FILED: NEW YORK COUNTY CLERK 10/06/ :15 PM INDEX NO /2014 NYSCEF DOC. NO. 164 RECEIVED NYSCEF: 10/06/2014

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1 FILED: NEW YORK COUNTY CLERK 10/06/ :15 PM INDEX NO /2014 NYSCEF DOC. NO. 164 RECEIVED NYSCEF: 10/06/2014 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK SYBRON CANADA HOLDINGS, INC., Implant Direct Sybron International, LLC, Implant Direct Sybron Manufacturing, LLC, Implant Direct Sybron Administration, LLC, Index No /2014 Plaintiffs, v. GERALD A. NIZNICK, Implant Direct Int l, Inc., Implant Direct Mfg., LLC, Mikana Manufacturing 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 International, LLC, Implant Direct Sybron Manufacturing, LLC, Implant Direct Sybron Administration, LLC, Plaintiffs and Counterclaim Defendants. PLAINTIFFS ANSWER AND AFFIRMATIVE DEFENSES TO COUNTERCLAIMS OF DEFENDANTS IMPLANT DIRECT INT L, INC., IMPLANT DIRECT MFG., LLC, AND MIKANA MANUFACTURING COMPANY INC. Plaintiffs Sybron Canada Holdings, Inc. ( Danaher ), Implant Direct Sybron International, LLC ( IDSI ), Implant Direct Sybron Manufacturing, LLC ( IDSM ), and Implant Direct Sybron Administration, LLC ( IDSA ) (IDSI, IDSM, and IDSA, collectively, the Joint 1

2 Venture Companies or JVCs ), by and through their attorneys, respond to Defendants Counterclaims with the following Answer and Affirmative Defenses: ANSWER 31. Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Defendants Implant Direct Int l, Inc., Implant Direct Mfg., LLC, and Mikana Manufacturing Company Inc. (collectively, the ID Companies ) have brought a counterclaim seeking certain relief that the ID Companies purport to characterize in paragraph 33. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit the allegations set forth in paragraph Plaintiffs admit the allegations set forth in paragraph Plaintiffs admit the allegations set forth in paragraph Plaintiffs admit that Danaher is a Delaware corporation that owns a 75% membership interest in the JVCs, and that Danaher is an indirect subsidiary of Danaher Corporation, which is listed on the New York Stock Exchange. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit the allegations set forth in paragraph Plaintiffs admit the allegations set forth in paragraph Plaintiffs admit the allegations set forth in paragraph Plaintiffs admit that Niznick is a dentist. Except as thus expressly admitted, Plaintiffs lack sufficient information to admit or deny, and therefore deny, the allegations set forth in paragraph 41. 2

3 42. Plaintiffs lack information sufficient to admit or deny, and therefore deny, the allegations contained in the first two sentences of paragraph 42. Except as thus expressly denied for lack of sufficient information, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, before the formation of the JVCs, the ID Companies carried on a dental-implant business known as Implant Direct. Except as thus expressly admitted, Plaintiffs lack sufficient information to admit or deny, and therefore deny, the allegations set forth in paragraph Plaintiffs admit that Danaher or its affiliates began acquiring dental companies after the year Plaintiffs further admit that, prior to the end of 2010, Danaher or its affiliates had a dental platform that included Sybron Implant Solutions Corporation. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Dr. Niznick and Danaher reached an agreement in November 2010, pursuant to which Danaher purchased a 75% interest in the ID Companies business for $225 million. Plaintiffs further admit that the three JVCs were formed to carry on the new joint business between Danaher and the ID Companies. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Danaher, Ormco Corporation, Niznick, two trusts Niznick controls, and the ID Companies executed a Transaction Agreement dated November 17, Plaintiffs further admit that Danaher, DH Holdings Corp., Niznick, two trusts Niznick controls, and the ID Companies executed three Operating Agreements dated December 30, Plaintiffs further admit that Danaher initially owned 75% of the membership units in the Joint Venture Companies. Plaintiffs lack information sufficient to admit or deny, and therefore deny, the allegation set forth in paragraph 46 concerning various ancillary agreements, as no such 3

