MTSI MACOM Technology Solutions Holdings Inc

FORWARD-LOOKING STATEMENTS

Information both included and incorporated by reference in this document may contain forward-looking statements, which may be identified by their use of terms such as “intend,” “plan,” “may,” “should,” “will,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “continue,” “potential,” “opportunity,” “project” and similar terms and their negative expressions. These statements are based on certain assumptions and analyses that MACOM’s management or AppliedMicro’s management believe are appropriate under the circumstances. However, these statements are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may differ materially from those expected, estimated or projected. Forward-looking statements speak only as of the date they are made, and neither MACOM nor AppliedMicro undertakes any obligation to publicly update or revise any of them in light of new information, future events or otherwise.

All subsequent forward-looking statements attributable to MACOM, AppliedMicro or any person acting on MACOM’s or AppliedMicro’s behalf are qualified by the cautionary statements in this section.

Factors that could have a material adverse effect on MACOM’s or AppliedMicro’s operations and future prospects or the consummation of the offer and the mergers, many of which are difficult to predict and beyond the control of MACOM or AppliedMicro, include, but are not limited to:

These risks and uncertainties, along with the risk factors discussed under “Risk Factors” in this document, should be considered in evaluating any forward-looking statements contained in this document.

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THE COMPANIES

MACOM

MACOM is a leading provider of high-performance analog semiconductor solutions that enable next-generation Internet applications, the cloud connected apps economy and the modern, networked battlefield across the radio frequency, microwave, millimeterwave and photonic spectrum. MACOM designs and manufactures differentiated, high-value products for customers who demand high performance, quality and reliability. MACOM offers a broad portfolio of over 4,500 standard and custom devices, which include integrated circuits, multi-chip modules, power pallets and transistors, diodes, amplifiers, switches and switch limiters, passive and active components and complete subsystems, across approximately 40 product lines serving over 6,500 end customers in three primary markets. MACOM’s semiconductor products are electronic components that our customers incorporate into their larger electronic systems, such as, point-to-point wireless backhaul radios, high density networks, active antenna arrays, radar, magnetic resonance imaging systems and unmanned aerial vehicles. MACOM’s primary markets are: Networks, which includes carrier and enterprise infrastructure, wired broadband and cellular backhaul, cellular infrastructure, photonic solutions, data centers and fiber optic applications; Aerospace and Defense, which includes military and commercial radar, radio frequency jammer, electronic countermeasure, and communication data link applications; and, Multi-market, which includes industrial, medical, test and measurement and scientific applications.

MACOM was incorporated in Delaware in March 2009 and became a public company in 2012. Its shares are traded on Nasdaq under the ticker symbol “MTSI.”

The address and telephone number of MACOM’s principal executive offices is 100 Chelmsford Street, Lowell, Massachusetts 01851, (978) 656-2500.

MACOM also maintains a website at https://www.macom.com/. MACOM’s website and the information contained therein or connected thereto shall not be deemed to be incorporated herein, and you should not rely on any such information in making an investment decision.

The Purchaser

The Purchaser is a Delaware corporation and a direct and wholly owned subsidiary of MACOM. The Purchaser was incorporated on November 17, 2016 for the purpose of making the offer and consummating the first merger. The Purchaser has engaged in no business activities to date and it has no material assets or liabilities of any kind, other than those incident to its formation and those incurred in connection with the merger agreement, the offer and the mergers.

The address and telephone number of the Purchaser’s principal executive offices is 100 Chelmsford Street, Lowell, Massachusetts 01851, (978) 656-2500.

Merger Sub

Merger Sub is a Delaware limited liability company and a direct and wholly owned subsidiary of MACOM. Merger Sub was formed on November 17, 2016 for the purpose of consummating the second merger and on December 28, 2016 underwent a name change from Montana Merger Sub II, LLC to MACOM Connectivity Solutions, LLC. Merger Sub has engaged in no business activities to date and it has no material assets or liabilities of any kind, other than those incident to its formation and those incurred in connection with the merger agreement and the mergers.

The address and telephone number of Merger Sub’s principal executive offices is 100 Chelmsford Street, Lowell, Massachusetts 01851, (978) 656-2500.

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AppliedMicro

AppliedMicro is a global leader in silicon solutions for next-generation cloud infrastructure and data centers, as well as connectivity products for edge, metro and long-haul communications equipment. AppliedMicro’s Computing products include the X-Gene family of server processors, each based on the ARMv8 64-bit ISA, which target mainstream cloud and data center infrastructure including hyperscale, telco, enterprise and high performance computing. As part of AppliedMicro’s current Computing business, AppliedMicro also offers embedded computing products which include the HeliX family of processors, based on the ARM 64-bit ISA, and PowerPC products, based on Power Architecture. AppliedMicro’s embedded Computing products are deployed in a variety of applications including networking and telecom, enterprise storage, data center and industrial applications. The Connectivity portion of AppliedMicro’s business provides high-speed, high-bandwidth, high-reliability communications products to network equipment manufacturers. They include the X-Weave family of products, designed to meet the needs of service providers and public cloud, private cloud, and enterprise data centers.

AppliedMicro was incorporated in California in 1979 and was reincorporated in Delaware in 1987. AppliedMicro became a publicly traded company in 1997. Its shares trade on the Nasdaq under the ticker symbol “AMCC.”

The address and telephone number of AppliedMicro’s principal executive offices is 4555 Great America Parkway, 6th Floor, Santa Clara, California 95054, (408) 542-8632.

AppliedMicro also maintains a website at https://www.apm.com/. AppliedMicro’s website and the information contained therein or connected thereto shall not be deemed to be incorporated herein, and you should not rely on any such information in making an investment decision.

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THE TRANSACTIONS

General

MACOM, through the Purchaser, which is a direct wholly owned subsidiary of MACOM, is offering to exchange the transaction consideration for each outstanding share of AppliedMicro common stock validly tendered in the offer and not properly withdrawn.

The transaction consideration consists of:

AppliedMicro stockholders will not receive any fractional shares of MACOM common stock in the offer or the first merger, and each AppliedMicro stockholder who otherwise would be entitled to receive a fraction of a share of MACOM common stock pursuant to the offer or the first merger will be paid an amount in cash (without interest) in lieu thereof, based on the MACOM trading price. See “Merger Agreement – Transaction Consideration.”

The purpose of the transactions is for MACOM to acquire control of, and ultimately the entire equity interest in, AppliedMicro. The offer is the first step in MACOM’s plan to acquire all of the outstanding shares of AppliedMicro common stock, and the first merger is the second step in such plan. Tendered shares of AppliedMicro common stock will be exchanged for the transaction consideration, and if the first merger is completed, any remaining shares of AppliedMicro common stock that were not tendered into the offer (other than certain dissenting, converted or cancelled shares, as described further in this document) will be converted into the right to receive the transaction consideration.

Immediately following the first merger and as the final step in MACOM’s plan to acquire all of the outstanding shares of AppliedMicro common stock, the first surviving company will merge with and into Merger Sub in the second merger.

Background of the Transactions

The AppliedMicro board of directors regularly and on an ongoing basis evaluates the strategic direction of AppliedMicro and its short-term and long-term business plans and objectives. In late 2014, in recognition of significant changes to AppliedMicro’s competitive landscape, including without limitation increased levels of consolidation among semiconductor and communications companies, as well as the need for AppliedMicro to make significant additional investments in new products and design process technologies, the AppliedMicro board of directors determined that AppliedMicro should explore its strategic alternatives.

In February 2015, AppliedMicro engaged Morgan Stanley & Co. LLC (“Morgan Stanley”) to provide financial advisory and placement agent services in connection with AppliedMicro’s efforts to conduct a private placement financing of AppliedMicro equity securities to one or more strategic investors in AppliedMicro or its ARM-based compute business, for the intended purpose of adding to AppliedMicro’s balance sheet and enabling increased product and market development activities.

In May 2015, the AppliedMicro board of directors, in accordance with AppliedMicro’s bylaws, established the strategy committee of the board (the “strategy committee”), consisting of directors Cesaratto, Shlapak, Williams and Zepf, to investigate, review, consider and, if deemed advisable, to make recommendations to the AppliedMicro board of directors with respect to one or more strategic alternatives intended to enhance stockholder value. All four members of the strategy committee are independent members of the AppliedMicro board of directors. Mr. Zepf is the managing principal of Kingdom Ridge Capital, which has been one of

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AppliedMicro’s largest stockholders since 2011. Strategic alternatives would include, but would not be limited to, a sale or purchase by AppliedMicro of one or more product lines, business units or engineering teams, an acquisition of AppliedMicro, an equity financing by AppliedMicro either by way of public or private offering, a debt financing of AppliedMicro, and/or one or more strategic partnerships. Over the course of the next several months, the strategy committee held meetings and investigated and evaluated various possible strategic alternatives, including, among others, the proposed private placement equity investment described above and other potential equity and debt financing alternatives, prior to the commencement of the activities leading up to the current transaction.

On January 21, 2016, at a telephonic meeting of the strategy committee, also attended by AppliedMicro management representatives, the strategy committee discussed expanding the focus of its evaluation of strategic alternatives to include the investigation of a potential merger or acquisition of AppliedMicro or of its ARM-based compute business, including what considerations should accompany such an analysis and what such a process would entail. The strategy committee members and management representatives discussed the value to AppliedMicro of engaging an experienced investment bank as financial advisor in connection with such investigation, and determined that at least three investment banks be interviewed in connection with making such engagement. Thereafter, representatives of Morgan Stanley joined the meeting and made a presentation to the strategy committee and management representatives on AppliedMicro’s strategic alternatives, as well as an overview of sales process considerations, the strategic landscape of the semiconductor industry, M&A timing and process considerations, Company financial analyses, and recommendations for next steps. Following their departure, the strategy committee members and management representatives discussed the Morgan Stanley presentation and identified two other qualified investment banks that would be requested to present to the management and, subject to clearing conflicts, the strategy committee.

In late January 2016, Dr. Gopi and director Zepf interviewed the second qualified investment banking firm candidate with respect to advising AppliedMicro on the proposed transaction, during which it was determined that such bank had material conflicts of interest as a result of its relationship with a key competitor of AppliedMicro and therefore could not be further considered for the engagement.

On February 2, 2016, the strategy committee held a meeting at which the representatives of the third investment banking firm candidate made a presentation to the strategy committee and management, which included an overview of the firm’s credentials, a semiconductor market update, including recent consolidation activity, an evaluation of AppliedMicro including financial analyses, an analysis of potential mergers and acquisitions partners, and related timing and process considerations.

Following the departure of the representatives of the third independent banking firm candidate, the strategy committee members reviewed and evaluated the presentations made by Morgan Stanley and the other banking firm, discussing the pros and cons of each in assisting AppliedMicro in connection with the proposed strategic transaction process. As part of this discussion, the strategy committee members considered various criteria and factors, including Morgan Stanley’s leadership position and experience in the semiconductor industry, its understanding of AppliedMicro’s business and previous advisory services provided to AppliedMicro, its relationships with potential business combination partners including the fact that Morgan Stanley’s representatives had informed AppliedMicro that it was not representing any of the potential business combination partners under discussion in connection with strategic transactions involving AppliedMicro or that would otherwise pose a conflict of interest, and its overall capabilities and strengths. After discussion, the strategy committee members determined that Morgan Stanley would be best qualified and able to serve as investment advisor to AppliedMicro and approved recommending the engagement of that firm to the full AppliedMicro board of directors.

