For those who may have missed the S/H's letter.
Thank you Eli.
However, we cannot expect to be represented in the BK proceedings w/o being represented by counsel.
If we are passive we will soon be passe.
I am arranging for a consultation with a seasoned NYC corp. BK att'y who has been brought up to speed on this case. As they say the consultation is free, the advice may be priceless but the retainer, should we chose to, will cost money. Fortunately for us, as we are many, the individual expense s/b nominal.
While I am ltd. to one post a day here (courtesy of the collective wisdom of I-Hub and frankly my tendency to avoid suffering fools lightly, hehe) I would ask anyone who is interested in participating in the consultation (at no cost) to contact me by pm or em (jpley@optonline.net).
We need to act. Together, we have a comprehensive history of XKEM, including statements and representations made by BOD members that will be very useful informing the judge's opinions and decisions.
I cannot overstate the importance of acting to protect our interests.
Failing this we will be disenfranchised, we will lose all of our investment, we will have wasted all of our time and effort all these many years. The commitment we have made in support of this company and our steadfast support for those suffering from sickle cell anemia will have been for naught.
We have done the heavy lifting. Although Dr. Pandey and NIPRID "made" Nicosan we have made this company and Nicosan possible. We are different from other penny stock investors, in that we (by in large) are investors not petty speculators but long term committed investors with a long term stake in the future of this company.
We need to see this through to the end. We cannot allow ourselves to tire, to be vanquished, only to stand by to witness a restructured XKEM emerge and flourish, standing not on our shoulders but on us, as a discarded heap.
The following is the shareholder letter originally sent to the BOD. This was a collective effort by DDOG and myself with advice of counsel. Please pay particular attention to the clauses relating to corp malfeasance, responsibility and bankruptcy as well as BOD culpability.
We can survive this together - only. As Benjamin Franklin said: "We must all hang together, gentlemen...else, we shall most assuredly hang separately"
I look forward to hearing from you all.
This excerpt is edited only to keep the names of the signors private, you know who you are :)
April 3, 2008
Dr. Robert Swift, CEO/COO, Director
Xechem International, Inc.
379 Thornall Street (West Tower)
Edison, N.J. 08837
Dr. Martin Biggs, Director
Xechem International, Inc.
379 Thornall Street (West Tower)
Edison, N.J. 08837
Mr. Steven Burg, Secretary, Director
Xechem International, Inc.
379 Thornall Street (West Tower)
Edison, N.J. 08837
Dr. Ramesh Pandey, Director
Xechem International, Inc.
379 Thornall Street (West Tower)
Edison, N.J. 08837
Gentlemen:
I write to you on behalf of myself and 101 shareholders who in aggregate own 434M common shares of Xechem International, Inc.( Xechem).We are all long term shareholders with many of us holding positions in the stock for over 4 years.
We believe it has been our investment in and loyalty to the company that has made it possible for the company to survive financially all these years. While there have been many dilutive corporate financings, most would agree none would have been possible without a committed shareholder base providing the necessary liquidity.
Since the coup d’état and ouster of Dr. Pandey, and the installment of Dr. Swift as his replacement (who, regardless of his title, is functioning as CEO, President, and Chairman of the BOD), Xechem has been run as if it were a private company. Xechem, however, was and is a public corporation, governed by the laws of Delaware (its state of incorporation). Moreover, all corporate actions are subject to Xechem's Articles of Incorporation and Bylaws. All of these statutory and corporate requirements are binding upon the company -- and the persons who purport to act on its behalf -- regardless of the fact that, due to current management's failure to make timely filings, XKEM shares are currently traded on the Pink Sheets.
We have serious concerns whether current management is complying with its legal requirements. Generally, it is impossible to answer this question, because management has provided virtually no meaningful information to shareholders since the appointment of Dr. Swift as interim CEO and President in July of 2007. However, in at least one instance, it is clear that management has failed to comply with the company’s governing documents. Section 1.1 of the Bylaws of Xechem International, Inc. provides that:
"Section 1.1 Annual Meeting.
