Amended Complaint, except
admit so much thereof as alleges the existence of the Transaction Agreement, and respectfully
refer the Court to that agreement for the terms thereof.
152. Deny the allegatit)ns of paragraph 152 of the First Amended Complaint.
153. Deny the allegations of paragraph 153 of the First Amended Complaint.
154. Deny the allegations of paragraph 154 of the First Amended Complaint.
155. State that the allegations of paragraph 155 of the First Amended Complaint
describe the relief sought, to which no response is required.
RESPONDING TO THE SEVENTH CAUSE OF ACTION
156. As and for their response to paragraph 156 of the First Amended Complaint,
Defendants refer the Court to their responses to paragraphs 1 to 155, which are incorporated
herein by this reference.
157. State that the allegations of paragraph 157 of the First Amended Complaint state
legal conclt1sions to which no response is required, and its allegations are therefore denied.
158. State that the allegations of paragraph I 58 of the First Amended Complaint state
legal conclusions to which no response is required, and its allegations are therefore denied,
159. Deny the allegations of paragraph 159 of the First Amended Complaint.
160. Deny the allegations of paragraph 160 of the First Amended Complaint, except
admit so much thereof as alleges the existence of the Third Amendment to the Operating
23 524520v.5
DTE691 C-024
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Agreements and Consulting Agreement contain tenns relating to the termination of the
agreements, and respectfully refer the Comt to those agreements for the terms thereof.
161. Deny the allegations of paragraph 161 of the First Amended Complaint, except
admit the Consulting Agreement contains tenns relating to the definition of "Cause," and
respectfully refer the Court to that agreement for the terms thereof.
162. Deny the allegations of paragraph 1 62 of the First Amended Complaint.
163. Deny the allegations of paragraph 163 of the First Amended Complaint, except
admit that Stratton sent a letter to Dr. Niznick on January 30, 2014 relating to the tennination of
the Consulting Agreement, and respectfully refer the Court to that letter for the contents thereof.
164. Deny the allegations of paragmph 164 of the First Amended Complaint.
J 65. State that the allegations of paragraph 165 desc1ibe the relief requested, to which
no response is required.
RESPONDING TO THE EIGHTH CAUSE OF ACTION
166. As and for their response to paragraph 166 of the First Amended Complaint,
Defendants refer the Court to their responses to paragraphs 1 to 165, which are incorporated
herein by this reference,
167. State that the allegations of paragraph 167 of the First Amended Complaint state a
legal conclusion to which no response is required, and is therefore denied.
168. Deny the allegations of paragraph 168 of the First Amended Complaint.
169. Deny the allegations of paragraph 169 of the First Amended Complaint, which
state a legal conclusion to which no response is required and the allegations of which arc therefor
denied, except admit so much thereof which allege that there is a 'fransaction Agreement and
Operating Agreements, to which the Comi is respectfully referred for the terms thereof.
24 524520v.5
DTE691 C-025
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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170. Deny the allegations of paragraph 170 of the First Amended Complaint, except
admit so much thereof which allege that there are Operating Agreements, to which the CoUit is
respectfully referred for the tem1s thereof.
171. Deny the allegations of paragraph 171 of the First Amended Complaint, except
admit that an action captioned Gerald Niznick, in his capacity as Trustee qf the Gerald A.
Niznick Family Trust u/dlt November 6, 2001, and as Trustee of the Niznick 2004
Grandchildren's Trust, et al v. Sybron Canada Holdings Inc., et al., Case No. BC538650 (Los
Angeles County Supclior Comi) ("Real Estate Action") was commenced, and respectfully refer
the Comito the pleadings therein for the allegations advanced in said pleadings,.and that Donald
S. Gottesman Esq., of Kulik Gottesman & Siegel LLP sent a letter dated Febrnary 6, 2014 to
Kenneth Brown Esq. of Willim11S & Com10lly LLP, re "Dispute Notice Based On Failure to Pay
Accumulated Retained Earnings" and respectfully refer the Court to that letter for the contents
thereof.
172. Deny the allegations of paragraph 172 of the First Amended Complaint, except
admit that an action captioned Implant Direct Mfg., et al. v. Sybron Canada Holdings, et al.,
Case No. BC539077 (Los Angeles County Superior Court) ("Implant Direct Action") was
commcncecl, and respectfully refer the Court to the pleadings therein for the allegations advanced
in said pleadings, and that Donald S. Gottesman Esq., of Kulik Gottesman & Siegel LLP sent a
Jetter dated January 31, 2014 to Kenneth Brown Esq. of Williams & Connolly LLP, re
"Response to January 29, 2014 letters: New Dispute Nolice" and respectfully refer the Court to
that letter for the contents thereof.
173. Deny the allegations of paragraph 173 of the First Amended Complaint.
174. Deny the allegations of paragraph 174 of the First Amended Complaint.
25 524520v 5
DTE691 C-026
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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RESPONDING TO THE NINTH CAUSE OF ACTION
175. For their response to paragraph 175 of the First Amended Complaint, Defendants
refer the Court to their responses to paragraphs 1 to 174, which are incorporated herein by this
reference.
176. State that the allegations of paragraph 176 of the First Amended Complaint state a
legal conclusion to which no response is required, and are therefore denied.
177. State that the allegations of paragraph 177 of the First Amended Complaint state a
legal conclusion to which no response is required, and are therefore denied.
178. Deny the allegations of paragraph 178 of the First Amended Complaint.
179. Deny the allegations of paragraph 179 of the First Amended Complaint, except
admit so much thereof as allege the existence of the Operating Agreements, to which the Court is
respectfully refeued for the terms thereof.
180. Deny the allegations of paragraph 180 of the First Amended Complaint.
J 81. Deny the allegations of paragraph 181 of the First Amended Complaint.
182. State that the allegations of paragraph 182 of the First Amended Complaint
describe the relief sought, to which no response is required.
RESPONDING TO THE TENTH CAUSE OF ACTION
183. As and for their response to paragraph 183 of the First Amended Complaint,
Defendants refer the Court to their responses to paragraphs 1 to 182, which arc incorporated
herein by this reference.
!84. State that the allegations of in paragraph 184 of the First Amended Complaint
state a legal conclusion to which no response is required, and arc therefore denied.
185. Deny the allegations of in paragraph 185 of the First Amended Complaint.
26 52~520v.5
DTE691 C-027
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
NYSCEF DOC. NO. 858 RECEIVED NYSCEF: 02/08/2017
186. Deny the allegations of paragraph 186 of the First Amended Complaint, except
admit so much thereof as allege the existence of the Transaction Agreement and Operating
Agreements, to which the Court is respectfully refetTed for the tenns thereof.
187. Deny the allegations set forth in paragraph 187 of the First Amended Complaint
188. Deny the allegations set forth in paragraph 188 of the First Amended Complaint.
189. Deny the allegations set forth in paragraph 189 of the First Amended Complaint.
190. State that the allegations of paragraph 190 of the First Amended Complaint
describe the relief sought, to which no response is required.
RESPONDING TO THE ELEVENTH CAUSE OF ACTION
191. State that no response to paragraph 191 of the First Amended Complaint is
required, as Plaintiff..<~ discontinued their eleventh cause of action without prejudice by stipulation
dated August 7, 2014.
192. State that no response to paragraph 192 of the First Amended Complaint is
required, as Plaintiff..<; discontinued their eleventh cause of action without prejudice by stipulation
elated August 7, 2014.
193. State that no response to paragraph 193 of the First Amended Complaint is
required, as Plaintiffs discontinued their eleventh cause of action without prejudice hy stipulation
dated August 7, 2014 ..
194. State that no response to paragraph 194 of the First Amended Complaint is
required, as Plaintiffs discontinued their eleventh cause of action without prejudice by stipulation
dated August 7, 2014.
27 524S20v.5
DTE691 C-028
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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195. State that no response to paragraph 195 of the First Amended Complaint is
required, as Plaintiffs discontinued their eleventh cause of action without prejudice by stipulation
dated August 7, 2014.
196, State that no response to paragraph 196 of the First Amended Complaint is
required, as Plaintiffs discontinued their eleventh cause of action without prejudice by stipulation
dated August 7, 2014.
AFFIRMATIVE DEFENSES
Defendants incorporate by reference herein the responses set f01ih above and assert the .
following additional defenses:
First Affirmative Defense
197. Plaintiffs' claims fail to state a cause of action.
Second Affirmative Defense
198. Plaintiffs' claims, including but not limited to claims based on or purporting to
assert the Employment Call Option, are barred in whole or in part by the doctdne of waiver and
release.
Third Affirmative Defense
199. The Real Estate Action was properly brought in California. It dealt, inter alia,
with the validity of amendments to two leases, each· of which addressed the right to use real
property located in California. One lease, for real prope1ty located in Calabasas Hills, California,
leased to IDSM, provides in Section 29 "This lease shall be binding upon the Parties, their
personal representatives, successors <md assigns and be governed by the laws of the State in
which Premises are located. Any litigation between the Parties hereto concerning this Lease
shall be initiated in the county in which the Premises are located." The premises that are the
28 524520v.5
DTE691 C-029
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
NYSCEF DOC. NO. 858 RECEIVED NYSCEF: 02/08/2017
subject of this lease are located in Calabasas Hills, California, which is located in Los Angeles,
the County in which the Real Estate Action was commenced. The second lease, for real prope1iy
located in Valencia Califomia, leased to IDSA, provides in Section 29 "This lease shall be
binding upon the Parties, their personal representatives, successors and assigns and be govemed
by the laws of the State in which Premises are located. Any litigation between the Patties hereto
conceming this Lease shall be initiated in the county in which the Premises are located." The
premises that are the subject of this lease are located in Valencia California, which is located in
Los Angeles, the County in which the Real Estate Action was commenced.
Fourth Affirmative Defense
200. Dr. Gerald Niznick was named as plaintiff in Gerald Niznick, in his capacity as
Trustee of the Gerald A. Niznick Family Trust uldlt November 6, 2001, and as Trustee of the
Niznick 2004 Grandchildren's Trust, et a/ v .• ~ybron Canada Holdings Inc., et al., Case No.
BC538650 (Los Angeles County Superior Court) in his capacity as Trustee of the Niznick
Family Trusts. Plaintiffs' claim against Dr. Niznick in his personal capacity for breaching forum
selection clauses in the parties' agreements by commencing this action thus fails.
Fifth Affirmative Defense
201. Plaintiffs cannot recover attomey's fees, expenses, or cotui costs for the alleged
breach of the forum selection clauses at issue.
Sixth Affirmative Defense
202. Plaintiffs' claims are barred in whole or in part by the doctrine of unclean hands.
Seventh Affirmative Defense
203. Plaintiffs' claims are barred in whole or in part by the doctrine of in pari delicto.
29 52452fk5
DTE691 C-030
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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Eighth Affirmative Defense
204. Plaintiffs' claims are baned in whole or in part by the doctrine of laches.
Ninth Affirmative Defense
205. Plaintiffs' claims are barred in whole or in part by failure of consideration.
Tenth Affirmative Defense
206. Plaintiffs' claims are baned in whole or in part by a superseding or intervening
cause.
Eleventh Affirmative Defense
207. Plaintiffs' claims are baned in whole or in pmi by their own culpable conduct,
including their own breaches of the agreements among the parties.
Twelfth Affirmative Defense
208. Plaintiffs' claims, and any potential recovery due to Plaintiffs thereunder, are
subject in whole or in part to offset.
Thirteenth Affirmative Defense
209. Plaintiffs' claims are barred in whole or in part because the Employment Call
Option and/or Cause Call Option are unenforceable penalties and/or liquidated damage
provisions.
Fourteenth Affirmative Defense
210. Because equity abhors fbrfeitures, this Court should exercise its equitable powers
lo avoid Defendants' forfeiture of tens of millions of dollars' worth of the value of their interests
in the J VCs pursuant to Danaher Sybron 's claims based on or purporting to assert the
Employment Call Option and/or the Cause Call Option.
30 524520v.5
DTE691 C-031
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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Fifteenth Afflrmative Defense
211. Danaher Sybron's claims based on or purpmiing to assert the Cause Call Option
are barred in whole or in part because of Danaher Sybron's failure to provide Defendants with
the required notice and opportunity to cure the alleged acts of"Cause."
Sixteenth Affirmative Defense
212. Danaher Sybron's claims based on or purporting to assert the Cause Call Option
are barred in whole or in part because Article X of the Operating Agreements, as Danaher
Sybron seeks to apply it to the facts sub judice, is unenforceable as violative of public policy
and/or statutory and/or common law concerning the permissible scope of restrictive covenants.
Seventeenth Affirmative Defense
213. Danaher Sybron's claims based on or purporting to assert the Employment Can
Option are barred in whole or in pat1 because that option had already expired by the time of
Danaher Sybron's purported exercise of it.
Eighteenth Affirmative Defense
214. Danaher Sybron's claims based on or purpm1ing to assert the Employment Call
Option are barred in whole or in part because Danaher Sybron failed to give Defendants timely
notice of their purported exercise of that option.
Nineteenth Affirmative Defense
215. Danaher Sybron's claims based on or purporting to assert the Employment Call
Option are baned in whole or in part because Dr. Niznick withdrew any notice of resignation he
may have given prior to any reliance by Danaher Sybron upon same.
31 524520v.5
DTE691 C-032
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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Twentieth Affirmative Defense
21 6. Danaher Sybron' s claims based on or purporting to assert the Cause Call Option
are baned in whole or in part because Dr. Niznick promptly cured the alleged acts of"Cause."
Twenty-First Affirmative Defense
217. Danaher Sybron's claims based on or purporting to assert the Cause Call Option
are barred in whole or in part because: (a) the wrongful conduct alleged does not constitute
"enticement" of employees to leave the employ of the JVCs and therefore does not constitute
"Cause" within the meaning of Article X of the Operating Agreements; and/or (b) to the extent
that disparagement constitutes "Cause" within the meaning of Article X of the Operating
Agreements, Danaher Sybron waived this claim based upon the prior course of conduct between
the parties, including but not limited to by allowing Dr. Niznick on numerous occasions to make
statements which might be deemed disparaging but without ever once taking the position that
doing so triggered the Cause Call Option.
Twenty-Second Affirmative Defense
218. Danaher Sybron's claims based on or purporting to assert the Employment Call
Option and/or the Cause Call Option are ban·ed in whole or in part because any breaches of these
contractual provisions were not material breaches.
Twenty-Third Affirmative Defense
219. Danaher Sybron's claims based on or purporting to assert the Employment Call
Option are barred in wl10le or in part because Defendants substantially perfon11ed the ten11s and
conditions of Dr. Niznick's employment by the JVCs and therefore the condition precedent to
Danaher Sybron's ability to exercise the option was not triggered.
32 524520v.5
DTE691 C-033
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Twenty-Fourth Affirmative Defense
220. Danaher Sybron's claims bused on or purporting to assert the Employment Call
Option are barred in whole or in part because Dr. Niznick had "Good Reaso11" (as defined by the
parties' agreements) to resign his employment with the .fVCs.
Twenty-Fifth Affirmative Defense
221. Danaher Sybron's claims bused on or purporting to assert the Employment Call
Option are barred in whole or in part because, under all of the factual circumstances sub judice,
Dr. Niznick did not resign his employment with the JVCs but rather was either tenninated by the
decision of the Sybron Board managers and/or his status was by mutual agreement converted
from employee to consultant.
Twenty-Sixth Affirmative Defense
222. Plaintiffs' claims are barred in whole or in part by the doctrines of ratification
and/or estoppel, including but not limited to ratifYing the Consulting Agreement with knowledge
ofthe fraud alleged in paragraphs 90 through 92 of the First Amended Complaint.
AS AND FOR DEFENDANTS' AlViENDED COUNTERCLAIMS/SUPPLEMENTAL COUNTERCLAIMS
AND THlRD PARTY COMPLAINT
NATURE OF THE COUNTERCLAIM
223. This case involves the oppression of the minority owners of a dental implant
manufacturing and distribution business, known as Implant Direct, by the majority owner,
Danaher Sybron. Danaher Sybron has wrongfully used its controlling interest in this business to
(1) exclude the Minority Members from any participation in its management, including denying
them !heir rightful representation on the Board of Managers of the business, (2) terminate the
involvement in the business of the Minority Members' representative, Dr. Niznick, who founded
the business, invented its products, and guided its am1irs as president to record sales growth
33
DTE691 C-034
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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within the implant industry, (3) pay millions less than the amount actually due to the Minority
Members for required distributions and thereafter cease making distributions altogether despite
the accumulation of over $30 million of excess cash, (4) fail, as mandated by the pa~iies'
agreements, to purchase 20% of the Minority Members' stake in the business for the many
millions due therefor, (5) attempt to force the Minority Members to sell their entire interest in the
business to Danaher Sybron for at least $60 million less than the real value of that interest,
improperly claiming the right to do so under forfeiture call options, (6) cut off the flow of
information about the business to the Minority Members, (7) improperly attempt to integrate the
businesses into entities owned, controlled or affiliated with Danaher Sybron for the benefit of
Danaher Sybron and to the detriment of Implant Direct, in violation of the Minority Members'
properly exercised veto rights, (8) use Implant Direct's employees, services, and intellectual
propetiy (including customer lists, trademarks, and logos) in furtherance of this improper
integration and of Danaher Sybron's economic interests at the expense of Implant Direct, (9)
terminate and harass employees who were loyal to Dr. Niznick and replace them with less
competent workers loyal to or employed by Danaher Sybron to aid in this improper integration,
(10) repeatedly violate the written agreements between the owiiers regarding the operation of the
b"usiness, including the provision granting the right to the Minority Members to veto transactions
between Implant Direct and Danaher Sybron, and (11) otherwise ensure the Minority Members
will derive no economic benefit fi·om their interest in the business.
224. By this conduct, Danaher Sybron and the plaintitT entities it controls have run
roughshod over the rights guaranteed the Minority l\1Iembers in the plaintitTs' Operating
Agreements, as well as breached the fiduciary duties and obligations to act in good faith they
owe the Minority Members. In so doing, they have caused the Minority Members damages in
34 524.'\20v.5
DTE691 C-035
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excess of $35 million, and seek, if not stopped, to cause the Minority Members additional
damages in excess of $60 million.
225. As a result, the Minority Members bring tllis counterclaim, asserting claims: (1)
that plaintiffs breached the patiies' Operating Agreements by (i) failing to honor the agreements'
mandatory buy-out clause (Section 9.04(a)), (ii) denying the Minority Members their rights to
appoint a manager to the Board of Managers (Section 4.02(c) and 4.03), (iii) failing to distribute
the proper sums due to the Minority Members tor retained eamings pursuant to the Second
Amendment to the Operating A&>reements; (iv) failing to make required quatierly distributions of
excess cash as required by the Second Amendment; and (v) improperly attempting to integrate
Implant Direct into entities owned, controlled or affiliated with Danaher Sybron tor the benefit
of Danaher Sybron and to the detriment oflmplant Direct, in violation of the Minority Members'
properly exercised veto rights (Section 4.02(f)); (2) for a declaratory judgment, determining that
plaintiffs do not have the right to exercise forfeiture call options, either under the Employment or
Cause Call Options, as those terms are defined below, compelling the Minority Members to sell
their interests in the business for approximately $60 million less than its value as recompense for
purported breaches of the Operating Agreements which caused no damage; (3) that the plaintiffs
breached their fiduciary duties, and duties of good faith and fair dealing, by engaging in the
misconduct described in these counterclaims, including the Integration Transaction (defined
below), and terminating valuable employees of Implant Direct in favor of replacements who will
support Danaher Sybron and its improper activities; (4) misappropriation of trade secrets by
improperly using Implant Direct's confidential information, including its customer lists; and (5)
an accounting.
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PARTIES
I. Defendants and Countcrclaimants/Third Party Plaintiffs
226. IDI is a Nevada corporation and the owner of a 25% membership interest in IDS I.
227. IDM is a Nevada limited liability company and the owner of a 25% membership
interest in IDSM.
228. IDA is a California corporation and the owner of a 25% membership interest in
IDS A.
H. Plaintiffs and Counterdcfendants/Third Party Defendant
229. Danaher Sybron is a Delaware coqJoration and the owner of a 75% membership
interest in IDSI, IDSM, and IDSA. Danaher Sybron is a subsidiary of Danaher Corporation, a
Delaware corporation and NYSE~listed corporate conglomerate with annual reported revenues of
over $19 billion.
230. IDSI is a Nevada limited liability company.
231. JDSM is a California limited liability company.
232. IDSA is a California limited liability company.
FACTUAL BACKGROUND
I. Dr. Niznick and Implant Direct
233. Dr. Niznick is a dentist with a Master's Degree in Prosthodontics and an inventor
of dental implant products with 30 U.S. patents, including one for the internal conical connection
(U.S. Patent No. 4,960,381) that is recognized as the cornerstone of modern implant design.
Dr. Nimick has trained thousands of dentists around the world in the placement and use of dental
implants, and published extensively in this 11eld. He started his first dental implant company
(Core-V cnt Bio-Engineering) in 1982 and, by 1990, Core-Vent was the largest implant company
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in the world in terms of units sold. Dr. Niznick sold Core-Vent (then lmown as Paragon Dental ·
Implant Company) in 2001 to an orthopedic company.
234. In 2004, Dr. Niznick began designing a new Hne of application specific implants
and founded Implant Direct to manufacture and sell these products. Implant Direct launched its
product line in 2006 and was immediately successful. By 201 0, Implant Direct had
approximately 300 employees, offices in the United States and three other countries, distributors
in over 30 countries, and a significant percentage of the global dental implant market.
235. Implant Direct's business operations were jointly carried on by three companies
(IDI, IDM, and IDA) owned in substantial part by two Niznick family trusts. IDI sold Implant
Direct's products, IDM manufactured them, and IDA handled the marketing and administrative
functions. Implant Direct's main offices were located in Los Angeles and Las Vegas, and its
main manufacturing plant was located in Calabasas, Califomia (the "Calabasas Facility"). A
Niznick family trust, for whkh Dr. Niznick is the tmstee, owned the Calabasas Facility and
leased it to IDM.
