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ROSEMARY M. RIVAS (SBN 209147)

FINKELSTEIN THOMPSON LLP

One California Street, Suite 900

San Francisco, CA 94111

Telephone: (415) 398-8700

Facsimile: (415) 398-8704

Email: rrivas@finkelsteinthompson.com

Attorney for Plaintiff Kevin Nygren 

and the Proposed Class

[Additional counsel appear on signature page]

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

Plaintiff Kevin Nygren (“Plaintiff”), by his undersigned attorneys, alleges the following 

on information and belief, except as to the allegations specifically pertaining to Plaintiff, which 

are based on personal knowledge.

NATURE AND SUMMARY OF THE ACTION

1. Plaintiff brings this action as a public stockholder of Applied Micro Circuits 

Corporation (“AppliedMicro” or the “Company”) against the members of AppliedMicro’s

KEVIN NYGREN, On Behalf of Himself and 

All Others Similarly Situated,

Plaintiff,

 vs.

APPLIED MICRO CIRCUITS 

CORPORATION, CESAR CESARATTO, 

PAUL R. GRAY, FRED SHLAPAK, 

ROBERT F. SPROULL, DUSTON 

WILLIAMS, PARAMESH GOPI, and 

CHRISTOPHER ZEPF,

 Defendants.

Case No. 3:16-cv-7400

CLASS ACTION

COMPLAINT FOR 

VIOLATION OF THE 

FEDERAL SECURITIES LAWS

JURY TRIAL DEMANDED

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Board of Directors (the “Board” or the “Individual Defendants”) and AppliedMicro for their 

violations of Section 14(d)(4), and Rule 14D-9 promulgated thereunder by the U.S. Securities 

and Exchange Commission (the “SEC”), and Sections 14(e) and 20(a). Specifically, 

Defendants solicit the tendering of stockholder shares to approve of the sale of the Company 

to MACOM Technology Solutions Holdings, Inc. (together, “MACOM” or “Parent”) through 

MACOM’s wholly owned subsidiary Montana Merger Sub I, Inc. (“Merger Sub”) (the 

“Proposed Transaction”) through a recommendation statement that omits material facts 

necessary to make the statements therein not false or misleading. Stockholders need this 

material information to decide whether to tender their shares or pursue their appraisal rights. 

2. On November 21, 2016, the Company announced that it had entered into a 

definitive agreement (the “Merger Agreement”) by which MACOM, through its wholly 

owned subsidiary, Merger Sub, would commence a tender offer (the “Tender Offer”) to 

acquire all of the outstanding shares of AppliedMicro in exchange for $3.25 in cash and 

0.1089 MACOM shares per share of AppliedMicro (the “Proposed Transaction”). The 

Proposed Transaction is valued at approximately $770 million.

3. On December 21, 2016, MACOM commenced the Tender Offer, which is set 

to expire at 12:00 midnight, Eastern Time, at the end of January 25, 2017 (the “Expiration 

Date”). The Tender Offer provides that the number of shares of AppliedMicro common 

stock that have to be validly tendered, together with the shares beneficially owned by 

MACOM and Merger Sub, if any, must represent at least one share more than one-half of the 

total number of outstanding shares of AppliedMicro common stock as of the Expiration Date. 

The Tender Offer is not subject to any financing condition. 

4. In connection with the commencement of the Tender Offer, on December 21, 

2016, the Company filed a Recommendation Statement on Schedule 14D-9 (the 

“Recommendation Statement”) with the SEC. The Recommendation Statement is materially 

deficient and misleading because, inter alia, it fails to disclose material information about the 

process leading to the Merger Agreement. Without all material information AppliedMicro

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stockholders cannot make an informed decision to exchange their shares in the Tender Offer.

The failure to adequately disclose such material information constitutes a violation of §§ 

14(d)(4), 14(e) and 20(a) of the Exchange Act as stockholders need such information in order 

to make a fully-informed decision regarding tendering their shares in connection with the 

Proposed Transaction about whether to tender their shares.

5. For these reasons and as set forth in detail herein, the Individual Defendants 

have violated federal securities laws. Accordingly, Plaintiff seeks to enjoin the Proposed 

Transaction or, in the event the Proposed Transaction is consummated, recover damages 

resulting from the Individual Defendants’ violations of these laws. Judicial intervention is 

warranted here to rectify existing and future irreparable harm to the Company’s stockholders.

JURISDICTION AND VENUE

6. The claims asserted herein arise under §§ 14(d), 14(e), and 20(a) of the 

Exchange Act, 15 U.S.C. § 78aa. The Court has subject matter jurisdiction pursuant to § 27 of 

the Exchange Act, 15 U.S.C. §78aa, and 28 U.S.C. § 1331 (federal question jurisdiction). 

