Kinam-AmendedComplaint, HTMLpage2
COUNT IV BY THE TENDEROR CLASS AND THE HOLDER CLASS AGAINST
DEFENDANTS KINROSS, KINROSS U.S.A., AND KINAM FOR
VIOLATION OF NEVADA'S ANTI-RACKETEERING LAW132. All plaintiffs repeat and reallege each of the allegations set forth in the foregoing paragraphs insofar as they are relevant. This claim is asserted against Kinross, Kinross U.S.A., and Kinam.
133. Sections 207.350 through 207.520 of the Nevada Revised Statutes (abbreviated "NRS") contain the state's anti-racketeering or "baby RICO" law. NRS 207.390 defines "racketeering activity" as "engaging in at least two crimes related to racketeering that have the same or similar pattern, intents, results, accomplices, victims or methods of commission, or are otherwise interrelated by distinguishing characteristics and are not isolated incidents... ." NRS 207.370 defines a "criminal syndicate" as "any combination of persons, so structured that the organization will continue its operation even if individual members enter or leave the organization, which engages in or has the purpose of engaging in racketeering activity."
134. Under NRS 207.360, a "crime related to racketeering" or predicate act includes, inter alia, "[a]ny violation of NRS 90.570" as well as "obtaining possession of money or property valued at $250 or more ... by means of false pretenses." NRS 90.570, in language that tracks Rule 10b-5 under the Exchange Act, prohibits fraud, deceit, and materially false or misleading statements or omissions "in connection with the offer to sell, sale, offer to purchase or purchase of a security. . ."
135. As in most states that have adopted the Uniform State Securities Code, NRS 90.660 provides a private right of action only to defrauded purchasers of securities, and then only for violations of NRS 90.570(2) relating to material misstatements or omissions. However, whether directed at purchasers or sellers, multiple violations of NRS 90.570, including subparagraphs (1) ("any device, scheme or artifice to defraud") and (3) ("an act, practice or course of business which operates or would operate as a fraud or deceit"), give rise to a private right of action under NRS 207.470 by "[a]ny person who is injured in his business or property by reason of any violation NRS 207.400," which provides in relevant part:
1. It is unlawful for a person:
* * * * * (b) Through racketeering activity to acquire or maintain, directly or indirectly, any interest in or control of any enterprise.
(c) Who is employed by or associated with any enterprise to conduct or participate, directly or indirectly, in:
(1) The affairs of the enterprise through racketeering activity; or
(2) Racketeering activity through the affairs of the enterprise.* * * * * (f) To furnish advice, assistance or direction in the conduct, financing or management of the affairs of the criminal syndicate with the intent to promote or further the criminal objectives of the syndicate.
* * * * * (h) To conspire to violate any of the provisions of this section.
136. NRS 207.520 provides that a civil action for violation of NRS 207.470 "may be commenced at any time within 5 years after the violation occurs or after the injured person sustains the injury, whichever is later." Accordingly, individual acts of securities fraud that cannot be reached under § 10(b) and Rule 10b-5 of the Exchange Act because of the three year period of repose remain actionable as predicate acts under Nevada's anti-racketeering law for another two years.
137. The multiple violations of the antifraud provisions of the federal securities laws alleged in Counts V and VI below also constitute violations of NRS 90.570 and predicate acts under NRS 207.360. Under NRS 90.830, NRS 90.570 covers offers to purchase "made in this state," including offers that "originate" in or are "directed" into the state whether or not the parties are there present.
138. The statement quoted above that Kinross's acquisition of Amax Gold would result in the "elimination" of most or all of its debt violated NRS 90.570 and constitutes a further predicate act under NRS 207.360. Kinross made this statement to mislead holders of the Preferred as to its true intention with respect to this debt, which, as demonstrated by its subsequent conduct, was to saddle the Preferred with virtually all of it. Relying on this statement, holders of the Preferred did not request the separate class vote on the 1998 merger to which they would have been entitled had the plan to leave all of Amax Gold's debt in Kinam been revealed.