II. The Deal with Danaher Cm·pm·ation
236. Danaher Corporation, upon information and belief, began acquiring companies
that made and sold different kinds of dental industry products in or about 2004. Prior to
acquiring an interest in Implant Direct in late 2010, Danaher Corporation had acquired numerous
companies that formed what Danaher Corporation called its "Dental Platform," including Sybron
Implant Solutions ("SIS"), an unprofitable dental implant distribution bu:Jincss that sold implants
manufactured in Korea and Germany. Upon infonnation and bcliet: in or about 2010, Danaher
Corporation began looking to acquire a successful dental implant blJSincss and, in connection
with this effort, commenced negotiations to buy an interest in Implant Direct.
23 7. In November 20 I 0, Dr. Niznick and Danaher Co1voration struck a deal pursuant
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to which (I) Danaher Sybron would initially purchase a 75% interest in Implant Direct's
business for $225 million from the Minority Members (IDI, IDM and IDA) and an additional 5%
interest three years later at a price to be calculated in accordance with a specified formula, (2) the
Minority Members would own the balance of the business, and (3) three new Joint Venture
Companies would be formed - a Nevada limited liability company (IDSl) and two California
limited liability companies (IDSM and IDSA) - to caiTy on the business of Implant Direct
commencing on January 1, 2011.
238, The parties' agreement was reflected in a Transaction Agreement dated
November 17,2010, three Operating Agreements dated December 30,2010 (one for each ofthe
three Joint Venture Companies); and various ancillary agreements, all signed and executed by
the parties. Pursuant to their agreement, Danaher Sybron initially owned 75% of the Joint
Venture Companies, with the Minority Members owning the remaining 25%.
239. Becatls.e of the substantial monetary value ($75 million) of the ownership interest
the Minority Members were to initially retain in the business and the prohibition against selling
that interest to a third party, Dr. Niznick sought to obtain and obtained provisions in the
Operating Agreements ofthe Joint Venture Companies to (1) protect against the diminution in
value of that interest, (2) increase the likelihood that Implant Direct's profitability and rapid
growth would continue, (3) require distributions of no less than the amount necessary to pay the
tedcral and state taxes due on the earnings of the Joint Venture Companies allocable to the
Minority Members, and (4) ensure Danaher Sybron would not be able to exercise absolute
control over the Joint Venture Companies or deal with them as if they were wholly-owned
subsidiaries of Danaher Sybron. To accomplish these goals, the Operating Agreements of the
Joint Venture Companies (Exhibits A, B, and C hereto) contained provisions which:
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e granted to the Minority Members the "right to veto any transaction" between the Joint
Venture Companies, on the one hand, and Danaher Sybmn or its affiliates, on the other,
subject only to the reasonable exercise of the veto rjght. See Exhibits A-C, § 4.02(f).
• appo1nted Dr. Niznick as the initial president of the Joint Venture Companies. ld.
§ 5.01(b).
• required that the business of the Joint Vent11re Companies be "fully and exclusively"
managed by a four-person Board of Managers (the "Board"), consisting of three
managers appointed by Danaher Sybron, and one manager, initially Dr. Niznick,
appointed by the Minority Members. Id. §§ 4.01, 4.02(a)-(c).
·~ required an annual distribution to the members of their pro rata share of 50% of"Excess
Cash," defined as all cash detennined by the Board "to be in excess of anticipated
workir1g capital expenses, capital expenditures and reasonable reserves .... " Id. §§ 1.01
and 7.01(a).
• required an additional annual distribution, if needed, to pay for the taxes due on camings
allocabletothemembers. Id. §§ 1.01 and 7.0l(b).
240. In accordance with the deal between Danaher Corporation and Dr. Niznick, the
Operating Agreements also contained a provision requiring Danaher Sybron to purchase a 5%
membership interest in the Joint Venture Companies from the Minority Members on January 31,
2014 (the "Mandatory Buy-Out Clause"). See Exhibits A-C, § 9.04(a). The Mandatory Buy-Out
Clause sets out a dclf!ilcd formula (the "Mandatory Buy-Out Formula") for calculating the
purchase price (the "Mandatory Buy-Out Price") of the 5% membership interest.
241. The Operating Agreements, as initially written, also contained provisions
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purporting to prescribe ceriain penalties against the Minority Members as remedies if (l) Dr.
Niznick terminated his employment as president of the Joint Venture Companies without "Good
Reason" (a defined term) prior to February 3, 2013, or (2) the Minority Members or Dr. Niznick
committed an act or omission constituting "Cause," defined as a material breach of the non
competition covenants in A1iicle X of the Operating Agreements not cured after receipt of a
proper written notice and opportunity to cure. See Exhibits A-C, §§ 1.01, 4.02(f), 4.1 0,
9.02(b)(i)w(ii), and 10.01-10.03. The penalties, which amounted to forfeiture clauses, were a (1)
buy-out of the Minority Members' interest, at Danaher Sybron's option, at substantially less than
the fair market value (the "Employment Call Option" and "Cause Call Option"), and (2)
forfeiture of the Minority Members' right to appoint one of the four Board managers (the "Board
Seat Forfeiture"). !d.
III. The Separate and Independent Status of the Joint Venture Companies
242. On January I, 2011, the Joint Venture Companies took over and carried on
Implant Direct's business, with Dr. Niznick as president and a member of the four-person Board.
243. The business of the Joint Venture Companies (i.e., Implant Direct) was not
integrated with, and was carried on independently from, Danaher Corporation's "Dental
Platform" companies. The Joint Venture Companies had !heir own products, manufactured at
their own facilities, marketed via their own marketing department, sold via their own sales torce
to their own customer base. They had their own administrators, who handled, inter alia, human
resource issues, invoicing, and collections, and 'Nbo zealously guarded the confidentiality of
lmplant Direct's customer list and customer-related infonnation.
244. This independence was evidenced by the resolution of a dispute that arose
between the Minority Members and Danaher Sybron less than three months after the Joint
Venture Companies commenced doing business. The dispute concerned whether Danaher
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Sybron had the authority, without Board approval and without the patticipation of the Joint
Venture Companies' HR Department (the "JVC HR Department"), to conduct investigations into
complaints regarding possible misconduct of Joint Venture Company employees and to req\.Jire
these employees to submit to interrogations by Danaher Sybron's agents at locations outside the
workplace.
245. The disp11te wasresolved on April 12, 2011 when the Board adopted a resolution
requiring that (1) investigations into alleged misconduct by Joint Venture Company employees
(other than the president) would be handled by the JVC HR department, not by Danaher Syhron,
(2) investigations into alleged misconduct by the president of the Joint Venture Companies
would be handled by the Board, not by Danaher Sybron, and (3) Dr. Niznick's employment
agreement would be amended to state that he would report to the Board, not to Danaher Sybron
or one of its executives.
246. On Apri115, 2011, in connection with the above-referenced Board resolution, the
following occun·ed:
• The Board chaim1an sent a written communication to all Joint Venture Company
employees stating that "[f) or clmification purposes, the Joint Venture is a separate entity
from [Danaher Sybron] and is run by a Board of Managers representing the shareholders
([Danaher Sybron] and Dr. Niznick)."
• Dr. Niznick entered into an amended employment agreement with the Joint Venture
Companies stating that he was to "report to the Board," but would "coordinate with" and
provide "updates" to Danaher Sybron's president, and that his tenn as president would
end on December 31, 2011 unless renewed pursuant to the automatic renewal provisions
of the employment agreement.
247. On April15, 2011, concurrent with the execution ofthe abovc-rcfcrcnc0d
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employment agreement, Danaher Sybron and the Minority Members executed a First
Amendment to the Operating Agreements ("First Amendment"), a copy of which is attached
heteto as Exhibit D. Pursuant to the First Amendment, Danaher Sybron and the Minority
Members agreed that the employment termination penalties -- the Employment Call Option and
Board Seat F01feiture Clause -- could not be used against the Minority Members unless Dr.
Niznick tenninated his employment as president without "Good Reason" prior to December 31,
2011. Exhibit D.
248. Subsequently, on or about November 14, 2011, Dr. Niznick entered into an
amended employment agreement, dated October 20, 2011, with the Joint Venture Companies,
pursuant to which he agreed to serve as president until Deceinber 31, 2012 and for one additional
year unless either party provided written notice by October 31, 2012 not to extend the tenn of
employment. No com:sponding amendment to the Operating Agreements was signed at the
time which, as the First Amendment had done, extended the date by which a termination of Dr.
Niznick's employment might trigger the Employment Call Option and Board Seat Forfeiture.
The amended employment agreement stated that "this amendment to your employment will have
no effect on the tenns of the Company's Operating Agreement .... " Consequently, the date by
which an employment termination had to occur to possibly trigger the Employment Call Option
and Board Seat Forfeiture remained, per the First Amendment, December 31, 2011.
IV. The Growth of the Joint V cntnre Companies During Dr. Niznick's Presidency
249. Dr. Niznick was th<.~ president of the Joint Venture Companies for 35 months
(January 1, 2011 until November 30, 2011) following the commencement of business operations
by the Joint Venture Companies.
250. Dr. Niznick was also a Board manager for nearly 37 months (January 1, 2011
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until January 29, 2014) and actively patiicipated m regular and special Board meetings
throughout this period.
251 .. During the time Dr. Niznick was president, Implant Direct's sales and profits
nearly doubled, making implant Direct the fastest growing company in the dental implant
industry. The number of Implant Direct's employees increased during this period from
approximately 300 to approximately 400.
252. By the end of his tenure as president, the Minority Members' 25% interest in the
Joint Venture Companies increased in value by at least $60 million (i.e., from $75 million to no
less than $135 million) and Danaher Sybron's interest increased in value by at least $1&0 million
(i.e., from $225 million to no less than $405 million).
253. Implant Direct's phenomenal success during Dr. Niznick's presidency was due in
large part to his (1) product developments and designs, (2) prominence and credibility in the
implant industry, (3) development of the implant industry's only "lights-out" manufactudng
capabilities that increased product quality while decreasing manufacturing costs, and ( 4)
marketing strategy of (a) branding Implant Direct as a stand-alone company that designed and
manufactured industry compatible dental implant and abutment products, (b) effectively using
the Internet for education and on-line ordering, and (c) crafting comparative marketing pieces
and videos that targeted the customers of three of Implant Direct's largest competitors
(Straumann, Nobel Biocare and Zimmer Dental) who also marketed themselves as stand-alone
dental implant companies. As a result of the foregoing, Implant Direct was able to dominate the
value segment of the dental implant industry created by Dr. Niznick in 2006 when hnplant Direct
launched it:.> produd line.
254. The year 2013 turned out to be a banner year for Implant Direct's business, with
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28% growth in sales in Nmth America- and 19% globally, about three to four times greater than
the sales growth that year of Implant Direct's main competitors in the implant industry and most
of Danaher Corporation's Dental Platfonn companies.
255. Danaher Sybron's senior executives recognized that Implant Direct's
extraordinary growth and profitability was due in large part to Dr. Niznick's leadership. In
March 2012, Danaher Corporation's CEO (Larry Culp), after hearing Dr. Niznick's presentation
about new implant products (including the InterActive implant system, SwishPlus2 System,
Legacy4 System, and CustomDirect Abutments and Bars), then in development and awaiting
FDA marketing approvals, wrote to Dr. Niznick stating, "Your vision is extraordinary and your
energy is infectious. I left even more confident that we are on a sustained growth trajectory." In
October 2013, Danaher Corporation's Senior Vice President (Dan Raskas), stated in an email to
Dr. Niznick, "(W]e realize that the company is highly profitable (thanks to your effmis)."
256. In or about early October 2013, Dr. Niznick, along with Roy Chang ("Chang"),
the Danaher Sybron-appointed CFO of the Joint Venture Companies, and Stratton, then IDSI's
Director of Global Sales, submitted a strategic business plan for the years 2014-2016 (the
"Strategic Plan") to the Board. Based on the assumption that Dr. Niznick would remain at the
helm of the business to ensure the proper introduction into the market of the new products he had
developed, the Strategic Plan projected 15% compounded annual growth in both sales and profits
for this three-year period. The projection was conservative, given that (1) sales revenue had
grown by approximately '/5% over the prior three-year period, and (2) the projection
c:ontemplatcd a 50% growth in sales through 2016 ·· only about 10% greater on an annual basis
than the industry growth rate.
V. Distributions to the Minority Members During Dr. Nizuick's Presidency
257. Commencing in October 2011, despite the Operating Agreements' requirement
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that tax distributions be made once per year, the Joint Venture Companies began making
quarterly distributions to the Minority Members in an amount equal to their share (25%) of 40%
of the Joint Venture Companies' earnings (i.e., operating profits) to facilitate the quarterly
payment of taxes by the Minority Members. These distributions were made at Dr. Niznick's
request and pursuant to Board approval.
258. In May 2012, at Dr. Niznick's request and pursuant to Board approval, the Joint
Venture Companies increased the above~referenced quarterly disttibutions to mi amount equal to
the Minority Members' share of 50% of earnings.
259. As a result of the foregoing, the Joint Venture Companies made distributions to
the Minority Members in an amount purportedly equal to their share of 40% of earnings, and
subsequently their share of 50% Of eamings, for the first ten quarters of the Joint Venture
Companies' business operations (the "Quarterly Tax Distributions"),
260. The amounts ofthc Quarterly Tax Distributions were calculated by Chang and
reflected in documents he prepared. To detem1ine the amount to be distributed to the Minority
Members, Chang calculated eamings by deducting the cost of goods sold and operating expenses
from gross revenues.
261. When computing earnings for the Qumierly Tax Distributions, Chang did not take
into aceouni any "tax allocations" within the meaning of Section 8.03 of the Operating
Agreements, including but not limited to any tax allocation to Danaher Sybron for its acquisition
costs, incurred in 20 I 0, in cotmection with its purchase of a 75% interest in celia in of Implant
Direct's inttmgiblc assets, such as trademarks and trade names ("Danaher Syhron's Acquisition
Expense"), Section 8.03(d) of the Operating Agreements expressly prohibits taking such tax
allocations "into account in computing ... distributions," and Chang complied with this
contractual requirement when computing the Qumierly Tax Distributions.
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262. The Quarterly Tax Distributions to the Minority Members, totaling $7,764,000 in
the aggregate, were made by the Joint Venture Companies fi·om October 2011 to and including
July 24, 2013.
263. Although the Operating Agreements also required annual distributions of Excess
Cash to the members, at Danaher Sybron's direction and despite Dr. Niznick's objections, the
Joint Venture Companies made no Excess Cash distributions for the first 31 months of
operations ~- even though they had accumulated approximately $42 million in cash during that
period of time. Finally, in August 2013, the Joint Venture Companies, at Danaher Sybron's
direction, distributed to Danaher Sybron an amount equal to three times the amount of the
Quarterly Tax Distributions made to the Minority Members (not previously paid to Danaher
Sybron) and then divided and distributed to the members pro rata the remaining cash balance
shown on the books of the Joint Venture Companies as of December 31, 2012, resulting in the
first "Excess Cash" distribution to the Minority Members of $3,233,000, and to Danaher Sybron
of three times that amount.
264. In or about August 2013, to emmre that Danaher Sybron would not continue to
use its controlling interest in the Joint Venture Compm1ies to withhold the distribution of Excess
Cash, the Minority Members sought to amend the Operati11g Agreements to require the annual
distribution to the Minority Members of their share (25%) of 100% of earnings as opposed to
their share of merely 50% of earnings, which was only enough to cover their tax burden.
Concurrently, Danaher Sybron sought to extend the tenn of IDSM's lease of the Calabasas
Facility (where IDSM manufactured its implant products) from one of the Niznick Family Trusts
which owned the Calabasas Pacility. In connection therewith, the parties executed the following
three instruments on October 4, 2013:
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.. A Second Amendment to Operating Agreements ("Second Amendment"), a copy of
which is attached hereto as Exhibit E, pursuant to which the members agreed that the
Joint Venture Companies would make (1) qumterly distributions to the members in an
amount equal to their pro rata share of90% of Excess Cash, (2) a one-time distribution to
the Minority Members on January 31, 2014 (immediately following Danaher Sybron's
purchase of an additional 5% membership interest pursuant to the Mandatory Buy~Out
Clause) in an amount equal to the Minority Members' share of 100% of the Joint Venture
Companies' "retained earnings" as ofDecember 31, 2013, and (3) annual distributions to
the Minority Members thereafter in an amount equal to their share of the increase to
retained earnings during the preceding year.
• A ten-year extension of the tenn ofiDSM's lease (from October 31, 2014 to October 31,
2024) of the Calabasas Facility from one of the Niznick Family Trusts.
• A five-year extension of the tenn of IDSA's lease (from December 31, 2018, to
December 31, 2023) of a building in Valencia, Califomia (the "Valencia Building'') fi·om
another Niznick Family Trust.
265. At the time the Second Amendment was executed, the Minority Members
understood that (1) retained (or undistributed) "earnings" within the meaning of the Operating
Agreements, as amended by the Second Amendment, would be calculated in exactly the same
manner as Chang had consistently calculated eamings for the Quarterly Distributions, i.e., by
deducting the cost of goods sold and operating expenses from gross revenues, without taking into
account Danaher Sybron 's Acquisition Expense or any amortized portion thereof, and (2) the
distributions to the Minority Members would increase on an annual basis frorn their pro rata
share of 50% of earnings to their pro rata share of 100% of camings. When the Second
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Amendment was executed, Danaher Sybron knew this was the Minority Members'
understanding.
VI. Danaher Sybron Decides To End lts Relationship With the Minority Members
266. On October 5, 2013, the day after the Second Amendment was signed, Dr.
Niznick informed Danaher Sybron that he was "prepared to continue as president" of the Joint
Venture Companies after his scheduled retirement date of December 31, 2013. Now that the
Minodty Members' investment had been "secured with a &>uarahtced disbursement of [their]
share of the profits" by the Second Amendment, it was 1n his "best interest" to continue running
the business as president.
267. On October 8, 2013, Ht.>nk van Duijnhoven ("Duijnhoven"), a Danaher
Corporation executive and Chairman of the Board of Managers of the Joint Venture Companies,
informed Dr. Niznick that his services as president would no longer be required after his then
current employment term expired on December 31, 2013.
268. On or about October 30, 2013, van Duijnhoven infom1ed Dr. Niznick that he
(van Duijnhoven) was engaging extemal counsel to conduct an investigation into m1 anonymous
complaint supposedly left on Danaher's "employee hotline" about Dr. Niznick and Josephine
Jurcoane ("Jurcoane"), then IDSA's Director of Strategic Planning, having an inappropriate
relationship resulting in favoritism towards Jurcoane. Jurcoanc had been with lmplant Direct for
six years and handled critical marketing functions during Implant Direct's rapid lise in sales and
profits. This alleged complaint was not made by Jureoane.
269. The allegation that Dr. Niznick and Jureoane had an inappropriate relationship
that resulted in flworitism towards her was false.
270. At the time van Duijnhoven threatened to investigate the relationship between Dr.
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Niznick and Jurcoane, the term of Dr. Niznick's employment as president was scheduled to end
in two months-- on December 31, 2013, although his last day in the office, due to a planned
vacation, was going to be December 13, 2013 -and Dr. Niznick was working half~time only
pursuant to his employment agreement, leaving just 22 work days remaining in Dr. Niznick's
term as president.
271. On October 31,2013, Dr. Niznick gave the Danaher Sybron-appointed Board
managers written notice he would resign his employment as president in 30 days, i.e., one month
early, hoping this would dissuade the Board from proceeding with an investigation that would be
potentially embarrassing to him (he had been married for 49 years at the time and was 3 7 years
older than Jurcoane) and expose the Joint Venture Companies to litigation fi:om Jurcoane.
272. When the notice did not deter Danaher Sybron from proceeding with the
investigation and Danaher Sybron scheduled a special Board meeting for November 6, 2013 to
discuss Dr. Niznick's resignation and the investigation, Dr. Niznick formally withdrew his
resignation notice prior to the Board meeting and infonned Danaher Sybron he would serve out
the remainder of his tenn through December 31, 2013. At no time did the Joint Venture
Companies lose Dr. Niznick's services as President as a result of his October 31,2013 notice.
273. At the time of the November 6, 2013 Board mccti11g, Dr. Niznick had just 18
work days left on his half-time work schedule before retiring on December 31, 2013.
274. At the November 6, 2013 Board meeting, Dr. Niznick offered to resign
immediately and asked to be released from his employment agreement, hoping his immediate
resignation would cause Danaher Sybron to refrain from going forward with the threatened
investigation. The Danaher Sybrnn-appoinLed Board managers, all of whom voted to proceed
with the investigation, refused to even discuss Dr. Niznick's offer, claiming they were not
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ptepared to discuss it and that it was not on the agenda- even though the issue of Dr. Niznick's
resignation was one of only two agenda items for the meeting that day.
275. Danaher Sybron knew the investigation into the relationship between Dr. Niznick
and Jurcoane was unnecessary and did not further the interests of the Joint Venture Companies,
but proceeded with the investigation nonetheless.
276. Over the next three weeks, the outside counsel engaged by Danaher Sybron
conducted and completed his investigation, which included questioning Dr. Niznick and a
number of employees, including Jurcoane, all of whom cooperated fully.
277. At the November 26, 2013 Board meeting, Julie Coletti ("Coletti''), an attorney
for a Danaher Sybron affiliate who attended the meeting (and who, unbeknownst to Dr. Niznick,
had been appointed, without Board approval, as general counsel for the Joint Venture
Companies), announced the results of the investigation. The Board meeting minutes state: "Ms.