4 agreements are specified. Except as thus specifically admitted, or denied for lack of sufficient information, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the JVCs Operating Agreements contain certain provisions set forth in 1.01, 4.01, 4.02(a) (c), 4.02(f), 5.01(b), 7.01(b), and Plaintiffs deny Defendants characterization of those provisions as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the JVCs Operating Agreements contain a provision titled 9.04(a). Plaintiffs deny Defendants characterization of that provision as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the JVCs Operating Agreements contain provisions titled 1.01, 4.02(f), 4.10, 9.02(b)(i) (ii), and Plaintiffs deny Defendants characterization of those provisions as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the JVCs began doing business on January 1, Plaintiffs further admit that, as of January 1, 2011, Niznick was President of all three JVCs and sat on their Board as a manager. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, shortly after the JVCs began doing business, a dispute arose over a human-resources investigation into Niznick s misconduct. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph 53. 4

5 54. Plaintiffs admit that Niznick entered into an amended employment agreement with the JVCs on April 15, Plaintiffs further admit that the Chairman of the JVCs board sent a written communication to the JVCs employees on April 15, Plaintiffs deny Defendants characterization of the April 15, 2011 employment agreement and the April 15, 2011 communication as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Danaher and the ID Companies entered into a First Amendment to the parties Operating Agreements on April 15, Plaintiffs deny Defendants characterization of the First Amendment as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Niznick signed an amended employment agreement on October 20, Plaintiffs deny Defendants characterization of that document as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit the allegations set forth in paragraph Plaintiffs admit the allegations set forth in paragraph Plaintiffs admit that the JVCs were the fastest growing major implant company in the industry. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph 63. 5

6 64. Plaintiffs admit that a Strategic Plan was submitted to the Board in or about October Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that cash distributions were made to the minority members beginning in 2011, based on operating profit. Plaintiffs further admit that Dr. Niznick requested, and the Board approved, the distributions. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that cash distributions relating to operating profit from Q1 through Q were made to the minority members based on 50% of operating profit. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, with respect to the operating profits related to 2011, 40% was distributed to the ID Companies, and with respect to the operating profit related to 2012 and the first two quarters of 2013, 50% was distributed to the ID Companies. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Mr. Chang calculated operating profit and the amount to be distributed. Plaintiffs further admit that operating profit is calculated by deducting the cost of goods sold and operating expenses from gross revenues. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that amortization expense is not deducted in the calculation of operating profit. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph 69. 6

7 70. Plaintiffs admit that approximately $7.7 million was distributed to the ID Companies from October 2011 through July Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the Board approved a distribution to the Members in August Plaintiffs further admit that the distribution ultimately was paid. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that in October 2013 Danaher and the ID Companies entered into a Second Amendment to the Operating Agreements, a ten-year extension to IDSM s lease of the JVCs Calabasas, California facility, and a five-year extension to IDSA s lease of the JVCs Valencia, California facility. Plaintiffs deny Defendants characterization of those documents as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs lack sufficient information to admit or deny, and therefore deny, the allegations set forth in the first sentence of paragraph 73. Plaintiffs deny the allegations set forth in the second sentence of paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, on October 30, 2013, Mr. van Duijnhoven informed the Board, including Niznick, that, pursuant to the policy enacted in April 2011, the Board would investigate an anonymous hotline complaint alleging that Niznick had an inappropriate relationship with a subordinate, Ms. Jurcoane, and had provided Ms. Jurcoane preferential treatment as a result. Plaintiffs further admit that Ms. Jurcoane was IDSA s Director of Strategic Planning as of October 30, Plaintiffs further admit that Ms. Jurcoane did not make the 7

8 hotline complaint. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, when Mr. van Duijnhoven informed the Board that the anonymous hotline complaint about Niznick s conduct would be investigated, Niznick s employment term was scheduled to end on December 31, Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Niznick gave the Board a notice of resignation late in the evening on October 31, 2013, Pacific time (November 1, 2013, Eastern time). Plaintiffs lack information sufficient to admit or deny, and therefore deny, the allegations set forth in paragraph 79, insofar as those allegations concern Niznick s mental state. Except as thus expressly admitted, or denied for lack of sufficient information, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the investigation of the hotline complaint proceeded. Except as thus expressly admitted, Plaintiffs deny the allegations contained in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Ms. Coletti announced the status of outside counsel s investigation at the JVCs November 26, 2013 board meeting. Plaintiffs deny Defendants characterization of the board-meeting minutes as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph 85 and deny the argument and any factual allegations in footnote 1. 8