139. All the predicate acts alleged above constitute racketeering activity under NRS 207.390 because they were related to each other as part of a coordinated scheme, starting in mid-1998 and continuing to the present time, directed at holders of the Preferred, located in Nevada and elsewhere, and designed to compel them ultimately to surrender their shares to the Kinross defendants at less than fair and full value.
COUNT V BY THE TENDEROR CLASS AND THE HOLDER CLASS AGAINST
ALL DEFENDANTS FOR VIOLATION OF SECTIONS 10(b) AND 13(e)
OF THE EXCHANGE ACT AND RULES 10b-5 AND 13e-4(j)140. All plaintiffs repeat and reallege each of the allegations set forth in the foregoing paragraphs insofar as they are relevant. This claim is asserted against Kinross, Kinross U.S.A., Kinam, and Buchan.
141. Defendants are liable for violations of sections 10(b) and 13(e) of the Exchange Act and Rules 10b-5 and 13e-4(j) for, in connection with the Offer, knowingly or recklessly making untrue statements of material fact, and omitting to disclose material facts necessary to make the statements they made, in light of the circumstances under which those statements were made, not misleading.
142. In connection with the Offer, defendants knowingly or recklessly made untrue statements of material fact, and omitted to disclose material facts necessary to make the statements they made, in light of the circumstances under which those statements were made, not misleading with the intention that plaintiffs and holders of the Preferred would rely upon these material omissions and misrepresentations, and plaintiffs and members of the proposed Classes did so rely. As alleged more fully herein, defendants' omissions and false and material misrepresentations were as follows.
143. Defendants' omission of the value of Kinam's proven and probable in-ground gold reserves, and Kinam's exploration and development projects, including, without limitation, the company's joint venture with X-Cal that includes the Sleeper gold mine, in the Offer Document and the Amended Offer Document, issued in connection with the Offer, were material facts necessary to make the statements made in those documents, in the circumstances under which those statements were made, not misleading.
144. Defendants' omission of material facts necessary to make the statements they made not misleading was made in the context of two documents: the "Offer to Purchase All Publicly-Held Shares of the Series B Convertible Preferred Stock of Kinam Gold, Inc. at $16.00 Per Share," (here and above the "Offer Document") dated February 20, 2002, and the "March 21, 2002, Amendment and Supplement to the Kinross Gold Corporation Offer to Purchase All Publicly-Held Shares of the Series B Convertible Preferred Stock of Kinam Gold, Inc. at $16.00 Per Share" (here and above the "Amended Offer Document") issued to holders of the Preferred in connection with the Offer.
145. The omission of the value of Kinam's proven and probable in-ground gold reserves, and Kinam's exploration and development projects were material facts necessary to make the statements made in the Offer Document and Amended Offer Document, in the circumstances under which those statements were made, not misleading because:
a. The price per ounce of contained in-ground gold reserves and the price per ounce of annual gold production, including a comparables analysis based thereon, are the most critical valuation metrics in connection with the valuation of gold mining companies or properties, and defendants knew this.
b. The Raymond James fairness opinion adopted by the special committee and incorporated into the Offer Document and the Amended Offer Document did not include any analysis of Kinam based on the price per ounce of its contained in-ground gold reserves or the price per ounce of its annual gold production, an omission which the defendants intended.
c. As a result of the omission of any such evaluation in connection with the Offer, a false and misleading negative value was assigned to Kinam and reported to holders of the Preferred in connection with the Offer, and defendants knew this.
d. The Raymond James fairness opinion applied valuation methodologies of marginal utility in the natural resource and extractive sectors, especially gold mining. By applying these methodologies, Raymond James falsely and inappropriately concluded: "A break up of Kinam through the sale of individual properties would not yield sufficient value to cover the company's liabilities and preferred shares liquidation value." Defendants knew that this statement was false.
e. In connection with its merger with Amax Gold, Kinross, through its investment banker Merrill Lynch, conducted an evaluation based upon the price per ounce of contained in-ground gold reserves and the price per ounce of annual gold production of Amax Gold.