7. The Court has personal jurisdiction over all of the defendants because each is 

either a corporation that conducts business in and maintains operations in this District, or is 

an individual who is either present in this District for jurisdictional purposes or has sufficient 

minimum contacts with this District so as to render the exercise of jurisdiction by this Court 

permissible under traditional notions of fair play and substantial justice.

8. Venue is proper in this District under § 27 of the Exchange Act, 15 U.S.C. 

§78aa, as well as pursuant to 28 U.S.C. § 1391, because: (i) the conduct at issue took place 

and had an effect in this District; (ii) AppliedMicro maintains its principal place of business 

in this District and each of the Individual Defendants, and Company officers or directors, 

either resides in this District or has extensive contacts within this District; (iii) a substantial 

portion of the transactions and wrongs complained of herein, occurred in this District; (iv) 

most of the relevant documents pertaining to Plaintiff’s claims are stored (electronically and 

otherwise), and evidence exists, in this District; and (v) defendants have received substantial 

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compensation in this District by doing business here and engaging in numerous activities that 

had an effect in this District.

THE PARTIES

9. Plaintiff is, and has been at all times relevant hereto, a stockholder of 

AppliedMicro. 

10. Defendant Cesar Cesaratto (“Cesaratto”) is AppliedMicro’s Chairman of the 

Board and has served as a director of the Company since April 2002. 

11. Defendant Paul R. Gray (“Gray”) has served as a director since 2009.

12. Defendant Fred Shlapak (“Shlapak”) has served as a director since 2006.

13. Defendant Robert F. Sproull (“Sproull”) has served as a director since 2011.

14. Defendant Duston Williams (“Williams”) has served as a director since 2013).

15. Defendant Paramesh Gopi (“Gopi) has served as the President and Chief 

Executive Officer of AppliedMicro since May 2009, and a Director of the Company since 

April 2009.

16. Defendant Christopher Zepf (“Zepf”) has served as a Director of the Company 

since May 14, 2015. Defendant Zepf is Managing Principal and Portfolio Manager of 

Kingdom Ridge Capital, LLC (Kingdom Ridge), a hedge fund that currently controls 

approximately 9% of the Company’s common stock. 

17. Defendants Cesaratto, Gray, Shlapak, Sproull, Williams, Gopi, and Zepf are 

collectively referred to herein as the “Individual Defendants,” and the Individual Defendants 

are sometimes collectively referred to herein as the “Board.”

18. Defendant AppliedMicro is a corporation organized and existing under the 

laws of the State of Delaware. It maintains its principal executive offices at 4555 Great 

America Parkway, Suite 601, Santa Clara, California, 95054. Common stock in 

AppliedMicro is publicly traded on the NASDAQ under the ticker symbol “AMCC.” 

AppliedMicro is named as a defendant herein solely for the purpose of providing full and 

complete relief.

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19. Defendants AppliedMicro and the Individual Defendants are collectively 

referred to as the “Defendants.”

20. MACOM, a non-party, is a developer and producer of radio, microwave, and 

millimeter wave semiconductor devices and components. MACOM is headquartered in

Lowell, Massachusetts.

21. Non-party Merger Sub is a Delaware corporation, a wholly-owned subsidiary 

of MACOM, and a party to the Merger Agreement. 

CLASS ACTION ALLEGATIONS

22. Plaintiff brings his claims against the Individual Defendants as a class action 

pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of all persons and 

entities that own AppliedMicro common stock (the “Class”). Excluded from the Class are 

defendants and their affiliates, immediate families, legal representatives, heirs, successors or 

assigns and any entity in which defendants have or had a controlling interest.

23. Plaintiff’s claim is properly maintainable as a class action under Rule 23 of the 

Federal Rules of Civil Procedure.

24. The Class is so numerous that joinder of all members is impracticable. While 

the exact number of Class members is unknown to Plaintiff at this time and can only be 

ascertained through discovery, Plaintiff believes that there are thousands of members in the 

Class. As of December 15, 2016, there were 87,641,177 shares of Company common stock 

issued and outstanding. All members of the Class may be identified from records maintained 

by AppliedMicro or its transfer agent and may be notified of the pendency of this action by 

mail, using forms of notice similar to that customarily used in securities class actions.

