exhibit c - judiciary of new york

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



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.

DTE691 C-002



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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DTE691 C-003



among other thi11gs, "Call Options," and respectfully refer the Comito those agreements for the

tem1s thereof.


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.


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


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.


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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DTE691 C-004



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.


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.




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.


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.


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.


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DTE691 C-006




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.


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.


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

G 52t1520v 5

DTE691 C-007



fom1 a belief as to the truth of the allegation about capturing "approximately 4%" of the above

referenced market.


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.


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.


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




admit so much thereof that alleges the existence of the Operating Agreements, and respectfully

refer the Court to those agreements for the terms thereof.


admit so much thereof that alleges the existence of the Operating Agreements and respectfully

refer the CoUlt to those agreements for the tmms thereof.



refer the Court to those agreements for the tenns thereof.



refer the Court to those agreements for the tetms thereof.



refer the Court to those agreements for the te1ms thereof.



refer the Court to those agreements for the tenns thereof.



refer the Court to those at,:rreements for the terms thereof.

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DTE691 C-009




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



refer the Court to those agreements for the tem1s thereof.


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.


53. Deny the allegations of paragraph 53 of the First Amended Complaint



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.


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.

9 524520v.5

DTE691 C-01 0




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.


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.


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.


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




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.


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


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.


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.


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.

ll 524S20v.5

DTE691 C-0 12




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.



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.


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.


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.

12 524520v.5

DTE691 C-013




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.


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.


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


which the Comt is respectfully referred for the terms thereof.

77. Deny the allegations of parat,>raph 77 of the First Amended Complaint, except


which the Court is respectfully referred for the terms thereof.


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



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.



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.


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.


admit that Stratton suspended McLachlan and that thereafter McLachlan's employment was

terminated.


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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DTE691 C-015



investigation had concluded and the claims had not been validated, Dr. Niznick made a comment

in jest about the matter.



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.


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.


admit that a subordinate filed a lawsuit against, among others, IDSA and Danaher Sybron.


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.


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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DTE691 C-016




admit that the Minority Members, through their counsel, sent a dispute notice to Plaintiff.'> on



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.



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.


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

16 524520v.5

DTE691 C-017



(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


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.


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



certain disputes that had arisen, and respectfhlly refer the Comi to these notices for the contents

tbcrcoi


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.


legal conclusion to which no response is required, and its allegations are therefore denied.



admit so much thereof as alleges the existence· of the Operating Agreements, and respectfully



admit so much thereof as alleges the existence of the Operating Agreements, and respectfully


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"

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DTE691 C-019



and that Defendants' counsel sent a letter in response, and respectfully refer the Court to those

letters for the contents thereof.


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


RESPONDING TO THE SECOND CAUSE OF ACTION


Defendants refer the Court to their responses to paragraphs I to 116, which are incorporated



legal conclusion to which no response is required, and its allegations are therefore denied.


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.


admit so much thereof as alleges the existence of the Operating Agreements, and respectfully



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.

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DTE691 C-020



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




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:


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


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.


1 34. Deny the allegations of paragraph 134 of the First Amended Complaint.

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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 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



required, as the Coutt dismissed the Fourth Cause of Action of the First Amended Complaint by




order dated february 4, 2015.

21

DTE691 C-022







required, as the Coutt dismissed the Fourth Cause of Action of the First Amended Complaint by


RESPONDING TO THE FIFTH CAUSE OF ACTION


required, as Plaintiffs discontinued their fifth cause of action without prejudice by stipulation

dated September 25, 2014.






dated September 25,2014.




RESPONDING TO THE SIXTH CAUSE O.F ACTION


Defi:mdants refer the Court to their responses to paragraphs 1 to 147, which are incoqJorated


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DTE691 C-023



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.



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.





RESPONDING TO THE SEVENTH CAUSE OF ACTION




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,



admit so much thereof as alleges the existence of the Third Amendment to the Operating

23 524520v.5

DTE691 C-024



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.


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.


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



herein by this reference,


legal conclusion to which no response is required, and is therefore denied.