f. In connection with the Kinross/Echo Bay/TVX merger, Echo Bay, then more than 10% owned by Kinross, issued a proxy statement in December 2002 that discussed certain valuation analyses made in connection with that merger, including a summary of the Echo Bay Fairness Opinion prepared by National Bank Financial. The Echo Bay Fairness Opinion included an evaluation based upon the price per ounce of contained in-ground gold reserves and the price per ounce of annual gold production, including an extensive analysis of comparables.
g. The Echo Bay Fairness Opinion did not assign a negative value to Kinam, or to any of its mining assets either individually or collectively, in connection with the merger of Echo Bay and TVX Merger into Kinross. On the contrary, Kinam's Fort Knox mine was the flagship mine that Kinross, the continuing company, brought to the deal.
h. The Echo Bay Fairness Opinion employed the same metrics utilized by Kinross and Merrill Lynch in valuing Kinam during the Kinross/Amax merger. Thus, the Offer was the only related transaction in which Kinross and its merger partners did not employ any evaluation based upon the price per ounce of contained in-ground gold reserves or the price per ounce of annual gold production.
i. Kinam was, in fact, solvent and had value as a going concern at the time of the Offer. Based on the comparables described in paragraph 76, $110 per ounce would have been and was reasonable price to assign to Kinam's then stated in-ground gold reserves of 4,139,000 ounces. As of September 30, 2001, Kinam's property, plant and equipment (i.e., its mining assets) were carried on the balance sheet in its Form 10-Q at $272 million, leaving it with a capital deficiency of $81 million counting as debt rather than equity $235 million of advances from Kinross. Adding $183 million -- the difference between the $455 million valuation of Kinam's gold reserves at $110 per ounce less their $272 million balance sheet valuation -- would not only have eliminated the capital deficiency, but also have left over $100 million for the Preferred even after repaying all $235 million of Kinross's so-called advances. Based on the comparables used in the Echo Bay Fairness Opinion and as described in paragraphs 96-97 above, a similar analysis yields an even higher value for Kinam.
j. Each of the defendants has engaged in numerous mergers and acquisitions necessitating the valuation of gold mining companies, such as Kinam. Defendants have regularly and as a matter of common practice valued gold mining companies based upon their price per ounce of contained in-ground gold reserves and the price per ounce of annual gold production. The defendants know -- and knew -- that this was the appropriate valuation approach.
k. Defendant Robert M. Buchan holds university level degrees in both mining engineering and mineral economics. Before presiding over the creation of Kinross in 1993, defendant Buchan served as a mining analyst for ten years. During that time, defendant Buchan was employed with an institutional boutique, where he specialized in "mining-related research and financing." See The Wall Street Transcript (December 23, 2002), at p. 66. Mr. Buchan is an expert in the valuation of mining properties and companies. Upon information and belief, Mr. Buchan possesses significant knowledge regarding the use of valuation metrics based upon the price per ounce of contained in-ground gold reserves and the price per ounce of annual gold production. Accordingly, Mr. Buchan knew that because it failed to apply these fundamental measures of value to Kinam, or to do any comparables analysis of companies in Kinam's peer group or against similar mining assets, the valuation opinion of Kinam presented to holders of the Preferred in the Offer Document and Amended Offer Document constituted a material omission rendering those documents false and misleading.