Coletti reported that the two hotline complaints [including the one relating to Dr. Niznick and
Jurcoane] being investigated by an outside investigator have been concluded. These claims were
not validated and are now closed." (Emphasis added.) 1
278. The November 26, 2013 Board meeting minutes also note that the following
discussion took place regarding Dr. Niznick's continued involvement with the Joint Venture
Companies:
Dr. Niznick requested to have a discussion regarding his continued involvement
with the JV Companies. Mr. van Duijnhoven stated that a discussion regarding
1 The November 26, 2013 Board meeting minutes contradict Danaher Sybron's allegation in paragraph 85 of the First Amended Complaint that the ''investigation of the hotline complaint involving Niznick and [Jurcoane] had been terminated in light of Niznick's decision to resign ... and as such had nol been 'validated."' Further, if Dr. Niznick 's "decision to resign" obviated the need to investigate, then Danaher Syhron proceeded with the investigation in bad faith because, according to Danaher Sybron , Dr. Niznick made the decision to resign on November 1, 2013, bcf(>rc the investigation began. (First Amended Complaint, paragraph 6 L)
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any consulting anangcment should be handled outside of the board meeting ... ,
that the resignation will be effective per Dr. Niznick's resignation letter and that
Dr. Niznick's request for withdrawal of the letter is not accepted. Dr. Niznick
stated that his position is that the resignation withdrawal was effective, ... [that]
his employment win go through the end of the year ... [and] that if his
employment does not contitme through the end of the year he is entitled to one
year's salary as severance [per the terms of his employment agreement]. An
agreement was made between Dr. Niznick and the other managers that the board
would move on with the agenda and table any discussion relating to a consulting
anangement with Dr. Niznick until after the Board meeting.
279. Immediately following the November 26, 2013 Board meeting, Dr. Niznick and
the Danaher Sybron-appointed Board managers negotiated the tenns of a consulting agreement
pursuant to which Dr. Niznick's status would be converted from employee to consultant at
approximately the same amount of compensation. The agreement was documented on December
20, 2013 when Dr. Niznick, the Minority Members, Danaher Sybmil, and the Joint Venture
Companies signed an agreement (the "Consulting and Waiver Agreement"), a copy of which is
attached hereto as Exhibit F, pursuant to which it was agreed, among other things, that (1) Dr.
Niznick's "status as an employee and officer terminated effective as of November 30, 2013," (2)
Dr. Niznick became a consultant to JDSI, commencing December 1, 2013, for a 61-month tenn,
(3) Dr. Niznick released any claims he had against IDST arising out of his employment
relationship, (4) IDSI and its owners (including Danaher Sybron) released any claims they had
against Dr. Niznick arising out of his employment relationship, and (5) Danaher Sybron agreed
to waive and release any rights it might have had to exercise the Employment Call Option (the
"Employment Call Option Waiver").
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280. The Employment Call Option Waiver (Section D to Exhibit B of the Consulting
and Waiver Agreement) states:
As material consideration for this Agreement, [Danaher SybronJ hereby
waives and releases any rights it may have under the Employment Call
Option under Section 9.04{b)(i) of each of the ... Operating Agreements, as
amended, for the (Joint Venture] Con1panies.
281. The Consulting and Waiver Agreement also contained an acknowledgment by Dr.
Njznick that, when he signed the agreement on December 20, 2013, he was not then "aware of
any claims" he or the Minority Members had against the Joint Venture Companies, Danaher
Sybron, or its affiliates. (Section D to Exhibit B of the Consulting and Waiver Agreement.) The
ack11owledgment was truthfuL As of December 20; 2013, Dr. Niznick was not aware of any
claims alleged in this Counterclaim and, specifically, was not aware that Danaher Sybron
intended to violate the Minority Members' veto rights under the Operating Agreements, or
breach their fiduciary duties to the Minority Members as alleged herein.
VII. Plaintiffs Repeatedly Breach Their Agreements With The Minority Members
282. On January 29,2014, Danaher Sybron gave notice to the Minority Members that,
because Dr. Niznick purportedly resigned as president of·the Joint Venture Companies without
"Good Reason" on or about November 1, 2013, Danaher Sybron was (1) "invoking the
Employrnent Cal1 Option" to buy out the Minority Members' interest in the Joint Venture
Companies (at approximately $60 million less than fair value), and (2) removing Dr. Niznick
frorn the Board pursuant to the Board Scat Forfeiture clause as a result thereof. Dr. Niznick was
removed from the Board without a Board vote or discussion.
283. As noted above, however, these were baseless and improper acts, because (1)
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Danaher Sybron expressly waived and released any right it might have had to exercise the
Employment Call Option in the Consulting and Waiver Agreement signed on December 20,
2013, and (2) the Employment Call Option expired on December 31, 2011 pursuant to the
express terms of the First Amendment, more than two years before Danaher Sybron purported to
exercise the option.
284. Also, by notice dated January 29, 2014, Danaher Sybron and the Joint Venture
Companies identified various purported breaches by Dr. Niznick of the non-competition
covenants contained in Article X of the Operating Agreements - breaches which, according to
Danaher Sybron, supposedly constituted "Cause" within the meaning of the Operating
Agreements and allowed Danaher Sybron to exercise the Cause Call Option. Danaher Sybron's
claim to exercise the Cause Call Option was also baseless because, among other things, Dr.
Niznick had not breached any of the non-competition covenants contained in Article X of the
Operating Agreements, nor was he afforded proper notice and an opportunity to cute the same.
285. From January 29,2014 to thepresenttime, Danaher Sybron has managed the
business of the Joint Venture Companies without any input from or participation by Dr. Niznick
or the Minority Members in violation of the Operating Agreements, and an illegally constituted
Board has purported to approve a series of actions, described below, to implement a transaction
involving the integration of the Joint Venture Companies and Danaher Corporation's "Dental
Platfonn" companies, described in more detail below, despite the Minority Members' veto
thereof.
286. On January 31,2014, the date on which Danaher Sybron was required to purchase
a 5'% membership interest in the Joint Venture Companies from the Minority Members pursuant
to the Mandatory Buy-Out Clause and to distribute to the Minority Members their share of
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retained earnings as of December 31, 2013 pursuant to the Second Amendment, Danaher Sybron
failed and refused to comply with either requirement.
287. Plaintiffs have also failed to make d1stributions due the Minority Members under
the Operating Agreements. On February 7, 2014, just nine days after removing Dr. Niznick from
his seat on the Board, Danaher Sybron used its control over Implant Direct's bank accounts to
ensure the Minority Member~ would not receive the disbibutions promised them in the Second
Amendment to the Operating Agreement. On that date, Danaher Sybron notified the Minority
Members that it would distribute $123,425 to them- an amount Danaher Sybron claimed was
their share of the Joint Venture Companies' retained eamings as of December 31, 2013 required
to be disttibuted by the Second Amendment, and which was distributed to the Minority Members
on or about February 17, 2014.
288. Danaher Sybron, however, knew its calculation of the amount due to the Minority
Members under the Second Amendment was grossly understated and that the amount which
should have been distributed was at least $4 million.
289. Danaher Sybron purpmted to justify its bogus calculation by claiming the right to
reduce the Joint Venture Cmnpanies' earnings (and thus the distributions to the Minority
Members of their share thereof) by $20,419,342, representing an amortized portion of Danaher
Sybron's Acquisition Expense, i.e., a portion of the price Danaher Sybron paid in 2010 to
acquire a 75% interest in some of Implant Direct's intangible assets.
290. Danaher Sybron's Acquisition Expense wasH special "tax allocation" granted
Danaher Sybron under Section 8.03 of the Operating Agreements (i.e., Danaher Sybron could
reduce its taxes by this expense, but the Minority Members could not). However, while the
Operating Agreement permitted this deduction tor tax purposes, Section 8.03(d) expressly
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prohibits such deductions from being taken into account "in computing ... distributions."
Nonetheless, in blatant disregard for this provision, Danaher Sybron did precisely that.
291. Moreover, Danaher Sybron took this position despite the fact that (I) Danaher
Sybmn had never taken all or any portion of its Acquisition Expense into account before when
calculating the Quarterly Tax Distributions for the first ten quarters of the Joint Venture
Companies' operations, and (2) Danaher Sybron's new method of calculating earnings for
distribution purposes would cause the Minority Members to be taxed on an amount of eamings
greater than the amount distributed to them.
292. Danaher Sybron changed its method of calculating earnings for distribution
purposes solely for the purpose of depriving the Minority Members of their rights under the
Second Amendment.
293. Danaher Sybron and the Joint Venture Companies have also failed to make the
Excess Cash distributions to the Minority Members in accordance with the Second Amendment
(which requires quarterly distributions in an amount equal to the Minmity Members' share of
90% of Excess Cash), even though there is clearly "Excess Cash'' to distribute. Upon
information and belief, the Joint Venture Companies' cash accounts have increased from
$13,496,761 at the end of 2013 to $29,456,741 at the end of the second quarter of 2014- an
increase of $16 million in six months and the Joint Venture Companies have no long-tenn
debt, and no good faith reason to withhold distribution of substantially all of the cash, which is
!:,'rowing at the rate of almost $3 million per month and presumably sitting in their bank accounts.
294. Danaher Sybron has also failed and refused to provide financial intCmnation to the
Minority Members in accordance with the requirements of the Operating Agreements. Danaher
Sybron failed to provide the Minority Members with year-end "audited financial statements" J<Jr
the Joint Venture Companies for the year 2013 by ''one hundred twenty (120) days after year-
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end" as required by Section 12.04 of the Operating Agreements and, upon information and
belief, has (1) failed to even retain an outside auditor to prepare the required audited financial
statements, and (2) employed and paid Danaher Corporation employees with Joint Venture
Company funds to prepare the unaudited statements, without giving the Minority Members
notice of the transactio11 or affording them the opportunity to exercise their veto right as to such
transactions. Despitethe Minority Members' May 1, 2014 demand pursuant to Section 12.03 of
the Operating Agreements for "access to the financial books and records of the [Joint Venture]
Companies for the first quarter of 2014, including but not limited to all books and records that
reflect the[1r] revenue, expenses, assets, liabilities, cash flow, disbursements, and receipts,"
Danaher Sybron and the Joint Venture Companies provided unaudited financial statements but
otherwise ignored the demand.
VIII. The Rescission alid Reinstatementof the Second Amendment
295. On Febmru:y 28, 2014, after it became apparent that Danaher Sybron and the Joint
Venture Companies did not intend to comply with the Second Amendment, the Minority
Members and Dr. Niznick (as tmstee of his family nusts) gave notice of rescission under
California law of the Second Amendment as well as the lease extensions signed concunently on
October 4, 2013 (the "Rescission Notice"). The grounds asserted were a material failure of
consideration (i.e., the failure to distribute to the Minority Members their share of retained
earnings as of December 31, 20 13) and Danaher Sybron' s fi·aud (i.e., promising to milke the
distribution without intending to make it).
296. The Minority Members demanded in the Rescission Notice that distributions to
them revert back to the status quo prior to the execution of the Second Amendment. The
Rescission Notice was, in legal effect, an offer to rescind conditioned upon a resumption of the
quarterly tax distributions to the Minority Members in an amount equal to their share of 501Vo of
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earnings, calculated without taking Danaher Sybron's Acquisition Expense into account, as
Chang had previously calculated earnings for the first ten quarters of operations.
297. Despite the Rescission Notice, the Joint Venture Companies did not resume the
practice of making quarterly distributions to the Minority Members in an amount equal to their
share of 50% of earnings, or in any other amount.
298. As a result, on July 30, 2014, the Minority Members retracted their notice of
rescission of the Second Amendment and Dr. Niznick (as trustee of his family trusts) retracted
his notice of rescission of the lease extensions for the Calabasas Facility and Valencia Building.
299. Danaher Sybron and the Joint Venture Companies have taken the position that the
execution on October 4, 2013 of the Second Amendment, the lease extension for the Calabasas
Facility, and the lease extension for the Valencia Building, were three separate and independent
transactions. Neither Danaher Sybron nor the Joint Venture Companies relied in any way on the
rescission of the Second Amendment prior to the retraction of the rescission thereof and,
consequently, the Minority Members are entitled to pursue their damages and/or specific
perfotmance remedy for the breach of the Second Amendment in lieu of the remedy of
rescission.
300. Upon information and belief, after giving the notice of rescission of the Calabasas
Facility lease extension, lDSM entered into a lease for a new manufacturing facility to
commence on November 1, 2014. On July 30, 2014, to avoid any prejLidice to Danaher Sybron
or the Joint Venture Companies caused by the Rescission Notice and retraction thereof, Dr.
Niznick (as tmstee of one of his family trusts) no titled them that he would not seek to enforce his
rights under the Calabasas Facility lease extension so long as lDSM vacated the Calabasas
Facility by October 31, 2014, remained current on its rent obligation, and did not interfere with
efforts to re-lease or sell the property.
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IX. Danahe~· Sybt·on's Integration Transaction
301. While not apparent then, the reasons tor Danaher Sybron's actions are now clear.
As part of their plan, Danaher Sybron sought to eliminate the Minority Members so as to permit
them to integrate Implant DiTect into Danaher Corporation's "Dental Platfonn" companies, a
transaction that benefits Danaher Sybron at the expense of Implant Direct and the Minority
Members, and a transaction Danaher Sybron knew would be (and, upon discovery, was) opposed
by the Minority Members.
302. Prior to December 2013, upon infonnation and belief, the companies in Danaher
Cmporation's "Dental Platfonn" were (1) KaVo, (2) Ken, (3) Ken Total Care, (4) Pentron, (5)
Axis, (6) Sybron Endo, (7) Orascoptic, (8) Pelton & Crane, (9) Manls, (10) DCI Equipment, (11)
Gendex, (12) DEXJS, (13) Instrumentarium, (14) SOREDEX, (15) i-CAT, (16) NOMAD, (17)
Onnco, and (t 8) Allesee Orthodontic Appliances (collectively "Danaher's Dental Platform
Companies"}.
303. Danaher's Dental Platform Companies, which manufactured and sold
various brands of dental equipment and consumables but not implant products, were refetTed to
as the "KaVo Kerr Group" by Danaher Corporation executives and were under the direction of
van Duijnhoven, a Danaher Corporation executive who also served as (and still is) the Board
chainnan for the Joint Venture Companies.
304. Implant Direct was not one of Danaher's Dental Platfotm Companies
when Dr. Niznick was president of the Joint Venture Companies.
305. Upon information and belief: at some time, the precise date of which is unknown
to the Minority Members, according to Danaher Sybron's subsequent press releases, Danaher
Sybron decided to form and create an "integrated organization" that would ''strategically unite"
and "formally link" Implant Direct and Danaher's Dental Platform Companies "under one
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identity with shared values" and "one name," the KaVa Kerr Group (the "Integration
Transaction").
306. On February 7, 2014, Danaher Sybron issued the first in a series of press releases
publicly announcing to the world that it had integrated Implant Direct into the KaVo Kerr Group.
Danaher Sybron's initial press release, entitled "KaVo Ken Group unifies major dental brands
under single umbrella," stated in pertinent part:
The fonnation of the Ka Vo Kerr Group strategically unites the leading dental
consumable, equipment, high tech, and specialty brands under a single global
platfom1 ....
KaVo Kerr Group brands include KaYo, Ken·, Kerr Total Care, Pentron, Axis,
Sybron Endo, Orascoptic, Pelton & Crane, Matus, DCI Equipment, Gendex,
DEXIS, Instrumentarium, SOREDEX, i-CAT, NOMAD, Implant Direct, and
Ormco.
"KaVo Kerr Group fom1ally links our world class dental brands and companies
together under one identity with shared values and a lasting commitment to the dental
profession," said Henk van Duijnhoven, president of KaYo Kerr Group globally.
(Emphasis added.)
307. The KaYo KetT Group is a Danaher Sybron affiliate, under the control of Danaher
Corporation. The KaVo Kerr Group website states that "KaYo Kerr Group is a member of the
Danaher Corporation, a diversified technology leader that designs, manufactures, and markets
innovative products and services with strong brand names and significant market positions.
Danaher and its subsidiaries are driven by a f(Jundation of strong core values and the Danaher
Business System, a tremendously successful approach to lean manufacturing and continuous
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improvement processes." The KaYo Kerr Group's president is van Duijnhoven, who has been a
senior executive of Danaher Corporation since 2002, and, upon information and belief: is
presently a Senior Vice President thereof
308. On February 20, 2014, Danaher Sybron issued another press release, entitled
"KaYo Kerr Group Featuring Twenty New Products at Chicago Mid-Winter," claiming that two
of the Joint Venture Companies' new products (Custom Direct Abutments and InterActive
implant systems)- which Dr. Niznick and his team spent yeats developing- Were KaYo Kerr
Group products that the KaVo Kerr Group "has released." At the Chicago Dental Society
Midwinter Meeting in February 2014, Danaher Sybron promoted these new products as KaYo
KelT Group products and used the services of a Joint Venture Company employee to assist in this
marketing strategy.
309. Commencing on and after Febmary 7, 2014 and continuing through the present
time, Danaher Sybron has actively marketed KaYo Kerr Group products through trade journal
and website advertisements, press releases, brochures, and other marketing materials that usc and
display the name "Implant Direct," a registered trademark owned by the Joint Venhtre
Companies (U.S. Registration Number 3,414,848), alorig with Implant Direct's orange-and-blue
logo, in which the Joint Venture Companies have a protectable trademark interest- all of which
suggest that Implant Direct's products are KaYo Kerr Group products. These marketing
materials have included two-page ads appearing in dental joumals which promote Implant
Direct's products on one page and the products of one of Danaher's Dental Platform Companies
on the other, with the two pages joined by the phrase "Your need is our mission - Kavo and
Implant Direct."
310. At a time unknown to the Minority Members, but upon information and belief no
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later than in or about mid-2014, Danaher Sybron obtained and began using the confidential list of
Implant Direct's customers, along with confidential information pertaining to the customers'
preferences and product orders, to market KaVo Ken- Group products. The confidential
customer list and related information constitute the intellectual prope1iy of the Joint Venture
Companies, gathered and created at great cost and over a number of years by Implant Direct's
sales force and "data miners." During his presidency, Dr. Niznick actively guarded and
protected the confidentiality of this information for the exclusive use of the Joint Venture
Companies and, in this regard, refused to release the information to Danaher's Dental Platfonn
Companies despite Danaher Sybron's request for disclosure of the confidential infonnation.
3 11. At a time unknown to the Minority Members, but believed to be on or after
December 1, 2013, Danaher Sybron substantially took over the Human Resources functions of
the Joint Venture Companies and attempted to recruit employees for Joint Venture Company
positions through online solicitations referring to Implant Direct as "a division of Danaher."
312. At a time unknown to the Minority Members, but believed to be on or after
December 1, 2013, Danaher Sybron took steps to ensure that a substantial pati ofthe marketing
functions and strategies of hnplari.t Direct and the Danaher's Dental Platform Companies are
now overseen by executives employed by the KaYo Ken· Group.
X. Minority Members' Veto Of Integration Transaction Ignored
313. Under the Operating Agreements (4.02(±)), the Minority Members have a right to
veto the Integration Transaction. The Integration Transaction, including all acts undertaken in
futiherance thereof~ is a "transaction" between the Joint Venture Companies, on the one hand,
and Danaher Sybron or its affiliates, on the other, within the meaning of Section 4.02(f) of the
Operating Agreements and, accordingly, is subject to the Minority Members' veto right.
314. As explained more Cully below, the Minority Members exercised that right by
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notice dated January 9, 2014. In response, Danaher Sybron denied that it had effectuated the
Integration Transaction and accordingly ignored it. Importantly, Danaher Sybron did not provide
the Minority Members with any of the details of this transaction.
315. The plaintiffs had no right to enter into the Integration Transaction, which should
be set aside and declared null and void. In addition, this transaction has and will continue to
cause Implant Direct substantial damages in an amount presently unknown, but which shall be
proven at triaL
XI. Other Actions Taken in Furtherance of the Integration Transaction
316. While unknown to the Minority Members when these events were occurring, it is
now clear that Danaher Sybron and the plaintiffs engaged in a series of improper actions to
enable them to execute the Integration Transaction, including their attempts to end the Minority
Members' affiliation with the Joint Venture Companies as aforesaid.
317. Thus, it now appears that, unbeknownst to the Minority Members, the plaintiffs
took the following actions in furtherance of, or as precursors to, the Integration Transaction.
318. To carry out the Integration Transaction, upon information and belief, Danaher
Sybron needed to ( 1) replace Dr. Niznick as president of the Joint V cnturc Companies, (2) stop
the Joint Venture Companies fi:om marketing Implant Direct as a stand-alone dental implant
company, (3) use Implant Direct's registered trademark, logo, and other intellectual propctty
belonging to the Joint Venture Companies in a marketing campaign that would brand Implant
Direct products, along with the products sold by Danaher's Dental Platfonn Companies, as
KaYo Kerr Group products, (4) obtain and use the Joint Venture Companies' confldentiallist of
Implant Direct customers, and other proprietary information regarding these customers
belonging to the Joint Venture Companies, to help market, seJJ and distribute KaYo Kerr Group
products, (5) use the Joint Venture Cornpanies' sales torce and fncilities to sell certain of KaYo
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Kerr Group's digital products, and (6) place the management of the Joint Venture Companies'
manufacturing, operations, accounting, infonnation technology, and legal ti.mctions under the
control of the KaVo Kerr Group.
319. Danaher Sybron anticipated that Dr. Niznick would not agree to the Integration
Transaction and would exercise the Minority Members' veto right to stop it from being
implemented.
320. Danaher Sybron also knew that Dr. Niznick did not and would not behave like the
executives of other Danaher's Dental Platform Companies and simply do what he was told to do
by Danaher Corporation. For example, in or about October 2013, Dr. Niznick refused to sell
titanium abutment blanks to one of the Dental Platfonn Companies (KaYo) at the price' it wanted
to pay because he believed the Joint Venture Companies could make more money using IDSM' s
machine time to make Implant Direct's products.