On February 3, 2016, at a regular meeting of the AppliedMicro board of directors, Mr. Cesaratto updated the directors with respect to the matters discussed and decisions made at the recent meetings held by the strategy committee including, among other things, the basis of its decision to recommend that AppliedMicro commence a non-public process aimed at finding an acquirer of its ARM-based compute business or product line or of

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AppliedMicro as a whole; its deliberations whether to engage Morgan Stanley as outside financial advisor in connection with such process; and its directive to Company management to initiate all appropriate steps consistent with implementing such process on a confidential basis, while continuing to fully execute on AppliedMicro’s existing annual operating plan.

Thereafter, following additional discussion and evaluation, the AppliedMicro board of directors approved each of the strategy committee’s recommendations and directives and agreed to vote upon engaging Morgan Stanley later in the meeting after hearing a presentation by the firm. The directors then discussed with AppliedMicro management and representatives of Morgan Stanley the strategic alternatives explored to date, an overview of sales process considerations, the strategic landscape, potential timing and process, Morgan Stanley’s preliminary views on valuation, and potential next steps. Following the departure of the Morgan Stanley representatives, the AppliedMicro board of directors discussed whether to engage Morgan Stanley as financial advisor to AppliedMicro in connection with the strategic transaction process. After discussion, the board of directors agreed to engage Morgan Stanley as financial advisor to AppliedMicro, and authorized and directed AppliedMicro management to negotiate an appropriate engagement letter with the firm.

On February 12, 2016, the strategy committee held a telephonic meeting to review and evaluate the proposed Morgan Stanley engagement letter and related indemnity agreement. After discussion of the material terms and conditions proposed, the strategy committee directed the AppliedMicro management representatives attending the meeting to finalize negotiation of the remaining terms and thereupon execute and deliver the agreements.

On February 24, 2016, AppliedMicro signed Morgan Stanley’s engagement letter and indemnity agreement to retain Morgan Stanley as AppliedMicro’s financial advisor in connection with the strategic transaction process.

Between March 9 and March 16, 2016, at the direction of the strategy committee, representatives of Morgan Stanley contacted representatives of six entities regarding their potential interest in a strategic transaction.

Between March 22 and April 26, 2016, at the direction of the strategy committee, representatives of AppliedMicro management and of Morgan Stanley contacted an additional nine entities to discuss their potential interest in a strategic transaction.

On April 26, 2016, the strategy committee met and received updates on the strategic process from representatives of AppliedMicro management and of Morgan Stanley, including that management presentations had been made to four entities, and that there was an upcoming meeting scheduled with one entity. The strategy committee was also informed that six of the 17 entities contacted to date had said they were not interested in pursuing discussions. The other entities contacted had expressed interest in meeting or a presentation, had not replied, or said they might have interest at a later date. The strategy committee asked AppliedMicro management and the Morgan Stanley representatives to follow up with those entities, and to re-engage with potential consolidation partners in China that previously had been contacted by or on behalf of AppliedMicro with respect to a potential investment transaction. Ultimately, in connection with the process of exploring its strategic alternatives, representatives of AppliedMicro and/or Morgan Stanley contacted 30 entities, met with 15 entities, and received indications of interest from five entities.

On May 3, 2016, the strategy committee met to discuss and evaluate the status of these outreach efforts. The strategy committee noted the results of the outreach efforts to date, and directed the AppliedMicro management attendees to take steps to expand AppliedMicro’s outreach to include seeking a consolidation partner for its connectivity business.

On May 4, 2016, the AppliedMicro board of directors held a meeting at which representatives of AppliedMicro management and of Morgan Stanley reported on activities undertaken to date in the current strategic process, and discussed next steps and additional considerations regarding strategic alternatives. The Morgan Stanley representatives also provided an update on their preliminary views on valuation.

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On May 19, 2016, the strategy committee met to discuss management’s efforts to market the compute and connectivity businesses separately, and to address and resolve customer and timing concerns that could be expected to arise if the two businesses were separated.

On May 26, 2016, director Cesaratto, representatives of AppliedMicro management and Company A met in Palo Alto, California to discuss Company A’s potential interest in a strategic transaction.

On June 3, 2016, the strategy committee again met to review with AppliedMicro management, the strategic process, discuss AppliedMicro’s operating progress and establish execution goals and directives for AppliedMicro management. The strategy committee also discussed additional outreach efforts to potential acquirers based in China, including the meeting with Company A. The strategy committee also discussed the interest in the connectivity business recently expressed by Company C.

On June 6, 2016, representatives of Company B met with AppliedMicro management at AppliedMicro’s Santa Clara offices to discuss Company B’s interest in a potential strategic investment.

On June 15, 2016, representatives of Morgan Stanley and the financial advisor to Company C met in Menlo Park to discuss Company C’s interest in a potential strategic transaction.

On June 20, 2016, the strategy committee met and received an update from representatives of AppliedMicro management and of Morgan Stanley on the strategic process. The strategy committee discussed potential Committee on Foreign Investment in the United States concerns related to China-based transactions. The strategy committee then discussed Company C’s interest in the connectivity business, and directed AppliedMicro management and the Morgan Stanley representatives to pursue further discussions with Company C. The Morgan Stanley representatives also discussed reaching out to seven additional entities, including MACOM and Company D, each of whom could potentially be interested in a transaction involving either the acquisition of AppliedMicro as a whole or just the connectivity business. The Morgan Stanley representatives noted that, consistent with the directions from the strategy committee, they were now also approaching potential financial sponsors in the U.S. and China. In this regard, they also discussed the interest from Company B, a U.S. private equity firm, in sponsoring a potential PIPE transaction. The strategy committee directed management and the Morgan Stanley representatives to pursue further discussions with the entities discussed at the meeting.

On June 27, 2016, representatives of Morgan Stanley met with Company C and the financial advisor to Company C, at Morgan Stanley’s Menlo Park offices to discuss Company C’s possible interest in a strategic transaction.

On June 28, 2016, representatives of AppliedMicro and Morgan Stanley held a call to discuss Company B’s interest in a potential PIPE transaction and conducting due diligence. On July 7, 2016, representatives of AppliedMicro, Morgan Stanley and Company B held a telephonic discussion regarding financial due diligence.

On July 7, 2016, the strategy committee met and received an update regarding a potential sale of the connectivity business, including due diligence meetings held with Company C (which had also expressed some interest in acquiring AppliedMicro as a whole and subsequently disposing of the compute business), and Company B’s continuing interest in a potential PIPE transaction. The strategy committee directed AppliedMicro management to continue to engage with Company C and Company B, pursue due diligence discussions with China-based potential investors and acquirers, and commence a broader outreach to additional entities.

Between July 13, 2016 and July 22, 2016, consistent with the directions from the strategy committee, representatives of Morgan Stanley contacted five more entities, including Company D, to discuss each party’s possible interest in a strategic transaction. On or about July 18, 2016, a representative from Morgan Stanley contacted John Croteau, MACOM’s president and chief executive officer, to ask whether MACOM had any interest in pursuing a potential acquisition of AppliedMicro.

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On July 25, 2016, representatives of AppliedMicro, Morgan Stanley and Company B held follow-up discussions by telephone regarding the connectivity business.

On July 27, 2016, MACOM and AppliedMicro executed a non-disclosure agreement following negotiations with their respective attorneys.

On July 29, 2016, representatives of AppliedMicro, Morgan Stanley and Company A met by video conference, at which time AppliedMicro made a management presentation to Company A.

On August 2, 2016, the strategy committee held a regular meeting, also attended by the other members of the AppliedMicro board of directors, during which the strategy committee and representatives of AppliedMicro management and Morgan Stanley discussed various possible alternatives, including a sale of AppliedMicro as a whole to potentially interested parties (including Company A, Company C and MACOM), a sale of the connectivity business to potentially interested parties (including Company C, Company D and MACOM), and a PIPE transaction to be led by Company B.

On August 5, 2016, representatives of AppliedMicro, accompanied by representatives of Morgan Stanley, provided management presentations to two entities, including Company D, at AppliedMicro’s Santa Clara offices.

On August 11, 2016, representatives of AppliedMicro, Morgan Stanley, Company C and the financial advisor to Company C held a follow-up meeting at AppliedMicro’s Santa Clara offices to further discuss the possibility of a strategic transaction.

On August 15, 2016, representatives of Morgan Stanley, Company D and the financial advisor to Company D met at AppliedMicro’s Santa Clara offices to discuss Company D’s interest in a strategic transaction.

On August 18, 2016, representatives of AppliedMicro, Morgan Stanley and MACOM, including Dr. Gopi and Preetinder Virk, MACOM’s Senior Vice President and General Manager, Carrier Networks, met at AppliedMicro’s Santa Clara offices, at which time AppliedMicro made a management presentation to MACOM.

On August 22, 2016, the strategy committee held a telephonic meeting during which the strategy committee and representatives of AppliedMicro management and of Morgan Stanley discussed the status of discussions with potential acquirers of AppliedMicro as a whole (including Company A and MACOM) and potential acquirers of the connectivity business (including Company D, MACOM and Company C), and discussed Company B as a potential lead investor for a PIPE transaction. The AppliedMicro management and Morgan Stanley representatives also reported on the other entities that had been recently contacted at the direction of the strategy committee and that had informed them that they did not have any interest in pursuing strategic or financing discussions with AppliedMicro.

On August 30, 2016, at the direction of the strategy committee, Morgan Stanley sent letters describing a proposed process for submitting indications of interest in a strategic transaction with AppliedMicro to five entities, including Company A, Company D, and MACOM, which letters provided for a September 13, 2016 deadline for submitting written indications of interest.

On August 30, 2016, Company B provided AppliedMicro, by email to representatives of Morgan Stanley, a draft term sheet for a proposed PIPE transaction involving the issuance of up to $300 million of senior secured, fully participating, redeemable, convertible preferred stock (the “PIPE proposal”). AppliedMicro and representatives of Morgan Stanley held a telephonic discussion of the draft term sheet on September 1, 2016.

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On September 1, 2016, representatives of AppliedMicro, Morgan Stanley and Company A held a due diligence call regarding the compute business.

On September 2, 2016, Company C submitted a written indication of interest for the purchase of the connectivity business for $300 million on a cash-free, debt-free basis (the “Company C Proposal”).

On September 6, 2016, the AppliedMicro board of directors met with management. Initially, the board of directors reviewed Company B’s PIPE proposal. The board of directors received advice that the proposal included material terms that would not typically be considered market standard for a transaction of this nature or that were otherwise onerous to AppliedMicro and its stockholders. The AppliedMicro board of directors considered the potentially negative impact of those terms on AppliedMicro and its stockholders. The AppliedMicro board of directors decided not to pursue further discussions of the PIPE proposal.