25. Questions of law and fact are common to the Class and predominate over 

questions affecting any individual Class member, including, among inter alia:

(a) Have the Defendants solicited stockholder approval of the Proposed 

Transaction with a materially false, misleading and/or incomplete recommendation statement;

(b) Is the Class entitled to injunctive relief or damages as a result of 

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Defendants’ wrongful conduct; and

(c) Whether Plaintiff and the other members of the Class would be 

irreparably harmed were the transactions complained of herein consummated.

26. Plaintiff will fairly and adequately protect the interests of the Class, and has no 

interests contrary to or in conflict with those of the Class that Plaintiff seeks to represent. 

Plaintiff has retained competent counsel experienced in litigation of this nature.

27. A class action is superior to all other available methods for the fair and 

efficient adjudication of this controversy. Plaintiff knows of no difficulty to be encountered in 

the management of this action that would preclude its maintenance as a class action.

28. Defendants have acted on grounds generally applicable to the Class with 

respect to the matters complained of herein, thereby making appropriate the relief sought 

herein with respect to the Class as a whole.

SUBSTANTIVE ALLEGATIONS

Background of the Company

29. AppliedMicro develops and produces computing and connectivity solutions 

for cloud infrastructure and data centers, including an array of connectivity and embedded 

computing products. The Company is a leader in 64-bit custom ARM-based processors, 

mixed-signal design and high speed signal processing, Internet protocol, OTN and Ethernet 

packet processing, and embedded processor System-on-Chip (“SoC”) design. AppliedMicro 

was founded in 1995 and has corporate headquarters in Sunnyvale, California.

30. In a press release dated November 21, 2016, the Company announced that it 

had entered into the Merger Agreement with MACOM and Merger Sub, pursuant to which 

the Company will be acquired by MACOM in a tender offer in which AppliedMicro

stockholders will receive $3.25 in cash and 0.1089 MACOM shares in exchange for each 

share of AppliedMicro common stock. This represents a total equity value of approximately 

$770 million.

31. In relevant part, the press release reads:

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LOWELL, Mass., November 21, 2016 - MACOM Technology Solutions 

Holdings, Inc. (NASDAQ: MTSI) (“MACOM”), a leading supplier of highperformance analog RF, microwave, millimeterwave and photonic 

semiconductor products, today announced it has entered into a definitive 

agreement to acquire Applied Micro Circuits Corporation (NASDAQ:AMCC) 

(“AppliedMicro”), a global leader in Connectivity and Computing solutions for 

next-generation cloud infrastructure and Data Centers, for approximately $8.36 

per share, consisting of $3.25 in cash and 0.1089 MACOM shares per share of

AppliedMicro. This price for each share of AppliedMicro represented a 15.4% 

premium over the company’s closing price of $7.25 on Friday, November 18th. 

MACOM intends to divest the well-positioned but non-strategic Compute 

business within the first 100 days of closing.

***

Commenting on the transaction, John Croteau, President and Chief Executive 

Officer, stated, “This transaction will accelerate and expand MACOM’s 

breakout opportunity in Enterprise and Cloud Data Centers. MACOM will now 

be able to provide all the requisite semiconductor content for optical networks -

analog, photonic and PHY - from the switch to fiber for long haul, metro, 

access, backhaul and Data Center. AppliedMicro’s 100G to 400G single-lambda 

PAM4 platform should perfectly complement MACOM’s leadership in analog 

and photonic components for Data Centers. 

Notably, the IEEE recently recommended the adoption of AppliedMicro’s 

single lambda PAM4 solution to be an industry standard for enterprise and Data 

Center connectivity, positioning this technology as the solution of choice going 

forward. Additionally, AppliedMicro’s Connectivity business aligns well with 

MACOM’s differentiated, high-growth business model, offering non-GAAP 

gross margins well in excess of MACOM’s long term target operating model, 

long product life cycles, and sticky customer relationships.” 

“AppliedMicro also provides value-added technologies including SerDes, high 

speed analog-to-digital and digital-to-analog converters with industry-leading 

engineering competencies and long product lifecycles. Importantly, we expect 

that this transaction will establish MACOM with an incumbent position 

supplying strategic components and enterprise and cloud Data Center 

customers.” 

MACOM intends to divest AppliedMicro’s well-positioned Compute business 

within 100 days from closing the transaction, as the business does not 

strategically align with MACOM’s long-term focus. AppliedMicro has been 

exploring strategic options for the Compute business and there is known 

strategic interest among several potential buyers and investors. MACOM will 

continue to support Compute customers and partners during this transition. 

