8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 23, 2007

VITESSE SEMICONDUCTOR CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-31614 (Commission File Number)	77-0138960 (IRS Employer Identification No.)
741 Calle Plano, Camarillo, California (Address of principal executive offices)	93012 (Zip Code)

Registrant’s telephone number, including area code: (805) 388-3700

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Asset Purchase Agreement

On August 23, 2007, Vitesse Semiconductor Corporation (the "Company") entered into an Asset Purchase Agreement (the "Purchase Agreement") with Maxim Integrated Products, Inc. (the "Buyer"), a copy of which is attached to this Form 8-K as Exhibit 10.1 and is incorporated herein by reference. Pursuant to the Purchase Agreement, among other things, the Company agreed to sell to Buyer certain assetsrelating to the Enclosure Management, Serial Attached SCSI (SAS), Serial Attached ATA (SATA) expander and Baseboard Management products developed and sold by the Company's storage product division(the "Transferred Assets"). As consideration for the acquisition of the Transferred Assets under the Purchase Agreement, Buyer will pay the Company $63 million in cash, plus additional earn-out payments not to exceed $12 million in the aggregate that are subject to the attainment of certain commercial milestones, and will assume certain liabilities described in the Purchase Agreement. The obligations of the Company and the Buyer to complete the transactions contemplated by the Purchase Agreement are subject to various closing conditions, including receipt of antitrust regulatory approval.

Intellectual Property Assignment and License Agreement

In connection with the completion of the transactions contemplated by the Purchase Agreement, as of the closing date, the Company and the Buyer will enter into an Intellectual Property Assignment and License Agreement (the "Intellectual Property Agreement"), pursuant to which, among other things, the Company will (i) assign to Buyer the rights to certain technology related to the Transferred Assets, portions of which technology will be licensed back to the Company, and (ii) license to Buyer the rights to certain other technology, including patents, related to the Transferred Assets. Licenses granted by the Company of certain technology are subject to certain restrictions that will be set forth in the Intellectual Property Agreement for three years commencing on the date of signing. The consideration to be paid under the Purchase Agreement, as described above, includes the consideration for the intellectual property rights to be assigned or licensed under the Intellectual Property Agreement.

Letter Agreement

In connection with the execution of the Purchase Agreement, the Company and certain subsidiaries of the Company executed a Letter Agreement, dated August 22, 2007 (the “Letter Agreement”), with the Lenders and the Agent under the Fourth Amended and Restated Loan Agreement, dated as of June 20, 2006, among the Company, certain subsidiaries of the Company, the Lenders and the Agent named therein (the “2006 Loan Agreement”). A copy of the Letter Agreement is attached to this Form 8-K as Exhibit 10.2 and is incorporated herein by reference. The Company intends to pay in full all amounts outstanding under the 2006 Loan Agreement with the net proceeds from the sale of the Transferred Assets under the Purchase Agreement and a portion of the amounts borrowed under the Loan Agreement (as defined below). In the event that all amounts outstanding under the 2006 Loan Agreement are not paid at the proposed closing under the Purchase Agreement, the Letter Agreement provides, among other things, that (i) the Company will pay the Lenders $45 million towards the amounts owed under the 2006 Loan Agreement, (ii) the Agent and the Lenders will release their liens on the

Transferred Assets and (iii) the Lenders will receive warrants to acquire 2% of the Company’s common stock at an exercise price of $1.45 per share, subject to adjustment, and the covenants of the Company contained in the 2006 Loan Agreement will be amended in certain respects as set forth in the Letter Agreement.

Proposed New Financing

The Company has entered into a Loan Agreement, dated as of August 23, 2007 (the “Loan Agreement”) with Whitebox VSC, Ltd. (“Whitebox”) and certain other Lenders, pursuant to which the Lenders have agreed to lend to the Company $30 million and may, at the Lenders’ option, lend up to an additional $15 million. A copy of the Loan Agreement is attached to this Form 8-K as Exhibit 10.3 and is incorporated herein by reference. The loan under the Loan Agreement will (i) mature on the fourth anniversary after the initial funding of the loan, (ii) bear interest at a rate equal to three-month LIBOR plus 4.00% (but in no event less than 8.50% per annum) and (iii) be secured by substantially all of the Company’s assets. The Loan Agreement contains a number of covenants, including limitations on mergers, disposition of assets, creation of new subsidiaries, restricted payments, transactions with affiliates, investments, liens, sale and leaseback transactions and hedging transactions. These covenants and the security interests of the Lenders will terminate if and when Convertible Notes (as defined below) in an aggregate principal amount of at least $15 million have been purchased. The closing of the Loan Agreement is subject to a number of conditions, including the closing under the Purchase Agreement.

In connection with the Loan Agreement, the Company also entered into a Senior Unsecured Convertible Note Purchase Agreement, dated as of August 23, 2007 (the “Note Purchase Agreement”), by and among the Company and Whitebox, a copy of which is attached to this Form 8-K as Exhibit 10.4 and is incorporated herein by reference. Pursuant to the Note Purchase Agreement, the Company will be entitled, until the third anniversary of the initial funding under the Loan Agreement, to purchase convertible notes (the “Convertible Notes”) in an aggregate principal amount of up to $45 million, the proceeds of which will be used by the Company to repay amounts outstanding under the Loan Agreement. If Convertible Notes are issued, they (i) will mature 20 years after their issuance date, (ii) will bear interest at six-month LIBOR plus 3.00% (but in no event less than 7.50% per annum), (iii) will be convertible into the Common Stock of the Company at an initial conversion rate of $2.00 per share of Common Stock, subject to adjustment as described in the Note Purchase Agreement, (iv) may be put to the Company by the holders of the Convertible Notes on each of the fifth, tenth and fifteenth anniversaries of the issue date of the Convertible Notes and (v) may be redeemed by the Company at any time after the fifth anniversary of the issue date of the Convertible Notes. At the time of the initial closing under the Note Purchase Agreement, the Company and Whitebox will enter into a Registration Rights Agreement pursuant to which the Company will agree to register the resale of shares of the Company’s Common Stock issuable upon the conversion of the Convertible Notes under the Securities Act of 1933 within a specified period of time after the Company is eligible to file a registration statement under the Securities Act of 1933.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
10.1	Asset Purchase Agreement, dated as of August 23, 2007, by and between the Company and Maxim Integrated Products, Inc.
10.2	Letter Agreement, dated August 22, 2007, among Obsidian, LLC, the Company, certain subsidiaries of the Company, Special Value Expansion Fund, LLC and Special Value Opportunities Fund, LLC
10.3	Loan Agreement, dated as of August 23, 2007, among the Company, the lenders named therein and Whitebox VSC, Ltd., as Agent
10.4	Senior Unsecured Convertible Note Purchase Agreement, dated as of August 23, 2007, by and between the Company and Whitebox VSC, Ltd.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 29, 2007

VITESSE SEMICONDUCTOR CORPORATION

By: /s/ MICHAEL B. GREEN

Michael B. Green

Vice President, General Counsel and Secretary

EXHIBIT INDEX

Exhibit No.	Description
10.1	Asset Purchase Agreement, dated as of August 23, 2007, by and between the Company and Maxim Integrated Products, Inc.
10.2	Letter Agreement, dated August 22, 2007, among Obsidian, LLC, the Company, certain subsidiaries of the Company, Special Value Expansion Fund, LLC and Special Value Opportunities Fund, LLC
10.3	Loan Agreement, dated as of August 23, 2007, among the Company, the lenders named therein and Whitebox VSC, Ltd., as Agent
10.4	Senior Unsecured Convertible Note Purchase Agreement, dated as of August 23, 2007, by and between the Company and Whitebox VSC, Ltd.

EX-99

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

VITESSE SEMICONDUCTOR CORPORATION

AND

MAXIM INTEGRATED PRODUCTS, INC.

August23, 2007

ARTICLE I.	DEFINITIONS		1
ARTICLE II.	PURCHASE AND SALE OF ASSETS		8
	2.1	Purchase and Sale	8
	2.2	Excluded Assets	9
	2.3	Assumed Liabilities	10
	2.4	Excluded Liabilities	10
	2.5	Certain Transfers of Assets	11
	2.6	Purchase Price	12
	2.7	Earnout	12
	2.8	Allocation of Purchase Price	14
ARTICLE III.	CLOSING		14
	3.1	Closing	14
	3.2	Actions at the Closing	14
ARTICLE IV.	REPRESENTATIONS AND WARRANTIES OF SELLER		15
	4.1	Organization, Standing and Power	15
	4.2	Authority	15
	4.3	Execution and Binding Effect	15
	4.4	Consents and Approvals of Governmental Entities	15
	4.5	No Violation	16
	4.6	Consents	16
	4.7	Absence of Certain Changes	16
	4.8	Transferred Assets Generally	16
	4.9	Intellectual Property	17
	4.10	Warranties and Indemnities	20
	4.11	Leased Facilities	20
	4.12	Inventory	20
	4.13	Compliance with Laws	20
	4.14	Employees	20
	4.15	Employee Benefit and Compensation Plans	21
	4.16	Taxes	22
	4.17	Contracts	22
	4.18	Product Liability	23
	4.19	Litigation; Other Claims	23
	4.20	Defaults	23
	4.21	Brokers and Finders	23
	4.22	Insurance	23
	4.23	Export Control and Foreign Corrupt Practices Act Compliance	24
	4.24	Limitation of Representations and Warranties; Disclosure	24
ARTICLE V.	REPRESENTATIONS AND WARRANTIES OF BUYER		24
	5.1	Organization	24
	5.2	Authority	24
	5.3	Execution and Binding Effect	24
	5.4	Consent and Approvals	25
	5.5	No Violation	25
	5.6	Brokers and Finders	25
	5.7	Financial Capability	25
ARTICLE VI.	COVENANTS		25
	6.1	Conduct of Business Prior to Closing	25
	6.2	Distributor Inventory	26
	6.3	Notification	27

	6.4	Access to Information	27
	6.5	Consents.	27
	6.6	Tax Returns	28
	6.7	Post-Closing Access to Information	29
	6.8	Further Assurances	29
	6.9	Taxes	29
	6.10	Seller Debt Arrangements	30
	6.11	Confidentiality	30
	6.12	Use of Vitesse Name	31
	6.13	Intercompany Arrangements	32
	6.14	Exclusivity	32
	6.15	Noncompetition	33
	6.16	Satisfaction of Conditions Precedent	34
	6.17	Bulk Transfer Laws	34
	6.18	Asset Schedule Updates	34
ARTICLE VII.	CONDITIONS TO CLOSING		34
	7.1	Conditions to Obligations of the Parties	34
	7.2	Conditions to Obligation of Buyer	34
	7.3	Conditions to Obligations of Seller	35
ARTICLE VIII.	EMPLOYEE MATTERS		36
	8.1	Transferred Employees	36
	8.2	No Right to Continued Employment or Benefits	37
	8.3	No Solicitation by Buyer; No Solicitation by Seller	37
ARTICLE IX.	INDEMNIFICATION		38
	9.1	Indemnification	38
	9.2	Survival of Representations and Warranties; Indemnification Period	38
	9.3	Limits on Liability	39
	9.4	Indemnification Procedure	40
	9.5	Treatment of Indemnity Payments	41
	9.6	Damages	42
	9.7	Exclusive Remedy; Injunctive Relief	42
	9.8	Exercise of Remedies by Persons Other than the Parties	42
ARTICLE X.	TERMINATION OF THE AGREEMENT		42
	10.1	Termination	42
	10.2	Effect of Termination	43
	10.3	Certain Effects of Termination	43
ARTICLE XI.	MISCELLANEOUS		43
	11.1	Amendments and Waivers	43
	11.2	Successors and Assigns	43
	11.3	Governing Law; Jurisdiction	44
	11.4	Counterparts	44
	11.5	Titles and Subtitles; Construction	44
	11.6	Notices	44
	11.7	Severability	44
	11.8	Entire Agreement	45
	11.9	Advice of Legal Counsel	45
	11.10	Expenses	45

11.11 No Joint Venture 45

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of August 23, 2007, by and between Maxim Integrated Products, Inc., a Delaware corporation (“Buyer”), and Vitesse Semiconductor Corporation, a Delaware corporation (“Seller”). Buyer and Seller are sometimes referred to as the “Parties” and each individually as a “Party.” All capitalized terms have the meanings ascribed to such terms in ArticleI or as otherwise defined herein.

RECITALS

WHEREAS, Buyer desires to acquire from Seller, and Seller desires to sell to Buyer, certain assets and liabilities relating to the Business, all on the terms and subject to the conditions set forth in this Agreement; and

NOW, THEREFORE, in consideration of the premises above and the mutual representations, warranties, covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I. DEFINITIONS

Capitalized terms will have the following meanings unless defined elsewhere in this Agreement.

1.1“Accounts Payable” means all accounts payable owing by Seller in connection with the Business for raw materials or supplies received by or services rendered to Seller on or prior to the Closing Date.

1.2“Acquisition Documents” means this Agreement, the Ancillary Agreements and any and all other documents, instruments or agreements executed in connection with any of the foregoing, together with any exhibits and schedules thereto, and in each case as modified, amended, supplemented, restated or renewed from time to time.

1.3“Affiliate” means, with respect to any Person, a Person directly or indirectly controlling, controlled by, or under common control with, such Person but only so long as such condition exists.

1.4“Ancillary Agreements” means the Assignment and Assumption Agreement, the Bill of Sale, the Intellectual Property Assignment and License Agreement, the Transition Services Agreement, and the Lease, together with any exhibits and schedules thereto, and in each case modified, amended, supplemented, restated or renewed from time to time.

1.5“Assigned Mark” has the meaning given to this term in the Intellectual Property Assignment and License Agreement.

1.6“Assigned Technology” has the meaning given to this term in the Intellectual Property Assignment and License Agreement.

1.7“Assignment and Assumption Agreement” means the Assignment and Assumption Agreement to be entered into by Buyer and Seller as of the Closing Date, in a customary form reasonably satisfactory to the Parties.

1.8“Bill of Sale” means the Bill of Sale to be entered into by Buyer and Seller as of the Closing Date, in a customary form reasonably satisfactory to the Parties.

1.9“Business” means Seller’s development, manufacture, sale and support of the Products as, and to the extent, conducted on the Closing Date.

1.10 “Closing” means the completion of the Contemplated Transactions.

1.11“Closing Date” means the date of the Closing, which date will be five (5) days after the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied on the Closing Date, but subject to the satisfaction or waiver of such conditions), or at any other date to which the Parties may agree.

1.12 “Code” means the Internal Revenue Code of 1986, as amended.

1.13“Confidential Information” means all oral or written information or information recorded, or displayed or communicated in any other media or form, furnished by Buyer or by Seller or by any of representatives or agents of Buyer or Seller, as applicable, whether furnished before or after the Closing, and all notes, analyses, compilations, studies or other documents, whether prepared by Buyer or Seller or others, which contain or otherwise reflect such information; provided, however, that Confidential Information does not include information that (i) is or becomes generally available to the public other than as a result of disclosure by the receiving party, (ii) was available to the receiving party on a non-confidential basis prior to its disclosure by or on behalf of the disclosing party, or (iii) becomes available to the receiving party after disclosure by the disclosing party, on a non-confidential basis from a source other than the disclosing party or its representatives or its agents who is not bound by a confidentiality agreement with the disclosing party, its representatives or its agents or otherwise prohibited from transmitting the information to the receiving party by a contractual, legal or fiduciary obligation.

1.14“Contemplated Transactions” means each of the transactions contemplated by this Agreement and the Intellectual Property Assignment and License Agreement.

1.15“Contract” means any agreement, commitment, contract, licenses, consensual obligation, promise, understanding, arrangement, commitment, purchase orders or undertaking of any nature (whether written or oral and whether express or implied) to which Seller is a party or is otherwise bound.

1.16“Copyrights” has the meaning given to this term in the Intellectual Property Assignment and License Agreement.

1.17“Damages” means any direct and actual Liabilities (including any Liabilities for Taxes), claims, injuries, losses, damages, settlements, judgments, awards, penalties, fines, costs or expenses (including reasonable legal, expert and consultant fees and expenses) but excluding any special, indirect, punitive or consequential damages (including lost profits, loss of revenue, loss of opportunity or lost sales) unless, solely with respect to special (to the extent that such damages are deemed consequential), punitive or consequential damages, any such damages are part of a judgment arising or resulting from (i) a Third Party Claim against an Indemnified Party, or (ii) the nonfulfillment, nonperformance or other breach of any covenant or agreement set forth in the Intellectual Property Assignment and License Agreement.

1.18“Deposits” means all prepaid items and deposits received by Seller in connection with the Business, and any claim, remedy or other right related to any of the foregoing.

1.19“Employee Benefit Plan” means any employee benefit plan, program, policy, agreement or other arrangement (including any “employee benefit plan,” as defined in Section 3(3) of ERISA) sponsored, maintained or contributed to by Seller or any ERISA Affiliate for the benefit of any Transferred Employee.

1.20“Environmental Conditions” means any environmental contamination or pollution or threatened contamination or pollution or the unauthorized Release or threatened Release of Hazardous Materials into, the surface water, groundwater, surface soil, subsurface soil, air and land.

1.21“Environmental Laws” means all foreign, international, national, regional, state, county or local laws, statutes, ordinances, decisional law, rules, regulations, codes, orders, decrees, directives and judgments relating to public health or safety, pollution, damage to or protection of the environment, Environmental Conditions, Releases or threatened Releases of Hazardous Materials into the environment or the use, manufacture, processing, distribution, treatment, storage, generation, disposal, transport or handling of Hazardous Materials.

1.22 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.23“ERISA Affiliate” means any corporation, partnership, limited liability company, sole proprietorship, trade, business or other entity that, together with Seller, is treated as a single employer under Section 414(b), (c) or (m) of the Code.

1.24“Excluded Product” means any product of Seller (including revisions of the product), other than the Products.

1.25“Excluded Technology” has the meaning given to this term in the Intellectual Property Assignment and License Agreement.

1.26“Governmental Authorizations” means the notices, permits, authorizations, consents or approvals of any Governmental Entity that are a condition to the lawful completion of the Contemplated Transactions as set forth on Schedule 1.26 to this Agreement.

1.27“Governmental Entity” means any court, or any federal, state, municipal or other governmental authority, department, commission, board, agency or other instrumentality (domestic or foreign).

1.28“Harmful Code” means any computer code or other mechanism of any kind designed to disrupt, disable or harm in any manner the operation of any Software or hardware or other business processes or to misuse, gain unauthorized access to or misappropriate any business or personal information, including worms, bombs, backdoors, clocks, timers, or other disabling device code, or designs or routines that cause Software or information to be erased, inoperable, or otherwise incapable of being used, either automatically or with passage of time or upon command.

1.29“Hazardous Materials” means any toxic or hazardous substance or infectious or radioactive substance or material, or any substances, materials and wastes defined, listed, or regulated under any Environmental Laws, including petroleum, polychlorinated byphenyls and urea formaldehyde.

1.30“Intellectual Property Assignment and License Agreement” means the Intellectual Property Assignment and License Agreement to be entered into by Buyer and Seller, as of the Closing Date, in the form attached as Exhibit A.

1.31“Intellectual Property Rights” has the meaning given to this term in the Intellectual Property Assignment and License Agreement.

1.32“Inventory” means (i) all Existing Products (as defined herein) and all raw materials, works-in-progress, finished goods and other inventories owned by Seller as of the Closing Date, in each case principally related to the Existing Products (the “Purchased Inventory”), and (ii) all Existing Products in the possession of Seller’s distributors as of the Closing Date which are subject to the distributor’s right to return such Products to Seller, in the case of each of clauses (i) and (ii) as identified on Section 4.12 of the Disclosure Schedule, which will be updated as of the Closing pursuant to Section6.18 hereof (the “Distributor Inventory”). Notwithstanding the foregoing, unless Buyer notifies Seller in writing prior to the Closing to the contrary, the Purchased Inventory will not include any inventory of Seller that is greater than the 12 month demand as reflected in Seller’s consumption forecast dated June 9, 2007 (the “Forecast”), a copy of which has been provided to Buyer and which will be updated as of the Closing Date pursuant to Section 6.18 hereof.

1.33“Knowledge of Seller,” “Seller’s Knowledge,” or any other similar knowledge qualification in this Agreement means the actual knowledge, without further investigation, of Sam Barnett, Christopher Gardner, Michael Green, Shawn Hasseland Tim Hornback.

1.34“Lease” means the Lease to be entered into by Buyer and Seller, as of the Closing Date, in substantially the form attached as Exhibit B.

1.35“Liability” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due).

1.36“Licensed Technology” has the meaning given to this term in the Intellectual Property Assignment and License Agreement.

1.37“Lien” means any mortgage, pledge, lien, security interest, option, covenant, condition, restriction, encumbrance, charge or other third party claim of any kind. Notwithstanding the foregoing, “Lien” will not include any license of Intellectual Property Rights, any option to obtain any such license, or any covenant to grant any such license.

1.38“Mark” has the meaning given to this term in the Intellectual Property Assignment and License Agreement.

1.39A violation, circumstance, change, effect or other matter is deemed to have a “Material Adverse Effect” on (i) Buyer or Seller, if such violation, circumstance, change, effect or other matter would have a material adverse effect on the ability of the Person to perform its obligations under this Agreement or on the ability of such Person to complete the Contemplated Transactions, or (ii) the Business, if such violation, circumstance, change, effect or other matter, either individually or in the aggregate with all other violations, circumstances, changes, effects and other matters, has, or would reasonably be expected to have, a material adverse effect on the condition (financial or other) of the business, assets (including intangible assets) and liabilities, results of operations or financial performance of the Business, taken as a whole; it being understood that none of the following, in and of themselves, either alone or in combination, will constitute a Material Adverse Effect: (x) delays in customer orders, reduction in sales, disruption in supplier, distributor, partner or similar relationships, in each case, which are, or are reasonably expected to be, temporary rather than permanent in nature and that are primarily the result of the announcement or pendency of the Contemplated Transactions or (y) any material adverse effect resulting from changes in economic conditions in the economy generally or in the industry in which

the Business operates generally (other than, in the case of subclause (y), effects of any such changes that disproportionately affect the Business relative to other such industry or market participants).

1.40“Ordered Materials” means those wafers or portions of wafers, turn key items, tester accessories and other items set forth on Schedule1.40 (as updated as of the Closing pursuant to Section6.18 hereof) which are ordered by Seller, but not delivered, as of the Closing Date. A true and complete list of the Ordered Materials as of the date hereof is set forth on Schedule1.40.

1.41“Patents” has the meaning given to this term in the Intellectual Property Assignment and License Agreement.

1.42“Person” means an individual, corporation, partnership, association, trust, government or political subdivision or agent or instrumentality thereof, or other entity or organization.

1.43“Post-Closing Period” means any taxable period beginning after the close of business on the Closing Date or, in the case of any tax period that includes, but does not begin, after the close of business on the Closing Date, the portion of the period beginning after the close of business on the Closing Date.

1.44“Pre-Closing Period” means any taxable period ending on or before the close of business on the Closing Date or, in the case of any taxable period that includes, but does not end on, the Closing Date, the portion of the period up to and including the Closing Date.

1.45“Prepayments” means all prepaid items and deposits paid by Seller in connection with the Business, and any claim, remedy or other right related to any of the foregoing. A true and complete list of the Prepayments as of the date of this Agreement is set forth on Schedule1.45, which will be updated as of the Closing pursuant to Section6.18 hereof.

1.46“Principal Agreements” means this Agreement, the Intellectual Property Assignment and License Agreement and the Transition Services Agreement.

1.47“Products” means, collectively, (i) all integrated circuit storage devices set forth on Schedule1.47(a) (“Existing Products”), and (ii) those products identified in the “Design” and “Concept” stages of development in the April Storage Products Division Product Futures presentation set forth on Schedule1.47(b) (“Product Designs and Concepts”).

1.48“Product Obligations” means (a) obligations arising in respect of Product support or maintenance obligations related to Products (x) sold or licensed prior to, on or after the Closing Date and (y) required to be performed after Closing, and any Liabilities which may arise in connection with the performance of, or failure to perform, such obligation, and (b) any and all obligations (and any related Liabilities) arising under any Assumed Contract relating to any product Liability, warranty, refund or similar claims or returns, other than Product Returns subject to Section 6.2 hereof, adjustments, allowances or repairs made with respect to Products sold prior to, on or after the Closing Date.

1.49“Registered Intellectual Property Rights” means, all United States, international and foreign (a) issued Patents and applications for Patents; (b) registered Marks and applications to register Marks, including intent to use applications; (c) Copyright registrations and applications to register Copyrights; and (d) applications and registrations for Web site addresses and domain names but excluding applications that have been abandoned by Seller prior to the Closing Date.

1.50“Release” means any intentional or unintentional release, discharge, spill, leaking, pumping, pouring, emitting, emptying, injection, disposal or dumping.

1.51“Seller Backlog Obligations” means the duty to deliver, and to perform all Product Obligations with respect to, all Products under any customer or distributor orders of Seller which are outstanding as of the Closing Date and set forth on Schedule1.51. An accurate and complete list of all Seller Backlog Obligations as of the date hereof is set forth on Schedule 1.51, which will be updated as of the Closing pursuant to Section6.18 hereof.

1.52“Software” means all computer software including all source code, object or executable code, firmware, software compilations, software implementations of algorithms, software tool sets, compilers, software models and methodologies, development tools, files, records, technical drawings, and data relating to the foregoing.

1.53“Taxes” means all taxes, however denominated, including any interest, penalties or other additions to tax that may become payable in respect thereof, imposed by any federal, territorial, state, local or foreign government or any agency or political subdivision of any such government, for which Buyer could become liable as successor to or transferee of the Business, Transferred Assets and Assumed Liabilities or which could become a charge against or lien on the Business or any of the Transferred Assets or Assumed Liabilities, which taxes will include, without limiting the generality of the foregoing, all sales and use taxes, ad valorem taxes, excise taxes, business license taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, real property gains taxes, payroll and employee withholding taxes, unemployment insurance contributions and social security taxes.

1.54“Technology” has the meaning given to this term in the Intellectual Property Assignment and License Agreement.

1.55“Transfer Taxes” means all federal, state, local or foreign sales, use, transfer, real property transfer, mortgage recording, stamp duty, value added or similar Taxes that may be imposed in connection with the transfer of Transferred Assets or assumption of Assumed Liabilities, together with any interest, additions to Tax or penalties with respect thereto.

1.56“Transferred Employees” means the Employees (as defined herein) who accept an offer of employment from Buyer and who commence their employment with Buyer in accordance with ArticleVIII hereof.

1.57“Transition Services Agreement” means the Transition Services Agreement entered into by Buyer and Seller, as of the Closing Date, in the form attached as Exhibit C.

1.58“Treasury Regulations” means regulations, including proposed or temporary regulations, promulgated under the Code. References herein to specific provisions of proposed or temporary regulations will include analogous provisions of final Treasury Regulations or other successor Treasury Regulations.

1.59Index of Other Defined Terms. In addition to those terms defined in the preamble, the Recitals and Sections 1.1 to 1.58, the following terms will have the respective meanings given to the terms in the sections indicated below:

Defined Term Section

Aggregate Purchase Price	2.6
ASP	2.7(a)
Assumed Contracts	2.1(b)
Assumed Liabilities	2.3
Buyer Benefit Plan	8.1(c)
Claims	2.1(h)
Confidentiality Agreement	4.14(a)
Consideration	2.6
Designated Employees	8.1(a)
Designated TSA Employees	8.1(a)
Disclosure Schedule	4
Earnout Payment	2.7(a)
Earnout Period	2.7(a)
Earnout Quarter	2.7(a)
Earnout Quarter Payment	2.7(b)
Earnout Referee	2.7(c)
Earnout Statement	2.7(c)
Employees	8.1(a)
Equipment	2.1(a)
Excluded Assets	2.2
Excluded Claims	2.2(f)
Excluded Liabilities	2.4
Existing Loan Agreement	6.10(a)
Final Earnout Report	2.7(c)
HSR Act	6.5(c)
Initial Purchase Price	2.6
Leased Facilities	3.2(a)
Licensed Third Party Technology	4.8(e)
Material Contracts	4.17(a)
Offer	8.1(a)
Permits	2.1(g)
Purchase Price	2.6
Registration Offices	4.9(b)
Required Consent	4.6
Restricted Business	6.15(a)
Restricted Period	6.15(a)
Seller Retained Ordered Materials	6.15(b)
Senior Lender Consent	6.10(a)
Third Party Claims	9.4(d)
Transfer Date	8.1(b)
Transferred Assets	2.1
Transferred Employee	8.1(a)
Unknown Third Party Patents	4.8(a)
USCO	4.9(a)
USPTO	4.9(a)

ARTICLE II. PURCHASE AND SALE OF ASSETS

2.1Purchase and Sale. Subject to the terms and conditions of this Agreement and except as provided in Section2.2 hereof, for the consideration set forth in Sections2.6 and 2.7 hereof, at the Closing, Seller agrees to sell, convey, assign, transfer and deliver to Buyer, and Buyer agrees to purchase and accept from Seller, all of the property and assets, real, personal or mixed, tangible or intangible of every kind and description, wherever located and whether or not reflected on the books and records of Seller, used principally in connection with or otherwise principally related to the Business (such assets and properties, collectively, the “Transferred Assets”). Without limiting the generality of the foregoing, the Transferred Assets will include the following:

(a)(x) all of the fixed assets, machinery, equipment, tools, test equipment and other tangible personal property that are described or listed on Schedule 2.1(a) as of the date hereof, plus (y) any fixed assets, machinery, equipment, tools, test equipment and other tangible personal property acquired by the Business following the date hereof but prior to the Closing in accordance with Section6.1 hereof (collectively, the “Equipment”);

(b)all rights, benefits and interests of Seller under the Contracts listed on Schedule2.1(b) as of the date hereof, plus any Contracts entered into following the date hereof but prior to the Closing in accordance with Section 6.1 hereof (collectively, the “Assumed Contracts”);

(c) the Inventory;

(d)the Assigned Technology, subject to the terms of the Intellectual Property Assignment and License Agreement;

(e)the Assigned Mark, subject to the terms of the Intellectual Property Assignment and License Agreement;

(f) the Ordered Materials;

(g)to the extent transferable, all approvals, authorizations, consents, licenses, permits, franchises, tariffs, orders and other registrations of any Governmental Entity pertaining to the ownership, lease or use of the Transferred Assets or used principally in the operation of the Business (the “Permits”);

(h)all claims, choses in action, causes of action and other similar rights of Seller to the extent that they pertain to the Transferred Assets, Assumed Liabilities or principally to the Business in existence, accrued, or arising out of facts existing prior to the Closing Date (“Claims”).

(i) all Prepayments relating to the Assumed Contracts;

(j)all goodwill of Seller associated with the Business, other than goodwill associated with the business of Seller generally; and

(k)all documents, operating data and records relating principally to the Business, Transferred Assets or Assumed Liabilities, including credit records, engineering information, historical sales records and promotional literature, manuals and data, sales and purchase correspondence, lists of present, former and prospective suppliers or customers, relevant information relating to Taxes, and other similar documents and records.

The Assigned Technology and Assigned Mark will be subject to any (i) rights retained by Seller or licenses granted to Seller pursuant to the Intellectual Property Assignment and License Agreement, (ii) certain licenses (including sublicenses) existing on the date hereof and as set forth on Section 4.9(c)(ii) of the Disclosure Schedule, and (iii) licenses (including sublicenses) or Contracts granted or otherwise entered into by Seller in accordance with Section6.1 hereof prior to the Closing Date.

2.2Excluded Assets. Notwithstanding anything to the contrary in this Agreement, the Transferred Assets will not include any of the following (the “Excluded Assets”):

(a)any cash, short term investments or other cash equivalents of Seller and Deposits;

(b) any accounts receivable or other receivables of Seller;

(c)any leases or other agreements pertaining to real property to which Seller is a party or is otherwise bound;

(d)all rights, benefits and interests of Seller arising under any Contract that is not an Assumed Contract;

(e)all Prepayments associated with any Contract that is not an Assumed Contract;

(f)all Claims to the extent the claims relate to any Excluded Assets or Excluded Liabilities (the “Excluded Claims”);

(g)all rights to or claims for refunds of Taxes (including any interest and penalties) with respect to any and all Taxes of Seller that constitute Excluded Liabilities, including those imposed on property, income or payrolls;

(h)except as set forth in the Intellectual Property Assignment and License Agreement and other than the right to receive the services pursuant to the terms of the Transition Services Agreement, all rights to receive or use administrative and corporate (overhead, shared and other) services, systems and benefits of the kind provided to the Business by Seller directly, or indirectly through third-party service providers, prior to the Closing Date, including (i)  information technology and information systems services and systems, including associated workstations, personal computers and laptop computers, (ii) quality assurance services, including return merchandise authorization services, (iii) reliability services, including qualification testing, (iv) sales and sales management services; (v) field applications engineering support services, (vi) customer service and order fulfillment services, (vii) product planning services, (vii) sales operations services and systems, including forecasting tools, (ix) foundry services, (x) design tools and systems, (xi) tool and library support services and systems, (xii) packaging services and systems, (xiii) technology services, (xiv) accounting services and systems, including accounts payable and accounts receivable services, (xv) purchasing services and systems, (xvi) shipping and receiving logistics services and systems, (xvii) technical writing and documentation services, (xviii) all tape-out and reticle services, (xix) travel services, (xx) telecommunications services and systems, (xxi) rights to use Applix, (xxii) rights to use Citrix, (xxiii) rights to use Concur, (xxiv) rights to use Documentum, (xxv) rights to use Access Databases, (xxvi) rights to use FactoryWorks and (xxvii) rights to use Help Desk;

(i)all Technology and the Mark licensed, and all other Technology not otherwise licensed or assigned, by Seller to Buyer pursuant to the Intellectual Property Assignment and License Agreement;

(j) all assets listed on Schedule 2.2(j);

(k) all Excluded Technology; and

(l) without limiting the generality of the foregoing, all Excluded Products.

2.3Assumed Liabilities. Buyer agrees, effective as of the Closing Date, to assume, pay, defend, discharge, and perform the following liabilities of Seller (the “Assumed Liabilities”):

(a)any Liability under any Assumed Contract that arises or accrues after the Closing, other than any Liabilities or obligations assumed pursuant to Sections2.3(b), 2.3(c) and 2.3(d);

(b) any Liability with respect to Ordered Materials;

(c)all Product Obligations (other than with respect to Product Returns (as defined herein), which are subject to Section6.2 hereof);

(d)all Seller Backlog Obligations (other than with respect to Product Returns, which are subject to Section6.2 hereof);

(e)only those Liabilities of Seller with respect to Transferred Employees for accrued vacation and paid time off pursuant to Section 8.1(b); and

(f)all other Liabilities arising out of, relating to or incurred in connection with the Business or the Transferred Assets on or following the Closing Date.

2.4Excluded Liabilities. Buyer is assuming only the Assumed Liabilities and is not assuming any other Liability of Seller (including any predecessor of Seller or any prior owner of all or part of its businesses and assets) of whatever nature, whether presently in existence or arising hereafter. Such Liabilities (the “Excluded Liabilities”) include the following:

(a) any Liabilities arising out of or related to any Excluded Asset;

(b)any Liability under any Assumed Contract arising prior to the Closing Date, other than as expressly contemplated by Section 2.3;

(c)any Liability for any Environmental Condition relating to 4225 and 4323 ArrowsWest Drive, Colorado Springs, Colorado, or arising in connection with any violation of any Environmental Law, except as may be provided in the Lease;

(d)any Liability or obligation for Taxes attributable to or imposed upon Seller or its Affiliates, except as contemplated by Section 6.9;

(e) any Accounts Payable except as contemplated by Section 2.3(b) above;

(f)any Liability of Seller for or in respect of any Indebtedness, including any liabilities owed to Affiliates of Seller;

(g)any Liability or obligation of Seller to employees for salaries, wages, commissions, bonuses, sabbatical, health and welfare benefits (except as otherwise contemplated in Section 2.3(e)), or with respect to any profit sharing, stock bonus, severance, pension, retirement, stock purchase, option, deferred compensation plan, or for any other benefits or compensation that arise or

accrue through the Closing Date, including any compensation payable to any Employees in connection with the Contemplated Transactions;

(h) any Employee Benefit Plan;

(i)any Liability arising out of or resulting from Seller’s compliance or non-compliance with any federal, state, local, municipal, foreign, international, multinational, or other constitution, law, statute, treaty, rule, regulation, ordinance, code, orders, decrees, directives, writs, injunctions or binding case law (collectively, “Laws”) or judgment;

(j)any Liability of Seller relating to any negotiations, agreements or other transactions, if any, by Seller with any third Person that relate to the acquisition of Seller or any of Seller’s assets or any termination of related negotiations or arrangements;

(k)all professional, financial advisory, broker, finder or other fees of any kind incurred by Seller in connection with the Contemplated Transactions; and

(l)all other Liabilities arising out of, relating to or incurred in connection with the Business or the Transferred Assets prior to the Closing Date, unless specifically identified as an Assumed Liability.

2.5 Certain Transfers of Assets.

(a)Promptly but in any event no later than 180 days following the Closing Date, Buyer will (i) at its own cost and expense, prepare for relocation of any Transferred Assets located at any facilities currently occupied by Seller which facilities are not to be purchased, assigned, subleased, transferred to or otherwise occupied by Buyer pursuant to this Agreement or any other agreement entered into in connection with the Contemplated Transactions (each such facility, a “Seller Facility”) and relocate such Transferred Assets from the relevant Seller Facility, and (ii) except as may be contemplated by the Transition Services Agreement, be responsible for all data transfer, delivery, transmission and reformatting costs and expenses related to the acquisition of the Transferred Assets. Subject to the provisions hereof, Seller agrees to cooperate with Buyer and provide Buyer all assistance reasonably requested by Buyer in connection with the planning and implementation of the transfer of any Transferred Assets or any portion of any of them to such location as Buyer will designate. The Transferred Assets will be transported by or on behalf of Buyer, and until all of the Transferred Assets are removed from a Seller Facility, Seller will permit Buyer and its authorized agents or representatives, upon prior notice, to have reasonable access to such Seller Facility during normal business hours to the extent necessary to disconnect, detach, remove, package and crate the Transferred Assets for transport. Buyer will be responsible for disconnecting and detaching all fixtures and equipment that are Transferred Assets from the floor, ceiling and walls of a Seller Facility so as to be freely removed from such Seller Facility by Buyer. Buyer will be responsible for packaging and loading the Transferred Assets for transporting to and reinstalling the Transferred Assets at such location(s) as Buyer will determine. All risk of loss as to the Transferred Assets will be borne by, and will pass to, Buyer as of the Closing; provided, however, that Seller will be liable for any damage to or loss with respect to any Transferred Asset for which Seller has not exercised ordinary care at any time before Buyer has taken custody of such Transferred Asset.