The AppliedMicro board of directors also discussed and evaluated the Company C Proposal, with input from AppliedMicro management. The AppliedMicro board of directors concluded that the purchase price set forth in the Company C Proposal was significantly below the minimum enterprise value attributable to the connectivity business, and decided not to accept its proposal.

AppliedMicro’s management then updated the AppliedMicro board of directors on the responses received from each entity that the board of directors had authorized them to contact, the likely further response expected from each, and which of AppliedMicro’s strategic alternatives were expected to be addressed by each such entity. The AppliedMicro directors discussed whether to invite additional companies to participate in the process.

The AppliedMicro board of directors then discussed with management and counsel the need to obtain from Morgan Stanley, as AppliedMicro’s outside independent financial advisor, further disclosure of Morgan Stanley’s relationships with the process participants who had submitted or were expected to submit indications of interest or proposals. The AppliedMicro board of directors directed management to request the additional disclosure, which it did by means of a letter to Morgan Stanley dated September 6, 2016.

On September 7, 2016, representatives of AppliedMicro (including Dr. Gopi), Morgan Stanley, MACOM (including Mr. Croteau) and Evercore, financial advisor to MACOM, met in Tyngsboro, Massachusetts for a management presentation by AppliedMicro.

On September 12, 2016, Company A sent AppliedMicro, by email to representatives of Morgan Stanley, a written indication of interest regarding a proposed purchase of AppliedMicro as a whole.

On September 13, 2016, MACOM and Company D each submitted to AppliedMicro a written indication of interest, with MACOM submitting a written indication of interest for AppliedMicro as a whole, and Company D submitting a written indication of interest to purchase the connectivity business only.

On September 14, 2016, the strategy committee of the AppliedMicro board of directors met by telephone and received an update from representatives of AppliedMicro management and Morgan Stanley on the initial indications of interest received. The Morgan Stanley representatives summarized the five proposals received to date, and noted they were waiting for responses from two other potentially interested parties. Of the five proposals: two proposals were for acquisitions of AppliedMicro as a whole, one at a proposed purchase price of $645 million (MACOM) and one at a proposed purchase price of $670 million (Company A); two were for the connectivity business, one at a proposed purchase price of $300 million (Company C), and one at a proposed purchase price of between $475 to $525 million (Company D); and one was for the $300 million PIPE proposal (Company B). The MACOM proposal was to buy AppliedMicro as a whole for a mixture of cash and stock, consisting of $2.67 per share in cash and approximately $4.43 per share in MACOM common stock, for a total price of $7.10 per share of AppliedMicro common stock, with the exchange ratio to be fixed at signing, and the Morgan Stanley representatives noted that this constituted essentially an at-market offer (no premium) and was

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not subject to a financing contingency. The MACOM proposal also requested a 45-day exclusive negotiating period. The proposal by Company D was to acquire the connectivity business in a debt-free asset purchase transaction for an all cash payment of between $475 million to $525 million, with the ultimate price to be determined after conducting due diligence. The Company D proposal was not subject to a financing contingency and would allow AppliedMicro to retain all of its cash and all assets other than the connectivity business. The proposal by Company A was an all-cash offer for AppliedMicro as a whole at $7.38 per share of AppliedMicro common stock for a total price of $670 million. However, the Company A proposal was subject to a financing contingency, the funding source had not been identified, Company A had not conducted significant due diligence, and the Company A proposal included unusual and unacceptable terms such as a requirement for indemnity of the buyer by AppliedMicro stockholders. The strategy committee and representatives of AppliedMicro management and of Morgan Stanley discussed the relative value and structure of the proposals, including the relative merits and advantages and disadvantages of a sale of AppliedMicro as a whole, a sale of the connectivity business only, and the PIPE proposal.

After extensive discussion, the strategy committee directed the AppliedMicro management and Morgan Stanley representatives to ask Company A to submit a separate indication of interest to acquire the compute business only, which might enable AppliedMicro to combine such an offer with a separate sale of the connectivity business to Company D or another bidder. In addition, the strategy committee believed that Company A might have an easier time obtaining financing for a smaller offer. The strategy committee directed the AppliedMicro management and Morgan Stanley representatives to ask Company A to otherwise improve the price and certainty of its proposal substantially. The strategy committee also directed the AppliedMicro management and Morgan Stanley representatives to ask MACOM and Company D to submit improved purchase price offers. The strategy committee reiterated the conclusion of the AppliedMicro board of directors that Company B’s Pipe proposal was not attractive, nor was Company C’s proposal to purchase the connectivity business for $300 million cash.

Between September 20 and 26, 2016, representatives of Morgan Stanley had a number of conversations with representatives of Evercore and MACOM concerning the MACOM indication of interest. The Morgan Stanley representatives communicated AppliedMicro’s view that the price offered by MACOM was inadequate. The Evercore representatives informed the Morgan Stanley representatives that MACOM would be willing to increase the price to at least a 10% premium over the AppliedMicro common stock current closing price, if AppliedMicro would permit MACOM to commence limited due diligence and the results of the diligence were satisfactory to MACOM. The Morgan Stanley representatives communicated this proposal to AppliedMicro’s management, which agreed to schedule preliminary due diligence meetings with MACOM.

On September 20, 2016, the AppliedMicro board of directors met to review and evaluate the potential feasibility of AppliedMicro selling the connectivity business and continuing to operate the compute business as a standalone public company (“RemainCo”) until such time as AppliedMicro was able to consolidate the compute business with another company or otherwise unlock additional value for the benefit of AppliedMicro’s stockholders. Management then reviewed in detail the potential viability of pursuing a RemainCo option, including an analysis of the context and objectives for unlocking additional value in the compute business. Management also presented preliminary pro forma financial information relating to a RemainCo enterprise.

On September 28, 2016, the AppliedMicro board of directors met to receive an update on indications of interest received and additional outreach conducted, and to review and evaluate additional financial and other information relating to the RemainCo option. The AppliedMicro board of directors instructed management to continue (either directly or in conjunction with or through Morgan Stanley) reaching out to potential purchasers of the compute business on a stand-alone basis, as well as any other likely participants in the strategic process and to encourage Company D and Company A to continue to engage in the process. Management also provided additional information regarding the RemainCo option. The AppliedMicro board of directors discussed the potential risks and benefits to AppliedMicro and its stockholders of pursuing a RemainCo option, required operating capital and cash reserves needed for the enterprise, and, in the event a consolidation partner or other

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growth or monetization strategy could not be found for the compute business, the costs associated with ceasing business operations. After discussion, the AppliedMicro board of directors decided that it was not supportive of proceeding with the RemainCo option at that time in light of the risks and uncertainties discussed.

On September 28, 2016, representatives of Morgan Stanley contacted two additional entities that had not submitted indications of interest; both declined to engage further in the process. Also on September 28, 2016, Company D informed representatives of Morgan Stanley via telephone that it was only willing to explore a possible acquisition of AppliedMicro’s connectivity business if AppliedMicro could address Company D’s reservations about AppliedMicro’s ability and willingness to complete a sale of its connectivity business without first finding a buyer for its compute business. Company D reiterated its lack of interest in making a bid for AppliedMicro as a whole, and its unwillingness to further engage with AppliedMicro, unless and until AppliedMicro could assure Company D that it had a buyer for its compute business.

On September 30, 2016, AppliedMicro granted MACOM and its advisors access to its electronic data room containing legal, contractual and other information regarding AppliedMicro. From September 30 through November 21, 2016, MACOM and its advisors engaged in due diligence review of AppliedMicro.

From October 4 to October 6, 2016, representatives of AppliedMicro, Morgan Stanley, MACOM, Evercore, financial advisor to MACOM, and AppliedMicro and MACOM legal counsel conducted due diligence and reverse due diligence review sessions at Pillsbury’s Palo Alto offices.

On October 7, 2016, the AppliedMicro board of directors met and initially reviewed and evaluated the current status of the indications of interest received from MACOM, Company D and Company A. A representative of Pillsbury attended the meeting. Members of AppliedMicro management updated the AppliedMicro board of directors with respect to discussions with each of MACOM, Company D and Company A. The AppliedMicro board of directors and management also discussed the scope of AppliedMicro’s reverse due diligence review of MACOM, given that MACOM’s proposed purchase price consideration included significant MACOM equity. The AppliedMicro board of directors then discussed the status of Company D’s indication of interest to acquire the connectivity business, including Company D’s reservations about AppliedMicro’s ability and willingness to complete a sale of its connectivity business without first finding a buyer for its compute business, its lack of interest in making a bid for AppliedMicro as a whole, and its unwillingness to further engage with AppliedMicro unless and until AppliedMicro could assure Company D that it had a buyer for its compute business. Consequently, the AppliedMicro board of directors asked management to instruct Morgan Stanley to keep Company D informed of AppliedMicro’s efforts to find a buyer for the compute business and to encourage Company D to further engage in due diligence. The AppliedMicro directors discussed with management the likely value of a RemainCo entity to determine whether such value, when added to the amount being offered for the connectivity business by Company D, would likely be higher than the other strategic alternatives potentially available to AppliedMicro, including the MACOM proposal and Company A proposals to purchase AppliedMicro as a whole, or the alternative of AppliedMicro remaining as an independent company with both the compute and connectivity businesses.

Management then reviewed with the AppliedMicro board of directors further information provided by Morgan Stanley in response to AppliedMicro’s September 6, 2016 letter related to its relationships with the companies participating in the process, including that the amount of fees received by Morgan Stanley for financial services to MACOM during the last two years was between $2 million to $3 million, that Morgan Stanley was a lender to MACOM, and that one of the senior Morgan Stanley AppliedMicro transaction team members who had served as a member of the MACOM board of directors starting in March 2013 and ending in September 2014 still held 2,533 shares of MACOM common stock received for such service and, along with another senior member of the Morgan Stanley AppliedMicro transaction team, is on Morgan Stanley’s coverage team for MACOM. The board of directors evaluated and was advised by counsel with respect to the disclosures. The AppliedMicro board of directors decided to further discuss these matters with Morgan Stanley’s representatives. It also considered the potential costs and benefits of retaining a second independent financial advisor to provide a valuation opinion and its view as to the conduct of the strategic transaction process as whole but took no action at that time.

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On October 14, 2016, MACOM submitted a revised non-binding proposal and proposed exclusivity agreement to AppliedMicro via email to representatives of Morgan Stanley. The revised non-binding proposal proposed that MACOM would acquire all of AppliedMicro’s equity for a premium of 10% over the closing price the day before signing a definitive agreement

On October 17, 2016, Company A submitted a revised proposal to acquire the compute business for $100 million in cash paid at closing, plus up to $140 million payable over three years subject to attainment of annual performance milestones, which was subject to a number of conditions.

