This case was last updated from Santa Clara County Superior Courts on 08/08/2019 at 20:12:01 (UTC).

Vladimir Gusinsky Revocable Trust v. Peeler, et al. (Veeco Instruments, Inc.)

Case Summary

On 12/21/2018 Vladimir Gusinsky Revocable Trust filed a Contract - Business lawsuit against Peeler, Veeco Instruments, Inc. This case was filed in Santa Clara County Superior Courts, Downtown Superior Court located in Santa Clara, California. The Judges overseeing this case are Kuhnle, Thomas and Walsh, Brian C. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ******9925

  • Filing Date:

    12/21/2018

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Business

  • Court:

    Santa Clara County Superior Courts

  • Courthouse:

    Downtown Superior Court

  • County, State:

    Santa Clara, California

Judge Details

Judges

Kuhnle, Thomas

Walsh, Brian C

 

Party Details

Plaintiff

Vladimir Gusinsky Revocable Trust

Defendants

Peeler, John R

Simone, Peter J

Kiernan, John P

Hunter, Gordon

Bayless, Kathleen A

D'Amore, Richard A

Jackson, Keith D

Maheshwari, Shubham

St. Dennis, Thomas

Nominal Defendant

Veeco Instruments Inc.

Not Classified By Court

Construction Workers Pension Trust Fund - Lake County and Vicinity

Iron Workers District Council of New England Pension Fund

Wolther, Matt

Superior Court of California

Attorney/Law Firm Details

Plaintiff Attorneys

Sanders, Shane Palmesano

Oddo, Stephen John

Robbins, Brian James

Not Classified By Court Attorneys

Jaconette, James Ian

Buell, Guillaume

Hall, David William

Bottini, Francis Alexander

Kolesnikov, Yury A

Chang, Albert Y.

Superior Court of CA, County of Santa Clara

 

Court Documents

Stipulation and Order

Stipulation and Order to Continue CMC: Comment: to Continue CMC - signed/BCW

Notice

Notice CMC reset from 7-12-19 to 8-16-19: Comment: CMC reset from 7/12/19 to 8/16/19

Notice

Notice CMC reset from 5-17-19 to 7-12-19: Comment: CMC reset from 5/17/19 to 7/12/19

Notice

Notice CMC reset from 3-15-19 to 5-17-19: Comment: CMC reset from 3/15/19 to 5/17/19

Notice

Notice CMC reset from 4-26-19 to 3-15-19: Comment: CMC reset from 4/26/19 to 3/15/19

Order: Deeming Case Complex

Order Deeming Case Complex and Staying Discovery and Responsive Pleading Deadline: Comment: Order Deeming Case Complex and Staying Discovery and Responsive Pleading Deadline signed/BCW

Summons: Issued/Filed

Summons Issued Filed:

Civil Case Cover Sheet

Civil Case Cover Sheet: Comment: COMPLEX

Complaint (Unlimited) (Fee Applies)

Complaint (Unlimited) (Fee Applies): Comment: Stockholder Derivative Complaint

 

Docket Entries

  • 08/16/2019
  • Conference: Case Management - Judicial Officer: Walsh, Brian C; Hearing Time: 10:00 AM; Comment: (1st CMC) Discovery and responsive pleading deadline stayed, as of 1/2/19, when the case was deemed complex.

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  • 05/06/2019
  • View Court Documents
  • Stipulation and Order - Stipulation and Order to Continue CMC: Comment: to Continue CMC - signed/BCW

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  • 05/06/2019
  • View Court Documents
  • Notice - Notice CMC reset from 7-12-19 to 8-16-19: Comment: CMC reset from 7/12/19 to 8/16/19

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  • 05/03/2019
  • View Court Documents
  • Notice - Notice CMC reset from 5-17-19 to 7-12-19: Comment: CMC reset from 5/17/19 to 7/12/19

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  • 02/19/2019
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  • Notice - Notice CMC reset from 3-15-19 to 5-17-19: Comment: CMC reset from 3/15/19 to 5/17/19

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  • 01/18/2019
  • Proof of Service: Summons DLR (Civil) - Comment: Notice and Acknowledgment of Receipt - Civil

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  • 01/14/2019
  • Proof of Service: Summons DLR (Civil) - Comment: Proof of Service of Summons/Complaint

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  • 01/02/2019
  • View Court Documents
  • Notice - Notice CMC reset from 4-26-19 to 3-15-19: Comment: CMC reset from 4/26/19 to 3/15/19

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  • 01/02/2019
  • View Court Documents
  • Order: Deeming Case Complex - Order Deeming Case Complex and Staying Discovery and Responsive Pleading Deadline: Comment: Order Deeming Case Complex and Staying Discovery and Responsive Pleading Deadline signed/BCW

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  • 12/21/2018
  • View Court Documents
  • Summons: Issued/Filed - Summons Issued Filed:

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  • 12/21/2018
  • View Court Documents
  • Civil Case Cover Sheet - Civil Case Cover Sheet: Comment: COMPLEX

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  • 12/21/2018
  • View Court Documents
  • Complaint (Unlimited) (Fee Applies) - Complaint (Unlimited) (Fee Applies): Comment: Stockholder Derivative Complaint

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Complaint Information

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ROBBINS ARROYO LLP

BRIAN J. ROBBINS

STEPHEN J. ODDO

SHANE P. SANDERS

5040 Shoreham Place

San Diego, CA 92122

Telephone: (619) 525-3990

Facsimile: (619) 525-3991

E-mail: brobbins@robbinsarroyo.com soddo@robbinsarroyo.com ssanders@robbinsarroyo.com

RM LAW, P.C.

RICHARD A. MANISKAS

1055 Westlakes Drive, Suite 300 Berwyn, PA 19312

Telephone: (484) 324-6800 Facsimile: (484) 631-1305

E-matl: rmaniskas@rmclasslaw.com

Attorneys for Plaintiff

E-FILED

12/21/2018 1:07 PM Clerk of Court

Superior Court of CA, County of Santa Clara

18CV339925

Reviewed By: R. Walker

SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA

Case No. 18C V339925

STOCKHOLDER DERIVATIVE COMPLAINT FOR BREACH OF

FIDUCIARY DUTY, WASTE OF CORPORATE ASSETS, AND UNJUST

ENRICHMENT VLADIMIR GUSINSKY REVOCABLE

TRUST, Derivatively on Behalf of VEECO

INSTRUMENTS INC.,

Plaintiff,

V.

JOHN R. PEELER,

JOHN P. KIERNAN, SHUBHAM MAHESHWARI, RICHARD A. D'AMORE, PETER J. SIMONE,

GORDON HUNTER,

KEITH D. JACKSON, THOMAS ST. DENNIS, KATHLEEN A. BAYLESS, and DOES 1-25, Inclusive,

Detendants.

-and-

VEECO INSTRUMENTS INC., a Delaware

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Plaintiff, by its attorneys, submits this Stockholder Derivative Complaint for Breach of Fiduciary Duty, Waste of Corporate Assets, and Unjust Enrichment. Plaintiff alleges the following on information and belief, except as to the allegations specifically pertaining to plaintiff which are based on personal knowledge. This complaint is also based on the investigation of plaintiff's counsel, which included, among other things, a review of public filings with the U.S. Securities and Exchange Commission ("SEC") and a review of news reports, press releases, and other publicly available sources.

NATURE AND SUMMARY OF THE ACTION

1. This i1s a stockholder derivative action brought by plaintiff on behalf of nominal defendant Veeco Instruments Inc. ("Veeco" or the "Company") against certain of its officers and directors for breach of fiduciary duty, waste of corporate assets, unjust enrichment, and violations of law. These wrongs resulted in hundreds of millions of dollars in damages to Veeco's reputation, goodwill, and standing in the business community. Moreover, these actions have exposed the Company to hundreds of millions of dollars in potential liability for violations of state and federal law.

2. Veeco 1s a designer, developer, manufacturer, and supplier of thin film process equipment used to make a broad range of microelectronic devices, including light emitting diodes ("LEDs") and semiconductor devices. The Company's primary technologies include Metal-Organic Chemical Vapor Deposition ("MOCVD") systems,' advanced packaging lithography systems,” laser processing systems, and wafer inspection systems. According to its Annual Reports, the Company is the world's leading supplier of MOCVD systems.

3. For years, the Company has generated a significant portion of its revenue in China. In 2015, for example, 51% of Veeco's total sales were to customers located in China. In recent years, however, Veeco's Chinese sales have dramatically declined, and the Company has significantly

underperformed the market. In 2016, the Company's total sales declined more than 30% over the

' MOCVD systems are used to manufacture LEDs, which are used in television and computer display backlighting, general illumination, and other applications.