146. Each of the defendants had actual knowledge of the omission of material facts necessary to make the alleged statements, in light of the circumstances under which they were made, not misleading, and each possessed an intent to deceive the holders of the Preferred regarding the true value of Kinam in connection with the Offer. The defendants' intent to deceive the holders of the Preferred is evidenced as follows:
a. At the time that it issued the Amended Offer Document, Kinross had begun negotiations to enter into a three way merger with Echo Bay and TVX, but failed to reveal this fact to holders of the Preferred.
b. At the time of its proposed merger with Echo Bay and TVX merger, approximately 75% of Kinross's total annual gold production and a similar percentage of its total attributable proven and probable gold reserves were derived from assets owned by Kinam.
c. Because Kinam represented approximately 75% of Kinross's total business operations, it was critical to Kinross to have full and unencumbered ownership of Kinam, free and clear of any minority interest.
d. With full and unencumbered ownership of Kinam's assets, especially the Fort Knox mine, vested in Kinross, defendants could substantially enhance Kinross's bargaining power in the proposed merger and improve the exchange ratio for Kinross's shares.
e. Prior to consummation of the Offer, Kinross misrepresented that it owned Kinam's principal mining assets, specifically including the Fort Knox mine, when in fact it did not. Kinross misrepresented its ownership of the Fort Knox gold mine in the Merger Circular (at pp. A-3; A-10).
f. Kinross threatened those holders of the Preferred who did not tender with a squeeze-out merger or other mechanism, as alleged below, which would confer 100% ownership and control of Kinam to Kinross.
g. At the time of the Offer, the defendants were under substantial pressure to bring to fruition any merger of Kinross with Echo Bay or TVX. Discussing this merger in The Wall Street Transcript (December 23, 2002), at p. 68, defendant Buchan opined: "I don't believe this transaction [Kinross/Echo Bay/TVX merger] could have occurred 12 months ago and I don't think it would be doable 12 months from now."
147. Defendants knowingly or recklessly made a material misrepresentation, in writing, to plaintiffs and members of the proposed Classes regarding the fairness of the Offer price. Defendants also knowingly or recklessly made a material misrepresentation of fact to plaintiffs and members of the proposed Classes that "the special committee believes that the offer is fair to the non-affiliated holders" when, in fact, they knew that the price was not fair because the Raymond James fairness opinion did not properly value Kinam and defendants had engaged in various improper schemes to distort the value of Kinam and artificially to depress the price of the Preferred. Because the defendants knew or recklessly disregarded the fact that that valuation was false and misleading and contained material omissions, as alleged above, the Offer price based upon that valuation was inadequate. Therefore, the defendant's representation that the Offer price was "fair" was, in fact, knowingly or recklessly a false and misleading statement of a material fact.
148. Defendants' knowing or reckless false and misleading statements of material fact regarding the fairness of the Offer price were made in writing in the Offer Document and Amended Offer Document.
149. Defendants' knowing or reckless misrepresentation of material fact to the holders of the Preferred that the Offer was "fair" was false and misleading because:
a. The valuation of Kinam omitted key valuation methods that, when utilized, revealed that Kinam was not, as reported in the Raymond James fairness opinion, insolvent, but rather possessed significant value as an ongoing concern as discussed in paragraph 145(i) above.
b. Defendants were aware that the Raymond James fairness opinion adopted by the special committee and incorporated into the Offer Document and the Amended Offer Document did not include any analysis based on or otherwise referencing the price per ounce of contained in-ground gold reserves or the price per ounce of annual gold production of Kinam, as alleged above.
c. The Raymond James fairness opinion applied valuation methodologies of marginal utility in the natural resource and extractive sectors, especially gold mining. By applying these methodologies, Raymond James falsely and inappropriately concluded: "A break up of Kinam through the sale of individual properties would not yield sufficient value to cover the company's liabilities and preferred shares liquidation value."
d. By establishing the Offer price based upon a valuation of Kinam that they knew was unfair, incomplete, and neither in accord with standard industry practice nor with their own past practice nor with their approach to contemporaneous merger discussions with other companies, the defendants knew that the Offer price itself was unfair.
e. In connection with its merger with Amax Gold, Kinross, through its investment banker Merrill Lynch, conducted an evaluation based upon the price per ounce of contained in-ground gold reserves and the price per ounce of annual gold production of Amax Gold.