On October 17, 2016, the AppliedMicro board of directors met and discussed the current status of outreach activities and an updated management presentation on the feasibility and viability of the RemainCo option. The directors then reviewed the revised MACOM indication of interest. Had a definitive agreement been signed on October 14, 2016, on the basis of such proposal the purchase price would have been $6.81 per share, of which $3.29 per share would be paid in cash and approximately $3.52 in MACOM common stock. The AppliedMicro board of directors noted that this price was lower than the $7.10 per share price set forth in MACOM’s previous indication of interest and on that basis instructed management and the Morgan Stanley representatives to convey to MACOM that its offer was unlikely to be acceptable unless it was increased. The AppliedMicro board of directors further noted that even though the $6.81 price per share was unacceptable, the actual price to be paid for AppliedMicro was unpredictable since it was not fixed but rather was based on the closing price of AppliedMicro stock on a trading date at least 30 calendar days in the future. The AppliedMicro board of directors then discussed other methods for calculating per share acquisition price other than setting it based on the closing price on a future date (a “spot price”). Among the approaches considered was calculating such price using a formula based on an average of the trading prices of AppliedMicro’s stock on a daily basis over an extended period of time prior to the signing of a definitive agreement. It was noted that such an approach would reduce the impact of one day or short term fluctuation in AppliedMicro’s stock price, more accurately reflect the market’s perception of the value of AppliedMicro when compared to the use of a spot price and would be less susceptible to manipulation. The AppliedMicro board of directors, and its advisors, then discussed various formulas used for calculating premiums in acquisition transactions including the use of a 10, 30 and 90 trading day volume weighted average price (“VWAP”), and the pros and cons of each, before settling on the latter as a basis for its counteroffer. Morgan Stanley was authorized to indicate to MACOM that AppliedMicro was willing to proceed with negotiations on the basis of a per share acquisition price equal to a 10% premium to AppliedMicro’s 90-day VWAP calculated as of the last trading day immediately prior to the signing of a definitive agreement.

The AppliedMicro directors then reviewed Company A’s revised indication of interest to acquire the compute business, noting that it was unclear from the written offer whether AppliedMicro would need to provide additional capital to fund the working capital requirements of the compute business, which would in effect substantially reduce the proposed purchase price, and further noting that Company A had conducted limited due diligence to date and had conditioned its offer on the results of further diligence. The AppliedMicro board of directors discussed the merits of the Company A proposal with the AppliedMicro management, Morgan Stanley and Pillsbury representatives, relative to the other proposals received, in light of its potential likelihood of completion, noting, among other matters: Company A’s financing condition, which raised uncertainty as to ability to complete the transaction; the relatively longer timeframe required to complete M&A transactions with Chinese acquirers due to regulatory and other issues; Company A’s relative lack of due diligence performed to date, the probability that the revenue goals set out in the earn-out portion of the proposal could be achieved, and the possible need to fund working capital requirements. The AppliedMicro board of directors directed management to continue to engage with Company A to discuss and potentially address the issues described above.

On October 19, 2016, management representatives had a telephonic meeting with Company A, during which Company A informed AppliedMicro that, notwithstanding the terms of Company A’s October 17 indication of interest, Company A would reduce the total cash purchase price for the compute business dollar-for-dollar by the amount of cash the business would need to operate until profitability; Company A expected the full management

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team for the compute business to come from AppliedMicro, with Company A serving primarily as an outside investor; Company A did not intend to engage a financial advisor and would engage legal counsel only later in the process; Company A would require additional strategic investors, as yet not identified, to provide financing for the acquisition; Company A would require detailed pro forma financial statements of the compute business as a standalone company; and Company A anticipated the time frame required to negotiate a definitive agreement would remain 60 days.

On October 19, 2016, representatives of Evercore and Morgan Stanley discussed MACOM’s indication of interest. On behalf of AppliedMicro, Morgan Stanley discussed AppliedMicro’s willingness to accept a per share acquisition price equal to a 10% premium if calculated based on a 90-day VWAP formula.

On October 21, 2016, Evercore, on behalf of MACOM, communicated MACOM’s counterproposal of $7.20 per share (comprised of both cash and shares of MACOM common stock) to Morgan Stanley.

On October 21, 2016, the strategy committee held a telephonic meeting, also attended by representatives of Morgan Stanley and AppliedMicro management, to discuss MACOM’s revised proposal to acquire AppliedMicro. The Morgan Stanley representatives presented the strategy committee with a summary of the key economic terms of MACOM’s prior indication of interest, as well as its new proposal, and its preliminary views regarding the valuation of the MACOM common stock. The Morgan Stanley representatives were requested to prepare for consideration by the AppliedMicro board of directors an additional analysis regarding the potential use of a price collar with respect to MACOM’s purchase price proposal. The strategy committee members also reviewed the status of the other indications of interest previously received by AppliedMicro and, with respect to a potential sale of the connectivity business, a RemainCo valuation analysis.

On October 22, 2016, the AppliedMicro board of directors met and received an update on the strategy committee meeting held on October 21, 2016, including the current revised non-binding Letter of Intent (“LOI”) and exclusivity agreement from MACOM. A representative of management and a representative of Pillsbury then provided a summary of the material terms in the proposed LOI and exclusivity agreement from MACOM, including suggested modifications. The Morgan Stanley representatives then discussed the use and advisability of requesting a price collar in light of the fact that under the MACOM proposal MACOM common stock would represent a significant portion of the total proposed purchase price, noting that whether a collar would benefit or be detrimental to AppliedMicro stockholders would depend on the type of collar and the movement of MACOM’s stock price between announcement of the transaction and closing. The AppliedMicro board of directors also considered the results of reverse due diligence performed to date and publicly available information (including the historical MACOM price performance information presented), Morgan Stanley’s preliminary views regarding the valuation of the MACOM common stock, the likelihood of success and cost in negotiating a collar, and that stock price performance is inherently unpredictable.

The AppliedMicro directors and management then discussed with Morgan Stanley its responses regarding its relationships with MACOM and the other participants in the process.

The AppliedMicro directors and management and the Morgan Stanley representatives then discussed the current MACOM proposal, including the value offered by MACOM relative to the other strategic alternatives available to AppliedMicro, including proceeding as a standalone company. The AppliedMicro board of directors decided that the MACOM proposal under consideration did not adequately value AppliedMicro and was not in the best interests of AppliedMicro stockholders. The AppliedMicro board of directors approved proposing a purchase price counter offer based on its earlier offer of a 10% premium valuing AppliedMicro stock for purposes of such valuation using a 90-day VWAP formula. Applying such formula generated a price per share, assuming no change in the results of the application of such formulas due to future stock price changes, of approximately $7.50 per share of AppliedMicro common stock (comprised of both cash and shares of MACOM common stock). The counteroffer did not include a price collar. Morgan Stanley was directed to deliver such counter offer to the Evercore representatives on AppliedMicro’s behalf.

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On October 22, 2016, Morgan Stanley, on behalf of AppliedMicro, counter-proposed a transaction in which MACOM would acquire all of the outstanding shares of AppliedMicro for approximately $7.50 per share (comprised of both cash and new shares of MACOM common stock), based on a 10% premium to the current 90-day VWAP of AppliedMicro stock.

On October 23, 2016, Evercore, on behalf of MACOM, orally made a counteroffer on the terms described below. On the same day, the AppliedMicro board of directors held a telephonic meeting to review and evaluate MACOM’s counterproposal and to discuss financial advisor independence matters. In its revised proposal, MACOM proposed a strategic combination that would involve a payment of $300 million in cash and the remainder in stock. The aggregate purchase price would reflect a 10% premium over AppliedMicro’s valuation as calculated using the VWAP of AppliedMicro’s outstanding stock for the 90 days preceding the date of the signing of a definitive agreement with respect to the strategic combination, with the exchange ratio of MACOM common stock to be issued in the transaction calculated in the same manner using the 90-day VWAP for MACOM’s stock. Applying the exchange ratio to MACOM’s stock price on October 21 (the last trading day preceding the Board meeting) would have generated an implied price per share of AppliedMicro common stock of approximately $7.43 per AppliedMicro share, with $3.25 paid in cash and approximately $4.18 in shares of MACOM common stock. The terms of the exclusivity agreement and the LOI as proposed by MACOM were otherwise unchanged, with the exception that MACOM (i) requested the ability to contact certain customers prior to executing the definitive agreement and (ii) had asked for access to all proposals regarding the sale of AppliedMicro’s compute business received by AppliedMicro.

The Morgan Stanley representatives informed the AppliedMicro board of directors that, absent a change in circumstance, they believed that the revised proposal represented MACOM’s last and best offer on price. It was noted that a potential change of circumstances might result from movements in the stock price of MACOM or AppliedMicro prior to signing a definitive agreement. The AppliedMicro board of directors discussed the revised MACOM proposal, including the potential impact on the return to AppliedMicro’s stockholders of changes in AppliedMicro and MACOM’s stock value prior to the signing of the definitive agreement and from the signing of the definitive agreement to the closing.

During the meeting, in a closed session of the AppliedMicro board of directors, a representative of Pillsbury discussed with the board of directors Morgan Stanley’s response to AppliedMicro’s request for additional details regarding the financial services that Morgan Stanley had provided to MACOM, including the fact that Morgan Stanley had served as an arranger and bookrunner in connection with a $250 million incremental term loan to MACOM in August 2016. A discussion followed, after which the AppliedMicro board of directors again discussed whether to retain a second independent financial advisor to review and evaluate the strategic process overall and deliver a second fairness opinion. Upon the conclusion of this discussion, taking into account the information received and considered at this and its prior meeting, the AppliedMicro board of directors concluded that it did not need the services of a second independent advisor at that time.

The Morgan Stanley representatives then returned to the meeting and responded to further questions regarding their previous work for MACOM. Morgan Stanley then presented a written analysis of the impact on the purchase price of stock price volatility and stock price changes over time in light of the 90-day VWAP formula.

The AppliedMicro board of directors again discussed the other strategic alternatives available to AppliedMicro, including the proposal received from Company A to acquire AppliedMicro as a whole, proposals received from Company D and Company A (individually or in combination), continuing the process in order to try to attract additional interest in AppliedMicro or its compute and connectivity businesses from other parties and remaining as a standalone company (either in conjunction with a sale of its connectivity or compute businesses or without having completed either transaction). The AppliedMicro directors also discussed in detail the merits of the MACOM revised proposal. The AppliedMicro board of directors concluded that, relative to the Company D indication of interest in acquiring the connectivity business (whether in combination with the Company A transaction with respect to the compute business or otherwise) and the Company A indications

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of interest to acquire AppliedMicro as a whole or the compute business, the MACOM proposal appeared to offer the best strategic alternative available to AppliedMicro and offered its stockholders, on a risk adjusted basis, the highest return. It was noted that AppliedMicro had engaged in a thorough marketing process and that it seemed unlikely that extending that process and either reaching out to additional parties or re-contacting parties who had been previously contacted would result in AppliedMicro’s receipt of proposals that offered a higher value than those received to date. It was also noted that a definitive agreement would provide for a fiduciary out that would allow other parties in the future, subject to certain conditions, to make an offer to acquire AppliedMicro and the AppliedMicro board of directors to consider such offer. The relative benefits of the MACOM offer as compared to proceeding on a standalone basis, on a risk-adjusted basis were also discussed. A representative of Pillsbury discussed with the AppliedMicro board of directors its fiduciary duties.

