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July 23 -- A director and former chief executive officer of Biolase Inc. is asking the Delaware Court of Chancery to delay the company's annual shareholders' meeting until the court decides whether to order that his slate of director nominees be included on the proxy ballot.
Plaintiff Federico Pignatelli filed his complaint for injunctive relief July 21, asking the court the postpone the annual meeting, scheduled for Aug. 27, 2014, “no more than four weeks.”
Pignatelli, who says he was forced to resign as CEO and chairman last month, wants the court to consider whether his competing slate of directors may stand for election, “the appropriateness of certain statements made, and omissions in, the [c]ompany's [p]roxy statement” regarding Pignatelli, and the validity of defensive actions taken by incumbent directors targeted specifically at him.
Most members of the current board are beholden to the company's largest stockholder, Oracle Partners LP, and are attempting to silence any voice that represents stockholders generally, the complaint alleges.
The months-long battle over board composition already includes a hearing before the Delaware Supreme Court. The state's high court ruled July 12 against Pignatelli, upholding the effectiveness of a director's resignation by an oral statement (Biolase Inc. v. Oracle Partners LP , 2014 BL 167994, Del., No. 270, 2014, 7/12/14) .
In that case, Biolase, directed by Pignatelli as CEO, argued that recently appointed director Paul Clark could not take his board seat because the Feb. 28 resignation of director Alexander Arrow was not done in writing. Pignatelli had nominated Clark and voted to add him to the board, but then opposed him when Clark asked Pignatelli to resign as CEO.
The Delaware Supreme Court held that Arrow could resign from the board by means of an oral statement under Delaware General Corporation Law § 141(b), which meant Clark could remain on the board.
Biolase, based in Irving, Calif., is a maker of dental and medical devices.
On the heels of the state Supreme Court decision, the board pushed Pignatelli from his positions as CEO and chairman, though he continues to serve on the board, according to the complaint.
According to a contract with the company, Pignatelli's name must appear on the proxy statement, but the company has “circumvented” that contractual obligation by recommending that shareholders not approve him, the complaint states.
Further, Pignatelli's slate of nominees were left off the proxy statement because of “a non-substantive, technical reading of [company bylaws] and an inaccurate characterization of the notice nominating” the slate, Pignatelli charges.
The complaint is available at http://www.bloomberglaw.com/public/document/Pignatelli_Federico_vs_Biolase_Inc_et_al_Docket_No_9920_Del_Ch_Ju.
The Supreme Court decision is available at http://www.bloomberglaw.com/public/document/Biolase_Inc_v_Oracle_Partners_LP_No_270_2014_2014_BL_167994_Del_J.
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