9 86. Plaintiffs admit that a Board meeting took place on November 26, Plaintiffs deny Defendants characterization of the board-meeting minutes as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that a Consulting Agreement was signed on December 20, Plaintiffs deny Defendants characterization of that document as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the Consulting Agreement includes an Exhibit B, which contains a Section D. Plaintiffs deny Defendants characterization of that document as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Niznick represented in the Consulting Agreement that, as of December 20, 2013, he was not aware of any claims he or the ID Companies had against the JVCs or Danaher. Except as expressly thus admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, on January 29, 2014, Danaher gave notice to the ID Companies that Danaher was invoking the Employment Call Option and that the ID Companies right to appoint a Manager to the Board had terminated. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, in a notice dated January 29, 2014, the JVCs informed Niznick that he had committed a series of specific acts constituting Cause, as the Operating Agreements define that term. Except as expressly thus admitted, Plaintiffs deny the allegations set forth in paragraph 92. 9

10 93. Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the JVCs informed the ID Companies on February 7, 2014, that they would pay a distribution in the amount of $123,425, which was the ID Companies share of the JVCs accumulated retained earnings. Plaintiffs further admit that such a distribution was made to the ID Companies on February 17, Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the JVCs made a deduction of amortization expense from the calculation of the JVCs accumulated retained earnings for purposes of the February 2014 distribution. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the Operating Agreements contain a Plaintiffs, however, deny Defendants characterization of that provision as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that amortization expense is not deducted in the calculation of operating profit. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the JVCs cash and market securities account contained approximately $13,496,761 at the end of 2013 and approximately $29,456,741 at the end of the second quarter of Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph

11 102. Plaintiffs admit that the ID Companies demanded certain information from the JVCs on May 1, Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, on February 28, 2014, Niznick caused the trusts he controls to send notices purporting to rescind the Second Amendment and the JVCs lease extensions for their Calabasas and Valencia facilities. Plaintiffs further admit that the grounds for rescission alleged in that notice were failure of consideration and fraud. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the ID Companies demanded in their rescission notice that the distribution obligations of the JVCs revert to quarterly distributions of the ID Companies share of 50% of operating profits. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the JVCs have not made a cash distribution to the ID Companies since February Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, before the two lease extensions and the Second Amendment were rescinded, they took the position that those agreements were not all part of a single transaction. Except as expressly thus admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that IDSM entered into a lease for a new manufacturing facility. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph

12 110. Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that a press release was issued on February 7, 2014 that announced the formation of the KaVo Kerr Group, LLC. Plaintiffs deny Defendants characterization of that press release as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the KaVo Kerr Group s website includes the language quoted in the second and third sentences of paragraph 115. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that a press release concerning products being unveiled in Chicago was issued. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, after February 7, 2014, KaVo Kerr Group companies have marketed their products through a variety of means, including trade-journal advertisements, press releases, and brochures. Plaintiffs further admit that those advertisements include the JVCs logo. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph

13 122. Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs lack sufficient information to admit or deny, and therefore deny, the allegations set forth in paragraph 128 insofar as those allegations relate to Niznick s mental state. Except as thus expressly denied for lack of sufficient information, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Mr. Stratton has a college degree in public relations. Plaintiffs further admit that Mr. Stratton had been working for the JVCs for approximately 11 months when he was appointed President. Plaintiffs further admit that Mr. Stratton performed well during his time at IDSI. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that a Board meeting took place on November 26, Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph

14 137. Plaintiffs admit that Niznick voted in favor of Mr. Stratton s appointment as President of the JVCs at the November 26, 2013 Board meeting. Plaintiffs further admit that the vote on Mr. Stratton s appointment as President was 4-0 in favor. Plaintiffs lack sufficient information to admit or deny, and therefore deny, Niznick s allegations about his own beliefs. Except as thus expressly admitted, or expressly denied for lack of sufficient information, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Mr. van Duijnhoven moved to appoint Mr. Moran Vice President of Operations of IDSM at the November 26, 2013 Board meeting. Plaintiffs further admit that Mr. Moran s compensation is shared between IDSM and Ormco. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Niznick purported to veto Mr. Moran s appointment at the November 26, 2013 Board Meeting. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph To the extent that paragraph 141 describes Niznick s mental state, Plaintiffs lack information sufficient to admit or deny, and therefore deny, the allegations set forth therein. Except as thus expressly denied for lack of sufficient information, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Mr. van Duijnhoven and the rest of the Board took the position that Mr. Moran s appointment was not a transaction within the meaning of the Operating Agreements. Plaintiffs further admit that the Board voted 3-1 to appoint Moran Vice President of Operations of IDSM, with Niznick dissenting. Plaintiffs further admit that Niznick stated that he would not oppose Mr. Moran s appointment if Mr. Stratton were appointed president of all 14