After discussion, the AppliedMicro board of directors approved proceeding with negotiations on the LOI and exclusivity agreement based on the price formula proposed by MACOM. AppliedMicro management, in conjunction with representatives of Morgan Stanley, was instructed to pursue the various suggestions considered by the AppliedMicro board of directors with respect to modifications of the LOI and authorized to negotiate an exclusivity agreement with MACOM, subject to the prior approval of the strategy committee or the AppliedMicro board of directors.

On October 25, 2016, Evercore submitted to AppliedMicro by email to representatives of Morgan Stanley, a revised LOI and exclusivity agreement from MACOM, requesting a 30-day exclusive negotiating period, and indicated that this constituted its final proposal to acquire AppliedMicro.

Between October 25 and October 28, 2016, representatives of AppliedMicro and MACOM continued to negotiate the terms of the LOI and an exclusivity agreement.

On October 28, 2016, the AppliedMicro board of directors met to review the status of negotiations with MACOM and to consider whether to approve the revised LOI and exclusivity agreement. The exclusivity agreement provided MACOM with the exclusive right to negotiate a potential transaction with AppliedMicro until November 15, 2016. The exclusivity agreement also contained an automatic 14-day extension of the exclusivity period provided that AppliedMicro had not provided written notice of termination of negotiations with MACOM. Representatives of AppliedMicro management, Pillsbury and Morgan Stanley discussed the status of the parties’ negotiation of the remaining open issues in the LOI, including: MACOM’s preliminary indication of a tax-free structure, concessions regarding due diligence customer calls and MACOM’s intention to provide at closing equity arrangements to AppliedMicro’s employees that were substantially comparable to existing arrangements, including those providing for acceleration. The AppliedMicro board of directors discussed the need to retain employees in the event the proposed transaction with MACOM failed to close; the importance of negotiating reasonable employee retention and compensation arrangements in the definitive agreement and the need for AppliedMicro to conduct further reverse due diligence in light of the equity portion of the proposed transaction. The AppliedMicro board of directors then discussed the remaining open issues in the exclusivity agreement. The AppliedMicro board of directors also discussed the anticipated timeframe and process by which additional due diligence would be conducted by both MACOM and AppliedMicro, and by which a proposed definitive agreement between the parties would be negotiated, drafted and signed. The AppliedMicro board of directors again reviewed with representatives of Morgan Stanley and Pillsbury the strategic alternatives available to the AppliedMicro board of directors and the status of each alternative. After the conclusion of this discussion, the AppliedMicro board of directors unanimously approved the terms and conditions of the proposed LOI and exclusivity agreement and directed Dr. Gopi to finalize and execute them.

On October 28, 2016, AppliedMicro and MACOM executed the LOI and exclusivity agreement.

On November 1, 2016, the AppliedMicro board of directors held a meeting at AppliedMicro’s Santa Clara, California headquarters offices, also attended by representatives of AppliedMicro management, Morgan Stanley and Pillsbury, to further discuss the LOI’s purchase price dynamics relating to potential changes in the share

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trading prices of AppliedMicro and the MACOM common stock prior to signing a definitive agreement. Among other things, Morgan Stanley reviewed with the directors the last 12 months stock price performance of AppliedMicro and MACOM, the parties’ historical exchange ratio, an economic summary of the LOI proposal at current share prices and as projected assuming a November 15, 2016 definitive agreement signing date, and illustrative value sensitivity and deal parameter sensitivity analyses, as well as a review of selected precedent lower-than-average premium M&A transactions. The AppliedMicro board of directors also discussed the status of the indications of interest previously submitted by other potential bidders and evaluated potential backup strategies in the event the LOI transaction did not reach completion. The AppliedMicro board of directors also discussed the anticipated timing of receipt from MACOM’s counsel of the first draft merger agreement, as well as certain open issues likely to be present in that document and requiring further negotiation.

On November 2, 2016, MACOM’s legal counsel, Ropes & Gray LLP (“Ropes”) sent the initial draft of the merger agreement for the transaction to representatives of Pillsbury.

On November 3, 2016, tax, environmental, export controls and compliance, and technology and engineering due diligence meetings took place between representatives of MACOM and AppliedMicro management.

On November 4, 2016, the AppliedMicro board of directors held a meeting to discuss the proposed transaction with MACOM. The AppliedMicro board of directors discussed the initial draft of the merger agreement, noting, among other things, that the draft did not reflect a tax-free structure, and was silent with respect to employee equity assumption. The AppliedMicro board of directors stressed to AppliedMicro management that a tax-free structure would be an important consideration for many of the AppliedMicro stockholders. It was noted that since the LOI with MACOM had been executed, AppliedMicro’s market capitalization had increased, while the price of MACOM’s common stock had declined. Dr. Gopi said that the increase in the AppliedMicro common stock price had substantially reduced the valuation premium represented by the offer described in the LOI, and the AppliedMicro board of directors directed AppliedMicro management to continue to monitor developments in this regard and work with the Morgan Stanley representatives to seek to negotiate a price increase with MACOM.

The AppliedMicro board of directors also discussed the retention of a second independent financial advisor in order to get its advice regarding AppliedMicro’s process for exploring its strategic alternatives and a second fairness opinion. The AppliedMicro board of directors concluded that such advice and opinion would be helpful to its decision-making and in the best interest of AppliedMicro’s stockholders, and authorized AppliedMicro management to continue its efforts in this regard. The AppliedMicro board of directors then selected three possible candidates, including Needham & Company, LLC (“Needham & Company”) for this role and authorized AppliedMicro’s management to select the firm within the group that could best serve AppliedMicro stockholders’ interests, taking into account actual or potential conflicts, expertise, ability to engage quickly and cost.

On November 4, 2016, AppliedMicro management held a telephonic discussion with Needham & Company regarding the retention of Needham & Company as a second independent financial advisor to provide its view as to the conduct of AppliedMicro’s strategic process overall and to render a second fairness opinion. AppliedMicro management also engaged in discussions with the two other firms on November 4 and 5, 2016.

On November 6, 2016, Pillsbury sent Ropes and MACOM a revised draft of the merger agreement reflecting AppliedMicro’s revisions to the initial draft provided by MACOM.

Between November 7 and November 18, 2016, representatives of AppliedMicro, Morgan Stanley, Pillsbury and, at times, AppliedMicro’s independent audit firm, KPMG LLP, participated in several reverse due diligence conference calls with representatives of MACOM, Evercore, and Ropes, and received information and documents from and on behalf of MACOM responding to written requests from AppliedMicro and its representatives for due diligence information.

On November 9, 2016, AppliedMicro entered into an engagement letter with Needham & Company. On that day representatives of Pillsbury and Ropes also discussed the draft merger agreement by telephone.

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On November 9, 2016, an AppliedMicro management representative, on behalf of AppliedMicro, requested that Morgan Stanley provide more detail with respect to the financial services provided to MACOM in its October 7, 2016 letter.

On November 10, 2016, Ropes sent MACOM’s revised draft of the merger agreement responding to the previous draft sent by Pillsbury and AppliedMicro. That draft did not provide for tax-free reorganization treatment with respect to the exchange of shares of MACOM common stock for AppliedMicro common stock in the proposed transaction.

On November 10, 2016, the AppliedMicro board of directors held a telephonic meeting, also attended by representatives of AppliedMicro management and Morgan Stanley, to discuss valuation of the consideration to be paid by MACOM per share of AppliedMicro common stock in the transaction, in light of current market prices and 90-day VWAP prices for the stock of both companies, and MACOM’s insistence on a taxable transaction for the share exchange portion of the consideration. The Morgan Stanley representatives noted that given that the value of the transaction to AppliedMicro’s stockholders was fluctuating daily, it might make sense to have a final discussion on this subject closer in time to the execution of the merger agreement, and that MACOM was due to release its financial results for the fourth quarter of fiscal 2016 on November 15, 2016. The AppliedMicro board of directors expressed the view that, absent a significant change in relative value, a price increase was appropriate. A representative of Morgan Stanley later called a representative of MACOM and communicated the request for a price increase in light of the recent increases in the AppliedMicro stock price. Such request was not accepted.

On November 11, 2016, representatives of Pillsbury and Ropes discussed open issues and negotiated terms of the merger agreement by telephone.

On November 11, 2016, the AppliedMicro board of directors held a meeting at which AppliedMicro management provided and the board approved updated projections for the future operation of the compute business. The AppliedMicro directors also received an update regarding the transaction and merger agreement discussions with MACOM from AppliedMicro management.

On November 11, 2016, intellectual property and software diligence meetings took place between representatives of Ropes and the MACOM and AppliedMicro management teams. In addition, technology diligence meetings also took place between MACOM’s technical team and AppliedMicro management.

On November 14, 2016, human relations diligence meetings took place between representatives of MACOM and AppliedMicro management.

On November 14, 2016, the AppliedMicro board of directors held a telephonic meeting, also attended by AppliedMicro management representatives and Pillsbury, to review and discuss the terms and conditions of the proposed support agreements to be entered into by AppliedMicro’s directors and officers and certain stockholders as a condition to MACOM’s execution and delivery of the proposed merger agreement, as well as the status of the merger agreement negotiations and estimated timetable to completion.

On November 16, 2016, representatives of Pillsbury sent AppliedMicro’s revised draft of the merger agreement to representatives of Ropes. Ropes and MACOM sent a further revised draft of the merger agreement to Pillsbury and AppliedMicro on November 17, 2016. The revised draft of the merger agreement provided for tax-free reorganization treatment of the share exchange portion of the proposed consideration.

On November 17, 2016, representatives of AppliedMicro management, Morgan Stanley and Pillsbury had a conference call with representatives of MACOM, Evercore and Ropes to discuss and negotiate open issues in the merger agreement.

On November 17, 2016, the AppliedMicro board of directors held a meeting at which representatives of Morgan Stanley reviewed with the AppliedMicro board of directors the implicit premium of the proposed

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transaction, noting that depending on the signing date and the performance of the stock price of the two companies in the interim, the 90-day VWAP might change. The AppliedMicro board of directors then discussed perceived trends in the stock price of the two companies and their potential impact on the transaction. Representatives of AppliedMicro management, Morgan Stanley and Pillsbury updated the AppliedMicro board of directors on the progress of various aspects of the transaction, including merger agreement negotiations, reverse due diligence, including the presentation of Mr. Croteau, to the AppliedMicro board of directors set for November 19, 2016, and customer diligence calls with MACOM’s top customers. They discussed MACOM’s financial position and its recent quarterly results and expected future prospects, based on publicly available information and research analyst reports. The AppliedMicro directors asked a number of questions regarding MACOM’s business model and its different lines of business. The Morgan Stanley representatives responded that MACOM appeared to be performing strongly and that they did not expect MACOM to make any divestitures in the near term apart from the possible sale, post-transaction, of the compute business. Morgan Stanley then left the meeting.