f. In connection with the Kinrosss/Echo Bay/TVX merger, Echo Bay, then more than 10% owned by Kinross, issued a proxy statement in December 2002 that discussed certain valuation analyses made in connection with that merger, including a summary of the Echo Bay Fairness Opinion prepared by National Bank Financial. The Echo Bay Fairness Opinion included an evaluation based upon the price per ounce of contained in-ground gold reserves and the price per ounce of annual gold production, including an extensive analysis of comparables.
g. The Echo Bay Fairness Opinion did not assign a negative value to Kinam, or to any of its mining assets either individually or collectively, in connection with the merger of Echo Bay and TVX Merger into Kinross. On the contrary, Kinam's Fort Knox mine was the flagship mine that Kinross, the continuing company, brought to the deal.
h. The Echo Bay Fairness Opinion employed the same metrics utilized by Kinross and Merrill Lynch in valuing Kinam during the Kinross/Amax merger. Thus, the Offer was the only related transaction in which Kinross and its merger partners did not employ any evaluation based upon the price per ounce of contained in-ground gold reserves or the price per ounce of annual gold production.
i. Kinam was, in fact, solvent and had value as a going concern at the time of the Offer. Based on the comparables described in paragraph 76 above, $110 per ounce would have been and was a reasonable price to assign to Kinam's then stated in-ground gold reserves of 4,139,000 ounces. As of September 30, 2001, Kinam's property, plant and equipment (i.e., its mining assets) were carried on the balance sheet in its Form 10-Q at $272 million, leaving it with a capital deficiency of $81 million counting as debt rather than equity $235 million of advances from Kinross. Adding $183 million -- the difference between the $455 million valuation of Kinam's gold reserves at $110 per ounce less their $272 million balance sheet valuation -- would not only have eliminated the capital deficiency, but also have left over $100 million for the Preferred even after repaying all $235 million of Kinross's so-called advances. Based on the comparables used in the Echo Bay Fairness Opinion and as described in paragraphs 96-97 above, a similar analysis yields an even higher value for Kinam.
j. Each of the defendants has engaged in numerous mergers and acquisitions necessitating the valuation of gold mining companies, such as Kinam. Defendants have regularly and as a matter of common practice valued gold mining companies based upon their price per ounce of contained in-ground gold reserves and the price per ounce of annual gold production.
k. Defendant Robert M. Buchan holds university level degrees in both mining engineering and mineral economics. Before presiding over the creation of Kinross in 1993, defendant Buchan served as a mining analyst for ten years. During that time, defendant Buchan was employed with an institutional boutique, where he specialized in "mining-related research and financing." See The Wall Street Transcript (December 23, 2002), at p. 66. Mr. Buchan is an expert in the valuation of mining properties and companies. Upon information and belief, Mr. Buchan possesses significant knowledge regarding the use of valuation metrics based upon the price per ounce of contained in-ground gold reserves and the price per ounce of annual gold production. Accordingly, Mr. Buchan knew that the Raymond James valuation opinion was critically defective and not in accordance with normal industry practice, and that the Offer price was unfair and attributed to Kinam's mining assets a value far below that which they would have commanded in an arm's length market transaction.
150. Each of the defendants had actual knowledge of the material misrepresentation alleged or acted with reckless disregard for the truth, and each possessed an intent to deceive the holders of the Preferred regarding the fairness of the Offer price. The defendants' intent to deceive the holders of the Preferred is evidenced as follows:
a. At the time that it issued the Amended Offer Document, Kinross had begun negotiations to enter into a three way merger with Echo Bay and TVX, but failed to reveal this fact to holders of the Preferred.
b. At the time of its proposed merger with Echo Bay and TVX merger, approximately 75% of Kinross's total annual gold production and a similar percentage of its total attributable proven and probable gold reserves were derived from assets owned by Kinam.
c. Because Kinam represented approximately 75% of Kinross's total business operations, it was critical to Kinross to have full and unencumbered ownership of Kinam, free and clear of any minority interest.
d. With full and unencumbered ownership of Kinam's assets, especially the Fort Knox mine, vested in Kinross, defendants could substantially enhance Kinross's bargaining power in the proposed merger and improve the exchange ratio for Kinross's shares.