15 three JVCs, not just IDSI and IDSA, and if Mr. Moran reported to Mr. Stratton. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Mr. Stratton s appointment as President of the JVCs and Mr. Moran s appointment as Vice President of Operations of IDSM were announced to the JVCs employees. Plaintiffs further admit that the announcement stated that Mr. Moran would continue to work for Ormco and Allesee Orthodontic Appliances. Except as thus expressly admitted, Plaintiffs deny the allegations in paragraph Plaintiffs admit that the announcement stated that Mr. McLachlan and Mr. Smith would report to Mr. Moran. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Mr. Stratton became the JVCs president on December 1, Plaintiffs further admit that Mr. Stratton referred to Mr. van Duijnhoven the Chairman of the JVCs Board as his boss at the JVCs National Sales Meeting. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Mr. Stratton sent Niznick an on December 1, Plaintiffs deny as incomplete and misleading Defendants characterization of that . Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that, under the Consulting Agreement, Niznick is to provide consulting services in response to requests from Mr. Stratton or a designated associate. Plaintiffs further admit that Niznick has sent s to Mr. Stratton concerning marketing. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph

16 149. Plaintiffs admit that the KaVo Kerr Group, LLC was incorporated in Delaware on December 17, Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Scott Henkel was appointed VP of Global Education and Digital Platform. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that KaVo s Arctica and Ormco s Lythos are digital products. Plaintiffs further admit that those products were listed in the Strategic Plan as equipment the JVCs might sell. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Niznick sent an to the Board on January 2, Plaintiffs deny Defendants characterization of that as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Niznick was invited to give a one-hour lecture at the National Sales Meeting. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Ms. Coletti sent Niznick an on January 3, Plaintiffs deny Defendants characterization of that as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Niznick replied to Ms. Coletti s by stating that he would attend the National Sales Meeting. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph

17 157. Plaintiffs admit that Niznick caused a Dispute Notice to be sent on January 9, Plaintiffs further admit that, in the January 9, 2014 Dispute Notice, Niznick purported to exercise the ID Companies veto and to demand information about what he characterized as an alleged integration merger between the JVCs and Danaher. Plaintiffs otherwise deny Defendants characterization of the Dispute Notice as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that Wayne Smith has terminated his employment with the JVCs. Plaintiffs further admit that Josie Jurcoane resigned from the JVCs and filed a lawsuit against IDSA, among others. Plaintiffs further admit that John McLachlan, Brenda Kent, Michael Kennedy, Barry Britzman, and Michael Doerle are no longer employed by the JVCs. Plaintiffs admit that Brian Banton is no longer the JVCs Vice President of International Sales. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that they filed a complaint in this litigation, which contained allegations pertaining to Niznick s conduct. Plaintiffs further admit that the Implant Direct website mentions Niznick. Plaintiffs deny Defendants characterization of their complaint and the JVCs website as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the Implant Direct website mentions Niznick s retirement. Plaintiffs deny Defendants characterization of the material on the JVCs website as incomplete and misleading. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph

18 163. Plaintiffs admit that the parties exchanged Dispute Notices and participated in negotiations concerning some of the Disputes in this case. Plaintiffs further admit that the parties discussions did not resolve their Disputes. Plaintiffs deny that those Notices included all Disputes raised in Defendants counterclaims. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the parties mediated certain Disputes on March 20, Plaintiffs further admit that the mediation was not successful. Plaintiffs deny that the mediation included all Disputes raised in Defendants counterclaims. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph In response to paragraph 165, Plaintiffs incorporate fully as if set forth herein their responses to each and every allegation set forth above Plaintiffs admit that the Operating Agreements are valid agreements among the parties thereto, including Danaher and the ID Companies. Plaintiffs further admit that those agreements contain 9.04(a), which pertains to a buy-out of 5% of the ID Companies membership interest in the JVCs. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph In response to paragraph 171, Plaintiffs incorporate fully as if set forth herein their responses to each and every allegation set forth above. 18