Representatives of Needham & Company then joined the meeting and shared their views with the AppliedMicro board of directors regarding the strategic process, including with respect to the approach taken by AppliedMicro generally in identifying and contacting interested bidders, as well as their thoughts as to the relative merits of the indications of interest received. A representative of Pillsbury asked the Needham & Company representatives if they had any business relationships with MACOM. The representatives responded that Needham & Company had been involved as a co-manager in MACOM’s initial public offering several years ago.

A member of AppliedMicro management and representatives of Pillsbury then summarized the open issues remaining in the merger agreement negotiations. The AppliedMicro board of directors provided management with specific instructions regarding AppliedMicro’s position with respect to certain of the specific issues identified. The AppliedMicro board of directors asked management for additional information regarding break-up fee precedents in transactions of this size. AppliedMicro management made a presentation with respect to the state of negotiations regarding retention arrangements with certain executives. He noted that the negotiation included a request for the modification of certain rights to severance that the executives might otherwise be entitled to receive on completion of the MACOM transaction.

On November 18, 2016, representatives of Pillsbury and Ropes again met by telephone to negotiate open issues under the merger agreement.

On November 18, 2016, the AppliedMicro board of directors held a telephonic meeting, also attended by AppliedMicro management representatives and Pillsbury, to review and discuss proposed amendments to AppliedMicro’s Executive Severance Benefit Plan that would take effect upon the merger agreement closing, ratify officer appointments and financial assumptions, and coordinate the remaining board meeting schedule to facilitate completion of the merger agreement.

On November 19, 2016, Pillsbury sent a revised draft of the merger agreement to Ropes and MACOM.

On November 19, 2016, the AppliedMicro board of directors held a meeting at 8:00 a.m. California time at which Mr. Croteau provided the AppliedMicro board of directors with an overview of MACOM’s business and his view of how the proposed acquisition of AppliedMicro would synergistically fit with MACOM’s business lines and business model. Mr. Croteau also provided a financial overview of MACOM and MACOM’s expectations regarding earnings and MACOM’s history of exceeding analyst forecasts. Mr. Croteau responded to diligence questions from the AppliedMicro board of directors.

Thereafter, Mr. Croteau left the meeting and the Morgan Stanley representatives reported to the AppliedMicro board of directors that as of the close of trading on November 18, 2016, assuming the execution of the merger agreement prior to the market opening on November 21, 2016, the consideration payable by MACOM in the proposed transaction would consist of $3.25 cash (39%) and 0.1089 shares of MACOM common stock (61%) per share of AppliedMicro common stock with an implied value (for such cash and stock) of $8.36 per

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share based on the MACOM common stock closing price. They noted that this represented approximately a 15% premium to the AppliedMicro common stock closing price on November 18, 2016. The Morgan Stanley representatives discussed the sales process and Morgan Stanley’s financial analysis of the transaction. The Morgan Stanley representatives then responded to questions from the AppliedMicro directors.

Next, AppliedMicro management discussed with the AppliedMicro board of directors Morgan Stanley’s responses to AppliedMicro’s requests for details with respect to the financial services provided to MACOM in the last two years, including that Morgan Stanley’s role as a lender to MACOM arose from Morgan Stanley’s participation in $30 million of a $130 million revolving credit facility in February 2015, and the involvement of a senior member of the Morgan Stanley AppliedMicro transaction team in the services provided for the August 2016 MACOM loan. Thereafter, Morgan Stanley representatives answered further questions regarding Morgan Stanley’s prior financial services for MACOM. A member of AppliedMicro management and a Pillsbury representative provided the AppliedMicro board of directors an update on the status of the Merger Agreement negotiations. The Morgan Stanley representatives then left the meeting. AppliedMicro management then shared with the AppliedMicro board of directors further information derived from the reverse due diligence.

On November 19, 2016, representatives of Morgan Stanley and Evercore had a number of discussions regarding open issues in the merger agreement and attempted to negotiate resolutions on behalf of their clients.

At the end of the day on November 19, 2016, representatives of Ropes sent MACOM’s latest revised merger agreement draft to Pillsbury and AppliedMicro. Representatives of Pillsbury and Ropes discussed the open issues.

On November 20, 2016, the AppliedMicro board of directors held a morning meeting at which representatives of Pillsbury, Morgan Stanley and AppliedMicro management were present. The Pillsbury representatives summarized the terms of the merger agreement as currently proposed by MACOM for signature by AppliedMicro and provided advice to the AppliedMicro board of directors on matters relating to the merger agreement and the proposed transaction. The Pillsbury representatives summarized the open issues in the merger agreement and received instruction from the AppliedMicro board of directors regarding AppliedMicro’s responses. The Pillsbury representatives recommended that the AppliedMicro board of directors reconvene later in the day to vote on MACOM’s proposed acquisition of AppliedMicro assuming the parties were able to resolve the open merger agreement issues. It was anticipated that at such later meeting, the AppliedMicro board of directors would vote on the proposed transaction and that Morgan Stanley and Needham & Company each would deliver its fairness opinion to the AppliedMicro board of directors, after which the AppliedMicro board of directors would vote on the proposed acquisition. The AppliedMicro board of directors then invited Needham & Company representatives to the meeting and the Needham & Company representatives presented their valuation analysis and assumptions, as well as an analysis with respect to the transaction consideration. The Needham & Company representatives stated that they were ready to deliver a fairness opinion if requested to do so.

Representatives of Pillsbury, Morgan Stanley, Ropes and Evercore negotiated the open issues in the merger agreement on November 20, 2016 and exchanged additional drafts of the merger agreement and the Support Agreements.

In the evening on November 20, 2016, the AppliedMicro board of directors met again. Pillsbury reviewed and discussed the proposed resolutions regarding the transaction and advised the AppliedMicro board of directors regarding their fiduciary duties. Representatives of Morgan Stanley reviewed with the AppliedMicro board of directors its financial analysis of the proposed transaction. Morgan Stanley rendered to the AppliedMicro board of directors its oral opinion, subsequently confirmed in writing, that as of November 20, 2016, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of the review undertaken by Morgan Stanley as set forth in its written opinion, the transaction consideration to be received by the holders of shares pursuant to the merger agreement was fair from a financial point of view to the holders of AppliedMicro shares. The opinion of Morgan Stanley is more fully described in the section entitled “The Transactions – Opinions of AppliedMicro’s Financial Advisors – Opinion of Morgan Stanley & Co. LLC.”

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The AppliedMicro board of directors then invited Needham & Company to the meeting and the Needham & Company representatives reviewed with the AppliedMicro board of directors its financial analysis of the proposed transaction and formally delivered the Needham & Company fairness opinion (orally, subsequently confirmed in writing), as more fully described below under the heading “The Transactions – Opinions of AppliedMicro’s Financial Advisors – Opinion of Needham & Company, LLC.” Following discussion, the AppliedMicro board of directors unanimously agreed and determined, for the reasons more fully described in “The Transactions – AppliedMicro’s Reasons for the Transactions; Recommendation of AppliedMicro’s Board of Directors,” that the offer and the transactions were advisable and in the best interests of AppliedMicro and its stockholders, and the AppliedMicro board of directors voted unanimously to approve the merger agreement and the transactions contemplated thereunder.

On the morning of November 21, 2016, before the opening of trading on Nasdaq, MACOM, Purchaser, Merger Sub and AppliedMicro executed the merger agreement and issued press releases announcing its execution.

MACOM’s Reasons for the Transactions

MACOM’s board of directors unanimously approved, adopted and declared advisable the transactions contemplated by the merger agreement, including the offer, the mergers and that the mergers are fair to, and in the best interests of, MACOM and its stockholders.

In reaching its determination, MACOM’s board of directors consulted with MACOM’s management, as well as with MACOM’s legal and financial advisors, and considered a variety of factors weighing favorably towards the transactions, including the factors described below.

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MACOM’s board of directors also identified and considered certain potentially negative factors in its deliberations to be balanced against the positive factors, including:

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After consideration of these factors, MACOM’s board of directors determined that, overall, the potential benefits of the transactions outweighed the potential risks.

This discussion of the information and factors considered by MACOM’s board of directors includes the material positive and negative factors considered by MACOM’s board of directors, but it is not intended to be exhaustive and may not include all the factors considered by MACOM’s board of directors. MACOM’s board of directors did not quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger agreement and the transactions. Rather, MACOM’s board of directors viewed its position and recommendation as being based on the totality of the information presented to and factors considered by it. In addition, individual members of MACOM’s board of directors may have given differing weights to different factors. It should be noted that this explanation of the reasoning of MACOM’s board of directors and certain information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Forward-Looking Statements.”

AppliedMicro’s Reasons for the Transactions; Recommendation of AppliedMicro’s Board of Directors

Expected Benefits of the Transactions

The transactions are expected to result in benefits to all AppliedMicro stockholders. In evaluating the transactions and the merger agreement, the AppliedMicro board of directors consulted with AppliedMicro management and legal and financial advisors. In reaching its decision that the transactions are advisable, and in reaching its recommendation that AppliedMicro stockholders tender their shares in the offer, the AppliedMicro board of directors considered a number of factors, including the following material factors, which the AppliedMicro board of directors viewed as supporting its recommendation.

Considered Factors

AppliedMicro’s Operating and Financial Condition; Prospects of AppliedMicro as an Independent Company and of Compute Business as a Standalone Company. The AppliedMicro board of directors considered its knowledge and familiarity with AppliedMicro’s business, its current and historical financial condition and results of operations, as well as AppliedMicro’s financial plan and prospects, if it were to remain an independent company with both the Compute and Connectivity businesses. The AppliedMicro board of directors evaluated AppliedMicro’s long-term strategic plan, including the execution risks and uncertainties, and the potential impact on the trading price of AppliedMicro shares (which is not feasible to quantify numerically) if AppliedMicro were to execute or fail to execute upon its strategic plan. The AppliedMicro board of directors reviewed the projections described in the section entitled “Certain Financial Forecasts of AppliedMicro,” and weighed the prospects of AppliedMicro’s ability as a stand-alone entity to achieve long-term value for AppliedMicro stockholders through execution on AppliedMicro’s strategic business plan against the near-term value to AppliedMicro stockholders which could be realized through the transaction at a premium to the then-current market price of the AppliedMicro shares.

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The AppliedMicro board of directors also considered the feasibility, financial viability and prospects of operating the Compute business as a standalone public company, after a sale of the Connectivity business, until such time as AppliedMicro were able to sell the Compute business or otherwise unlock additional value for the benefit of AppliedMicro stockholders. The AppliedMicro board of directors evaluated the potential impact to the stock price of AppliedMicro after a sale of the Connectivity business, as well as the lack of scale, negative cash flow, projected losses and the lack of predictability around product development and future revenue and market and customer perception of the long-term viability of the Compute business as a standalone company, as well as the disproportionate expense and management burden of remaining a public company given the scale of the Compute business. The AppliedMicro board of directors also evaluated the divesture alternatives that might be available in the event an acquiror or other growth or monetization strategy could not be found for the Compute business.