(b)Notwithstanding any other provision of this Agreement, this Agreement does not effect an assignment of any Assumed Contract or any agreement otherwise included in the Transferred Assets that prohibits any assignment otherwise contemplated by this Agreement, and for which Seller has not obtained a required consent to assignment or given a required notice as of the Closing. Without limiting Section 6.5 hereof, Seller agrees to use commercially reasonable efforts to obtain any Required

Consent(s) as promptly as possible after the Closing, and to act after the Closing as Buyer’s agent and otherwise cooperate with Buyer in order to obtain for Buyer the benefits under those agreements to the maximum extent permitted by law. Subject to rights of Buyer pursuant to ArticleIX hereof, Buyer will be solely responsible for any costs or expenses necessary to obtain any such consent, other than administrative or similar costs incurred by Seller in connection with the solicitation of any consents. If an attempted assignment would be ineffective or would impair Buyer rights under any Transferred Asset so that Buyer would not receive all such rights, then Seller and Buyer will cooperate in any lawful and reasonable arrangement, to the extent so permitted under the terms of any Assumed Contract, which will provide Buyer the obligations and benefits of any such Transferred Asset, including subcontracting, licensing or sublicensing to Buyer any or all of Seller’s rights and obligations with respect to such Transferred Asset. In any such arrangement, Buyer will (i) bear the sole responsibility for completion of the work or provision of goods and services, (ii) bear all Taxes with respect thereto or arising therefrom that relate to any Post-Closing Period, and (iii) be solely entitled to all benefits thereof, economic or otherwise. If and when such consents or approvals are obtained or such other required actions have been taken, the transfer of such Transferred Asset will be effected in accordance with the terms of this Agreement. For the avoidance of doubt, in no event will Seller have any obligation under this Section 2.5 with respect to any agreement relating to the Business other than the Assumed Contracts

2.6Purchase Price. The consideration for the Transferred Assets (the “Consideration”) will be the sum of (x) sixty-three million dollars ($63,000,000) (the “Initial Purchase Price”), plus (y) the Earnout Payment (as defined in Section2.7 below), if any (together with the Initial Purchase Price, the “Aggregate Purchase Price”), plus (z) the assumption by Buyer of the Assumed Liabilities. Buyer will pay the Initial Purchase Price to Sellerin immediately available funds on the Closing Date in accordance with Article III hereof.

2.7 Earnout.

(a)Buyer will pay Seller as additional consideration an amount (the “Earnout”) in cash not to exceed $12,000,000 based on the shipment of Products by Buyer during the period commencing on October 1, 2007 and ending on September 30, 2008 (such period, the “Earnout Period”) in accordance with this Section2.7. The actual amount of cash payable as the Earnout (the “Earnout Payment”) will be determined on the basis of the Earnout Amount (as defined herein) for each fiscal quarter during the Earnout Period as set forth on and pursuant to Schedule2.7 hereto (each such fiscal quarter, an “Earnout Quarter”). In no event will Buyer be obligated to pay any amounts in the aggregate in excess of $12,000,000 under this Section2.7 (including, for such purpose, Schedule2.7) as the Earnout Payment, irrespective of the amount of Earnout Amount in a particular Earnout Quarter or the entire Earnout Period. The Earnout Payment will be payable in accordance with subsection (b) hereof. For the purposes hereof, “Earnout Amount” means the aggregate dollar amount of all Products shipped by Buyer during the Earnout Period, which will be determined by multiplying (i) the number of each such Product shipped by Buyer by (ii) the trailing quarterly weighted average sales price (“ASP”) of each such Product shipped by Buyer to its distributors or customers as determined using the applicable invoice(s); provided, however, that solely for the purposes of the first Earnout Quarter, any Products shipped by Seller to Buyer at the written request of Buyer, which Products are not subsequently shipped by Buyer to any distributor or customer during such Earnout Quarter, will be deemed to constitute a “shipment by Buyer” for the purposes hereof and thus will be included in the calculation of the Earnout Amount for such Earnout Quarter; provided further, that for the purpose of determining ASP for each Product shipped by Buyer during the first Earnout Quarter (including those products deemed shipped by Buyer pursuant to the immediately preceding proviso), such ASP will be determined based on the applicable purchase order(s) for any such Product as submitted by Buyer’s distributors and customers. In the event that the Closing Date occurs after October 1, 2007, the Parties will agree to a mutually acceptable adjustment of the Earnout Amount and Earnout Payment for the first Earnout Quarter.

(b)As soon as practicable but in no event later than 45 days following the end of an Earnout Quarter, Buyer will pay Seller the portion of the Earnout Payment attributable to such period (an “Earnout Quarter Payment”), by wire transfer to an account designated in writing by Seller. Buyer will have the right to withhold and set off against any portion of such Earnout Quarter Payment the amount of any Damages to which any Buyer Indemnified Party may be entitled under this Agreement.

(c)No later than 90 days after the expiration of the Earnout Period, Buyer will deliver to Seller a computation of the Earnout Amount, identifying the Earnout Payment previously made by Buyer based on such computation, during the Earnout Period (the “Earnout Statement”). Unless within 60 days after receipt of such computation, Seller tenders written notice to Buyer setting forth any and all items of disagreement relating to such computation, the computation will be conclusive and binding on Seller. If Seller delivers a dispute notice within such 60-day period, Buyer and Seller will use reasonable efforts to resolve their differences for a period of 10 days. If Buyer and Seller are unable to resolve their differences within such period, Buyer and Seller will jointly retain a mutually agreed third Person (the “Earnout Referee”) to resolve such disagreement. Buyer and Seller will request that the Earnout Referee render a determination as to the computation of the aggregate Earnout Amount, and the Earnout Payment based thereon, within 45 days after its retention, and Buyer and Seller will cooperate fully with the Earnout Referee so as to facilitate a final determination as quickly and as accurately as possible. In making such resolution, the Earnout Referee will consider only those issues, items or amounts in the Earnout Statement as to which Seller has disagreed in writing in the aforementioned dispute notice. The Earnout Referee’s final determination (the “Final Earnout Report”) will be in writing and will be binding on Buyer and Seller, and the fees and expenses of the Earnout Referee will be allocated between the Parties in the same proportion that the aggregate amount of disputed items so submitted to the Earnout Referee that is unsuccessfully disputed by such Party (as finally determined by the Earnout Referee) bears to the total amount of such remaining disputed items so submitted. In the event that any amount is payable as the Earnout Payment under this subsection (c), Buyer will pay such amount by wire transfer of immediately available funds to an account designated by the Seller as soon as reasonably practicable but in no event later than 10 days following the receipt of the Final Earnout Report. In the event that the Earnout Payment is adjusted downward in the Final Earnout Report, Seller will pay such amount by wire transfer of immediately available funds to an account designated by Buyer as soon as practicable but in no event later than 10 days following the receipt of the Final Earnout Report.

(d)Buyer agrees, with respect to the Earnout, except as otherwise agreed by the Seller, such agreement not to be unreasonably withheld or delayed, that:

(i)it will use commercially reasonable efforts to cause the Business to be integrated with its existing businesses and operations promptly and in a manner that does not have a material negative impact on the Earnout Payment;

(ii)during the Earnout Period it will use commercially reasonable efforts to promote and maximize the sale of Products; and

(iii)during the Earnout Period it will not cease or materially reduce production of the Products.

Notwithstanding the foregoing, Seller acknowledges that (A) upon the closing of the Contemplated Transactions, Buyer has the right to operate the Business and Buyer’s other businesses in any way that Buyer deems appropriate in Buyer’s sole and absolute discretion, consistent with clauses (d)(i) through (d)(iii) above, (B) subject to clauses (d)(i) through (d)(iii) above, Buyer has no obligation to operate the Business in order to achieve any Earnout Payment or to maximize the amount of the Earnout Payment during the Earnout Period or any particular Earnout Quarter, (C) the Earnout Payment is speculative and

is subject to numerous factors outside the control of Buyer and Seller, (D) there is no assurance that Seller will receive any Earnout Payment and Buyer has not promised nor projected any Earnout Payment, (E) Buyer owes no fiduciary duty or, subject to clauses (d)(i) through (d)(iii) above, express or implied duty to the Seller, including an implied duty of good faith and fair dealing, and (F) the Parties solely intend the express provisions of this Agreement to govern their contractual relationship. Seller hereby waives any fiduciary duty or, subject to clauses (d)(i) through (d)(iii) above, express or implied duty of Buyer to the Seller, including an implied duty of good faith and fair dealing.

(e)Buyer agrees that, if requested by Seller, it will meet with Seller at a mutually agreeable time once each quarter at the Buyer’s principal executive offices during regular business hours, at Seller’s sole expense, to discuss the level of sales of Products. Buyer agrees that it will consider in good faith the suggestions of Seller concerning increasing the sales of Products. If requested by Seller within 60 days from the end of the Earnout Period, Buyer will cooperate with and allow Seller and any representative of Seller, during normal business hours and subject to customary confidentiality restrictions, upon reasonable notice and at Seller’s expense, to conduct an audit of Buyer’s records with respect to the Earnout Payment.

2.8Allocation of Purchase Price. As soon as practicable following the Closing, Seller will provide to Buyer for Buyer’s review and approval (which approval will not be unreasonably withheld) proposed allocation of the Initial Purchase Price and all other capitalizable costs, among the various classes of Transferred Assets (as such classes are defined for the purposes of Section 1060 of the Code). All allocations made pursuant to this Section 2.8 will be made in accordance with the requirements of Section 1060 of the Code. Neither Party will take a position on any Tax return (including Internal Revenue Service Form 8594), before any domestic, foreign, national, state, county or municipal or other local governmental entity, including any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising any Tax authority or any other entity exercising Tax regulatory authority (“Tax Authority”) or in any judicial proceeding that is in any manner inconsistent with such allocation without the written consent of the other Party or unless specifically required pursuant to a determination by an applicable Tax Authority. The Parties will promptly advise each other of the existence of any Tax audit, controversy or litigation related to any allocation hereunder.

ARTICLE III. CLOSING

3.1Closing. Subject to the terms and conditions of this Agreement, the Closing will take place at the offices of Baker & McKenzie LLP located at 660 Hansen Way, Palo Alto, California 94304, or at such other location as the parties may agree.

3.2 Actions at the Closing. At the Closing:

(a)Seller will deliver, or will cause to be delivered, to Buyer (i) the various certificates, instruments and documents referred to in Section7.2 hereof, and (ii) subject to Section2.5 hereof, the Transferred Assets and make available to Buyer the facilities and premises, including all of the buildings, structures, improvements and fixtures, that are the subject of the Lease (the “Leased Facilities”) or owned by Seller; and

(b)Buyer will deliver to Seller (i) the various certificates, instruments and documents referred to in Section7.3 hereof, and (ii) the Initial Purchase Price by wire transfer of immediately available funds, to an account to be designated by Seller no later than two (2) business days prior to the Closing.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth specifically on the disclosure schedule, dated as of the date of this Agreement and delivered by Seller to Buyer (the “Disclosure Schedule”), Seller represents and warrants to Buyer that the statements set forth in this ArticleIV are accurate and complete as of the date hereof and as of the Closing Date. The Disclosure Schedule will be prepared and arranged in Sections and paragraphs corresponding to the numbered and lettered sections and paragraphs contained in this Article IV, and the disclosure in any Section or paragraph of the Disclosure Schedule qualifies other sections and paragraphs in this Article IV only to the extent it is clear that a given disclosure is applicable to other sections or paragraphs. Notwithstanding the foregoing, in no event will any disclosure or other information set forth on any schedule prepared or delivered in connection with this Agreement (other than pursuant to this ArticleIV) be deemed to qualify any representation or warranty of this Article IV unless a specific reference is included in the Disclosure Schedule to such effect.

4.1Organization, Standing and Power. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Seller has the requisite corporate power and authority, and all necessary permits, authorizations, consents, and approvals of all Governmental Entities to own, lease and operate its properties and to carry on the operation of the Business as now being conducted except where the failure to have such permits, authorizations, consents, and approvals would not have a Material Adverse Effect on the Business. Seller is duly qualified or licensed as a foreign corporation to do business, and, where applicable, is in good standing, in each jurisdiction where the failure to be so qualified would have a Material Adverse Effect on the Business.

4.2Authority. The execution and delivery of this Agreement by Seller and the other Acquisition Documents to be executed and delivered by Seller, the performance by Seller of its obligations hereunder and thereunder, and the completion by Seller of the Contemplated Transactions have been duly authorized by all necessary action by the Board of Directors of Seller, and no other act or proceeding on the part of or on behalf of Seller or its stockholders is necessary to approve the execution and delivery of this Agreement and other Acquisition Documents, the performance by Seller of its obligations hereunder and thereunder and the completion of the Contemplated Transactions. The signatory officers of Seller have the power and authority to execute and deliver this Agreement and the other Acquisition Documents to be executed and delivered by Seller pursuant hereto, to complete the Contemplated Transactions and to take all other actions required to be taken by Seller pursuant to the provisions hereof and thereof.

4.3Execution and Binding Effect. This Agreement has been duly and validly executed and delivered by Seller and constitutes, and the other Ancillary Agreements to be executed and delivered by Seller pursuant hereto, upon their execution and delivery by Seller, will constitute (assuming, in each case, the due and valid authorization, execution and delivery thereof by Buyer), legal, valid and binding agreements of Seller, enforceable against Seller in accordance with their respective terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other laws and equitable principles affecting the enforcement of creditors’ rights generally or provisions limiting competition, and by equitable principles.

4.4Consents and Approvals of Governmental Entities. Other than the Governmental Authorizations, there is no requirement applicable to Seller to make any filing, declaration or registration with, or to obtain any permit, authorization, consent or approval of, any Governmental Entity as a condition to the lawful completion by Seller of the Contemplated Transactions and the other agreements and instruments to be executed and delivered by Seller pursuant to this Agreement, except for filings that are referred to in Section4.4 of the Disclosure Schedule.

4.5No Violation. Neither the execution, delivery and performance of this Agreement and the other Acquisition Documents to be executed and delivered by Seller pursuant to this Agreement, nor the completion of the transactions contemplated hereby or thereby, will, with or without the passage of time or the delivery of notice or both, (a) conflict with, violate or result in any breach of the terms, conditions or provisions of the Certificate of Incorporation or Bylaws of Seller, each as amended to date, (b) except with respect to the Required Consents (as defined herein), conflict with or result in a violation or breach of, or constitute a default or require consent of any Person (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any Assumed Contract or other instrument or obligation to which any of the Transferred Assets or the Business may be bound, (c) violate any Law applicable to Seller or by which any Transferred Assets may be bound or otherwise subject, or (d) result in the creation or imposition of any Lien on any of the Transferred Assets.

4.6Consents. Section4.6 of the Disclosure Schedule sets forth each Assumed Contract that requires the consent of another Person or party thereto in connection with the execution and delivery of this Agreement or the completion of the Contemplated Transactions (each a “Required Consent”).

4.7Absence of Certain Changes. Except as set forth in Section 4.7 of the Disclosure Schedule, since March 31, 2007, (i) there has not been any Material Adverse Effect on the Business, nor has there occurred any event or development which would reasonably likely result in such a Material Adverse Effect on the Business prior to the Closing Date, and (ii) Seller has conducted the Business in the ordinary course of business, consistent with past practice. Without limiting the generality of the foregoing, since March 31, 2007, Seller has not taken any of the actions set forth in paragraphs (a) through (m) of Section 6.1 hereof, other than actions undertaken after the date hereof in accordance with Section 6.1 hereof (it being acknowledged and agreed by the Parties that, for the purposes of the foregoing representation by Seller made as of the date hereof, such representation will not be deemed to include any actions set forth under paragraphs (i) or (j) thereof).

4.8 Transferred Assets Generally.

(a)Other than the Licensed Technology, the Licensed Third Party Technology (as defined in Section 4.8(e) and set forth in Section 4.8(e) of the Disclosure Schedule), the Required Consents, the Governmental Approvals and Patents owned by third Persons, of which such Patents Seller does not have Knowledge (“Unknown Third Party Patents”), no licenses or other consents from, or payments to any other Person are or will be necessary for Buyer to operate the Business (excluding, for such purposes, the Product Designs and Concepts) and use the Transferred Assets in a manner substantially equivalent to the manner in which Seller has used the Transferred Assets (excluding, for such purposes, the Product Designs and Concepts) prior to the Closing Date.

(b)Seller holds good title or license to all of the Transferred Assets free and clear of any Liens, and subject to its receipt of the Required Consents or Governmental Approvals, has the power and right to sell, assign, and deliver the Transferred Assets to Buyer. Upon completion of the Contemplated Transactions, Buyer will acquire good title or license to the Transferred Assets free and clear of any Liens, other than those listed on Section4.8(b) of the Disclosure Schedule.

(c)Except as listed on Section 4.8(c) of the Disclosure Schedule, there exists no restriction on the use or transfer of the Transferred Assets.

(d)Other than with respect to Intellectual Property Rights (which are exclusively addressed in Section4.8(e) hereof), and the Excluded Assets described in Sections2.2(h) and 2.2(j) of this Agreement, the Transferred Assets (i) that are tangible personal property are in good operating

condition and repair (reasonable wear and tear excepted), as required for their use by Seller as presently conducted, and (ii) constitute all of the assets and properties used in the Business as of the Closing Date (excluding, for such purposes, the Product Designs and Concepts), and necessary for the operation of the Business (excluding, for such purposes, the Product Designs and Concepts).

(e)The Technology licensed by Seller from third Persons set forth in Section 4.8(e) of the Disclosure Schedule (“Licensed Third Party Technology”) constitutes all Technology licensed by Seller from any Person that is used by Seller in the Business up to the Closing Date, excluding any third party generally available, off-the-shelf business software and licenses thereto used by Seller. The Licensed Third Party Technology, together with the Assigned Technology and Licensed Technology (and the Intellectual Property Rights therein and thereto) constitute all of the Technology and Intellectual Property Rights, other than the Excluded Technology, used in the Business as of the Closing Date (excluding, for such purposes, the Product Designs and Concepts), and necessary for the operation of the Business (excluding, for such purposes, the Product Designs and Concepts). The Excluded Technology does not include any Technology that is embodied or incorporated in or otherwise necessary to make, have made, sell, support or import any of the Products.

(f)Section 4.8(f) of the Disclosure Schedule sets forth in tabular form an accurate and complete schedule of all royalties or similar payments payable per Product shipped by Seller to any Person. Seller has made available to Buyer true and complete copies of all Contracts pursuant to which any such royalties or similar payments are due and payable by Seller, and no subsequent written or oral modifications have been made to such Contracts.

4.9 Intellectual Property.

(a)The Registered Intellectual Property Rights listed on Section 4.9(a)(i) of the Disclosure Schedule constitute all Registered Intellectual Property Rights, other than the Excluded Technology, owned by Seller that are used in the Business. The Registered Intellectual Property Rights listed in Section 4.9(a)(ii) of the Disclosure Schedule constitute all of the Registered Intellectual Property Rights, other than the Excluded Technology, owned by Seller that are embodied in the Product Designs and Concepts. Section4.9(a)(iii) of the Disclosure Schedule lists any pending or, to Seller’s Knowledge, threatened, proceedings or actions before any court, tribunal (including the United States Patent and Trademark Office (the “USPTO”), the United States Copyright Office (the “USCO”) or equivalent authority anywhere in the world) related to any of such Registered Intellectual Property Rights (including any opposition, interference, reexamination or similar proceedings). Section 4.9(a)(iv) of the Disclosure Schedule sets forth a complete and accurate list of all unregistered Marks comprising the Assigned Technology (which list constitutes all unregistered Marks used in the Business), and lists any pending or known threatened proceeding concerning any such Mark. As of the Closing Date, except for the Registered Intellectual Property Rights described above and as set forth in Section 4.9(a)(v) of the Disclosure Schedule (a) there are no abandoned Registered Intellectual Property Rights nor abandoned applications for Registered Intellectual Property Rights, with respect to the Assigned Technology, and (b) there are no invention disclosures or unfiled applications for Registered Intellectual Property Rights (and no applications being prepared) with respect to any Assigned Technology.

(b)Each registration of Registered Intellectual Property Rights is subsisting and in force, and all necessary registration, maintenance and renewal fees in connection with such Registered Intellectual Property Rights that became due and payable on or before the Closing Date have been paid and all necessary documents and certificates in connection with such Registered Intellectual Property Rights that were required to be filed on or before the Closing Date have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions (“Registration Offices”), as the case may be, for the purposes of maintaining such Registered Intellectual

Property Rights. Except as set forth on Section 4.9(b) of the Disclosure Schedule, to Seller’s Knowledge, there are no actions that must be taken by Seller within 120 days of the Closing Date, relating to the payment of any registration, maintenance or renewal fees or the filing of any responses to Registration Offices actions, documents, applications or certificates for the purposes of obtaining, maintaining, perfecting or preserving or renewing any Registered Intellectual Property Rights.

(c)Each item of Assigned Technology and each Assigned Mark is owned by Seller, free and clear of any Liens, except for those set forth on Section 4.9(c)(i) of the Disclosure Schedule. Since January 1, 2002, Seller has not received any written claim from a third Person asserting that Seller is not the sole owner of all right, title and interest in and to the Assigned Technology and each Assigned Mark or that any such Assigned Technology or Assigned Mark is invalid, unenforceable or infringed. Section 4.9(c)(ii) of the Disclosure Schedule sets forth a complete and accurate list of any and all licenses or other rights that have been granted by Seller with respect to the Assigned Technology and the Assigned Mark, and true and complete copies of all Contracts (including any amendments whether in writing or otherwise) documenting such rights have been made available to Buyer.

(d)All Assigned Technology was either (i) developed, written or created by employees of Seller acting within the scope of their employment who have effectively transferred all rights in and to such Technology to Seller as of the Closing Date as contemplated in Section 4.9(e), or (ii) developed and created by third Persons (including consultants and contractors) who have validly and irrevocably assigned their rights in such Technology to Seller, and no third Person owns or has any rights to any such Assigned Technology. Section 4.9(d) of the Disclosure Schedule sets forth a complete and accurate list of such employees and such third Persons, if any.

(e)Except as set forth on Section4.9(e) of the Disclosure Schedule, each of the employees of Seller who has created or contributed to any Assigned Technology has entered into a valid and binding written proprietary information, confidentiality and assignment agreement with Seller (substantially in the form set forth on Section 4.9(e) of the Disclosure Schedule), sufficient to irrevocably vest title in Seller of all such Assigned Technology including all accompanying Intellectual Property Rights, created by such Transferred Employee, in the scope of his or her employment with Seller.

(f)Except as set forth on Section4.9(c)(ii) of the Disclosure Schedule, Seller has not transferred ownership of any Assigned Technology or Assigned Mark to any other Person. There are no outstanding licenses of any Licensed Technology to any Restricted Entities (as such term is defined in the Intellectual Property Assignment and License Agreement).

(g)Except as set forth on Section 4.9(g) of the Disclosure Schedule, there are no Contracts or licenses between Seller and any other Person with respect to Assigned Technology or Licensed Technology (each, an “IP Related Agreement”) under which there is any dispute regarding the scope of such agreement, or performance under such agreement, including with respect to any payments to be made or received by Seller thereunder, and to Seller’s Knowledge, no such dispute has been threatened. Without limiting the foregoing or anything in Section4.17 hereof, to Seller’s Knowledge, Seller is not alleged to be in default in any material respect of any IP Related Agreement, and there exists no default or event of default or event, occurrence, condition or act with respect to Seller or, to Seller’s Knowledge, with respect to the other contracting Person which, with the giving of notice or the lapse of time, would become a default or event of default under any IP Related Agreement.

(h)The operation of the Business by Seller prior to the Closing Date does not, to the Knowledge of Seller, infringe or misappropriate any Intellectual Property Right of any other Person, and since January 1, 2002, Seller has not received notice from any Person claiming or asserting that such operation of the Business (including any of the Assigned Technology or Licensed Technology) infringes

or misappropriates any Intellectual Property Right of any Person (such notice including any invitation to license).

(i)Since January 1, 2002, Seller has not brought or threatened to bring any action (or otherwise made any claim or assertion) concerning the infringement or misappropriation of any Assigned Technology or Assigned Mark. To the Knowledge of Seller, no Person is infringing or misappropriating any Assigned Technology or Assigned Mark.

(j)No Assigned Technology or Assigned Mark is subject to any proceeding or outstanding decree, order, judgment or settlement agreement or stipulation that restricts in any manner the use, transfer or licensing thereof by Seller.

(k)Except as set forth on Section 4.9(k) of the Disclosure Schedule, Seller has the right to grant the licenses granted to Buyer under the Intellectual Property Assignment and License Agreement.

(l)Seller has taken all commercially reasonable steps necessary to protect and preserve trade secrets and other Confidential Information included in the Assigned Technology or Licensed Technology.

(m)No government funding, facilities of a university, college, other educational institution or research center, was used in the creation or development of the Assigned Technology. Seller is not a party to any Contract or license with any Governmental Authority that grants to such Governmental Authority any right or license with respect to the Assigned Technology. Except as set forth on Schedule 4.9(m) of the Disclosure Schedule, Seller is not a member of, and Seller is not obligated to license or disclose any Intellectual Property to, any official or de facto standards setting or similar organization or to any of such organization’s member.

(n) Software.

(i)Each of the Software programs included in the Assigned Technology is functional and operational substantially in accordance with the specifications and documentation of Seller relating to that Software. Seller possesses full and complete source and object code versions of all such Software. The Assigned Technology and Licensed Technology, as applicable, include all items necessary so that a trained computer programmer can develop, maintain, support, compile and use that Software.

(ii)Seller takes commercially reasonable steps at all times to assure that all Software and data residing on its computer networks or licensed or otherwise distributed to customers is free of viruses and other disruptive technological means. The Assigned Technology and the Licensed Technology, as applicable, do not contain any Harmful Code.

(iii)Except as set forth on Section 4.9(n)(iii) of the Disclosure Schedule, there is no open source software incorporated into the Software within the Assigned Technology. Furthermore, none of the Software within the Assigned Technology is, in whole or in part, subject to any written open source agreement. For purposes of this Section 4.9(n)(iii), an “open source agreement” means any agreement or other type of license agreement or distribution model agreement that: (A) requires the distribution or making available of the source code for any such Software; (B) prohibits or limits Seller from charging a fee or receiving consideration in connection with sublicensing or distributing any such Software; (C) except as specifically permitted by law, grants any right to any Person (other than Seller) or otherwise allows any such Person to decompile, disassemble or otherwise reverse-engineer any

such Software; or (D) requires the licensing of any such Software for the purpose of making derivative works.

4.10Warranties and Indemnities. Section4.10 of the Disclosure Schedule sets forth all forms of guaranty, warranty, right of return, right of credit or other indemnity that legally bind Seller in connection with any goods or services manufactured, sold, licensed, leased or delivered by Seller. No Product is subject to any guaranty, warranty or other indemnity beyond the applicable standard terms and conditions of sale or lease set forth in Section 4.10 of the Disclosure Schedule. Seller has no Liability (and no facts or circumstances exist that could reasonably be expected to give rise to any proceeding, claim or demand against any of them giving rise to any Liability) for replacement or repair of any Product manufactured, sold or delivered by Seller or other damages in connection therewith, subject only to the specific reserve for product warranty claims set forth in Section 4.10 of the Disclosure Schedule (itemized as to specific Products), as adjusted for the passage of time through the Closing Date in the ordinary course, consistent with the past practice of Seller.

4.11Leased Facilities. Seller has not entered into any lease, sublease, assignment or other agreement transferring any of its interest in the Leased Facilities.

4.12Inventory. Section4.12 of the Disclosure Schedule sets forth all of the inventory of Seller related to the Existing Products as of May 31, 2007. The inventory was, and all inventory hereafter acquired and maintained through the Closing Date will have been, acquired and maintained in the ordinary course, consistent with past practice.

4.13Compliance with Laws. Except as set forth in Section 4.13 of the Disclosure Schedule, Seller’s operation of the Business has not been at any time since 2002, and is not currently, in material breach of any Law applicable to the Business.

4.14 Employees.

(a)Except as set forth on Section 4.14(a) of the Disclosure Schedule, all Employees (as defined herein) that have had access to the Assigned Technology and Licensed Technology are parties to written agreements (each, a “Confidentiality Agreement”), under which each such person (i) is obligated to disclose and transfer to Seller, without the receipt by such person of any additional value therefor (other than normal salary or fees for consulting services), all inventions, developments and discoveries (including all Intellectual Property Rights related or included therein) which, during the period of employment with or performance of services for Seller, he or she makes or conceives of either solely or jointly with others, that relate to any subject matter with which his or her work for Seller may be concerned, or relate to or are connected with the Business or the Transferred Assets, or involve the use of the time, material or facilities of Seller, and (ii) is obligated to maintain the confidentiality of proprietary information of Seller.

(b)Except for the Confidentiality Agreements or as set forth on Section 4.14(b) of the Disclosure Schedule, there are no Contracts of employment, change in control agreements, severance plans, or other arrangements in place between Seller and any Transferred Employee (as defined herein).

(c)Seller is not a party or otherwise subject to any collective bargaining agreement governing the wages, hours or terms of employment of its employees engaged in the conduct of the Business, and Seller is not aware of any effort to organize any such employees as a part of any collective bargaining or similar unit, nor has any such organizational effort been made or threatened by or on behalf of any labor union (which includes any application or request for recognition) within the last twenty-four months. Seller has not experienced within the last 24 months any strikes or other industrial actions,

grievances, claims of unfair labor practices, or other collective bargaining disputes or trade disputes. There is no union or any employee group that must be notified or consulted with in connection with the Contemplated Transactions.

(d)To Seller’s Knowledge, no Employee is in breach of his or her Confidentiality Agreement or other Contract with Seller.

(e)Section4.14(e) of the Disclosure Schedule contains an accurate list of the name, title, accrued vacation and paid time off and annual compensation for each Transferred Employee (including wages, salary, or, with respect to Transferred Employees compensated on an hourly or per diem basis, the hourly or per diem rate of compensation, commissions, fringe benefits, bonuses and other payments or benefits of any type, promised or contemplated increases in wages, salary, compensation, commissions, fringe benefits, bonuses or other payment or benefits of any type, promised or contemplated promotions, and service credited for purposes of vesting and eligibility to participate under any Employee Benefit Plans), and identifies each Transferred Employee who is on a Seller-approved leave of absence and the type of such approved leave.

(f)To Seller’s Knowledge, Seller has not committed any unfair labor practice or violated any applicable Laws or its own policies with regard to any Transferred Employees since 2002, including but not limited to those relating to wages and hours, including overtime, rest and meal periods, discrimination in employment, occupational health and safety, fair employment practices, terms and conditions of employment, equal employment opportunity, benefits or workers’ compensation.

(g)Seller has properly paid all wages and salaries and employment Taxes (including social security taxes and other payroll taxes and including any share owed by Seller and any share that Seller was required to withhold from the compensation paid to Employees) and is not liable for any penalties or arrears, except for any arrears that would exist in the ordinary course of business and would be in compliance with applicable law.

(h)All Transferred Employees are authorized and have appropriate documentation to work in the United States and Seller is in compliance with applicable immigration Laws.

(i)Seller has not experienced any layoff or plant closing within the last twelve months that would give rise to Liability under the Worker Adjustment and Retraining Notification Act or any similar Law.

4.15Employee Benefit and Compensation Plans. Section4.15 of the Disclosure Schedule contains a complete and accurate list of all Employee Benefit Plans. Neither Seller nor any of its ERISA Affiliates sponsors, maintains or contributes to, nor, during the last six years, has sponsored, maintained or contributed to (or been obligated to sponsor, maintain or contribute to), (i) a multiemployer plan as defined in Section 3(37) of ERISA, (ii) a multiple employer plan within the meaning of Section 4063 or 4064 of ERISA, or (iii) an employee benefit plan, fund, program, contract or arrangement that is subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA, for the benefit of any employees assigned to the Products. Each Employee Benefit Plan is in substantial compliance in form and operation with the applicable requirements provided by any and all applicable law, including but not limited to ERISA and the Code. Except as disclosed on Section 4.15 of the Disclosure Schedule, the completion of the Contemplated Transactions (either alone or in conjunction with any other event) will not trigger any change of control payments under, cause accelerated vesting, payment or delivery of, or increase the amount or value of any payment or benefit under or in connection with any Employee Benefit Plan.

4.16Taxes. There are no liens for Taxes on the Transferred Assets, other than Taxes not yet due and payable as of the Closing Date. There are no pending or, to the Knowledge of Seller, threatened proceedings with respect to Taxes relating to the Transferred Assets. Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code.

4.17 Contracts.

(a)Section 4.17(a) of the Disclosure Schedule contains a list of all Contracts which are material to the Transferred Assets (“Material Contracts”), as follows:

(i)each Contract (other than routine purchase orders given and pricing quotes received in the ordinary course of business and covering a period of less than one year) for the purchase of inventory, spare parts, other materials or personal property with any supplier or for the furnishing of services relating to the Products which (A) involved consideration of more than $500,000 in the aggregate during the calendar year ended December 31, 2006, (B) is likely to involve consideration of more than $500,000 in the aggregate during the calendar year ending December 31, 2007 or (C) cannot be canceled without penalty or further payment of at least $500,000;

(ii)each customer Contract relating to the Products (other than routine purchase orders, pricing quotes with open acceptance and other tender bids, in each case, entered into in the ordinary course of business and covering a period of less than one year) which (A) involved consideration of more than $500,000 in the aggregate during the calendar year ended December 31, 2006, (B) is likely to involve consideration of more than $500,000 in the aggregate during the calendar year ending December 31, 2007, or (C) cannot be canceled without penalty or further payment of at least $500,000;

(iii)(A) all distributor, manufacturer’s representative, broker, franchise, agency and dealer Contracts relating to the Products and (B) all sales promotion, market research, marketing and advertising Contracts relating to the Products which (1) involved consideration of more than $500,000 in the aggregate during the calendar year ended December 31, 2006, or (2) is likely to involve consideration of more than $500,000 in the aggregate during the calendar year ending December 31, 2007;

(iv)all Contracts with independent contractors or consultants (or similar arrangements) relating to the Transferred Assets;

(v)all Contracts related to the Transferred Assets (excluding routine checking account overdraft agreements involving petty cash amounts) under which Seller has incurred (A) obligations for borrowed money, (B) obligations evidenced by bonds, debentures, notes or similar instruments, (C) obligations of others for borrowed money secured by any encumbrance on property owned or acquired by Seller, whether or not the obligation secured thereby has been assumed, (D) guarantees of obligations of others for borrowed money, and (E) obligations, contingent or otherwise, as an account party in respect of letters of credit and letters of guaranty (collectively, “Indebtedness”);

(vi)all Contracts that limit the ability of any Person related to the Transferred Assets to compete in any line of business or with any Person or in any geographic area or during any period of time, or to solicit any customer or client;

(vii)all Contracts related to the Products pursuant to which Seller has agreed to supply Products to a customer at specified prices, whether directly or through a specific distributor, manufacturer’s representative or dealer;

(viii)all Contracts between or among Seller, on the one hand, and any of its Affiliates, on the other hand, relating to the Business or the Transferred Assets; and

(ix)all other Contracts (A) which are material to the Transferred Assets or (B) the early termination or cancellation of which would have a Material Adverse Effect on the Transferred Assets.

(b)Except as set forth on Section 4.17(b) of the Disclosure Schedule, Seller is not alleged to be in default in any material respect of any Material Contract, and there exists no default or event of default or event, occurrence, condition or act with respect to Seller or, to the Knowledge of Seller, with respect to the other contracting party which, with the giving of notice or the lapse of time, would become a default or event of default under any Material Contract. Each Assumed Contract is a legal, valid and binding agreement, enforceable as to Seller in accordance with its terms subject to (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies. Seller has made available to Buyer true and complete copies of all Assumed Contracts.

4.18Product Liability. There are no claims, actions or suits by any Person or Governmental Entity and, to Seller’s Knowledge, there are no inquiries, proceedings, or investigations by a Governmental Entity pending against Seller, or threatened against Seller, relating to the Business, the Products and any other services produced, sold or provided by the Business that contain allegations that defects in such products or services (including defects in design or manufacture or improper labeling) caused bodily injury, death or property damage.

4.19Litigation; Other Claims. Except as set forth on Section 4.19 of the Disclosure Schedule, there are no claims, actions or suits by any Person or Governmental Entity and there are no inquiries, proceedings, or investigations by a Governmental Entity pending against Seller, or any of its officers, directors or stockholders, relating to the Business, the Products or the Transferred Assets which are pending or, to the Knowledge of Seller, threatened, at law or in equity or before or by any Governmental Entity.

4.20Defaults. Seller is not in default under or with respect to any judgment, order, writ, injunction or decree of any court or any Governmental Entity related to or in connection with the Business, the Products or the Transferred Assets.

4.21Brokers and Finders. Seller has employed Credit Suisse Securities (USA) LLC as a broker or finder and is solely responsible for any Liabilities incurred for any brokerage fee, commission or finder’s fee in connection with the Contemplated Transactions.

4.22Insurance. There is no claim by Seller pending under any insurance policies or fidelity bonds covering the Products, Transferred Assets or Licensed Technology as to which coverage has been questioned, denied or disputed by the underwriters of such policies and bonds. All premiums due and payable under all such policies and bonds have been paid and Seller is otherwise in material compliance with the terms of such policies and bonds (or other policies and bonds providing substantially similar insurance coverage).

4.23Export Control and Foreign Corrupt Practices Act Compliance. Neither Seller nor any of its respective directors, officers, agents, representatives or employees (in their capacity as directors, officers, agents, representatives or employees) has, in respect of the Business: (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) directly or indirectly, paid or delivered any fee, commission or other sum of money or item of

property, however characterized, to any finder, agent, or other party acting on behalf of or under the auspices of a governmental official or Governmental Entity, in the United States or any other country, which is in any manner illegal under any applicable Law; (c) made any payment to any customer or supplier of Seller or any officer, director, partner, employee or agent of any such customer or supplier for an unlawful reciprocal practice, or made any other unlawful payment or given any other unlawful consideration to any such customer or supplier or any such officer, director, partner, employee or agent; or (d) violated export control Laws governing the export of technology.