“This is an exciting day for AppliedMicro, and we are pleased to be joining 

forces with MACOM. The transaction affirms the value that our employees 

have created and provides a strong path forward for our Connectivity business 

while delivering AppliedMicro stockholders a robust premium,” said Paramesh 

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Gopi, President and CEO, AppliedMicro. “This transaction will create an 

industry powerhouse with the scale, deep customer relationships, innovative 

technology, and enabling products that will help deliver explosive growth in 

Enterprise and Cloud Data Centers. In addition, this agreement provides a 

promising path forward for the Compute business, which is in the process of 

bringing AppliedMicro’s highly-competitive third-generation X-Gene processor 

to market. X-Gene is well-positioned to address the large opportunity for 

mainstream server processors with its proven high performance cores, scalable 

interconnect and high per socket memory capabilities.” 

MACOM intends to commence a tender offer to purchase each outstanding 

common share of AppliedMicro for approximately $8.36 per share, consisting 

of $3.25 in cash and 0.1089 MACOM shares per share of AppliedMicro. 

MACOM will assume certain equity awards held by AppliedMicro employees. 

The transaction value is approximately $770 million in diluted equity value, or 

approximately $688 million net of AppliedMicro’s cash position of 

approximately $82 million as of September 30, 2016. The transaction is 

expected to be accretive to MACOM’s non-GAAP gross margin, non-GAAP 

operating margin and non-GAAP EPS in fiscal year 2017, excluding the 

Compute business. AppliedMicro stockholders are expected to own 

approximately 15% of the combined company on a pro forma basis. MACOM 

expects to pay the cash portion of the acquisition price from cash on hand. The 

boards of directors of both companies have approved the transaction, which is 

subject to customary closing conditions and regulatory approvals. MACOM 

currently expects the transaction to close in the first calendar quarter of 2017.

The Process Preceding the Execution of the Proposed Transaction

32. On May 14, 2015, the Company announced that it had invited Defendant Zepf 

to join the Board at the same time it increased the size of the Board from six to seven 

members. At the time of this announcement, Defendant Zepf’s Kingdom Ridge fund had 

accumulated 9.9% of the Company’s outstanding shares of common stock. 

33. Analysts following the stock noted that the appointment of Defendant Zepf 

likely signaled a new openness to being acquired. In an article published on TheDeal.com on 

June 15, 2015, reporter Jaewon Kang noted that “While Kingdom Ridge is a traditional, nonactivist growth investor, Zepf will focus on getting Applied Micro to achieve its highest 

possible valuation either organically or through a sale, this person said, adding that the latter 

is a more likely scenario.”

34. Kang quoted Cody Acree, senior research analyst at Ascendiant Capital 

Markets: “’AMCC is a very unique vehicle. It’s two to three years ahead of everybody else 

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in a market that’s in high demand,’ Acree explained. ‘That’s why it’s ripe for acquisition.’ 

Applied Micro could attract a price tag of between $800 million to $1 billion, according to 

Acree.”

35. Indeed, the Board had determined in late 2014 that it should begin exploring 

AppliedMicro’s strategic alternatives. In February 2015, the Company engaged Morgan 

Stanley & Co. LLC (“Morgan Stanley”) to provide financial advisory and placement agent 

services for a potential private investment in public equity (“PIPE”) transaction in order to 

enable new development. In May 2015, the Board formed a Strategy Committee of 

Defendants Cesaratto, Shlapak, Williams, and Zepf to investigate, review, consider, and make 

recommendations to the Board with respect to strategic alternatives. 

36. On January 21, 2016, the Strategy Committee considered expanding its 

potential strategic alternatives to include a potential merger or acquisition of AMCC or its 

ARM-based Compute business. During this meeting, Morgan Stanley presented on the 

current strategic landscape and a strategic process. After Morgan Stanley left, the Strategy 

Committee identified two other investment banks to interview for the advisory role in the 

strategic process. 

37. After interviewing two other investment banks, the Strategy Committee 

determined that Morgan Stanley would be best qualified to serve as its financial advisor. 

38. On February 3, 2016, the Board met and approved the Strategy Committee’s 

recommendations on the commencement of a process to find an acquirer of the entire 

Company or its ARM-based Compute business and approved the engagement of Morgan 

Stanley as financial advisor. Morgan Stanley and the Company entered into an engagement 

letter and indemnity agreement on February 24, 2016.

39. Morgan Stanley contacted six entities regarding a potential strategic 

transaction between March 9 and March 16, 2016. Between March 22, 2016 and April 26, 

2016, AppliedMicro management and Morgan Stanley contacted another nine entities. 

40. On April 26, 2016, the Strategy Committee met to receive updates on the 

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process. Six of the seventeen entities had declined to pursue discussions, and four entities 

had received management presentations. The Strategy Committee directed management and 

Morgan Stanley to contact potential partners in China as well.