2 Advanced Packaging technology enables the miniaturization and performance improvement o electronic products, such as smartphones, smartwatches, and other mobile applications. N

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previous year, falling from $477 million to only $332.4 million. The largest sales decline was in China, where sales decreased nearly 65% compared to the previous year. At the same time, the Company's stock price was sharply declining. Indeed, after closing at a high of $41.78 per share on March 21, 2014, by July 2016, the Company's stock had fallen more than 60%, trading at only $16.51 per share on July 28, 2016, and erasing $1.2 billion of the Company's market capitalization.

4, In light of the Company's deteriorating operating performance and corresponding declines in 1its stock price, Veeco implemented a restructuring plan to improve its profitability by reducing fixed costs and streamlining its operations. As part of its turnaround efforts, on February 2, 2017, Veeco entered into an agreement with Ultratech, Inc. ("Ultratech"), a producer of lithography products for Advanced Packaging applications and LEDs, pursuant to which Veeco would acquire Ultratech via a merger (the "Merger"). In the Company's press release announcing the Merger, the Company's then Chief Executive Officer ("CEQ"), John R. Peeler ("Peeler") touted Veeco's acquisition of Ultratech, highlighting that it would "establish Veeco as a leading equipment supplier in the high growth Advanced Packaging industry" and that Veeco's and Ultratech's "complementary end market exposure and customer relationships will create the ideal platform to accelerate growth." The Individual Defendants (as defined herein) assured analysts and investors that the Merger would be accretive immediately, while also forecasting significant future earnings, growth, and profits.

5. To solicit stockholder votes in favor of the impending Merger, on March 13, 2017, the Individual Defendants reviewed, signed, and filed a Registration Statement on Form S-4 with the SEC.? On April 21, 2017 the Company filed an amended Registration Statement (the "Registration Statement") which was declared effective as of April 24, 2017. The Registration Statement included a prospectus (collectively, the "Offering Documents") that contained financial projections for Veeco signaling significant improvement in the Company's financial results. The Offering Documents also

represented that no third party had infringed Veeco's intellectual property and that there were no legal

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disputes or claims pending related to the Company's intellectual property. Based on these statements, Ultratech shareholders elected to approve the Merger and exchange their Ultratech shares for Veeco stock. The companies closed the Merger on May 26, 2017.

6. Unfortunately, as the Company would slowly reveal between August and December 2017, increased competition in China, worsening financial metrics, and escalating intellectual property disputes with Veeco's primary competitor in China, Advanced Micro-Fabrication Equipment Inc. ("AMEC"), were having a negative effect on the Company's revenues and prospects at the time the Offering Documents were issued. While the Individual Defendants were well aware of these issues before the release of the Offering Documents, the initial hints of these startling revelations did not begin to trickle out until early August 2017, when Veeco unexpectedly lowered its revenue guidance and announced that it was experiencing deferred orders from its customers in the advanced packaging business and increased competition in the Chinese MOCVD market. By October 2017, KeyBanc Capital Markets ("KeyBanc") had downgraded Veeco stock, citing concerns about the competitive dynamics in the Company's MOCVD business.

7. During the following two months, the Company was forced to reveal that, for months, it had been in an acrimonious dispute with AMEC related to intellectual property and patent infringement. In November 2017, Veeco disclosed that the charges of intellectual property violations were so contentious and unresolved that, on April 12, 2017, two weeks before the Registration Statement was effective, it filed a patent infringement lawsuit in the U.S. District Court for the Eastern District of New York against AMEC's primary wafer carrier supplier—SGL Carbon, LLC and SGL Carbon SE (collectively, "SGL"), alleging that SGL infringed Veeco's patents relating to wafer carrier technology used in MOCVD equipment. Veeco's lawsuit sought an injunction prohibiting SGL from selling wafer carriers for use in MOCVD systems made by AMEC.

8. Then, in December 2017, the Company issued a press release announcing an unfavorable development in a July 13, 2017 patent infringement lawsuit brought by AMEC against Veeco Instruments Shanghai Co., Ltd. ("Veeco Shanghai") in the Fujian High Court in China. In the press release, Veeco disclosed that the Fujian High Court in China had issued a ruling requiring Veeco

Shanghai to discontinue importing, making, selling, and offering to sell certain MOCVD systems whichT

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contain the accused infringing mechanism covered by one of AMEC's patents. On this news, Veeco's stock price plunged nearly 19%, or $2.75 per share, on December 7, 2017, to close at $11.90 per share compared to the previous trading day's closing of $14.65 per share, erasing more than $132.8 million in market capitalization in a single day.

9. In total, the Individual Defendants' faithless actions and repeated improper statements have devastated Veeco's market capitalization by more than $935 million, a 68% market capitalization loss, from a high of nearly $1.4 billion in May 2017, to less than $450 million at present.

10. Further, as a direct result of this unlawful course of conduct, the Company is now the subject of a consolidated securities class action lawsuit filed in the Superior Court of the State of California for the County of Santa Clara on behalf of investors who purchased or acquired Veeco's shares pursuant to or traceable to the Offering Documents (the "Securities Class Action"). The Securities Class Action alleges violations of sections 11, 12(a)(2), and 15 of the Securities Exchange Act of 1933 (the "1933 Act") in connection with certain false statements concerning the Company's business and operations contained in the Offering Documents.

11. By this action, plaintiff seeks to rectify the conduct of the individuals bearing ultimate responsibility for the harm to the Company—the members of Veeco's Board of Directors (the "Board") and senior management—to impose responsibility upon those individuals, and to recover damages sustained by Veeco due to the Individual Defendants' breaches of fiduciary duties, unjust enrichment, and waste of corporate assets.

RIS T YEN!

12. This Court has jurisdiction over all causes of action asserted herein pursuant to the California Constitution, Article VI, section 10, because this case is a cause not given by statute to othe trial courts, as this derivative action is brought pursuant to section 800 of the California Corporations Code to remedy defendants' violations of law,

13. This Court retains general jurisdiction over each named defendant who is a resident o California. Additionally, this Court has specific jurisdiction over each named nonresident defendant because these defendants maintain sufficient minimum contacts with California to render jurisdiction by28

information and belief, defendant Kathleen A. Bayless ("Bayless") is a resident of San Jose, California, defendant Gordon Hunter ("Hunter") is a resident of Los Altos Hills, California, and defendant Thomas St. Dennis ("St. Dennis") is a resident of Livermore, California. Ultratech was headquartered in San Jose, California, at the time Veeco purchased it. Thus, defendants' conduct was purposefully directed at California. Finally, exercising jurisdiction over any nonresident defendant is reasonable under these circumstances.

14. Venue is proper in this Court because one or more of the defendants either resides in o maintains executive offices in this County, a substantial portion of the transactions and wrongs complained of herein, including the defendants' primary participation in the wrongful acts detailed herein and aiding and abetting and conspiracy in violation of fiduciary duties owed to Veeco occurred in this County, and defendants have received substantial compensation in this County by doing business here and engaging in numerous activities that had an effect in this County.

THE PARTIES

Plaintiff

15. Plaintiff Vladimir Gusinsky Revocable Trust was a stockholder of Veeco at the time of the wrongdoing complained of, has continuously been a stockholder since that time, and is a current Veeco stockholder.

Nominal Defendant

16. Nominal Defendant Veeco is a Delaware Corporation with principal executive offices located at Terminal Drive, Plainview, New York. Veeco develops, manufactures, sells, and supports semiconductor process equipment. The Company's primary technologies include MOCVD, advanced packaging lithography, wet etch and clean, laser annealing, ion beam, molecular beam epitaxy, wafer inspection, and atomic layer deposition systems. As of December 31, 2017, the Company had approximately 1,014 employees.