4.24Limitation of Representations and Warranties; Disclosure. The representations and warranties set forth in this Article IV, and any statement made in the Disclosure Schedule, any other Acquisition Document or in any certificate or other instrument delivered in connection herewith or therewith are the only representations and warranties made by Seller with respect to the Business and the Transferred Assets. To Seller’s Knowledge, no such representation or warranty of Seller contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading. Seller represents that, to its Knowledge, the Forecast was prepared in good faith and that Seller reasonably believes there is a reasonable basis for such Forecast.

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller that the statements set forth in this ArticleV are true and complete as of the date hereof and as of the Closing Date.

5.1Organization. Buyer is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware, and has full corporate power and authority and the legal right to execute and deliver this Agreement and all of the other Acquisition Documents to be executed and delivered by Buyer pursuant hereto, and to complete the transactions contemplated hereby and thereby.

5.2Authority. The execution and delivery of this Agreement by Buyer and all other Acquisition Documents to be executed and delivered by Buyer, the performance by Buyer of its obligations hereunder and thereunder, and the completion by Buyer of the Contemplated Transactions have been duly authorized by all necessary action by the Board of Directors of Buyer, and no other act or proceeding on the part of or on behalf of Buyer or its stockholders is necessary to approve the execution and delivery of this Agreement and such Acquisition Documents, the performance by Buyer of its obligations hereunder and thereunder and the consummation of the Contemplated Transactions. The signatory officers of Buyer have the power and authority to execute and deliver this Agreement and all of the other Acquisition Documents to be executed and delivered by Buyer pursuant hereto, to complete the Contemplated Transactions and to take all other actions required to be taken by Buyer pursuant to the provisions hereof and thereof.

5.3Execution and Binding Effect. This Agreement has been duly and validly executed and delivered by Buyer and constitutes, and the other Ancillary Agreements to be executed and delivered by Buyer pursuant hereto, upon their execution and delivery by Buyer, will constitute (assuming, in each case, the due and valid authorization, execution and delivery thereof by Seller), legal, valid and binding agreements of Buyer, enforceable against Buyer in accordance with their respective terms except as enforceability may be limited by bankruptcy, insolvency, moratorium, or other laws affecting the enforcement of creditors’ rights generally or provisions limiting competition, and by equitable principles.

5.4Consent and Approvals. Other than Governmental Authorizations, there is no requirement applicable to Buyer to make any filing, declaration or registration with, or to obtain any permit, authorization, consent or approval of, any Governmental Entity as a condition to the lawful

completion by Buyer of the Contemplated Transactions and the other Acquisition Documents to be executed and delivered by Buyer pursuant hereto, except for filings the failure of making which would not have a Material Adverse Effect on Buyer.

5.5No Violation. Neither the execution, delivery and performance of this Agreement and of all the other Acquisition Documents to be executed and delivered pursuant hereto, nor the completion of the transactions contemplated hereby or thereby, will, with or without the passage of time or the delivery of notice or both, (a) conflict with, violate or result in any breach of the terms, conditions or provisions of the Certificate of Incorporation or Bylaws of Buyer, as amended to date, (b) conflict with or result in a violation or breach of, or constitute a default or require consent of any Person (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any material notice, bond, mortgage, indenture, license, franchise, permit, agreement, lease or other instrument or obligation to which Buyer is a party or by which Buyer or any of its properties or assets may be bound, or (c) violate any Law applicable to Buyer or by which any of its properties or assets may be bound, except in each case where any such conflict, violation, breach, default, required consent, termination, cancellation, or acceleration would not have, in the aggregate, a Material Adverse Effect on Buyer.

5.6Brokers and Finders. Neither Buyer nor any of its officers, directors or employees has employed any broker or finder or incurred any Liability for any brokerage fee, commission or finder’s fee in connection with the Contemplated Transactions.

5.7Financial Capability. Buyer has, or will have prior to or at the Closing (or at such other time when payment therefor is due hereunder), adequate capital resources to satisfy its monetary and other obligations under this Agreement including the obligation to pay the Aggregate Purchase Price in accordance herewith.

ARTICLE VI. COVENANTS

6.1Conduct of Business Prior to Closing. From the date of this Agreement until the Closing, Seller will (a) conduct the Business only in the ordinary course, consistent with past practice, (b) use its commercially reasonable efforts to preserve and protect the Business, its organization, assets, employment relationships, and relationships with customers, strategic partners, suppliers, distributors, landlords and others doing business with it, (c) confer with Buyer concerning operational matters of a material nature, (d) otherwise report periodically to Buyer concerning the status of its business, operations and finances, and (e) not act or omit to act in a manner that would impair or otherwise adversely affect any of the Transferred Assets or the financial or other ability of Seller to perform Seller’s obligations under this Agreement. Without limiting the generality of the foregoing and except as otherwise expressly permitted by this Agreement, Seller will not take any of the following actions with respect to the Business or the Transferred Assets, without the consent of Buyer, which will not be unreasonably withheld:

(a)voluntarily incur any Liability other than in the ordinary course or in connection with the performance or completion of the Contemplated Transactions;

(b)lease, license, sell, transfer, encumber or permit to be encumbered any Transferred Asset, except in connection with the sale of Products in the ordinary course of business, consistent with past practice;

(c)dispose of any Transferred Asset, except inventory and obsolete equipment of the Business (other than the Equipment) in the ordinary course of business, consistent with past practice;

(d) waive or release any right or claim that is a Transferred Asset;

(e) terminate or amend any Assumed Contract;

(f)increase the remuneration or otherwise change terms of employment of any Transferred Employee other than as required by law;

(g)sell any Product (i) with payment terms longer than terms customarily offered by Seller for such Product, (ii) at a greater discount from listed prices than customarily offered for such Product, other than pursuant to a promotion of a nature previously used in the ordinary course of business, consistent with past practice, for such Product, (iii) at a price that does not give effect to any general increase in the list price for such Product publicly announced prior to the Closing Date, (iv) with shipment terms more favorable to the customer than shipment terms customarily offered by Seller for such Product, (v) in a quantity greater than the reasonable resale requirement of the particular customer or (vi)  in conjunction with other material benefits to the customer not previously offered in the ordinary course of business to such customer;

(h)(i) cause the Business to merge with, enter into a consolidation with or acquire an interest of 5% or more in any Person engaged in a business relating to the Business, (ii) acquire a substantial portion of the assets or business of any Person engaged in a business relating to the Business or any division or line of business thereof, or (iii) otherwise acquire any material assets relating to the Business other than in the ordinary course of business, consistent with past practice;

(i)make any capital expenditure or commitment for any capital expenditure, in each case relating to the Business, in excess of $100,000 individually or $200,000 in the aggregate;

(j)incur any Indebtedness relating to the Business in excess of $100,000 individually or $200,000 in the aggregate;

(k)make any loan to, guarantee any indebtedness of, or otherwise incur any indebtedness on behalf of, any person in connection with the Business;

(l) do anything that would have a Material Adverse Effect on the Business; or

(m) agree to do any of the things described in this Section6.1.

6.2Distributor Inventory. In the event of any Product Returns (as defined below) during the Return Period (as defined below), Buyer will have the right to purchase from Seller up to all of such Product Returns at a price equal to Seller’s standard cost (i.e., without any markup) pursuant to this Section6.2. In the event that Seller receives any Product Returns, Seller will notify Buyer in writing, describing in reasonable detail the Products so returned and the applicable cost of such Product; provided, however, in no event will the cost applicable to a Product for the purpose of this Section6.2 exceed the average sales price for such Product as set forth on Schedule 6.2(a), which will be updated as of the Closing Date, pursuant to Section 6.18 hereof. Promptly but in no event later than 3 business days thereafter, Buyer will tender to Seller a purchase order, in the form set forth on Schedule 6.2(b), for the specific amount of Product Returns that it desires to purchase pursuant to this Section 6.2. All other terms and conditions of such purchase and sale will be as set forth in the purchase order. In the event that Buyer elects to purchase less than all Products Returns pursuant to this Section 6.2, Seller may sell to another Person any such Product Returns that Buyer has elected not to purchase. For purposes of this Section 6.2, the term “Product Returns” means any Distributor Inventory that (A) is returned to Seller within the prescribed time period (which in any event will not exceed 180 days after the Closing Date) (the “Return Period”) in accordance with a written Contract between Seller and its distribution partner(s) in effect on the date hereof that permits such distribution partner to return any Product as a direct result of

the characterization of the Contemplated Transactions as a “Change of Control” and the distribution partner identifies such a “Change of Control” as the reason for the return, (B) is made through authorized sales and distribution channels after the Closing Date, and (C) is in suitable and customary condition for sale within the industry that the Business operates. Buyer expressly agrees not to intentionally take any action or intentionally cause any other Person to take any action which would materially impede, circumvent, interfere with or otherwise materially and adversely affect Seller’s distributors in the sale of Products from such distributors’ inventory, including with respect to any distributor’s sale of Products to its customers, during the Return Period. For purposes of clarification, the provisions of this Section 6.2 do not affect Buyer’s obligations under Sections 2.3(c) and (d).

6.3Notification. From the date of this Agreement until the Closing, each Party will give prompt notice to the other Party of (a) the occurrence, or non-occurrence, of any event, the occurrence or non-occurrence of which would reasonably be expected to cause any representation or warranty of such Party contained in this Agreement to be untrue or inaccurate in any material respect, in each case at any time from and after the date of this Agreement until the Closing and (b) any failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such party under this Agreement. No notification pursuant to this Section6.3 will be deemed to amend or supplement the Disclosure Schedule, prevent or cure any misrepresentation, breach of warranty or breach of covenant, or limit or otherwise affect any rights or remedies available to the Party receiving notice, including pursuant to ArticleIX hereof.

6.4Access to Information. Prior to the Closing, Seller will permit Buyer and its representatives and agents, to make a full and complete investigation of the Business and Transferred Assets and to receive from Seller all information of Seller relating to the Business and the Transferred Assets. Without limiting this right, Seller will give to Buyer and its accountants, legal counsel, and other representatives full access, during normal business hours, at a mutually agreeable location arranged in advance, to (a) such materials and information about the Business as Buyer may reasonably request, and (b) members of management of the Business; provided, however, that the foregoing will not limit or otherwise affect the respective obligations of the Parties under Section6.11 hereof.

6.5 Consents.

(a)Subject to the other provisions of this Section6.5, each Party will use its respective commercially reasonable efforts (i) to take promptly, or cause to be taken (including actions after the Closing), all actions, and to do promptly, or cause to be done, all things necessary, proper or advisable to complete and make effective the Contemplated Transactions and (ii) as promptly as practicable after the date of this Agreement, to obtain all Governmental Authorizations from, give all notices to, and make all filings with, all Governmental Authorities, and to obtain all other consents, waivers, approvals and other authorizations from, and give all other notices to, all other third Persons, that are necessary or advisable in connection with the authorization, execution and delivery of this Agreement and the completion of the Contemplated Transactions, including the Required Consents for the Assumed Contracts and other instruments listed on Schedule 6.5(a) (“Designated Required Consents”).

(b)Subject to the foregoing, if one or more Required Consents listed on Schedule 6.5(b) (“Other Required Consents”) is not obtained prior to the Closing Date, or if an attempted assignment would be ineffective or would adversely affect Seller’s ability to convey its interest to Buyer, Seller or its agents will on or after the Closing Date, take commercially reasonable action and do or cause to be done things that are necessary or proper to assure that the rights and obligations of Seller thereunder will be preserved for the benefit of Buyer in accordance with Section 2.5(b). Buyer will be solely responsible for any and all amounts of any financial accommodations to any third Person solely in connection with such third Person’s consent to assignment of the Other Required Consents.

(c)As soon as reasonably practicable and in any event within 10 business days following the execution and delivery of this Agreement, Seller and Buyer will each file a Notification and Report Form and related material with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), will use their respective commercially reasonable efforts to obtain early termination of the applicable waiting period and will make all further filings pursuant thereto that may be necessary, proper or advisable. The foregoing will not be deemed to require Buyer to enter into any agreement, consent decree or other commitment requiring Buyer or any of its Affiliates to divest (including through the granting of any license rights) or hold separate any assets (including the Transferred Assets) or to take any other action that would have a Material Adverse Effect on Buyer or any of its Affiliates (including for this purpose, the Transferred Assets, the Assumed Liabilities and the business to be conducted with the Transferred Assets). In addition, each Party agrees to file with the applicable Governmental Entity, as soon as reasonably practicable following the date of this Agreement, any filings or similar information submissions required under any other applicable antitrust or other competition Laws. Notwithstanding the foregoing, Buyer will be solely responsible for any and all filing fees due under the HSR Act and any non-U.S. applicable laws in connection with the filings described above, and Seller will not have any Liability or other obligation with respect to the payment of such filing fee other than its own internal costs as well as costs and expenses of its counsel and advisors in connection therewith.

(d)Each Party will promptly notify the other Party of any communication it or any of its Affiliates receives from any Governmental Entity relating to the Contemplated Transactions, and will permit the other Party to review in advance any proposed communication by such Party to any Governmental Entity. Neither Party will agree to participate in any meeting with any Governmental Entity in respect of any filings, investigation or other inquiry unless it consults with the other Party in advance and, to the extent permitted by such Governmental Entity, gives the other Party the opportunity to attend and participate at such meeting. The Parties will coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other Party may reasonably request in connection with the foregoing and in seeking early termination of any applicable waiting periods including under the HSR Act. Each Party will provide to counsel for the other Party copies of all correspondence, filings or communications between them or any of their representatives, on the one hand, and any Governmental Entity or members of its staff, on the other hand, with respect to this Agreement and the Contemplated Transactions.

6.6Tax Returns. At all times following the Closing, each Party will provide the other Party (at such other Party’s expense) with such reasonable assistance, including the provision of available relevant records or other information and reasonable access to and cooperation of any employees, as may be reasonably requested by either of them in connection with the preparation of any financial statement or tax return, any audit or examination by any taxing authority, or any judicial or administrative proceeding relating to Liability for Taxes.

6.7 Post-Closing Access to Information.

(a)In order to facilitate the resolution of any claims made against or incurred by Buyer relating to the Business, for a period of three (3) years after the Closing, Seller will (i) retain the books and records relating to the Business for all periods prior to the Closing which will not otherwise have been delivered to Buyer and (ii) upon reasonable notice, afford the officers, employees, agents and representatives of Buyer reasonable access (including the right to make, at Buyer’s expense, photocopies), during normal business hours, to such books and records; provided, however, that prior to any disposal or destruction of any books and records relating to the Business after the end of such three-year period other than books and records that are not required to be maintained by law during such period, Seller will

provide to Buyer at least 10 business days prior written notice thereof. Notwithstanding the foregoing, (A) Buyer expressly acknowledges that certain of such records and materials may primarily relate to the businesses of Seller, other than the Business, and that, in such case, Seller may withhold portions thereof that do not relate to the Business, and (B) Seller will not be required to disclose to Buyer (including, for such purpose, its agents and representatives) any information if such disclosure would, in Seller’s reasonable discretion, (I) jeopardize any attorney-client or other legal privilege or (II) contravene any applicable Laws.

(b)In order to facilitate the resolution of any claims made against or incurred by Seller relating to the Business, on or after the Closing Date, at the reasonable request of Seller and subject to customary confidentiality restrictions, Buyer will afford the officers, employees, agents and representatives of Seller reasonable access (including the right to make, at Seller’s expense, photocopies), during normal business hours, the documents, operating data and records that were delivered to Buyer by Seller in connection with the Contemplated Transactions. Notwithstanding the foregoing, Buyer will not be required to disclose to Seller (including, for such purpose, its agents and representatives) any information if such disclosure would, in Buyer’s reasonable discretion, (A) jeopardize any attorney-client or other legal privilege or (B) contravene any applicable laws.

(c)On or after the Closing Date, at the reasonable request of either Party and subject to customary confidentiality restrictions, the other Party will cooperate with the requesting Party, and provide reasonable assistance to the requesting Party (including causing its personnel to be available for interviews during normal working hours), in connection with the requesting Party’s preparation of any historical or pro forma financial statements relating to, or otherwise involving, the Business as such financial statements may be required under applicable rules or regulations of the United States Securities and Exchange Commission; provided, however, that no such cooperation or provision of assistance will unreasonably interfere with the conduct of the businesses of the other Party. The requesting Party will compensate the other Party based on an hourly rate to be agreed by the Parties in good faith prior to making any personnel of the other Party available, and the requesting Party will also reimburse the other Party for any all out-of-pocket costs and expenses incurred in connection therewith.

6.8Further Assurances. Prior to and following the Closing, each Party agrees to cooperate fully with the other Party and to execute such further instruments, documents and agreements, and to give such further written assurances, as may be reasonably requested by any other Party to evidence and reflect better the Contemplated Transactions and to carry into effect the intents and purposes of this Agreement. In connection therewith, each Party agrees to comply, and will cause its applicable Affiliates to comply, with its respective pre-Closing commitments, obligations and covenants under the other applicable Acquisition Documents.

6.9 Taxes.

(a)Notwithstanding any legal requirements to the contrary, Buyer will be responsible for and will reimburse Seller for any Transfer Taxes when due. Buyer will, at its own expense, file all necessary tax returns and other documentation with respect to all such Transfer Taxes; provided, however, that, if required by law, Seller will join in the execution of any such tax returns and other documentation.

(b)Seller will be responsible for and will pay any Taxes arising or resulting from or in connection with the conduct of the Business or the ownership of the Transferred Assets attributable to the Pre-Closing Period. Buyer will be responsible for and will pay any Taxes arising or resulting from or in connection with the conduct of the Business or the ownership of the Transferred Assets attributable to the Post-Closing Period.

(c)All real property, personal property, ad valorem or other similar Taxes (not including income Taxes) payable with respect to the Transferred Assets or the Business in a taxable period which includes (but does not end on) the Closing Date will be apportioned between Buyer and Seller based on the number of days included in such period through and including the Closing Date and the number of days included in such period after the Closing Date; provided, however, that Seller will not be responsible for any increased assessments on real or personal property resulting from the Contemplated Transactions.

6.10 Seller Debt Arrangements.

(a)As of the date hereof, Seller has obtained the written consent of the Required Lenders (as defined in the Fourth Amended and Restated Loan Agreement, dated as of June 20, 2006, by and among Seller and the Other Borrowers Named therein and Special Value Expansion Fund, LLC and Special Value Opportunities Fund, LLC, as Lenders, and Obsidian, LLC, as Agent and Collateral Agent (the “Existing Loan Agreement”)) to the sale of, and the release of all Liens under the Existing Loan Agreement relating to, the Transferred Assets, and has caused a copy of such consent (the “Senior Lender Consent”) to be delivered to Buyer. From the date of this Agreement through the Closing, Seller will (x) keep Buyer apprised of any communications between or among Seller, any Lender (as defined in the Existing Loan Agreement) and/or Agent, and (y) deliver to Buyer copies of any written communications received from Agent or any Lender (including a written summary of any oral communications) as follows:

(i)promptly following receipt (but in no event more than 36 hours thereafter), to the extent such communications relate, or could reasonably be interpreted to relate, in any respect to (A)(I) a withdrawal, rescission or modification, or a threat of withdrawal, rescission or modification, of the Senior Lender Consent, (II) the failure to release a Lien on any Transferred Asset, or (III) the imposition or threatened imposition of a Lien on any Transferred Asset, (B) any allegation or threat that Seller is in default under any provision of the Existing Loan Agreement (including for such purpose any agreements entered into in connection therewith), or that a Default (as such term is defined in the Existing Loan Agreement) or Event of Default (as such term is defined in the Existing Loan Agreement) has occurred or is likely to occur, or (C) any proposed amendment or waiver by any party under the Existing Loan Agreement (including for such purpose any agreements entered into in connection therewith); or

(ii)as soon as reasonably practicable following receipt (but in no event more than five (5) business days thereafter), in all other cases.

(b)The Senior Lender Consent will not be withdrawn or rescinded, and will remain in full force and effect at all times through and including the Closing. Seller will not amend or otherwise alter the Senior Lender Consent without the prior written consent of Buyer in its sole and absolute discretion.

(c)From the date of this Agreement through the Closing, Seller will (i) use its best efforts to keep Buyer apprised of any communications between or among Seller and any proposed new lender or source of new Indebtedness, and (ii) promptly deliver to Buyer drafts of the definitive documentation relating to any proposed new arrangement relating to Indebtedness.

6.11 Confidentiality.

(a)Each Party agrees to continue to abide by that certain confidentiality letter agreement dated as of March 7, 2007 (the “Nondisclosure Agreement”), the terms of which are

incorporated by reference in this Agreement and which terms will survive until the Closing, at which time paragraphs 2, 4, 7, 8 and 13 only of the Nondisclosure Agreement will terminate and the Nondisclosure Agreement will otherwise continue in full force and effect. If this Agreement is, for any reason, terminated prior to the Closing, the entire Nondisclosure Agreement will continue in full force and effect. The existence of this Agreement, the Intellectual Property Assignment and License Agreement and the other Acquisition Documents and the terms hereof and thereof (including the exhibits and schedules appended hereto) will be deemed “Confidential Information” for purposes of the Nondisclosure Agreement. In addition, for the purposes hereof and thereof, Licensed Technology (other than Licensed Patents) will be included within the definition of Confidential Information under the Nondisclosure Agreement, but may be used and disclosed by Buyer in accordance with the terms and conditions of the Intellectual Property Assignment and License Agreement. Promptly following the Closing, Seller will notify each Person with which Seller has entered into a nondisclosure agreement with respect to the evaluation of the sale of the Business (including any material portion thereof) that it is required to return or destroy (pursuant to the terms of such agreements) any materials or information provided to such parties that would constitute “Confidential Information” for purposes of the Nondisclosure Agreement, and, beginning on the date hereof, neither Seller nor any of its Affiliates will waive affirmatively any right under any such agreement without the prior written consent of Buyer.

(b)After the Closing, Seller will hold, and Seller will cause its Affiliates and its and their respective accountants and advisors to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of Law, all documents and information to the extent relating to the Business (the “Business Information”), except to the extent that such Business Information (i) must be disclosed in connection with the obligations of Seller pursuant to the other Acquisition Documents, (ii) can be shown to have been in the public domain through no fault of Seller, or (iii) was later lawfully acquired by Seller from Persons other than those related to its prior ownership of the Business. In the event that Seller or any of its agents, representatives, Affiliates, employees, officers or directors (each, a “Seller Disclosing Party”) becomes legally compelled to disclose any Business Information, such Seller Disclosing Party will provide Buyer with prompt written notice of such requirement so that Buyer may seek a protective order or other remedy or waive compliance with this Section6.11(b). All expenses reasonably incurred by Seller in seeking a protective order or other remedy will be borne by Buyer. In the event that such protective order or other remedy is not obtained, or Buyer waives compliance with this Section6.11(b), such Seller Disclosing Party will furnish only that portion of such Business Information which is legally required to be provided and will exercise its best efforts to obtain assurances that confidential treatment will be accorded such Business Information. Notwithstanding the foregoing, in no event will this Section6.11(b) limit or otherwise restrict Seller’s use of the Business Information in connection with its indemnification obligations hereunder, including the defense of any Third Party Claims.

(c)For purposes of securities law compliance, each Party agrees not to issue any press release or make any other public announcement relating to this Agreement without the prior written approval of the other Party, except that each Party reserves the right, without the other Party’s prior consent, to make any public disclosure it believes in good faith is required by applicable securities laws or securities listing standards (in which case the disclosing party agrees to use reasonable efforts to advise the other party prior to making such disclosure) and agrees to provide the content of such disclosure to Buyer at least two business days prior to the date of the disclosure.

6.12 Use of Vitesse Name.

(a)Seller hereby grants to Buyer a non-exclusive, worldwide, fully-paid up license effective for 180 days immediately following the Closing Date (i) to use the Names and Marks (as defined herein) only as needed to indicate that the Products previously sold by Seller are now sold by

Buyer; and (ii) to use, market, sell and distribute the Product Distribution Material (as defined herein) and Product Marketing Material (as defined herein) acquired by Buyer under this Agreement; provided, however, that the foregoing license does not include the right for Buyer to reproduce the Product Distribution Material or Product Marketing Material that contain any of the Names and Marks or create derivatives of such materials if such derivatives contain any of the Names and Marks. Buyer will also have the right for 180 days immediately following the Closing Date to use, market, sell and distribute Products that bear any of the Names and Marks and that have been manufactured (or are in production) as of the Closing Date or on which any of the Names and Marks are applied by masks, molds or other tooling required under this Agreement; provided, however, that Buyer will not have any right to manufacture any Products bearing any of the Names and Marks. When using the Names and Marks, Buyer will also indicate that Buyer is not affiliated with Seller and that Seller does not sponsor the activities of Buyer. Notwithstanding anything to the contrary herein, Buyer will have the right in perpetuity to use, sell and distribute Products (and Product Distribution Material) that bear any of the Names and Marks and that have been manufactured (or are in production) as of the Closing Date (including any Products sold by Seller and returned to Buyer by customers and distributors).

(b)Buyer may not, without the prior written consent of Seller, remove or alter any trademark notice, copyright notice, patent notice or any other legends affixed to or used in marketing collateral in connection with the Products, or any container or package for the Products. Seller will have the right to exercise quality control over the use made by Buyer of the Names and Marks to the limited degree necessary to maintain the validity of the Names and Marks and to protect the goodwill associated with the Names and Marks.

(c)For the purposes of this Section 6.12, the following definitions will apply: (i) “Names and Marks” means Seller’s corporate name and such trademarks, service marks, trade dress, slogans, logos and other incidica of source or origin of Seller that, as of the Closing Date, appear on any Product, and/or appear in or on Product Distribution Material or Product Marketing Material; (ii) “Product Distribution Material” means Product packaging, Product user guides, Product instructional material, or other inserts or material distributed with the Products; and (iii) “Product Marketing Material” means any product specifications, advertising or promotional material for the Products.

6.13Intercompany Arrangements. Seller will cause any contract or arrangement that is disclosed (or should have been disclosed) in Section4.17(a)(viii) of the Disclosure Schedule and to the extent related to the Business, to be terminated, effective no later than as of the Closing, other any arrangement entered into pursuant hereto or in connection with the Contemplated Transactions.

6.14Exclusivity. From the date of this Agreement until the Closing, Seller will not (and Seller will not permit or authorize, as applicable, any of its Affiliates, directors, officers, stockholders, employees, agents, consultants and other advisors and representatives to), directly or indirectly (a) solicit, initiate, encourage, knowingly facilitate, or entertain any inquiry or the making of any proposal or offer, (b) enter into, continue or otherwise participate in any discussions or negotiations, or enter into any Contract, (c) furnish to any Person any non-public information or grant any Person access to its properties, books, Contracts, personnel and records, or (d) approve or recommend, or propose to approve or recommend, or execute or enter into, any letter of intent, agreement in principal, acquisition agreement, option agreement or other similar Contract or propose, whether publicly or to any director or stockholder, or agree to do any of the foregoing for the purpose of encouraging or facilitating any proposal, offer, discussions or negotiations; in each case regarding any business combination transaction involving the Business or any other transaction to acquire all or any material part of the Transferred Assets, whether by merger, purchase of assets, purchase of stock, tender offer, license or otherwise, other than with Buyer. Seller will immediately cease and cause to be terminated any such negotiations, discussion or Contracts (other than with Buyer) that are the subject of clauses (a) or (b) above and will immediately cease

providing and secure the return of any non-public information and terminate any access of the type referenced in clause (c) above. If Seller or any of its Affiliates, directors, officers, stockholders, employees, agents, consultants or other advisors and representatives receives, prior to the Closing, any offer, proposal or request, directly or indirectly, of the type referenced in clause (a) or (b) above or any request for disclosure or access as referenced in clause (c) above, Seller will immediately suspend or cause to be suspended any discussions with such offeror or Person with regard to such offers, proposals or requests and notify Buyer thereof, including information as to the identity of the offeror or Person making any such offer or proposal and the specific terms of such offer or proposal, as the case may be, and such other information related thereto as Buyer may reasonably request.

6.15 Noncompetition.

(a)For a period of three (3) years after the Closing Date (the “Restricted Period”), Seller will not, and it will cause its controlled Affiliates not to (i) engage, directly or indirectly, in any business anywhere in the world that manufactures, produces or supplies products (A) of the kind manufactured, produced or supplied by the Business as of the Closing (including, for the avoidance of doubt, the Products), or (B) that incorporate, that are similar to or that are based upon any of the Product Designs and Concepts (collectively, the “Restricted Business”), or (ii) without the prior written consent of Buyer, directly or indirectly, own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with, as a partner, stockholder, consultant or otherwise, any Person that competes with Buyer or the Business in the Restricted Business. For the purposes of this Section 6.15, Restricted Business will not include any business that manufactures, produces or supplies repeater, retimer, signal integrity, and cross point switch products manufactured by Seller as of the Closing and developments, derivatives and improvements of, and designs and concepts directly relating to, those products, including those on any “roadmap” related to such products as of the Closing.

(b)Notwithstanding anything to the contrary contained in Section 6.15(a), Seller may, without violating the terms of this Section 6.15, take any of the following actions: (i) own securities having no more than five (5) percent of the outstanding voting power of any Person engaged in (or proposed to be engaged in) the Restricted Business which is listed on any national securities exchange, as long as Seller has no other connection or relationship with such Person engaged in (or proposed to be engaged in) the Restricted Business; (ii) grant any license to the Technology as permitted under the Intellectual Property Assignment and License Agreement (and otherwise in compliance with such Intellectual Property Assignment and License Agreement); (iii) undertake any activities pursuant to and in compliance with Section6.2 hereof; (iv) sell to any Person those Ordered Materials identified as “Seller Retained Ordered Materials” on Schedule 1.40; (v) be acquired (whether by acquisition of assets (including, for such purpose, the divisional sale by Seller of any business that includes products that embody, incorporate or practice the Licensed Technology), merger or otherwise and including, for such purpose, the acquisition of any voting securities of Seller by any Person otherwise unaffiliated with Seller or its Affiliates that, following such acquisition, holds, together with such Person’s Affiliates, a majority of Seller’s then-outstanding voting securities, in each case whether in a single transaction or a series of related transactions) by a Person engaged in (or proposed to be engaged in) the Restricted Business, if the acquiring Person agrees, for the remainder of the Restricted Period, not to exploit or otherwise use any Licensed Technology (other than the COT Technology or the ‘213 Patent Family, as such terms are defined in the Intellectual Property Assignment and License Agreement) in any manner, either directly or indirectly, in connection with that portion of the acquiring Person’s business that comprises a Restricted Business; or (vi) acquire (whether by acquisition of assets, merger or otherwise) a Person engaged in (or proposed to be engaged in) the Restricted Business, if the gross revenues of such acquired Person from the Restricted Business do not exceed five percent (5%) of such Person’s total gross revenues during such Person’s last fiscal year and Seller, for the remainder of the Restricted Period, does not exploit or

otherwise use the Licensed Technology in any manner, either directly or indirectly, in connection with that portion of the acquired Person’s business that comprises a Restricted Business.

(c)The Restricted Period will be extended by the length of any period during which Seller or any of its controlled Affiliates is in breach of the terms of this Section6.15.

6.16Satisfaction of Conditions Precedent. The Parties agree to use commercially reasonable efforts to satisfy or cause to be satisfied all the conditions precedent that are set forth in ArticleVII, and the parties will use commercially reasonable efforts to cause the transactions contemplated hereby to be consummated.

6.17Bulk Transfer Laws. Buyer hereby waives compliance by Seller with any applicable bulk sale or bulk transfer Laws of any jurisdiction in connection with the Contemplated Transactions.

6.18Asset Schedule Updates. On the Closing Date, Seller will deliver to Buyer updates to each of Schedules 1.40, 1.45, 1.51, 2.1(a),2.1(b), 4.12 and 6.2(a) and the Forecast (collectively, the “Asset Schedule Updates”) as of the most recent month-end prior to the Closing Date, unless the Closing Date is on or prior to the 15th calendar day of the month, in which case the Asset Schedule Updates will speak as of the immediately preceding month-end. As soon as practicable but no more than 5 business days after the Closing Date, Seller will deliver to Buyer Asset Schedule Updates to reflect any changes to such schedules arising following the date hereof through and including the Closing Date. With respect to the update to the Forecast as of the Closing Date (the “Updated Forecast”), it is expressly acknowledged and agreed that such Updated Forecast will not impact or otherwise alter Seller’s obligations under the Transition Services Agreement.

ARTICLE VII. CONDITIONS TO CLOSING.

7.1Conditions to Obligations of the Parties. The obligations of Buyer and Seller to complete the Closing are subject to the satisfaction or written waiver of each of the following conditions:

(a)No Governmental Entity will have enacted, issued, promulgated or entered any applicable Law which is in effect on the Closing Date that has or would have the effect of prohibiting, restraining or enjoining the completion of the Contemplated Transactions. No temporary restraining order, preliminary or permanent injunction, cease and desist order or other order issued by any court or other Governmental Entity that has the effect of making the Contemplated Transactions illegal or otherwise prohibiting completion of the Contemplated Transactions will be in effect as of the Closing Date, and there will be no pending or threatened actions or proceedings by any Governmental Entity (or determinations by any Governmental Entity) challenging or in any manner seeking to prohibit the Closing.

(b)The waiting period (and any extension thereof) applicable to the completion of the Contemplated Transactions under the HSR Act, and any other applicable similar merger notification Laws of foreign Governmental Entities, will have expired or been terminated, and any applicable filings or approvals under the HSR Act, and any other applicable similar merger notification Laws of foreign Governmental Entities that are required to be made or obtained prior to Closing, will have been made or obtained.

7.2Conditions to Obligation of Buyer. The obligation of Buyer to complete the Closing is subject to the satisfaction or written waiver of each of the following conditions:

(a)The representations and warranties of Seller in ArticleIV must have been accurate in all material respects when made and must be accurate in all material respects as of the Closing without regard for any “material” or “Material Adverse Effect” qualifiers therein (other than to the extent any such representation or warranty speaks as of any other specific date, in which case such representation or warranty will have been so accurate as of such date).

(b)Seller must have performed or complied in all material respects with its agreements and covenants required to be performed or complied with under the Principal Agreements as of or prior to the Closing Date.

(c)Buyer must have received from Seller written evidence that the execution, delivery and performance of its obligations under the Principal Agreements have been duly and validly approved and authorized and that all necessary corporate or organizational approvals of Seller have been obtained.

(d)Seller must have delivered to Buyer a written certification in compliance with applicable United States Treasury regulations, to the effect that Seller is exempt from withholding pursuant to the Foreign Investment in Real Property Tax Act.

(e)There will not have occurred a Material Adverse Effect with respect to the Business.

(f)Seller must have executed and delivered the Acquisition Documents and such Acquisition Documents must be in full force and effect on the Closing Date.

(g)Seller must have delivered to Buyer a certificate signed by an officer of Seller to the effect that each of the conditions specified in Section7.2 is satisfied in all respects.

(h)Seller must have delivered to Buyer the release of (i) the Liens set forth on Section 4.8(b) of the Disclosure Schedule with respect to the Transferred Assets, and related claims, and (ii) any other Lien arising in connection with the Existing Loan Agreement, and related claims, in each case in a form satisfactory to Buyer in its sole discretion.

(i)Seller must have obtained and delivered to Buyer all Designated Required Consents listed on Schedule 6.5(a) in the form attached hereto on Schedule 7.2(i).

7.3Conditions to Obligations of Seller. The obligation of Seller to complete the Closing is subject to the satisfaction or written waiver of each of the following conditions:

(a)The representations and warranties of Buyer in ArticleV must have been accurate in all material respects when made and must be accurate in all material respects as of the Closing without regard for any “material” or “Material Adverse Effect” qualifiers therein (other than to the extent any such representation or warranty speaks as of any other specific date, in which case such representation or warranty will have been so accurate as of such date).

(b)Buyer must have performed or complied in all material respects with its agreements and covenants required to be performed or complied with under the Principal Agreements as of or prior to the Closing Date.

(c)Seller must have received from Buyer written evidence that the execution, delivery and performance of its obligations under the Principal Agreements have been duly and validly

approved and authorized and that all necessary corporate or organizational approvals of Buyer have been obtained.

(d)Buyer must have executed and delivered the Acquisition Documents and such Acquisition Documents must be in full force and effect on the Closing Date.

(e)Buyer must have delivered to Seller a certificate signed by an officer of Buyer to the effect that each of the conditions specified in Section7.3 is satisfied in all respects.

ARTICLE VIII. EMPLOYEE MATTERS.

8.1 Transferred Employees.

(a)Subject to and in accordance with the provisions of this Section 8, Buyer may offer employment to any or all of the employees identified by Seller to Buyer who are necessary for the operation of the Business as of the date of this Agreement (the “Employees”). Prior to the Closing, Seller will permit Buyer reasonable access to information relating to the Employees in order to allow Buyer to determine whether it wishes to extend an offer of employment to such Employees. Seller will provide reasonable cooperation to assist Buyer for a period of up to two (2) months after the Closing to facilitate the transition of Seller’s employees to Buyer. Such employment will be subject to Buyer’s established policies generally applicable to new employees. With regard to the Employees listed on Schedule 8.1(a), Buyer will deliver written offers of employment (the “Offer”) to such Employees by or on the Closing Date. Upon Closing, Buyer may hire those Employees to whom it has made an offer in accordance with this Section 8.1 and who accept such offer in the manner and within the time frame reasonably established by Buyer (“Designated Employees”). With regard to the Employees listed on Schedule 8.1(b) (“Designated TSA Employees”), Buyer will deliver Offers to such Employees on a date mutually agreed to by the Parties on or following the Closing. Upon delivery of the Offer, Buyer may hire the Designated TSA Employees who accept such Offer in the manner and within the time frame reasonably established by Buyer. Each such Designated Employee or Designated TSA Employee who is employed by Seller prior to the date of the respective Offer and who actually transfers to employment with Buyer at or after the date of the respective Offer is hereafter referred to as a “Transferred Employee.”