41. On May 26, 2016, Defendant Cesaratto and Company management met with 

Company A to discuss its potential interest in a strategic transaction. On June 6, 2016, 

Company management met with Company B to discuss a potential strategic investment. On 

June 15, 2016, Morgan Stanley met with the financial advisor to Company C to discuss 

Company C’s interest in a potential strategic transaction. 

42. On June 20, 2016 the Strategy Committee met and received an update from 

Company management and Morgan Stanley on the strategic process. The Strategy 

Committee discussed Company C’s interest in the Company’s Connectivity business. They 

also discussed reaching out to seven additional entities including MACOM and Company D 

regarding an acquisition of either the whole Company or the Connectivity business. They 

also discussed approaching potential financial sponsors in the United States and China. In 

line with this approach, the Strategy Committee discussed a potential PIPE transaction with 

Company B, 

43. On June 27, 2016, Morgan Stanley met with Company C and its financial 

advisor to discuss possible interest in a strategic transaction. The next day, Morgan Stanley 

and Company management discussed a potential PIPE transaction with Company B, and the 

parties held a financial due diligence telephone call on July 7, 2016.

44. Between July 13, 2016 and July 22, 2016, Morgan Stanley contacted five more 

entities including Company D. On July 18, Morgan Stanley contacted MACOM’s president 

and chief executive officer regarding a potential acquisition. On July 27, 2016, MACOM and 

the Company entered into a non-disclosure agreement.

45. On August 2, 2016, the Strategy Committee held a meeting with Company 

management and Morgan Stanley to discuss the ongoing process and possible strategic 

alternatives including a sale of the entire company to Company A, Company C, and 

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MACOM, a sale of the Connectivity business to Company C, Company D, and MACOM, 

and a PIPE transaction led by Company B.

46. On August 22, 2016, the Strategy Committee held another meeting to discuss 

the process in pursuing strategic alternatives to continuing as a standalone company. On 

August 30, 2016, Morgan Stanley sent letters describing the process for submitting 

indications of interest to five parties, including Company A, Company D, and MACOM. 

These letters stated a deadline of September 13, 2016 for submitting indications of interest. 

47. On August 30, 2016, Company B submitted a draft term sheet for a proposed 

PIPE transaction for the issuance of up to $300 million in senior secured preferred stock. 

Morgan Stanley discussed this proposal with Company management on September 1, 2016.

48. On September 2, 2016, Company C submitted a written indication of interest 

for the purchase of the Connectivity business for $300 million.

49. The Board met on September 6, 2016 to discuss and review Company B’s 

PIPE proposal. After discussion and advice, the Board decided not to pursue further 

discussion because the terms were not standard and/or were onerous to AppliedMicro and its 

stockholders. The Board also evaluated Company C’s offer and found it to be below the 

minimum enterprise value attributable to the Connectivity business and elected to reject the 

proposal.

50. During this meeting, the Board discussed the need to obtain additional 

disclosure from Morgan Stanley on potential conflicts with the parties expected to make 

proposals in the process. It then requested such disclosures by letter.

51. On September 12, 2016, Company A sent the Company a written indication of 

interest regarding a purchase of the entire Company for $670 million. On September 13, 

2016, Company D submitted a written indication of interest to purchase the Connectivity 

business for between $475 and $525 million. The same day, MACOM submitted an 

indication of interest to purchase the entire Company for $645 million.

52. The Strategy Committee met on September 14, 2016 to consider the five 

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proposals the Company had received. Although Company A’s proposal was higher than the 

proposal from MACOM, the Strategy Committee directed Company management and 

Morgan Stanley to ask Company A to submit a separate indication of interest to acquire only 

the Compute business, or substantially improve its bid because of other unusual or risky 

terms. The Strategy Committee agreed with the Board that the PIPE proposal from Company 

B was not attractive, and found Company C’s proposal to purchase the Connectivity business 

for $300 million to pale in comparison to Company D’s proposal of $475 to $525 million.

53. Between September 20 and September 26, 2016, Morgan Stanley 

communicated with MACOM regarding its indication of interest. Evercore represented that 

MACOM would be willing to increase its price to a 10% premium over AppliedMicro’s 

closing trading price, subject to additional diligence. 

54. Morgan Stanley and Company management continued to reach out to potential 

counterparties and negotiate with existing interested parties. Company D made its offer 

contingent on the Company identifying a purchaser for its Compute business on September 

28, 2016.