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




admit so much thereof which allege that there are Operating Agreements, to which the CoUit is

respectfully referred for the tem1s thereof.


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.


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.



25 524520v 5

DTE691 C-026



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.


legal conclusion to which no response is required, and are therefore denied.


legal conclusion to which no response is required, and are therefore denied.



admit so much thereof as allege the existence of the Operating Agreements, to which the Court is

respectfully refeued for the terms thereof.


J 81. Deny the allegations of paragraph 181 of the First Amended Complaint.



RESPONDING TO THE TENTH CAUSE OF ACTION


Defendants refer the Court to their responses to paragraphs 1 to 182, which arc incorporated


!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




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.



RESPONDING TO THE ELEVENTH CAUSE OF ACTION


required, as Plaintiff..<~ discontinued their eleventh cause of action without prejudice by stipulation

dated August 7, 2014.


required, as Plaintiff..<; discontinued their eleventh cause of action without prejudice by stipulation

elated August 7, 2014.


required, as Plaintiffs discontinued their eleventh cause of action without prejudice hy stipulation

dated August 7, 2014 ..


required, as Plaintiffs discontinued their eleventh cause of action without prejudice by stipulation


27 524S20v.5

DTE691 C-028






196, State that no response to paragraph 196 of the First Amended Complaint is



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



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



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



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



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


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


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



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



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



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.

35 S24520v.5

DTE691 C-036



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

36 524520v.5

DTE691 C-037



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

37 524520v.5

DTE691 C-038



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:

38 524520v.5

DTE691 C-039



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

39 52rJ520v.5

DTE691 C-040



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

40 524520v.5

DTE691 C-041



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

4! 524520v.5

DTE691 C-042



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

42 524520v.5

DTE691 C-043



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

43 S24520v.5

DTE691 C-044



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:

46

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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


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


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.


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 ."


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).


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)


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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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)



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.


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'

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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)



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

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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).


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'


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


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)



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.




themselves interested in the acts and transactions being challenged by this cause of action.,


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


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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


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.


and Danaher Sybron.


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'


confidential customer lists and infonnation).


(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 file suit would he futile, and is therefore excused, because all of the



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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)




and Danaher Sybron.


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'


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


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






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



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.

!00 524520v.5

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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


and Danaher Sybron.


Agreements.

497. Pursuant to the terms of the Operating Agreements, the Joint Venture Companies


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.


Joint Venture Companies to file suit would be fhtile, and is therefore excused, because all of the



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


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.


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.

I 12 524520v.5

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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


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.


damages in that Implant Direct's sales nnd earnings, and the value of the Minority Members'


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.


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)


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.


damage..<: in that Implant Direct's sales and earnings, and the value of 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.


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


530. 'J'o the extent this cause of action must be pursued derivatively on Implant

ll5 52452Uv.5

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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)


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.


damages in that Implant Direct's sales and earnings, and the value of 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


116 521l52()v 5

DTE691 C-117




Corporation were and are malicious and oppressive. They intended to injure the Minority


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)




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.


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.


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

ll8 524520v.5

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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)



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.

119 524520v.5

DTE691 C-120



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

!20 524520v.5

DTE691 C-121



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



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





and Danaher Sybron.

561. Pursuant to the terms of the Operating A&rreements, the Joint Venture Companies


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


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


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


them to su!Ter unjust hardship.

WHEREFORE, the Minority Members respectfully request that the Court enter judgment

in their favor:

122 524520\'.5

DTE691 C-123



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

123 524520v.:i

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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


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)

124 52,l520v.5

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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


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

125 52<152()v.5

DTE691C-126



detennined at trial, together with a pennanent injunction (i) restraining Danaher Sybron and the


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'


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


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


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


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

126 524520\'.5

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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


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

127 52,1520v.5

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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


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


deten11ined at trial, together with a pen11anent injunction compelling Danaher Sybron and the

128 524520v.5

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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;

DTE691 C-130



exhibit c - judiciary of new york

Documents