321. To solve this problem, upon information and belief, Danaher Sybron decided that
the Integration Transaction could best be accomplished with Dr. Niznick out of the way,
discredited, and marginalized to the maximum extent possible.
322. Danaher Sybron took a number of actions to marginalize Dr. Niznick's
involvement in the Joint Venture Companies. As stated above, on October 8, 2013, van
Duijnhoven informed Dr. Niznick that his services as president would no longer be required after
his then current employment term expired on December 31,2013.
323. On October 9, 2013, Danaher Sybron intom1ed Dr. Niznick that a presentation
about the Strategic Plan he had been invited to make lhe following day to a t,>Toup of Danaher
Sybron executives had been canceled.
324. Upon inionnation and belief, at some time in or around mid-October 2013,
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unbeknownst to the Minority Members, Danaher Sybron decided that Stratton would replace Dr.
Niznick as president of IDSI and IDSA as soon as that could be accomplished and proceeded to
negotiate the terms of Stratton's employment with Stratton.
325. On November 25, 2013, at Coletti's direction, Stratton told Dr. Niznick that at the
regular Board meeting scheduled to be held the following day (1) Stratton would be appointed to
replace Dr. Niznick as president ofiDSI and IDSA effective December 1, 2013, (2) Moran, a
Vice President of Operations for Ormco and Allesee Orthodontic Appliances, two of Danaher's
Dental Platfonn Companies, would be appointed as Vice President of Operations for IDSM,
working half--time for IDSM while continuing to work for Danaher Sybron's affiliates, effective
December 1, 2013, and (3) the Board would offer a consulting agreement to Dr. Niznick.
326. At the time Danaher Sybron decided to appoint Stratton as president of IDSI and
IDSA, Stratton had a college degree in public relations and had begun working for IDSI only 11
months earlier. For five years prior to working for IDSI, Stratton managed a five-person
distribution company with limited success. Although Stratton performed well in his sales role at
IDSJ under Dr. Niznick's direction, Stratton lacked expertise and experience in many aspects of
Implant Direct's business that Dr. Niznick handled as president of the Joint Venture Companies,
including designing and developing new implant products, filing and prosecuting patent
applications and resolving patent legal issues, manufacturing and testing dental implant products,
creating marketing strategies, crafting technical brochures, journal advertiserncnts, lectures and
video tape pieces comparing Implant Direct's products with competitors' products and managing
htnnan resource issues.
327. :\!though Danaher Sybron was aware of these fads, Danaher Sybron nonetheless
decided to install Stratton as president of IDSI and IDSA to replace the person who ( 1) founded
Implant Direct's business, (2) designed lmplant Direct's products, (3) was well-known and
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respected throughout the global implant industry, (4) was largely responsible for Implant
Direct's rapid rise in sales and profits, and (5) was ready, willing, and able to stay on as
president. In retrospect, Danaher Sybron made this decision, not because it was in the best
interest of the Joint Venture Companies (it was not), but because replacing Dr. Niznick with
Stratton would facilitate the implementation of the Integration Transaction.
328. The Board meeting proceeded as scheduled on November 26, 2013. At the
meeting, although Danaher Sybron had already made the decision to appoint Stratton as
president of IDS I and IDSA to replace Dr. Niznick, Danaher Sybron sought a Board vote to give
its appointment the appearance ofpropricty.
329. Prior to the Board meeting, Stratton infonned Dr. Niznick that, if Stratton were
appointed president and Dr. Niznick became a consultant to the Joint Venture Companies,
Stratton would can·y on Dr. Niznick's vision for Implant Direct and preserve its unique business
culture that had proven so successful under Dr. Niznick's leadership. Believing that he would be
engaged as a consultant and that Danaher Sybron and Stratton would actually consult with him
about the business of the Joint Venture Companies, Dr. Niznick voted in favor of appointing
Stratton as president of IDST and IDSA at the November 26, 2013 Board meeting. The vote
cmTied 4 to 0.
330. At the time be cast his vote in favor of appointing Stratton as president, Dr.
Niznick did riot know about the Integration Transaction or that Danaher Sybron and Stratton
would pursue it at the Joint Venture Companies' expense. He also did not know that Danaher
Sybron and Stratton had no intention of actually consulting with Dr. Niznick about anything.
331. At the November 26, 20 !3 Board meeting, the Danaher Sybron managers also
moved to appoint !\'loran as Vice President of Operations of JDSM, working half.timc only for
JDSM and the remainder of his time for Onnco in Glendora, California, and Allcsee Orthodontic
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Appliances in Stmicvant, Wisconsin, with Moran's compensation to be shared between IDSM
and Onnco.
332. Dr. Niznick immediately exercised the Minority Members' veto right over
Moran's proposed appointment. Because the appointment involved the sharing of Moran's
services between IDSM and at least one of Danaher's Dental Platform Companies, it constituted
a "transaction;' between IDSM and a Danaher Sybron affiliate within the meaning of the veto
clause (Section 4.02(f)) in the Operating Agreements subject to the Minority Members' veto
rights.
333. Dr. Niznick also objected to Moran's appointment on the grounds that (1) Moran,
when he worked for IDSM for a few months in 2011, proved to be a poor employee, (2) IDSM's
then current Director of Engineering (Wayne Smith), who knew Moran, would likely quit if he
had to report to Moran, and (3) working only half-time for IDSM and the remainder of his time
for other Danaher Dental Platfonn Companies, Moran could not provide the type of supervision
and management IDSM needed if Dr. Niznick were no longer president.
334. Van Duijnhoven and the rest of the Board, however, took the position that
Moran's appointment was not a "transaction" within the meaning of the veto clause and that the
lyiinority Members therefore had no right to veto the appointment. As a result, the Danaher
Sybron-appointed managers voted to appoint Moran as Vice President of Operations of IDSM
and to have Moran report to the Board. The vote carried 3 to 1, with Dr. Niznick casting the
dissenting vote. Dr. Niznick, unaware of the Integration Transaction, stated he would withdraw
the Minority Members' veto of Moran's appointment if Stratton were appointed as president of
all three Joint Venture Companies (i.e., not just lDSl and IDSA) and if Moran reported to
Stratton.
335. On November 27, 2013, Danaher Sybron announced its actions to Implant
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Direct's employees, informing them that (1) Stratton had been appointed president of all three
Joint Venture Companies effective December I, 2013, and (2) Moran, while continuing to work
for Onnco and Allesee Orthodontic Appliances, had been appointed as IDSM's new Vice
President of Operations effective December 1, 2013, reporting to Stratton, and responsible for
operations "across Implant Direct."
336. The announcement also stated that John McLachlan ("McLachlan"), IDSI's
Director of Education and Operations in Las Vegas, and Wayne Smith ("Smith"), IDSM's
Director of Engineering, would report to Moran (rather than to the president oflmplant Direct, to
whom they had previously repo1ied).
337. Stratton became president of the Joint Venture Companies on December 1, 2013
and, upon information and belief, immediately began repmiing directly to van Duijnhoven, the
KaYo Kerr Group's president, rather than to the entire Board. At the National Sales Meeting of
Implant Direct's sales force in Las Vegas on January 4, 2014, Stratton publicly refen·ed to van
Duijnhoven as his "boss."
338. Stratton immediately continued the marginallzation of Dr. Niznick. On December
1, 2013, at 7:48a.m., Stratton's first act as president was to inform Dr. Niznick by email that (1)
there were significant "changes coming to Implant Direct that ... will be vetted by [van
Duijnhoven] before implementation," and (2) although Stratton would speak to Dr. Niznick at
Board meetings, "there will be limited focus given to explaining and/or defending every
decision" he made as president - despite !he fact that Stratton, in the two months prior to his
appointment as president, had sent emails to the Board and to Dr. Niznick (i) "embrac[ing)" the
idea of working "collaboratively" with Dr. Niznick as a consultant "over !:he next 5 years plus,"
(ii) praising Dr. Niznick's "wisdom and insights" regarding the implant industry as "invaluable"
and his knowledge of"implant dentistry" as "unmatched," (iii) stating that his "respect for what
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[Dr. Niznick] built at Implant Direct holds no boundaries," (iv) stating that Dr. Niznick's
''entrepreneurial spirit" and "motivating" energy led to Implant Direct's "record sales growth
within the implant industry" and inspired Stratton, and (v) claiming that, as presidertt, he would
ensure that Dr. Niznick's "legacy will remain intact for years to come."
339. On December 2, 2013, Stratton's second day as the new president, he instructed
his staff to stop sending reports about company business to Dr. Niznick, even though Dr. Niznick
was still a Board member at the time.
340. Although the Consulting and Waiver Agreement states Dr. Niznick would provide
consulting services "in response to requests fi·om Tom Stratton or such other associates [as] he
designates," neither Stratton nor any designated associate has made any such requests to Dr.
Niznick after January 1, 2014. Upon infom1ation and belief, Stratton instructed his marketing
and product development staff to refrain from communicating with Dr. Niznick. Despite the
absence of any requests for consulting services, Dr. Niznick has nevertheless sent numerous
emails to Stratton making marketing suggestions and pointing out inaccurate statements in
marketing pieces and newsletters published on Implant Direct's website or in joumal ads that
require correction. Stratton never replied to any of these emails, adopted any of Dr. Niznick's
marketing suggestions, or con-ected the inaccurate statements in the marketing materials.
341. Danaher Sybron' s then secret plans to effectuate the Integration Transaction
continued apace. On December 17, 2013, Danaher Corporation filed a Certificate of Fonnation
of KaYo Kerr Group, LLC, a Delaware limited liability company, with the office of the
Secretnry of State of the State of Delaware. Upon information and belief, this would turn out to
be the corporate vehicle used to unite Danaher's Dental Platform Companies~ including Implant
Direct- under a single umbrella.
342. Danuher Sybron also planned to use a National Sales Meeting ofimplant Direct's
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sales managers and representatives scheduled f()r January 2~5, 2014, to announce further steps at
integratil1g the entities- having Jmplant Direct's salesmen stmt selling certain KaYo Ken· Group
digital products, something the stand-alone Implant Direct had never previously done.
343. This is evidenced by Danaher Sybron's appointment of Scott Henkel as "VP of
Global Education and Digital Platform." (Italics added.) This was accomplished by Danaher
Sybron on January 2, 2014, without Board approval as required by Section 5.01(a) of the
Operating Agreement. Importantly, at the time of Henkel's appointment, the Joint Venture
Companies did not have a "digital platfonn" and did not make or sell digital products.
344. Some of Danaher's Dental Platform Companies, including KaYo and Ormco, on
the other hand, had a "digital platfonn" and made and sold digital products ("Danaher's digital
products"), including Ka V o' s Artie a scan, engine, and bench milling machine, and Ormco' s
Lythos High-Tech Intraoral scanner, which were listed in the Strategic Plan as "possible"
equipment that Implant Direct might consider selling. As set forth more fully below, Danaher
Sybron intended to have Henkel announce at the National Sales Meeting ("NSM") its efforts to
have Implant Direct's sales force sell these products.
345. On January 2, 2014, immediately after learning of Danaher Sybron's appointment
of a vice president of a "digital platfonn" the Joint Venture Companies did not have, Dr. Niznick
sent an email to van Duijnhoven and the other Danaher Sybron-appointed Board managers to
request an emergency Board meeting and express his suspicion that the reason he was being
prevented front hearing other presentations at the NSM was because Danaher Sybron had (1)
decided to use Implant Direct's sales force to sell Danaher's digital products without providing
the Minority Members with the details of the plan so that they could make an intelligent and
knowing exercise of their veto right over the transaction, and (2) ''chatted a course for implant
Direct that focuses on what is in the best interests of Kavo/Kerr and not what is in the best
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interest of the Joint Venture." Dr. Niznick concluded, "Because of my position on the Board and
because of my right to veto Danaher transactions, l demand full details on any plan to integrate
the sale of Danaher Sybron digital products" into Implant Direct's business.
346. Danaher Sybron and Stratton sought to hide from Dr. Niznick their plans by
limiting his participation at the National Sales Meeting at which they would be announced. On
December 30, 2013, Stratton invited Dr. Niznick to give a one-hour lecture at the National Sales
Meeting but stated that Dr. Niznick would not be pennitted W sit in the audience and listen to the
presentations of the other NSM speakers- even though (1) no such restrictions were placed on
the other dentists invited to speak, (2) Dr. Niznick was still a Boal'd manager, and (3) van
Duijnhoven had infom1ed Dr. Niznick that van Duijnhoven would be attending the first two days
of the NSM. Dr. Niznick did not know why Stratton 1nsisted on keeping Dr. Niznick from
hearing the other NSM speakers, although he would subsequently find out, as alleged below.
347. On January 3, 2014, Coletti sent an email to Dr. Niznick stating that although Dr.
Niznick would not be permitted to attend the NSM, van Duijnhoven would attend "in his
capacity as the president ofKKG [i.e., the KaVo Kerr Group]" and that Coletti would attend too.
Coletti concluded, "I do not believe the Operating Agreement[s) or Nevada law suppoti the
proposition that shareholders or members of the board of managers may attend sales meetings."
348. Dr. Niznick replied to Coletti's email by telling her he would attend the NSM
anyway and atTived at the NSM on January 4, 2014 at approximately 8:00 a.m. Shortly
thereafter, and unknown to Dr. Niznick at the time, Henkel, who had prepared to rnake a
presentation at the NSM to Implant Direct's sales force that included references to Dnnahcr's
digital products, revised his presentation to exclude any reference to these products or their sale
by Implant Direct's sales force. Upon information and belief this was done at the direction of
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Stratton who, upon seeing that Dr. Niznick had not been deterred from attending the NSM,
instructed Henkel to make this change to conceal the Integration Tnmsaction from Dr. Niznick.
349. On January 9, 2014, out of an abundance of caution, when Danaher Sybron failed
to respond to Dr. Niznick's January 2, 2014 request to disclose the details of any integration
plans, the Minority Members (1) gave notice of the exercise of their veto right over any plan by
Danaher Sybron to effect "at least a partial merger" between or "integration" of the Joint Venture
Companies and Danaher's Dental Platform Companies, and (2) demanded "disclosure of each
and every element of the transactions between Danaher Sybron and any or all of the Joint
Venture Companies" so that the Minority Members could exercise their veto right "on a !mowing
and informed basis."
350. On January 16, 2014, Danaher Syb~on responded to the Minority Members' veto
by, in substance, denying the existence of the Integration Transaction and threatening to force the
Minority Members to sell their interest in the Joint Venture Companies to Danaher Sybron at less
than fair value through the exercise of the Employment Call Option- an option Danaher Sybron
waived in the Consulting and Waiver Agreement and which, pursuant to the express tenns of the
First Amendment, had expired anyway on December 31, 2011.
351. Not long after removing Dr. Niznick as president ofthe Joint Venture Companies
and replacing him with Stratton, Danaher Sybron also terminated, or caused the termination of~
the employment of numerous highly valuable, trained and competent director-level employees,
who were loyal to Implant Direct and Dr. Niznick, to facilitate the implementation of the
Integration Transaction:
"' Smith, lDSM's Director of Engineering, resigned because of Danaher Sybron's
insistence that he report to Moran. Smith st<nied working for Implant Direct when it was
founded in 2004, was responsible for setting up its "lights-out" munufacturing process
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described in a trade magazine as "The Shop of the Future," and was critical to the
successful launch of one oflmplant Direct's new product lines (Custom Direct Abutments
and Bars) in which millions of dollars had been invested. Smith and Moran had clashed
and quaneled in 2011 when Moran briefly worked for IDSM. Although Dr. Niznick
warned Stratton that Smith would quit if he had to rep011 to Moran (rather than
continuing to report to the president), the advice was ignored and Smith quit
• The employment of McLachlan, IDSI's Director of Education and Operations, was first
suspended and then terminated because he too refused to report to Moran instead of
Implant Direct's President. McLachlan, who had worked for IDSI for four years,
Stlccessfully started and ran Implant Direct's teaching facility, shipping and "clean room''
operations in Las Vegas, and had previously been described as one of Implant Direct's
"superstars" by Stratton. Dr. Niznick warned Stratton in a text exchange on November
27, 2013 that McLachlan would view the change in reporting (fi·om reporting to the
president, as he had with Dr. Niznick, to reporting to a new half-time Vice President
working in another city for a different company) as a demotion. This advice was ignored,
resulting in the loss of McLachlan's services.
• Jurcoane, as Dr. Niznick warned at the November 6, 2013 Board meeting, wound up
suing the Joint Venture Companies, alleging in substance that she was the victim of
repeated harassment by Stratton, co-workers, and Danaher Sybron agents for having a
"close personal relationship" with Dr. Niznick. The claimed harassment began in
connection with the unnecessary investigation initiated by the Danaher-appointcd Board
managers into the purported inappropriate relationship between Jurcoane and Dr.
Niznick. After the investigation concluded and Stratton became president, Stratton,
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according to Jurcoane's lawsuit, told Jurcoane that he had a "small window ... to
negotiate a severance package ... [with] people who had a 'close personal relationship
with Dr. Niznick"' and that Jurcoane "needed to get in the right boat." Jurcoane alleged
that when she refused to voluntarily resign, Stratton reduced her job responsibilities,
whereupon Jurcoane filed the lawsuit, as predicted by Dr. Niznick, and she ultimately
resi&rned.
• The employment of Brenda Kent, IDSA's Director of Human Resources who had been
with Implant Direct for six years, and Michael Kennedy, IDSA's Director of Clinical
Training and Events, who had been with Implant Direct for eight years, was also
terminated. Upon information and belief, since there was no performance basis for
tenninating their employment, these two highly valuable employees also fell victim to
having a "close personal relationship with Dr. Niznick."
• Brian Banton, IDSI's Vice President oflntemational Sales who had been with Implant
Direct since Dr. Niznick founded it, was replaced in that position by a friend of
Stratton's.
• Barry Britzman, IDSM's Director of Facilities who had been with Implant Direct for ten
years, was summarily discharged as was Michael Doerle, IDSI's Director of Sales for
Europe.
352. The tem1ination of these valuable employees, combined with the loss of Dr.
Niznick's leadership, marketing expertise and technical knowledge, has and will continue to
negatively atTect the launch and marketing of Implant Direct's new products (Custom Direct
Abutments, the InterActive and SwishPlus2 implant systems, GPS Attachments, and the
SBActivc new implant surface) as well as the marketing and sale of Implant Direct's existing
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products. The successful launch and marketing of these products is critical to achieving the ] 5%
compounded growth in sales and profits projected through 2016 in the Strategic Plan.
Momentum from marketing efforts in 2013 and customer satisfaction may sustain that level of
growth for a year or so, but without the high level of web-based marketing and the proper
explanation of the product advantages compared to competitive products, sales wil1 slow to the
level of the industry growth overall.
353. In futiherance of the Integration Transaction, Danaher Sybron and the Joint
Venture Companies have also included inaccurate, inelevant, and scandalous matter in the
Amended Complaint filed in this action for the purpose of impugning and discrediting Dr.
Niznick's character and reputation- while at the same time continuing to display Dr. Niznick's
image and use his name on Implant Direct's website (over 150 times) for the purpose of
promoting the sale of Implant Direct's products. Danaher Sybron and the Joint Venture
Companies refer to Dr. Niznick as ''unprofessional," "offensive," and "crude" in their Amended
Complaint, and allege the purported reasons that supposedly necessitated his removal from the
Board. To sell products, however, they currently paint Dr. Niznick in a different light on Implant
Direct's website, stating:
.... Dr. Niznick has had 35 dental implant US patents issued to him
including the internal connection patent that has become the cornerstone of
modern implant design. • . • Dr. Niznicl<'s significant contributions to the
dental implant field have been recognized by academic institutions and
dental implant organizations .... The United States Department of Veterans
Affairs issued a Commendation to Dr. Niwick for conceiving and funding
the largest dental implant study worlchvide at 32 VA centers thai included
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900 patients receivh1g over 2800 of Dr. Niznick's implants. Special issues of
the Journal of Periodontology and the Journal of Oral and Maxillofacial
Surgery were dedicated to publishing the results of this monumcnhtl
prospective, multi-center clinical study, ·which added signit1cantly to dental
implant knowledge.
354. And van Duijnhoven's announcement of Dr. Niznick's "retirement," posted (on
three separate pages) on Implant Direct's website, suggests Dr. Niznick is still a Board manager,
long after Danaher Sybron removed him:
Under Dr. Niznick's leadership, Implant Direct has nearly doubled its sales
in the last three years and launched many new products that have
siguificantly increased the predictability and affordability of dental implant
procedures. Implant Direct in 2013 is the fastest growing major implant
company in the industry. Dr. Niznick will remain a significant part of
Implant Direct as a shareholder, boat·d member and as a consultant for
product development and marketing. On behalf of the Board and the
management team at Implant Direct, I want to congratulate Dr. Nizuick on
the wonderful, exciting company he has built and the dedicated, skilled team
he has assembled.
355. During early 2014, the parties exchanged Dispute notices and responses regarding
the disputes raised herein as required by the Transaction and Operating Agreements. The parties
then engaged in negotiations regarding the noticed Disputes. Those discussions, however, did
not resolve the Disputes.
356. On March 20,2014, the parties mediated their various Disputes as required by the
Transaction and Operating Agreements. The mediation was unsuccessful.
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FIRST COUNTERCLAIM: BRI~ACH OF MANDATORY BUY~OUT CLAUSE (Minority Members versus Danaher Sybron)
357, The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
358. The Operating Agreements constih1te contracts between the Minority Members
and Danaher Sybron. The Mandatory Buy-Out Clause is set out in Section 9.04(a) of the
Operating Agreements.
359. The Minority Members fully perf01111ed their obligations under the Operating
Agreements.
360. On January 31,2014, and continuing thereafter, Danaher Sybron breached the
Mandatory Buy-Out Clause by failing and refusing, despite demand, to purchase a 5%
membership interest in the Joint Venture Companies fi·om the Minority Members at the
Mandatory Buy~Out Price, or at any other price.