55. On October 17, 2016, Company A submitted a proposal to acquire the 

Compute business for $100 million in cash paid at closing and up to $140 million payable 

over three years subject to annual performance milestones. 

56. The Board met later that day to discuss the status of the strategic review 

process. They noted that the MACOM offer of a 10% premium to AppliedMicro’s closing 

price represented a decline from its initial indication of interest due to fluctuations in 

AppliedMicro’s stock price. As of October 17, 2016, the price would have been $6.81 per 

share. The Board suggested that instead of a premium to the price at closing, MACOM might 

pay a premium on AppliedMicro’s volume weighted average price (“VWAP”) as a way to 

smooth price fluctuations and pricing risk. The Board also reviewed Company A’s proposal, 

and was concerned with Company A’s apparent lack of seriousness and the requirement that 

the full Compute management team continue following any acquisition.

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57. Morgan Stanley discussed a VWAP pricing with MACOM’s financial advisor 

on October 19, 2016. On October 21, 2016, MACOM’s financial advisor communicated a 

counteroffer of $7.20 per share to Morgan Stanley. 

58. The Board met on October 22, 2016 and reviewed the current status of the 

process. The Board directed Morgan Stanley to revert to MACOM with the proposed 10% 

premium to the 90-day VWAP of AppliedMicro’s stock price, approximately $7.50. Later 

that day, Morgan Stanley communicated this response to MACOM’s financial advisor.

59. The next day, MACOM’s financial advisor made an oral counteroffer to 

Morgan Stanley of a 10% premium to 90-day VWAP for AppliedMicro’s common stock as 

of the signing of a definitive merger agreement. Morgan Stanley believed that this was 

MACOM’s best and final offer on price. MACOM also sought an exclusivity agreement to 

negotiate other terms of the merger agreement.

60. The Board met later that day and reviewed all of the outstanding proposals for 

strategic alternatives, including those for purchases of either the Compute or Connectivity 

businesses, and the possibility of continuing as a standalone company. After review, the 

Board determined that MACOM’s proposal was likely the best possible price the Company 

would receive, and authorized negotiation of an exclusivity agreement with MACOM.

61. On October 28, 2016 the Board met to review the status of negotiations. After 

discussion, the Board agreed to an exclusivity agreement until November 15, 2016 with an 

automatically renewing 14-day extension.

62. On November 9, 2016, AppliedMicro entered into an engagement letter with 

Needham & Company, LLC to provide a second fairness opinion.

63. On November 10, 2016, the Board met by telephone and concluded that due to 

changes in the market price for the Company’s and MACOM’s stock, a price increase was 

appropriate. Morgan Stanley communicated this conclusion to MACOM, and MACOM 

rejected such an increase. The Board did nothing to follow-up on this rejection.

64. Negotiations continued over the next two weeks, with the Board reviewing 

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progress. On November 20, 2016, the Board met again to review the final Merger agreement. 

Both Morgan Stanley and Needham reviewed their financial analysis and provided fairness 

opinions on the Proposed Transaction. Following this review, the Board unanimously voted 

to approve the Merger Agreement.

65. On the morning of November 21, 2016 before the opening of the market, the 

parties executed the Merger Agreement and issued press releases announcing the Proposed 

Transaction.

The Recommendation Statement Fails to Disclose Material Information

66. Defendants filed the Recommendation Statement with the SEC in connection 

with the Proposed Transaction. As alleged below and elsewhere herein, the Recommendation 

Statement omits material information that must be disclosed to AppliedMicro’s stockholders 

to enable them to render an informed decision with respect to the Proposed Transaction.

67. The Recommendation Statement omits material information with respect to 

the process and events leading up to the Proposed Transaction, as well as the opinions and 

analyses of AppliedMicro’s financial advisors. This omitted information, if disclosed, would 

significantly alter the total mix of information available to AppliedMicro’s stockholders.

68. In the Recommendation Statement, the Company describes the fairness 

opinions provided by Merrill Lynch and Goldman Sachs and the various valuation analyses 

performed in support of these opinions.

