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Aug. 7 — A former chief executive officer of Biolase Inc. who has been embroiled in litigation relating to the company's leadership has resigned from the company's board and is withdrawing his nomination at its upcoming election, according to an Aug. 6 letter to company shareholders.
Federico Pignatelli, who says he was forced to resign as CEO and chairman last month, said his resignation stems from the “campaign” by Oracle Partners, Biolase's largest shareholder, “to disenfranchise independent directors through a series of calculated actions designed to isolate us and reduce our power.”
Most members of the current board are beholden to the company's largest stockholder, Oracle Partners LP, which owns 19 percent of the company, and are attempting to silence any voice that represents stockholders generally, Pignatelli alleged in a July 21 complaint filed in the Delaware Court of Chancery. In the complaint, Pignatelli asked the court for an injunction to delay the company's annual shareholders' meeting, scheduled for Aug. 27, 2014, until the court decides whether to order that his slate of director nominees be included on the proxy ballot (Pignatelli v. Biolase Inc.,Del. Ch., C.A. No. 9920, complaint filed 7/21/14).
According to court records, however, Pignatelli has abandoned the lawsuit; on July 29, Pignatelli filed a notice of voluntary dismissal of his complaint for injunctive relief.
In the letter, Pignatelli writes that “after being denied expedited relief on a number of time-sensitive issues by the Delaware Chancery Court, based upon various technicalities argued by the Oracle-controlled Board and designed to drown the proceedings in a sea of red tape, I determined that it is in the best interest of BIOLASE stockholders that I change my strategy, withdraw as a Director and Director nominee, and seek to preserve and protect the rights of BIOLASE stockholders as an independent unaffiliated stockholder.”
The months-long battle over Biolase's 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 continued to serve on the board until his Aug. 6 letter.
The letter also stated that Norman Nemoy resigned from the board Aug. 5, leaving Biolase with four directors with “direct ties and/or allegiance to Oracle.”
The board will be limited to five directors, according to Biolase's proxy statement.
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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