(b)With regard to those Transferred Employees whose Offer was made by Buyer prior to or on the Closing Date, their employment with Seller will end at the close of business on the Closing Date and their employment with Buyer will commence at 12:01 a.m. on the day after the Closing Date. With regard to those Transferred Employees whose Offer was made after the Closing Date, their employment with Seller will end and their employment with Buyer will commence at a time and date mutually agreed to by and between the Seller and Buyer. The date the Transferred Employees’ employment terminates with Seller and commences with Buyer will be referred to as the “Transfer Date.” The terms of employment with Buyer (or Buyer’s Affiliates) will be as mutually agreed to between each Transferred Employee and Buyer (or Buyer’s Affiliate, as the case may be). Subject to the provisions of this Section8.1, any salary, wages, commissions, sabbatical, bonus, health and welfare benefits (excluding accrued vacation and paid time off), profit sharing, stock bonus, severance, pension, retirement, stock purchase, options, deferred compensation plans, or other Employee Benefit Plan accrued through the Transfer Date will be paid by Seller to Transferred Employees as of the Transfer Date; provided, however, that Buyer will assume all accrued vacation and paid time off balances as of the Transfer Date for Transferred Employees. Buyer will have no Liability or other obligation with respect to payments of salary, wages, commissions, sabbatical, bonus, health and welfare benefits (excluding accrued vacation and paid time off), profit sharing, stock bonus, severance, pension, retirement, stock purchase, options, deferred compensation plans, or any other sums due to any Transferred Employee related to periods of employment under Seller. To the extent “continuation coverage” (within the

meaning of Code Section 4980B) is required to be provided, Buyer will assume responsibility for any “M&A qualified beneficiaries” (within the meaning of Code Section 4980B) in connection with the Contemplated Transactions solely with respect to Transferred Employees. Buyer will be fully responsible for all amounts payable to any Transferred Employee, including (without limitation) all termination payments, redundancy compensation, severance pay, and other amounts payable in respect of the termination of employment of any Transferred Employee following the Transfer Date. Notwithstanding the foregoing provision to the contrary, with respect to any Transferred Employee, the transactions contemplated in this Agreement will not constitute a termination of employment under any Employee Benefit Plan entitling the Transferred Employee to termination payments, redundancy compensation, severance pay, and other amounts payable in respect of a termination of employment; provided, however, that this provision will not apply to those plans intended to qualify under Code Section 401(a).

(c)As of the Closing Date, and for a period of at least 12 months thereafter, Buyer will provide employee benefits to Transferred Employees that are not less favorable, in the aggregate, than the employee benefits provided by Buyer to similarly situated employees of Buyer. Transferred Employees will receive full credit for their service with Seller and its ERISA Affiliates (and any predecessor employer to the extent previously recognized under the Employee Benefit Plans) for purposes of determining eligibility to participate, vesting, amount of benefits (other than benefits under a defined benefit pension plan) and all other relevant purposes under all employee benefit plans, programs, arrangements, policies and practices of Buyer extended to Transferred Employees (each, a “Buyer Benefit Plan”). With respect to each Buyer Benefit Plan providing health care benefits, including medical benefits, Buyer (i) will waive or will cause to be waived any and all preexisting condition limitations and exclusions and any and all eligibility waiting periods with respect to each of the Transferred Employees and their spouses and dependents, and (ii) will recognize or cause to be recognized for purposes of annual deductible, co-pay and out-of-pocket limits any deductible, co-pay and out-of-pocket expenses paid by Transferred Employees and their spouses and dependents under the relevant Employee Benefit Plan during the calendar year in which the Closing occurs. Transferred Employees will be third party beneficiaries for the purposes of enforcing this Section 8.1. In addition, any Transferred Employee who is either receiving benefits or waiting for a disability determination under Seller’s long-term disability plan as of the Transfer Date will continue to be covered under Seller’s long-term disability plans, subject to the terms and conditions of such plans, until they are no longer disabled or receive a final determination that they are not disabled, and Buyer will have no Liability for providing long-term disability benefits to such Transferred Employees.

8.2No Right to Continued Employment or Benefits. Except as otherwise expressly provided in Section 8.1, Buyer is under no obligation to hire any employee of Seller, provide any employee with any particular benefits, or make any payments or provide any benefits to those employees of Seller whom Buyer chooses not to employ.

8.3No Solicitation by Buyer; No Solicitation by Seller. From and after the date hereof and for a period of two (2) years after the Closing, Buyer will not solicit any employee of Seller listed on Schedule 8.3 hereof. From and after the date hereof and for a period of two (2) years after the Closing, Seller will not solicit (x) any employee of Buyer who was involved or played any role in the acquisition of the Transferred Assets by Buyer, or (y) any Transferred Employee. Notwithstanding the foregoing, nothing in this Section8.3 will be deemed to prohibit Seller or Buyer from engaging in general media advertising or solicitation that may be targeted to a particular geographic or technical area but that is not targeted towards employees of Seller or Buyer, as the case may be.

ARTICLE IX. INDEMNIFICATION.

9.1 Indemnification.

(a)Subject to the limitations set forth in this Article IX, from and after the Closing Date, Seller will, during the Indemnification Period, protect, defend, indemnify and hold harmless Buyer and Buyer’s Affiliates, officers, directors, employees, representatives and agents (the “Buyer Indemnified Parties”) from and against any and all Damages incurred by any Buyer Indemnified Party arising or resulting from the following:

(i)any inaccuracy or breach of any of Seller’srepresentations and warranties contained in any Principal Agreement or any certificate or instrument delivered in connection therewith;

(ii)the nonfulfillment, nonperformance or other breach of any covenant or agreement of Seller set forth in any Principal Agreement;

(iii) any Excluded Liability; or

(iv)any noncompliance by Seller with any applicable bulk sales or bulk transfer Laws in connection with the Contemplated Transactions.

(b)Subject to the limitations set forth in this Article IX, from and after the Closing Date, Buyer will, during the Indemnification Period, protect, defend, indemnify and hold harmless Seller and Seller’s Affiliates, officers, directors, employees, representatives and agents (the “Seller Indemnified Parties”) from and against any and all Damages incurred by any Seller Indemnified Party arising or resulting from the following:

(i)any inaccuracy or breach of any of Buyer’s representations and warranties contained in any Acquisition Document;

(ii)the nonfulfillment, nonperformance or other breach of any covenant or agreement of Buyer set forth in any Principal Agreement; or

(iii) any Assumed Liability.

9.2Survival of Representations and Warranties; Indemnification Period. The representations, warranties, covenants and agreements contained in any Principal Agreement or any certificate delivered pursuant hereto or thereto (I) survive the Closing and any investigation at any time made by or on behalf of an Indemnified Party and (II) expire as follows (the period through the relevant expiration date being referred to as the “Indemnification Period” in this Agreement):

(a)the representations of Seller set forth in Section4.2 [Authority] and Section4.8(b) [Assets Generally] of this Agreement, and the representation of Buyer set forth in Section5.2 [Authority] of this Agreement, will survive indefinitely or until the latest date permitted by Law;

(b)the representations of Seller set forth in Section4.16 [Taxes] will survive the Closing until three (3) months after the expiration of the applicable statute of limitations (including any extensions or tolling thereof);

(c)any other representation of Seller and any other representation of Buyer set forth in any Principal Agreement will survive the Closing and expire on the three hundred sixty-fifth (365^th) day following the Closing Date; and

(d)all other covenants and agreements of the Parties contained in any Principal Agreement or in any certificate or other writing delivered pursuant hereto or thereto or in connection herewith or therewith will survive the Closing until the expiration of the applicable statute of limitations (including any extension or tolling thereof) or for the shorter period explicitly specified therein, except that for such covenants and agreements that survive for such shorter period, breaches thereof will survive indefinitely until the expiration of the applicable statute of limitations (including any extension or tolling thereof); provided, however, that covenants and agreements relating to Taxes will survive the Closing until three (3) months after the expiration of the applicable statutes of limitation (including any extension or tolling thereof).

If an Indemnified Party (as defined herein) delivers to an Indemnifying Party, before expiration of the applicable Indemnification Period, either a Claim Notice (as defined herein) based on the fact that an Indemnified Party has incurred Damages, or a notice that, as a result of a legal proceeding instituted by or claim made by a third Person, the Indemnified Party reasonably expects to incur Damages (an “Expected Claim Notice”), then the applicable representation, warranty, covenant or agreement will survive until, but only for purposes of, the resolution of the matter covered by such notice. If the legal proceeding or written claim with respect to which an Expected Claim Notice has been given is definitively withdrawn or resolved in favor of the Indemnified Party, the Indemnified Party will promptly so notify the Indemnifying Party.

9.3 Limits on Liability.

(a)Notwithstanding the foregoing, the Liability of Seller and Buyer under Section 9.1(a) and Section 9.1(b), respectively, or any other Acquisition Document (other than the Intellectual Property Assignment and License Agreement, which is exclusively addressed in clause (b) hereof), will be subject to the following limitations:

•In no event will either Party’s aggregate Liability under this Agreement or the Transition Services Agreement exceed the Aggregate Purchase Price.

•In no event will Seller’s Liability under Section9.1(a)(i) or Buyer’s Liability under Section 9.1(b)(i), as the case may be, exceed fifteen percent (15%) of the Aggregate Purchase Price, and no Indemnifying Party is liable under Section9.1(a)(i) or Section9.1(b)(i), as the case may be,unless and until the aggregate Damages for which it would otherwise be liable under Section9.1(a)(i) or Section9.1(b)(i), as the case may be, exceed $350,000 (at which point the Indemnifying Party is liable for the aggregate Damages and not just amounts in excess of that sum).

(b)In no event will either Party’s aggregate Liability under the Intellectual Property Assignment and License Agreement exceed one hundred fifty percent (150%) of the Aggregate Purchase Price.

(c)Notwithstanding any other provision of this Agreement, nothing in this Agreement limits the Liability of a Party to any other Person for fraud or willful misconduct committed by such Party.

9.4 Indemnification Procedure.

(a)Claim Notice. A Party which seeks indemnity under this ArticleIX (an “Indemnified Party”) will give written notice (a “Claim Notice”) to the Party from whom indemnification is sought (an “Indemnifying Party”), whether the Damages sought arise from matters solely between the Parties or from Third Party Claims described in Section9.4(d). The Claim Notice must contain (i) a description and, if known, the estimated amount (the “Claimed Amount”) of any Damages incurred or reasonably expected to be incurred by the Indemnified Party, (ii) a reasonable explanation of the basis for the Claim Notice to the extent of facts then-known by the Indemnified Party, and (iii) a demand for payment of those Damages.

(b)Response to Notice of Claim. Within 30 days after delivery of a Claim Notice, the Indemnifying Party will deliver to the Indemnified Party a written response (the “Response”) in which the Indemnifying Party will either:

(i)agree that the Indemnified Party is entitled to receive all of the Claimed Amount, and the Indemnifying Party will pay the Claimed Amount in accordance with a payment and distribution method reasonably acceptable to the Indemnified Party; or

(ii)dispute that the Indemnified Party is entitled to receive any of the Claimed Amount (in such an event, the Response will be referred to as an “Objection Notice”).

If no Response is delivered by the Indemnifying Party to the Indemnified Party within such 30-day period, the Indemnifying Party is deemed to have agreed that an amount equal to the entire Claimed Amount will be payable to the Indemnified Party and such Claimed Amount will be payable in accordance with the provisions of this ArticleIX.

(c)Contested Claims. In the event that the Indemnifying Party disputes the Claimed Amount, such dispute will be governed by, and subject to the terms of, Section11.3 hereof.

(d) Third Party Claims.

(i)In the event that the Indemnified Party receives notice or otherwise learns of the assertion by a Person other than a Buyer Indemnified Party or Seller Indemnified Party of any claim with respect to which the Indemnifying Party may be obligated to provide indemnification under this ArticleIX (a “Third Party Claim”), the Indemnified Party will give written notification to the Indemnifying Party as soon as practicable but in no event later than five (5) business days thereafter. Such notice will be accompanied by reasonable supporting documentation submitted by such third Person (to the extent then in the possession of the Indemnified Party) and will describe in reasonable detail (to the extent known by the Indemnified Party) the facts constituting the basis for such suit or proceeding and the amount of the claimed damages; provided, however, that no delay or deficiency on the part of the Indemnified Party in so notifying the Indemnifying Party will relieve the Indemnifying Party of any Liability or obligation hereunder except if such delay or deficiency materially prejudices or otherwise materially and adversely affects the rights of the Indemnifying Party with respect thereto and then, only to the extent of such material prejudice.

(ii)Within 30 days after the Indemnified Party’s delivery of notice of the commencement of such proceeding under this Section9.4(d), the Indemnifying Party may assume control of the defense of such proceeding by giving to the Indemnified Party written notice of the intention to assume such defense, but if and only if the Indemnifying Party further:

(A)acknowledges in writing to the Indemnified Party that Damages that may be assessed in connection with such Proceeding constitute Damages for which, subject to the limits on liability set forth in Section 9.3, the Indemnified Party will be indemnified pursuant to this Article IX without contest or objection and that the Indemnifying Party will advance all expenses and costs of defense; and

(B)retains counsel for the defense of such Proceeding reasonably satisfactory to the Indemnified Party and furnishes to the Indemnified Party evidence satisfactory to the Indemnified Party that the Indemnifying Party has and will have sufficient financial resources to fund on a current basis the cost of such defense and paying those Damages which fall within the limits on liability set forth in Section 9.3, that may arise under the claim.

An Indemnifying Party will lose any previously acquired right to control the defense of any proceeding if for any reason the Indemnifying Party ceases to actively, competently and diligently conduct the defense.

(iii)If the Indemnifying Party does not, or is not able to, assume or maintain control of such defense in compliance with Section9.4(d)(ii), the Indemnified Party will have the right to control such defense. If the Indemnified Party controls such defense, the Indemnifying Party agrees to pay to the Indemnified Party promptly upon demand from time to time all reasonable attorneys’ fees and other costs and expenses of defense. The Party not controlling the defense of any Third Party Claim (the “Noncontrolling Party”) may participate therein at its own expense. However, if the Indemnifying Party assumes control of such defense and the Indemnified Party reasonably concludes that the Indemnifying Party and the Indemnified Party have conflicting interests or different defenses available with respect to such proceeding, then the reasonable fees and expenses of a single counsel to the Indemnified Party will be considered and included as “Damages” for purposes of this Agreement. The Party controlling such defense (the “Controlling Party”) will reasonably advise the Noncontrolling Party of the status of such proceeding and the defense thereof, and the Controlling Party will consider in good faith recommendations made by the Noncontrolling Party. The Noncontrolling Party will furnish the Controlling Party with such information as it may have with respect to such proceeding (including copies of any summons, complaint or other pleading which may have been served on such Party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and will otherwise cooperate with and assist the Controlling Party in the defense of such proceeding.

(iv)The Indemnifying Party will not agree to any settlement of, or the entry of any judgment arising from, any such suit or proceeding without the prior written consent of the Indemnified Party, which will not be unreasonably withheld or delayed; provided, however, that the consent of the Indemnified Party will not be required if the Indemnifying Party agrees in writing to pay any amounts payable pursuant to such settlement or judgment and such settlement or judgment includes a full, complete and unconditional release of the Indemnified Party from further Liability or other obligation. The Indemnified Party will not agree to any settlement of, or the entry of any judgment arising from, any such suit or proceeding without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld or delayed.

9.5Treatment of Indemnity Payments. The amount of any and all Damages for which indemnification is provided pursuant to this ArticleIX will be net of (i) any Tax benefit to which an Indemnified Party is entitled by reason of payment of such obligation or Liability (taking into account any Tax cost or reduction in such Tax benefits by reason of receipt of the indemnification payment or the underlying event giving rise to indemnification), and (ii) any amounts of any insurance proceeds, indemnification payments, contribution payments or reimbursements actually received by, or paid in kind to, the Indemnified Party with respect to such Damages or any of the circumstances giving rise thereto. In connection therewith, if, at any time following payment in full by the Indemnifying Party of any amounts

of Damages due hereunder, the Indemnified Party receives any insurance proceeds, indemnification payments, contribution payments or reimbursements relating to the circumstances giving rise to such Damages, the Indemnified Party will promptly remit to the Indemnifying Party such proceeds, payments or reimbursements in an amount not to exceed the amount of the corresponding indemnification payment made by the Indemnifying Party.

9.6Damages. Except as expressly provided for in this Agreement, no Party (or its Affiliates) will, in any event, be liable to the other Party (or its Affiliates) for any Liabilities (including any Liabilities for Taxes), claims, injuries, losses, damages, settlements, judgments, awards, penalties, fines, costs or expenses, special (including incidental damages), indirect, punitive or consequential damages (including lost profits, loss of revenue, loss of opportunity or lost sales) relating to the breach or alleged breach of this Agreement or any Principal Agreement, unless, solely with respect to special (to the extent that such damages are deemed consequential), punitive or consequential damages, any such damages are part of a judgment arising or resulting from (i) a Third Party Claim against an Indemnified Party, or (ii) the nonfulfillment, nonperformance or other breach of any covenant or agreement set forth in the Intellectual Property Assignment and License Agreement.

9.7 Exclusive Remedy; Injunctive Relief.

(a)From and after the Closing, the sole and exclusive remedy of any Buyer Indemnified Party with respect to any and all Damages arising in connection with the representations, warranties, covenants and agreements set forth in this Agreement or any Acquisition Document will be pursuant to the indemnification obligations set forth in Section9.1(a). Except as contemplated in this Article IX, the Seller will not have any Liability under this Agreement or any Acquisition Document.

(b)From and after the Closing, the sole and exclusive remedy of any Seller Indemnified Party with respect to any and all Damages arising in connection with the representations, warranties, covenants and agreements set forth in this Agreement or any Acquisition Document will be pursuant to the indemnification obligations set forth in Section9.1(b). Except as contemplated in this Article IX, the Buyer will not have any Liability under this Agreement or any Acquisition Document.

(c)Nothing in this Agreement will prevent or hinder either party from seeking any equitable remedy for claims made under this Agreement.

9.8Exercise of Remedies by Persons Other than the Parties. No Buyer Indemnified Party (other than Buyer or any successor or assignee of Buyer) is entitled to assert any indemnification claim or exercise any other remedy under this Agreement unless Buyer (or any successor or assignee of Buyer) consents to the assertion of the indemnification claim or the exercise of the other remedy. No Seller Indemnified Party (other than Seller or any successor or assignee of Seller) is entitled to assert any indemnification claim or exercise any other remedy under this Agreement unless Seller (or any successor or assignee of Seller) consents to the assertion of the indemnification claim or the exercise of the other remedy.

ARTICLE X. TERMINATION OF THE AGREEMENT

10.1 Termination. This Agreement may be terminated at any time prior to the Closing:

(a) By mutual written consent of Buyer and Seller;

(b)By either Buyer or Seller for any reason if the Closing has not occurred by the date that is 90 days following the date of this Agreement, unless otherwise mutually agreed in writing by

the Parties, or such later date as the Parties may agree in writing; provided, however, that a party cannot terminate under this provision if the failure of the Closing to occur is the result of the failure on the part of such Party to perform any of its obligations hereunder (except the failure on the part of such Party to satisfy a closing condition over which such Party has no control); provided, further, that such 90-day period will be extended for an additional period to the extent necessary for either Party but with a maximum of 120 days, as applicable, to satisfy the conditions set forth in Section7.1(b) (except in circumstances contemplated by subsection (c) hereof);

(c)By either Buyer or Seller if any Governmental Entity has issued a final, non-appealable order, injunction, decree or ruling or taken any other action enjoining, restraining or otherwise prohibiting the Contemplated Transactions; or

(d)By Buyer immediately if there has been a breach of (i) Section6.10(b), or (ii) either of Section6.10(a) or Section6.10(c), which breach has not been cured within 10 business days following the occurrence of such breach.

Any termination of this Agreement under Sections10.1(b), 10.1(c) and 10(d) is effective by the delivery of written notice by the terminating Party to the other Party.

10.2Effect of Termination. Upon termination of this Agreement pursuant to this ArticleX, this Agreement and the rights and obligations of the Parties under this Agreement automatically end without any Liability against any Party or its Affiliates, except that nothing in this Section10.2 relieves any party from Liability for the breach of any provisions of this Agreement prior to termination, and the provisions of Section6.11 [Confidentiality], this Section10.2, Section10.3 [Certain Effects of Termination] and ArticleXI will remain in force and survive any termination of this Agreement.

10.3Certain Effects of Termination. If Buyer or Seller terminates this Agreement pursuant to this ArticleX, each Party will comply with the Nondisclosure Agreement regarding the return and/or destruction of any documents furnished to the other party in connection with this Agreement.

ARTICLE XI. MISCELLANEOUS

11.1Amendments and Waivers. Any term of this Agreement may be amended or waived with the written consent of the Parties or their respective successors and assigns. Any amendment or waiver effected in accordance with this Section 11.1 will be binding upon the Parties and their respective successors and assigns.

11.2Successors and Assigns. The terms and conditions of this Agreement will inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in Article IX of this Agreement. Notwithstanding the foregoing and except as expressly provided in this Agreement, neither Party will assign its rights or delegate its duties under this Agreement to any other Person; provided, however, that either Party may assign its rights and delegate its duties under this Agreement (i) to any of its Affiliates, (ii) to the purchaser of all or substantially all of its assets, or (iii) in connection with its merger with or into another Person, provided that, in each case such Affiliate, purchaser or other Person (including, in the case of clause (ii) or (iii), the corporate Person that ultimately controls the acquiring Person), as the case may be, expressly agrees in writing to be bound by the terms and conditions of this Agreement. Any assignment or delegation in violation of this Section 11.2 will be null and void.

11.3Governing Law; Jurisdiction. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the Parties will be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law that would require the application of the laws of any other state. Any dispute arising under or related to this Agreement will be litigated in the state or federal courts located in Los Angeles, California.

11.4Counterparts. This Agreement may be executed in two or more counterparts, including counterparts transmitted by facsimile or electronic transmission, each of which will be deemed an original and all of which together will constitute one instrument.

11.5Titles and Subtitles; Construction. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. Any reference in this Agreement to an “Article,” “Section,” “Exhibit” or “Schedule” refers to the corresponding Article, Section, Exhibit or Schedule of or to this Agreement, unless the context indicates otherwise. The table of contents and the headings of Articles and Sections are provided for convenience only and are not intended to affect the construction or interpretation of this Agreement. All words used in this Agreement should be construed to be of such gender or number as the circumstances require. The term “including” means “including without limitation” and is intended by way of example and not limitation. Any reference to a statute is deemed also to refer to any amendments or successor legislation, and all rules and regulations promulgated thereunder, as in effect at the relevant time. Any reference to a Contract or other document as of a given date means the Contract or other document as amended, supplemented and modified from time to time through such date.

11.6Notices. Any notice, demand or request required or permitted to be given under the provisions of this Agreement will be in writing; will be delivered personally, including by means of fax, or mailed by registered or certified mail, postage prepaid and return receipt requested; will be deemed given on the date of personal delivery or on the date set forth on the return receipt; and will be delivered or mailed to the addresses or fax numbers set forth below or to such other address as any party may from time to time direct, with copies to:

In the case of Seller:	In the case of Buyer:
Vitesse Semiconductor Corporation 741 Calle Plano Camarillo, California 93012 Attention: General Counsel Fax:	Maxim Integrated Products, Inc. 120 San Gabriel Drive Sunnyvale, California 94086 Attention: General Counsel Fax: (408) 331-1473
With a copy to:	With a copy to:
Perkins Coie Brown & Bain 2901 N. Central Avenue, Suite 2000 Phoenix, Arizona 85012 Attention: Judith K. Weiss Facsimile: (602) 648-7140	Baker & McKenzie LLP 660 Hansen Way Palo Alto, California 94304 Attention: Matthew R. Gemello Facsimile: ( 650) 856-9299

11.7Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the Parties agree to renegotiate such provision in good faith, in order to maintain the economic position enjoyed by each Party as close as possible to that under the provision rendered unenforceable. In the event that the Parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision will be excluded from this Agreement, (ii) the

balance of this Agreement will be interpreted as if such provision were so excluded and (iii) the balance of this Agreement will be enforceable in accordance with its terms.

11.8Entire Agreement. This Agreement and the Ancillary Agreements, together with all of the schedules and exhibits appended thereto, are the product of both Parties, and constitute the entire agreement between such Parties pertaining to the subject matter hereof and thereof, and merge all prior negotiations and drafts of the Parties with regard to the transactions contemplated herein and therein. Except as expressly provided for in this Agreement, any and all other written or oral agreements existing between the Parties hereto regarding such transactions are expressly canceled. In the event of a conflict between the provisions of this Agreement and any other Acquisition Document, this Agreement will control.

11.9Advice of Legal Counsel. Each Party acknowledges and represents that, in executing this Agreement, it has had the opportunity to seek advice as to its legal rights from legal counsel and that the person signing on its behalf has read and understood all of the terms and provisions of this Agreement. This Agreement will not be construed against any Party by reason of the drafting or preparation thereof.

11.10Expenses. Each Party will bear its own expenses in connection with the preparation for and consummation of the transaction contemplated herein.

11.11No Joint Venture. Nothing in this Agreement creates a joint venture or partnership between the parties. This Agreement does not authorize either Party (a) to bind or commit, or to act as an agent, employee or legal representative of, the other Party, except as may be specifically set forth in other provisions of this Agreement, or (b) to have the power to control the activities and operations of the other Party. The Parties are independent contractors with respect to each other under this Agreement. Each Party agrees not to hold itself out as having any authority or relationship contrary to this Section 11.11.

(This space intentionally left blank)

This Asset Purchase Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first above written.

“Seller” VITESSE SEMICONDUCTOR CORPORATION, a Delaware corporation By:        /s/ Christopher R. Gardner Name:  Christopher R. Gardner Title:    Chief Executive Officer “Buyer” MAXIM INTEGRATED PRODUCTS, INC., a Delaware corporation By:        /s/ Charles Rigg Name:  Charles Rigg Title:    Senior Vice President and General Counsel

EXHIBITS

Intellectual Property Assignment and License Agreement	Exhibit A
Lease	Exhibit B
Transition Services Agreement	Exhibit C

SCHEDULES

Governmental Authorizations	1.26
Ordered Materials	1.40
Prepayments	1.45
Existing Products	1.47(a)
Product Designs and Concepts	1.47(b)
Seller Backlog Obligations	1.51
Equipment	2.1(a)
Assumed Contracts	2.1(b)
Excluded Assets	2.2(j)
Calculation of Earnout Payment	2.7
Consents and Approvals of Government Entities	4.4
Required Consents Material Adverse Changes to the Business Since March 31, 2007	4.6 4.7
Liens	4.8(b)
Restrictions on Use of Transferred Assets	4.8I
Licensed Third Party Technology	4.8(e)
Royalties Payable Per Product by Seller	4.8(f)
Registered Intellectual Property Rights – Business	4.9(a)(i)
Registered Intellectual Property Rights – Product Designs and Concepts	4.9(a)(ii)
Pending or Threatened Proceedings or Actions Relating to Registered Intellectual Property Rights	4.9(a)(iii)
Unregistered Marks Abandoned Registered Intellectual Property Rights	4.9(a)(iv) 4.9(a)(v)
Actions to be Taken on Registered Intellectual Property Rights	4.9(b)
Liens on Assigned Technology and Assigned Mark Licenses and Other Rights Granted by Seller with Respect to Assigned Technology	4.9I(i) 4.9I(ii)
List of Employees and Third Persons	4.9(d)
Exceptions to Transferred Employees Having Entered into Valid Assignment Agreements with Seller	4.9(e)
Transferred Ownership and Exclusive Licenses	4.9(f)
List of Government and Other Similar Organizations of which Seller is a Member and/or to which Seller is Obligated to License or Disclose any Intellectual Property	4.9(m)
Open Source Software Incorporated into Software within Assigned Technology or Licensed Technology	4.9(n)(iii)
Warranties and Indemnities	4.10
Inventory Exceptions to Compliance with Laws	4.12 4.13
Exceptions to Transferred Employees Who Had Access to Assigned Technology and/or Licensed Technology Being subject to a Confidentiality Agreement	4.14(a)
Written or Oral Contracts between Seller and Transferred Employees	4.14(b)
Compensation for Transferred Employees	4.14(e)
Employee Benefit Plans	4.15
Material Contracts	4.17(a)
Defaults Under Material Contracts	4.17(b)
Material Litigation	4.19
Product Sales Price	6.2(a)
Form of Purchase Order	6.2(b)
Designated Required Consents	6.5(a)
Other Required Consents	6.5(b)
Form of Third Party Consent	7.2(i)
Designated Employees List	8.1(a)
Designated TSA Employees List	8.1(b)
Employees Subject to Nonsolicitation	8.3

EX-99

Tennenbaum Capital Partners, LLC

August 22, 2007

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, CA 93012

Attention: Shawn Hassel

Maxim Integrated Products, Inc.

120 San Gabriel Dr.

Sunnyvale, CA 94086

Attention: General Counsel

With copy to:

Baker & McKenzie LLP

660 Hansen Way

Palo Alto, CA 94304

Attention: Matthew R. Gemello

Ladies and Gentlemen:

Reference is made to the Fourth Amended and Restated Loan Agreement dated as of June 20, 2006 (as amended, the “Loan Agreement”), among Vitesse Semiconductor Corporation, a Delaware corporation(the “Company”), the other Borrowers identified therein (together with Company, the “Borrowers”), Special Value Expansion Fund, LLC and Special Value Opportunities Fund, LLC (collectively, the “Lenders”), and Obsidian, LLC, as agent and collateral agent (the “Agent”). All initially capitalized terms used in this letter without definition will have the respective meanings specified in the Loan Agreement.

Company separately has notified the Agent that it proposes (i) to sell and transfer to Maxim Integrated Products, Inc. (together, with its affiliates, “Maxim”) certain assets constituting Collateral pursuant to an asset purchase agreement in substantially the form attached as Exhibit A hereto (the “APA”), and (ii) to use $45,000,000 of the proceeds of the asset sale to prepay, pursuant to Section 2.7 of the Loan Agreement, a portion of the outstanding Loans (including without limitation, accrued and unpaid cash and PIK interest and the Make-Whole Amount with respect to the portion of the Loans to be prepaid) on the Closing Date (as defined in the APA).

In accordance with the terms of Section 13.4 of the Loan Agreement, the Agent, for and behalf of (and at the direction of) each of the Lenders, hereby consents to, and waives any Default or Event of Default that would otherwise occur as a result of, the execution and performance of the APA by Company and the sale of the assets contemplated thereby on and subject to the terms contained therein and in this letter.

The Borrowers hereby agree to pay, or cause to be paid, to the Lenders, in immediately available funds, an aggregate amount of $45,000,000 (the “Payout Amount”) on the Closing Date. The Agent and the Lenders hereby agree that, upon receipt by the Lenders of wire transfers of immediately available funds to Lenders in accordance with the Agent’s written wire instructions on the Closing Date, in an aggregate amount equal to the Payout Amount, then the security interests, liens, deeds to secure debt, mortgages or

other charges or encumbrances of the Agent and the Lenders arising under any and all Loan Documents encumbering the Transferred Assets (as used herein, “Transferred Assets” shall have the meaning given thereto in the APA attached hereto as Exhibit A) will be, without further action, deemed automatically released, discharged and terminated, each without delivery of any instrument or performance of any act by any party. The Borrowers acknowledge and agree that the Payout Amount shall be allocated among the Lenders and between principal, accrued and unpaid interest (including PIK interest) and Make-Whole Amount by the Agent, and any such determination shall be binding upon the Borrowers absent manifest error. The Borrowers hereby further acknowledge and agree that, in the event the Obligations (including, for the avoidance of doubt, accrued and unpaid cash and PIK interest and the Make-Whole Amount on the entire principal amount of the Loans outstanding on such date) are not repaid in full on the Closing Date, the Agent and the Lenders are entitled to receive a consent fee in respect of this letter agreement and the transactions contemplated hereby (the “Consent Fee”) and to amend the Loan Agreement, each on substantially the terms set forth as Exhibit B. The definitive documentation for the Consent Fee shall be agreed between the Borrowers and the Agent in good faith as promptly as practicable after the execution hereof, and the parties agree to finalize such definitive documentation within 30 days of the date hereof; provided that in no event will the final agreement of such parties on the definitive documentation be deemed a condition to the agreement of the Lenders and the Agent set forth above with respect to the release of security interests and liens on the Transferred Assets. For the avoidance of doubt, neither the Consent Fee nor the Payout Amount shall be payable in the event there is no Closing (under and as defined in the APA).

Agent will execute and deliver, without representation or warranty, to or for Borrowers such additional documents and will provide such additional information as Borrowers may reasonably require to carry out the terms of this letter agreement. Each of the Borrowers will execute and deliver to or for Agent such additional documents and will provide such additional information as Agent may reasonably require to carry out the terms of this letter agreement.

Each of the Borrowers hereby represents and warrants to the Agent and the Lenders that: (a) the representations and warranties of the Borrowers set forth in the Loan Agreement and the other Loan Documents shall be true, correct and complete in all material respects as if made by the Borrowers on the Closing Date (it being understood that, unless the Loans are prepaid in full on the Closing Date, the Borrowers shall be permitted to deliver updated disclosure schedules on or before the Closing Date); (b) the Loan Agreement and the other Loan Documents to which any Borrower is a party are the valid and legally binding obligations of such Borrower, fully enforceable against such Borrower in accordance with their respective terms; (d) there exists no Default or Event of Default; (e) from and after the Closing Date, the payment and performance of the Obligations are, and shall continue to be, secured by the Collateral other than the Transferred Assets; and (f) from and after the Closing Date, the Collateral Agent, for the benefit of the Secured Parties, shall continue to have a perfected security interest in, and lien on, the Collateral (including the Proceeds (as defined in Article 9 of the Uniform Commercial Code as in effect on the date hereof in the State of New York) of the sale of the Transferred Assets) other than the Transferred Assets.

Except as expressly released hereby, all of the Liens granted to the Collateral Agent, for the benefit of the Secured Parties (as defined in the Security Agreement), under the Loan Documents (including the Proceeds (as defined in Article 9 of the Uniform Commercial Code as in effect on the date hereof in the State of New York) of the sale of the Released Assets) shall remain in full force and effect as collateral security for the payment and performance of the Obligations. Except as expressly provided herein, the terms and provisions of the Loan Agreement, the other Loan Documents and each of the documents executed and delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed by the Borrowers.

This letter agreement, together with the Loan Documents and each of the schedules and exhibits appended hereto and thereto, constitutes the entire agreement between the parties pertaining to the subject matter hereof and thereof, and merges all prior negotiations and drafts of the parties with regard to the transactions contemplated herein and therein.

This letter agreement will terminate and be null and void if the Closing Date has not occurred and the Payout Amount is not received, in each case on or before 2:00 pm (Pacific time), on November 20, 2007, unless the APA is terminated prior thereto in accordance with its terms, in which case this letter agreement will terminate concurrently therewith.

.

(This space intentionally left blank)

This letter agreement may be executed by each party on a separate counterpart, including counterparts transmitted by facsimile or electronic transmission, each of which when so executed and delivered will be an original, but all of which, taken together, will constitute one agreement.

This letter agreement will be governed by, and construed in accordance with, the laws of the State of New York.

Very truly yours,

OBSIDIAN, LLC,

as Agent for the Lenders

By: /s/ Hugh Steven Wilson

Name: Hugh Steven Wilson

Title: Authorized Person

Agreed to by the undersigned:

VITESSE SEMICONDUCTOR CORPORATION

By: /s/ Richard C. Yonker

Name: Richard C. Yonker

Title: CFO

VITESSE INTERNATIONAL, INC.

By: /s/ Richard C. Yonker

Name: Richard C. Yonker

Title: CFO

VITESSE MANUFACTURING & DEVELOPMENT CORPORATION

By: /s/ Richard C. Yonker

Name: Richard C. Yonker

Title: CFO

VITESSE SEMICONDUCTOR SALES CORPORATION

By: /s/ Richard C. Yonker

Name: Richard C. Yonker

Title: CFO

Acknowledged by the undersigned:

SPECIAL VALUE EXPANSION FUND, LLC, as a Lender

By: Tennenbaum Capital Partners, LLC

Its:  Investment Manager

By: /s/ Hugh Steven Wilson

Name: Hugh Steven Wilson

Title: Managing Partner

SPECIAL VALUE OPPORTUNITIES FUND, LLC, as a Lender

By: Tennenbaum Capital Partners, LLC

Its:   Investment Manager

By: /s/ Hugh Steven Wilson

Name: Hugh Steven Wilson

Title: Managing Partner

EXHIBIT A

Form of Asset Purchase Agreement

EXHIBIT B

Consent Fee and Amendment

• The Lenders shall receive 2% warrant coverage with 7 year warrants (net exercisable in kind) at a $1.45 strike price.

• The Loan Agreement will be modified to provide for a covenant whereby TTM revenue (measured quarterly) must be at least 60% of the Revenue Covenant Level, where the “Revenue Covenant Level” is non-SAS/SATA/EM revenue as measured for the trailing 12 months ended September 30, 2007.  The calculation will not be affected by subsequent changes in accounting treatment so long as the method for calculating the Revenue Covenant Level is the same as that used in calculating compliance levels each quarter.

• The parties will work together in good faith towards the addition to the Loan Agreement to allow for limited use of assets in joint ventures.

• The Company shall be entitled to monetize the Mellenox assets for use at the company.

• The Loan Agreement shall be amended to prohibit the Borrowers from incurring Indebtedness or granting Liens under a New Revolver.