19 172. Plaintiffs admit that this Court has the authority to declare the rights, status, or other legal relations of the parties before it. Plaintiffs further admit that there exists a genuine and justiciable controversy relating to Danaher s right to exercise the Employment Call Option. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph In response to paragraph 175, Plaintiffs incorporate fully as if set forth herein their responses to each and every allegation set forth above Plaintiffs admit that this Court has the authority to declare the rights, status, or other legal relations of the parties before it. Plaintiffs further admit that there exists a genuine and justiciable controversy relating to Danaher s right to exercise the Cause Call Option. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph In response to paragraph 179, Plaintiffs incorporate fully as if set forth herein their responses to each and every allegation set forth above Plaintiffs admit that the Operating Agreements are valid agreements among the parties thereto, including Danaher and the ID Companies. Plaintiffs further admit that those agreements contain 4.02(c) and Plaintiffs deny that the Second Amendment is still valid. Plaintiffs deny as incomplete and misleading Defendants characterization of those provisions. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph

20 182. Plaintiffs admit that Niznick was a member of the JVCs Board from January 1, 2011 to January 29, Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the Operating Agreements contain a provision titled Plaintiffs deny as incomplete and misleading Defendants characterization of that provision. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Because Plaintiffs have moved to dismiss the Fifth Counterclaim, the allegations therein (paragraphs ) require no response at this time. Plaintiffs reserve the right to respond to those allegations in the event the Court does not grant their motion to dismiss Because Plaintiffs have moved to dismiss the Sixth Counterclaim, the allegations therein (paragraphs ) require no response at this time. Plaintiffs reserve the right to respond to those allegations in the event the Court does not grant their motion to dismiss In response to paragraph 203, Plaintiffs incorporate fully as if set forth herein their responses to each and every allegation set forth above Plaintiffs admit that the Operating Agreements are valid agreements among the parties thereto, including Danaher and the ID Companies. Plaintiffs admit that the Operating Agreements contain a 4.02(f). Plaintiffs further admit that Danaher Corporation s wholly- and majority-owned dental-industry subsidiaries are Danaher affiliates, within the meaning of the Operating Agreements. Except as thus expressly admitted, Plaintiffs deny the allegations set forth in paragraph

21 205. Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Because Plaintiffs have moved to dismiss the Seventh Counterclaim insofar as it alleges a derivative claim, the allegations in paragraph 211 require no response at this time. Plaintiffs reserve the right to respond to those allegations in the event the Court does not grant their motion to dismiss Because Plaintiffs have moved to dismiss the Eighth Counterclaim, the allegations therein (paragraphs ) require no response at this time. Plaintiffs reserve the right to respond to those allegations in the event the Court does not grant their motion to dismiss Because Plaintiffs have moved to dismiss the Ninth Counterclaim, the allegations therein (paragraphs ) require no response at this time. Plaintiffs reserve the right to respond to those allegations in the event the Court does not grant their motion to dismiss In response to paragraph 225, Plaintiffs incorporate fully as if set forth herein their responses to each and every allegation set forth above Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph In response to paragraph 228, Plaintiffs incorporate fully as if set forth herein their responses to each and every allegation set forth above. 21

22 229. Plaintiffs admit that the Operating Agreements contain a provision titled Plaintiffs deny the ID Companies characterization of that provision as incomplete and misleading. Except as otherwise expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the Operating Agreements contain a provision titled Plaintiffs deny the ID Companies characterization of that provision as incomplete and misleading. Except as otherwise expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs admit that the Operating Agreements contain a provision titled Plaintiffs deny the ID Companies characterization of that provision as incomplete and misleading. Except as otherwise expressly admitted, Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph Plaintiffs deny the allegations set forth in paragraph As to the WHEREFORE Clause and the subparagraphs that follow it, Plaintiffs deny all allegations therein and deny that Defendants are entitled to the relief requested. AFFIRMATIVE DEFENSES Plaintiffs incorporate by reference herein the responses set forth above. Plaintiffs assert the following additional defenses: First Affirmative Defense Defendants counterclaims fail to state a cause of action. 22