Defendants

17. Defendant Peeler is Veeco's Executive Chairman and has been since October 2018 and

a director and has been since July 2007. Defendant Peeler was also Veeco's Chairman of the Board N

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named as a defendant in the related Securities Class Action alleging that he violated sections 11, 12(a)(2), and 15 of the 1933 Act. Defendant Peeler knowingly, recklessly, or with gross negligence made improper statements in the Company's press releases and public filings concerning Veeco's

business, operations, and prospects. Veeco paid defendant Peeler the following compensation as an

Non-Equity Year Awards Compensation | Compensation Total $2,402,882

18. Defendant John P. Kiernan ("Kiernan") is Veeco's Treasurer and has been since

executive:

December 2011, and Chief Accounting Officer and Senior Vice President of Finance and has been since July 2005. Defendant Kiernan was also Veeco's Corporate Controller from February 1995 to December 2017; Vice President, Finance from April 2001 to June 2005; and Vice President from November 1998 to March 2001. Defendant Kiernan is named as a defendant in the related Securities Class Action alleging that he violated sections 11, 12(a)(2), and 15 of the 1933 Act. Defendant Kiernan knowingly, recklessly, or with gross negligence made improper statements in the Company's press releases and public filings concerning Veeco's business, operations, and prospects. Veeco paid

defendant Kiernan the following compensation as an executive:

Non-Equity Stock Incentive Plan All Other Year Awards Compensation | Compensation Total $653,332

19. Defendant Shubham Maheshwari ("Maheshwari") is Veeco's Chief Operating Officer

and has been since October 2018, and Executive Vice President and Chief Financial Officer and has been since May 2014. Defendant Maheshwari is named as a defendant in the related Securities Class Action alleging that he violated sections 11, 12(a)(2), and 15 of the 1933 Act. Defendant Maheshwari knowingly, recklessly, or with gross negligence made improper statements in the Company's press releases and public filings concerning Veeco's business, operations, and prospects. Veeco paidW

Non-Equity Stock Incentive Plan All Other Year Awards Compensation | Compensation Total

2017 $439,500 $600,464 $304,341 $17,310 $1,361,615

20. Defendant Richard A. D'Amore ("D'Amore") is Veeco's Lead Independent Director and has been since May 2016 and a director and has been since 1990. Defendant D'Amore is named as a defendant in the related Securities Class Action alleging that he violated sections 11, 12(a)(2), and 15 of the 1933 Act. Defendant D'Amore knowingly or recklessly made improper statements in the Company's press releases and public filings concerning Veeco's business, operations, and prospects. Veeco paid defendant D'Amore the following compensation as a director:

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Year Cash Stock Awards Total

2017 $89,750 $119,973 $209,723 2016 $81,097 $119,996 $201,093

21. Defendant Peter J. Simone ("Simone") is a Veeco director and has been since July

Hunter is named as a defendant in the related Securities Class Action alleging that he violated sections 11, 12(a)(2), and 15 of the 1933 Act. Defendant Hunter knowingly or recklessly made improper statements in the Company's press releases and public filings concerning Veeco's business, operations, o« 3 N

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Fiscal Fees Paid in Year Cash Stock Awards Total

2017 $86,250 $119,973 $206,223 $85,000 $119,996 $204,996

2016

23. Defendant Keith D. Jackson ("Jackson") is a Veeco director and has been since February 2012. Defendant Jackson is also a member of Veeco's Audit Committee and has been since at least March 2016. Defendant Jackson is named as a defendant in the related Securities Class Action alleging that he violated sections 11, 12(a)(2), and 15 of the 1933 Act. Defendant Jackson knowingly or recklessly made improper statements in the Company's press releases and public filings concerning

Veeco's business, operations, and prospects. Veeco paid defendant Jackson the following compensation as a director:

Fees Paid in Cash | Stock Awards

2017 $82,500 $119,973 $202,473 2016 $77,500 $119,996 $197,496

24, Defendant St. Dennis is a Veeco director and has been since May 2016. Defendant St.

Dennis is named as a defendant in the related Securities Class Action alleging that he violated sections 11, 12(a)(2), and 15 of the 1933 Act. Defendant St. Dennis knowingly or recklessly made improper statements in the Company's press releases and public filings concerning Veeco's business, operations, and prospects. Veeco paid defendant St. Dennis the following compensation as a director:

Year Cash Stock Awards Total

2017 $71,875 $119,973 $191,848 2016 $45,694 $119,996 $165,690

23. Defendant Bayless is a Veeco director and has been since July 2016. Defendant

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Year Cash Stock Awards Total

26. The defendants identified in f17-19 are referred to herein as the "Officer Defendants." The defendants identified in 17, 20-25 are referred to herein as the "Director Defendants." The defendants identified in {21, 23, 25 are referred to herein as the "Audit Committee Defendants." Collectively, the defendants identified in §917-25 are referred to herein as the "Individual Defendants."

217. The true names and capacities of defendants sued herein under California Code of Civil Procedure section 474 as Does 1 through 25, inclusive, are presently not known to plaintiff, who therefore sues these defendants by such fictitious names. Plaintiff will seek to amend this complaint and include these Doe defendants' true names and capacities when they are ascertained. Each of the fictitiously named defendants is responsible in some manner for the conduct alleged herein.

TIES OF

Fiduciary Duties

28. By reason of their positions as officers and directors of the Company, each of the Individual Defendants owed and owe Veeco and its stockholders fiduciary obligations of trust, loyalty, good faith, and due care, and were and are required to use their utmost ability to control and manage Veeco 1n a fair, just, honest, and equitable manner. The Individual Defendants were and are required to act in furtherance of the best interests of Veeco and not in furtherance of their personal interest or benefit.

29, To discharge their duties, the officers and directors of Veeco were required to exercise reasonable and prudent supervision over the management, policies, practices, and controls of the financial affairs of the Company. By virtue of such duties, the officers and directors of Veeco were required to, among other things:

(a) ensure that the Company operated with adequate internal controls over financial reporting;

(b) ensure that the Company operated in a diligent, honest, and prudent manner in O 0 1] O i bW N e

compliance with all applicable laws, rules, and regulations;

() ensure that the Company complied with its legal obligations and requirements— including requirements involving the filing of accurate financial and operational information with the SEC—and refrain from engaging in deceptive conduct;

(d) ensure processes were in place for maintaining the integrity and reputation of the Company and reinforcing a culture of ethics, compliance, and appropriate risk management;

(e) conduct the affairs of the Company in an efficient, business-like manner in compliance with all applicable laws, rules, and regulations so as to make it possible to provide the highest quality performance of its business, to avoid wasting the Company's assets, and to maximize the value of the Company's stock;

() remain informed as to how Veeco conducted its operations, and, upon receipt of notice or information of imprudent or unsound conditions or practices, make a reasonable inquiry in connection therewith, and take steps to correct such conditions or practices and make such disclosures as necessary to comply with applicable laws; and

(g) truthfully and accurately guide investors and analysts as to the business operations of the Company at any given time.

Additional Duties of the Audit Committee Defendants

30. Under the Veeco Board's Audit Committee Charter, the Audit Committee Defendants, defendants Bayless, Jackson, and Simone owe and/or owed specific additional duties to Veeco. According to the Audit Committee Charter, among other things, the Audit Committee is responsible fo assisting the Board in overseeing: (1) "the integrity of the Company's financial statements"; (ii) "the effectiveness of the Company's internal controls over financial reporting and disclosure"; (ii1) "the independent auditor's qualifications, independence, and performance”; and (iv) "the performance of the Company's internal audit function and internal auditors." In overseeing the integrity of the Company's financial statements, the Audit Committee is specifically required to review "the adequacy and effectiveness of internal controls over financial reporting and disclosure, including any significant AN

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(a) Annual Financial Statements - The Committee shall review and discuss with management and the independent auditor, the Company's annual financial statements and the auditor's report thereon, including disclosures under "Management's Discussion and Analysis of Financial Conditions and Results of Operations,” to be included in the Company's Annual Report on Form 10-K. The Committee shall make a recommendation to the Board whether such financial statements should be included in the Company's Annual Report. The Committee shall also review all certifications required to be made by the Company's Chief Executive Officer and Chief Financial Officer in connection with the Company's Annual Report.

(b) Interim Financial Statements — The Committee shall review and discuss with management and the independent auditor, the Company's interim financial statements before quarterly results are released publicly. The Committee shall also review all certifications required to be made by the Company's Chief Executive Officer and Chief Financial Officer in connection with the Company's Quarterly Reports on Form 10-

Q.

(©) Accounting Treatment and Other Matters - At the completion of the annual audit and such other times as the Committee may deem appropriate, the Committee shall review with the independent auditors, management and the internal auditor, as applicable:

» The quality of, and major issues regarding, the Company's accounting principles, financial reporting process and financial statement presentations, including all critical accounting policies and practices used and any significant changes in the Company's selection or application of accounting principles.

e Any analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements.