e. Prior to consummation of the Offer, Kinross misrepresented that it owned Kinam's principal mining assets, specifically including the Fort Knox mine, when in fact it did not. Kinross misrepresented its ownership of the Fort Knox gold mine in the Merger Circular (at pp. A-3; A-10).
f. Kinross threatened those holders of the Preferred who did not tender with a squeeze-out merger or other mechanism, as alleged below, which would confer 100% ownership and control of Kinam to Kinross.
g. At the time of the Offer, the defendants were under substantial pressure to bring to fruition any merger of Kinross with Echo Bay or TVX. Discussing this merger in The Wall Street Transcript (December 23, 2002), at p. 68, defendant Buchan opined: "I don't believe this transaction [Kinross/Echo Bay/TVX merger] could have occurred 12 months ago and I don't think it would be doable 12 months from now."
151. Because of his position within Kinross, defendant Buchan possessed the power and authority to control the content of the securities filings, press releases and representations of Kinross, Kinross U.S.A. and Kinam to holders of the Preferred. Upon information and belief, defendant Buchan was timely provided with copies of documents alleged to be misleading as well as the documents upon which they were based, and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of his position and access to material non-public information, defendant Buchan knew that the adverse facts alleged in this Amended Complaint had not been disclosed to, and were in fact actually being concealed from, the holders of the Preferred, and that the representations regarding the valuation and solvency of Kinam made to holders of the Preferred were materially false and misleading. Defendant Buchan is also liable for the false and misleading statements alleged in this Amended Complaint because those statements are "group-published" information and, thus, the result of the collective actions of all defendants.
152. Since acquiring Kinam in 1998, the Kinross defendants have engaged in a deliberate scheme to defraud holders of the Preferred and to facilitate a cheap buy-out of their shares at below fair value. This scheme has involved both verbal and non-verbal conduct, including but not limited to: representing that the debt of Amax Gold would be eliminated but thereafter treating it as debt of Kinam to Kinross rather than equity; suspending payment of dividends on the Preferred; moving the corporate home of Kinam from Delaware to Nevada in order to avoid certain Delaware statutory remedies; acquiring 51.4% of the Preferred in violation of both § 13(e) and Rule 13e-4 of the Exchange Act and the terms of the Preferred; making the Offer in violation of these same provisions; making numerous material misstatements and omissions in the Offer Document and Amended Offer Document; and threatening to undermine the liquidity and value of any shares of Preferred not tendered to the Offer.
153. As alleged more fully above, as a direct and proximate result of the defendants' wrongful conduct, plaintiffs and the members of the proposed Classes suffered damages in an amount to be proven at trial.
154. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded above. The statements alleged to be false and misleading in this Amended Complaint all relate to then-existing or historical facts, circumstances, or opinions, and therefore were not forward-looking statements. In addition, to the extent certain of the statements alleged to be false may be characterized as forward-looking, they were not so identified when those statements were made and/or were not accompanied by meaningful cautionary statements identifying relevant important factors that could cause actual results to differ materially from those stated. Alternatively, to the extent that the statutory safe harbor does apply to any forward-looking statements pleaded in this Amended Complaint, defendants are liable for those forward-looking statements because at the time that each of those forward-looking statements was made, those defendants had actual knowledge that the particular forward-looking statement was false or believed that the particular forward-looking statement was false.
COUNT VI BY THE TENDEROR CLASS AND THE HOLDER CLASS AGAINST
ALL DEFENDANTS FOR VIOLATION OF SECTIONS 10(b) AND 13(e)
OF THE EXCHANGE ACT AND RULES 10b-5(a) and (c) AND 13e-4(j)(1)(i) and (iii)
155. All plaintiffs repeat and reallege each of the allegations set forth in the foregoing paragraphs insofar as they are relevant. This claim is asserted against Kinross, Kinross U.S.A., Kinam, and Buchan.