69. However, the Recommendation Statement indicates that Morgan Stanley and 

Needham & Co. relied on certain internal projections for fiscal years 2016-2020 in rendering 

their fairness opinions, as well as Company Management’s guidance in extrapolating public 

forecasts for the years 2016-2018. The Recommendation Statement discloses Revenue, 

Operating Income, Adjusted EBITDA, Net Income, and Earnings Per Share. However, the 

Proxy omits the Company’s internal projections for the following items: (i) free cash flows 

and the terminal values thereof for the “Company Street Case” and “Management Case” used 

in Morgan Stanley’s Discounted Cash Flow Analysis; (ii) line items used by Morgan Stanley 

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to calculate free cash flows, including net interest expense, income tax expense, stock-based 

compensation, and capital expenditures; (iii) unlevered free cash flows as used in Needham & 

Co.’s Discounted Cash Flow Analysis (iv) terminal year enterprise values used in Needham 

& Co.’s Discounted Cash Flow Analysis; and (v) the definition of unlevered free cash flow 

used by Needham & Co. Without this information, as described below, AppliedMicro’s

public stockholders are unable to fully understand the analyses and, thus, are unable to 

determine what weight, if any, to place on the fairness opinion rendered in support of the 

Proposed Transaction.

70. These omissions of material fact represent selective disclosures made by 

Defendants in the Registration Statement that significantly alter the total mix of information 

that Defendants used to market the Proposed Transaction. Defendants misled investors into 

believing the Proposed Transaction is fair while refusing to disclose the full picture provided 

to the board of AppliedMicro by its financial advisors. 

71. Accordingly, Plaintiff seeks injunctive and other equitable relief to prevent the 

irreparable injury that Company stockholders will continue to suffer absent judicial 

intervention

CLAIMS FOR RELIEF

COUNT I

Claims Against All Defendants for Violations of § 14(e) of the

Securities Exchange Act of 1934

72. Plaintiff incorporates each and every allegation set forth above as if fully set 

forth herein.

73. Section 14(e) of the Exchange Act provides that it is unlawful “for any person 

to make any untrue statement of a material fact or omit to state any material fact necessary in 

order to make the statements made, in the light of the circumstances under which they are 

made, not misleading...” 15 U.S.C. § 78n(e). 

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74. As discussed above, AppliedMicro filed and delivered the Recommendation 

Statement to its stockholders, which defendants knew or recklessly disregarded contained 

material omissions and misstatements as set forth above.

75. Defendants violated § 14(e) of the Exchange Act by issuing the 

Recommendation Statement in which they made untrue statements of material facts or failed 

to state all material facts necessary in order to make the statements made, in the light of the 

circumstances under which they are made, not misleading, or engaged in deceptive or 

manipulative acts or practices, in connection with the tender offer commenced in conjunction 

with the Proposed Transaction. Defendants knew or recklessly disregarded that the 

Recommendation Statement failed to disclose material facts necessary in order to make the 

statements made, in light of the circumstances under which they were made, not misleading.

76. The Recommendation Statement was prepared, reviewed and/or disseminated 

by defendants. It misrepresented and/or omitted material facts, including material information 

about the consideration offered to stockholders via the tender offer, the intrinsic value of the 

Company, and potential conflicts of interest faced by certain Individual Defendants.

77. In so doing, defendants made untrue statements of material facts and omitted 

material facts necessary to make the statements that were made not misleading in violation of 

§ 14(e) of the Exchange Act. By virtue of their positions within the Company and/or roles in 

the process and in the preparation of the Recommendation Statement, defendants were aware 

of this information and their obligation to disclose this information in the Recommendation 

Statement.

78. The omissions and incomplete and misleading statements in the 

Recommendation Statement are material in that a reasonable stockholder would consider them 

important in deciding whether to tender their shares or seek appraisal. In addition, a 

reasonable investor would view the information identified above which has been omitted from 

the Recommendation Statement as altering the “total mix” of information made available to 

stockholders.

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79. Defendants knowingly or with deliberate recklessness omitted the material 

information identified above from the Recommendation Statement, causing certain statements 

therein to be materially incomplete and therefore misleading. Indeed, while defendants 

undoubtedly had access to and/or reviewed the omitted material information in connection 

with approving the Proposed Transaction, they allowed it to be omitted from the 

Recommendation Statement, rendering certain portions of the Recommendation Statement 

materially incomplete and therefore misleading.

80. The misrepresentations and omissions in the Recommendation Statement are 

material to Plaintiff, and Plaintiff will be deprived of their entitlement to make a fully 

informed decision if such misrepresentations and omissions are not corrected prior to the 

expiration of the tender offer.

COUNT II

Claims Against All Defendants for Violations of § 14(d)(4) of the

Securities Exchange Act of 1934 and SEC Rule 14d-9 (17 C.F.R. § 240.14d-9)

81. Plaintiff repeats and realleges the preceding allegations as if fully set forth 

herein.

82. Defendants have caused the Recommendation Statement to be issued with the 

intention of soliciting stockholder support of the Proposed Transaction.

83. Section 14(d)(4) of the Exchange Act and SEC Rule 14d-9 promulgated 

thereunder require full and complete disclosure in connection with tender offers. 