An annual meeting of stockholders for the purpose of electing directors and of transacting other business as may come before it shall be held each
year at such date, time, and place, either within or without the State of Delaware, as may be specified by the Board of Directors."
As shareholders of Xechem International, Inc. we were given no notice of any annual stockholder meeting held during the calendar year 2007, and therefore we assume that no such meeting was held. (Section 1.3 of the Bylaws requires that written notice of any stockholder meetings be given to each stockholder entitled to vote at least ten days before that meeting. Without such notice, no stockholders' meeting may be legally held, and any action taken at a meeting held without the required notice should be regarded as null and void.) Not only was the required annual stockholder meeting not held, but no explanation for this failure was provided by management to stockholders, despite Dr. Swift's promise of a comprehensive update by years end. He failed to honor this pledge.
Section 2.1 of the Bylaws provides in part that:
"The directors shall be elected by the holders of shares entitled to vote thereon at the annual meeting of stockholders, and each shall serve . . . until the
Next succeeding annual meeting of stockholders and until his respective successor has been elected and qualified."
Because the Bylaws contemplate that an annual meeting of stockholders will be held each year, that the directors will be elected by the stockholders at that meeting, and that each director will serve only until the next annual meeting, an interesting question exists as to whether the current Board of Directors of Xechem is lawful, since none of those directors were elected by the shareholders at the required annual meeting in 2007. Surely the current BOD cannot remain in power indefinitely merely by refusing to hold required annual stockholder meetings.
We expect the company through the BOD to be in full compliance with its own Bylaws and as such we seek a Shareholders meeting post haste.
The price of XKEM shares has plummeted since the takeover by current management in 2007. This dramatic drop in share price, we believe, is at least due in part to the failure of management to keep shareholders and the general public informed of even the most basic information relevant to Xechem International, Inc. As of the last public update on May 10, 2007 the companies outstanding shares were 1,641,396,853, the number of shareholders of record as of Apr 16, 2007 was 356 and the estimated market cap as of Mar 28, 2008 was $4,595,911.
It has been suggested that the pending litigation with Dr. Pandey and others justifies this "wall of silence," and, indeed, certain matters pertinent to that litigation are not appropriate for public dissemination. However, there is no rationale connection between the current litigation and the failure of management to keep shareholders (present and prospective) apprised of such matters as the current state of construction of the new SHESTCO facility, current production rates for Nicosan, recent Nicosan sales data, the status of any clinical studies planned or now underway, the status of any Nicosan pre-purchase agreements with the Nigerian Government, and the status of efforts to extend the existing license from NAFDAC (which, it is believed, expires in July). To the extent that these matters are relevant to the pending litigation, Xechem can be compelled to provide such information to its opponents through the civil discovery process; to the extent that such matters are not relevant to the lawsuits, their public disclosure cannot harm the corporation. Thus, there is no justifiable basis -- legal or otherwise -- for management's refusal to provide shareholders with even the most basic data regarding their investment in this corporation. Management’s failure to communicate with shareholders has made it impossible for us to meaningfully evaluate our investment in Xechem, thereby contributing to the substantial losses which we have incurred. In sharp contrast to the lack of information provided to existing shareholders, and as recently as March 25, 2008, management apparently made material disclosures to at least two investor groups in order to facilitate their investment in Xechem International.
For several months, Xechem International, Inc. has been embroiled in litigation -- both in the United States and in India -- arising out of the affairs and ownership of Xechem India, Ltd. There has been speculation that funds have been diverted from Xechem International to Xechem India, and that the ownership interest of Xechem International in Xechem India, Ltd, if any, is unclear. Management has not provided shareholders with adequate information regarding the nature and status of this litigation, even though it is offered as a rationale for management's failure to file financials in a timely manner, as required by law.