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Periodically, as appropriate, the Committee shall review with the independent auditor, the internal auditor, and/or management:

o the adequacy and effectiveness of internal controls over financial reporting and disclosure, including any significant deficiencies in their design or operation;

« any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and

* any significant changes in internal controls or other factors that could significantly affect internal controls, including any corrective actions taken with regard to deficiencies and weaknesses. wn A LN e

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e the types of information to be disclosed and the type of presentation to be made in connection with any earnings press release;

e the type of financial information and earnings guidance (if any) which may be provided to analysts and rating agencies; and

o the use of "pro forma" or "adjusted" non-GAAP information in Company disclosure documents.

Breaches of Duties

31. The conduct of the Individual Defendants complained of herein involves a knowing and culpable violation of their obligations as officers and directors of Veeco, the absence of good faith on their part, and a reckless disregard for their duties to the Company that the Individual Defendants were aware or reckless in not being aware posed a risk of serious injury to the Company.

32. The Individual Defendants breached their duties of loyalty and good faith by allowing the other defendants to cause, or by themselves causing, the Company to misrepresent its financial condition and growth prospects. The Individual Defendants further failed to implement adequate internal controls to ensure the Company's compliance with federal securities laws. These improper practices wasted the Company's assets, and caused Veeco to incur substantial damage.

33. The Individual Defendants, because of their positions of control and authority as officers and/or directors of Veeco, were able to and did, directly or indirectly, exercise control over the wrongful acts complained of herein. The Individual Defendants also failed to prevent the other Individual Defendants from taking such illegal actions.

34. In addition, as a result of the Individual Defendants' improper course of conduct, the Company is now the subject of the Securities Class Action that alleges violations of federal securities laws. As a result, and in addition to the damage the Company has already incurred, Veeco has

expended, and will continue to expend, significant sums of money.

35. In committing the wrongful acts alleged herein, the Individual Defendants have pursued, or joined in the pursuit of, a common course of conduct, and have acted in concert with and conspired with one another in furtherance of their common plan or design. In addition to the wrongful O L0 a9 O

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abetted and/or assisted each other in breaching their respective duties.

36. During all times relevant hereto, the Individual Defendants, collectively and individually, initiated a course of conduct that was designed to and did: (i) deceive the investing public, including stockholders of Veeco, regarding the Company's business, operations, and prospects; and (ii) enhance the Individual Defendants' executive and directorial positions at Veeco and the profits, power, and prestige that the Individual Defendants enjoyed as a result of holding these positions. In furtherance of this plan, conspiracy, and course of conduct, the Individual Defendants, collectively and individually, took the actions set forth herein.

37. The Individual Defendants engaged in a conspiracy, common enterprise, and/or common course of conduct. During this time, the Individual Defendants caused the Company to issue improper financial statements.

38. The purpose and effect of the Individual Defendants' conspiracy, common enterprise, and/or common course of conduct was, among other things, to disguise the Individual Defendants' violations of law, breaches of fiduciary duty, waste of corporate assets, and unjust enrichment, and to conceal adverse information concerning the Company's operations, financial condition, and future business prospects.

39. The Individual Defendants accomplished their conspiracy, common enterprise, and/or common course of conduct by causing the Company to purposefully or recklessly release improper statements. Because the actions described herein occurred under the authority of the Board, each of the Individual Defendants was a direct, necessary, and substantial participant in the conspiracy, common enterprise, and/or common course of conduct complained of herein.

40. Each of the Individual Defendants aided and abetted and rendered substantial assistance in the wrongs complained of herein. In taking such actions to substantially assist the commission of the wrongdoing complained of herein, each Individual Defendant acted with knowledge of the primary wrongdoing, substantially assisted in the accomplishment of that wrongdoing, and was ok

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41. Veeco 1s a designer, developer, manufacturer, and supplier of thin film process equipment for high-technology electronic device production and development, including MOCVD systems, lithography systems, laser processing systems, and wafer inspection systems. According to its Annual Reports, the Company is the world's leading supplier of MOCVD systems. Veeco's technology is used to manufacture a broad range of microelectronic equipment, including LEDs, micro- electromechanical systems ("MEMS"),* wireless devices, and semiconductor devices, among other things.

42, For years, the Company has generated a significant portion of its revenue in China. In 2015, for example, 51% of Veeco's total sales were to customers located in China. In recent years, however, Veeco's Chinese sales have dramatically declined, and the Company has significantly underperformed the market. In 2016, the Company's total sales declined more than 30% over the previous year, falling from $477 million to only $332.4 million. According to the Company's Annual Report filed on Form 10-K with the SEC on February 22, 2017, the largest sales decline was in China, where sales declined nearly 65% compared to the previous year. At the same time, the Company's stock price was sharply declining. Indeed, after closing at a high of $41.78 per share on March 21, 2014, by July 2016, the Company's stock had fallen more than 60%, trading at only $16.51 per share on July 28, 2016.

43. In light of the Company's deteriorating operating performance and corresponding declines in its stock price, Veeco implemented a restructuring plan to improve its profitability by reducing fixed costs and streamlining its operations. The restructuring plan involved the consolidation of three disparate manufacturing operations and a generalized "streamlining of field and administrative

functions." o R 9 &N n B WD

THE INDIVIDUAL DEFENDANTS MADE IMPROPER STATEMENTS

44, In connection with the Company's efforts to address this decline, on February 2, 2017, Veeco announced that it had signed the Merger Agreement to acquire Ultratech (the "Merger Agreement"). In the press release announcing the Merger, defendant Peeler touted the Company's acquisition of Ultratech, highlighting that it would "establish Veeco as a leading equipment supplier in the high growth Advanced Packaging industry" and that Veeco and Ultratech's "complementary end market exposure and customer relationships will create the ideal platform to accelerate growth." Defendant Peeler assured analysts and investors that the Merger would be accretive immediately and lead to significant synergies. As a result of these positive representations, investors were led to believe that the Company was executing on its turnaround plan and that its financial results and growth

prospects were improving. The press release stated:

"The strategic combination will establish Veeco as a leading equipment supplier in the high growth Advanced Packaging industry. Ultratech's leadership in lithography together with Veeco's Precision Surface Processing (PSP) solutions form a strong technology portfolio to address the most critical Advanced Packaging applications. We believe our complementary end market exposure and customer relationships will create the ideal platform to accelerate growth," said John R. Peeler, Veeco's Chairman and Chief Executive Officer. "Ultratech is a great fit with our strategy to profitably grow our business and diversify our revenue. We expect this transaction to be immediately accretive to adjusted EBITDA and non-GAAP EPS."

45, On February 16, 2017, the Company issued a press release announcing its financial results for the fourth quarter and fiscal year ended December 31, 2016. In the press release, defendant Peeler again assured investors that the Merger with Ultratech would "establish Veeco as a leading equipment supplier to the Advanced Packaging industry," and allow the Company to "increase [it's] scale, diversify [it's] revenue and provide a stable platform to drive long-term shareholder value."

46. In connection with the impending Merger, on March 13, 2017, the Company filed a Registration Statement on Form S-4 with the SEC and an amended Registration Statement on April 21, 2017. The Registration Statement was signed by defendants Peeler, Maheshwari, Kiernan, Bayless, D'Amore, Hunter, Jackson, Simone, and St. Dennis and declared effective as of April 24, 2017. The 1

improvement in Veeco's financial results in 2017 and 2018 from its disappointing results reported in the

2 || first half of 2016. The Offering Documents contained the following projections for 2017 and 2018:

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Veeco Street Case

2017E 2018E

Revenue $ 4114 § 461.6 Gross Profit 167.8 194.8 EBITDA(1) 53.0 80.9 Operating Income 38.0 64.2 Non-GAAP Net Income(2) 22.7 38.4 Non-GAAP Earnings Per

Share(3) 0.59 0.96

47. The Offering Documents also boasted that Veeco benefits from the regulatory

environment in China, with "the Chinese Government... provid[ing] various incentives" and "subsidies,” which "have enabled and encouraged certain [Veeco] customers in [China] to purchase more of [its] [products] than [they] might have purchased without these subsidies."

48. In addition, the Offering Documents represented that no third party had infringed Veeco's intellectual property and that there were no legal disputes or claims pending related to the Company's intellectual property. With respect to intellectual property, in the "representations and

warranties" clause of the Merger Agreement, Veeco stated:

Section 5.14 Intellectual Property

(a) Parent and/or its Subsidiaries have valid title and ownership interest in the material Parent Owned [Intellectual Property], free and clear of any Liens (other than Permitted Liens).