361. Based on the preliminary unaudited financial statements provided by Danaher
Sybron to the Minority Members, the Mandatory B'uy-Out Price for a 5% membership interest in
the Joint Venture Companies was $28,007,960 on January 31, 2014.
362. As a proximate result of said breach, the Minority Members have been damaged
in the amount of $28,007,960, or in such other amount as may be proved at ttial, plus interest
thereon at the annual rate of9% from January 31, 2014 until paid.
SECOND COUNTERCLAIM: DECLARATORY JUDGMENT THAT DANAHER SYBRON CANNOT EXERCISE THE EMPLOYMENT CALL OPTION
(Minority Members versus Danaher Sybron)
363. The Minority Members repeat and reallege each and every allegation set fi)tih
above as if set forth in full herein.
364. Pursuant to C.P.L.R. § 3001, this Court has authoriiy to declare the rights, status
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or other legal relations of the parties before it. There exists a genuine and justiciable controversy
relating to whether Danaher Sybron has the right to exercise the Employment Call Option, set
out in Section 9.04(b)(i) of the Operating Agreements, and thereby compel the Minority
Members to sell their membership interest in the Joint Venture Companies to Danaher Sybron
for a fraction of its value.
365. Danaher Sybron has no right to exercise the Employment Call Option because:
(1) Danaher Sybron expressly waived and released any rights it had or might have had to
exercise the Employment Call Option pursuant to the Employment Call Option Waiver in the
Consulting and Waiver Agreement (Exhibit F); or (2) altematively, all of the conditions
precedent to Danaher Sybron's right to exercise tlw Employment Call Option have not been
satisfied, in that (i) Dr. Niznick's employment relationship with the Joint Venture Companies
was not terminated prior to December 31, 2011, (ii) Dr. Niznick did not tem1inate his own
employment, but was either fired or, pursuant to the mutual agreement of the parties, converted
his status fi:om employee to consultant, and (iii) if Dr. Niznick terminated his own employment,
he did so with "Good Reason" within the meaning of the Employment Call Option.
366. The Minority Members therefore request that the Court enter a declaratory
judgment that Danaher Sybron has no right, and is not entitled, to exercise the Employment Call
Option.
THIRD COUNTERCLAIM: DECLARATORY JUDGMENT THAT DANAHER SVBRON CANNOT EXERCIS.l!-: THE CAUSE CALL OPTION
(Minority Members versus Danaher Sybron)
367. The Minority Members repeat and reallege each and every allegation set f01ih
above as if set f()rth in full herein.
368. Pursuant to C.P.L.R. § 3001, this Court has authority to declare the rights, status
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or other legal relations of the parties before it. There exists a genuine and justiciable controversy
relating to whether Danaher Sybron has the right to exercise the Cause Call Option, set out in
Section 9.04(b)(ii) of the Operating Agreements, and thereby compel the Minority Members to
sell their membership interest in the Joint Venture Companies to Danaher Sybron for a fraction
of its value.
369. Danaher Sybron has no right to exercise the Cause Call Option because all of the
conditions precedent to Danaher Sybron's right to exercise that option have not been satisfied, in
that {i) neither the Minority Members, Dr. Niznick, or the Niznick Family Trusts have breached
any of the covenants in Article X of the Operating Agreements, including but not limited to the
non-competition covenants contained in Section 10.02 of the Operating Agreements, and (ii) if
such a breach occun·ed, Dr. Niznick did not receive the requisite notice and opportunity to cure
from Danaher Sybron or the Joint Venture Companies.
370. The Minority Members therefore request that the Court enter a declaratory
judgment that Danaher Sybron has no right, and is not entitled, to exercise the Cause Call
Option.
FOURTH COUNTERCLAIM: BREACH OF BOARD MANAGER APPOINTMENT CLAUSE
(Minority Members vet·sus Danaher Svbron and the .Joint Venture Companies)
371. The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
372. The Operating Agreements constitute contracts between the Minority Members
and Danaher Sybron. Pursuant to Sections 4.02(c) and 4.03 of the Operating Agreements, the
Minority Mernbcrs have the right to appoint one of the !'our !Vlanagcrs on the Board of Managers
of the Joint Venture Companies and to have thBt Manager fully partic.ipate at all Board meetings
and vote on all matters brought bdorc the Board.
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373. The Minority Members fully performed their obligations under the Operating
Agreements.
3 74. The Minority Members appointed Dr. Niznick as a Manager and, in that capacity,
Dr. Niznick participated in all regular and special Board meetings that took place from January
1, 2011 until January 29, 2014, and voted on all matters brought before the Board during this
period of time.
375. On January 29, 2014, and continuing thereafter, Danaher Sybron and the Joint
Venture Companies breached Sections 4.02(c) and 4.03 of the Operating Agreements by
removing Dr. Niznick from the Board and by thereafter managing, or purporting to manage, the
business of the Joint Venture Companies by an illegally constituted Board, consisting ofDanaher
Sybron-appointed managers only, without any input or participation by Dr. Niznick or the
Minority Members.
376. As a proximate resultofsaid breach, the Minority Members have been excluded
from participating in the management of the business Joint Venture Companies, an ineparable
hatm that cannot be compensated by monetary damages.
3 77. Section 15.04 of the Operating Agreements provides that the patties thereto (1)
acknowledge "there will be no adequate remedy at law for any violation by any party of any of
the covenants" contained in the Operating Agreements, and (2) "shall have the right to injunctive
relief to restrain a breach or threatened breach ot: or otherwise to obtain speeific perfonnanee ot:
the other parties' covenants ... contained in this Agreement, without the posting of any bond, in
addition to any other remedy to which it may he entitled, at law or in equity."
378. The Minority Members therefore seck (i) an injunction requiring lhe reinstatement
of Dr. Niznick to the Board, along with the rights and privileges afforded to the other Danaher
Sybron-appointed Board managers, including without limitation access to the brJoks, rcconJs, and
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facilities of the business, (ii) an injunction prohibiting Danaher Sybron and the Joint Venture
Companies from continuing to manage, or purporting to manage, the business of the Joint
Venture Companies via a Board consisting of Danaher Sybron-appointed managers only without
any input or participation by Dr. Niznick or the Minority Members, and (iii) a decree nullifying
all votes taken on and after January 29, 2014 by a Board consisting of Danaher Sybron-appointed
managers only, except to the extent that the rights of innocent third parties might be involved.
FIFTH COUNTERCLAIM: BREACH OF THE RETAINED EARNINGS DISTRIBUTION PROVISION IN THE SECOND AMENDMENT
(Minority Members versus Danaher Sybron and the Joint Venture Companies)2
379. The Minority Members repeat and reallege each and every allegation set fmth
above as if set f01th in full herein.
380. The Operating Agreements constitute contracts between the Minority Members
and Danaher Sybron. Pursuant to the Second Amendment, immediately following Danaher
Sybron's payment of the Mandatory Buy-Out Price to the Minority Members on January 31,
2014, the Joint Venture Companies were required to distribute to the Minority Members their pro
rata share (which, foHowing the payment of the Mandatory Buy-Out Price, would have been
20%) of the "accumulated retained earnings of the Joint Venture Companies as of December 31,
2013 .. 0 ."
381. The Minority Members fully performed their obligations under the Operating
Agreements.
182. Based on the preliminary <maudited financial statements provided by Danaher
Sybron to the Minority Members, the amount of accumulated retained earnings that should have
been distributed to the Minority Members on January 31, 2014, immediately following the
payment of the Mandatory Buy-Out Price, was $4,177,684.
1 This cause of action was dismissed pursuant to the Court's Order ofFcbnmry 4, 20 !5 (Doc. No. 201), p. 25. It is, however, restated here for the purpose of prt.:scrvine the Minority Members' appeal 'Nith respect thereto.
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383. On or about February 7, 2014, the Joint Venture Companies distributed to the
Minority Members the sum of $123,425, claiming without justification that said amount
constituted the Minority Members' share of the accumulated retained earnings of the Joint
Venture Companies as of December 31, 2013, and thereby underpaying the amount that should
have been distributed by $4,054,259 (i.e., $4,177,684 minus $123,425).
384. On January 31, 2014, and continuing thereafter, Danaher Sybron and the Joint
Venture Companies breached the Second Amendment by failing to distribute to the Minority
Members the amount of money actually due pursuant to the above-referenced retained earnings
provision of the Second Amendment.
3 85, The Minority Members seek a decree of specific performance compelling
Danaher Sybron and the Joint Venture Companies to distlibute to the Minority Members, in
accordance with the above-referenced retained earnings provision of the Second Amendment, the
sum of $4,054,259, or in such other amount as may be proved at trial, plus interest thereon at the
annual rate of9% from January 31,2014 until paid.
SIXTH COUNTERCLAIM: BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING REGARDING EXCESS CASH DISTRIBUTIONS
(Minority Members versus Danaher Sybron and the Joint Venture Companies)
386. The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in f111l herein.
387. The Operating Agreements co11stitute contracts between the Minority Members
and Danaher Sybron.
388. Pursuant to the tetms of the Operating Agreements, the determination of the
amount of Ex(;ess Cash for distribution purposes must be made by the Board after taking into
account the Joint Venture Companies' "anticipated working capital expenses, capital
expenditures and reasonable rese1ves f<.1r all expenses, expenditures and any contingent
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DTE691 C-082
FILED: NEW YORK COUNTY CLERK 02/08/2017 10:57 AM INDEX NO. 650908/2014
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liabilities." Such determination must be made in good faith pursuant to the implied covenant of
good faith and fair dealing inherent in all contracts.
389. The Minority Members fully perfonned their obligations under the Operating
Agreements.
390. Based on the preliminary unaudited financial statements provided by Danaher
Sybron to the Minority Members, the Joint Venture Companies had cash on hand, as of June 30,
2014, in the amount of $29,456,741 and, based on information and beliet: that amount is
increasing at the rate of nearly $3 million per month.
391. Danaher Sybron and the Joint Venture Companies breached the covenant of good
faith and fair dealing by (1) detem1ining in bad faith, and not for any purpose related to the
reasonable needs of the business, that (a) none of the cash on hand constituted and/or constitutes
Excess Cash, as that term is defined in the Operating Agreements, or (b) that there was and/or
and is not sufficient Excess Cash to wan·ant Excess Cash distributions "more frequently" than
annually within the meaning of Section 7.1(a) of the Operating Agreements, and (2) failing in
bad faith to continue making Excess Cash distributions to the Minority Members.
392. The Minority Members seek a decree of specific perfonnancc compelling
Danaher Sybron and the Joint Venture Companies to make Excess Cash distributions to the
Minority Members that should have been made after January 1, 2014, including but not limited
to the annual Excess Cash distributions that should have been made in 2014 and 2015.
393. The Minority JVIembers also seek punitive damages agains1 Danaher Sybron. The
actions of Danaher Sybron were and are maliciou~ and oppres~ive. Danaher Sybron intended to
injure the Minority Members, acted in willful and conscious disregard of the Minority Members'
rights, and caused them to suffer unjust hardship.
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SEVENTH COUNTERCLAIM: BREACH OF THE MINORITY MEMBERS' VETO RIGHT UNDli:R THE OPERATING AGREEMENTS
(Minority Members, on Their Own Behalf and DcrivHtively, versus Danaher Sybron and the Joint Venture Companies)
394. The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
395. The Operating Agreements, as amended by the Second Amendment, constitute
contracts between the Minodty Members and Danaher Sybron. Pursuant to Section 4.02(f) of
the Operating Agreements, the Minority Members were granted the right to veto any transaction
between the Joint Venture Companies, on the one hand, and Danaher Sybron or any of its
affiliates, on the other. Danaher Sybron's affiliates include the KaVo Ken· Group and Danaher's
Dental Platform Companies.
396, Section4.02(f), reasonably construed, requires Danaher Sybron to (1) give
advance notice to the Minority Members of any transaction subject to their veto right, and the
details of such transaction, so that the Minority Members would be able to exercise their veto
right in a knowing and informed manner, and (2) refrain from going forward with and
implementing all transactions subject to the veto right after the exercise thereof by the Minority
Members.
397. The Minority Members fully performed their obligations under the Operating
Agreements.
398. Commencing on a date unknown to the Minority Members but believed to be
sometime in or hefbre October 20!3, Danaher Sybron and the Joint Venture Companies breached
the Operating A~:,rrcements by (I) tailing to provide advance notice of the Integration Transaction
to the Minority Members, and lhc details thereof, and (2) going forward with and implementing
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the Integration Transaction by canying out all of the acts herein alleged notwithstanding the
Minority Members' exercise of their veto over said transaction.
399. As a proximate result of said breaches, upon information and belief, (1) the Joint
Venture Companies have been hanned in that their sales and earnings, and the value of the
business, have been and will be reduced, (2) the Minority Members have been banned in that
their share of distributions and the value of their membership interest in the Joint Venture
Companies have been and will be reduced too, and (3) Danaher Sybron and its affiliates,
including the KaYo Kerr Group and the Danaher Dental Platfonn Companies, have been and are
being unjustly endched as a result of their wrongful use of the Joint Venture Companies'
services, employees, and intellectual property (including but not limited to trademarks and
confidentiaL customer lists and infonnation).
400. Upon information and belief, on a date unknown to the Minority Members, but
believed to be in or about March 2014, Danaher Sybron and the Joint Venture Companies further
breached the Operating Agreements by entering into a transaction between them, without
affording the Minority Members notice thereof or an opp01iunity to exercise their veto rights
over the transaction, to jointly prosecute claims against, and jointly defend against claims
asserted by, the Minority Members.
401. As remedies for said breaches, the Minority Members seek on their own behalf
and derivatively on behalf of the Joint Venture Companies (I) compensatory damages against
Danaher Sybron, including but not limited to a loss of earnings, in an amount currently unknown
but to be proved at trial, and (2} a pennanent injunction (i) restraining Danaher Sybron and the
Board of the Joint Venture Companies from using Implant Direct's name, logo, customer list,
and customer information in connection with the marketing and promotion of KaYo Kerr Group
products and from any further acts placing the management of the .Joint Venture Companies'
524520v.S
DTE691 C-085
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manufacturing, operations, accounting, information technology, and legal functions under
Danaher Corporation's control, whether categorized as being pmi of the KaYo KelT Group or
part of Danaher's Dental Platform, and (ii) compelling Danaher Sybron and the Board of the
Joint Venture Companies to unwind and reverse to the maximum extent possible all acts taken
by them in furtherance of the Integration Transaction.
402. To the extent this cause of action must be pursued derivatively, a demand on the
Joint Venture Companies to t11e suit would be futile, and is therefore excused, because all of the
Danaher Sybron-appointed Board managers who now control the Joint Venture Companies are
themselves interested in the acts and transactions being challenged by this cause of action.
EIGHTH COUNTERCLAIM: BREACH OF FIDUCIARY DUTY {Minol'ity Members, on Their Own Behalf and Derivatively, versus Danaher Sybron)
403. The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
404. Under the laws of the States ofNew York and California, Danaher Sybron, as the
controlling member of the Joint Venture Companies, along with the Danaher Sybron executives
appointed to act as Board managers, owe certain fiduciary duties to the Minority Members which
cannot be waived, including without limitation the duty to ( 1) treat the Minmity Members fairly
and evenly, (2) operate the business for the benefit of all of the owners, not just Danaher Sybron,
(3) act as the guardian of the business, and ( 4) exercise, in connection with their control of the
business, the care that a reasonably prudent person would use under similar circumstances.
405. Danaher Sybron breached these fiduciary duties by (1) excluding the Minority
Members from any participation in the management of the business, (2) tenninating the
employment of Dr. Niznick, the founder of the business and inventor of its products, and
replacing him with a president far less competent but more loyal to Danaher Sybron and the
85 524520v.5
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KaYo KelT Group than to the Joint Venture Companies, (3) ceasing the distribution of earnings
to the Minority Members, (4) cutting off the flow of information about the business to the
Minority Members, (5) attempting to force the Minority Members to sell their interest in the
business to Danaher Sybron for a fraction of its value, through the assertion of baseless claims,
(6) using theJoint Venture Companies' employees, services, and intellectual property (including
customer lists, trademarks, and logos) to further Danaher Sybron's economic interests, (7)
terminating and harassing valuable and highly competent long-time employees and replacing
them with less competent workers loyal to or employed by Danaher Sybron or the KaYo Ken
Group, (8) implementing the Integration Transaction, despite the veto of the Minority Members,
to benefit the KaYo KetT Group at the expense ofthe Joint Venture Companies, and (9) doing all
in its power to ensure the Minority Members will derive no economic benefit from their interest
in the business.
406. As a proximate result of said breaches of fiduciary duties, upon infonnationand
belief. (l) the Joint Venture Companies have been hanned in that their sales and eamings, and
the value of the business, have been and will be reduced, (2) the Minority Members have been
harmed in that their share of disttibutions and the value of their membership interest in the Joint
Venture Companies have been and will be reduced too, and (3) Danaher Sybron and its affiliates,
including the KaVo KelT Group and the Danaher Dental Platform Companies, have been and are
being unjust1y enriched as a result or their wrongful use of the Joint Venture Companies'
services, employees, and intellectual properly (including but not limited to trademarks and
confidential customer lists and infonnation).
407. As remedies for said breaches, the Minority Members seek on their own behalf
and derivatively on behalf of the Joint Venture Companies (l) compensatory damages against
Danaher Sybron, including but not limited to a Joss of earnings, in an amount currently unknown
36 524S20v.5
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but to be proved at trial, and (2) an injunction (i) restraining Danaher Sybron and the Board of
the Joint Venture Companies fi·om using Implant Direct's name, logo, customer list, and
customer infonnation in connection with the marketing and promotion of KaYo Kerr Group
products and from any further acts placing the management of the Joint Venture Companies'
manufacturing, operations, accounting, information technology, and legal functions under
Danaher Corporation's control, whether categorized as being part of the KaYo Kerr Group or
part of Danaher's Dental Platfonn Companies, and (ii) compelling Danaher Sybron and the
Board of the Joint Venture Companies to unwind and reverse to the maximum extent possible all
acts taken by them in furtherance of the Integration Transaction.
408. To the extent this cause of action must be p1.;1rsued derivatively, a demand on the
Joint Venture Companies to file suit would be futile, and is therefore excused, because all of the
Danaher Sybron-appointcd Board managers who now control the Joint Venture Companies are
themselves interested in the acts and transactions being challenged by this cause of action.
409. The Minority Members also seek punitive damages. The actions of Danaher
Sybron were and arc malicious and oppressive. Danaher Sybron intended to injure the Minority
Members, acted in willful and conscious disregard of the Minority Members' rights) and caused
them to suffer unjust hardship.
NINTH COUNTERCLAIM: MISAPPROPRIATION OF TRADE SECRETS (Minority Members, on Their Own Behalf and Derivativclv,
versus Danaher Sybron)
410. The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
41 L The confidential list oflmplant Direct's customers, along with the customer-
related information gathered by the employees of the Joint Venture Companies, constitute trade
secrets (collectively, the "Trade Secrets") under the laws of the State of New York and
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Califomia and derive actual and potential independent economic value from not being generally
known to the public or to other persons and companies who can obtain economic value from its
disclosure or use. The Trade Secrets are owned by the Joint Venture Companies.
412. In or before mid-2014, the precise date of which is unknown to the Minority
Members, upon information and belief, Danaher Sybron unlawfully misappropriated the Trade
Secrets by using its majority control over the Joint Venture Companies to take the Trade Secrets,
without compensation to the Joint Venture Companies, and to use them to actively promote and
market Ka Vo Kerr Group products to Implant Direct customers by email and telemarketing.
413. As a result of said misappropriation, the Minority Members seek on their own
behalf and derivatively on behalf of the Joint Venture Companies (1) compensatory damages in
an amount cmTently unknown but to be proved at trial, including without limitation the amount
by which Danaher Sybron and its affiliates have been unjustly enriched by the use of the Trade
Secrets, and (2) an injunction prohibiting Danaher Sybron and its agents and affiliates, including
without limitation, the KaYo KetT Group, .from continuing to use the Trade Secrets for any
purpose whatsoever, and compelling them to retum the Trade Secrets to the exclusive
possession, custody, and control of the Joint Venture Companies.
414. To the extent this cause of action must be pursued derivatively, a demand on the
Joint Venture Companies to file suit would be futile, and is therefore excused, because all of the
Danaher Sybron-appointed Board managers who now control the Joint Venture Companies are
themselves interested in the acts and transactions being challenged by this cause of action.,
415. The Minority Members also seek punitive damages. The actions of Danaher
Sybron were and are malicious and oppressive. Danaher Sybron intended to injure the Minority
Members, acted in willful and conscious disregard of the Minority Members' rights, and caused
them to suffer unjust hardship.
88 524520v.5
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TENTH COUNTERCLAIM: ACCOUNTING (Minority Members versus the Joint Venture Companies and Danaher Sybron)
416. The Minority Members repeat and reallege each and every a11egation set forth
above as if set forth in full herein.
417. The plaintiffs' breaches of duty and misconduct as aforesaid require an
accounting to determine (1) the Mandatory Buy-Out Price due to the Minority Members for
Danaher Sybron's acquisition from them of a 5% membership interest in the Joint Venture
Companies, (2) the actual earnings of the Joint Venture Companies (without taking Danaher
Sybron's Acquisition Expense or post~2011 SIS losses into account) so that distributions can be
properly calculated, and (3) the full extent of the Minority Members' losses and damages,
including those arising fi·om the Integration Transaction, and the injury to the Joint Venture
caused thereby.
418. As members of the Plaintiff limited liability companies, there is a confidential and
fiduciary relationship between the Joint Venture Companies, Danaher Sybron and the Minority
Members. Given the breaches of the duty imposed by that relationship on the Plaintiffs, as
described herein, the Minority Members are entitled to a full equitable accounting from the
plaintiffs of all of the financial affairs and dealings of the Joint Venh1re Companies, so as to
enable the Minority Members, inter alia, to detetmine the distributions they are due and the
purchase price owed for breach of the Mandatory Buy-Out Clause.