Moreover, we cannot understand how certain members of the current BOD were unaware of the alleged diversion of funds to Xechem India Ltd. For example, Steve Burg was a director and head of the audit committee when Dr. Pandey was CEO; how could significant funds be diverted from Xechem International Inc. to Xechem India Ltd. without Mr. Burg's knowledge? Likewise, why didn't the company's auditors and accountants know of this diversion? If current management has evidence tending to prove that prior or present corporate officers and/or employees have committed acts which constitute crimes, has management notified the appropriate authorities, so that criminal charges can be filed and pursued?
If not, why not?
We were advised last year that the previous CEO was removed due to his inability to manufacture and sell Nicosan and properly manage the company's finances and assets. A review of the last few 8K reports clearly reveals that nothing has changed. Why? What is current management doing to correct these issues, serve our customers and provide for the success of the company? Current management assumed control of Xechem International, Inc. in July, 2007. Current management has failed to file the appropriate 10Q's and 10K, notwithstanding the passing of nine months, which should surely be more than adequate time for a comprehensive review of the corporation's financial records required for the re-listing of the company's shares on the OTC Bulletin Board. This failure is inexplicable to shareholders. Our new CEO/COO has failed to provide us with the status of the construction at Shestco (a project that has committed the Parent company through our wholly owned Nigerian subsidiary) to:
1. $9.38 million U.S. owed to UPS Capital and the U.S. EX-IM Bank;
2. N150 million Naira (approximately $1.2 million U.S. dollars), on June 26th, 2006 (1st phase);
3. N325 million Naira (approximately $2.6 million U.S. dollars) on April 5th, 2007 (2nd phase) both disbursed by NEXIM Bank;
4. March 6, 2007, the Company borrowed $480,000 from Michael and Betsy Brauser;
5. There has been an additional $459,000 worth of funding filed on December 31st, 2007, and to date there is no public record of exactly what those funds were to be used for; and
6. Tuesday, March 25, 2008 as yet undisclosed financing figures.
While the dramatic decline in XKEM's share price has had a devastating impact upon retail shareholders (some of who have seen the value of their shares drop over 90% since the new regime took over last July), it may have actually served the best interests of other parties. For example, the PIPE holders (who have "ratchet" protection), have enjoyed an increase by multiples in their share totals, with no additional investment. Likewise, persons who wish to privatize Xechem International, Inc. and or take it through bankruptcy in order to wipe out the interest of the retail shareholders may believe the drop in share price makes it less likely that the retail shareholders will challenge such actions.
With reference to the possibility of bankruptcy, it is helpful to remember that even if the corporation were to successfully complete bankruptcy proceedings, it does not follow that corporate officers and employees would also be discharged in those proceedings. Indeed, any claim which shareholders may have against corporate officers and or employees -- and any other persons who are working in concert with them -- for misfeasance, malfeasance, nonfeasance, conflict of interest, unlawful use of material non-public information, misrepresentation, negligence, and or violation of any applicable statute or administrative rule, should survive the termination of Xechem's corporate existence.
Moreover, in the event of litigation between the shareholders and Xechem or its representatives, the corporation, its officers, employees, and any other persons having relevant knowledge will be subject to the discovery process. For example, corporate officers, employees, and even other investors having knowledge relating to the management of Xechem and its affairs, may be deposed. In such depositions, each witness, under penalty of perjury, would be required to answer questions relating to the management of this corporation. We are aware of no privilege that would allow any corporate officer or other person with relevant knowledge to avoid his/her legal obligation to testify under oath at such a deposition.
Please pardon the direct nature of this communication. No one wanted to fire a shot across the bow of our own company. But, we have been left with no choice. We are prepared to defend our rights as shareholders. We do not relish the thought of joining the list of litigants against OUR Company, but we will no longer be trifled with.
We are resolute in this.
We, as a unified group of shareholders have, ironically, considerably greater resources to wage this fight than the company does to defend against it. If needed, we are prepared to assert our rights and prevent our disenfranchisement through the legal process, and to pursue claims we may have against any individual or entity that has violated applicable law to the detriment of the shareholders.
We look forward to your timely response to our concerns.
Signed,
For your shareholders of record;
BY DHL OVERNIGHT DELIVERY