(b) To the knowledge of the Parent. Parent and its Subsidiaries own, license or otherwise have the right to use all Intellectual Property used in the operation of their businesses as currently conducted, except as would not reasonably be excepted to result in, a material liability for or restriction on the Parent and its Subsidiaries, taken as a whole. its Subsidiaries that would reasonably be expected to have a Parent Material Adverse

1 Effect.

0 (d) To the knowledge of Parent, none of Parent or its Subsidiaries has infringed,

3 misappropriated or otherwise violated any Intellectual Property of any Person, except for such infringements, misappropriations or violations that would not reasonably be

4 expected to have, individually or in the aggregate, a Parent Material Adverse Effect.

5 (e) To the knowledge of Parent, no Parent Owned IP has been infringed,

6 misappropriated or otherwise violated by any Third Party, except for such infringements, misappropriations or violations that would not reasonably be expected to

7 have, individually or in the aggregate, a Parent Material Adverse Effect.

8 || Director defendants Peeler, D'Amore, Simone, Hunter, Jackson, Bayless, and St. Dennis each reviewed

9 ||and approved the Merger Agreement representing that there were no legal disputes or claims pending

10 || related to the Company's intellectual property.

11 49, The Offering Documents also included a section titled "Risk Factors," wherein the 12 || Company made a number of representations about various risk factors affecting Veeco and Ultratech. 13 || With respect to legal risks, the Offering Documents provided only that a generic and unrealized risk of 14 || future litigation could affect the Merger and that Ultratech was the subject of two stockholder lawsuits

15 || related to the Merger:

16 Litigation against Veeco and Ultratech, or the members of the Ultratech board, could prevent or delay the completion of the merger or result in the payment of damages 17 following completion of the merger. As further discussed in the section entitled "Litigation Related to the Merger" beginning on page 99 of this proxy 138 statement/prospectus, there have been two purported class actions filed by Ultratech 19 shareholders related to the merger. While Ultratech and Veeco believe that the claims asserted in these actions are without merit, the results of any such potential legal 20 proceedings are difficult to predict, and could delay or prevent the merger from becoming effective in a timely manner. The existence of litigation related to the merger could affect 21 the likelihood of obtaining the required approval from Ultratech stockholders. Moreover,

any litigation could be time consuming and expensive, could divert Veeco's and

e Ultratech's management's attention away from their regular business and, if any lawsuit is

73 adversely resolved against either Veeco, Ultratech or members of the Ultratech board (each of whom Ultratech is required to indemnify pursuant to indemnification

24 agreements), could have a material adverse effect on Veeco's or Ultratech's financial condition.

25

26 50. The Offering Documents continued with generalized "risk factors," including

27 || generalized "Risk Factors Related to Veeco Following the Merger." In this section, the CompanyWO

Veeco's ability to maintain relationships with customers, suppliers, employees and other partners" following the merger, including the "loss of customers."

J1. The Offering Documents also incorporated by reference a number of other documents that supposedly contained "important information about Veeco, its financial condition or other matters," including a number of SEC filings lauding the Merger. For example, the Offering Documents incorporated by reference the February 2, 2017 Current Report on Form 8-K and PowerPoint presentation attached thereto. The presentation touted the Merger as "A Compelling Transaction — Strategically and Financially," and stated that Veeco and Ultratech had "Complementary Markets, Cutting Edge Technologies," which created a "Winning Combination." The presentation further assured investors that the Merger was "A Compelling Combination for All Stakeholders," and asserted that the combined company was "[b]etter positioned to continue addressing customers' critical needs" and had "[c]Jomplementary skills to deliver innovative and cost-effective solutions."

52, The Offering Documents also incorporated by reference the February 16, 2017 Current Report on Form 8-K and PowerPoint presentation attached thereto, which included a number of positive representations concerning Veeco's business and growth prospects. In particular, the presentation asserted that the Company was "Executing Well Against Strategic Objectives," "Strengthening [its] Core," "Enhancing Profitability," and "Positioning for Profitable Growth." The PowerPoint presentation further represented that the Company was experiencing "[s]olid sales across all end markets," that "[s]ales into China... reflect[ed] increased MOCVD demand," and that "Veeco [was] poised to benefit as [a] market leader in MOCVD." Also appended to the Form 8-K, and incorporated into the Offering Documents was a transcript from the Company's earnings conference call on February 16, 2017. During the conference call, when asked about competition in the Chinese market, defendant Peeler stated that competition was "normal," the "dual supplier approach" was the "normal approach" and there was nothing "new" in terms of competition.

53. In addition, the Offering Documents incorporated by reference the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the "2016 Form 10-K"). The 2016 Form 10-K stated that Veeco faced "substantial competition"” and identified AMEC as one of its I p—

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tools" over its competitors.

54. The 2016 Form 10-K also included a number of generalized possible "Risk Factors" that the Company stated "may" or "could" adversely affect it in the future if they occurred. Among other things, the 2016 Form 10-K identified as a risk factor the possible "rescheduling and, to a lesser

"n "

extent, cancellations of orders" due to potential "volatile" "market conditions" including "reduced

demand," "increased price competition," "increased competition from sellers of used equipment," and "disruptions in [its] supply chain." It also stated that "reduction or elimination of foreign government subsidies and economic incentives may adversely affect the future order rate for [its] MOCVD equipment ... [which] could result in order cancellations" or "a reduction in order backlog." According to the 2016 Form 10-K, the possible "cyclicality" of industries and possible technological obsolescence or "unexpected product defects" was also a potential "risk" to order "demand."

55. Another risk factor Veeco cited in its 2016 Form 10-K was "significant competition” resulting from new "innovative" product "introductions" by unspecified "competitors”" or "local competitors" and "intensified price competition." According to the 2016 Form 10-K the "failure of

[Veeco's] outsourcing partners to perform as anticipated" "could" affect it's "ability to bring new

products to market." The 2016 Form 10-K further stated:

"If we do not effectively manage our outsourcing strategy or if third party providers do not perform as anticipated, we may not realize the benefits of productivity improvements, and we may experience operational difficulties, increased costs, manufacturing and/or installation interruptions or delays, inefficiencies in the structure and/or operation of our supply chain, loss of intellectual property rights, quality issues, increased product time- to-market and/or inefficient allocation of human resources, any or all of which could materially and adversely affect our business...."

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[Veeco's] outsourcing strategy requires that we share certain portions of our technology with our outsourcing partners, which poses additional risks of infringement and trade secret misappropriation. Infringement of our rights by a third party, possibly for purposes of developing and selling competing products, could result in uncompensated lost market and revenue opportunities.

57. The truth was, however, that these risks had already come to fruition, as the Company was experiencing increasing competition in China, including competition that was directly supported by the Chinese government, as well as delays in orders in the advanced packaging business at the time the Offering Documents were issued. In addition, at this time, Veeco was already in an acrimonious dispute with AMEC, and its supplier, SGL, concerning intellectual property and patent infringement. Several regulations required the SEC to disclose this material information.

58. First, pursuant to Item 303 of SEC Regulation S-K, 17 C.F.R. §229.303, and the SEC's related interpretive releases thereto, issuers are required to disclose events or uncertainties, including any known trends, that have caused or are reasonably likely to cause the registrant's financial information not to be indicative of future operating results. At the time of the Merger, Veeco was experiencing increasing competition in China, including competition that was directly supported by the Chinese government, as well as delays in orders in the advanced packaging business, which trends were likely to result in a further slowdown in the Company's growth of revenues. Furthermore, AMEC was selling products that infringed Veeco's patents, which was having a significantly negative impact on Veeco's sales and market share. These undisclosed adverse events were likely to (and in fact did) materially and adversely affect the Company's operating resuits.

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shareholders. On the first trading day following the Merger, Veeco's stock closed at $32.00 per share,

representing over $253 million in total market value.

61. The statements referenced above were each improper when made because they failed to disclose and misrepresented the following material, adverse facts, which the Individual Defendants knew, consciously disregarded, or were reckless in not knowing:

(a) at the time the Offering Documents were issued Veeco was experiencing delayed orders in its advanced packaging business and increased competition, pricing pressure, and reduced margins in the Chinese MOCVD market;

(b) the negative trends in the Chinese MOCVD market were expected to persist and worsen going forward;

() at the time the Offering Documents were issued Veeco was involved in acrimonious accusations of patent and intellectual property violations with its major competitor in China, AMEC;

(d) AMEC, which was 25% owned by the Chinese government and thus had significant economic and political influence in China, was likely to aggressively retaliate in response to Veeco's allegations of intellectual property infringement;

(e) the escalating patent and intellectual property disputes were likely to continue to erode Veeco's market share and margins in China;

(H increased Chinese competition, worsening financial metrics, escalating intellectual property disputes, and the severe risk of retaliation in its critical Chinese markets were having a negative effect on Veeco's financial condition and prospects; and

(2) as a result of the foregoing, Veeco's representations concerning the Company's business, operations, and prospects were improper.