ELEVENTH COUNTERCLAIM: ACCOUNTING (Minority Members versus the Joint Venture Companies)
419. The Minority Members repeat and reallege each and every allegation set f01th
above as if set forth in fhll herein.
420. The Operating Agreements, in Section 12.04, obligate the Joint Venture
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Companies to maintain various financial records, and make the same available to the Minority
Members in accordance therewith. These records include "(i) audited financial statements
including a balance sheet and statements of income and cash flows together with a statement
showing the balance of each Member's Capital Account at the end of such fiscal year, and (ii)
unaudited qumterly financial statements with respect to the applicable fiscal quarter, including a
balance sheet and statements of income and cash flows together with a statement showing the
balance of each Member's Capital Account at the end ofsuch fiscal quarter. All such statements
shall be prepared in accordance with GAAP (or such other accounting principles utilized and
agreed to by such Member.)"
421. The Operating Agreements, in Section 4.15, further obligate the Joint Venture
Companies to "audit [their] books and records" and, in connection therewith, to engage Ernst &
Young LLP as the "Auditor" unless the Board selects "another nationally recognized accounting
firm."
422. The Joint Venture Companies have breached Sections 4.15 and 12.04 by failing to
provide the Minority Members with the aforesaid documents, including audited financial
statements, and, upon infonnation and belief, by failing to engage Emst & Young LLP to audit
their books and records.
423. In addition, pursuant to Section 12.03 ofthe Operating Agreements, "the
Company shall provide the Members and their agents and attorneys access to the books and
records of the Company and other infonnation and documents concerning the Company, upon
reasonable notice to the Company during regular business hours and in a manner reasonably
designed to minimize any interference with the normal operations of the Company, for any
purpose reasonably related to the demanding Member's interest in the Company."
424. Despite due demand, the Joint Venture Companies have fhiled to provide the
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Minority Members access to their books and records, and thereby breached section 12.03.
425. As a result of this misconduct, as aforesaid, the Minority Members are entitled to
judgment, direct the Joint Venture Companies to comply with their obligations under Sections
4.15, 12.03, and 12.04 as aforesaid, and produce the financial statements, and books and records
in accordance therewith forthwith.
SUPPLEMENTAL TWELFTH COUNTERCLAIM: BREACH OF OPERATING AGREEMENTS RE: INTEGRATION TRANSACTION
(Minority Members, on Their Own Behalf and Derivatively, versus Danaher Syhron and the Joint Veutul'e Companies)
426. The Minority Members repeat and reallege each and every allegation set f01ih
above as if set forth ih full herein.
427. The Operating Agreements constitute contracts between the Minority Members
and Danaher Sybron.
428. The Minority Members fully perfonned their obligations under the Operating
Agreements.
429. Articles IV and V ofthe Operating Agreements describe the corporate governance
structure for the JVCs.
430. Secti011 4.01 of the Operating Agreements, entitled "Management Generally,"
describes the Board's role on the JVCs' governance, and provides in relevant part:
The powers of the Company shall be exercised by or under the authority or~ and the business and affairs of the Company shall be managed fully and exclusively by, the Members, by and through a board of managers (the "Board of Managers") as described herein. Except as stated in Section 4.02(t), the foregoing powers and the authority to manage the business and affairs of the Company are hereby delegated in fhll by the Members to the Board of Managers, and the Board of Managers shall, pursuant to such delegation, be responsihle tor the management and operations of the Company and have all povvcrs necessary to manage and control the Company, to conduct its business and to implement any decision of the Members adopted pursuant to this Agreement. Pursuant to the foregoing delegation, the Board of Managers will possess all power, on behalf of the Company, to do or authorize the Company or to direct the Officers (as defined in Section 5.01), employees and agents of the Company, on behalf of the
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Company, to do all things necessary or convenient to carry out the business and affairs of the Cornpany.
431. Section 5.01(b) of the Operating Agreem.ent describes, among other things, the
repoliing structure of the JVCs' officers subordinate· to the president and provides that, except as
may be otherwise stated therein for the Chief Financial Officer and the head of the regulatory
function (who were to be appointed by Danaher Sybron's Managers and report to Danaher
Sybron), all other officers were to be appointed by and report to the JVCs' president, who was to
be Dr. Niznick initially. To that end, Section 5.01 of the Operating Agreements, entitled
"Appointment of Officers," states in relevant part:
While Niznick is the President of the Company ... the Manager elected by [the Minority Members] shall have the authority to appoint and remove all of the Company's other Officers, and they shall report direclly to Niznick.
432. On or about April 12, 2011, as documented in the minutes of a special Board
meeting on that date, the JVCs' members agreed that (1) the head of the regulatory function
would report to IDSM's president (then Dr. Niznick) rather than reporting to Danaher Sybron as
may initially have been contemplated by Section 5.01 (b) of the Operating Agreements, and (2)
Dr. Niznick would report directly to the Board rather than to the president of Sybron Dental
Specialties Inc., a Danaher Sybron affiliate, as may have been contemplated by Dr. Niznick's
initial employment agreement.
433. Three days later, on April IS, 2011, tbe JVCs' Board chairman (then Dan Even)
sent a written communication to all JVC employees informing them that "lhe Joint Venture is a
separate entity fi·om [Danaher Sybron] and is run by a Board of Managers repn:senting the
shareholders [Danaher Sybron] and Dr. Niznick)."
434. From April 15,2011 through November 30,2013, Dr. Niznick, as president of the
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JVCs reporting to the Board, ran the day-to-day affairs of the Joint Venture Companies, which
operated as an entity separate and distinct from Danaher Sybron and its affiliates, with the sole
exception that the JVCs' Chief Financial Officer reported to Danaher Sybron.
435. Articles IV and V ofthe Operating Agreements, reasonably construed, require
that the JVCs are to be run independently from Danaher Sybron and its affiliates (except for the
CFO reporting to Danaher Sybnm) and that all decisions concerning the .JVCs be made by the
Board at the top level and, beneath that, by officers chosen by and reporting to the .JVCs'
president.
436. Beginning on a date that is presently unlmown to the Minority Members, but no
later than December 1, 2013, Danaher Sybron began breaching, and have to date continued to
breach, the Operating Agreements by engaging in the Integration Transaction, including all acts
alleged above in Paragraphs 301-356, and by, in furtherance of said transaction, instituting a new
corporate governance structure for the JVCs in violation of the Operating Agreements, including
(1) transferring decision-making functions properly belonging to the Board to Danaher Sybron
and/or its affiliates; (2) having the JVCs' new president (Stratton) repmt to the Senior Vice
President of the KaVa Ketr Group rather than to the Board, and (3) creating a system whereby,
in substance and effect, all JVC officers subordinate to the president (not just the CFO and the
head of the regulatory function) take their instructions and strategic direction from the KaYo
Kerr Group and its officers, and/or :fi·om Danaher Corporation, Danaher Sybron and/or their
affiliates.
437. As a proximate result of said breaches and the acts and decisions improperly
taken and made pursuant to the directions of the KaVo Kerr Group and its officers, and/or iiom
Danaher Corporation, Danaher Sybron and/or their affiliates, as aforesaid, upon information and
belief: (a) the Joint Venture Companies have been harmed in that their sales and earnings, and
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the value of the business, have been and will be reduced; (b) the Minority Members have been
harmed in that their share of distributions and the value of their membership interest in the Joirit
Venture Companies have been and will be reduced too; and (c) Danaher Sybron and its aft1liates,
including the KaVo Kerr Group and the Danaher Dental Platfonn Companies, have been and are
being unjustly emiched as a result of their wrongful use of the Joint Venture Companies'
services, employees, and intellectual property (including but not limited to trademarks and
confidential customer lists and infonnation).
438. As remedies for said breaches, the Minority Members seek on their own behalf
(1) compensatory damages against Danaher Sybron, including but not limited to damages for the
reduction in the amount of their distributions and the reduction in the value of their membership
interest in the Joint Venture Companies, in an amount currently unknown but to be proved at
trial; and (2) an injunction (i) restraining Danaher Sybron and the Board of the Joint Venture
Companies from using Implant Direct's name, logo, customer list, and customer infonnation in
connection with the marketing and promotion of KaYo Kerr Group products and from any
fmther acts of placing the management of the Joint Venture Companies' manufacturing,
operations, accounting, hrfonnation technology, and legal functions under the Danaher
Corporation's control, whether categorized as being part of the KaYo Kerr Group or pmt of
Danaher's Dental Platfonn Companies, and (ii) compelling Danaher Sybron and the Board of the
Joint Venture Companies to unwind and reverse to the maximum extent possible all acts taken
by them in furtherance of the Integration Transaction.
439. To the extent this cause of action must be pursued derivatively, a demand on the
Joint Venture Companies to file suit would he futile, and is therefore excused, because all of the
Danaher Sybron-appointed Board managers who now control the Joint Venture Companies are
themselves interested in the acts and transactions being challenged by this cause of action.
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SUPJ>LEMENTAL THIRTEENTH COUNTERCLAIM: BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING
REGARDING T.HE INTEGRATION TRANSACTION (Minority Members, on Their Own Behalf and Derivatively, versus Danaher Sybron and
the Joint Venture Companies)
440. The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
441. The Operating Agreements constitute contracts between the Minority Members
and Danaher Sybron.
442. The Minority Members fully perfonned their obligations under the Operating
Agreements.
443. Pursuant to the terms of the Operating Agreements, the Jojnt Venh1re Companies
are to be managed by the Board and by duly selected officers.
444. In managing the Joint Venture Companies pursuant to the Operating Agreements,
there is an implied covenant of good faith and fair dealing which requires Danaher Sybron and
its appointed Board members to make decisions and manage the Joint Venture Companies in the
best interests of the Joint Venture Companies and not for the benefit of third parties.
445. Beginning on a date that is presently unknown to the Minority Members, but no
later than December 1, 2013, Danaher Sybron and its appointed Board members began
breaching, and have to date continued to breach, the covenant of good faith and fair dealing
implied in the Operating Agreements by making decisions and managing the Joint Venture
Companies, not for the benefit of the Joint V cnturc Companies, but for the benefit of the KaYo
Kerr Group, and/or Danaher Corporation, Danaher Sybron and/or their affiliates, by engaging in
the Intet:,rration Transaction, including all acts alleged above engaging in Paragraphs 301-356,
and by, in furtherance of said transaction, instituting a new corporate governance stmcture for
the JVCs in violation of the Operating Agreements, including (1) transferring decision-making
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functions properly belonging to the Board to Danaher Sybron and/or its affiliates, (2) having the
JVCs' new president {Stratton) repoti to the Senior Vice President of the KaYo Ken Group
rather than to the Board, and (3) creating a system whereby, in substance and effect, all JVC
officers subordinate to the president (not just the CPO and the head of the regulatory function)
take their instructions and strategic direction from the KaYo Kerr Group and its officers, and/or
from Danaher Corporation, Danaher Sybron and/or their affiliates. By the Integration
Transaction, Danaher Sybron, its appointed Board members and the Joint Venture Companies'
officers have been making decisions and managing the Joint Venture Companies in a manner not
motivated by the Joint Venture Companies' best interests, but rather motivated by the best
interests of the KaYo Ken Group, and/or Danaher Corporation, Danaher Sybron and/or their
affiliates.
446. As a proximate result of said breaches, upon information and belief: (a) the
Minority Members have been hanned in that because the Integration Transaction has reduced
and/or will reduce the Joint Venture Companies' sales, earnings and value, the Minority
Members' share of distributions and the value of their membership interest in the Joint Venture
Companies have been and will be reduced too; and {b) Danaher Sybron and its affiliates,
including the KaVo Kerr Group and the Danaher Dental Platform Companies, have been and are
being unjustly enriched as a result of their wrongful use of the Joint Venture Companies'
services, employees, and intellectual property (including but not limited to trademarks and
confidential customer lists and information).
447. As remedies f(H said breaches, the JV1inority Members seek on their own behalf
(1) compensatory damages against Danaher Sybron, including but not limited to damages for the
reduction in the amount of their distributions and the reduction in the value of their membership
interest in the .Joint Venture Companies, in an amount currently unknown hut to be proved at
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trial; and (2) an injunction (i) restraining Danaher Sybron and the Board of the Joint Venture
Companies fi·om using Implant Direct's name, logo, customer list, and customer infonnation in
connection with the marketing and promotion of KaVo Kerr Group products and from any
further acts of placing the management of the Joint Venture Companies' manufacturing,
operations, accounting, information technology, and legal functions under Danaher
Corporation's control, whether categorized as being part of the KaYo Kerr Group or part of
Danaher's Dental Platfonn Companies, and (ii) compelling Danaher Sybron and the Board of the
Joint Venture Companies to unwind and reverse to the maximum extent possible all acts t<1ken
by them in furtherance of the Integration Transaction.
448. To the extent this cause of action must be pursued derivatively, a demand on the
Joint Venture Companies to file suit would be futile, and is therefore excused, because all of the
Danaher Sybron-appointed Board managers who now control the Joint Venture Companies are
themselves interested in the acts and transactions being challenged by this cause of action.
449. The Minolity Members also seek punitive damages against Danaher Sybron. The
actions of Danaher Sybron were and arc malicious and oppressive. Danaher Sybron intended to
injure the Minority Members, acted in willful and conscious disregard of the Minority Ivlembers'
rights, and caused them to suffer undue hardship.
SUPPLEMENTAL FOURTEENTH COUNTERCLAIM: BREACH OF THE COVENANT OF GOOD f<'AITH AND FAIR DEALING
REGARDING NOBEL (Minority Members, on Their Own Behalf and Derivatively, versus Danaher Sybrou and
the Joint Venture Companies)
450. The Minority Members repeat and reallege each and every allegation set forth
above as if sc1 fi1rth in full herein.
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Implant Direct's Competition with Nobel
451. Prior to the launch of Implant Direct's products in 2006, the market for the sale of
dental implants and related products in the United States was dominated by a handful of large
corporations selling so-called "premium" implants. These companies included Nobel Biocare
Holding AG ("Nobel"), Stramnann Group ("Straumann"), and Zimmer Holdings Inc.
("Zimmer"). Sales of Nobel and Straumann implants accounted for approximately one-half of
the U.S. and global dental implant market in terms of total sales dollars.
452. Nobel, Straumann, Zimmer, and the other "premium" companies charged
customers- mainly dental specialists (e.g., oral surgeons, prosthodontists, and periodontists) and
general dental practitioners - approximately $600 to $750 for the implant, abutment, and
ancillary components needed for a single tooth replacement. These companies claimed that the
quality and breadth of their product lines, customer service, and clinical research justified the
high price,
453. In addition to the "premium" market segment, the U.S. dental implant market
included a small "discount" segment, consisting of companies which marketed products on price
alone- charging $50 to $150 for an implant and abutment- to less disceming dentists, primarily
in Eastern Bloc countries, Russia, and Israel, but also in the United States.
454. Based on the principle that the only thing "premium" about "premium" implants
was their high price, Dr. Niznick founded Implant Direct with the single-minded purpose of
vigorously competing with the "prcn1imn" companies by manufacturing a wide range of dental
implants that met or exceeded the product quality, customer service, and supporting clinical
research offered by the "premium" companies- and selling them at about one-third of the price
of the "premium" products.
455. Dr. Niznick believed he could succeed by, among other things, (1) using
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innovative manufacturing techniques to reduce product costs, (2) making it easier for customers
to buy products online, (3) marketing Implant Direct's products through comparative advertising
pieces and online videos showing why Implant Direct's products were a better value for the
customer than the higher-p1iced "premium" products, and (4) selling products "compatible" with
the "premium" product Hnes.
456. Product compatibility, as developed by Dr. Niznick, enabled a customer to place
an Implant Direct implant using tools and drills the customer had already purchased from a
"premium" company (surgical compatibility) or to insert an Implant Direct abutment into a
"premium" implant (prosthetic compatibility). Implant Direct develops, manufactures, and sells
Nobel-compatible products, Zimmer-compatible products, and Straummm-compatible products.
A Nobel customer, for example, would be more interested in buying a Nobel-compatible lmplant
Direct implant if he or she could place it in the patient with the Nobel tools and drills the
customer already owned (thereby avoiding the cost ofbuying a new set of drills and tools).
457. Implant Direct's business model quickly succeeded and enabled Implant Direct to
capture a significant percentage of the global and domestic dental implant market, largely at the
expense of the so-called "premium" brands.
458. When considering the purchase of a controlling interest in Implant Direct in 2010,
Danaher Corporation found that (1) Implant Direct had high-quality products and the broadest,
most developed product portfolio in the industry, (2) 55% oflmplant Direct's revenue in tbe U.S.
was based on sales to dental specialists, and (3) Implant Direct's success came at the expense of
the "premium" brands.
459. The main victim of Implant Direct's rapid success was Nobel ~as evidenced by,
among other things, the fact that nearly 40% of Implant Direct's business was generated through
sales of its Nobel-compatible implant, knovvn as the RePlant implant
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460. From its inception through 2013, Implant Direct's primary competitive focus was
on converting Nobel customers into Implant Direct customers. To do this, Implant Direct
successfully exploited Nobel's well-known problems (e.g., Nobel's lack of meaningful product
innovations, and implant design and packaging issues) by (1) developing lower-priced Nobel
compatible products with improved implant designs, and (2) using comparative advertising and a
well-trained sales force to expose the deficiencies in Nobel's products and demystify Nobel's
false image of being an innovator.
461. As a result of these efforts, Implant Direct began to successful! y convett large
numbers of Nobel customers into Implant Direct customers. During the seven-year period from
2006 throt~gh 2013, Implant Direct became the fastest growing implant company in the United
States, whlle Nobel's sales and profits remained relatively flat (during five of these years,
NobePs sales did not grow at all) -due in part to the "catmibalizing" of Nobel customers by
Implant Direct.
462. In 2013, Nobel~compatihle products accounted for approximately 25% oflmplant
Direct's total sales. Straumann-compatible products, on the other hand, accounted for no more
than 3% oflmplant Direct's total sales.
Danaher Corporation's Acquisition of Nobel
463. Danaher Sybron was and is a wholly-owned subsidiary of Danaher Corporation.
464. The Joint Venture Companies operate the business known as Implant Direct.
465. Upon infonnation and belief, fl·om March 26, 2014 to the present, lmplant
Direct's Board of Managers has consisted of the folJovving tour persons, all appointed by
Danaher Sybron: (1) van Duijnhoven; (2) Vicente Reyna!; (3) Henrik Roos; and ( 4) Stephen
Tomassi (sometimes collectively referred to below as the "Danaher Sybron Managers"). During
this time, van Duijnhoven was, and still is, the Chairman of Implant Direct's Board of Managers.
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466. Each Danaher Sybron Manager is, and at all times while acting as a Danaher
Sybron Manager was, an officer, executive, and/or agent of Danaher Corporation or one of its
subsidiaries.
467. At some point in time unknown to Defendants but prior to September 15,2014,
Danaher Corporation negotiated a deal to acquire Nobel for $2,200,000,000 ($2.2 billion)
through the purchase of all ofNobel's publicly-traded stock.
468. Danaher Corporation's agreement to acquire Nobel was publicly announced on
September 15, 2014. Prior thereto,- Defendants were not aware of Danaher Co11Joration's
negotiations to acquire Nobel.
469. Danaher Corporation's acquisition ofNobel was completed in December 2014.
470. Upon infonnation and belie( as detailed below, in order to maximize the return
on its $2.2 billion investment in Nobel, Danaher Corporation needed to stop Implant Direct from
continuing to conveti and cannibalize Nobel customers and eliminate, or reduce to the maximum
extent possible, competition between Nobel and Implant Direct As detailed below in paragraphs
471 through 504, Danaher Sybron and the Danaher Sybron Managers helped, and are continuing
to help, Danaher Corporation to achieve this goal.
471. The public announcement of Danaher Corporation's acquisition ofNobel was the
product of a carefully-crafied, collaborative, and coordinated effort between Danaher
CoqJoration, Danaher Sybron, and the Danaher Sybron Jitfanagers. It was intended, in
substantial part, to aid in marketing Nobel's products, falsely embellish Nobel's
accomplishments, and brand Implant Direct as a company that did not and could no! compete
against Nobel and other companies in the "premium'' segment of the dental implant market.
472. The means used to convey this marketing message consisted of, among other
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things, (1) a Danaher Corporation press release, (2) an analysts' conference call with Danaher
Corporation's president Thomas Joyce ("Joyce"), (3) a letter to Implant Direct's sales force, (4) a
link to Danaher Corporation's press release on Implant Direct's website, and {5) a Danaher
Corporation slide presentation distributed to Implant Direct's sales force.
473. Danaher Corporation's press release, dated September 15, 2014, quotes van
Duijnhoven, the Chairman of Implant Direct's Board of Managers, as praising Nobel and
trumpeting Nobel's "deep expertise in implant dentistry," "continued innovation," and "strong
platfonn for future growth." The press release also:
• states, "With this acquisition, Danaher will have an unmatched position in dental
implants with Nobel Biocare in the premium segment and the Implant Direct joint
venture in the value segment .... " Persons knowledgeable about the implant industry
would interpret this statement to mean that Implant Direct's products, customer service,
and supporting clinical research arc inferior to Nobel's and that Implant Direct does not
compete in the "premium" market SC!,}}llent.
• refers to Nobel as "the world leader in implant dentistry," a "pioneer in nearly every
aspect of implant dentistry," and to the purported "discovery" by P.I. Branemark, a
Swedish professor closely identified with Nobel, of osseointegration, i.e., the anchoring
of an implant by the growth of bone around it.
e states Nobel will be a "cornerstone" of Danaher's Dental Platform Companies.
474. Danaher Sybron and the Danaher Sybron Managers, in coordination with Danaher
Corporation, also saw to it that a link to Danaher Corporation's press release was placed on
Implant Direct's >vebsite so that Implant Direct's customers would sec the praise heaped on
Nobel, Implant Direct's main competitor.