EX-99

EXECUTION COPY

LOAN AGREEMENT

Dated as of August 23, 2007

among

VITESSE SEMICONDUCTOR CORPORATION,

THE LENDERS PARTY HERETO

and

WHITEBOX VSC, LTD., as Agent

Table of Contents

Article I	DEFINITIONS AND ACCOUNTING TERMS		1
	Section 1.1	Defined Terms	1
	Section 1.2	Accounting Terms and Calculations	13
	Section 1.3	Computation of Time Periods	13
	Section 1.4	Other Definitional Terms	13
Article II	TERMS OF THE LOANS		14
	Section 2.1	Term Loans; Option to Increase the Term Loan Aggregate Commitment Amount	14
	Section 2.2	Procedure for Term Loans and the Term Loan Increase	14
	Section 2.3	Notes	15
	Section 2.4	Interest Rates, Interest Payments and Default Interest	15
	Section 2.5	Repayment	16
	Section 2.6	Prepayments	16
	Section 2.7	Computation	17
	Section 2.8	Payments	17
	Section 2.9	Use of Loan Proceeds	17
	Section 2.10	Fees	17
	Section 2.11	Taxes	17
Article III	CONDITIONS PRECEDENT		20
	Section 3.1	Documents	20
	Section 3.2	Opinion	22
	Section 3.3	Compliance	22
	Section 3.4	Security Documents; Termination of Liens	23
	Section 3.5	Other Matters	23
	Section 3.6	Indebtedness under the Existing Loan Agreement	23
	Section 3.7	Fees and Expenses	23
	Section 3.8	SPD Sale	23
	Section 3.9	Representations; Default; Request	24
	Section 3.10	Consents	24
Article IV	REPRESENTATIONS AND WARRANTIES		24
	Section 4.1	Organization, Standing, Etc	24
	Section 4.2	Authorization and Validity	25
	Section 4.3	No Conflict; No Default	25
	Section 4.4	Government Consent	25
	Section 4.5	Litigation	26

	Section 4.6	Environmental, Health and Safety Laws	26
	Section 4.7	ERISA	26
	Section 4.8	Title to Property; Leases; Liens; Subordination	26
	Section 4.9	Taxes	27
	Section 4.10	Trademarks, Patents	27
	Section 4.11	Burdensome Restrictions	27
	Section 4.12	Force Majeure	27
	Section 4.13	No Investment Company or Margin Stock	27
	Section 4.14	Retirement Benefits	28
	Section 4.15	Full Disclosure	28
	Section 4.16	Subsidiaries	28
	Section 4.17	Labor Matters	28
	Section 4.18	Solvency	28
Article V	AFFIRMATIVE COVENANTS		28
	Section 5.1	Financial Statements and Reports	29
	Section 5.2	Existence	30
	Section 5.3	Insurance	30
	Section 5.4	Payment of Taxes and Claims	30
	Section 5.5	Inspection	30
	Section 5.6	Maintenance of Properties	31
	Section 5.7	Books and Records	31
	Section 5.8	Compliance	31
	Section 5.9	ERISA	31
	Section 5.10	Environmental Matters; Reporting	31
	Section 5.11	Further Assurances	32
	Section 5.12	Compliance with Terms of Material Contracts	32
Article VI	NEGATIVE COVENANTS		32
	Section 6.1	Merger	33
	Section 6.2	Disposition of Assets	33
	Section 6.3	Plans	34
	Section 6.4	Change in Nature of Business	34
	Section 6.5	Subsidiaries	34
	Section 6.6	Negative Pledges; Subsidiary Restrictions	35
	Section 6.7	Restricted Payments	35
	Section 6.8	Transactions with Affiliates	36
	Section 6.9	Accounting Changes	36
	Section 6.10	Subordinated Debt	36
	Section 6.11	Investments	36
	Section 6.12	Indebtedness	37
	Section 6.13	Liens	38
	Section 6.14	Contingent Liabilities	39

	Section 6.15	Loan Proceeds	40
	Section 6.16	Sale and Leaseback Transactions	40
	Section 6.17	Hedging Agreements	40
Article VII	EVENTS OF DEFAULT AND REMEDIES		40
	Section 7.1	Events of Default	40
	Section 7.2	Remedies	42
	Section 7.3	Deposit Accounts; Offset	42
Article VIII	THE AGENT		43
	Section 8.1	Appointment and Authorization	43
	Section 8.2	Note Holders	43
	Section 8.3	Consultation With Counsel	43
	Section 8.4	Loan Documents	43
	Section 8.5	Whitebox and Affiliates	43
	Section 8.6	Action by Agent	43
	Section 8.7	Credit Analysis	44
	Section 8.8	Notices of Event of Default, Etc	44
	Section 8.9	Indemnification	44
	Section 8.10	Payments and Collections	44
	Section 8.11	Sharing of Payments	45
	Section 8.12	Advice to Lenders	45
	Section 8.13	Defaulting Lender	45
	Section 8.14	Resignation	46
Article IX	MISCELLANEOUS		46
	Section 9.1	Modifications	46
	Section 9.2	Expenses	47
	Section 9.3	Waivers, etc	47
	Section 9.4	Notices	48
	Section 9.5	Successors and Assigns; Participations; Purchasing Lenders	48
	Section 9.6	Confidentiality of Information	50
	Section 9.7	Governing Law and Construction	51
	Section 9.8	Consent to Jurisdiction	51
	Section 9.9	Waiver of Jury Trial	51
	Section 9.10	Survival of Agreement	51
	Section 9.11	Indemnification	51
	Section 9.12	Captions	52
	Section 9.13	Entire Agreement	52

Section 9.14	Counterparts	52
Section 9.15	Borrower Acknowledgements	52
Section 9.16	Interest Rate	53
Section 9.17	Closing Date	53

EXHIBITS AND SCHEDULES
Exhibit A	Form of Term Notes
Exhibit B	Form of Opinion of Counsel
Exhibit C	Form of Assignment Agreement
Exhibit D	Form of Letters of Consent
Schedule 1.1	Term Loan Commitment Amounts
Schedule 3.1	Locations of Collateral
Schedule 4.3	Conflicts and Defaults
Schedule 4.5	Existing Litigation
Schedule 4.6	Environmental Disclosures
Schedule 4.8	Lease Defaults
Schedule 4.9	Taxes
Schedule 4.11	Burdensome Restrictions
Schedule 4.16	Subsidiaries
Schedule 6.2	Permitted Dispositions
Schedule 6.11	Investments
Schedule 6.12	Existing Indebtedness
Schedule 6.13	Existing Liens
Schedule 6.14	Existing Contingent Liabilities

LOAN AGREEMENT

This Loan Agreement (this “Agreement”), dated as of August 23, 2007, is by and among the lenders from time to time signatory hereto (collectively the “Lenders” and individually each a “Lender”), Vitesse Semiconductor Corporation, a Delaware corporation (the “Borrower”), and Whitebox VSC, Ltd., a limited partnership organized under the law of the British Virgin Islands, one of the Lenders and as agent for the Lenders (in such capacity, the “Agent”).

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.1Defined Terms. As used in this Agreement the following terms shall have the following respective meanings (and such meanings shall be equally applicable to both the singular and plural form of the terms defined, as the context may require):

“Acquisition”: The acquisition by the Borrower or any of its Subsidiaries of substantially all of the Equity Interests of any other Person or substantially all of another Person’s assets or of any division or line of business of any other Person.

“Affiliate”: When used with reference to any Person, (a) each Person that, directly or indirectly, controls, is controlled by or is under common control with, the Person referred to, and (b) each of such Person’s officers, directors, joint venturers and partners. The term control (including the terms “controlled by” and “under common control with”) means the possession, directly, of the power to direct or cause the direction of the management and policies of the Person in question.

“Agent”: As defined in the opening paragraph hereof.

“Aggregate Term Loan Commitment Amount”: The sum of the Term Loan Commitment Amounts of all the Lenders.

“Applicable Margin”: 4%.

“Asset Sale”: The sale by the Borrower or any of its Subsidiaries to any Person (other than a sale between any Borrower and any Subsidiary) of (i) any of the Equity Interests of any of the Borrower’s Subsidiaries, (ii) substantially all of the assets of any division or line of business of the Borrower or any of its Subsidiaries or (iii) any other assets (whether tangible or intangible) of any Borrower or any of its Subsidiaries other than those permitted by this Agreement to the extent that the aggregate value of all such assets sold exceeds $1,000,000 in any one fiscal year (but only to such extent).

“Assignment Agreement”: As defined in Section 9.5(c).

“Board”: The Board of Governors of the Federal Reserve System or any successor thereto.

“Borrower”: As defined in the opening paragraph hereof.

“Borrower Pledge Agreement”: The Pledge Agreement dated concurrently herewith executed by the Borrower in favor of the Agent, for the benefit of the Lenders, as the same may be amended, restated or otherwise modified from time to time.

“Borrower Security Agreement”: The Security Agreement executed by the Borrower in favor of the Agent for the benefit of the Lenders and dated concurrently herewith (as the same may be amended, restated or otherwise modified from time to time).

“Business Day”: Any day (other than a Saturday, Sunday or legal holiday in the State of Minnesota) on which banks are permitted to be open in New York, New York.

“Capitalized Lease”: A lease of (or other agreement conveying the right to use) real or personal property with respect to which at least a portion of the rent or other amounts thereon constitute Capitalized Lease Obligations.

“Capitalized Lease Obligations”: As to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real or personal property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board), and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP (including such Statement No. 13).

“Cash Equivalents”: As at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, the highest rating obtainable from either S&P or Moody’s; (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (v) shares of any money market mutual fund that (a) has at least 95% of its assets invested continuously in the types of investments referred to in clauses (i), (ii) and (iii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody’s.

“Change of Control”: The occurrence, after August 23, 2007, of any of the following circumstances: (a) any Person or two or more Persons acting in concert acquiring beneficial ownership (within the meaning of Rule 13d 3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Equity Interests of the Borrower representing 35% or more of the combined voting power of all Equity Interests of the Borrower

entitled to vote in the election of directors; or (b) the first day on which a majority of the members of the board of directors of the Borrower are not Continuing Directors; or (c) any Person or two or more Persons acting in concert acquiring by contract or otherwise, or entering into a contract or arrangement which upon consummation will result in its or their acquisition of, control over Equity Interests of the Borrower representing 35% or more of the combined voting power of all Equity Interests of the Borrower entitled to vote in the election of directors.

“Closing Date”: The first Business Day on which all of the conditions precedent set forth in Article III are satisfied; provided, however, that the Closing Date must occur on or before December 31, 2007.

“Code”: The Internal Revenue Code of 1986, as amended.

“Common Stock”: The Borrower’s common stock, par value $0.01 per share.

“Collateral Assignment of IP”: The Collateral Assignment of IP dated on or before the Closing Date executed by the Borrower in favor of the Agent, for the benefit of the Lenders.

“Competitor”: A Person engaged, directly or indirectly, in manufacturing and/or supplying integrated circuits; it being agreed that a Person providing passive financing for any of the foregoing activities and such person or its designees serving as managers, managing members, general partners or directors of another Person in connection with its passive investment, shall not be deemed to be a “Competitor” unless that Person is also engaged in one or more of the foregoing activities.

“Contingent Obligation”: With respect to any Person at the time of any determination, without duplication, any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or otherwise: (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any direct or indirect security therefor, (b) to purchase property, securities, Equity Interests or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness, (c) to maintain working capital, equity capital or other financial statement condition of the primary obligor so as to enable the primary obligor to pay such Indebtedness or otherwise to protect the owner thereof against loss in respect thereof, or (d) entered into for the purpose of assuring in any manner the owner of such Indebtedness of the payment of such Indebtedness or to protect the owner against loss in respect thereof; provided, that the term “Contingent Obligation” shall not include endorsements for collection or deposit, in each case in the ordinary course of business.

“Continuing Directors”: As of any date of determination, any member of the board of directors of the Borrower who: (1) was a member of such board of directors on the Closing Date; or (2) was nominated for election or elected to such board of directors with the approval of a majority of the Continuing Directors who were members of such board of directors at the time of such nomination or election.

“Control Agreements”: Collectively, the Deposit Account Control Agreement (Borrower), the Deposit Account Control Agreements (Guarantor), the Securities Account Control Agreement (Borrower) and the Securities Account Control Agreements (Guarantor).

“Convertible Notes”: Unsecured convertible promissory notes, each substantially in the form of Exhibit A to the Note Purchase Agreement, to be issued by the Borrower to the Lenders (at the option of the Required Lenders) pursuant to the terms and conditions of the Note Purchase Agreement.

“Current Liabilities”: As of any date, the consolidated current liabilities of the Borrower, determined in accordance with GAAP.

“Default”: Any event which, with the giving of notice (whether such notice is required under Section 7.1, or under some other provision of this Agreement, or otherwise) or lapse of time, or both, would constitute an Event of Default.

“Defaulting Lender”: At any time, any Lender that, at such time (a) has failed to make its Term Loan thereunder required pursuant to the terms of this Agreement, (b) has failed to pay to the Agent or any Lender an amount owed by such Lender pursuant to the terms of this Agreement, or (c) has been deemed insolvent or has become subject to a bankruptcy, receivership or insolvency proceeding, or to a receiver, trustee or similar official.

“Deposit Account Control Agreement (Borrower)”: The Deposit Account Control Agreement by and among the Borrower, the Agent and Wells Fargo Bank, National Association, as depository bank, as the same may be amended, restated or otherwise modified from time to time.

“Deposit Account Control Agreements (Guarantor)”: The Deposit Account Control Agreements dated on or before the Closing Date, each in form and substance acceptable to the Agent and executed by a Guarantor, the Agent and a bank that maintains a deposit account (as such term is defined in Guarantor Security Agreement) on behalf of or in the name of such Guarantor, each as may be amended, restated or otherwise modified from time to time.

“Effective Rate”: As defined in Section 2.4(a).

“Eligible Assignee”: Means any Person approved by the Agent which is not a Competitor of the Borrower or any of its Subsidiaries.

“Equity Interests”: All shares, interests, participation or other equivalents, however designated, of or in a corporation or limited liability company, whether or not voting, including but not limited to common stock, member interests, warrants, preferred stock, and all agreements, instruments and documents convertible, in whole or in part, into any one or more or all of the foregoing (but excluding the Existing Convertible Debentures).

“ERISA”: The Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate”: Any trade or business (whether or not incorporated) that is a member of a group of which the Borrower is a member and which is treated as a single employer under Section 414 of the Code.

“Escrow Agent”: U.S. Bank National Association, in its capacity as escrow agent under the Escrow Agreement.

“Escrow Agreement”: The Escrow Agreement dated as of August 23, 2007 by and among the Agent, the Borrower and the Escrow Agent.

“Event of Default”: Any event described in Section 7.1.

“Existing Convertible Debentures. The 1.5% Convertible Subordinated Debentures due 2024 of the Borrower issued pursuant to the Indenture.

“Existing Loan Agreement”: The Fourth Amended and Restated Loan Agreement, dated as of June 20, 2006, by and among (a) the Borrower and Vitesse International, Inc., as borrowers and (b) Special Value Expansion Fund, LLC and Special Value Opportunities Fund, LLC, as lenders, and (c) Obsidian, LLC, as agent and collateral agent.

“Federal Funds Rate”: For any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions, with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.

“Fee Letter”: As defined in Section 2.10.

“GAAP”: Generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of any date of determination.

“Group”: The Borrower and all Subsidiaries, taken as a whole.

“Guarantor”: Each party that at any time executes, joins, or otherwise becomes a party to the Guaranty.

“Guarantor Security Agreement”: A Security Agreement in form and substance satisfactory to the Agent duly executed or joined by each Guarantor (as the same may be amended, restated or otherwise modified from time to time).

“Guaranty”: A Guaranty in form and substance satisfactory to the Agent duly executed by each Subsidiary of the Borrower (as the same may be amended, restated or otherwise modified from time to time).

“Immediately Available Funds”: Funds with good value on the day and in the city in which payment is received.

“Increase Election”: As defined in Section 2.1(b).

“Indebtedness”: With respect to any Person at the time of any determination, without duplication, and in each case whether contingent or otherwise: (a) all obligations of such Person for borrowed money (including non-recourse obligations), (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid or accrued, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services, (f) all obligations of others secured by any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Capitalized Lease Obligations of such Person, (h) all obligations of such Person in respect of interest rate swap agreements, cap or collar agreements, interest rate futures or option contracts, currency swap agreements, currency futures or option agreements and other similar contracts (i) all obligations of such Person, actual or contingent, as an account party in respect of letters of credit or bankers’ acceptances, (j) all obligations of any partnership or joint venture as to which such Person is or may become personally liable, (k) all obligations of such Person under any Equity Interests issued by such Person, and (l) all Contingent Obligations of such Person.

“Indemnitee”: As defined in Section 9.11.

“Indenture”: The Indenture dated as of September 22, 2004 by and between the Borrower and U.S. Bank National Association, as trustee, pursuant to which the Existing Covertible Debentures were issued, as the same has been or may be amended restated or otherwise modified from time to time.

“Initial VWAP”: The average VWAP for the 20 consecutive trading days ending on the trading day immediately preceding the Closing Date.

“Interest Payment Date”: Means (a) each October 15, January 15, April 15 and July 15, commencing October 15, 2007, provided that if any such day is not a Business Day, such Interest Payment Date shall be extended to the next succeeding Business Day and interest shall accrue for each day of such extension and (b) the date of any payment (whether as a prepayment or otherwise) of principal in accordance with this Agreement.

“Interest Period”: The initial period beginning on the Closing Date and ending on October 15, 2007 and each three month period thereafter that begins on the last day of an immediately preceding Interest Period; provided that:

(1) any Interest Period that would otherwise end on a day which is not a LIBOR Business Day shall be extended to the next succeeding LIBOR Business Day unless such LIBOR Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding LIBOR Business Day; and

(2) any Interest Period that begins on the last LIBOR Business Day of a calendar month (or a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last LIBOR Business Day of the calendar month in which such Interest Period is to end.

Notwithstanding the foregoing, no Interest Period can end after the maturity of the Term Notes. For purposes of determining an Interest Period, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month.

“Investment”: The acquisition, purchase, making or holding of any stock or other security, any loan, advance, contribution to capital, extension of credit (except for trade and customer accounts receivable for inventory sold or services rendered in the ordinary course of business and payable in accordance with customary trade terms), any acquisitions of real or personal property (other than real and personal property acquired in the ordinary course of business) and any purchase or commitment or option to purchase stock or other debt or equity securities of or any interest in another Person or any integral part of any business or the assets comprising such business or part thereof. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.

“Lender”: As defined in the opening paragraph hereof.

“LIBOR Rate”: With respect to each Interest Period, the average offered rate for deposits in United States dollars (rounded upward, if necessary, to the nearest 1/16 of 1%) for delivery of such deposits on the first day of such Interest Period, for the number of days in such Interest Period, which appears on Reuters Screen LIBOR01 Page as of 11:00 A.M., London time (or such other time as of which such rate appears) two LIBOR Business Days prior to the first day of such Interest Period, or the rate for such deposits determined by the Agent at such time based on such other published service of general application as shall be selected by the Agent for such purpose.

“Lien”: With respect to any Person, any security interest, mortgage, pledge, lien, charge, encumbrance, title retention agreement or analogous instrument or device (including the interest of each lessor under any Capitalized Lease), in, of or on any assets or properties of such Person, now owned or hereafter acquired, whether arising by agreement or operation of law.

“Loan Documents”: This Agreement, the Term Notes, and the Security Documents.

“Material Adverse Occurrence”: Any occurrence of whatsoever nature (including, without limitation, any adverse determination in any litigation, arbitration, or governmental investigation or proceeding) which could reasonably be expected to materially and adversely affect (a) the financial condition or operations of the Borrower and its Subsidiaries taken as a

whole, (b) impair the ability of the Borrower or any Subsidiary to perform its obligations under any Loan Document or the Note Purchase Agreement, or any writing executed pursuant thereto, (c) the validity or enforceability of the material obligations of the Borrower or any Subsidiary under any Loan Document or the Note Purchase Agreement, (d) the rights and remedies of the Lenders or the Agent against any the Borrower or any Subsidiary, (e) the timely payment of the principal of and interest on the Loans or other amounts payable by the Borrower hereunder, or (f) the validity of the joint and several nature of the obligations of the Borrower with respect to all of the Obligations.

“Maturity Date”: The four year anniversary of the Closing Date.

“Moody’s”: Means Moody’s Investor Services, Inc. or any successor thereto.

“Multiemployer Plan”: A multiemployer plan, as such term is defined in Section 4001 (a) (3) of ERISA, which is maintained (on the Closing Date, within the five years preceding the Closing Date, or at any time after the Closing Date) for employees of the Borrower or any ERISA Affiliate.

“New York Banking Day”: Any day (other than a Saturday or a Sunday) on which commercial banks are open for business in New York, New York.

“Net Asset Sale Proceeds”: With respect to any Asset Sale, means all cash or Cash Equivalents (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by the Borrower or any Subsidiary from such Asset Sale, net of any bona fide direct costs actually paid by the Borrower or any Subsidiary in connection with such Asset Sale, including (i) out-of-pocket fees and expenses, and any underwriting, brokerage or other customary selling commissions and legal, advisory and other fees and expenses, including title and recording expenses, associated therewith and payment of unassumed liabilities relating to the assets that are paid or payable within 365 days of such Asset Sale, (ii) income taxes reasonably estimated to be actually payable within two years of the date of such Asset Sale as a direct result of any gain recognized in connection with such Asset Sale, (iii) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that was allowed pursuant to Section 6.12 at the time of such Asset Sale and that was secured by a Lien permitted pursuant to Section 6.13 on the Equity Interests or assets in question at the time of such Assets Sale and that is repaid within 365 days of such Asset Sale under the terms therof as a result of such Asset Sale, and (iv) any actual reserve for adjustment (for so long as and, to the extent that, such reserve is required under U.S. GAAP) in respect of (A) the sale price of such asset or assets and (B) quantifiable liabilities associated with such asset or assets and retained by the Borrower or any of its Subsidiaries after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefits liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.

“Note Purchase Agreement”: The Senior Unsecured Convertible Note Purchase Agreement dated concurrently herewith by and among the Borrower and the Lenders.

“Obligations”: The Borrower’s obligations in respect of the due and punctual payment of principal and interest on the Term Notes when and as due, whether by acceleration or otherwise and all fees, expenses, indemnities, reimbursements and other obligations of the Borrower under this Agreement or any other Borrower Loan Document, and the Rate Protection Obligations, in all cases whether now existing or hereafter arising or incurred.

“Other Taxes”: As defined in Section 2.11(b)

“Participants”: As defined in Section 9.5(b).

“PBGC”: The Pension Benefit Guaranty Corporation, established pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the functions thereof.

“Person”: Any natural person, corporation, partnership, limited partnership, limited liability company, joint venture, firm, association, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity.

“Plan”: Each employee benefit plan (whether in existence on the Closing Date or thereafter instituted), as such term is defined in Section 3 of ERISA, maintained for the benefit of employees, officers or directors of the Borrower or of any ERISA Affiliate.

“Permitted Acquisition”: Shall mean a Merger Transaction permitted pursuant to Section 6.1 and any other acquisition by the Borrower or a Subsidiary that meets the following criteria:

(a)the acquisition is not a hostile acquisition or takeover and the acquired business is in the same line of business as the Borrower or a Subsidiary;

(b)no Event of Default or Default has occurred and is continuing or would be caused thereby; and

(c)the total aggregate purchase price (including assumed indebtedness and the fair market value of any non-cash consideration and any earn out) of all Permitted Acquisitions made during the term of this Agreement does not exceed $25,000,000.

“Permitted Refinancing”: With respect to any Person, any modification, refinancing, refunding, renewal or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended (the “Refinanced Indebtedness”) except by an amount equal to unpaid accrued interest and premium thereon plus other reasonable amounts paid, and fees and expenses reasonably incurred, in connection with such modification, refinancing, refunding, renewal or extension and by any amount equal to any existing commitments unutilized thereunder or as otherwise permitted pursuant to this Agreement, (b) such modification, refinancing, refunding, renewal or extension has a final maturity date equal to or later than the final maturity date of the Refinanced Indebtedness, and (c) if the Refinanced Indebtedness is subordinated in right of payment to the Obligations, such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Obligations on terms at least as favorable to Required

Lenders as those contained in the documentation governing the Refinanced Indebtedness, taken as a whole.

“Prepayment Event”: Means:

(a)any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of the Borrower or any Subsidiary, other than dispositions described in clauses (a), (b), (c), (d) and (e) of Section 6.2;

(b)any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Subsidiary, but only to the extent that the Net Asset Sale Proceeds therefrom have not been applied, or committed pursuant to an agreement (including any purchase orders) to be applied, to repair, restore or replace such property or asset within 180 days after such event;

(c)the incurrence by the Borrower or any Subsidiary of any Indebtedness, other than Indebtedness permitted by Section 6.12; or

(d)the issuance of the Convertible Notes pursuant to the Note Purchase Agreement.

“Prohibited Transaction”: The respective meanings assigned to such term in Section 4975 of the Code and Section 406 of ERISA.

“Rate Protection Agreement”: Any interest rate swap, cap or option agreement, or any other agreement pursuant to which the Borrower hedges interest rate risk with respect to a portion of the Obligations, entered into by the Borrower with a Rate Protection Provider.

“Rate Protection Obligations”: The liabilities, indebtedness and obligations of the Borrower, if any, to any Rate Protection Provider under a Rate Protection Agreement.

“Rate Protection Provider”: Any Lender, or any Affiliate of any Lender, that is the counterparty of the Borrower under any Rate Protection Agreement.

“Refinanced Indebtedness”: As defined in the definition of “Permitted Refinancing.”

“Register”: As defined in Section 9.5(f).

“Registration Rights Agreement”: The Registration Rights Agreement to be executed by and between the Borrower and the Lender, as the same may be amended, restated or otherwise modified from time to time.

“Replacement Notes”: As defined in Section 2.1(b).

“Reportable Event”: A reportable event as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that

it be notified within 30 days of the occurrence of such event, provided, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any waiver in accordance with Section 412(d) of the Code.

“Required Lenders”: At any time, Lenders, other than Defaulting Lenders, holding at least 51% of the aggregate unpaid principal amount of the Term Notes, excluding Term Notes held by Defaulting Lenders, provided, that, if at any date of determination, there are two Lenders, the “Required Lenders” shall constitute 100% or the Lenders other than Defaulting Lenders.

“Restricted Payments”: With respect to the Borrower and its Subsidiaries, collectively, all dividends (other than dividends from any wholly-owned subsidiary to another wholly-owned subsidiary of the Borrower) or other distributions with respect to the Equity Securities of such Borrower or Subsidiary of any nature (cash, Equity Interests other than common stock, assets or otherwise), and all payments on any class of Equity Interests (including warrants, options or rights therefor) issued by the Borrower or such Subsidiary, whether such Equity Interests are authorized or outstanding on the Closing Date or at any time thereafter and any redemption or purchase of, or distribution in respect of, any of the foregoing, whether directly or indirectly.

“S&P”: Means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto.

“Securities Account Control Agreement (Borrower)”: The Securities Account Control Agreement, in form and substance acceptable to the Agent and executed by the Borrower, the Agent and a securities intermediary (as such term is defined in Article 8 of the UCC) on behalf of or in the name of the Borrower, as the same may be amended, restated or otherwise modified from time to time.

“Securities Account Control Agreements (Guarantor)”: The Securities Account Control Agreements, each in form and substance acceptable to the Agent and executed by a Guarantor, the Agent and a securities intermediary (as such term is defined in Article 8 of the UCC) that maintains a securities account (as such term is defined in Article 8 of the UCC) on behalf of or in the name of such Guarantor, each as may be amended, restated or otherwise modified from time to time.

“Security Documents”: Collectively, the Borrower Security Agreement, the Borrower Pledge Agreement, the Control Agreements, the Collateral Assignment of IP, the Guaranty and the Guarantor Security Agreement.

“SPD Sale”: The sale of certain of the borrower’s assets pursuant to the SPD Sale Documents.

“SPD Sale Documents”: The Asset Purchase Agreement dated as of August 23, 2007 by and between the Borrower and Maxim Intergrated Products, Inc., and each other agreement, investment and document required thereby as executed in connection therewith.

“Subordinated Debt”: (a) the Existing Convertible Debentures and (b)any other Indebtedness of the Borrower, now existing or hereafter created, incurred or arising, which is subordinated in right of payment to the payment of the Obligations in a manner and to an extent (i) that Required Lenders have approved in writing prior to the creation of such Indebtedness, or (ii) as to any Indebtedness of the Borrower existing on the date of this Agreement, that Required Lenders have approved as Subordinated Debt in a writing delivered by Required Lenders to the Borrower on or prior to the Closing Date.

“Subsidiary”: Any corporation or other entity of which Equity Interests having ordinary voting power for the election of a majority of the board of directors or other Persons performing similar functions are owned by the Borrower either directly or through one or more Subsidiaries.

“Taxes”: As defined in Section 2.11(a).

“Term Loan”: As defined in Section 2.1(a).

“Term Loans”: The term loans to be advanced to the Borrower by the applicable Lenders, in an aggregate amount equal to the Term Loan Aggregate Commitment Amount.

“Term Loan Aggregate Commitment Amount”: The sum of the Term Loan Commitment Amounts of all the Lenders.

“Term Loan Commitment”: With respect to a Lender, the agreement of such Lender to make a Term Loan to the Borrower in an amount equal to such Lender’s Term Loan Commitment Amount upon the terms and subject to the conditions of this Agreement.

“Term Loan Commitment Amount”: With respect to a Lender, the amount set opposite such Lender’s name on Schedule 1.1 hereto as its Term Loan Commitment Amount, as the same may be increased pursuant to Section 2.1(b) hereto.

“Term Loan Increase Amount”: As defined in Section 2.1(b).

“Term Loan Percentage”: With respect to any Lender, the percentage equivalent of a fraction, the numerator of which is the amount of the Term Loan Commitment of such Lender and the denominator of which is the sum of the Term Loan Commitments of all the Lenders.

“Term Notes”: The promissory notes of the Borrower, in the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay the Term Loans (as the same may be amended, restated or otherwise modified from time to time), and “Term Note” means any one of such promissory notes without distinction.

“Trading Market”: The following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“UCC”: The Uniform Commercial Code as enacted in the State of New York.

“U.S. Taxes”: As defined in Section 2.11(e).

“VWAP”: As of any date of determination, the price (in each case adjusted to take into account stock splits) determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average per share price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by the Agent in a commercially reasonable manner in consultation with the Borrower and a nationally recognized investment banking firm reasonably acceptable to the Borrower.

“Whitebox”: Whitebox VSC, Ltd. in its capacity as one of the Lenders hereunder.

Section 1.2Accounting Terms and Calculations. Except as may be expressly provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP. To the extent any change in GAAP affects any computation or determination required to be made pursuant to this Agreement, such computation or determination shall be made as if such change in GAAP had not occurred unless the Borrower and Required Lenders agree in writing on an adjustment to such computation or determination to account for such change in GAAP.

Section 1.3Computation of Time Periods. In this Agreement, in the computation of a period of time from a specified date to a later specified date, unless otherwise stated the word “from” means “from and including” and the word “to” or “until” each means “to but excluding”.

Section 1.4Other Definitional Terms. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to Sections, Exhibits, schedules and like references are to this Agreement unless otherwise expressly provided. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” Unless the context in which used herein otherwise clearly requires, “or” has the inclusive meaning represented by the phrase “and/or.” All incorporation by reference of covenants, terms, definitions or other provisions from other agreements are incorporated into this Agreement as if such provisions were fully set forth herein, and such incorporation shall include all necessary definitions and related provisions from such other agreements but including only amendments thereto agreed to by the Required Lenders, and shall survive any termination of such other agreements until the obligations of the Borrower under this Agreement and the Term Notes are irrevocably paid in full, and the commitments of any Lender to advance funds to the Borrower are terminated.

ARTICLE II

TERMS OF THE LOANS

Section 2.1Term Loans; Option to Increase the Term Loan Aggregate Commitment Amount

(a)Term Loans. Upon the terms and subject to the conditions hereof, each Lender, severally and not jointly, agrees to make a loan (a “Term Loan”) to the Borrower in an amount equal to such Lender’s Term Loan Commitment Amount in a single advance on the Closing Date. Amounts borrowed under each Term Loan and repaid may not be reborrowed.

(b)Option to Increase the Term Loan Aggregate Commitment Amount. Prior to the Closing Date, the Borrower requested that the Aggregate Term Loan Commitment Amount be increased by $15,000,000. As an accommodation to the Borrower, during the ninety (90) day period beginning on the Closing Date, the Required Lenders may, in their sole discretion, increase (the “Increase Election”) the Aggregate Term Loan Commitment Amount by an aggregate amount up to $15,000,000 (such amount constituting the “Term Loan Increase Amount”). The Required Lenders will provide the Agent with prompt, written notice of their Increase Election and the Agent will notify the Borrower of the Increase Election within one (1) Business Day after the Agent’s actual receipt of such written notice. The Borrower acknowledges and agrees that it will execute replacement term notes (“Replacement Notes”) in favor of each Lender in the principal amount of such Lender’s respective Term Loan Commitment Amount (after giving effect to the increase in such Term Loan Commitment Amount provided for pursuant to this Section 2.1(b)) within five (5) Business Days after receiving written notice from the Agent of the Increase Election. Upon receipt by the Agent of duly executed originals of all the Replacement Notes, each Lender’s respective Term Loan Commitment Amount will be increased by its pro rata share of the Term Loan Increase Amount. The Borrower and the Lenders acknowledge and agree that, following such increase, the Agent may attach an amended Schedule 1.1 to this Agreement reflecting the appropriate Term Loan Commitment Amounts of the Lenders without any further consent (oral or written) from the Borrower or the Lenders.

Section 2.2 Procedure for Term Loans and the Term Loan Increase

(a)Term Loans. Upon the due execution and delivery of this Agreement by the Borrower, the Agent and the Lenders, each Lender shall provide the Escrow Agent with the amount of such Lender’s Term Loan in Immediately Available Funds. Not later than 12:00 Noon (Minneapolis, Minnesota time) on the Closing Date, the Borrower shall deliver to the Agent a written notice of borrowing. Such notice of borrowing shall be irrevocable and shall be deemed a representation by the Borrower that on the Closing Date and after giving effect to the Term Loans the applicable conditions specified in Article III have been and will be satisfied. The Agent shall promptly notify each Lender and the Escrow Agent of the receipt of such notice and the matters specified therein. Unless the Agent determines that any applicable condition specified in Article III has not been satisfied, and subject to the terms and conditions of the Escrow Agreement, the

Agent will, no later than 12:00 Noon (Minneapolis, Minnesota time) on the Closing Date, instruct the Escrow Agent to provide to the Borrower the amount of the Term Loan in Immediately Available Funds.

(b)Term Loan Increase. The Agent will notify the Lenders of the Increase Election on the same Business Day that it notifies the Borrower pursuant to Section 2.1(b). Each Lender will provide to the Agent such Lender’s pro rata amount of the Term Loan Increase Amount in Immediately Available Funds not later than 11:00 A.M. (Minneapolis, Minnesota time) on the Business Day immediately following its receipt of such notice. Unless the Agent determines that any applicable condition specified in Article III has not been satisfied, and following receipt by the Agent of duly executed originals of the Replacement Notes, the Agent will promptly provide the Term Loan Increase Amount in Immediately Available Funds to the Borrower on such Business Day, provided, that, if the conditions specified in this Section 2.2(b) are not satisfied by 12:00 noon (Minneapolis, Minnesota time) on such Business Day, the Agent shall provide such funds on the immediately succeeding Business Day.

Section 2.3Notes. The Term Loan of each Lender shall be evidenced by a Term Note payable to the order of such Lender in the principal amount equal to such Lender’s Term Loan Commitment Amount. Upon receipt of each Lender’s Term Note from the Borrower, the Agent shall mail such Note to such Lender. Each Lender shall enter in its ledgers and records the amount of its Term Loan and the payments made thereon, and each Lender is authorized by the Borrower to enter on a schedule attached to its Term Note, a record of such Term Loan and payments; provided, however, that the failure by any Lender to make any such entry or any error in making such entry shall not limit or otherwise affect the obligation of the Borrower hereunder and on the Term Notes, and, in all events, the principal amounts owing by the Borrower in respect of the Term Notes shall be the aggregate amount of all Term Loans made by the Lenders less all payments of principal thereof made by the Borrower.

Section 2.4Interest Rates, Interest Payments and Default Interest. Interest shall accrue and be payable on the Term Loans as follows:

(a)Subject to paragraphs (b) and (c) below, the Term Loan shall bear interest on the unpaid principal amount thereof during the Interest Period applicable thereto at a rate per annum equal to greater of (i) the sum of (1) the LIBOR Rate for such Interest Period plus (2) the Applicable Margin or (ii) 8.50% (such greater amount constituting the “Effective Rate”).

(b)After the occurrence and during the continuance of an Event of Default, and at all times following the Required Lender’s election to enforce their remedies under Section 7.2 hereof, the Term Loan shall, at the option of the Required Lenders, bear interest until paid in full at a rate per annum equal to the Effective Rate plus 2.0%.

(c)Upon the failure of the Borrower to provide the financial statements required by Section 5.1 within the deadlines specified therein, the Term Loan shall, at the option of the Required Lenders, bear interest at a rate per annum equal to the Effective Rate plus 2.0% until such financial statements are delivered to the Agent.

(d)Interest on the Term Loans and all other Obligations shall be payable to Lenders quarterly in arrears on each Interest Payment Date, upon any prepayment (on the amount prepaid), and on the Maturity Date; provided that interest under paragraph (b) of this Section shall be payable on demand.

Section 2.5Repayment. The unpaid principal amount of the Term Loans, together with all accrued and unpaid interest thereon, shall be due and payable at the earlier of (a) the Maturity Date and (b) upon the Obligations becoming due and payable as provided in Section 7.2.

Section 2.6 Prepayments.

(a) Optional Prepayments; Prepayment Fee.

i. The Borrower may prepay all or any part of the outstanding principal balance under the Term Loan upon three (3) Business Days prior written notice to the Agent. Any written notice by the Borrower of its election to prepay under this Section shall be irrevocable. Each partial prepayment shall be in a minimum aggregate amount for all the Lenders of $100,000 or an integral multiple thereof. Except upon an acceleration following an Event of Default, the Borrower may prepay pursuant to this Section 2.6(a) only on the last day of an Interest Period. Amounts prepaid on the Term Loan under this paragraph shall be for the account of each Lender in proportion to its share of the outstanding Term Loans.

ii. The Borrower shall pay the Lenders a non-refundable prepayment fee on each prepayment made pursuant to Section 2.6(a) that is equal to one percent (1%) of the aggregate amount of principal prepaid (the “Prepayment Fee”). The Prepayment Fee shall be paid concurrently with each prepayment paid pursuant to this Section 2.6(a).

(b)Mandatory Prepayments for a Prepayment Event or Redemption of Existing Coverible Debentures.

i. If at any time a Prepayment Event occurs, the Borrower shall immediately pay to the Agent for the ratable benefit of the Lenders the net proceeds realized by such Prepayment Event. Any such prepayments shall be applied to the Term Loans. Amounts prepaid under this paragraph shall be for the account of each Lender in proportion to its share of the outstanding Term Loans.

ii. If the Borrower at any time exercises its option to redeem the Existing Convertible Debentures pursuant to Section 10.1 of the Indenture using cash or Cash Equivalents not obtained through a refinancing of the Existing Covertible Debentures or an issuance of

Equity Interests permitted pursuant to this Agreement, the Borrower shall immediately pay to the Agent an amount equal to the lesser of (A) the aggregate principal amount of all Term Loans then outstanding plus all accrued and unpaid interest owing to the Lenders pursuant to this Agreement at the time of such redemption and (B) 25% of the aggregate amount of Existing Covertible Debentures redeemed. Any such prepayments shall be applied to the Term Loans.

Section 2.7Computation. Interest on the Term Loans shall be computed on the basis of actual days elapsed and a year of 360 days.