Risks of Execution in a Competitive Marketplace. In evaluating AppliedMicro’s long-term prospects as an independent company against the value to AppliedMicro stockholders which could be realized by AppliedMicro stockholders through the transaction, the AppliedMicro board of directors considered the impact of general economic market trends on AppliedMicro’s sales, as well as general market risks that could reduce the price of AppliedMicro shares. The AppliedMicro board of directors also considered the highly competitive marketplace for AppliedMicro’s products and the fact that many of AppliedMicro’s competitors are significantly larger and have greater financial and other resources than AppliedMicro, and the impact of this competitive environment on AppliedMicro’s ability to execute its strategic plan without substantial risk to the value of AppliedMicro.

Premium to Market Share Price . The AppliedMicro board of directors considered that the transaction consideration represented:

Absence of Financing Condition and Other Limited Conditions. The AppliedMicro board of directors considered that the offer is likely to be completed and the merger is likely to be consummated, based on, among other things, the absence of a financing condition and the limited number of other conditions to the transactions.

Timing of Completion. The AppliedMicro board of directors considered the anticipated timing of the consummation of the transactions contemplated by the merger agreement and the fact that the transaction is structured as a tender offer and a subsequent merger, which can often be completed more promptly than would have been the case with a merger alone, meaning that all AppliedMicro stockholders are likely to receive the transaction consideration for their shares more promptly.

Opinions of AppliedMicro’s Financial Advisors.

The AppliedMicro board of directors considered the oral opinion of Morgan Stanley, which was confirmed in writing by delivery of Morgan Stanley’s written opinion, dated November 20, 2016, that as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of the review undertaken by Morgan Stanley as set forth in its written opinion, the transaction consideration to be received by the holders of shares of AppliedMicro common stock pursuant to the merger agreement was fair from a financial point of view to such holders. The full text of Morgan Stanley’s written opinion to the AppliedMicro board of directors, dated as of November 20, 2016, is attached hereto as Annex C. The summary of the opinion of Morgan Stanley herein is qualified in its entirety by reference to the full text of the opinion. We encourage you to read Morgan Stanley’s opinion and the summary of Morgan Stanley’s opinion below under the heading “Opinions of AppliedMicro’s Financial Advisors – Opinion of Morgan Stanley & Co. LLC,” carefully and in their entirety.

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The AppliedMicro board of directors also considered the oral opinion of Needham & Company, which was confirmed in writing by delivery of Needham & Company’s written opinion, dated November 20, 2016, to the effect that, as of such date and based upon and subject to the various qualifications, limitations, assumptions and conditions set forth therein, the transaction consideration per share to be paid to AppliedMicro stockholders (other than MACOM or any of its affiliates and other than holders of dissenting shares) pursuant to the merger agreement was fair from a financial point of view to such stockholders, as more fully described below under the heading “Opinions of AppliedMicro’s Financial Advisors – Opinion of Needham & Company, LLC.” The full text of Needham & Company’s written opinion, dated November 20, 2016, is attached hereto as Annex D.

Inclusion of Cash and Stock Consideration. The AppliedMicro board of directors considered the form of transaction consideration to be paid to the AppliedMicro stockholders in the transactions and the certainty of the value of the cash consideration component in addition to the current and potential value of the stock consideration, as well as the fact that MACOM’s proposal was not subject to obtaining any outside financing. The AppliedMicro board of directors considered the performance of the MACOM common stock, the reverse due diligence conducted on MACOM, the business reputation of MACOM and its management and the substantial financial resources of MACOM and, by extension, Purchaser, which the AppliedMicro board of directors believed supported the conclusion that a transaction with MACOM and Purchaser could be completed relatively quickly and in an orderly manner, and, furthermore, that the stock consideration would enable stockholders to participate in any future growth in MACOM’s value.

Available Alternatives; Results of Discussions with Third Parties. The AppliedMicro board of directors considered the possible alternatives to the acquisition by MACOM (including the possibility of being acquired in whole or in part by another company or financial sponsor, continuing to operate as an independent entity, and operating the Compute business as a standalone company subsequent to a sale of the Connectivity business as discussed above, and the desirability and perceived risks of those alternatives), the range of potential benefits to AppliedMicro stockholders of these alternatives and the timing and the likelihood of accomplishing the goals of such alternatives, as well as the AppliedMicro board of directors’ assessment that none of these alternatives were reasonably likely to present superior opportunities for AppliedMicro to create greater value for AppliedMicro stockholders, taking into account risks of execution as well as business, competitive, industry and market risks. The AppliedMicro board of directors also considered the results of the process that the AppliedMicro board of directors had conducted, with the assistance of the AppliedMicro management and its financial and legal advisors, to evaluate strategic alternatives and the results of discussions with third parties regarding business combination and change of control transactions. The AppliedMicro board of directors also considered the ability of other bidders to make, and the likelihood that other bidders would make, a proposal to acquire AppliedMicro at a higher price.

Availability of Appraisal Rights. The AppliedMicro board of directors considered the availability of statutory appraisal rights under the DGCL for AppliedMicro stockholders in connection with the first merger who do not tender their shares in the offer and who otherwise comply with the statutory requirements of the DGCL, and who believe that exercising their appraisal rights would yield them a greater per share amount than the first merger would.

Regulatory Approvals. The AppliedMicro board of directors considered that the substantive regulatory approvals that may be required to consummate the transactions would likely be limited to complying with the requirements under the HSR Act.

Terms of the Merger Agreement

Termination Right to Accept Superior Proposals. The AppliedMicro board of directors also considered the fact that the merger agreement provides that at any time prior to such time as the purchaser accepts the shares tendered and not properly withdrawn, if the AppliedMicro board of directors receives a bona fide unsolicited written company takeover proposal (as defined in the merger agreement) that did not result from a breach of

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AppliedMicro’s covenant not to solicit and if the AppliedMicro board of directors determines in good faith, after consultation with its independent financial advisor and legal counsel, that such company takeover proposal constitutes or would reasonably be expected to lead to a company superior proposal (as defined merger agreement) and that failure to take such action would or would be reasonably be expected to, be inconsistent with the AppliedMicro directors’ fiduciary duties under applicable law, pursuant to the terms and conditions of the merger agreement, the AppliedMicro board of directors can terminate the merger agreement to concurrently enter into an agreement with respect to that company superior proposal. The AppliedMicro board of directors also considered the fact that there is no additional expense reimbursement payable except to the extent of the fixed termination fee.

Change in Recommendation. The AppliedMicro board of directors considered the fact that, on the terms and subject to the conditions set forth in the merger agreement, the AppliedMicro board of directors may withdraw or modify its recommendation (a) in response to a company superior proposal or (b) in other circumstances not in response to a company superior proposal, if it determines in good faith, after consultation with its financial and legal advisors, that in the case of (a), such action would, or would reasonably be expected to, be required to comply with the directors’ fiduciary duties under applicable law and in the case of (b), such action is required to comply with the directors’ fiduciary duties under applicable law.

Termination Fee. The AppliedMicro board of directors considered that the merger agreement requires AppliedMicro to pay a termination fee of $30.0 million if AppliedMicro terminates the merger agreement to enter into an agreement with respect to a company superior proposal or if MACOM terminates the merger agreement because a company adverse recommendation change (as defined in the merger agreement) has occurred. The AppliedMicro board of directors believes that the termination fee amount is customary and reasonable and will not deter any interested third party from making a company superior proposal or inhibit the AppliedMicro board of directors from approving a company superior proposal if such were available.

Extension of Offer Period. The AppliedMicro board of directors considered the fact that the merger agreement provides that, under certain circumstances, the Purchaser would be required to extend the offer beyond the initial expiration of the offer if certain conditions to the consummation of the offer are not satisfied as of the initial expiration of the offer or, if applicable, certain subsequent expirations, which would increase the likelihood that the offer could be consummated.

Arm’s-Length Negotiation. The merger agreement has customary terms and was the product of arm’s-length negotiations.

Potentially Negative Factors

The AppliedMicro board of directors also considered potential risks associated with the transactions in connection with its evaluation of the fairness of the proposed transaction, including:

Termination by MACOM. The AppliedMicro board of directors considered the risk that MACOM may terminate the merger agreement and not complete the offer in certain limited circumstances, including, subject to certain conditions, if there is a company material adverse effect (as defined in the merger agreement), or if AppliedMicro does not perform its obligations under the merger agreement in all material respects.

Termination Fee. The AppliedMicro board of directors reviewed and discussed the termination fee that could become payable by AppliedMicro pursuant to the merger agreement under certain circumstances. The AppliedMicro board of directors believes that the termination fee is customary and reasonable and will not deter any interested third party from making a company superior proposal or inhibit the AppliedMicro board of directors from approving a company superior proposal if such were available.

Pre-Closing Covenants. The AppliedMicro board of directors considered that, under the terms of the merger agreement, AppliedMicro has agreed that it will carry on its business in the ordinary course of business

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consistent with past practice and, subject to specified exceptions, that AppliedMicro will not take a number of actions related to the conduct of its business without the prior written consent of MACOM (which consent shall not be unreasonably withheld, conditioned or delayed). The AppliedMicro board of directors further considered that these terms may limit the ability of AppliedMicro to pursue or undertake business opportunities that could arise prior to the consummation of the transactions.

Loss of Ability to Participate in the Future Growth of AppliedMicro. The AppliedMicro board of directors considered the fact that stockholders who tender their shares (or whose shares are converted to transaction consideration in the merger, if it occurs) will not participate in any future earnings or growth of AppliedMicro and will not benefit from any future appreciation in the value of AppliedMicro. Likewise, if the first merger is completed, AppliedMicro stockholders will not bear the risks associated with a decrease in the value of AppliedMicro.

Tax Treatment. The AppliedMicro board of directors considered that the receipt of cash by AppliedMicro stockholders will be fully taxable to AppliedMicro stockholders.

Failure to Close. The AppliedMicro board of directors considered the risk that the proposed transaction might not be completed and the effect of the resulting public announcement of termination of the merger agreement on:

Regulatory Approvals. The AppliedMicro board of directors considered the regulatory approvals that may be required to consummate the transactions (including, in particular, the requirements under the HSR Act).

Other Factors

In addition to the above, the AppliedMicro board of directors also considered the following factors:

Conflicts of Interest. The AppliedMicro board of directors considered the fact that AppliedMicro’s executive officers and directors have financial interests in the transactions contemplated by the merger agreement, including the offer and the mergers, that may be different from or in addition to those of other stockholders, as more fully described under “Interests of Certain Persons in the Transactions.”

Liquidation Valuation; Net Book Value; Other Factors Not Considered. The AppliedMicro board of directors did not consider the liquidation value of AppliedMicro, because the AppliedMicro board of directors considered AppliedMicro to be a viable, going concern with its value derived from cash flows from its continuing operations rather than from its assets. Moreover, the AppliedMicro board of directors did not consider net book value, which is an accounting concept, because it believes that net book value does not present a meaningful valuation for AppliedMicro and its business since AppliedMicro’s value is derived from cash flows generated by continuing operations.