475. Tn addition to using Implant Direct's website to promote the business of its
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competitor, a letter, dated September 15, 20 I 4, was sent by Stratton (Implant Direct's president
who reports to van Duijnhoven) to Implant Direct's sales representatives. The letter informed
the sales representatives- whose job it had been to convert Nobel customers by convincing the111
that Nobel products were "premium" in price only- that Stratton was "excited" about Danaher
Corporation's investment in Nobel, a company Stratton praised as (1) "a pioneer and world
leader in implant dentistry," (2) as having built its reputation "on a series of im10vations, starting
with [PI] Branemark's discovery of osseointegration and engineering of the first dental
implants," and (3) as having one of the "strongest brand names in the dental industry" and a
"comprehensive portfolio."
476. Joyce, in his public statements at the September 15, 2014 analysts' conference,
attempted to brand Implant Direct as a company that could not and did not compete with Nobel,
a "premium" company. When questioned about "the premium versus discount market
considerations" involved in Danaher Corporation's acquisition of Nobel, Joyce responded that
although Danaher Corporation had a position "in the value segment with Implant Direct," he was
convinced "the premium market is the place to be" because "specialists tend to buy the premium
implants" due to "the implant itself, the service, the support, [and] the clinical research ... [that]
comes along with a premium player like Nobel.'' Joyce also refcned to a discount implant
company (Alpha Bio) acquired by Nobel in 2008 as competing in the "value segment" with
Implant Direct, thereby giving the false impression that Implant Direct competed against
discount companies (like Alpha Bio) but not premium companies (like Nobel).
477. On September 15, 2014, Stratton distributed to Implant Direct's sales force an ''ID
Townhall PowerPoint" slide presentation prepared by a Danaher Corporation executive. Stratton
instructed the sales representatives to usc it "for meetings with groups that we lead and/or
individual meetings with members of our teams." The slide presentation stated, among other
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things, (1) "[W]e believe many implant dentists (especially Surgical Specialists) will continue to
buy from 'Premium' players in the future," and (2) Nobel "has a strong relationship with
Specialist customers who value its products and services." The message Stratton conveyed was,
in substance, that efforts to convert specialists who buy Nobel products would likely fail because
ofNobel's "strong relationship" with specialists- a message which, based on Stratton's personal
experience as Executive Vice President of Sales and Implant Direct's successful track record for
converting Nobel customers, he knew was untrue. An independent president, one more
interested in looking out for Implant Direct's best interests than Danaher Corporation's, would
not have conveyed such a message- but would have told Implant Direct's sales representatives
that all Nobel customers, including specialists, could be persuaded to switch to Implant Direct
products by educating them about the Implant Direct's product quality, favorable prices, top
notch customer service, and extensive product portfolio.
478. Statements and implications made by Danaher Corporation in its press release,
Stratton in his letter, and Joyce at the analysts' conference are false:
• It is not true that Implant Direct competes in a different market segment than Nobel.
Since its inception, Implant Direct has competed against the "premium" companies,
including Nobel.
" It is not true that Nobel offers a more "comprehensive portfolio" of implant products than
Implant Direct's portfolio. It is the other way around.
• H is not true that Branemark discovered osseointegration. In his 1977 textbook,
Branemark acknowledges an orthopedist named Levanthal (who wns not affiliated with
Nobel) as being the first to report the bonding of bone to titanium (i.e., osseointegration).
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o It is not true that Bran em ark engineered the first implant. The first publication of a dental
implant was by Strock (who was not affiliated with Nobel) in 1939.
479. The marketing message contained in the coordinated public statements about
Danaher Corporation's acquisition of Nobel contradicted, and was intended to contradict,
Implant Direct's long-standing efforts to market its products as being competitive with, and of
the same or higher quality than, the so-called "premium" products and to challenge Nobel's
marketing claims of being the industry leader in quality, service, and innovation.
The Minority Members' Objections to Danaher Corporation's Acquisition of Nobel
480. On September 26, 2014, eleven days after Danaher Coq)oration' s public
announcement of its deal to acquire Nobel, Dr. Niznick wrote to the Danaher Sybron Managers
to ask them to notify the Federal Trade Commission (fTC) and the Department of Justice (DOJ)
on behalf of Implant Direct that Implant Direct opposed the acquisition of Nobel on the ground
that it would adversely affect competition between Implant Direct and Nobel. The Danaher
Sybron Managers never responded.
481. On September 29, 2014, Robert Kehr, an attomey for the Minority Members,
wrote to Plaintiffs' counsel to say in substance that (1) Danaher Corporation and Implant Direct
had clearly cooperated "in making a fundamental change to Implant Direct's marketing strategy
and brand positioning ... to promote the success of Nobel and degrade Implant Direct," (2) the
Minority Members were concerned that this "arrangement" would impair Implant Direct's
"ability to continue conve1iing Nobel users by exposing deficiencies in Nobel products or by
otherwise engaging in the most robust competition," (3) out of an abundance of caution, the
Minority Members exercised their veto right with respect to the acquisition, including the above
referenced "arrangement," and (4) Implant Direct would not be able to return ''to its strategy of
taking over Nobel customers by vigorously exposing the deficiencies of Nobel's products and
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the superiority of those of Implant Direct" unless the Danaher Sybron Managers were replaced
by "independent" managers not beholden to Danaher Corporation for their employment
482. On October 10, 2014, Dr. Niznick sent an email to van Duijnhoven asking him, in
his capacity as Chairman of Implant Direct's Board of Managers, to notify the FTC and DOJ that
Implant Direct "vigorously oppose[ d) the acquisition of Nobel" by Danaher Corporation. Van
Duijnhoven did not comply with Dr. Niznick's request.
483. On October 10,2014, Danaher Sybron's counsel responded to Mr. Kehr's
September 29, 2014 letter with a cursory letter stating that Danaher Sybron disagreed with Mr.
Kehr's assertions and that the Minority Members had no veto right to exercise in connection with
the Nobel transaction.
Implant Direct Changes Its Focus to Converting Straumann Customers
484. Not only did the Danal1er Sybron Managers and Danaher Sybron refbse to notify
the FTC or DOJ on Implant Direct's behalf of their opposition to the Nobel acquisition, they
continued to degrade Implant Direct's ability to compete with Nobel in order to protect Danaher
Corporation's $2.2 billion investment in Nobel.
485. On or about February 17, 2015, a prominent dental journal known as the Dental
Products Report published an interview with Stratton in which he publicly announced that
Implant Direct was changing its competitive focus towards converting Straumann customers into
Implant Direct customers. Concurrently, Implant Direct (i) changed its website to place an
image of Implant Direct's Straumann-compatihle implants (the Swish system) -- a product line
targeted towards converting Straumann customers · as the first image seen by customers visiting
the site, and (ii) placed an advertisement for the same Straumann-compatiblc implants on the
cover of the Dental Products Report and inside another journal.
486. In March 2015, i1t the San Francisco conference of the Academy of
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Osseointegration, a prestigious organization which hosts an annual conference attended by
thousands of dental professionals interested in implant dentistry, Implant Direct placed only one
advertisement in the registrant's bag at the conference: an advertisement for its Straumann
compatible Swish implant system. And, prior to the conference, Implant Direct sent an email
blast to conference registrants promoting the same line of implants but not promoting Implant
Direct's Nobel-compatible product lines.
4R7. In 2015, Implant Direct removed the InterActive Reality Check Video- an eight
minute narrated computer graphic video demonstrating the advantages of [mplant Direct's
InterActive implant over Nobel's Nobe1Active implant- from its European website. Implant
Direct also removed links to a two-hour video of a lecture given by Dr. Niznick, explaining the
many advantages of Implant Direct's products over Nobel's, from its European and U.S.
websites. Following Dr. Niznick's removal from Implant Direct's Board of Managers, the
amount of Implant Direct's journal advertisements and email blasts targeting Nobel customers
for the sale of Implant Direct's Nobel-compatible RePlant implant substantially declined or
ceased altogether even though RePlant implants accounted for about 25% of Implant Direct's
2013 and 2014 sales.
488. There is i1o good faith justification for the decision to change Implant Direct's
long-established successful strategy of focusing on the conversion of Nobel customers to a
strategy of focusing on the conversion of Straumann customers. Implant Direct has always had
more success converting Nobel customers than Straumann customers as evidenced by the fact
that about 25'% of its sales are Nobel-compatible products compared to less than 3% of
Straumann-compntiblc products. The reasons for this include: (i) approximately 75% of Implant
Direct's customers are general practice dentists ("GPs"); (ii) Straumann's policy has been to
provide surgical training to oral surgeons and periodontists only, in contrast to Nobel's
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willingness to train GPs; (iii) Implant Direct offers only a limited number of Straumann
compatible products, and none that ate prosthetically compatible with Straumann's newer bone
level implants; and (iv) by contrast, Implant Direct has a patent that allows it to exclusively make
an implant compatible with Nobel's most popular tJ.i-lohe internal connection, and launched in
early 2014 its InterActive implant system with cross-compatibility with Nobel's newer
Nobe!Active System.
489. Only one reason explains this change in competitive focus: Danaher Corporation
has invested billions of dollars in Nobel and, to protect this substantial investment, needs to stop
the conversion of Nobel customers to Implant Direct customers.
Implant Direct's Competitive Abilities Are Further Degraded to Help Nobel
490. Nobel is, and for a number of years has been, a distributor of certain dental
implant-related products, manufactured by Zest Anchors ("Zest"), known as Zest Locator
abutments and snap attachments used in connection with implant-retained overdentures
(collectively, "Zest attachments").
491. Implant Direct has, for a number of years, manufacturqd and sold abutments and
attachments !mown as GPS abutments and attachments (collectively, "CPS attachments"),
developed by Dr. Niznick, which directly compete with the Zesl attachments distributed by
NobeL GPS attachments are an important and valuable part of Implant Direct's product
portf<)Jio, offering a 35% price advantage along with technological advantages which helped
Implant Direct convert Nobel's customers to purchasing not only the GPS attachments but also
implants and other products.
492. Upon information and belief, the Joint Venture Companies, in or about July 201 S,
under the direction of Danaher Sybron and its appointed Board managers, entered into an
agrct::ment with Zest to remove GPS attachments from the market, and cease selling them, in
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coimection with the settlement of a patent infringement lawsuit filed by Zest against Implant
Direct in tederal com't in the Southern District of California (the "Zest lawsuit").
493. GPS attachments do not infringe Zest's patents. Upon infonnation and belief,
Danaher Sybron and the Danaher Sybron Managers, with full knowledge that GPS attachments
do not infringe Zest's patcnts,nonetheless agreed to remove GPS attachments from the market as
part of the above-referenced settlement.
494. Upon information and belief, despite the harm Implant Direct will suffer as a
result of removing a valuable part of its product p01ifolio form the market, Danaher Sybron and
the Danaher Sybron Managers authorized the settlement, over the Minority Members' objection,
for the purpose, in substantial part, of degrading Implant Direct's ability to compete with Nobel.
Breach of Covenant of Good Faith and Fair Dealing
495. The Operating Agreements constitute contracts between the Minority Members
and Danaher Sybron.
496. The Minority Members fully perfonned their obligations under the Operating
Agreements.
497. Pursuant to the terms of the Operating Agreements, the Joint Venture Companies
are to be managed by the Board and by duly selected officers.
498. In managing the Joint Venture Companies, there is an implied covenant of good
faith and fair dealing which requires the Board and the officers of the Joint Venture Companies
to n1ake decisions and manage the Joint Venture Companies in the best interests of the Joint
Venture Companies and not to manage or aid the affairs of third parties, such as Nobel or
Danaher Corporation.
499. Since at least September l 5, 2013, the business and affairs oflmp18nt Direct have
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been managed so as to achieve the best interests of Nobel and/or Danaher Corporation and to the
detriment of Implant Direct.
500. By the actions alleged herein, Danaher Sybron and the Danaher Sybron Managers
have breached the covenant of good faith and fair dealing implied in the Operating Agreements
in managing and carrying out the business and affairs by, among other things, (1) issuing press
releases and other public pronouncements, in coordination with Danaher Corporation, suggesting
that Implant Direct's products and services are inferior to Nobel's, and that Implant Direct and
Nobel operate in different market segments, (2) promoti'ng the business of Implant Direct's main
competitor, Nobel, (3) falsely extolling Nobel's product line and accomplishments, (4) using
Implant Direct's own website and personnel to convey marketing messages hannful to Implant
Direct but helpful to Nobel, (5) switching Implant Direct's long-standing and successful
competitive focus away from converting Nobel customers towards conve1iing Straumann
customers, (6) upon infonnation and belief, agreeing not to make any more GPS attachments as
part of the Zest settlement for the primary purpose of degrading Implant Direct's ability to
compete with Nobel; (7) otherwise carrying out the business and affair of Nobel by acting in the
best interests of Nobel rather than in the best interests of Implant Direct, and (8) otherwise
degrading Implant Direct's ability to compete with Nobel.
501. Danaher Sybron and the Danaher Sybron Managers have undertaken these acts in
bad faith, with t'illl knowledge of the likely adverse consequences to the business they are
charged 1.vith the responsibility of managing.
502. As a result of Danaher Sybron's above-referenced breach of the covenant of good
faith and fair dealing, the Minority Members have suffered damages in that Implant Direct's
sales and earnings and the value of the Minority Members' interest in Implan! Direct, have been
and will continue to be reduced.
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503. To stop the continuing hann to Implant Direct's business, the Minority Members
seek, in addition to an award of compensatory damages against Danaher Sybron, an injunction
removing the current Danaher Sybron Managers from Implant Direct's Board of Managers and
prohibiting Danaher Sybron, for so long as Danaher Corporation owns Nobel, from appointing
any officer, director, employee, agent or shareholder of Danaher Corporation or any of its
affiliates as a Board Manager.
504. To the extent this cause of action must be pursued derivatively, a demand on the
Joint Venture Companies to file suit would be fhtile, and is therefore excused, because all of the
Danaher Sybron-appointed Board managers who now control the Joint Venture Companies are
themselves interested in the acts and transactions being challenged by this cause of action.
505. The Minority Members also seek punitive damages against Danaher Sybron.
The actions of Danaher Sybron were and are malicious and oppressive. Danaher Sybron
intended to injure the Minority Members, acted in willful and conscious disregard of the
Minority Members' rights, and caused them to suffer undue hardship.
SUPPLEMENTAL FIFTEENTH COUNTERCLAIM: BREACH OF THE MINORITY MEMBERS' VETO RIGHT UNDER THE OPERATING AGREEMENTS
(Minority Members versus Danaher Sybron and the Joint Venture Companies}
506. ·The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
507. The conduct of the Danaher Sybron Managers, Danaher Sybron, and Danaher
Corporation as alleged above establishes an arrangement between Implant Direct, on the one
hand, and Danaher Sybron and Danaher Corporation on the other, to eliminate, or reduce to the
extent possible, competition in the dental implant market between Implant Direct and Nobel by,
among other things, marketing Nobel as a company competing in I he premium segment of the
market and Implant Direct as a company competing in the discount segment of the market, and
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changing Implant Direct's strategic focus away from converting Nobel customers and towards
converting Straumann customers (the "Nobel Transaction"). Danaher Corporation and Danaher
Sybron have directed Implant Direct and its managers to reduce their efforts to compete with
Nobel to benefit Danaher Corporation at the expense of Implant Direct.
508. Upon infonnation and belief, the an·angement between Implant Direct, Danaher
Sybron, and Danaher Corporation noted above is a transaction within the meaning of the
Operating Agr~ements, subject to the Minority Members' veto rights thereunder.
509. The Minority Members fully performed their obligations under the Operating
Agreements.
510. Danaher Sybron and the Joint Venture Companies breached the Operating
Agreements by (J) failing to provide advance notice of the Nobel Transaction to the Minority
Members, or the details thereof, so that the Minority Members could exercise their veto right
with respect to the transaction pursuant to Section 4.02(f) of the Operating Agreements, and (2)
going forward with and implementing the Nobel Transaction notwithstanding the Minority
Members' express opposition and veto.
511. As a proximate result of the foregoing, the Minority Members have suffered
damages in that Implant Direct's sales and camings, and the value of the Minority Members'
interest in Implant Direct, have been and will continue to be reduced.
512. To stop the continuing harm to Implant Direct's business, the Minority Members
seek, in addition to an award of compensatory damages against Danaber Sybron, an injunction
against Danaher Sybron and the Joint Venture Companies removing the current Danaher Syhron
Managers from lmplant Direct's Board of Managers and prohibiting Danaher Sybron, for so long
as Danaher Corporation owns Nobel, fl·om appointing any ofGcer, director, employee, agent, or
shareholder of Danaher Corporation or any of its affiliates as a Board Manager.
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SUPPLEMENTAL SIXTEENTH COUNTERCLAIM: BREACH OF FIDUCIARY DUTY
(Minority Members, on Their Own Behalf and Derivatively, versus Danahel· Sybt·on)
513. The Minority Members repeat and reallege each and every allegation set fotih
above as if set forth in full herein.
514. Danaher Sybron and the Danaher Sybron Managers owed a tlduciaryduty of
loyalty to fmplant Direct.
515. Danaher Sybron and the Danaher Sybron Managers breached their fiduciary duty
by, in bad faith and intentionally, collaborating and working with Danaher Corporation to protect
the latter's investment in Nobel via among other things (1) issuing press releases and other
public pronouncements suggesting that Implant Direct's products and services are inferior to
Nobel's, and that Implant Direct and Nobel operate in different market segments, (2) promoting
Nobel's business, (3) falsely extolling Nobel's product line and accomplishments, (4) using
Implant Direct's own website and personnel to convey marketing messages harmful to Implant
Direct but helpful to Nobel, (5) switching Implant Direct's long~standing and successfhl
competitive focus away from converting Nobel customers towards converting Straumann
customers, (6) carrying out the business and affairs of Nobel rather than the business and affairs
of Implant Direct, and (7) degrading Implant Direct's ability to compete with Nobel.
516. Danaher Sybron is liable for the conduct of its agents, the Danaher Syhron
Managers, who acted at its direction and subject to its control.
517. As a proximate result of the foregoing, the Minority Members have suffered
damages in that Implant Direct's sales nnd earnings, and the value of the Minority Members'
interest in Implant Direct, have been and will continue to be reduced.
518. To stop the continuing harm to Implant Direct's business, the Minority Members
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seek, in addition to an award of compensatory damages against Danaher Sybron, an injunction
removing the current Danaher Sybron Managers fi·om Implant Direct's Board of Managers and
prohibiting Danaher Sybron, for so long as Danaher Corporation owns Nobel, ft·om appointing
any officer, director, employee, agent, or shareholder of Danaher Corporation or any of its
affiliates as a Board Manager.
519. The Minority Members also seek punitive damages. The actions of Danaher
Sybron were and are malicious and oppressive. They intended to injure the Minority Members,
acted in willful and conscious disregard of the Minority Members' rights, and caused them to
suffer unjust hardship.
520. To the extent this cause of action must be pursued derivatively on Implant
Direct's behalt: a demand on the Danaher Sybron Managers to file suit would be fhtile, and is
therefore excused, because (1) all of the Danaher Managers are themselves interested in Nobel
Transaction and employed, directly or indirectly, by Danaher Corporation, and (2) as alleged in
paragraphs 480 through 483, the Minor.ity Members' efforts to persuade the Danaher Sybron
Managers to oppose the Nobel Transaction were unsuccessful.
SUPPLEMENTAL SEVENTEENTH COUNTERCLAIM: INDUCEMENT OF BREACH OF CONTRACT
{Minority Members, on Their Own Behalf and Derivatively, versus Danaher Corporation)
521. The Minority Members repeat and reallege each and every allegation set forth
above as if set fotih in full herein.
522. The Operating Agreements constituted contracts between, among others, the
Minority Members, on the one hand, and Danaher Sybron and the Joint Venture Companies, on
the other.
523. Danaher Corporation had knowledge of the Operating Agreements.
524. The Minority Members fully perf(mncd their obligations under the Operating
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Ah'Teements.
525. Danaher Corporation intentionally and in bad faith induced (1) Danaher Sybron to
breach the covenant of good taith and fair dealing in managing and carrying out the business and
affairs of Imphmt Direct, as alleged in the Fourteenth Supplemental Counterclaim, and (2)
Danaher Sybron and the Joint Venture Companies to breach the Minority Members' veto right,
as alleged in the Fifteenth Supplemental Counterclaim.
526. Danaher Corporation's inducement of the above-referenced breaches was not
done to further the economic interest of Danaher Sybron, which owns 75% of Implant Direct, or
its interests therein, but rather to further the economic interests of Nobel and Danaher
Corporation.
527. As a proximate result of the foregoing, the Minority Members have suffered
damage..<: in that Implant Direct's sales and earnings, and the value of the Minority Members'
interest in Implant Direct, have been and will continue to be reduced.
528. To stop the continuing hann to Implant Direct's business, the Minority Members
seek, in addition to an award of compensatory damages against Danaher Corporation, an
injunction removing the cuuent Danaher Sybron Managers fi·om Implant Direct's Board of
Managers and prohibiting Danaher Sybron, for so long as Danaher Corporation owns Nobel,
from appointing any officer, director, employee, agent, or shareholder of Danaher CoqJoration or
any of its affiliates as a Board Manager.
529. The Minority Members also seek punitive damages. The actions of Danaher
Corporation were and are malicious and oppressive. They intended to injure the Minority
· Members, acted in willful and conscious disregard ofthc Minority Members' rights, and caused
them to suffer unjust hardship.
530. 'J'o the extent this cause of action must be pursued derivatively on Implant
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Direct's behalf, a demand .on the Danaher Sybron Managers to file suit would be [·utile, and is
therefore excused, because (I) all of the Danaher Sybron Managers are themselves interested in
the Nobel Transaction and employed, directly or indirectly, by Danaher Corporation, and (2) as
alleged in paragraphs 480 through 483, the Minority Members' effmis to persuade the Danaher
Sybron Managers to oppose the Nobel Transaction were unsuccessful.