Section 2.8Payments. Payments and prepayments of principal of, and interest on, the Term Notes and all fees, expenses and other obligations under this Agreement payable to the Agent or the Lenders shall be made without setoff or counterclaim in Immediately Available Funds not later than 3:00 P.M. (Minneapolis, Minnesota time) on the dates called for under this Agreement and the Term Notes to the Agent at its main office in Minneapolis, Minnesota. Funds received after such time shall be deemed to have been received on the next Business Day. The Agent will promptly distribute in like funds to each Lender its ratable share of each such payment of principal, interest and fees received by the Agent for the account of the Lenders. Whenever any payment to be made hereunder or on the Term Notes shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time, in the case of a payment of principal, shall be included in the computation of any interest on such principal payment.

Section 2.9Use of Loan Proceeds. The proceeds of the Term Loans shall be used for (a) the repayment of existing Indebtedness under the Existing Loan Agreement plus any accrued interest and any prepayment penalties; and (b) general business purposes of the Borrower in a manner not in conflict with any of the Borrower’s covenants in this Agreement.

Section 2.10Fees. The Borrower shall pay to the Agent the fees set forth in the separate letter agreement dated concurrently herewith (the “Fee Letter”) between the Agent and the Borrower. Such fees shall be paid on the Closing Date and at such other times as may be required pursuant to the terms of the Fee Letter.

Section 2.11 Taxes

(a)Any and all payments by the Borrower hereunder or under the Term Notes shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions or charges of withholdings (“Taxes”), and all liabilities with respect thereto, excluding, in the case of each Lender, the Agent, or any other recipient of a payment hereunder or under the Term Notes (a “Recipient”) (inclusive in each case all related liabilities with respect thereto), (i) Taxes imposed on its overall income (however denominated), franchise Taxes imposed on it in lieu of income Taxes, and branch profits or similar Taxes, (ii) any withholding or backup withholding Tax that (A) is imposed under a law in effect at the time such Recipient becomes a party hereto or otherwise acquires an interest herein (or in the case of any Lender, designates a new

lending office) or (B) is attributable to such Recipient’s failure to comply, or unreasonable delay in complying, with Section 2.11(e), and (iii) any Tax that results from such Recipient’s gross negligence or willful misconduct (all such non-excluded Taxes in respect of payments hereunder or under the Term Notes being hereinafter referred to as “Indemnified Taxes”).

(b)The Borrower agrees to pay any present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies that arise from any payment made hereunder or under the Term Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Term Notes (hereinafter referred to as “Other Taxes”).

(c)The Borrower shall indemnify each Lender and the Agent for the full amount of Indemnified Taxes or Other Taxes imposed on or paid by such Lender or the Agent and any penalties, interest and expenses with respect thereto. Payments on this indemnification shall be made within 30 days from the date such Lender or the Agent makes written demand therefor, unless such liability results from, or is with respect to, any Tax with respect to any period prior to the date that is 120 days prior to such claim if such Lender or the Agent knew or could reasonably have been expected to know of the circumstances giving rise to such claim and of the fact that such circumstances would result in the claim, in which case the Borrower shall have no indemnification obligation with respect to such Tax. A certificate of a Lender or the Agent setting forth in reasonable detail the amount or amounts necessary to compensate such Lender or the Agent, as the case may be, the changes as a result of which such amounts are due and the manner of computing such amounts shall be delivered to the Borrower.

(d)Within 30 days after the date of any payment of Indemnified Taxes, the Borrower shall furnish to the Agent, at its address referred to on the signature page hereof a copy of a receipt or other reasonably satisfactory document evidencing payment thereof.

(e)Each Lender or other Recipient, as of the date it becomes a party hereto or acquires an interest hereunder or under the Term Notes, represents to the Borrower and the Agent that it is either (i) a corporation organized under the laws of the United States or any State thereof or (ii) is entitled to complete exemption from United States withholding Tax imposed on or with respect to any payments, including fees, to be made pursuant to this Agreement (x) under an applicable provision of a tax convention to which the United States is a party. (y) because it is acting through a branch, agency or office in the United States and any payment to be received by it hereunder is effectively connected with a trade or business in the United States or (z) under an exemption for portfolio interest under the Code. Each Lender or other Recipient that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) (“Foreign Recipient”) shall submit to the Borrower and the Agent, on or before the day on which such Lender or such Recipient becomes a party thereto, a duly completed and signed copy of either Form W-8BEN or Form W-8ECI of the United States Internal Revenue Service. In the case of a Foreign Lender or Foreign Recipient claiming the benefits of the exemption for portfolio interest under the Code, such Lender or such Recipient must

submit to the Borrower and the Agent, on or before the day on which it becomes a party hereto, (i) a certificate, to the effect that such Foreign Lender or Foreign Recipient is not (x) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (y) a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (z) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (ii) duly completed copies of Internal Revenue Service Form W-8BEN. Form W-8BEN shall include the Foreign Lender or Foreign Recipient’s United States taxpayer identification number if required under the current regulations to claim exemption from withholding pursuant to a tax convention. Thereafter and from time to time, each such Lender or other Recipient shall submit to the Borrower and the Agent such additional duly completed and signed copies of one or the other of such Forms (or such successor Forms as shall be adopted from time to time by the relevant United States taxing authorities) and certificates or other applicable forms or documentation (e.g., Internal Revenue Service Form W-8IMY) as may be (i) reasonably requested by the Borrower or the Agent and (ii) required and permitted under then-current United States law or regulations to avoid United States withholding Taxes in respect of all payments to be received by such person hereunder. Each Lender or other Recipient that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Agent a duly completed and signed certificate on Internal Revenue Service Form W-9 or such substitute form as is reasonably satisfactory to the Borrower and the Agent to the effect that it is such a United States person. If the Borrower shall be required by law or regulation to make any deduction, withholding or backup withholding of any taxes, levies, imposts, duties, fees, liabilities or similar charges of the United States of America, any possession or territory of the United States of America (including the Commonwealth of Puerto Rico) or any area subject to the jurisdiction of the United States of America (“U.S. Taxes”) from any payments to a Lender pursuant to any Loan Document in respect of the Obligations payable to such then or thereafter outstanding, the Borrower shall make such withholdings or deductions and pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with applicable law.

(f) [Reserved].

(g)If the Agent, a Lender, or a Recipient determines, in its good faith discretion, that it has received a refund (including by way of offset) of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnification payments made, or additional amounts paid, by the Borrower under this Section with respect to Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Agent, such Lender or such Recipient, as the case may be, and without interest (other than any interest paid by the relevant governmental authority with respect to such refund); provided, that the Borrower, upon the request of the Agent, such Lender, or such Recipient agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant governmental authority) to the Agent, such Lender, or such Recipient in the event the Agent, such Lender, or such Recipient is required to repay such refund to such

governmental authority. This paragraph shall not be construed to require the Agent, any Lender, or any Recipient to make available its tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other person.

(h)If the Borrower determines in good faith that a reasonable basis exists for contesting Indemnified Taxes or Other Taxes with respect to which the Borrower has paid an additional or indemnification amount under this Section 2.11, the Agent, the applicable Lender or the applicable Recipient shall cooperate with the Borrower (but shall have no obligation to disclose any confidential information, unless reasonably satisfactory arrangements have been made to preserve the confidential nature of such information) in challenging such Indemnified Taxes or Other Taxes at the Borrower’s expense if requested by the Borrower (it being understood and agreed that none of the Agent, any Lender, or any Recipient shall have any obligation to contest, or any responsibility for contesting, any Indemnified Taxes or Other Taxes).

ARTICLE III

CONDITIONS PRECEDENT

The making of the Term Loans shall be subject to the prior or simultaneous fulfillment of the following conditions:

Section 3.1Documents. The Agent shall have received the following in sufficient counterparts (except for the Term Notes) for each Lender:

(a)This Agreement, executed by a duly authorized officer (or officers) of the Borrower and dated on or before the Closing Date.

(b)A Term Note drawn to the order of each Lender executed by a duly authorized officer (or officers) of the Borrower and dated on or before the Closing Date.

(c)The Borrower Security Agreement, executed by a duly authorized officer (or officers) of the Borrower and dated on or before the Closing Date.

(d)The Borrower Pledge Agreement, executed by a duly authorized officer (or officers) of the Borrower and dated on or before the Closing Date.

(e)The Collateral Assignment of IP, executed by a duly authorized officer (or officers) of the Borrower and dated on or before the Closing Date.

(f)The Guaranty, executed by a duly authorized officer (or officers) of each Guarantor.

(g)The Guarantor Security Agreement, executed by a duly authorized officer (or officers) of each Guarantor.

(h)With respect to each securities account (as such term is defined in Article 8 of the UCC) maintained on behalf of or in the name of the Borrower, a Securities Account Control Agreement (Borrower) with respect to such account executed by a duly

authorized officer (or officers) of the Borrower and the securities intermediary (as such term is defined in Article 8 of the UCC) maintaining such account.

(i)With respect to each securities account (as such term is defined in Article 8 of the UCC) maintained on behalf of or in the name of a Guarantor, a Securities Account Control Agreement (Guarantor) with respect to such account executed by a duly authorized officer (or officers) of the applicable Guarantor and the securities intermediary (as such term is defined in Article 8 of the UCC) maintaining such account.

(j)the Deposit Account Control Agreement (Borrower), executed by a duly authorized officer (or officers) of the Borrower and Wells Fargo Bank, National Association, respectively.

(k)With respect to each deposit account (as such term is defined in the Guarantor Security Agreement) maintained on behalf of or in the name of a Guarantor, a Deposit Account Control Agreement (Guarantor) with respect to such account executed by a duly authorized officer (or officers) of the applicable Guarantor and the bank that maintains such account, within thirty (30) days of the Closing Date.

(l)The Fee Letter, executed by a duly authorized officer (or officers) of the Borrower and dated on or before the Closing Date.

(m)The Note Purchase Agreement, executed by a duly authorized officer (or officers) of the Borrower and dated on or before the Closing Date.

(n)The Registration Rights Agreement, executed by a duly authorized officer (or officers) of the Borrower and dated on or before the Closing Date.

(o)A copy of the corporate resolutions of the Borrower authorizing the execution, delivery and performance of the Loan Documents to which it is a party, the Note Purchase Agreement and all of the transaction contemplated by any of the foregoing, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Borrower.

(p)An incumbency certificate showing the names and titles and bearing the signatures of the officers of the Borrower authorized to execute the Loan Documents to which it is a party and to request the Term Loans hereunder, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Borrower.

(q)A copy of the corporate or company resolutions of each Guarantor authorizing the execution, delivery and performance of the Loan Documents to which such Guarantor is a party and all of the transaction contemplated thereby, certified as of the Closing Date by the Secretary or an Assistant Secretary of such Guarantor.

(r)An incumbency certificate showing the names and titles and bearing the signatures of the officers of each Guarantor authorized to execute the Loan Documents, certified as of the Closing Date by the Secretary or an Assistant Secretary of each Guarantor.

(s)A copy of the Articles of Incorporation (or the equivalent thereof) of the Borrower and each Guarantor, with all amendments thereto, certified by the appropriate governmental official of the jurisdiction of its organization as of a date acceptable to the Agent.

(t)Certificates of good standing for the Borrower and each Guarantor in their respective jurisdictions of organization, each certified by the appropriate governmental officials as of a date acceptable to the Agent.

(u)A copy of the bylaws of the Borrower, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Borrower.

(v)A copy of the bylaws, limited liability company agreement, partnership agreement (or the equivalent thereof) of each Guarantor certified as of the Closing Date by the Secretary or Assistant Secretary of such Guarantor.

(w)A certificate dated the Closing Date of the chief executive officer or chief financial officer of the Borrower certifying as to (i) the matters set forth in Sections 3.9(a) and (b) below and (ii) the solvency of the Borrower after giving effect to the Term Loan and the SPD Sale.

(x)Landlord’s waivers and/or bailee’s waivers for locations identified on Schedule 3.1.

(y)ACORD 25 and ACORD 27 certificates of insurance with respect to each of the businesses and real properties of the Borrower and its Subsidiaries in such amounts and with such carriers as shall be reasonably acceptable to the Agent.

(z)Results of a recent search of all effective Uniform Commercial Code financing statements and fixture filings which may have been made with respect to any personal or mixed property of the Borrower and the Guarantors, together with copies of all such filings disclosed by such search.

Section 3.2Opinion. The Borrower shall have requested its counsel to prepare a written opinion, addressed to the Lenders and dated the Closing Date, substantially in the form attached hereto as Exhibit B, and such opinion shall have been delivered to the Agent.

Section 3.3Compliance. The Borrower shall have performed and complied in all material respects with all agreements, terms and conditions contained in the Loan Documents and the Note Purchase Agreement required to be performed or complied with by the Borrower prior to or simultaneously with the Closing Date.

Section 3.4Security Documents; Termination of Liens. The Security Documents (or financing statements with respect thereto) shall have been appropriately filed or recorded to the satisfaction of the Agent; any pledged collateral shall promptly (and in no event more than five (5) Business Days) following the Closing Date be delivered to the Agent; any title insurance required by the Agent (with endorsements required by the Agent) shall have been obtained and be satisfactory to the Agent; and the priority and perfection of the Liens created by the Security

Documents shall have been established to the satisfaction of the Agent and its counsel. Each Lien against the Borrower and its Subsidiaries other than those Liens permitted pursuant to Section 6.13 shall have been terminated to the satisfaction of the Agent in its sole discretion.

Section 3.5Other Matters. All corporate and legal proceedings relating to the Borrower and all instruments and agreements in connection with the transactions contemplated by this Agreement shall be satisfactory in scope, form and substance to the Agent, the Lenders and the Agent’s special counsel, and the Agent shall have received all information and copies of all documents, including records of corporate proceedings, as any Lender or such special counsel may reasonably have requested in connection therewith, such documents where appropriate to be certified by proper corporate or governmental authorities.

Section 3.6Indebtedness under the Existing Loan Agreement. The Agent shall have received evidence reasonably satisfactory to the Agent that all Indebtedness owing under the Existing Loan Agreement has been paid in full and that all liens created thereunder or relating thereto have been terminated as of the Closing Date.

Section 3.7Fees and Expenses. The Agent shall have received for itself and for the account of the Lenders all fees and other amounts due and payable by the Borrower on or prior to the Closing Date, including the reasonable fees and expenses of counsel to the Agent payable pursuant to Section 9.2 and fees owing on the Closing Date pursuant to the Fee Letter.

Section 3.8 SPD Sale

(a)The Agent shall have received (a) evidence, reasonably satisfactory to the Agent, that the Borrower has completed, or concurrently with the initial credit extension hereunder will complete, the SPD Sale in accordance with the terms of the SPD Sale Documents (without any material amendment thereto or material waiver thereunder unless consented to by the Agent), (b) evidence that the Borrower has received and has available on the Closing Date, as part of the purchase price paid to the Borrower pursuant to the SPD Sale Documents, an amount in cash or Cash Equivalents of not less than $30,000,000 and (c) all of the following, each duly executed and dated the Closing Date (or such earlier date as shall be satisfactory to the Agent), in form and substance satisfactory to the Agent:

i. Copies of Documents. Copies of the executed SPD Sale Documents, certified by the secretary or assistant secretary (or similar officer) of the Borrower as being true, accurate and complete.

ii. Closing Certificate and Consents. A certificate executed by an officer of the Borrower on behalf of the Borrower certifying as to the occurrence of the closing of the SPD Sale and that such closing has been consummated in accordance with the terms of the SPD Sale Documents without waiver of any material condition thereof; together with evidence that all necessary governmental, regulatory, creditor, member, partner and other material consents, approvals

and exemptions required to be obtained by the Borrower in connection with the SPD Sale have been duly obtained and are in full force and effect.

Section 3.9 Representations; Default; Request

(a)Representations and Warranties. The representations and warranties contained in Article IV shall be true and correct on and as of the Closing Date, with the same force and effect as if made on such date.

(b)No Default. No Default or Event of Default shall have occurred and be continuing on the Closing Date or will exist after giving effect to the Term Loan made on such date.

(c)Loan Request. The Agent shall have received the Borrower’s request for the Term Loan as required under Section 2.2.

Section 3.10Consents. Whitebox and Linden Capital L.P., as holders of a majority of the aggregate principal amount of the Existing Convertible Debentures, shall deliver to the Borrower, and agree not to revoke, executed Letters of Consent, substantially in the form attached hereto as Exhibit D, with respect to a majority of the aggregate principal amount of the Existing Convertible Debentures.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

To induce the Lenders to enter into this Agreement and to make the Term Loan hereunder, the Borrower represents and warrants to the Lenders:

Section 4.1Organization, Standing, Etc. The Borrower is a corporation duly incorporated and validly existing and in good standing under the laws of the jurisdiction named in the opening paragraph hereof and has all requisite power and authority to carry on its business as now conducted, to enter into this Agreement and to issue the Term Notes and to perform its obligations under the Loan Documents. Each Subsidiary is duly organized and validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to carry on its business as now conducted. Each of the Borrower and the Subsidiaries (a) holds all certificates of authority, licenses and permits necessary to carry on its business as presently conducted in each jurisdiction in which it is carrying on such business, except where the failure to hold such certificates, licenses or permits would not constitute a Material Adverse Occurrence and (b) is duly qualified and in good standing as a foreign corporation (or other organization) in each jurisdiction in which the character of the properties owned, leased or operated by it or the business conducted by it makes such qualification necessary and the failure so to qualify would permanently preclude the Borrower or such Subsidiary from enforcing its rights with respect to any assets or expose the Borrower to any Material Adverse Occurrence.

Section 4.2Authorization and Validity. The execution, delivery and performance by the Borrower of the Loan Documents and each Subsidiary of the Loan Documents to which it is

a party have been duly authorized by all necessary corporate action by the Borrower or such Subsidiary. This Agreement constitutes, and the Term Notes, the other Loan Documents to which it is a party and the Note Purchase Agreement, when executed, will constitute, the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, subject to limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights generally and subject to limitations on the availability of equitable remedies. The Loan Documents to which any Subsidiary is a party, when executed, will constitute the legal, valid and binding obligations of such Subsidiary, enforceable against such Subsidiary in accordance with their respective terms, subject to limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights generally and subject to limitations on the availability of equitable remedies.

Section 4.3No Conflict; No Default. The execution, delivery and performance by the Borrower of the Loan Documents will not (a) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to the Borrower, (b) violate or contravene any provision of the Articles of Incorporation or bylaws of the Borrower, or (c) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which the Borrower is a party or by which it or any of its properties may be bound or result in the creation of any Lien thereunder. The execution, delivery and performance by each Subsidiary of the Loan Documents to which it is a party will not (a) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to such Subsidiary, (b) violate or contravene any provision of the organizational documents of such Subsidiary, or (c) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which such Subsidiary is a party or by which it or any of its properties may be bound or result in the creation of any Lien thereunder. Except as set forth in Schedule 4.3, neither the Borrower nor any Subsidiary is in default under or in violation of any such law, statute, rule or regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in which the consequences of such default or violation could reasonably be expected to constitute a Material Adverse Occurrence.

Section 4.4Government Consent. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority is required on the part of the Borrower to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, the Loan Documents, except for any necessary filing or recordation of or with respect to any of the Security Documents. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority is required on the part of any Subsidiary to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, the Loan Documents to which it is a party, except for any necessary filing or recordation of or with respect to any of the Security Documents.

Section 4.5Litigation. Except as set forth on Schedule 4.5 hereto, there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary or any of their properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which, if determined adversely to the Borrower or any Subsidiary, would constitute a Material Adverse Occurrence, and there are no unsatisfied judgments against the Borrower or Subsidiary, the satisfaction or payment of which would constitute a Material Adverse Occurrence.

Section 4.6Environmental, Health and Safety Laws. There does not exist any violation by the Borrower or any Subsidiary of any applicable federal, state or local law, rule or regulation or order of any government, governmental department, board, agency or other instrumentality relating to environmental, pollution, health or safety matters which has, will or threatens to impose, a material liability on the Borrower or a Subsidiary or which has required or would require a material expenditure by the Borrower or a Subsidiary to cure. Neither the Borrower nor any Subsidiary has received any notice to the effect that any part of its operations or properties is not in material compliance with any such law, rule, regulation or order or notice that it or its property is the subject of any governmental investigation evaluating whether any remedial action is needed to respond to any release of any toxic or hazardous waste or substance into the environment, which non compliance or remedial action could reasonably be expected to constitute a Material Adverse Occurrence. Except as set out on Schedule 4.6 attached hereto, the Borrower does not have knowledge that it or its property or any Subsidiary or the property of any Subsidiary will become subject to environmental laws or regulations during the term of this Agreement, compliance with which could reasonably be expected to require Capital Expenditures which would constitute a Material Adverse Occurrence.

Section 4.7ERISA. Each Plan is in substantial compliance with all applicable requirements of ERISA and the Code and with all material applicable rulings and regulations issued under the provisions of ERISA and the Code setting forth those requirements. No Reportable Event has occurred and is continuing with respect to any Plan. All of the minimum funding standards applicable to such Plans have been satisfied and there exists no event or condition which would reasonably be expected to result in the institution of proceedings to terminate any Plan under Section 4042 of ERISA. With respect to each Plan subject to Title IV of ERISA, as of the most recent valuation date for such Plan, the present value (determined on the basis of reasonable assumptions employed by the independent actuary for such Plan and previously furnished in writing to the Lenders) of such Plan’s projected benefit obligations did not exceed the fair market value of such Plan’s assets.

Section 4.8Title to Property; Leases; Liens; Subordination. Each of the Borrower and the Subsidiaries has (a) good and marketable title to its real properties and (b) good and sufficient title to, or valid, subsisting and enforceable leasehold interest in, its other material properties, including all real properties, other properties and assets, referred to as owned by the Borrower and its Subsidiaries in the most recent financial statement referred to in Section 5.1 (other than property disposed of since the date of such financial statements in the ordinary course of business). Except as set forth on Schedule 4.8, there are no actual, threatened or alleged defaults with respect to any leases of real property under which any Borrower or any of its Subsidiaries is lessee or lessor which could reasonably be expected to result in a Material Adverse Occurrence. None of such properties is subject to a Lien, except as allowed under

Section 6.13. The Borrower has not subordinated any of its rights under any obligation owing to it to the rights of any other person.

Section 4.9Taxes. Except as set forth in Schedule 4.9 hereto, each of the Borrower and the Subsidiaries has filed all material federal, state and local tax returns required to be filed and has paid or made provision for the payment of all taxes due and payable pursuant to such returns and pursuant to any assessments made against it or any of its property and all other taxes, fees and other charges imposed on it or any of its property by any governmental authority (other than taxes, fees or charges the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance with GAAP have been provided on the books of the Borrower). No tax Liens have been filed and no material claims are being asserted with respect to any such taxes, fees or charges. The charges, accruals and reserves on the books of the Borrower in respect of taxes and other governmental charges are adequate and the Borrower knows of no proposed material tax assessment against it or any Subsidiary or any basis therefor.

Section 4.10Trademarks, Patents. Each of the Borrower and the Subsidiaries possesses or has the right to use all of the patents, trademarks, trade names, service marks and copyrights, and applications therefor, and all technology, know how, processes, methods and designs used in or necessary for the conduct of its business, without known conflict with the rights of others.

Section 4.11Burdensome Restrictions. Except as set forth on Schedule 4.11, neither the Borrower nor any Subsidiary is a party to or otherwise bound by any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter, corporate or partnership restriction which would foreseeably constitute a Material Adverse Occurrence.

Section 4.12Force Majeure. Since the date of this Agreement, the business, properties and other assets of the Borrower and the Subsidiaries have not been materially and adversely affected in any way as the result of any fire or other casualty, strike, lockout, or other labor trouble, embargo, sabotage, confiscation, condemnation, riot, civil disturbance, activity of armed forces or act of God.

Section 4.13No Investment Company or Margin Stock. The Borrower is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Borrower is not engaged principally, or as one of its important activities, directly or indirectly, in the business of extending credit for the purpose of purchasing or carrying margin stock. None of the proceeds of the Term Loan will be used to purchase or carry margin stock or will be made available in any manner to any other Person to enable or assist such Person in purchasing or carrying margin stock. Terms for which meanings are provided in Regulation U of the Board of Governors of the Federal Reserve System or any regulations substituted therefor, as from time to time in effect, are used in this paragraph with such meanings.

Section 4.14Retirement Benefits. Except as required under Section 4980B of the Code, Section 601 of ERISA or applicable state law, the Borrower is not obligated to provide post-retirement medical or insurance benefits with respect to employees or former employees.

Section 4.15Full Disclosure. Subject to the following sentence, no certificate, written statement, exhibit or report furnished by or on behalf of the Borrower in connection with or pursuant to this Agreement contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein not misleading. Certificates or statements furnished by or on behalf of the Borrower to the Lenders consisting of projections or forecasts of future results or events have been prepared in good faith and based on good faith estimates and assumptions of the management of the Borrower, and the Borrower has no reason to believe that such projections or forecasts are not reasonable.

Section 4.16Subsidiaries. Schedule 4.16 sets forth as of the date of this Agreement a list of all Subsidiaries and the number and percentage of the shares of each class of Equity Interests owned beneficially or of record by the Borrower or any Subsidiary therein, and the jurisdiction of incorporation of each Subsidiary. As of the Closing Date, the Borrower and the Guarantors collectively own at least 95% of the total assets, whether tangible or intangible, of the Borrower and all Subsidiaries taken as a whole.

Section 4.17Labor Matters. There are no pending or threatened strikes, lockouts or slowdowns against the Borrower or any Subsidiary. Neither the Borrower nor any Subsidiary has been or is in violation in any material respect of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign law dealing with such matters. All material payments due from the Borrower or any Subsidiary on account of wages and employee health and welfare insurance and other benefits (in each case, except for de minimus amounts), have been paid or accrued as a liability on the books of the Borrower or such Subsidiary. The consummation of the transactions contemplated under the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower or any Subsidiary is bound.

Section 4.18Solvency. After the making of any Loan and after giving effect thereto, (a) the fair value of the assets of the Borrower, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of the Borrower will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the Borrower will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) the Borrower will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is proposed to be conducted following the Closing Date.

ARTICLE V

AFFIRMATIVE COVENANTS

Until the Term Notes and all of the other Obligations have been paid in full, unless the Required Lenders shall otherwise consent in writing:

Section 5.1Financial Statements and Reports. The Borrower will furnish to the Lenders:

(a)On December 31, 2009 (and as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower thereafter), the consolidated financial statements of the Borrower and the Subsidiaries consisting of at least statements of income, cash flow and changes in stockholders’ equity for such year, and a consolidated balance sheet as at the end of such year, setting forth in each case in comparative form corresponding figures from the previous fiscal year, and the report, without qualification, of BDO Seidman LLP or other independent certified public accountants of recognized national standing selected by the Borrower, together with any management letters, management reports or other supplementary comments or reports to the Borrower or its board of directors furnished by such accountants.

(b)As soon as available and in any event within 45 days after the end of each fiscal quarter, commencing with the fiscal quarter ending December 31, 2009, unaudited consolidated statements of income, cash flow and changes in stockholders’ equity for the Borrower and the Subsidiaries for such quarter and for the period from the beginning of such fiscal year to the end of such quarter, and a consolidated balance sheet of the Borrower as at the end of such quarter, setting forth in comparative form figures for the corresponding period for the preceding fiscal year, accompanied by a certificate signed by the chief financial officer of the Borrower stating that such financial statements present fairly the financial condition of the Borrower and the Subsidiaries and that the same have been prepared in accordance with GAAP (except for the absence of footnotes and subject to year end audit adjustments as to the interim statements).

(c)Promptly upon any officer of the Borrower becoming aware of any Default or Event of Default, a notice describing the nature thereof and what action Borrower proposes to take with respect thereto.

(d)Promptly upon any officer of the Borrower becoming aware of the occurrence, with respect to any Plan, of any Reportable Event or any Prohibited Transaction, a notice specifying the nature thereof and what action the Borrower proposes to take with respect thereto, and, when received, copies of any notice from PBGC of intention to terminate or have a trustee appointed for any Plan.

(e)Promptly upon any officer of the Borrower becoming aware of any matter that has resulted or is reasonably likely to result in a Material Adverse Occurrence, a notice from the Borrower describing the nature thereof and what action Borrower proposes to take with respect thereto.

(f)Promptly upon any officer of the Borrower becoming aware of (i) the commencement of any action, suit, investigation, proceeding or arbitration before any court or arbitrator or any governmental department, board, agency or other instrumentality affecting the Borrower or any Subsidiary or any property of such Person, or to which the Borrower or any Subsidiary is a party (other than litigation where the insurance insures against the damages claimed and the insurer has assumed defense of the litigation without reservation) which is reasonably likely to constitute a Material Adverse Occurrence; or (ii) any adverse development which occurs in any litigation, arbitration or governmental investigation or proceeding previously disclosed by the Borrower or any

Subsidiary which is reasonably likely to constitute a Material Adverse Occurrence, a notice from the Borrower describing the nature and status thereof and what action the Borrower proposes to take with respect thereto.

(g)Promptly upon the mailing or filing thereof, copies of all financial statements, reports and proxy statements mailed to the Borrower’s shareholders, and copies of all registration statements, periodic reports and other documents filed with the Securities and Exchange Commission (or any successor thereto) or any national securities exchange.

(h)From time to time, such other information regarding the business, operation and financial condition of the Borrower and the Subsidiaries as any Lender may reasonably request.

Section 5.2Existence. The Borrower will maintain, and cause each Subsidiary to maintain, its corporate existence in good standing under the laws of its jurisdiction of organization and its qualification to transact business in each jurisdiction where failure so to qualify would preclude the Borrower or such Subsidiary from enforcing its rights with respect to any material asset or would expose the Borrower or such Subsidiary to any material liability; provided, however, that nothing herein shall prohibit the merger or liquidation of any Subsidiary allowed under Section 6.1.

Section 5.3Insurance. The Borrower shall maintain, and shall cause each Subsidiary to maintain, with financially sound and reputable insurance companies such insurance as may be required by law and such other insurance in such amounts and against such hazards as is customary in the case of reputable firms engaged in the same or similar business and similarly situated.

Section 5.4Payment of Taxes and Claims. The Borrower shall file, and cause each Subsidiary to file, all material tax returns and reports which are required by law to be filed by it and will pay, and cause each Subsidiary to pay, before they become delinquent all taxes, assessments and governmental charges and levies imposed upon it or its property and all claims or demands of any kind (including but not limited to those of suppliers, mechanics, carriers, warehouses, landlords and other like Persons) which, if unpaid, might result in the creation of a Lien upon its property; provided, that the foregoing items need not be paid if they are being contested in good faith by appropriate proceedings, and as long as the Borrower’s or such Subsidiary’s title to its property is not materially adversely affected, its use of such property in the ordinary course of its business is not materially interfered with and adequate reserves with respect thereto have been set aside on Borrower’s or such Subsidiary’s books in accordance with GAAP.

Section 5.5Inspection. The Borrower shall permit the Agent (or any Person designed by the Agent that is not a Competitor) to visit and inspect any of the properties, books and financial records of the Borrower and the Subsidiaries to examine and to make copies of the books of accounts and other financial records of the Borrower and the Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and the Subsidiaries with, and to be advised as to the same by, its officers at reasonable times during the Borrower’s normal business

hours, provided, that, (a) if no Default or Event of Default has occurred and is continuing, the Agent shall not exercise such rights more than one (1) time during any calendar year and (b) upon and during the continuation of a Default or Event of Default, the Agent may exercise such rights as many times as the Agent deems necessary, in its sole discretion, to protect the rights, interests and liens of the Agent and the Lenders under the Loan Documents.

Section 5.6Maintenance of Properties. The Borrower will maintain, and cause each Subsidiary to maintain, its properties used or useful in the conduct of its business in good condition, repair and working order, and supplied with all necessary equipment, and make all necessary repairs, renewals, replacements, betterments and improvements thereto, all as may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times.

Section 5.7Books and Records. The Borrower will keep, and will cause each Subsidiary to keep, adequate and proper records and books of account in which full and correct entries will be made of its dealings, business and affairs.

Section 5.8Compliance. The Borrower will comply, and will cause each Subsidiary to comply, in all material respects with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject; provided, however, that failure so to comply shall not be a breach of this covenant if such failure does not constitute a Material Adverse Occurrence and the Borrower or such Subsidiary is acting in good faith and with reasonable dispatch to cure such noncompliance.

Section 5.9ERISA. The Borrower will maintain, and cause each Subsidiary to maintain, each Plan in compliance with all material applicable requirements of ERISA and of the Code and with all applicable rulings and regulations issued under the provisions of ERISA and of the Code and will not, and will not permit any of the ERISA Affiliates to (a) engage in any transaction in connection with which the Borrower or any of the ERISA Affiliates would be subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, in either case in an amount exceeding $50,000, (b) fail to make full payment when due of all amounts which, under the provisions of any Plan, the Borrower any ERISA Affiliate is required to pay as contributions thereto, or permit to exist any accumulated funding deficiency (as such term is defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, with respect to any Plan in an aggregate amount exceeding $50,000 or (c) fail to make any payments in an aggregate amount exceeding $50,000 to any Multiemployer Plan that the Borrower or any of the ERISA Affiliates may be required to make under any agreement relating to such Multiemployer Plan or any law pertaining thereto.

Section 5.10Environmental Matters; Reporting. The Borrower will observe and comply with, and cause each Subsidiary to observe and comply with, all laws, rules, regulations and orders of any government or government agency relating to health, safety, pollution, hazardous materials or other environmental matters to the extent non compliance could result in a material liability or otherwise constitute a Material Adverse Occurrence. The Borrower will give the Agent prompt written notice of any violation as to any environmental matter by the Borrower or any Subsidiary and of the commencement of any judicial or administrative proceeding relating to health, safety or environmental matters (a) in which an adverse

determination or result could result in the revocation of or have a material adverse effect on any operating permits, air emission permits, water discharge permits, hazardous waste permits or other permits held by the Borrower or any Subsidiary which are material to the operations of the Borrower or such Subsidiary, or (b) which will or threatens to impose a material liability on the Borrower or such Subsidiary to any Person or which will require a material expenditure by the Borrower or such Subsidiary to cure any alleged problem or violation.

Section 5.11Further Assurances. The Borrower shall promptly correct any defect or error that may be discovered in any Loan Document or in the execution, acknowledgment or recordation thereof. Promptly upon request by the Agent or the Required Lenders, the Borrower also shall, and shall cause each Subsidiary to do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all deeds, conveyances, mortgages, deeds of trust, trust deeds, assignments, estoppel certificates, financing statements and continuations thereof, notices of assignment, transfers, certificates, assurances and other instruments as the Agent or the Required Lenders may reasonably require from time to time in order: (a) to carry out more effectively the purposes of the Loan Documents; (b) to perfect and maintain the validity, effectiveness and priority of any security interests intended to be created by the Loan Documents including, without limitation, the delivery of a landlord waiver from any landlord required by the Agent or the Required Lenders; and (c) to better assure, convey, grant, assign, transfer, preserve, protect and confirm unto the Lenders the rights granted now or hereafter intended to be granted to the Lenders under any Loan Document or under any other instrument executed in connection with any Loan Document or that the Borrower may be or become bound to convey, mortgage or assign to the Agent for the benefit of the Lenders in order to carry out the intention or facilitate the performance of the provisions of any Loan Document. The Borrower shall furnish to the Lenders evidence satisfactory to the Required Lenders of every such recording, filing or registration. In addition, at any time upon the Agent’s request, the Borrower shall, and shall cause each Guarantor to, execute and deliver any additional security agreements, pledge agreements, collateral assignments or any other documents, instruments or agreements the Agent reasonably deems necessary to create, ensure, perfect or to give the Agent priority in any intellectual property, including without limitation any patent registrations, trademarks, domain names, trade names, copyright registrations or any equivalent thereof.

Section 5.12Compliance with Terms of Material Contracts. The Borrower shall, and shall cause each Subsidiary to, make all payments and otherwise perform all obligations in respect of all material contracts to which the Borrower or any Subsidiary is a party.

ARTICLE VI

NEGATIVE COVENANTS

Until the earlier of (i) the Term Notes and all of the other Obligations have been paid in full or (ii) the issuance of the Convertible Notes pursuant to the Note Purchase Agreement in an aggregate principal amount greater than or equal to $15,000,000, unless Required Lenders shall otherwise consent in writing:

Section 6.1Merger. The Borrower will not merge or consolidate or enter into any analogous reorganization or transaction with any Person or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution) nor permit any Subsidiary to do any of the foregoing

(each a “Merger Transaction”); provided, however, that so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, and the Obligations have not been accelerated pursuant to Section 7.2, any Subsidiary may be merged with or liquidated into the Borrower or any Guarantor if the Borrower or such Guarantor is the surviving corporation or concurrently with the effectiveness of such Merger Transaction the continuing or surviving Person shall expressly assume the obligations of such Borrower or such Guarantor under the Loan Documents in a manner acceptable to the Agent in its sole discretion and, provided, further, that, so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, and the Obligations have not been accelerated pursuant to Section 7.2, (A) the Borrower may merge with another Person so long as (aa) the Borrower is the surviving entity or concurrently with the effectiveness of such Merger Transaction the continuing or surviving Person expressly assumes the obligations of such Borrower under the Loan Documents in a manner acceptable to the Agent in its sole discretion and (bb) no Cash or Cash Equivalents are exchanged by the Borrower as consideration for the Merger Transaction, (B) if the VWAP is less than or equal to 150% of the Initial VWAP but greater than 50% of the Initial VWAP, the Borrower may merge with another Person in exchange for Cash or Cash Equivalents (each a “Cash Merger”) so long as (aa) the Borrower is the surviving entity or concurrently with the effectiveness of such Merger Transaction the continuing or surviving Person expressly assumes the obligations of such Borrower under the Loan Documents in a manner acceptable to the Agent in its sole discretion and (bb) the aggregate value of all such Cash Mergers does not exceed $25,000,000 and (C) if the VWAP is greater than 150% of the Initial VWAP, the Borrower may merge with another Person so long as the Borrower is the surviving entity or concurrently with the effectiveness of such Merger Transaction the continuing or surviving Person expressly assumes the obligations of such Borrower under the Loan Documents in a manner acceptable to the Agent in its sole discretion.