156. Defendants knowingly or recklessly employed a manipulative and deceptive device, scheme and/or artifice to defraud in violation of Rules 10b-5(a) and 13e-4(j)(1)(i), and engaged in an act, practice or course of business which operated as a fraud or deceit in violation of Rules 10b-5(c) and 13e-4(j)(1)(iii), in connection with the Offer. Defendants’ manipulative and deceptive devices and practices included, inter alia, artificially rendering Kinam insolvent, eliminating the dividend payable on the Preferred, making Kinross common shares effectively the creditors of the Preferred, artificially depressing the share price of the Preferred, and using coercive tactics, including the threat of delisting the Preferred, to cause acceptance of the Offer.
157. As a direct and proximate result of these manipulative and deceptive acts, artifices, schemes, practices and/or devices, plaintiffs and the members of the proposed classes were injured and incurred damages.
158. In connection with their manipulative and deceptive acts, practices and devices alleged herein, defendants used the means or instrumentalities of interstate commerce and the mails, and thereby violated sections 10(b) and 13(e) of the Exchange Act and Rule 10b-5(a) and (c) and Rule 13e-4(j)(1)(i) and (iii).
159. By virtue of the foregoing, defendants have violated sections 10(b) and 13(e) of the Exchange Act and Rule 10b-5(a) and (c) and Rule 13e-4(j)(1)(i) and (iii).
160. As a direct and proximate result of defendants' wrongful conduct, plaintiffs and the members of the proposed Classes incurred damages in an amount to be proven at trial.
161. This Count is brought solely under Rule 10b-5(a) and (c) and Rule 13e-4(j)(1)(i) and (iii). Accordingly, in connection with this Count, plaintiffs need not allege nor prove that defendants made misrepresentations or omissions of material fact for which defendants may also be liable under Rule 10b-5(b), Rule 13e-4(j)(1)(ii) and/or any other provision of law. Likewise, and for that same reason, the statutory safe harbor for certain forward-looking statements does not apply to this Count in any respect.
COUNT VII BY THE TENDEROR CLASS AND THE HOLDER CLASS AGAINST
DEFENDANTS KINROSS, KINROSS U.S.A., AND BUCHAN
FOR VIOLATION OF SECTION 20(a) OF THE EXCHANGE ACT162. All plaintiffs repeat and reallege each of the allegations set forth in the foregoing paragraphs insofar as they are relevant. This claim is asserted against Kinross, Kinross U.S.A., and Buchan, pursuant to Section 20(a) of the Exchange Act, 75 U.S.C. § 78t.
163. Defendants Kinross, Kinross U.S.A., and Buchan, by virtue of their stock ownership, positions, and/or specific acts described above, were, at the time of the wrongs alleged herein, controlling persons within the meaning of Section 20(a) of the Exchange Act.
164. Said defendants had the power and influence, and in fact, directly or indirectly, exercised the same to cause Kinam to engage in the illegal conduct and practices complained of herein, and possessed the power and control and/or ability to control each of the wrongful acts and practices complained of herein.
165. As a direct and proximate result of defendants' wrongful conduct, plaintiffs and members of the proposed Classes suffered damages in an amount to be proven at trial. By reason of the conduct alleged in this Amended Complaint, said defendants are liable for the aforesaid wrongful conduct, and are liable to plaintiffs and the members of the Tenderor and Holder Classes for the substantial damages which they have suffered.
WHEREFORE, plaintiffs on behalf of themselves, the Tenderor Class and the Holder Class pray for judgment as follows:
(1) A declaration that the Franklin Transaction was a constructive redemption of the Preferred requiring that all outstanding shares thereof be redeemed at the redemption price;
(2) In the event that the declaration requested in (1) above is made, damages for the Tenderor Class in the amount of $39.25 per share (the redemption price at the date of the Franklin Transaction ($51.50 plus $3.75 in unpaid dividends) less the $16.00 per share paid pursuant to the Offer), plus interest since July 2001.