SUPPLEMENTAL EIGHTEENTH COUNTERCLAIM: AIDING AND ABETTING A BREACH OF' FIDUCIARY DUTY
(Minority Members, on Their Own Behalf and Derivatively, versus Danaher Corporation)
531. The Minority Members repeat and reallege each and every allegation set forth
above as if set fmih in full herein.
532. Danaher Corporation knowingly, intenti01ia1ly, and in bad faith induced and
participated in the breach by Danaher Sybron and the Danaher Sybron Managers of their
fiduciary duty ofloyalty, as alleged in the Supplemental Sixteenth Counterclaim.
533. Danaher Corporation's inducement of the above-referenced breach was not done
to further the economic interest of Danaher Sybron, which owns 75% of Implant Direct, but
rather to further the economic interests ofNobe.t and Danaher Corporation.
534. As a proximate result of the foregoing, the Minority Members have suffered
damages in that Implant Direct's sales and earnings, and the value of the Minority Members'
interest in Implant Direct, have been and will continue to be reduced.
535. To stop the continuing hann to Implant Direct's business, the Minority Members
seek, in addition to an award of compensatory damages against ·Danaher Corporation, an
injunction removing the current Danaher Sybron Managers from Implant Direct's Board of
Managers and prohibiting Danaher Sybron, for so long as Danaher Corporation owns Nobel,
from appointing any officer, director, employee, agent, or shareholder of Danaher Corporation or
any of its affiliates as a Board Manager.
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536. The Minority Members also seek punitive damages. The actions of Danaher
Corporation were and are malicious and oppressive. They intended to injure the Minority
Members, acted in willful and conscious disregard of the Minority Members' rights, and caused
them to sutTer unjust hardship.
537. To the extent this cause of action must be pursued derivatively on Implant
Direct's behalf, a demand on the Danaher Sybron Managers to file suit would be futile, and is
therefore excused, because (1) all of the Danaher Managers are themselves interested in the
Nobel Transaction and employed, directly or indirectly, by J?anaher Corporation, and {2) as
alleged in paragraphs 480 through 483, the Minority Members' efforts to persuade the Danaher
Sybron Managers to oppose the Nobel Transaction were unsuccessful.
SUPPLEMENTAL NINETEENTH COUNTERCLAIM: BREACH OF CONTRACT REGARDING THE ZEST SETTLEMENT
(Minority Members, on Theh· Own Behalf and Derivatively, versus Danaher Sybron and the Joint Venture Companies)
538. The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
539. The Operating Agreements constitute contracts between the Minority Members
and Danaher Sybron. Pursuant to Sections 4.02(c) and 4.03 of the Operating Agreements, the
Minority Members have the right to appoint one of the four Managers on the Board of Managers
of the Joint Venture Companies and to have that Manager fully participate at all Board meetings
and vote on all matters brought before the Board.
540. The Minority Members fully performed their obligations under the Operating
Agreements.
541. The Minorit.y Members appointed Dr. Niznick as a Manager and, in that capacity,
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Dr. Niznick participated in all regular and special Board meetings that took place fi·om January
1, 2011 until January 29, 2014, and voted on ali matters brought before the Board during this
period oftimc.
542. On January 29, 2014, and continuing thereafter, Danaher Sybron and the Joint
Venture Companies breached Sections 4.02(c) and 4.03 of the Operating Agreements by
removing Dr. Niznick from the Board and by thereafter managing, or purporting to manage, the
business of the Joint Venture Companies by an illegally constituted Board, consisting of Danaher
Sybron-appoi11ted managers only, without any input or participation by Dr. Niznick or the
Minority Members.
543. Upon information and belief, in or about July 2015, the illegally constituted Board
of the Joint Venture Companies voted to approve the settlement with Zest described above in
Paragraphs 480 through 483, pursuant to which the Joint Venture Companies are required to
remove from the market and cease selling a valuable portion of their pot1folio of products) i.e.,
GPS attachments.
544. The Joint Venture Companies' failure to permit Dr. Niznick and the Minority
Members to participate in the decision to approve the Zest settlement and to vote on that matter
is a fUiiher breach of the Operating Agreements.
545. Because the Board was illegally constituted, its approval of the Zest settlement is
invalid and Dr. Niznick and the Minority Members so advised Zest at a lime which, upon
information and belief, was prior to the execution of the settlement agreement.
546. As a proximate result of the Board's invalid approval of the settlement -;vith Zest,
upon information and belief: (a) !he Joint Venture Companies have been h<n111cd in that their
sales and earnings, and the value of the business, have been and will be reduced; and (b) the
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Minority Members have been harmed in that their share of disttibutions and the value of their
membership interest in the Joint Venture Companies have been and will be reduced too.
547. As remedies for the invalid approval of the Zest Settlement, the Minority
Members seek on their own behalf (1) compensatory damages against Danaher Sybron,
including but not limited to damages for the reduction in the amount of their distributions and the
reduction in the value of their membership interest in the Joint Venture Companies, in an amount
currently unknown but to be proved at trial; and (2) and injunction compelling Danaher Sybron
and the Board of the Joint Venture Companies to seek to unwind and reverse to the maximom
extent possible the Zest settlement.
548. To the extent that this cause of action must be pursued derivatively, a demand on
the Joint Ve11ture Companies to file suit would be futile, and is therefore excused, because all of
the Danaher Sybron-appointed Board managers who now control the Joint Venture Companies
are themselves interested in the acts and transactions being challenged by this cause of action.
SUPPLEMENTAL TWENTIETH COUNTERCLAIM: BREACH OF FIDUCIARY DUTY REGARDING THE ZEST SETTLEMENT
(Minority Members, on Their Own Behalf and Derivatively, versus Danaher Sybron)
549. The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
550. Danaher Sybron and the Danaher Sybron Managers owed fiduciary duties of
loyalty and care to Implant Direct.
551. Danaher Sybron and the Danaher Sybron Managers knew that the claims asserted
by Zest against the Joint Venture Companies in the Zest lawsuit were completely lacking in
merit. Because those claims lacked merit, the Board for years, both before and after the
improper exclusion or Dr. Nizniek, caused the Joint Venture Companies to aggressively defend
against Zest's daims.
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552. Upon infonnation and belief, in or about July 2015, Danaher Sybron and the
Danaher Sybron managers, in breach of their fiduciary duties, voted to approve the settlement
with Zest described above in Paragraphs 490 through 494, pursuant to which the Joint Venture
Companies are required to remove from the market and cease selling a valuable portion of their
portfolio ofproducts, Le., GPS Attachments.
553. The decision of Danaher Sybron and the Danaher Sybron Managers to approve of
and execute the settlement of the Zest lawsuit is not protected by the business judgment rule
because no person of ordinary sound business judgment would say that the Joint Venture
Companies received a fair benefit in exchange for the settlement with Zest.
554. Danaher Sybron is liable for the conduct of its agents, the Danaher Sybron
Managers, who acted at its direction and subject to its control.
555. As a proximate result of the Board's invalid approval ofthe settlement with Zest,
upon information and belief: (a) the Joint Venture Companies have been hanncd in that their
sales and earnings, and the value ofthe business, have been and will be reduced; and (b) the
Minority Members have been hmmed in that their share of distributions and tl1e value of their
membership interest in the Joint Venture Companies have been and will be reduced too.
556. As remedies for the invalid approval of the Zest Settlement, the Minority
Members seek on their own behalf (1) compensatory damages against Danaher Syhron;
including but not limited to damages for the reduction in the amount of their distributions and the
reduction in the value of their membership interest in the Joint Venture Companies, in an amount
currently unknown but to be proved at trial; and (2) and injunction compelling Danaher Sybron
and the Board of the Joint Venture Companies to seck to unvvind and reverse to the maximum
extent possible the Zest settlement.
557. To the extent that this cause of action rnust be pursued derivatively, a demand on
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the Joint Venture Companies to file suit would be futile, and is therefore excused, because all of
the Danaher Sybron-appointed Board managers who now control the Joint Venture Companies
are themselves interested in the acts and transactions being challenged by this cause of action.
558. The Minority Members also seek punitive damages, The actions of Danaher
Sybron were and are malicious and oppressive. Danaher Sybron intended to injure the Minority
Members, acted in willful and conscious disregard of the Minority Members' rights, and caused
them to suffer unjust hardship.
SUPPLEMENTAL TWENTY-FIRST COUNTERCLAIM: BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING
REGARDING THE ZEST SETTLEMENT (Minority Members, on Their Own Behalf and Derivatively, versus Danaher Sybron and
the Joint Venture Companies)
559. The Minority Members repeat and reallege each and every allegation set forth
above as if set forth in full herein.
560. The Operating Agreements constitute contracts between the Minority Members
and Danaher Sybron.
561. Pursuant to the terms of the Operating A&rreements, the Joint Venture Companies
are to be managed by the Board and by duly selected officers.
562. In managing the Joint Venture Companies pursuant to the Operating Agreements,
there is an implied covenant of good faith and fair dealing which requires Danaher Sybron and
its appointed Board members to exercise sound business judgment and to receive a fair benefit in
transactions with third parties.
563. Beginning on a date that is presently unknown to the Minority Members, but no
later than July 2015, Danaher Sybron and its appointed Board members breached the covenant of
good faith and fair dealing implied in the Operating At.,rreements by executing the Zest
settlement, a transaction that no person of ordinary sound business judgment would say results in
!21 524520v.5
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the Joint Venture Companies receiving a fair benefit in exchange for their payment to Zest and
their removal from the market of a valuable p01iion bf their portfolio of products, i.e., GPS
attachments.
564. As a proximate result of said breach, upon information and belief~ the Minority
Members have been harmed because the Zest settlement has reduced and/or will reduce the Joint
Venture Companies' sales, earnings and value, resulting in the Minority Members' share of
distributions and the value of their membership interest in the Joint Venture Companies being
reduced too.
565. As remedies for said breach, the Minority Members seek on their own behalf (I)
compensatory damages against Danaher Sybron, including but not limited to damages for the
reduction in the amount of their distributions and the reduction in the value of their membership
interest in the Joint Venture Companies, in an amount cunently unknown but to be proved at
trial; and (2) an injunction compelling Danaher Sybron and the Board of the Joint Venture
Companies to seek to unwind and reverse to the maximum extent possible the Zest settlement.
566. To the extent that this cause of action must be pursued derivatively, a demand on
the Joint Venture Companies to file suit would be futile, and is therefore excused, because all of
the Danaher Sybron-appointed managers who now control the Joint Venture Companies are
themselves interested in the acts and transactions being challenged by this cause of action.
567. The Minority Memben; also seek punitive damages. The actions ofDanaher
Syhron were and arc malicious and oppressive. Danaher Sybron intended to injure the Minority
Members, acted in willful and conscious disregard of the Minority Members' rights, and caused
them to su!Ter unjust hardship.
WHEREFORE, the Minority Members respectfully request that the Court enter judgment
in their favor:
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A. Dismissing Plaintiffs' First Amended Complaint in its entirety and with prejudice;
B. On the First Counterclaim, against Danaher Sybron for damages for breach of the
Mandatory Buy-Out Clause in an amount to be detem1ined at trial, but not less than $28 million
dollars;
C. On the Second Counterclaim, against Danaher Sybron, decreeing and adjudging
that Danaher has no right to exercise the Employment Call Option;
D. On the Third Counterclaim, against Danaher Syhron decreeing and adjudging that
Danaher has no right to exercise the Cause Call Option;
E. On the Fourth Counterclaim, against all plaintiffs, awarding the Minority
Members (i) a penn anent injunction requiring the immediate reinstatement of Dr. Niznick to the
Board, along with the rights and privileges afforded to the other Danuher-appointed Board
managers, including without limitation access tq the books, records, and facilities of the
business, (ii) a permanent injunction prohibiting Danaher Sybron and the Joint Venture
Companies from continuing to manage, or purporting to manage, the business of the Joint
Venture Companies via a Board consisting of Danaher-appointed managers only without any
input or participation by Dr. Niznick or the Minority Members, and (iii) a decree nullifying all
votes taken on and after January 29, 2014 by a Board consisting of Danaher-appointed managers
only, except to the extent that the rights of innocent third parties might be involved;
F. On the Fifth Counterclaim, against all plaintiffs, jointly and severally, for
damages in an amount to be determined at trial, but not less than $4 million dollars;
G. On the Sixth Counterclaim, against all plaintiff.'>, for a decree of specific
performance, compelling, plaintiffs to perform their Excess Cash distribution obligations under
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the Operating Agreements, together with punitive damages against Danaher Sybron in an amount
to be determined at trial;
H. On the Seventh Counterclaim, awarding the Minority Members Judgment in their
own behalf and derivatively on behalf of the Joint Venture Companies, against Danaher Sybron
for damages in an amount cutTently unknown but to be proved at trial, and against Danaher
Sybron and the Joint Venture Companies for a pelmanent injunction (i) restraining Danaher
Sybron and the Board of the Joint Venture Companies from using Implant Direct's name, logo,
customer list, and customer information in connection with the marketing and promotion of
KaVo KetT Group products and from any further acts placing the management of the Joint
Venture Companies' manufacturing, operations, accounting, infonnation teclmology, and legal
functions under Danaher Corporation's control, whether categorized as being part of the KaYo
Ken· Group or part of Danaher's Dental Platform, and (ii) compelling Danaher Sybron and the
Board of the Joint Venture Companies to unwind and reverse to the maximum extent possible all
acts taken by them in furtherance of the Integration Transaction;
I. On the Eighth Counterclaim, awarding the Minority Members Judgment in their
own behalf and derivatively on behalf of the Joint Venture Companies, against Danaher Sybron
for damages in an amount cun-ently unknown but to be proved at trial, and a permanent
injunction (i) restraining Danaher Sybron and the Board of the Joint Venture Companies from
using Implant Direct's name, logo, customer list, and customer information in connection with
the marketing ai1d promotion ofKaVo Ken Group products and from any fUiiher acts placing the
management of the Joint Venture Companies' manufacturing, operations, accounting,
information technology, and legal functions under Danaher Corporation's control, whether
categorized as being part of the Ka Vo Kerr Group or pati of Danaher's Dental Platform, and (ii)
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compelling Danaher Sybron and the Board of the Joint Venture Companies to unwind and
reverse to the maximum extent possible all acts taken by them in furtherance of the Integration
Transaction;
J. On the Ninth Counterclaim, awarding the Minority Members judgment in their
own behalf and derivatively on behalf of the Joint Venture Companies, against Danaher Sybron
for damages in an amount to be determined at trial, together with a permanent injunction
prohibiting Danaher Sybron and its agents atid affiliates, including vvithout limitation, the KaVo
Ken Group, from continuing to use the Trade Secrets for any purpose whatsoever, and
compelling them to return the Trade Secrets to the exclusive possession, custody, and control of
the Joint Venture Companies;
K. On the Tenth Counterclaim, against all plaintiffS, requiring the Joint Venture
Companies to provide a full and complete accounting of all of the financial affairs and dealings
of the Joint Venture Companies, so as to enable the Minority Members, inter alia, to detennine
the distributions they a:re due and the purchase price owed for breach of the Mandatory Buy-Out
Clause;
L. On the Eleventh Counterclaim, against all plaintiffs, directing plaintiffs provide
the Minority Members and their representatives with full and complete access to the Joint
Venture Companies' books and records, including their books of account, as well as audited
financial statements for calendar years fi·om inception through 20J 3, and unaudited financial
statements for the same period, including balance sheets, statement of income and cash flows;
M. On the Supplemental Twelfth Counterclaim, against Danaher Sybron and the
Joint Venture Companies, awarding the Minority Members on their own behalf and derivatively
on behalf of the Joint Venture Companies, damages from Danaher Sybron in an amount to be
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detennined at trial, together with a pennanent injunction (i) restraining Danaher Sybron and the
Board of the Joint Venture Companies from using Implant Direct's name, logo, customer list,
and customer information in connection with the marketing and promotion ofKaVo Ken Group
products and fi·om any further acts of placing the management of the Joint Venture Companies'
manufacturing, operations, accounting, information technology, and legal functions under
Danaher Corporation's control, whether categorized as being part of the KaYo Ken Group or
part of Danaher's Dental Platform, and (ii) compelling Danaher Sybron and the Board of the
Joint Venture Companies to unwind and reverse to the maximum extent possible all acts taken
by them in furtherance of the Integration Transaction;
N. On the Supplemental Thirteenth Counterclaim, against Danaher Sybron and the
Joint Venture Companies, awarding the Minority Members on their own behalf and de1ivatively
on behalf of the Joint Venture Companies, damages against Danaher Sybron in an amount to be
determined at trial, together with a permanent injunction (i) restraining Danaher Sybron and the
Board of the Joint Venture Companies from using Implant Direct's name, logo, customer list,
and customer infom1ation in connection with the marketing and promotion of Ka Vo Kerr Group
products and from any f1nther acts of placing the management of the Joint Venture Companies'
manufacturing, operations, accounting, information teclmology, and legal functions under
Danaher Corporation's control, whether categorized as being part of the KaYo Ken Group or
part of Danaher's Dental Platfonn, and (il) compelling Danaher Sybron and the Board of the
Joint Venture Companies to unwind and reverse to the maximum extent possible all acts taken
by them in fmtherance of the Integration Transaction;
0. On the Supplemental Fourteenth Counterclaim, against Danaher S)ibron,
awarding the Minority Members damages in an amount to be determined at trial, together with a
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pennanent injunction removing the cmTent Danaher Managers from Implant Direct's Board of
Managers and prohibiting Danah~r :Sybron, for so long as Danaher Corporation owns Nobel,
from appointing any officer, director, employee, agent, or shareholder of Danaher Corporation or
any of its affiliates as a Board Manager.
P. On the Supplemental Fifteenth Counterclaim, against Danaher Sybron and the
Joint Venture Companies, awarding the Minority Members damages against Danaher Sybron in
an amount to be detennined at trial, together with a permanent injunction against Danaher
Sybron and the Joint Venture Companies removing the current Danaher Managers from Implant
Direct's Board of Managers and prohibiting Danaher Sybron, for so long as Danaher Corporation
owns Nobel, from appointing any officer, director, employee, agent, or shareholder of Danaher
Corporation or any of its affiliates as a Board Manager;
Q. 011 the Supplemental Sixteenth Counterclaim, against Danaher Sybron, awarding
the Minority Members, on their own behalf and derivatively on behalf of the Joint Venture
Companies, damages against Danaher Sybron in an amount to be determined at trial, together
with a pennanent injunction removing the cun·ent Danaher Managers from Implant Direct's
Board of Managers and prohibiting Danaher Sybron, t{}r so long as Danaher Corporation owns
Nobel, fi·orn appointing any officer, director, employee, agent, or shareholder of Danaher
Corporation or any of its affiliates as a Board Manager, together with punitive damages in an
amount to be determined at trial;
R. On the Supplemental Seventeenth Counterclaim, against Danaher Corporation,
awarding the Minority Members, on their own behalf and detivatively on behalf of the Joint
Venture Companies, damages in an amount to be determined at trial, together with a permanent
injunction removing the current Danaher Managers from Implant Direct's Board of Managers
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and prohibiting Danaher Sybron, for so long as Danaher Corporation owns Nobel, from
appointing any officer, director, employee, agent, or shareholder of Danaher Corporation or any
of its affiliates as a Board Manager, together with punitive damages in an amount to be
determined at trial.
S. On the Supplemental Eighteenth Counterclaim, against Danaher Corporation,
awarding the Minority Members, on their own behalf and derivatively on behalf of the Joint
Venture Companies, damages in an amount to be determined at trial, together with a pennanent
injunction removing the cun-ent Danaher Managers from Implant Direct's Board of Managers
and prohibiting Danaher Sybron, for so long as Danaher Corporation owns Nobel, from
appointing any officer, director, employee, agent, or shareholder of Danaher Corporation or any
of its affiliates as a Board Manager, together with punitive damages in an amount to be
determined at trial.
T. On the Supplemental Nineteenth Counterclaim, against Danaher Sybron and the
Joint Venture Companies, awarding the Minority Members, on their own behalf and derivatively
on behalf of the Joint Venture Companies, damages against Danaher Sybron in an amount to be
determined at trial, together with a pennanent injunction compelling Danaher Sybron and the
Board of the Joint Venture Companies to seek to unwind and reverse to the maximum extent
possible the Zest settlement;
U. On the Supplemental Twentieth Counterclaim, against Danaher Sybron and the
Joint Venture Companies, awarding the Minority Members, on their own behalf and derivatively
on behalf of the Joint Venture Companies, damages against Danaher Sybron in an amount to be
deten11ined at trial, together with a pen11anent injunction compelling Danaher Sybron and the
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Board of the Joint Venture Companies to seek to unwind and reverse to the maximum extent
possible the Zest settlement;
V. On the Supplemental Twenty-First Counterclaim, against Danaher Sybron and the
Joint Venture Companies, awarding the Minority Members, on their own behalf and dedvatively
on behalf ofthe Joint Venture Companies, damages against Danaher Sybron in an amount to be
detetmined at trial, together with a permanent injunction compel!ing Danaher Sybron and the
Board of the Joint Venture Companies to seek to unwind and reverse to the maximuin extent
possible the Zest settlement; and
W. Together with the costs and disbursements of the action, interest, and such other
and further relief as to this Court may seem just and proper.
Dated: October 8, 2015 New York, New York
129 524520v.5
Respectfully submitted,
KULIK GOTTESMAN & SIEGEL LLP
By: _______ ---------Don Gottesman
Comerica Bank Building 15303 Ventura Boulevard, Suite 1400 Shennan Oaks, California 91403 818-817-3600
-and-
DavidoffHutcher & Citron LLP 605 Third Avenue New York, New York 10158 (212) 557-7200
Attorneys/or Defendants and Counterclaim Plainqf/.VThird Party PlaintiffS;
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