Section 6.2Disposition of Assets. The Borrower will not, nor will permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of (whether in one transaction or a series of transactions), including without limitation any transfer by the Borrower to a Subsidiary (other than a Guarantor) or a Subsidiary to any other Subsidiary (other than a Guarantor), any property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except that, so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, and the Obligations have not been accelerated pursuant to Section 7.2, any of the following transactions are expressly permitted hereunder:

(a)dispositions of inventory, or used, worn-out or surplus equipment, all in the ordinary course of business;

(b)the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the Net Asset Sale Proceeds of such sale are applied with reasonable promptness (and in no event more than sixty (60) days after such sale of equipment) to the purchase price of such replacement equipment;

(c)other dispositions of property during the term of this Agreement whose net book value in the aggregate does not exceed 5% of the Borrower’s total consolidated assets as shown on its balance sheet for its most recent prior fiscal quarter;

(d)any Asset Sale for which the Net Asset Sale Proceeds of such Asset Sale are (i) retained as cash or Cash Equivalents or (ii) used within 365 days of the receipt of such Net Asset Sale Proceeds (i) to pay for any Permitted Acquisitions, (ii) to purchase tangible assets or any information systems or (iii) for working capital or research and development purposes, provided, that, the aggregate fair market value of all property disposed of pursuant to this Section 6.2(d) during the term of this Agreement may not exceed $20,000,000;

(e)other Asset Sales in addition to those allowed pursuant to Section 6.2(d) above, provided, that: (a) if VWAP at the time of such Asset Sale is greater than or equal to 150% of the Initial VWAP, the Borrower shall not be required to prepay the Term Loans from the Net Asset Sale Proceeds of the Asset Sale so long as the Net Asset Sale Proceeds of such Asset Sale are (i) retained as cash or Cash Equivalents or (ii) used within 365 days of the receipt of such Net Asset Sale Proceeds (i) to pay for any Permitted Acquisitions, (ii) to purchase tangible assets or any information systems or (iii) for working capital or research and development purposes, (b) the VWAP at the time of such Asset Sale is less than 150% of the Initial VWAP but greater than or equal to the Initial VWAP, the Borrower shall be required to prepay the Term Loans with at least 50% of the Net Asset Sale Proceeds of the Asset Sale within five (5) Business Days of the effectiveness of such Asset Sale and (c) the VWAP at the time of such Asset Sale is less than the Initial VWAP, the Borrower shall be required to prepay the Term Loans with 100% of the Net Asset Sale Proceeds of the Asset Sale within five (5) Business Days of the effectiveness of such Asset Sale; and

(f) the disposition of any of the property described on Schedule 6.2 hereto.

Section 6.3Plans. The Borrower will not permit, nor will allow any Subsidiary to permit, any event to occur or condition to exist which would permit any Plan to terminate under any circumstances which would cause the Lien provided for in Section 4068 of ERISA to attach to any assets of the Borrower or any Subsidiary; and the Borrower will not permit, as of the most recent valuation date for any Plan subject to Title IV of ERISA, the present value (determined on the basis of reasonable assumptions employed by the independent actuary for such Plan and previously furnished in writing to the Lenders) of such Plan’s projected benefit obligations to exceed the fair market value of such Plan’s assets.

Section 6.4Change in Nature of Business. The Borrower will not, nor will permit any Subsidiary to, make any material change in the nature of the business of the Borrower or such Subsidiary, as carried on at the date hereof, except as otherwise permitted by this Agreement.

Section 6.5 Subsidiaries. After the Closing Date:

(a)the Borrower will not, and will not permit any Subsidiary to, form or acquire any corporation which would thereby become a Subsidiary (a “New Subsidiary”)

unless such New Subsidiary, as the case may be, simultaneously executes and delivers to the Agent (a) a Joinder Agreement in the form of Exhibit A to the Guaranty, (b) a Joinder Agreement in the form of Exhibit A to the Guarantor Security Agreement and (c) any additional documents, instruments, agreements, resolutions or organizational documents reasonably requested by the Agent to ensure that it obtains an enforceable, first priority security interest in all of the Collateral (as such term is defined in the Guarantor Security Agreement) in which such New Subsidiary possesses rights.

(b)the Borrower will not permit the Subsidiaries (excluding the Guarantors) to own, at any given time, in the aggregate, more than 5% of the total assets (whether tangible or intangible) of the Group (any such ownership amount greater than 5% of the total assets of the Group constituting the “Excess Amount”), unless (a) one or more of such Subsidiaries (other than the Guarantors) owning assets in an amount at least equal to the Excess Amount, simultaneously execute and deliver to the Agent (i) a Joinder Agreement in the form of Exhibit A to the Guaranty, (ii) a Joinder Agreement in the form of Exhibit A to the Guarantor Security Agreement and (iii) any additional documents, instruments, agreements, resolutions or organizational documents reasonably requested by the Agent to ensure that it obtains an enforceable, first priority security interest in all of the Collateral (as such term is defined in the Guarantor Security Agreement) in which such Subsidiary or Subsidiaries, as the case may be, possess rights and, (b) at the time of each such joinder by a Subsidiary, no Default or Event of Default would result therefrom.

Section 6.6Negative Pledges; Subsidiary Restrictions. Except as permitted by Sections 6.12(c) and (d), the Borrower will not, nor will permit any Subsidiary to, enter into any agreement, bond, note or other instrument with or for the benefit of any Person other than the Lenders which would (i) prohibit the Borrower or such Subsidiary from granting, or otherwise limit the ability of the Borrower or such Subsidiary to grant, to the Lenders any Lien on any assets or properties of the Borrower or such Subsidiary, or (ii) require the Borrower or such Subsidiary to grant a Lien to any other Person if the Borrower or such Subsidiary grants any Lien to the Lenders. The Borrower will not permit any Subsidiary to place or allow any restriction, directly or indirectly, on the ability of such Subsidiary to (a) pay dividends or any distributions on or with respect to such Subsidiary’s capital stock or (b) make loans or other cash payments to the Borrower.

Section 6.7Restricted Payments. The Borrower will not make any Restricted Payments; provided that so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, and the Obligations have not been accelerated pursuant to Section 7.2:

(a)the Borrower may make Restricted Payments in an aggregate amount not to exceed $250,000 in any fiscal year;

(b)to the extent constituting Restricted Payments, the Borrower and its Subsidiaries may enter into transactions and make payments expressly permitted by the terms of any Loan Document; and

(c)the Borrower or its Subsidiaries may repurchase or redeem Equity Interests upon exercise of stock options or warrants to the extent such Equity Interests constitute a portion of the exercise price of such options or warrants.

Section 6.8Transactions with Affiliates. The Borrower will not, nor will permit any Subsidiary to, enter into any transaction with any Affiliate of the Borrower, except upon fair and reasonable terms no less favorable than the Borrower, or such Subsidiary, would obtain in a comparable arm’s-length transaction with a Person not an Affiliate.

Section 6.9Accounting Changes. The Borrower will not, nor will permit any Subsidiary to, make any significant change in accounting treatment or reporting practices, except as required by GAAP, or change its fiscal year or the fiscal year of any Subsidiary.

Section 6.10Subordinated Debt. The Borrower will not, nor will permit any Subsidiary to, (a) make any scheduled payment of the principal of or interest on any Subordinated Debt which would be prohibited by the terms of such Subordinated Debt and any related subordination agreement; (b) directly or indirectly make any prepayment on or purchase, redeem or defease any Subordinated Debt or offer to do so (whether such prepayment, purchase or redemption, or offer with respect thereto, is voluntary or mandatory) except as required by the terms of such Subordinated Debt; (c) amend or cancel the subordination provisions applicable to any Subordinated Debt; (d) take or omit to take any action if as a result of such action or omission the subordination of such Subordinated Debt, or any part thereof, to the Obligations might be terminated, impaired or adversely affected; or (e) omit to give the Agent prompt notice of any notice received from any holder of Subordinated Debt, or any trustee therefor, of any default under any agreement or instrument relating to any Subordinated Debt by reason whereof such Subordinated Debt might become or be declared to be due or payable.

Section 6.11Investments. The Borrower will not, nor will it permit any Subsidiary to, acquire for value, make, have or hold any Investments, except:

(a)Investments existing on the date of this Agreement and disclosed on Schedule 6.11 hereto;

(b) Permitted Acquisitions;

(c)travel and other expense advances to management personnel and employees in the ordinary course of business;

(d)Investments in readily marketable direct obligations issued or guaranteed by the United States or any agency thereof and supported by the full faith and credit of the United States;

(e)certificates of deposit or bankers’ acceptances issued by any commercial bank organized under the laws of the United States or any State thereof which has (i) combined capital and surplus of at least $100,000,000, and (ii) a credit rating with respect to its unsecured indebtedness from a nationally recognized rating service that is satisfactory to the Agent;

(f)commercial paper given the highest rating by a nationally recognized rating service;

(g)repurchase agreements relating to securities issued or guaranteed as to principal and interest by the United States of America with a term of not more than seven (7) days; provided, that all such agreement shall require physical delivery of the securities securing such repurchase agreement, except those delivered through the Federal Reserve Book Entry System;

(h)other readily marketable Investments in debt securities which are reasonably acceptable to the Required Lenders;

(i)Investments by the Borrower in any Guarantor and by any Guarantor in any other Guarantor;

(j)so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, and the Obligations have not been accelerated pursuant to Section 7.2, other Investments not exceeding an aggregate amount of $250,000 at any time;

(k)so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, and the Obligations have not been accelerated pursuant to Section 7.2, other Investments in joint ventures not exceeding an aggregate amount of $20,000,000; and

(l)so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, and the Obligations have not been accelerated pursuant to Section 7.2, in addition to the Investments permitted by subsection (k) above, other Investments in joint ventures not exceeding an aggregate amount of $20,000,000, if, at the time of such Investements, VWAP is greater than or equal to 150% of the Initial VWAP.

Any Investments under clauses (c), (d), (e) or (f) above must mature within one year of the acquisition thereof by either Borrower or any Subsidiary.

Section 6.12Indebtedness. The Borrower will not, nor will permit any Subsidiary to, incur, create, issue, assume or suffer to exist any Indebtedness, except:

(a) The Obligations;

(b)Indebtedness existing on the date of this Agreement and disclosed on Schedule 6.12 hereto, but not including any extension or refinancing thereof;

(c)The Borrower and its Subsidiaries may become and remain liable with respect to Indebtedness in respect of Capitalized Leases and purchase money obligations in an aggregate amount not greater than $5,000,000 at any one time and any Permitted Refinancing thereof;

(d)The Borrower or any of its Subsidiaries may become and remain liable with respect to Indebtedness of any Person assumed (or Indebtedness in respect of assets acquired) in connection with a Permitted Acquisition and a Person that becomes a direct or indirect Subsidiary of the Borrower as a result of a Permitted Acquisition may remain liable with respect to Indebtedness existing on the date of such acquisition; provided, that, such Indebtedness is not created in anticipation of such acquisition; and provided, further that the aggregate amount of such Indebtedness with respect to all Permitted Acquisitions, together with any Permitted Refinancing thereof, shall not exceed $5,000,000 at any time;

(e)The Borrower or any of its Subsidiaries may become and remain liable with respect to unsecured Subordinated Debt, on subordination terms reasonably satisfactory to the Agent, incurred for the purpose of financing any Permitted Acquisition, or any other purpose approved by Agent, in a principal amount not to exceed $20,000,000 in the aggregate;

(f)Indebtedness representing deferred compensation to employees of the Borrower or any of its Subsidiaries incurred in the ordinary course of business or in connection with any Permitted Acquisition;

(g)Cash management obligations and other Indebtedness in respect of netting services, overdraft protections and similar arrangements in each case in connection with cash management and deposit accounts, providedthat such obligations and other Indebtedness shall not exceed $500,000 in the aggregate at any time;

(h)Indebtedness consisting of the financing of insurance premiums, so long as the aggregate amount payable pursuant to such Indebtedness does not materially exceed the amount of the premium for such insurance;

(i)Other Indebtedness in an aggregate principal amount not to exceed $20,000,000 at any time outstanding provided that the VWAP at the time of the incurrence of such Indebtedness is greater than or equal to 150% of the Initial VWAP;

(j)Indebtedness (other than for borrowed money or with respect to Capitalized Leases or purchase money obligations) secured by Liens permitted under Section 6.13 hereof; and

(k)all premiums (if any), interest, fees, expenses and charges on obligations described in clauses (a) through (j).

Section 6.13Liens. The Borrower will not, nor will it permit any Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter into, or make any commitment to enter into, any arrangement for the acquisition of any property through conditional sale, lease purchase or other title retention agreements, with respect to any property now owned or hereafter acquired by the Borrower or a Subsidiary, except:

(a)Liens granted to the Agent and the Lenders under the Security Documents to secure the Obligations.

(b)Liens existing on the date of this Agreement and disclosed on Schedule 6.13 hereto.

(c)Deposits or pledges to secure payment of workers’ compensation, unemployment insurance, old age pensions or other social security obligations, in the ordinary course of business of the Borrower or a Subsidiary.

(d)Liens for taxes, fees, assessments and governmental charges not delinquent or to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of Section 5.4.

(e)Liens of carriers, warehousemen, mechanics and materialmen, and other like Liens arising in the ordinary course of business, for sums not due or to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of Section 5.4.

(f)Liens incurred or deposits or pledges made or given in connection with, or to secure payment of, indemnity, performance or other similar bonds.

(g)Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided, that (i) such deposit account is not a dedicated cash collateral account and is not subject to restriction against access by the Borrower or a Subsidiary in excess of those set forth by regulations promulgated by the Board, and (ii) such deposit account is not intended by the Borrower or any Subsidiary to provide collateral to the depository institution.

(h)Encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property and landlord’s Liens under leases on the premises rented, which do not materially detract from the value of such property or impair the use thereof in the business of the Borrower or a Subsidiary.

(i)The interest of any lessor under any Capitalized Lease entered into after the Closing Date or purchase money Liens on property acquired after the Closing Date; provided, that (i) the Indebtedness secured thereby is otherwise permitted by this Agreement and (ii) such Liens are limited to the property acquired and do not secure Indebtedness other than the related Capitalized Lease Obligations or the purchase price of such property.

(j)Liens incurred in connection with the grant of cash or Cash Equivalents collateral in an aggregate amount not exceeding $5,000,000 at any time by the Borrower to secure the issuance of letters of credit.

Section 6.14Contingent Liabilities. The Borrower will not, nor will permit any Subsidiary to, be or become liable on any Contingent Obligations except Contingent Obligations existing on the date of this Agreement and described on Schedule 6.14 and Contingent Obligations for the benefit of the Lenders.

Section 6.15Loan Proceeds. The Borrower will not, nor will permit any Subsidiary to, use any part of the proceeds of any Term Loan directly or indirectly, and whether immediately, incidentally or ultimately, (a) to purchase or carry margin stock (as defined in Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund Indebtedness originally incurred for such purpose or (b) for any purpose which entails a violation of, or which is inconsistent with, the provisions of Regulations U or X of the Board.

Section 6.16Sale and Leaseback Transactions. The Borrower will not, nor will permit any Subsidiary to, enter into any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real or personal, and thereafter lease such property for the same or a substantially similar purpose or purposes as the property sold or transferred.

Section 6.17Hedging Agreements. The Borrower will not, nor will permit any Subsidiary to, enter into any hedging arrangements, other than (a) any Rate Protection Agreements or (b) any hedging arrangements entered into in the ordinary course of business for the purpose of hedging against risk related to fluctuations in interest rates or currency values and not for speculative purposes.

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

Section 7.1Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default:

(a)The Borrower shall fail to make when due, whether by acceleration or otherwise, any payment of principal of or interest on any Term Note or any other Obligation required to be made to the Agent or any Lender pursuant to this Agreement.

(b)Any representation or warranty made by or on behalf of the Borrower or any Subsidiary in this Agreement or any other Loan Document or by or on behalf of the Borrower or any Subsidiary in any certificate, statement, report or document herewith or hereafter furnished to any Lender or the Agent pursuant to this Agreement or any other Loan Document shall prove to have been false or misleading in any material respect on the date as of which the facts set forth are stated or certified.

(c)The Borrower shall fail to comply with Sections 5.2 or 5.3 hereof or any Section of Article VI hereof.

(d)The Borrower shall fail to comply with any other agreement, covenant, condition, provision or term contained in this Agreement (other than Sections 5.1(a) and (b) and those hereinabove set forth in this Section 7.1) and (i) if the Borrower provides prompt (and in any event not more than five (5) days) written notice of such failure to comply, such failure to comply shall continue for 30 calendar days after the date on which the Borrower receives notice from the Agent notifying the Borrower of such failure or (ii) if the Borrower fails to provide prompt (and in any event not more than five (5) days) written notice of such failure to comply, such failure to comply shall continue for 30 calendar days after the date on which the Borrower knew or should have known of such failure to comply and the Agent provides notice to the Borrower of such failure.

(e)The Borrower, any material Subsidiary or any Guarantor shall become insolvent or shall generally not pay its debts as they mature or shall apply for, shall consent to, or shall acquiesce in the appointment of a custodian, trustee or receiver of the Borrower or such material Subsidiary or for a substantial part of the property thereof or, in the absence of such application, consent or acquiescence, a custodian, trustee or receiver shall be appointed for the Borrower or a material Subsidiary or for a substantial part of the property thereof and shall not be discharged within 60 days, or the Borrower or any material Subsidiary shall make an assignment for the benefit of creditors.

(f)Any bankruptcy, reorganization, debt arrangement or other proceedings under any bankruptcy or insolvency law shall be instituted by or against the Borrower, any Subsidiary or any Guarantor, and, if instituted against the Borrower, any Subsidiary or any Guarantor, shall have been consented to or acquiesced in by the Borrower or such Subsidiary, or shall remain undismissed for 60 days, or an order for relief shall have been entered against the Borrower or such Subsidiary.

(g)Any dissolution or liquidation proceeding not permitted by Section 6.1 shall be instituted by or against the Borrower, any material Subsidiary or any Guarantor, and, if instituted against the Borrower, any material Subsidiary or any Guarantor, shall be consented to or acquiesced in by the Borrower or such Subsidiary or shall remain for 60 days undismissed.

(h)A judgment or judgments for the payment of money in excess of the sum of $1,000,000 in the aggregate shall be rendered against the Borrower or a Subsidiary and either (i) the judgment creditor executes on such judgment or (ii) such judgment remains unpaid or undischarged for more than 60 days from the date of entry thereof or such longer period during which execution of such judgment shall be stayed during an appeal from such judgment.

(i)The maturity of any material Indebtedness of the Borrower (other than Indebtedness under this Agreement) or a Subsidiary shall be accelerated, or the Borrower or a Subsidiary shall fail to pay any such material Indebtedness when due (after the lapse of any applicable grace period) or, in the case of such Indebtedness payable on demand, when demanded (after the lapse of any applicable grace period). For purposes of this Section, Indebtedness of the Borrower or a Subsidiary shall be deemed “material” if it exceeds $1,000,000 as to any item of Indebtedness or in the aggregate for all items of Indebtedness with respect to which any of the events described in this Section 7.1 has occurred.

(j)Any execution or attachment shall be issued whereby any substantial part of the property of the Borrower or any Subsidiary shall be taken or attempted to be taken and the same shall not have been vacated or stayed within 60 days after the issuance thereof.

(k)Any Security Document shall, at any time, cease to be in full force and effect or shall be judicially declared null and void, or the validity or enforceability thereof shall be contested by the Borrower or any Guarantor, or the Agent or the Lenders shall

cease to have a valid and perfected security interest having the priority contemplated thereunder in all of the collateral described therein, other than by action or inaction of the Agent or the Lenders if (i) the aggregate value of the collateral affected by any of the foregoing exceeds $500,000 and (ii) any of the foregoing shall remain unremedied for ten days or more after receipt of notice thereof by the Borrower from the Agent.

(l) Any Change of Control shall occur.

(m)Any Guarantor shall repudiate or purport to revoke its Guaranty, or the Guaranty for any reason shall cease to be in full force and effect as to any Guarantor or shall be judicially declared null and void as to any Guarantor.

(n)The Borrower shall fail to deliver the items required by Section 5.1(a) and Section 5.1(b) on or before December 31, 2010.

Section 7.2Remedies. If (a) any Event of Default described in Sections 7.1(e), (f) or (g) shall occur with respect to the Borrower, the Term Notes and all other Obligations shall automatically become immediately due and payable; or (b) any other Event of Default shall occur and be continuing, then, upon receipt by the Agent of a request in writing from the Required Lenders, the Agent shall declare the outstanding unpaid principal balance of the Term Notes, the accrued and unpaid interest thereon and all other Obligations to be forthwith due and payable, whereupon the Term Notes, all accrued and unpaid interest thereon and all such Obligations shall immediately become due and payable, in each case without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything in this Agreement or in the Term Notes to the contrary notwithstanding. Upon the occurrence of any of the events described in clause (a) of the preceding sentence, or upon the occurrence of any of the events described in clause (b) of the preceding sentence when so requested by the Required Lenders, the Agent may exercise all rights and remedies under any of the Loan Documents, and enforce all rights and remedies under any applicable law.

Section 7.3Deposit Accounts; Offset. In addition to the remedies set forth in Section 7.2, upon the occurrence of any Event of Default and thereafter while the same be continuing, the Borrower hereby irrevocably authorizes each Lender to set off any Obligations owed to such Lender with, and any and all claims of the Borrower against, such Lender. Such right shall exist whether or not such Lender shall have made any demand hereunder or under any other Loan Document, whether or not the Obligations, or any part thereof, is or are matured or unmatured, and regardless of the existence or adequacy of any collateral, guaranty or any other security, right or remedy available to such Lender or the Lenders. Each Lender agrees that, as promptly as is reasonably possible after the exercise of any such setoff or enforcement right, it shall notify the Borrower of its exercise of such setoff or enforcement right; provided, however, that the failure of any Lender to provide such notice shall not affect the validity of the exercise of such setoff or enforcement rights. Nothing in this Agreement shall be deemed a waiver or prohibition of or restriction on any Lender to all rights of banker’s Lien, setoff and counterclaim available pursuant to law.

ARTICLE VIII

THE AGENT

The following provisions shall govern the relationship of the Agent with the Lenders.

Section 8.1Appointment and Authorization. Each Lender appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such respective powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto. Neither the Agent nor any of its directors, officers or employees shall be liable for any action taken or omitted to be taken by it under or in connection with the Loan Documents, except for its own gross negligence or willful misconduct. The Agent shall act as an independent contractor in performing its obligations as Agent hereunder. The duties of the Agent shall be mechanical and administrative in nature, and nothing herein contained shall be deemed to create any fiduciary relationship among or between the Agent, the Borrower or the Lenders.

Section 8.2Note Holders. The Agent may treat the payee of any Term Note as the holder thereof until written notice of transfer shall have been filed with it, signed by such payee and in form satisfactory to the Agent.

Section 8.3Consultation With Counsel. The Agent may consult with legal counsel selected by it and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel.

Section 8.4Loan Documents. The Agent shall not be responsible to any Lender for any recitals, statements, representations or warranties in any Loan Document or be under a duty to examine or pass upon the validity, effectiveness, genuineness or value of any of the Loan Documents or any other instrument or document furnished pursuant thereto, and the Agent shall be entitled to assume that the same are valid, effective and genuine and what they purport to be.

Section 8.5Whitebox and Affiliates. With respect to its Term Loan Commitment and the Term Loan made by it, Whitebox shall have the same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it were not the Agent consistent with the terms thereof, and Whitebox and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower as if it were not the Agent.

Section 8.6Action by Agent. Except as may otherwise be expressly stated in this Agreement, the Agent shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights which may be vested in it by, or with respect to taking or refraining from taking any action or actions which it may be able to take under or in respect of, the Loan Documents. The Agent shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all holders of Term Notes; provided, however, that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to the Loan Documents or applicable law. The Agent shall incur no liability under or in respect of any of the Loan Documents by acting upon any notice,

consent, certificate, warranty or other paper or instrument believed by it to be genuine or authentic or to be signed by the proper party or parties and to be consistent with the terms of this Agreement.

Section 8.7Credit Analysis. Each Lender has made, and shall continue to make, its own independent investigation or evaluation of the operations, business, property and condition, financial and otherwise, of the Borrower in connection with entering into this Agreement and has made its own appraisal of the creditworthiness of the Borrower. Except as explicitly provided herein, the Agent has no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect to such operations, business, property, condition or creditworthiness, whether such information comes into its possession on or before the first Event of Default or at any time thereafter.

Section 8.8Notices of Event of Default, Etc. In the event that the Agent shall have acquired actual knowledge of any Event of Default or Default, the Agent shall promptly give notice thereof to the Lenders. The Agent shall not be deemed to have knowledge or notice of any Default or Event of Default, except with respect to actual defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Lenders, unless the Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “Notice of Default”.

Section 8.9Indemnification. Each Lender agrees to indemnify the Agent, as Agent (to the extent not reimbursed by the Borrower), ratably according to such Lender’s Term Loan Percentage from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on or incurred by the Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Agent under the Loan Documents, provided, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent’s gross negligence or willful misconduct. No payment by any Lender under this Section shall relieve the Borrower of any of its obligations under this Agreement.

Section 8.10Payments and Collections. All funds received by the Agent in respect of any payments made by the Borrower on the Term Notes shall be distributed forthwith by the Agent among the Lenders, in like currency and funds as received, ratably according to each Lender’s Term Loan Percentage. After any Event of Default has occurred, all funds received by the Agent, whether as payments by the Borrower or as realization on collateral or on any guaranties, shall (except as may otherwise be required by law) be distributed by the Agent in the following order: (a) first to the Agent or any Lender that has incurred unreimbursed costs of collection with respect to any Obligations hereunder, ratably to the Agent and each Lender in the proportion that the costs incurred by the Agent or such Lender bear to the total of all such costs incurred by the Agent and all Lenders; (b) next to the Agent for the account of the Lenders (in accordance with their respective Term Loan Percentages) for application on the Term Notes; and (c) last to the Agent for the account of the Lenders (in accordance with their respective Term Loan Percentages) for any unpaid fees or other Obligations owing by the Borrower hereunder.

Section 8.11Sharing of Payments. If any Lender shall receive and retain any payment, voluntary or involuntary, whether by setoff, application of deposit balance or security, or otherwise, in respect of Indebtedness under this Agreement or the Term Notes in excess of such Lender’s share thereof as determined under this Agreement, then such Lender shall purchase from the other Lenders for cash and at face value and without recourse, such participation in the Term Notes held by such other Lenders as shall be necessary to cause such excess payment to be shared ratably as aforesaid with such other Lenders; provided, that if such excess payment or part thereof is thereafter recovered from such purchasing Lender, the related purchases from the other Lenders shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest. Subject to the participation purchase obligation above, each Lender agrees to exercise any and all rights of setoff, counterclaim or banker’s lien first fully against any Term Notes and participations therein held by such Lender, next to any other Indebtedness of the Borrower to such Lender arising under or pursuant to this Agreement and to any participations held by such Lender in Indebtedness of the Borrower arising under or pursuant to this Agreement, and only then to any other Indebtedness of the Borrower to such Lender.

Section 8.12Advice to Lenders. The Agent shall forward to the Lenders copies of all notices, financial reports and other communications received hereunder from the Borrower by it as Agent, excluding, however, notices, reports and communications which by the terms hereof are to be furnished by the Borrower directly to each Lender.

Section 8.13 Defaulting Lender.

(a)Remedies Against a Defaulting Lender. In addition to the rights and remedies that may be available to the Agent or the Borrower under this Agreement or applicable law, if at any time a Lender is a Defaulting Lender such Defaulting Lender’s right to participate in the administration of the Term Loans, this Agreement and the other Loan Documents, including without limitation, any right to vote in respect of, to consent to or to direct any action or inaction of the Agent or to be taken into account in the calculation of the Required Lenders, shall be suspended while such Lender remains a Defaulting Lender. If a Lender is a Defaulting Lender because it has failed to make timely payment to the Agent of any amount required to be paid to the Agent hereunder (without giving effect to any notice or cure periods), in addition to other rights and remedies which the Agent or the Borrower may have under the immediately preceding provisions or otherwise, the Agent shall be entitled (i) to collect interest from such Defaulting Lender on such delinquent payment for the period from the date on which the payment was due until the date on which the payment is made at the overnight Federal Funds Rate, (ii) to withhold or setoff and to apply in satisfaction of the defaulted payment and any related interest, any amounts otherwise payable to such Defaulting Lender under this Agreement or any other Loan Document until such defaulted payment and related interest has been paid in full and such default no longer exists and (iii) to bring an action or suit against such Defaulting Lender in a court of competent jurisdiction to recover the defaulted amount and any related interest. Any amounts received by the Agent in respect of a Defaulting Lender’s Term Loan shall not be paid to such Defaulting Lender and shall be held uninvested by the Agent and either applied against the purchase price of such

Loan under the following subsection (b) or paid to such Defaulting Lender upon the default of such Defaulting Lender being cured.

(b)Purchase from Defaulting Lender. Any Lender that is not a Defaulting Lender shall have the right, but not the obligation, in its sole discretion, to acquire all of a Defaulting Lender’s Term Loan Commitment. If more than one Lender exercises such right, each such Lender shall have the right to acquire such proportion of such Defaulting Lender’s Commitment on a pro rata basis. Upon any such purchase, the Defaulting Lender’s interest in its Term Loan and its rights hereunder (but not its liability in respect thereof or under the Loan Documents or this Agreement to the extent the same relate to the period prior to the effective date of the purchase) shall terminate on the date of purchase, and the Defaulting Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest to the purchaser thereof subject to and in accordance with the requirements set forth in Section 9.5, including an Assignment in form acceptable to the Agent. The purchase price for the Term Loan Commitment of a Defaulting Lender shall be equal to the amount of the principal balance of the Loan outstanding and owed by the Borrower to the Defaulting Lender. The purchaser shall pay to the Defaulting Lender in Immediately Available Funds on the date of such purchase the principal of and accrued and unpaid interest and fees on the Loan made by such Defaulting Lender hereunder (it being understood that such accrued and unpaid interest and fees may be paid pro rata to the purchasing Lender and the Defaulting Lender by the Agent at a subsequent date upon receipt of payment of such amounts from the Borrower). Prior to payment of such purchase price to a Defaulting Lender, the Agent shall apply against such purchase price any amounts retained by the Agent pursuant to the last sentence of the immediately preceding subsection (a). The Defaulting Lender shall be entitled to receive amounts owed to it by the Borrower under the Loan Documents which accrued prior to the date of the default by the Defaulting Lender, to the extent the same are received by the Agent from or on behalf of the Borrower. There shall be no recourse against any Lender or the Agent for the payment of such sums except to the extent of the receipt of payments from any other party or in respect of the Loan.

Section 8.14Resignation. If at any time Whitebox shall deem it advisable, in its sole discretion, it may submit to each of the Lenders and the Borrower a written notification of its resignation as Agent under this Agreement, such resignation to be effective upon the appointment of a successor Agent, but in no event later than 30 days from the date of such notice. Upon submission of such notice, the Required Lenders may appoint a successor Agent.

ARTICLE IX

MISCELLANEOUS

Section 9.1Modifications. Notwithstanding any provisions to the contrary herein, any term of this Agreement may be amended with the written consent of the Borrower; provided, that no amendment, modification or waiver of any provision of this Agreement or any other Loan Document or consent to any departure therefrom by the Borrower or other party thereto shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such amendment, modification, waiver or consent shall be effective only in the specific instance and for the purpose for which given. (The Agent may enter into amendments or

modifications of, and grant consents and waivers to departure from the provisions of, those Loan Documents to which the Lenders are not signatories without the Lenders joining therein, provided the Agent has first obtained the separate prior written consent to such amendment, modification, consent or waiver from the Required Lenders.) Notwithstanding the forgoing, no such amendment, modification, waiver or consent shall:

(a)Reduce the rate or extend the time of payment of interest thereon, or reduce the amount of the principal thereof, or modify any of the provisions of any Term Note with respect to the payment or repayment thereof, without the consent of the holder of each Term Note so affected; or

(b)Reduce the rate or extend the time of payment of any fee payable to a Lender, without the consent of the Lender affected; or

(c)Except as may otherwise be expressly provided in any of the other Loan Documents, release any material portion of collateral securing, or any guaranties for, all or any part of the Obligations without the consent of all the Lenders; or

(d)Amend the definition of Required Lenders or otherwise reduce the percentage of the Lenders required to approve or effectuate any such amendment, modification, waiver, or consent, without the consent of all the Lenders; or

(e)Amend any of the foregoing Subsections (a) through (d) of this Section or this Subsection (e) without the consent of all the Lenders; or

(f)Amend any provision of this Agreement relating to the Agent in its capacity as Agent without the consent of the Agent.

Section 9.2Expenses. Whether or not the transactions contemplated hereby are consummated, the Borrower agrees to reimburse the Agent upon demand for all reasonable out of pocket expenses paid or incurred by the Agent (including filing and recording costs and fees and expenses of Dorsey & Whitney LLP, counsel to the Agent), less any amounts previously paid by the Borrower or any of its representatives and received by the Agent or any Lender, in connection with the negotiation, preparation, approval, review, execution, delivery, administration, amendment, modification and interpretation of this Agreement and the other Loan Documents and any commitment letters relating thereto. The Borrower shall also reimburse the Agent and each Lender upon demand for all reasonable and documented out of pocket expenses (including expenses of legal counsel) paid or incurred by the Agent or any Lender in connection with the collection and enforcement of this Agreement and any other Loan Document, less any amounts previously paid by the Borrower or any of its representatives and received by the Agent or any Lender. The obligations of the Borrower under this Section shall survive any termination of this Agreement.

Section 9.3Waivers, etc. No failure on the part of the Agent or the holder of a Term Note to exercise and no delay in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power

or right. The remedies herein and in the other Loan Documents provided are cumulative and not exclusive of any remedies provided by law.

Section 9.4Notices. Except when telephonic notice is expressly authorized by this Agreement, any notice or other communication to any party in connection with this Agreement shall be in writing and shall be sent by manual delivery, facsimile transmission, overnight courier or United States mail (postage prepaid) addressed to such party at the address specified on the signature page hereof, or at such other address as such party shall have specified to the other party hereto in writing. All periods of notice shall be measured from the date of delivery thereof if manually delivered, from the date of sending thereof if sent by facsimile transmission, from the first Business Day after the date of sending if sent by overnight courier, or from four days after the date of mailing if mailed; provided, however, that any notice to the Agent or any Lender under Article II hereof shall be deemed to have been given only when received by the Agent or such Lender.

Section 9.5 Successors and Assigns; Participations; Purchasing Lenders.

(a)This Agreement shall be binding upon and inure to the benefit of the Borrower, the Agent, the Lenders, all future holders of the Term Notes, and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender.

(b)Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other financial institutions (“Participants”) participating interests in a minimum amount of $5,000,000 in any Term Loan or other Obligation owing to such Lender, any Term Note held by such Lender, and any Term Loan Commitment of such Lender, or any other interest of such Lender hereunder. In the event of any such sale by any Lender of participating interests to a Participant, (i) such Lender’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible for the performance thereof, (iii) such Lender shall remain the holder of any such Term Note for all purposes under this Agreement, (iv) the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (v) the agreement pursuant to which such Participant acquires its participating interest herein shall provide that such Lender shall retain the sole right and responsibility to enforce the Obligations, including, without limitation the right to consent or agree to any amendment, modification, consent or waiver with respect to this Agreement or any other Loan Document, provided, that such agreement may provide that such Lender will not consent or agree to any such amendment, modification, consent or waiver with respect to the matters set forth in Sections 9.1(a) through (d) without the prior consent of such Participant. The Borrower agrees that if amounts outstanding under this Agreement, the Term Notes and the Loan Documents are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have, to the extent permitted by applicable law, the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Term Note or other

Loan Document to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement or any Term Note or other Loan Document; provided, that such right of setoff shall be subject to the obligation of such Participant to share with the Lenders, and the Lenders agree to share with such Participant, as provided in Section 8.11. The Borrower also agrees that each Participant shall be entitled to the benefits of Section 9.2 with respect to its participation in the Term Loan Commitments and Term Loans; provided, that no Participant shall be entitled to receive any greater amount pursuant to such subsections than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred.

(c)Each Lender may, from time to time, with the consent of the Agent (which consent shall not be unreasonably withheld or delayed), assign to an Eligible Assignee all or part of its rights or obligations hereunder or under any Loan Document in a minimum amount of $5,000,000 evidenced by any Term Note then held by that Lender and its Term Loan Commitment pursuant to written agreements executed by such assigning Lender, such Eligible Assignee(s), the Borrower and the Agent in substantially the form of Exhibit C, which agreements shall specify in each instance the portion of the Obligations evidenced by the Term Notes which is to be assigned to each Eligible Assignee and the portion of the Term Loan Commitment of such Lender to be assumed by each Eligible Assignee (each, an “Assignment Agreement”); provided, however, that the assigning Lender must pay to the Agent a processing and recordation fee of $5,000 per assignment. Upon the execution of each Assignment Agreement by the assigning Lender, the relevant Eligible Assignee, the Borrower and the Agent, payment to the assigning Lender by such Eligible Assignee of the purchase price for the portion of the Obligations being acquired by it and recordation of the assignment in the Register, (x) such Eligible Assignee lender shall thereupon become a “Lender” for all purposes of this Agreement with a pro rata share of the a Term Loan Commitment in the amount set forth in such Assignment Agreement and with all the rights, powers and obligations afforded a Lender under this Agreement, (y) such assigning Lender shall have no further liability for funding the portion of its Commitment assumed by such Eligible Assignee and (z) the address for notices to such Eligible Assignee shall be as specified in the Assignment Agreement executed by it. Concurrently with the execution and delivery of each Assignment Agreement, the assigning Lender shall surrender to the Agent the Term Note a portion of which is being assigned, and the Borrower shall execute and deliver a Term Note to the Eligible Assignee in the amount of its Term Loan Commitment and a new Term Note to the assigning Lender in the amount of its Term Loan Commitment after giving effect to the reduction occasioned by such assignment, all such Notes to constitute “Term Notes” for all purposes of this Agreement and of the other Loan Documents.

(d)The Borrower shall not be liable for any costs incurred by the Lenders in effecting any participation under subparagraph (b) of this subsection or by the Lenders in effecting any assignment under subparagraph (c) of this subsection.

(e)Each Lender may disclose to any Eligible Assignee or Participant and to any prospective Eligible Assignee or Participant any and all financial information in such Lender’s possession concerning the Borrower or any of its Subsidiaries (if any) which

has been delivered to such Lender by or on behalf of the Borrower or any of its Subsidiaries pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower or any of their Subsidiaries in connection with such Lender’s credit evaluation of the Borrower or any of its Subsidiaries prior to entering into this Agreement, provided, that prior to disclosing such information, such Lender shall first obtain the agreement of such prospective Eligible Assignee or Participant to comply with the provisions of Section 9.6.

(f)The Agent shall maintain at one of its offices a copy of each assignment and transfer delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Term Note Commitment Amounts of the Term Notes owing to each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.

(g)Notwithstanding any other provision in this Agreement, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement and any note held by it in favor of any federal reserve bank in accordance with Regulation A of the Board or U. S. Treasury Regulation 31 CFR § 203.14, and such federal reserve bank may enforce such pledge or security interest in any manner permitted under applicable law.