(3) A declaration that the Franklin Transaction was the first step in a multi-step issuer tender offer for the Preferred, that the Offer was an integral part of the multi-step issuer tender offer, and that the Franklin Transaction, as the highest per share value paid to any offeree during the multi-step issuer tender offer, set the value that must be paid to all recipients of the Offer.
(4) In the event that the declaration requested in (3) above is made, damages or equitable relief as follows:
(a) For all members of the Tenderor Class, damages in an amount per share not less than the greater of: (i) $9.80 per share (the $25.80 per share received by Franklin less the $16.00 per share paid pursuant to the Offer), plus all accrued and unpaid dividends since July 2001; or (ii) the market price of one Kinross common share on the date of payment (or such other date as may be fixed by the Court) multiplied by 8.958333 (26.875 divided by 3), the conversion rate received by Franklin in the Franklin Transaction adjusted for Kinross's reverse stock split in 2003, plus all accrued and unpaid dividends since July 2001;
(b) For all members of the Holder Class, an election between either: (i) damages per share as specified in request (4)(a); or (ii) an equitable adjustment of the conversion rate to 8.958333 shares of Kinross for each share of Preferred, together with the right to all unpaid dividends accruing since July 2001.
(5) For members of both the Tenderor Class and the Holder Class who are entitled or who elect to receive damages, an award of treble damages under Nevada Revised Statutes, § 207.470.
(6) For members of the Holder Class who elect the remedy specified in request (4)(b)(ii) above, and in substitution for treble damages, a further equitable adjustment of the conversion rate from 8.958333 to 26.875 shares of Kinross for each share of the Preferred.
(7) For members of the Holder Class who elect the remedy specified in request (4)(b)(ii) above, a declaration that neither Kinam nor any of its affiliates may redeem any outstanding shares of the Preferred without first offering the holders thereof reasonable opportunity to exercise their right of conversion into Kinross common shares.
(8) A declaration that for purposes of determining whether dividends may be paid on the Preferred, Kinam must employ a fair valuation of its assets and liabilities as allowed under Nevada law.
(9) An order converting into common equity, or extinguishing completely, all inter-company debt owed by Kinam to Kinross U.S.A., Kinross, or any of their other affiliates or subsidiaries.
(10) A declaration that all shares of the Preferred held by Kinross U.S.A. or any of its affiliates must be treated as shares redeemed, converted, or otherwise acquired by the issuer, and therefore cannot be voted on any matters on which the Preferred is entitled to vote.
(11) A declaration that the holders of the Preferred are entitled to elect two members to the board of directors of Kinross and Kinam in the circumstances set forth in Article 4C.(6)(b) of the Charter.
(12) An order of civil forfeiture under Nevada Revised Statutes s. 207.490(6) placing all the common shares of Kinam or, alternatively, its gold mining assets including the Sleeper and Fort Knox gold mines, in trust to secure payment of all damages awarded to class members, and thereafter to be available to compensate earlier holders of the Preferred for their damages resulting from the racketeering activity alleged, or to escheat to the states of Nevada or Alaska in punishment therefor.
(13) Attorneys' fees and costs of investigation and litigation reasonably incurred.
(14) Interest at the statutory rate on all damages.
(15) Such other and further relief as the Court may deem just and proper.
JURY DEMAND Plaintiffs demand a trial by jury on all issues so triable.
Dated: November 21, 2003
KUMMER KAEMPFER BONNER & RENSHAW
By:
Thomas F. Kummer
L. Joe Coppedge
3800 Howard Hughes Parkway
Seventh Floor
Las Vegas, Nevada 89109
(702) 792-7000 (Tel)
(702) 792 7181 (Fax)BERGER & MONTAGUE, P.C.
Merrill G. Davidoff
Michael Dell'Angelo
1622 Locust Street
Philadelphia, PA 19103
(215) 875-3000 (Tel)
(215) 875-4608 (Fax)Reginald H. Howe
49 Tyler Road
Belmont, Massachusetts 02478-2022
(617) 484-0029 (Tel & Fax)Attorneys for Plaintiffs