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The AppliedMicro board of directors based its ultimate decision on its business judgment that the benefits of the transactions to unaffiliated AppliedMicro stockholders outweigh the negative considerations. The AppliedMicro board of directors determined that the transactions represent the best reasonably available alternative to maximize AppliedMicro stockholder value with the least risk of non-completion.

This discussion of the information and factors considered by the AppliedMicro board of directors includes the material positive and negative factors considered by the AppliedMicro board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the AppliedMicro board of directors. The AppliedMicro board of directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, and did not quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination that the transactions, the merger agreement and the other transactions contemplated by the merger agreement are fair and advisable to and in the interests of AppliedMicro stockholders (including the unaffiliated AppliedMicro stockholders). Rather, the AppliedMicro board of directors conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, AppliedMicro management and AppliedMicro’s outside advisors, and considered the factors overall to be favorable to, and to support, its determination. In addition, individual members of the AppliedMicro board of directors may have given different weight to different factors.

For the reasons described above, the AppliedMicro board of directors has unanimously recommended that the AppliedMicro stockholders accept the offer and tender their shares in the offer.

Opinions of AppliedMicro’s Financial Advisors

Opinion of Morgan Stanley & Co. LLC

AppliedMicro retained Morgan Stanley to provide it with financial advisory services and the AppliedMicro board of directors with a financial opinion in connection with the sale of AppliedMicro. AppliedMicro selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise and reputation, its knowledge of and involvement in recent transactions in AppliedMicro’s industry, and its knowledge of AppliedMicro’s business and affairs. In connection with the transactions, at the meeting of the AppliedMicro

board of directors on November 20, 2016, Morgan Stanley rendered to the AppliedMicro board of directors its oral opinion, subsequently confirmed in writing, that as of November 20, 2016, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of the review undertaken by Morgan Stanley as set forth in the written opinion, the transaction consideration to be received by the holders of shares of AppliedMicro common stock, pursuant to the merger agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Morgan Stanley, dated as of November 20, 2016, is attached as Annex C to this prospectus/offer and is incorporated by reference in this prospectus/offer in its entirety. You are encouraged to read the opinion in its entirety for a discussion of the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of the review undertaken by Morgan Stanley in rendering its opinion. The summary of the opinion of Morgan Stanley in prospectus/offer is qualified in its entirety by reference to the full text of the opinion. Morgan Stanley’s opinion was addressed to the AppliedMicro board of directors, in its capacity as such, and addresses only the fairness from a financial point of view of the transaction consideration to be received by the holders of shares of AppliedMicro common stock pursuant to the merger agreement as of the date of the opinion. Morgan Stanley’s opinion did not address any other aspects or implications of the transactions and does not constitute an opinion or a recommendation as to how the stockholders of AppliedMicro should act or vote in connection with any of the transactions contemplated by the merger agreement, including, without limitation, as to whether the stockholders of AppliedMicro should tender their shares into the offer.

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In connection with rendering its opinion, Morgan Stanley, among other things:

In arriving at its opinion, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to Morgan Stanley by AppliedMicro and MACOM, and formed a substantial basis for its opinion. With respect to the financial projections, including information relating to certain strategic, financial and operational benefits anticipated from the transactions, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of AppliedMicro’s management of the future financial performance of AppliedMicro and MACOM. At AppliedMicro’s direction, Morgan Stanley’s analysis relating to the business and financial prospects of MACOM for purposes of the opinion were made on the basis of Thompson consensus forecasts as of November 18, 2016 (the “MACOM Street Forecasts”) only. Morgan Stanley was advised by AppliedMicro, and assumed, with AppliedMicro’s consent, that the MACOM Street Forecasts are a reasonable basis upon which to evaluate the business and financial prospects of MACOM. Morgan Stanley expressed no view as to the MACOM Street Forecasts or the assumptions on which they were based, including the selection of the analyst forecasts from which the MACOM Street Forecasts were derived. In addition, Morgan Stanley assumed that the transactions will be consummated in accordance with the terms set forth in the merger agreement without any waiver, amendment or delay of any terms or conditions, and that transactions will be treated as a tax-free reorganization, pursuant to the Code, and that the definitive merger agreement would not differ in any material respect from the draft thereof furnished to Morgan Stanley. Morgan Stanley also assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the proposed merger, no delays, limitations, conditions or restrictions will be

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imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed transactions. Morgan Stanley is not a legal, tax, or regulatory advisor. Morgan Stanley is a financial advisor only and relied upon, without independent verification, the assessment of MACOM and AppliedMicro and their legal, tax, or regulatory advisors with respect to legal, tax, or regulatory matters. Morgan Stanley relied upon, without independent verification, the assessment by the managements of AppliedMicro and MACOM of: (1) the strategic, financial and other benefits expected to result from the transactions, (2) the timing and risks associated with the integration of AppliedMicro and MACOM, (3) their ability to retain key employees of AppliedMicro and MACOM, respectively, and (4) the validity of, and risks associated with, AppliedMicro’s and MACOM’s existing and future technologies, intellectual property, products, services and business models. Morgan Stanley expressed no opinion with respect to the fairness of the amount or nature of the compensation to any of AppliedMicro’s officers, directors or employees, or any class of such persons, relative to the transaction consideration to be received by the holders of shares of AppliedMicro common stock in the transaction. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of AppliedMicro or MACOM, nor was Morgan Stanley furnished with any such valuations or appraisals. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Morgan Stanley as of November 20, 2016. Events occurring after November 20, 2016 may affect Morgan Stanley’s opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion.

Summary of Financial Analyses.

The following is a brief summary of the material analyses performed by Morgan Stanley in connection with its oral opinion and the preparation of its written opinion letter to the AppliedMicro board of directors dated November 20, 2016. The following summary is not a complete description of Morgan Stanley’s opinion or the financial analyses performed and factors considered by Morgan Stanley in connection with its opinion, nor does the order of analyses described represent the relative importance or weight given to those analyses. Except as otherwise noted, to the extent that it is based on market data, the following quantitative information is based on market data as it existed on or before November 18, 2016, the last full trading day prior to the meeting of the AppliedMicro board of directors to approve and adopt the merger agreement, declare the advisability of the merger agreement and approve the transactions. The various analyses summarized below were based on the closing prices of $7.25 per share, and $46.95 per share of the MACOM common stock, respectively, as of November 18, 2016, and are not necessarily indicative of current market conditions. Based on the closing price per share of the MACOM common stock of $46.95, and the per share transaction consideration comprised of $3.25 in cash and 0.1089 of a share of MACOM common stock for each share, the implied value of the transaction consideration per share was $8.36.

Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Morgan Stanley, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. The analyses listed in the tables and described below must be considered as a whole; considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying Morgan Stanley’s opinion.

In performing the financial analyses summarized below and arriving at its opinion, Morgan Stanley used and relied upon certain forecasts approved for its use by the AppliedMicro board of directors, including (1) a “Management Case,” which was based on AppliedMicro management’s projections (as defined below under the heading “Certain Financial Forecasts of AppliedMicro”) for the fiscal quarter ended March 31, 2017 and the fiscal years 2017 through 2020 and AppliedMicro’s management’s guidance in extrapolating these forecasts for fiscal years 2021 through 2026, and (2) a “Company Street Case” based on Thompson consensus forecasts as of November 18, 2016 for fiscal years 2017 and 2018 and AppliedMicro management’s guidance in extrapolating these forecasts for fiscal years 2019 through 2026.

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Public Trading Comparables Analysis.

Morgan Stanley performed a public trading comparables analysis, which attempts to provide an implied value of a company by comparing it to similar companies that are publicly traded. Morgan Stanley reviewed and compared certain financial estimates for AppliedMicro, under each of the Company Street Case and the Management Case, with comparable publicly available consensus equity analyst research estimates for selected companies that share similar business characteristics and have certain comparable operating characteristics including, among other things, similarly sized revenue and/or revenue growth rates, market capitalizations, profitability, scale and/or other similar operating characteristics (we refer to these companies as the comparable companies). These companies were the following:

Morgan Stanley analyzed the ratio of aggregate value (defined as fully diluted market capitalization plus total debt, plus non-controlling interest, less cash and cash equivalents) to projected revenue for calendar year 2017. For purposes of this analysis, Morgan Stanley utilized market data as of November 18, 2016 and Thompson consensus forecasts as of November 18, 2016 for aggregate value and revenue for each of the comparable companies. Morgan Stanley also analyzed the ratio of aggregate value to projected EBITDA (defined as net income excluding net interest expense, income tax expense and certain other non-cash and non-recurring items, principally depreciation, amortization and stock-based compensation) for calendar year 2017, and the ratio of price per share to projected earnings per share for calendar year 2017, but as the projected EBITDA and earnings for AppliedMicro for calendar year 2017 under the Management Case are negative, these ratios were not material.

Based on its analysis of the relevant metrics for each of the comparable companies and upon the application of its professional judgment and experience, Morgan Stanley selected a representative range of ratios of aggregate value to projected revenue, and applied this range to the projected revenue for AppliedMicro for calendar year 2017, under each of the Company Street Case and the Management Case. Based on this analysis, and the outstanding shares of AppliedMicro common stock on a fully diluted basis (including outstanding options, restricted stock units and performance-based restricted stock units) as of November 18, 2016, Morgan Stanley calculated the estimated implied value per share as of November 18, 2016 as follows:

Morgan Stanley also performed a public trading comparables analysis of MACOM, consistent with the method used to perform a public trading comparables analysis of AppliedMicro, as described above. Morgan Stanley utilized the MACOM Street Forecasts to compare MACOM with the following companies:

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Based on its analysis of the relevant metrics for each of the comparable companies and upon the application of its professional judgment and experience, Morgan Stanley selected representative ranges of aggregate value to revenue and aggregate value to EBITDA and price to earnings multiples, and applied these ranges to the estimated relevant metric for MACOM under the MACOM Street Forecasts. Based on this analysis, and the outstanding shares of MACOM common stock on a fully diluted basis (including outstanding options, restricted stock units and warrants) as of November 18, 2016, Morgan Stanley calculated the estimated implied value per share of MACOM common stock as of November 18, 2016 as follows:

No company utilized in the public trading comparables analysis is identical to AppliedMicro or MACOM. In evaluating the comparable companies, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters, many of which are beyond AppliedMicro’s, MACOM’s and Morgan Stanley’s control. These include, among other things, the impact of competition on AppliedMicro’s and MACOM’s respective businesses and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of AppliedMicro and MACOM, in the industry, and in the financial markets in general. Mathematical analysis (such as determining the average or median) is not in and of itself a meaningful method of using comparable company data.

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Precedent Transactions Analysis.

Morgan Stanley performed a precedent transactions analysis, which is designed to imply a value of a company based on publicly available financial terms and premia of selected transactions. Morgan Stanley compared publicly available statistics for select semiconductor transactions occurring between 2012 and November 2016, and involving U.S.-based target companies. Morgan Stanley selected such comparable transactions because they shared certain characteristics with the transactions, most notably because they were similar semiconductor transactions. The following is a list of the semiconductor transactions reviewed: