3Ware 2004 Annual Report Download - page 98

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APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company believes that the allegations in these lawsuits are without merit and intend to defend against
the lawsuits vigorously. The Company cannot predict the likely outcome of these lawsuits, and an adverse result
in either lawsuit could have a material adverse effect on the Company. The Company has notified its insurance
carriers of these lawsuits and submitted expenses incurred in defending the lawsuits as claims under the relevant
insurance policies.
Since 1993, the Company has been named as a potentially responsible party, or PRP, along with a large
number of other companies that used Omega Chemical Corporation in Whittier, California to handle and dispose
of certain hazardous waste material. The Company is a member of a large group of PRPs that has agreed to fund
certain remediation efforts at the Omega Chemical site, for which the Company has accrued approximately
$100,000. In September 2000, the Company entered into a consent decree with the Environmental Protection
Agency, pursuant to which the Company agreed to fund its proportionate share of the initial remediation efforts
at the Omega Chemical site.
In September 2003, Silvaco Data Systems (“Silvaco”) filed a complaint against us in the Superior Court of
the State of California in the County of Santa Clara. Silvaco Data Systems v. Applied Micro Circuits Corporation
Case No. 103cv005696. In its complaint, Silvaco claims that the Company misappropriated trade secrets and
engaged in unfair business practices by using software licensed to us by Circuit Symantics, Inc. The Company
filed an answer denying Silvaco’s allegations and filed a motion seeking a stay of the lawsuit against us pending
arbitration of terms of a settlement agreement between Circuit Symantics and Silvaco. The motion has been
granted and the arbitration is expected to take place in the second quarter of fiscal 2005.
Several litigation matters are discussed below involving JNI Corporation (“JNI”), which became a wholly-
owned subsidiary of the Company in October 2003.
In April 2001, a series of similar federal complaints were filed against JNI and certain of its officers and
directors. These complaints were consolidated into a single proceeding in U.S District Court for the Southern
District of California. Osher v. JNI, lead Case No. 01 cv 0557 J (NLS). The first consolidated and amended
complaint alleged that between July 13, 2000 and March 28, 2001 JNI and the individual defendants made false
statements about its business and operating results in violation of the Securities Exchange Act, and also included
allegations that defendants made false statements in its secondary public offering of common stock in October
2000. In March, 2003, the Court dismissed the action, with prejudice. In April, 2004, Plaintiffs filed a notice of
appeal.
In October 2001, a stockholder derivative suit was filed against JNI and certain of its former officers and
directors in the San Diego County Superior Court, Case No. GIC 775153. The complaint alleged that between
October 16, 2000 and January 24, 2001, the defendants breached their fiduciary duty by failing to adequately
oversee the activities of management and that JNI allegedly made false statements about its business and results
causing its stock to trade at artificially inflated levels. The Court has sustained JNI’s demurrers to each of the
plaintiff’s complaints and dismissed the plaintiff in June 2002. However, in May 2002, another plaintiff, Sik-Lin
Huang, filed a motion to intervene in the case. In June 2002, the Court granted Huang’s motion to intervene.
Huang filed a complaint in intervention in July 2002. In September 2002, the board of directors of JNI appointed
aspecial litigation committee to investigate the allegations. In February 2003, the special litigation committee
issued a report of its investigation which concluded that it is not in the best interests of JNI to pursue the
litigation. In February 2003, counsel for the special litigation committee filed a motion to dismiss the action. In
November 2003, the court dismissed the matter with prejudice. In January 2004, plaintiffs filed a notice of
appeal.
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