23 Second Affirmative Defense Defendants Seventh Counterclaim is barred in whole or in part because Defendants failed to comply with one or more conditions precedent. In particular, the Operating Agreements provide that, if ID... does not exercise [its] veto right within five (5) calendar days of receiving notice of the proposed transaction, then ID shall be deemed to have waived the right to veto the proposed transaction. FAC, Exs. B-D 4.02(f). Defendants failed to veto several purported transactions within five days of receiving notice thereof, although Plaintiffs dispute whether, inter alia, any of these events qualify as transactions within the meaning of the Operating Agreements. Danaher and the JVCs filed this lawsuit on March 21, The ID Companies did not exercise their veto within five days. Thus, even if Plaintiffs pursuit of this lawsuit were a transaction and it is not so much of the Seventh Counterclaim as rests on that ground would fail because the ID Companies failed timely to exercise their veto under 4.02(f) of the Operating Agreements. Similarly, even assuming (only for the sake of argument) that the following occurred and were transactions, the ID Companies did not timely veto: (1) the press release dated February 7, 2014, ; (2) the press release dated February 20, 2014 and product release at the Chicago midwinter meeting, 116; (3) the marketing campaign referenced in 117; (4) the use of Implant Direct s customer lists, 118; (5) the human-resources functions, ; (6) Stratton s appointment as president of the JVCs, 133; (7) the appointment of Carlos Moran as Vice President of Operations of IDSM, 139; (8) certain specific employees resignations or terminations, 159; and (9) the filing of an amended complaint in this case, 161. Because Niznick failed timely to object to these purported transactions, he failed to fulfill a condition precedent to his Seventh Counterclaim and that Counterclaim should be dismissed 23

24 Third Affirmative Defense Defendants counterclaims are barred in whole or in part by the doctrine of collateral estoppel. Fourth Affirmative Defense Defendants counterclaims are barred in whole or in part by the doctrine of equitable estoppel. Fifth Affirmative Defense Defendants counterclaims are barred in whole or in part by the doctrine of promissory estoppel. Sixth Affirmative Defense Defendants counterclaims are barred in whole or in part by the doctrine of unclean hands. Seventh Affirmative Defense Defendants counterclaims are barred in whole or in part by the doctrine of in pari delicto. Eighth Affirmative Defense Defendants counterclaims are barred in whole or in part by the doctrine of laches. Ninth Affirmative Defense Defendants counterclaims are barred in whole or in part by election of remedies. Tenth Affirmative Defense Defendants counterclaims are barred in whole or in part by failure of consideration. Eleventh Affirmative Defense Defendants counterclaims are barred in whole or in part by the doctrine of waiver and 24

25 release. Twelfth Affirmative Defense Defendants counterclaims are barred in whole or in part by a superseding or intervening cause. Thirteenth Affirmative Defense Defendants counterclaims are barred in whole or in part by their own culpable conduct, including their own breaches of the agreements among the parties. Fourteenth Affirmative Defense The counterclaims, and any recovery due to Defendants thereunder, are subject in whole or in part to offset. Dated: New York, New York October 6, 2014 Respectfully submitted, PILLSBURY WINTHROP SHAW PITTMAN LLP By /s/ E. Leo Milonas E. Leo Milonas David G. Keyko 1540 Broadway New York, New York (212) Attorneys for Plaintiffs WILLIAMS & CONNOLLY LLP Dane H. Butswinkas R. Hackney Wiegmann (pro hac vice pending) Kenneth J. Brown (pro hac vice pending) Benjamin E. Vaughn (pro hac vice pending) A. Joshua Podoll th Street, N.W. 25

26 Washington, DC Tel: (202) Attorneys for Plaintiff Sybron Canada Holdings, Inc. GOLDMAN ISMAIL TOMASELLI BRENNAN & BAUM LLP Andrew L. Goldman (pro hac vice pending) Joe W. Tomaselli, Jr. (pro hac vice pending) 564 West Randolph Street, Suite 400 Chicago, IL Tel: (312) Attorneys for the Joint Venture Companies 26