THE TRUTH EMERGES

62. The truth behind the Company's business prospects and Individual Defendants'

wrongdoing began to emerge on August 3, 2017, when Veeco held a conference call with analysts and

investors to discuss its second quarter 2017 earnings results. During the call the Company lowered its 1

revenue guidance and revealed that it was experiencing increased competition in the MOCVD market

2 || and deferred orders from its customers in its advanced packaging business. Defendants Maheshwari

3 || and Peeler stated:

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[Defendant Maheshwari:] We are guiding revenues in the range of $125 million to $145 million. This is lower than previously expected. . . We are seeing a temporary pause in the advanced packaging market. This has resulted in several Ultratech advanced packaging lithography tool shipments pushed out of Q3, which is impacting the quarter by approximately $15 million in revenue.

[Defendant Peeler:] "[W]e are seeing signs of more competition in China [in the MOCVD market]" and that "We have had some shipments push out and orders slow down for our advanced packaging lithography products over the last few months."

63. Analysts were quick to express concern about these startling revelations. During the question and answer session that followed these prepared remarks, Sreekrishnan Sankar ("Sankar™), an analyst with Merrill Lynch asked defendant Peeler to elaborate on the increased competition in China in the MOCVD market. In response, defendant Peeler disclosed that there was "a competitive battle going

on" in China. The following exchange took place:

Q: Sreekrishnan Sankar, BofA Merrill Lynch, Research Division — Director

First and foremost, you guys mentioned about the competition in China on the MOCVD JSront. Can you elaborate more on it? Because it seems like your largest customer in China, your share might be weakening. And where is your share today and where do you think it might end up being exiting 2017 for the MOCVD until now?

A: John R. Peeler, Veeco Instruments Inc. - Chairman and CEO

Sure, Krish. So first of all, we've seen the China market heating up. And there are more purchases from a variety of both first tier and second tier customers. These customers have wanted to have two — a dual supplier approach for a long time. And so they have been purchasing from Veeco, but there have also been some purchases from competitors . . . obviously, there is a competitive battle going on.

64. Furthermore, in response to a question from another analyst, defendant Peeler conceded that this increased competition was negatively impacting Veeco's prices:

Q: Henry Constantine Elder, Goldman Sachs Group Inc., Research Division

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A: John R. Peeler

Yes, well, it's obviously a more competitive market, so there is price pressure.

65. During the call, analysts also expressed concern over Veeco's disclosure that it had been experiencing delayed orders in its advanced packaging business. In response to analysts' questions concerning the impact of the delayed orders, defendant Pecler commented that it would be approximately $15 million in third quarter 2017 and admitted that the Company did not have the

visibility as to when the problem would be corrected. The following exchange took place:

Q: Sreekrishnan Sankar, BofA Merrill Lynch, Research Division — Director

John, you mentioned about the advanced packaging push outs for Ultratech. Do you expect that to revenue at some -- or, like, be shipped sometime in Q4 this year? Or do you think it's more pushed out into next year?

A: John R. Peeler, Veeco Instruments Inc. - Chairman and CEQO

We've had some customers that were previously going to take product in Q3, push out to Q4. And so we have seen something of a pause. If you remember, we had very strong shipments in the second half of 2016 and Q1 of 2017. So I think there's a little bit of a digestion going on. We think the market will bounce back, but the timing's little unclear at this point.

A: Shubham Maheshwari

Krish, I'd also add that on the advanced packaging side and Ultratech, we get much less visibility. So the visibility into Q4 is less at this time.

% * *

Q: Yeuk-Fai Mok, Needham & Company, LLC, Research Division - Senior Analyst

Just a follow-up on Krish's question on advanced packaging. [I]n terms of push out, anyway you can cost size that for us to kind of give us a better way to think about the factor?

A: John R. Peeler WD

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66. On this news, Veeco's market capitalization plunged more than 20%, or $6.95 per share, on August 4, 2017, to close at $21.85 per share compared to the previous trading day's closing of $28.80 per share, erasing more than $336.5 million in market capitalization in a single day.

67. Then, on October 24, 2017, KeyBanc downgraded shares of Veeco citing concemns about the competitive dynamics in the Company's MOCVD business. KeyBanc analysts Daniel Baksht and Weston Twigg opined that these issues would: (i) have a sustainable impact on Veeco's shares; (ii) drive downward risk to pricing; and (iii) set up market-slowdown risk in 2018. KeyBanc noted that new entrants, including AMEC, had achieved more than 50% market share for GaN-based MOCVD systems® in China in 2017 from their low-single-digit share in 2016. Given the price-competitive environment and the recent success of new entrants, KeyBanc found it unlikely that Veeco could regain market share in 2018 up to its 2016 levels.

68. On this news, Veeco's stock price fell nearly 11%, or $3.02 per share, on October 24, 2017, to close at $18.73 per share compared to the previous trading day's closing of $21.75 per share, erasing more than $122 million in market capitalization in a single day.

69. In a press release dated November 2, 2017 and a Form 8-K filed with the SEC the same day, the Company disclosed that on April 12, 2017, before Veeco's Registration Statement became effective, it commenced a patent infringement action in the U.S. District Court for the Eastern District of New York against AMEC's primary wafer carrier supplier, SGL, alleging that it infringed Veeco's patents relating to wafer carrier technology used in MOCVD equipment. The press release further announced that the Court in this action had granted Veeco's motion for a preliminary injunction against SGL Carbon, LLC despite SGL's argument that its wafer carriers were based on AMEC's specifications. The preliminary injunction prevents SGL from selling wafer carriers for use in MOCVD

systems using Veeco's patented technology, including wafer carriers designed for AMEC's MOCVD wn A W

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systems.® With respect to AMEC, the Company noted: "This ruling shows that AMEC does not respect Veeco's intellectual property rights," and "shows the clear nature of SGL's and AMEC's violation of Veeco's IP." Given that AMEC was 25% owned by the Chinese government and thus had significant economic and political influence in China, AMEC was likely to aggressively retaliate against Veeco in

response to the Company's allegations of intellectual property infringement. The press release stated:

PLAINVIEW, NY -- (Marketwired) -- 11/02/17 -- Veeco Instruments Inc. (NASDAQ: VECO) announced today that the United States District Court for the Eastern District of New York granted Veeco's motion for a preliminary injunction against SGL Carbon, LLC (SGL), a supplier of wafer carriers to Advanced Micro-Fabrication Equipment Inc. (AMEC). The injunction prohibits the sale of wafer carrierssusceptorless Metal Organic Chemical Vapor Deposition (MOCVD) systems using Veeco's patented technology, including wafer carriers designed for AMEC MOCVD systems.

"This ruling affirms the strength of Veeco's intellectual property and its worldwide patent portfolio," said John R. Peeler, Chairman and CEO of Veeco. "Veeco takes enforcement of its IP seriously, and will not hesitate to protect its significant investment in research & development, including its patents in the U.S., Europe and Asia -- particularly in China."

The ruling takes effect immediately and prohibits SGL from shipping wafer carriers using Veeco's patented technology without Veeco's express authorization. This prohibits SGL from supplying wafer carriers for use in all AMEC MOCVD systems. The Court also ruled that Veeco showed a "clear likelihood of success" on its claim that Veeco's patent on wafer carriers for use in susceptorless MOCVD reactors is infringed by SGL and that the patent is valid, despite SGL's arguments to the contrary. SGL had argued that its wafer carriers were based on AMEC's specifications. This ruling shows that AMEC does not respect Veeco's intellectual property rights. Preliminary injunctions are rare in patent cases, because the legal requirements to issue such an injunction prohibiting sales prior to a jury verdict on patent infringement are very stringent. Thus, this ruling shows the clear nature of SGL's and AMEC's violation of Veeco's IP.