84. The Recommendation Statement violates § 14(d)(4) and Rule 14d-9 because it 

omits material facts, including those set forth above, which omissions render the 

Recommendation Statement false and/or misleading.

85. Defendants knowingly or with deliberate recklessness omitted the material 

information identified above from the Recommendation Statement, causing certain statements 

therein to be materially incomplete and therefore misleading. Indeed, while defendants 

undoubtedly had access to and/or reviewed the omitted material information in connection 

with approving the Proposed Transaction, they allowed it to be omitted from the 

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Recommendation Statement, rendering certain portions of the Recommendation Statement 

materially incomplete and therefore misleading.

86. The misrepresentations and omissions in the Recommendation Statement are 

material to Plaintiff, and Plaintiff will be deprived of their entitlement to make a fully 

informed decision if such misrepresentations and omissions are not corrected prior to the 

expiration of the tender offer.

87. The misrepresentations and omissions in the Recommendation Statement are 

material to Plaintiff, and Plaintiff will be deprived of their entitlement to make a fully 

informed decision if such misrepresentations and omissions are not corrected prior to the 

expiration of the tender offer.

COUNT III

Claims Against All Defendants for Violations of § 20(a) of the 

1934 Act Against the Individual Defendants 

88. Plaintiff repeats and realleges the preceding allegations as if fully set forth 

herein.

89. The Individual Defendants acted as controlling persons of AppliedMicro

within the meaning of Section 20(a) of the 1934 Act as alleged herein. By virtue of their 

positions as officers and/or directors of AppliedMicro and participation in and/or awareness of 

the Company’s operations and/or intimate knowledge of the false statements contained in the 

Definitive Proxy, they had the power to influence and control and did influence and control, 

directly or indirectly, the decision making of the Company, including the content and 

dissemination of the various statements that plaintiff contends are false and misleading.

90. Each of the Individual Defendants was provided with or had unlimited access 

to copies of the Definitive Proxy alleged by Plaintiff to be misleading prior to and/or shortly 

after these statements were issued and had the ability to prevent the issuance of the statements 

or cause them to be corrected.

91. In particular, each of the Individual Defendants had direct and supervisory 

involvement in the day-to-day operations of the Company, and, therefore, is presumed to have 

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had the power to control and influence the particular transactions giving rise to the violations 

as alleged herein, and exercised the same. The Definitive Proxy contains the unanimous 

recommendation of the Individual Defendants to approve the Proposed Transaction. They 

were thus directly in the making of the Definitive Proxy.

92. By virtue of the foregoing, the Individual Defendants violated Section 20(a) of 

the 1934 Act.

93. As set forth above, the Individual Defendants had the ability to exercise control 

over and did control a person or persons who have each violated Section 14(a) of the 1934 Act 

and Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their positions as 

controlling persons, these defendants are liable pursuant to Section 20(a) of the 1934 Act. As 

a direct and proximate result of defendants’ conduct, Plaintiff is threatened with irreparable 

harm.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff demands judgment against defendants jointly and severally, as 

follows:

(A) declaring this action to be a class action and certifying Plaintiff as the Class 

representatives and her counsel as Class counsel;

(B) declaring that the Recommendation Statement is materially false or misleading;

(C) enjoining, preliminarily and permanently, the Proposed Transaction;

(D) in the event that the transaction is consummated before the entry of this Court’s 

final judgment, rescinding it or awarding Plaintiff and the Class rescissory damages;

(E) directing that Defendants account to Plaintiff and the other members of the Class 

for all damages caused by them and account for all profits and any special benefits 

obtained as a result of their breaches of their fiduciary duties.

(F) awarding Plaintiff the costs of this action, including a reasonable allowance for 

the fees and expenses of Plaintiff’s attorneys and experts; and

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(G) granting Plaintiff and the other members of the Class such further relief as the 

Court deems just and proper. 

JURY DEMAND

Plaintiff demands a trial by jury.

Dated: December 29, 2016 FINKELSTEIN THOMPSON LLP

By: /s/ Rosemary M. Rivas

Rosemary M. Rivas 

One California Street, Suite 900

San Francisco, CA 94111

Tel: (415) 398-8700

Fax: (415) 398-8704

Email: rrivas@finkelsteinthompson.com

Donald J. Enright (to be admitted pro hac vice)

LEVI & KORSINSKY LLP

1101 30th Street NW, Suite 115

Washington, DC 20007

Tel: (202) 524-4290

Fax: (202) 337-1567

Email: denright@zlk.com

Counsel for Plaintiff Nygren and 

the Proposed Class

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