This action for patent infringement was commenced by Veeco against SGL Carbon, LLC and SGL Carbon SE on April 12, 2017 in the federal court for the Eastern District of New York. SGL manufactures wafer carriers which are used in susceptorless MOCVD systems. In addition to the preliminary injunction, Veeco is seeking a post-trial permanent injunction, monetary damages and other relief. BN

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70. That same day, November 2, 2017, the Company issued a press release announcing its financial and operating results for the third quarter ended September 30, 2017. The press release stated that Veeco generated revenues of $131.9 million and a net loss of $21.9 million. The press release also provided the Company's financial projections for the fourth quarter ended December 31, 2017:

Guidance and Outlook

The following guidance is provided for Veeco's fourth quarter 2017:

e Revenue is expected to be in the range of $135 million to $155 million

e GAAP net loss is expected to be in the range of ($15) million to ($8) million

e Non-GAAP operating income is expected to be in the range of $5 million to $12 million

e GAAP earnings (loss) per share are expected to be in the range of ($0.33) to ($0.17)

e Non-GAAP earnings (loss) per share are expected to be in the range of $0.00 to $0.16

71. The following day, on November 3, 2017, the Company filed a Quarterly Report on Form 10-Q with the SEC, reaffirming the previously announced financial results and revenue guidance (the "Q3 2017 Form 10-Q"). The Q3 2017 Form 10-Q also disclosed that on July 13, 2017, less than three months after the Registration Statement was declared effective, AMEC filed a patent infringement lawsuit against Veeco Shanghai in the Fujian High Court in China, alleging that Veeco's MOCVD systems "infringed a Chinese utility model patent relating to the synchronous movement engagement mechanism in a chemical vapor deposition reactor and seeking injunctive relief and monetary damages." While the Company did not disclose this lawsuit until November 3, 2017, by April 12, 2017, Veeco was already involved in acrimonious accusations of patent and intellectual property violations with SGL over patents related to wafer carrier technology used in products it sold to AMEC. Given AMEC's interest in the patent infringement accusations, AMEC would undoubtedly have been involved in this dispute by the time the Registration Statement became effective on April 24, 2017.

72. In the weeks after Veeco announced its disappointing financial results and revenue whn A W N

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2,2017 to only $11.90 per share on December 4, 2017.

73. On December 7, 2017, after the market closed, the Company issued a press release announcing' an unfavorable development in AMEC's patent infringement lawsuit. In the press release, Veeco disclosed that the Fujian High Court in China had issued a ruling requiring Veeco Shanghai to discontinue "importing, making, selling, and offering to sell Veeco EPIK 700 model MOCVD systems which contain the accused infringing synchronous movement engagement mechanism covered by AMEC utility model patent ZL 201220056049.5 and wafer carriers used as supplies for the EPIK 700 MOCVD system." The Company further noted that the Fujian High Court made its ruling without providing notice to Veeco and without hearing Veeco's position on the alleged infringement. The press

release stated:

AMEC vs Veeco

On July 13, 2017, AMEC filed a patent infringement complaint against Veeco Instruments Shanghai Co., Ltd. ("Veeco Shanghai") with the Fujian High Court in China, alleging that Veeco's MOCVD systems infringed a Chinese utility model patent relating to the synchronous movement engagement mechanism in a chemical vapor deposition reactor and seeking injunctive relief and monetary damages. Veeco Shanghai filed a petition for invalidation of this patent with the Chinese Patent Reexamination Board ("PRB"). The Fujian High Court suspended the infringement case against Veeco Shanghai pending the outcome of the invalidation proceeding at the PRB. On November 24, 2017, the PRB issued a ruling in the invalidation proceeding which upheld AMEC's patent. During the proceeding, AMEC surrendered its broadest independent claim, thereby significantly narrowing the scope of this patent.

On December 7, 2017, without providing notice to Veeco and without hearing Veeco's position on alleged infringement, the Fujian High Courtissued a ruling, applicable in China, that requires Veeco Shanghai to stop importing, making, selling and offering to sell Veeco EPIK 700 model MOCVD systems which contain the accused infringing synchronous movement engagement mechanism covered by AMEC utility model patent ZL 201220056049.5 and wafer carriers used as supplies for the EPIK 700 MOCVD system.

Although Veeco is still evaluating the ruling, Veeco notes that:

e The ruling applies only in China.

o The ruling does not apply to EPIK 700 MOCVD systems previously shipped to customers in China.

e Veeco will continue to service and support its installed base of EPIK 700 MOCVD systems (while complying with the ruling).

e By its specific terms, the ruling does not cover Veeco's EPIK 868 MOCVD system.WON

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e Veeco is working on potential alternative designs which are not covered by the ruling or the utility model patent asserted by AMEC.

"Veeco continues to believe this lawsuit 1s without merit," said John R. Peeler, Chairman and CEO of Veeco. "We plan to appeal this ruling, to vigorously defend against this matter and to enforce Veeco's IP rights. Veeco remains committed to its customers in China and to supporting its installed base of MOCVD systems."

74. On this news, Veeco's stock price plunged nearly 19%, or $2.75 per share, on December 7, 2017, to close at $11.90 per share compared to the previous trading day's closing of $14.65 per share, erasing more than $133.1 million in market capitalization in a single day.

75. Since then, the Company's stock has continued to decline, and currently trades in the range of $7 to $8 per share, reflecting a more than 68% decline, or $883.2 million market capitalization loss, from its value at the time of the closing of the merger on May 26, 2017.

DAMAGES TO VEECO

76. As a result of the Individual Defendants' improprieties, Veeco disseminated improper, public statements concerning Veeco's financial condition and prospects. These improper statements have devastated Veeco's credibility as reflected by the Company's more than $970.5 million, or 70%, market capitalization loss from its May 2017 high to the present.

77. Veeco's improper statements also damaged its reputation within the business community and in the capital markets. In addition to price, Veeco's current and potential investors consider a company's trustworthiness, stability, and ability to evaluate known risks. Investors are less likely to invest in companies that disseminate improper statements, fail to comply with their own internal protocols and external regulations, and are uncertain about their own financial condition. Accordingly, Veeco's ability to attract investors is now impaired. In addition, Veeco's ability to raise equity capital or debt on favorable terms in the future is now impaired. The Company stands to incur higher marginal costs of capital and debt because the improper statements and misleading projections disseminated by the Individual Defendants have materially increased the perceived risks of investing in and lending money to the Company.

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(a) costs incurred from defending and paying any settlement in the Securities Class Action for violations of securities laws: (b) costs incurred from defending and paying any settlement in the patent infringement lawsuit brought by AMEC,; (c) costs incurred to investigate wrongdoing; and (d) costs incurred from compensation and benefits paid to the defendants who have breached their duties to Veeco.

FUTIL TIONS

79. Plaintiff brings this action derivatively in the right and for the benefit of Veeco to redress injuries suffered, and to be suffered, by Veeco as a direct result of breaches of fiduciary duties, waste of corporate assets, and unjust enrichment, as well as the aiding and abetting thereof, by the Individual Defendants. Veeco is named as a nominal defendant solely in a derivative capacity. This is not a collusive action to confer jurisdiction on this Court that it would not otherwise have. 80. Plaintiff will adequately and fairly represent the interests of Veeco in enforcing and prosecuting its rights. 81. Plaintiff was a stockholder of Veeco at the time of the wrongdoing complained of, has continuously been a stockholder since that time, and is a current Veeco stockholder. 82. The current Board of Veeco consists of the following eight individuals: defendants Bayless, D'Amore, Hunter, Jackson, Peeler, Simone, and St. Dennis and nondefendant Miller. Plaintiff has not made any demand on the present Board to institute this action because such a demand would be

a futile, wasteful, and useless act, as set forth below.

Demand Is Excused Because Defendants Bayless, D' Amore, Hunter, Jackson, Peeler, Simone, and St. Dennis Face a Substantial Likelihood of Liability for Their Misconduct

83. As alleged above, defendants Bayless, D'Amore, Hunter, Jackson, Peeler, Simone, and St. Dennis breached their fiduciary duties of loyalty by making improper statements in the Company's press releases and SEC filings regarding Veeco's financial condition and prospects. In particular, defendants Bayless, D'Amore, Hunter, Jackson, Peeler, Simone, and St. Dennis, each reviewed,e

following material, adverse facts: (i) at the time of the Merger, Veeco was experiencing delayed orders in its advanced packaging business and increased competition, pricing pressure, and reduced margins in the Chinese MOCVD market; (ii) the negative trends in the Chinese MOCVD market were expected to persist and worsen going forward; (iii) at the time of the Merger, Veeco was involved in acrimonious accusations of patent and intellectual property violations with its major competitor in China, AMEC; (iv) AMEC, which was 25% owned by the Chinese government and thus had significant economic and political influence in China, was likely to aggressively retaliate in response to Veeco's allegations of intellectual property infringement; (v) the escalating patent and intellectual property disputes were likely to continue to erode Veeco's market share and margins in China; and (vi) increased Chinese competition, worsening financial metrics, escalating intellectual property disputes, and the severe risk of retaliation in its critical Chinese markets were having a negative effect on Veeco's financial condition and prospects. As a result of the foregoing, Veeco's representations concerning the Company's business, operations, and prospects were improper.

84. Any suit by the current directors of Veeco to remedy these wrongs would expose defendants Maheshwari, Peeler, Kiernan, Bayless, D'Amore, Hunter, Jackson, Simone, and St. Dennis, and Veeco to liability for violations of the federal securities laws in the pending Securities Class Action. The Securities Class Action alleges violations of Sections 11, 12(a)(2) and 15 of 1933 Act. If the Board elects for the Company to press forward with its right of action against defendants Maheshwari, Peeler, Kiernan, Bayless, D'Amore, Hunter, Jackson, Simone, and St. Dennis in this action, then Veeco's efforts would compromise its defense of the Securities Class Action. Accordingly, demand on the Board is excused.

Demand Is Excused as to Nondefendant Miller Because He Lacks Independence

85. The principal professional occupation of nondefendant Miller is his employment with Veeco, pursuant to which he has received and continues to receive substantial monetary compensation and other benefits as alleged above. Accordingly, nondefendant Miller lacks independence from defendants Bayless, D'Amore, Hunter, Jackson, Peeler, Simone, and St. Dennis due to his interest inN

incapable of impartially considering a demand to commence and vigorously prosecute this action.

All Other Compensation Total

$17,310 $1,744,883

Veeco paid nondefendant Miller the following compensation:

Stock Year Awards

2017 $470,231 $850,294

Non-Equity Incentive Plan pensation

$407,048

Accordingly, nondefendant Miller is incapable of impartially considering a demand to commence and vigorously prosecute this action because he has an interest in maintaining his principal occupation and the substantial compensation he receives in connection with that occupation. Demand is futile as to nondefendant Miller.

86. A true and correct copy of this Complaint was delivered to Veeco prior to being filed with this Court.

FIRST CAUSE OF ACTION

Against the Individual Defendants and Does 1-25 for Breach of Fiduciary Duty

87. Plaintiff incorporates by reference and realleges each and every allegation contained above, as though fully set forth herein.

88. The Individual Defendants and Does 1-25 owed and owe Veeco fiduciary obligations. By reason of their fiduciary relationships, the Individual Defendants and Does 1-25 owed and owe Veeco the highest obligation of good faith, fair dealing, loyalty, and due care.

89. The Individual Defendants and Does 1-25 and each of them, violated and breached their fiduciary duties of candor, good faith, and loyalty. More specifically, the Individual Defendants and Does 1-25 violated their duty of good faith by creating a culture of lawlessness within Veeco, and/or consciously failing to prevent the Company from engaging in the unlawful acts complained of herein.

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retaliation in its critical Chinese markets; and (iii) that each of these conditions was having a negative effect on Veeco's financial condition and prospects. Accordingly, the Officer Defendants breached their duty of care and loyalty to the Company.

91. The Director Defendants, as directors of the Company, owed Veeco the highest duty of loyalty. These defendants breached their duty of loyalty by recklessly permitting the improper activity detailed herein. The Director Defendants knew or were reckless in not knowing that at the time the Offering Documents were issued: (i) Veeco was experiencing increased Chinese competition, worsening financial metrics, and escalating intellectual property disputes; (ii) Veeco faced a severe risk of retaliation in its critical Chinese markets; and (iii) that each of these conditions was having a negative effect on Veeco's financial condition and prospects. Accordingly, these defendants breached their duty of loyalty to the Company.

92. The Audit Committee Defendants breached their fiduciary duty of loyalty by approving the statements described herein which were made during their tenure on the Audit Committee, which they knew or were reckless in not knowing contained improper statements and omissions. The Audit Committee Defendants completely and utterly failed in their duty of oversight, and failed in their duty to appropriately review financial results, as required by the Audit Committee Charter in effect at the time.

93. As a direct and proximate result of the Individual Defendants' and Does 1-25's breaches of their fiduciary obligations, Veeco has sustained significant damages, as alleged herein. As a result of the misconduct alleged herein, these defendants are liable to the Company.

94, Plaintiff, on behalf of Veeco, has no adequate remedy at law.

SECOND CAUSE OF ACTION

Against the Individual Defendants and Does 1-25 for Waste of Corporate Assets

95. Plaintiff incorporates by reference and realleges each and every allegation contained above, as though fully set forth herein.

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97. In addition, as a result of the Individual Defendants' and Does 1-25's failure to implement adequate internal controls to ensure that the Company's SEC filings were accurate, Veeco is subject to the Securities Class Action. The Individual Defendants and Does 1-25 have caused Veeco to waste its assets by forcing it to defend itself in the ongoing litigation, in addition to any ensuing costs from a potential settlement or adverse judgment.

08. Further, the Individual Defendants and Does 1-25 have caused Veeco to waste its assets by paying improper compensation and bonuses to certain of its executive officers and directors that breached their fiduciary duty.

99. As a result of the waste of corporate assets, the Individual Defendants and Does 1-25 are liable to the Company.

100. Plaintiff, on behalf of Veeco, has no adequate remedy at law.

THIRD CAUSE OF ACTION

Against the Individual Defendants and Does 1-25 for Unjust Enrichment

101. Plaintiff incorporates by reference and realleges each and every allegation contained above, as though fully set forth herein.

102. By their wrongful acts and omissions, the Individual Defendants and Does 1-25 were unjustly enriched at the expense of and to the detriment of Veeco. The Individual Defendants and Does 1-25 were unjustly enriched as a result of the compensation and director remuneration they received while breaching fiduciary duties owed to Veeco.

103. Plaintiff, as a stockholder and representative of Veeco, seeks restitution from these defendants, and each of them, and seeks an order of this Court disgorging all profits, benefits, and other compensation obtained by these defendants, and each of them, from their wrongful conduct and fiduciary breaches.

104. Plaintiff, on behalf of Veeco, has no adequate remedy at law.

PRAYER FOR RELIEF

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A. Against all of the defendants and in favor of the Company for the amount of damages sustained by the Company as a result of the defendants' breaches of fiduciary duties, waste of corporate assets, and unjust enrichment;

B. Directing Veeco to take all necessary actions to reform and improve its corporate governance and internal procedures to comply with applicable laws and to protect Veeco and its stockholders from a repeat of the damaging events described herein, including, but not limited to, putting forward for stockholder vote, resolutions for amendments to the Company's Bylaws or Articles of Incorporation and taking such other action as may be necessary to place before stockholders for a vote of the following corporate governance policies:

1. a proposal to strengthen the Company's disclosure controls to ensure material information is adequately and timely disclosed to the SEC and public;

2. a proposal to strengthen the Board's supervision of operations and develop and implement procedures for greater stockholder input into the policies and guidelines of the Board;

3. a provision to permit the stockholders of Veeco to nominate at least three candidates for election to the Board;

C. Extraordinary equitable and/or injunctive relief as permitted by law, equity, and state statutory provisions sued hereunder, including attaching, impounding, imposing a constructive trust on, or otherwise restricting the proceeds of defendants' trading activities or their other assets so as to assure that plaintiff on behalf of Veeco has an effective remedy;

D. Awarding to Veeco restitution from defendants, and each of them, and ordering disgorgement of all profits, benefits, and other compensation obtained by the defendants;

E. Awarding to plaintiff the costs and disbursements of the action, including reasonable attorneys' fees, accountants' and experts' fees, costs, and expenses; and h B W N

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Plaintiff demands a trial by jury.

Dated: December 20, 2018

JURY DEMAND ROBBINS ARROYO LLP

BRIAN J. ROBBINS STEPHEN J. ODDO SHANE P. SANDERS

gipery & =T R Semen

BRIAN J. ROBBINS

5040 Shoreham Place

San Diego, CA 92122

Telephone: (619) 525-3990

Facsimile: (619) 525-3991

E-mail: brobbins@robbinsarroyo.com soddo@robbinsarroyo.com ssanders@robinsarroyo.com

RM LAW, P.C.

RICHARD A. MANISKAS

1055 Westlakes Drive, Suite 300 Berwyn, PA 19312

Telephone: (484) 324-6800 Facsimile: (484) 631-1305