Section 9.6Confidentiality of Information. The Agent and each Lender shall use reasonable efforts to assure that information about the Borrower and its operations, affairs and financial condition, not generally disclosed to the public or to trade and other creditors, which is furnished to the Agent or such Lender pursuant to the provisions hereof is used only for the purposes of this Agreement and any other relationship between such Lender and the Borrower and shall not be divulged to any Person other than the Lender, their Affiliates and their respective officers, directors, employees and agents, except: (a) to their attorneys and accountants, (b) in connection with the enforcement of the rights of the Agent and the Lenders hereunder and under the Loan Documents or otherwise in connection with applicable litigation, (c) in connection with assignments and participations and the solicitation of prospective assignees and participants referred to in the immediately preceding Section, (d) if such information is generally available to the public other than as a result of disclosure by the Agent or any Lender, (e) to any direct or indirect contractual counterparty in any hedging arrangement or such contractual counterparty’s professional advisor, (f) to any nationally recognized rating agency that requires information about any Lender’s investment portfolio in connection with ratings issued with respect to such Lender, and (g) as may otherwise be required or requested by any regulatory authority having jurisdiction over the Agent or any Lender or by any applicable law, rule, regulation or judicial process, the opinion of any Lender’s counsel concerning the making of such disclosure to be binding on the parties hereto. No Lender shall incur any liability to the Borrower by reason of any disclosure permitted by this Section.

Section 9.7Governing Law and Construction. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE TERM NOTES SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. Whenever possible, each provision of this Agreement and the other Loan Documents and any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement, the other Loan Documents or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto.

Section 9.8Consent to Jurisdiction. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL COURT OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK; AND THE PARTIES HERETO CONSENT TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.

Section 9.9Waiver of Jury Trial. EACH OF THE BORROWER AND THE LENDERS IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 9.10Survival of Agreement. All representations, warranties, covenants and agreement made by the Borrower herein or in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be deemed to have been relied upon by the Lenders and shall survive the making of the Term Loans by the Lenders and the execution and delivery to the Lenders by the Borrower of the Term Notes, regardless of any investigation made by or on behalf of the Lenders, and shall continue in full force and effect as long as any Obligation is outstanding and unpaid; provided, however, that the obligations of the Borrower under Sections 9.2, 9.5 and 9.11 shall survive payment in full of the Obligations and the termination of the Commitments.

Section 9.11Indemnification. The Borrower hereby agrees to defend, protect, indemnify and hold harmless the Agent and the Lenders and their respective Affiliates and the directors, officers, employees, attorneys and agents of the Agent and the Lenders and their respective Affiliates (each of the foregoing being an “Indemnitee” and all of the foregoing being collectively the “Indemnitees”) from and against any and all claims, actions, damages, liabilities, judgments, costs and expenses (including all reasonable fees and disbursements of counsel which may be incurred in the investigation or defense of any matter) imposed upon, incurred by or asserted against any Indemnitee, whether direct, indirect or consequential and whether based on any federal, state, local or foreign laws or regulations (including securities laws, environmental

laws, commercial laws and regulations), under common law or on equitable cause, or on contract or otherwise:

(a)by reason of, relating to or in connection with the execution, delivery, performance or enforcement of any Loan Document, any commitments relating thereto, or any transaction contemplated by any Loan Document; or

(b)by reason of, relating to or in connection with any credit extended or used under the Loan Documents or any act done or omitted by any Person, or the exercise of any rights or remedies thereunder, including the acquisition of any collateral by the Lenders by way of foreclosure of the Lien thereon, deed or bill of sale in lieu of such foreclosure or otherwise;

provided, however, that the Borrower shall not be liable to any Indemnitee for any portion of such claims, damages, liabilities and expenses resulting from such Indemnitee’s gross negligence or willful misconduct. In the event this indemnity is unenforceable as a matter of law as to a particular matter or consequence referred to herein, it shall be enforceable to the full extent permitted by law.

This indemnification applies, without limitation, to any act, omission, event or circumstance existing or occurring on or prior to the date of payment in full of the Obligations, including specifically Obligations arising under clause (b) of this Section. The indemnification provisions set forth above shall be in addition to any liability the Borrower may otherwise have. Without prejudice to the survival of any other obligation of the Borrower hereunder the indemnities and obligations of the Borrower contained in this Section shall survive the payment in full of the other Obligations. To the extent duplicative of the provisions of Section 2.11, this Section 9.11 shall not apply to Indemnified Taxes or Other Taxes.

Section 9.12Captions. The captions or headings herein and any table of contents hereto are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Agreement.

Section 9.13Entire Agreement. This Agreement and the other Loan Documents embody the entire agreement and understanding between the Borrower, the Agent and the Lenders with respect to the subject matter hereof and thereof. This Agreement supersedes all prior agreements and understandings relating to the subject matter hereof. Nothing contained in this Agreement or in any other Loan Document, expressed or implied, is intended to confer upon any Persons other than the parties hereto any rights, remedies, obligations or liabilities hereunder or thereunder.

Section 9.14Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.

Section 9.15Borrower Acknowledgements. The Borrower hereby acknowledges that (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents, (b) neither the Agent nor any Lender has any fiduciary relationship to the Borrower, the relationship being solely that of debtor and creditor, (c) no joint

venture exists between the Borrower and the Agent or any Lender, and (d) neither the Agent nor any Lender undertakes any responsibility to the Borrower to review or inform the Borrower of any matter in connection with any phase of the business or operations of the Borrower and the Borrower shall rely entirely upon its own judgment with respect to its business, and any review, inspection or supervision of, or information supplied to, the Borrower by the Agent or any Lender is for the protection of the Lenders and neither the Borrower nor any third party is entitled to rely thereon.

Section 9.16Interest Rate. In the event the obligation of the Borrower to pay interest on the principal balance of the Term Notes is or becomes in excess of the maximum interest rate which the Borrower is permitted by law to contract or agree to pay, giving due consideration to the execution date of this Agreement, then, in that event, the rate of interest applicable with respect to such Lender’s Term Loan Percentage shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not of interest.

Section 9.17Closing Date. Notwithstanding anything to the contrary contained herein, the Closing Date must occur on or before December 31, 2007. If the Closing Date does not occur on or before December 31, 2007, this Agreement shall terminate and be of no further force and effect, and all obligations of the parties hereto shall terminate.

[The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

VITESSE SEMICONDUCTOR CORP.

By: /s/ RICHARD C. YONKER

Name: Richard C. Yonker

Title: CFO

Address for Borrower:

Vitesse Semiconductor Corp.

741 Calle Plano

Camarillo, California 93012

Attn.:_________________________

Fax: (805) 388-7477

WHITEBOX VSC, LTD., as Agent

By: /s/ JONATHAN WOOD

Name: Jonathan Wood

Title: Director-COO

WHITEBOX VSC, LTD., as Lender

By: /s/ JONATHAN WOOD

Name: Jonathan Wood

Title: Director -COO

Address for Whitebox VSC, Ltd., as Agent and as Lender:

Whitebox VSC, Ltd.

Suite 300

3033 Excelsior Boulevard

Minneapolis, MN 55416

Attn: Dale Willenbring

Fax: (612) 253-6180

EX-99

EXECUTION COPY

SENIOR UNSECURED

CONVERTIBLE NOTE

PURCHASE AGREEMENT

BY AND BETWEEN

VITESSE SEMICONDUCTOR CORPORATION

AND

WHITEBOX VSC, LTD.

August 23, 2007

SENIOR UNSECURED CONVERTIBLE NOTE PURCHASE AGREEMENT

THIS SENIOR UNSECURED CONVERTIBLE NOTE PURCHASE AGREEMENT (the “Agreement”) is made effective as of August 23, 2007, by and between Vitesse Semiconductor Corporation, a Delaware corporation (the “Company”), and Whitebox VSC Ltd., a limited partnership organized under the laws of the British Virgin Islands (“Whitebox” or the “Investor”).

RECITALS

A.The Company desires to issue and sell, and the Investor desires to purchase, unsecured convertible promissory notes in substantially the form attached to this Agreement as Exhibit A (collectively, the “Notes”), which shall be convertible on the terms stated therein into common stock, par value $.01 per share (the “Common Stock”), of the Company; and

B.The Company and the Investor have entered into a Loan Agreement, dated as of August 23, 2007 (the “Loan Agreement”), governing the terms and conditions relating to the issuance of a term loan in the original principal amount of $30,000,000, which may be increased to $45,000,000 upon satisfaction of certain conditions specified therein (the “Term Loan”); and

C.The Investor has the option to invest up to $30,000,000 in the Notes, which may be increased to $45,000,000 upon satisfaction of certain conditions specified in the Term Loan (in each case, such investment not to be in less than $5,000,000 increments), and the proceeds from any such investment in the Notes shall be used to pay down the Term Loan.

AGREEMENT

NOW, THEREFORE, in consideration of the respective representations, warranties, covenants and agreements contained herein, and for other valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Specific Definitions. As used in this Agreement, the following terms shall have the meanings set forth or as referenced below:

“Action” shall have the meaning ascribed to such term in Section 4.10.

“Additional Notes” shall have the meaning ascribed to such term in Section 2.2.

“Affiliate” of a specified person (natural or juridical) means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, that person, as such terms are used in and construed under Rule 405 under the Securities Act. With respect to the Investor, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Investor will be deemed to be an Affiliate of such Investor.

“Agreement” means this Agreement and all Exhibits and Schedules hereto.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” means the Company’s common stock, par value $0.01 per share.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Control” shall mean ownership of more than 50% of the shares of stock entitled to vote for the election of directors in the case of a corporation, and more than 50% of the voting power in the case of a business entity other than a corporation.

“Conversion Price” means the conversion price in effect on any given date, which initially shall be equal to $2.00 but which shall be subject to adjustment as described herein and in the Note.

“Conversion Shares” or “Shares” means the shares of Common Stock issued or issuable upon conversion of any of the Convertible Notes.

“Convertible Note” or “Note” means each of the promissory notes, in the form attached hereto as Exhibit A, to be issued by the Company to the Investor, including the Initial Note and any the Additional Notes that may be issued to such Investor.

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith in accordance with Article IV of this Agreement.

“Effective Date” means the date that the initial Registration Statement filed by the Company pursuant to the Registration Rights Agreement is first declared effective by the SEC.

“Environmental Laws or Regulations” means any federal, state or local statute, law, ordinance or regulation that relates to or deals with hazardous substances, human health or the environment, and all regulations promulgated by a regulatory body pursuant to any of the foregoing statutes, laws, regulations, or ordinances.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is a member of a group of which the Company is a member and which is treated as a single employer under Section 414 of the Code.

“Exchange Act” means the Securities Exchange Act of 1934, as amended to date.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, consultants or directors of the Company pursuant to the Company’s

employee benefit plans (provided that any such issuances of shares of Common Stock (other than pursuant to options) and options shall not exceed, in the aggregate, 15% of the Company’s outstanding shares and/or options, in the aggregate, in any five-year period (based on the number of outstanding shares of Common Stock at the beginning of each such five-year period, with the first period commencing on the date hereof), (b) securities upon the exercise or exchange of or conversion of any securities issued pursuant to this Agreement and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities, and (c) securities issued pursuant to a Permitted Acquisition, provided any such issuance shall only be to a person which is, itself or through its subsidiaries, an operating company in a business synergistic with or complementary to the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

“GAAP” shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of any date of determination.

“Hazardous Substances” means any and all substances (whether solid, liquid or gas) defined, listed, or otherwise classified as hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, toxic substances, toxic pollutants, contaminants, pollutants or words of similar meaning or regulatory effect under any Environmental Laws or Regulations or that may have a negative impact on human health or the environment or the presence of which on, in or under any property, is prohibited under Environmental Law, including petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead and radon, and compounds containing them (including gasoline, diesel fuel, oil and lead-based paint), and radioactive materials, flammables and explosives and compounds containing them.

“Indemnifiable Losses” shall have the meaning ascribed to such term in Section 9.1.

“Initial Closing” shall have the meaning ascribed to such term in Section 3.1(a).

“Initial Closing Date” shall have the meaning ascribed to such term in Section 3.1(a).

“Initial Note” shall have the meaning ascribed to such term in Section 2.1.

“Initial Purchase Price” shall have the meaning ascribed to such term in Section 2.1.

“Intellectual Property” means (i) all proprietary rights, privileges and priorities provided under U.S., state and foreign law relating to U.S. and foreign patents and patent applications, trademarks, service marks and registrations thereof and applications therefor, copyrights and copyright registrations and applications, mask works and registrations thereof, know-how, and

trade secrets; (ii) proprietary inventions, discoveries, ideas, technology, data, information, and processes; (iii) proprietary drawings, designs, licenses, computer programs and software, and technical information including but not limited to proprietary information embodied in material specifications, processing instructions, equipment specifications, product specifications, confidential data, electronic files, research notebooks, invention disclosures, research and development reports and the like related thereto; and (iv) all amendments, modifications, and improvements to any of the foregoing.

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 4.13.

“Knowledge” means actual knowledge of a fact or the knowledge which such person could reasonably be expected to have based on reasonable inquiry. The knowledge of an entity shall include the knowledge of the individuals who are executive officers of such entity at the time in question.

“Legend Removal Date” shall have the meaning ascribed to such term in Section 6.9(c).

“Liens” means liens, mortgages, charges, security interests, claims, voting trusts, pledges, encumbrances, options, assessments, restrictions, or third-party or spousal interests of any nature.

“Material Adverse Effect” means any effect that could reasonably be expected to materially and adversely affect (a) the business, operations, results of operations, prospects, assets (including intangible assets), liabilities or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement or any of the Transaction Documents or any other agreement or instrument to be entered into in connection with this Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation, established pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to the functions thereof.

“Permitted Acquisition” shall mean an acquisition by the Company that meets the following criteria: (i) the acquisition is not a hostile acquisition or takeover and the acquired business is in the same line of business as the Company and (ii) no Event of Default or Default (as such terms are defined in the Loan Agreement) has occurred and is continuing or would be caused thereby under the Loan Agreement.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Plan” means each employee benefit plan (whether in existence on as of the date hereof or thereafter instituted), as such term is defined in Section 3 of ERISA, maintained for the benefit of employees, officers or directors of the Company or of any ERISA Affiliate.

“Product Liability” means any liability, claim or expense, including but not limited to attorneys’ fees and medical expenses, arising in whole or in part out of a breach of any express or implied product warranty by the Company, strict liability in tort, negligent manufacture of

product, negligent provision of services, product recall, or any other allegation of liability arising from the design, testing, manufacture, packaging, labeling (including instructions for use), or sale of products.

“Purchased Securities” means the Convertible Notes and the Conversion Shares.

“Registration Rights Agreement” means the Registration Rights Agreement among the Company and the Investor in the form attached hereto as Exhibit B.

“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Investor of the Conversion Shares.

“Reportable Event” means a “reportable event” as defined in Section 4043 of ERISA and the regulations issued under such Section, with respect to a Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event; provided, that a failure to meet the minimum funding standard of Section 412 of the Code and Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any waiver in accordance with Section 412(d) of the Code.

“Required Approvals” shall have the meaning ascribed to such term in Section 4.5.

“Required Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or issuable in the future pursuant to the Transaction Documents, including any Conversion Shares issuable upon exercise or conversion in full of all Notes, ignoring any conversion or exercise limits set forth therein.

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

“SEC” means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

“SEC Reports” means all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof.

“Securities Act” means the United States Securities Act of 1933, as amended, and all regulations promulgated thereunder.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

“Subsequent Closing” shall have the meaning ascribed to such term in Section 3.1(b).

“Subsequent Closing Date” shall have the meaning ascribed to such term in Section 3.1(b).

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 4.1 and shall, where applicable, include any subsidiary of the Company formed or acquired after the date hereof.

“Term Loan” has the meaning set forth in the Recitals.

“Trading Day” means a day on which the Nasdaq Stock Market (or such other Trading Market on which the Company’s Common Stock is then listed or quoted for trading) is open for trading.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“Transaction Documents” means this Agreement, the Notes, the Registration Rights Agreement and such other documents, instruments and agreements executed in connection with the consummation of the transactions contemplated hereby.

“Variable Rate Transaction” shall have the meaning ascribed to such term in Section 6.8(b).

“VWAP” means, for any date, the price (in each case adjusted to take into account stock splits) determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price per share of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by Whitebox in a commercially reasonable manner in consultation with the Company and a nationally recognized investment banking firm reasonably acceptable to the Company.

Section 1.2 Definitional Provisions.

(a)The words “hereof,” “herein,” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provisions of this Agreement.

(b)The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. Terms referring to a masculine gender shall be deemed to refer to the feminine or neuter genders, as applicable.

(c)References to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of the Exhibits or Schedules attached to or referenced in this Agreement, and references to an “Article” or a “Section” are, unless otherwise specified, to one of the Articles or Sections of this Agreement.

(d)The term “dollars” or “$” shall refer to the currency of the United States of America.

(e)Unless otherwise specified, all references to time shall refer to Minneapolis, Minnesota time.

ARTICLE II

PURCHASE AND SALE OF CONVERTIBLE NOTES

Section 2.1 Purchase and Sale of Initial Notes. Subject to the terms and conditions of this Agreement, the Investor agrees to purchase on the Initial Closing Date, and the Company agrees to sell and issue to the Investor on the Initial Closing Date, a Note, in substantially the form attached hereto as Exhibit A, in the aggregate original principal amount of not less than $10,000,000 nor greater than $30,000,000, with the original principal amount of such Note (the “Initial Note”) to be determined by the Investor in its sole discretion, at a purchase price equal to 100% of the principal amount thereof (the “Initial Purchase Price”); provided, however, that if the Required Lenders specified in the Loan Agreement agree to exercise their option pursuant to Sections 2.1(b) and 2.2(b) of the Loan Agreement to increase the amount of the Term Loan from $30,000,000 to $45,000,000 within ninety (90) days of the closing date under the Loan Agreement, then the maximum principal amount of the Notes purchasable under this Agreement shall be increased to $45,000,000. Upon the purchase of the Initial Note, the Company shall pay down the Term Loan outstanding under the Loan Agreement by the amount of such Initial Note.

Section 2.2 Purchase and Sale of Additional Notes. Between the Initial Closing Date and the third anniversary of the closing date under the Loan Agreement, the Investor will have the option, in its sole discretion, to purchase additional Notes (the “Additional Notes”) in an amount not less than $5,000,000 for each such purchase of Additional Notes, with such purchase to be on the same terms and conditions specified in this Agreement with respect to the purchase of the Initial Note; provided, that the Investor may not purchase more than an aggregate of $20,000,000 of Additional Notes pursuant to this Agreement, providedfurther that, at no time shall the sum of (i) the principal amount of the Initial Note and (ii) the principal amount of the Additional Notes exceed $30,000,000; providedfurther, however, that if the Required Lenders specified in the Loan Agreement agree to exercise their option pursuant to Sections 2.1(b) and

2.2(b) of the Loan Agreement to increase the amount of the Term Loan from $30,000,000 to $45,000,000 within ninety (90) days of the closing date under the Loan Agreement, then the maximum principal amount of Notes which may be purchased under this Agreement shall be increased to $45,000,000 and the maximum principal amount of the Additional Notes which may be purchased under this Section 2.2 shall be increased to $35,000,000; provided that, at no time shall the sum of (i) the principal amount of the Initial Note and (ii) the principal amount of the Additional Notes exceed $45,000,000. The Additional Notes will be issued to the Investor in the original principal amount of such Additional Notes, at a purchase price equal to 100% of the principal amount thereof. Upon the purchase of the Additional Notes, the Company shall pay down the Term Loan outstanding under the Loan Agreement by the amount of such Additional Notes.

Section 2.3 Note Conversion. The Investor may, at its option, purchase shares of the Company’s Common Stock by converting amounts outstanding under the Initial Note or, if applicable, the Additional Notes at the applicable Conversion Price as provided therein (in each case, a “Note Conversion Closing”). At each Note Conversion Closing, the Company shall issue certificates representing any shares purchased under this Section 2.3 in a form acceptable to such Investor and such Investor’s counsel, and such Investor shall pay the Conversion Price of $2.00 per share (subject to adjustment as provided therein) for such shares by surrendering the applicable Note(s) to the Company.

Section 2.4 Use of Proceeds. The Company shall use the all of the cash proceeds of the sale of the Notes (including the Initial Note and any Additional Notes) to pay down the outstanding principal balance under the Term Loan.

ARTICLE III

THE CLOSING

Section 3.1 Closings.

(a)Initial Closing. The purchase and sale of the Initial Notes shall take place at the offices of the Company and on a date (the “Initial Closing Date”) within ten (10) business days of the Investor’s notice to the Company, on or prior to the third anniversary of the closing date under the Loan Agreement, of the exercise of its option to purchase the Initial Note in accordance with the terms set forth in this Agreement (the “Initial Closing”). At the Initial Closing, the Company shall deliver to the Investor the Initial Note that such Investor is purchasing against delivery to the Company by the Investor of a check or wire transfer in the amount of such Investor’s Initial Note, payable to the Company’s order (or by wire of funds in such amount to the Company’s designated bank account).

(b)Subsequent Closings. The purchase and sale of the Additional Notes shall occur within five (5) business days of an Investor’s notice to the Company of the exercise of its option to purchase the Additional Notes in accordance with the terms set forth in Section 2.2 of this Agreement (each such closing, a “Subsequent Closing” and each such closing date, a “Subsequent Closing Date”).

Section 3.2 Closing Deliveries.

(a)Company Deliveries. On the Initial Closing Date, the Company shall deliver or cause to be delivered to the Investor the following:

(i) this Agreement duly executed by the Company;

(ii)the Initial Note registered in the name of the Investor in the principal amount of the Initial Note, in the form attached hereto as Exhibit A;

(iii)the Registration Rights Agreement, in substantially the form attached hereto as Exhibit B (the “Registration Rights Agreement”), duly executed by the Company;

(iv)evidence of the closing of the transactions contemplated by the Loan Agreement; and

(v)such certificates and other documents as shall be required to consummate the transactions contemplated by this Agreement.

(b)Investor Deliveries. On the Initial Closing Date, the Investor shall deliver or cause to be delivered to the Company the following:

(i) this Agreement duly executed by the Investor;

(ii)the Registration Rights Agreement duly executed by the Investor; and

(iii)the payment of the Initial Purchase Price by the Investor, in the manner specified in Section 3.1 above.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Attached hereto as Schedule A are the Disclosure Schedules containing sections numbered to correspond to the sections of this Article IV (the “Disclosure Schedules”). Except as specifically set forth in the corresponding section of such Disclosure Schedules (or in any other section of the Disclosure Schedules so long as the applicability of such disclosure to the particular representation and warranty which such disclosure is intended to modify is reasonably apparent), the Company hereby represents and warrants to the Investor as follows as of the date hereof:

Section 4.1Subsidiaries. All of the direct and indirect subsidiaries (the “Subsidiaries”) of the Company are set forth on Schedule 4.1. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

Section 4.2Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company and each of the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect, and no proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

Section 4.3Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its shareholders in connection therewith other than in connection with the Required Approvals (as defined in Section 4.5 below). Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

Section 4.4No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Purchased Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals (as defined in Section 4.5 below) and the accuracy of the representations and warranties of the Investor set forth in Article V hereof, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or any Subsidiary is subject (including federal

and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

Section 4.5Filings, Consents and Approvals. Assuming the accuracy of the representations and warranties of the Investor in Article V hereof, the Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) filings required pursuant to Section 6.10 of this Agreement, (ii) the filings required or contemplated by the Registration Rights Agreement, (iii) application(s) to each applicable Trading Market for the listing of the Conversion Shares for trading thereon in the time and manner required thereby, (iv) the filing of Form D with the SEC and such filings as are required to be made under applicable state securities laws and (v) any filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (collectively, the “Required Approvals”).

Section 4.6Issuance of the Securities. The Notes are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Conversion Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its duly authorized capital stock the number of shares of Common Stock equal to the Conversion Shares.

Section 4.7Capitalization. The capitalization of the Company is as set forth on the Disclosure Schedules under the caption referencing this Section 4.7. The Company has not issued any capital stock since March 31, 2007, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion or exercise of Common Stock Equivalents outstanding as of March 31, 2007. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on the Disclosure Schedules or as a result of the purchase and sale of the Purchased Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the

Purchased Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investor) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any shareholder, the Board of Directors of the Company or others is required for the issuance and sale of the Purchased Securities. There are no stockholder agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party (other than those contemplated in connection with the Transaction Documents) or, to the knowledge of the Company, between or among any of the Company’s shareholders.

Section 4.8Financial Statements. All consolidated financial statements or cash flow statements for the Company and its Subsidiaries provided to the Investor fairly present in all material respects the Company’s consolidated financial condition, results of operations and cash flows. There has not been any material deterioration in the Company’s consolidated financial condition since the date of the most recent financial statements and cash flows provided by the Company to the Investor.

Section 4.9Material Changes; Undisclosed Events, Liabilities or Developments. Since March 31, 2007, (i) there has been no event, occurrence or development that has had or that is reasonably expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer or director, except pursuant to existing Company stock option plans. Except for the issuance of the Purchased Securities contemplated by this Agreement or as set forth on Schedule 4.9, no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

Section 4.10Litigation. Except as set forth in the Disclosure Schedules under the caption referencing this Section 4.10, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Purchased Securities or (ii) involves claims for more than $250,000. Except as set forth in the Disclosure Schedules, there has not been, and to the knowledge of the Company there is not pending or

contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

Section 4.11Regulatory Compliance. Except as set forth in the Disclosure Schedules, neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as is not reasonably expected to result in a Material Adverse Effect. The Company is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). The Company has complied in all material respects with the Federal Fair Labor Standards Act. The Company has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to have a Material Adverse Effect. Neither the Company’s nor any of its Subsidiaries’ properties or assets has been used by the Company or any Subsidiary or, to the best of the Company’s knowledge, by previous persons, in disposing, producing, storing, treating, or transporting any Hazardous Substances other than in compliance in all material respects with applicable Environmental Laws and Regulations. The Company and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted, except where the failure to obtain such consents, approvals or authorizations or make such declarations or filings would not, individually or in the aggregate, have a Material Adverse Effect.

Section 4.12Title to Assets. The Company and each of the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens that do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance in all material respects. Except as set forth in the Disclosure Schedules, there are no actual, threatened or alleged defaults with respect to any leases of real property under which the Company or any of its Subsidiaries is lessee or lessor which could reasonably be expected to result in a Material Adverse Effect.

Section 4.13Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks,

trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable, and there is no existing infringement by another Person of any of the Intellectual Property Rights.

Section 4.14Insurance. The Disclosure Schedules under the caption referencing this Section 4.14 sets forth each insurance policy (including type of insurance and coverage limits) maintained by the Company. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business.

Section 4.15Transactions With Affiliates and Employees. None of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $100,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

Section 4.16Certain Fees. Except for fees payable to Credit Suisse Securities (USA) LLC, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section 4.16 that may be due in connection with the transactions contemplated by the Transaction Documents.

Section 4.17Private Placement. Assuming the accuracy of the Investor’s representations and warranties set forth in Article V, no registration under the Securities Act is required for the offer and sale of the Purchased Securities by the Company to the Investor as contemplated hereby. The issuance and sale of the Purchased Securities hereunder does not contravene the rules and regulations of the Trading Market on which the Common Stock is listed or designated.

Section 4.18Investment Company. The Company is not, and immediately after receipt of payment for the Purchased Securities will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.

Section 4.19Registration Rights. Other than the Investor, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company, other than registration statements which have already been filed and declared effective.

Section 4.20Exchange Act Registration. The Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the SEC is contemplating terminating such registration.

Section 4.21Disclosure. All disclosure furnished by or on behalf of the Company to the Investor regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases and the SEC Reports filed or disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that the Investor are not making and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Article V below.

Section 4.22No Integrated Offering. Assuming the accuracy of the Investor’s representations and warranties set forth in Article V, neither the Company nor any Person acting on its behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Purchased Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of the Purchased Securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

Section 4.23Solvency. After the issuance of the Notes and after giving effect thereto, (a) the fair value of the assets of the Company, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair salable value of the property of the Company will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the Company will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) the Company will not have unreasonably small capital with which to

conduct the business in which it is engaged as such business is proposed to be conducted following the Initial Closing Date or any Subsequent Closing Date, as applicable.

Section 4.24Tax Status and Payments; Pension Contributions. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary. Except as set forth in the Disclosure Schedules, the Company is unaware of any claims or adjustments proposed for any of the Company’s prior tax years which could result in additional taxes becoming due and payable by the Company. The Company has paid all amounts necessary to fund all present pension, profit-sharing and deferred compensation plans in accordance with their terms, and the Company has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of the Company, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

Section 4.25Employee Benefit Plans. Each Plan is in substantial compliance with all applicable requirements of ERISA and the Code and with all material applicable rulings and regulations issued under the provisions of ERISA and the Code setting forth those requirements. No Reportable Event has occurred and is continuing with respect to any Plan. All of the minimum funding standards applicable to such Plans have been satisfied, and there exists no event or condition which would reasonably be expected to result in the institution of proceedings to terminate any Plan under Section 4042 of ERISA. With respect to each Plan subject to Title IV of ERISA, as of the most recent valuation date for such Plan, the present value (determined on the basis of reasonable assumptions employed by the independent actuary for such Plan) of such Plan’s projected obligations did not exceed the fair market value of such Plan’s assets.

Section 4.26No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Purchased Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Investor and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

Section 4.27Accountants. The Company’s accounting firm is set forth on Schedule 4.27 of the Disclosure Schedule. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements at September 30, 2007 and for the two years ending September 30, 2007.

Section 4.28Acknowledgment Regarding the Investor’s Purchase of Securities. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s-length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction

Documents and the transactions contemplated thereby and any advice given by such Investor or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to such Investor’s purchase of the Purchased Securities. The Company further represents to the Investor that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

Section 4.29Acknowledgement Regarding the Investor’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding, it is understood and acknowledged by the Company (i) that the Investor has not been asked by the Company to agree, nor has the Investor agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Purchased Securities for any specified term; (ii) that past or future open market or other transactions by the Investor, including Short Sales, and specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly traded securities; (iii) that the Investor, and counter-parties in “derivative” transactions to which the Investor is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) that the Investor shall not be deemed to have any affiliation with or control over any arm’s-length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (a) the Investor may engage in hedging activities at various times during the period that the Purchased Securities are outstanding, including, without limitation, during the periods that the value of the Conversion Shares deliverable with respect to the Notes are being determined and (b) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

Section 4.30Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Purchased Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Purchased Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Purchased Securities.

Section 4.31Product Liability Claims. To the Company’s knowledge, all products manufactured, distributed or sold by or on behalf of the Company were merchantable, free from defects in design, specifications, processing, manufacture, material or workmanship, and suitable for the purpose for which they were intended. The Company has not incurred any uninsured or insured Product Liability that is reasonably expected, individually or in the aggregate, to have a Material Adverse Effect. The Company has maintained complete and accurate complaint histories regarding the Company’s products.

Section 4.32Outstanding Borrowing. The Disclosure Schedules sets forth the amount of all indebtedness of the Company as of the date hereof, the liens that relate to such indebtedness and that encumber the Company’s assets and the name of each lender thereof. No holder of indebtedness of the Company is entitled to any voting rights in any matters voted upon by the holders of the Common Stock.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor represents and warrants to the Company for itself as follows:

Section 5.1 Authorization. Such Investor has full power and authority to enter into and perform under this Agreement in accordance with its terms. This Agreement has been duly authorized by all necessary action on the part of such Investor, has been duly executed and delivered by each such Investor, and is the valid and binding agreement of each such Investor and is enforceable against each such Investor in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and to judicial limitations on the remedy of specific enforcement and other equitable remedies.

Section 5.2 Purchase Entirely for Own Account. This Agreement is made with the Investor in reliance upon such Investor’s representation to the Company, which by such Investor’s execution of this Agreement the Investor hereby confirms, that the Purchased Securities will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Investor further represents that such Investor does not have any contract, undertaking, agreement or arrangement with any third party to sell, transfer or grant participations to such third party or to any third person, with respect to any of the Purchased Securities.

Section 5.3 Reliance Upon the Investor’s Representations; Restrictions on Resale. The Investor understands that none of the Notes or Conversion Shares have been registered under the Securities Act or any state securities laws by reason of their contemplated issuance in transactions exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated under the Securities Act and applicable state securities laws, and that the reliance of the Company and others upon these exemptions is predicated in part upon the representations and warranties of such Investor in this Article V. The Investor further understands that the Notes and the Conversion Shares may not be transferred or resold without (i) registration under the Securities Act and any applicable state securities laws, or (ii) an exemption from the requirements of the Securities Act and applicable state securities laws. The Investor also understands that any Conversion Shares will be issued without prior registration thereof under the Securities Act or applicable state securities laws in reliance upon Section 4(2) of the Securities Act and transactional exemptions from registration under applicable state securities laws based upon appropriate representations of the Investor. As such, the Conversion Shares will be subject to transfer restrictions similar to restrictions applicable to the Convertible Notes. The Investor understands (i) that an exemption from such registration is

not presently available pursuant to Rule 144 promulgated under the Securities Act by the SEC and (ii) that in any event such Investor may not sell any securities acquired hereunder pursuant to Rule 144 prior to the expiration of a one-year period (or such shorter period as the SEC may hereafter adopt) after such Investor has acquired such securities. The Investor understands that any sales pursuant to Rule 144 can be made only in full compliance with the provisions of Rule 144.

Section 5.4 Receipt of Information. The Investor represents that the Company has provided such Investor at a reasonable time prior to the execution of this Agreement sufficient opportunity to ask questions and receive answers from the Company’s management concerning the Company’s business, management and financial affairs and the terms and conditions of the offering of the Purchased Securities and the Conversion Shares and to obtain any additional information (which the Company possesses or can acquire without unreasonable effort or expense) as may be necessary to verify the accuracy of information furnished to such Investor. The Investor has reviewed the representations concerning the Company contained in this Agreement. The foregoing, however, does not limit or modify the representations and warranties of the Company in this Agreement or the right of the Investor to rely thereon.

Section 5.5 Investment Experience. The Investor represents that it is experienced in evaluating and investing in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Notes and the Conversion Shares. If other than an individual, the Investor also represents it has not been organized for the purpose of acquiring the Notes and Conversion Shares.

Section 5.6 Accredited Investor. The Investor is an “accredited investor” within the meaning of SEC Rule 501 of Regulation D promulgated under the Act, as presently in effect.

Section 5.7 Legends. To the extent applicable, each certificate or other document evidencing any of the Purchased Securities shall be endorsed with the legends set forth in Section 6.9(b) hereof, and the Investor covenants that, except to the extent such restrictions are waived by the Company, such Investor shall not transfer the shares represented by any such certificate without complying with the restrictions on transfer described in the legends endorsed on such certificate:

The Company shall make a notation regarding the restrictions on transfer of the Conversion Shares or other Purchased Securities in its books and the Conversion Shares and other Purchased Securities shall be transferred on the books of the Company only if transferred or sold pursuant to an effective registration statement under the Securities Act covering the securities to be transferred or an opinion of counsel reasonably satisfactory to the Company that such registration is not required; provided, however, that (i) the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances and (ii) the Company will not require opinions of counsel for transfers to affiliated entities managed by the same manager or managing partner or management company, or managed by an entity controlling, controlled by or under common control with such manager, managing partner or management company so long as the transferor certifies in writing to the Company that the

transferor is not receiving any consideration in connection with the transfer and so long as the transferee makes the representations and warranties contained in this Article V and will be subject to the terms of these restrictions to the same extent as if such transferee were an original Investor hereunder.

ARTICLE VI

COVENANTS

The Company covenants that for so long as any Notes remain outstanding:

Section 6.1 Financial Statements, Reports, Etc. The Company shall furnish to the Investor:

(a)on or prior to December 31, 2009 (and as soon as available and in any event within 90 days (or such shorter period of time as shall be required by the SEC in connection with the filing of the Company’s annual reports with the SEC under the Exchange Act) after the end of each fiscal year of the Company thereafter), the consolidated financial statements of the Company and the Subsidiaries consisting of at least statements of income, cash flow and changes in stockholders’ equity for such year, and a consolidated balance sheet as at the end of such year, setting forth in each case in comparative form corresponding figures from the previous fiscal year, and the report, without qualification, of BDO Seidman LLP or other independent certified public accountants of recognized national standing selected by the Company, together with any management letters, management reports or other supplementary comments or reports to the Company or its board of directors furnished by such accountants;

(b)as soon as available and in any event within 45 days (or such shorter period of time as shall be required by the SEC in connection with the filing of the Company’s quarterly reports with the SEC under the Exchange Act) after the end of each fiscal quarter, commencing with the fiscal quarter ending December 31, 2009, unaudited consolidated statements of income, cash flow and changes in stockholders’ equity for the Company and its Subsidiaries for such quarter and for the period from the beginning of such fiscal year to the end of such quarter, and a consolidated balance sheet of the Company as at the end of such quarter, setting forth in comparative form figures for the corresponding period for the preceding fiscal year, accompanied by a certificate signed by the chief financial officer of the Company stating that such financial statements present fairly the financial condition of the Company and the Subsidiaries and that the same have been prepared in accordance with GAAP (except for the absence of footnotes and subject to year-end audit adjustments as to the interim statements);

(c)promptly after any officer of the Company becomes aware of any Default or Event of Default under this Agreement or the Notes, a notice describing the nature thereof and the action(s) the Company proposes to take with respect thereto;

(d)promptly upon the mailing or filing thereof, copies of all financial statements, reports and proxy statements mailed to the Company’s stockholders, and copies of all

registration statements, periodic reports and other documents filed with the SEC (or any successor thereto) or any national securities exchange; and

(e)promptly, from time to time, such other information regarding the business, financial condition, operations, property or affairs of the Company and its subsidiaries as the Investor may reasonably request.

Section 6.2 Inspection, Consultation and Advice. The Company shall permit the Investor and such persons as the Investor may designate, at the Investor’s expense, upon reasonable notice and at such times as the Investor may reasonably request to visit and inspect any of the properties of the Company, examine its books and records (including without limitation product complaint histories and related information) and take copies and extracts therefrom, discuss the affairs (including, without limitation, operations and relations with suppliers), finances and accounts of the Company with its officers, employees and public accountants (and the Company hereby authorizes said accountants to discuss with the Investor and any such designees such affairs, finances and accounts), and consult with the management of the Company as to such affairs, finances and accounts of the Company and its subsidiaries, all at reasonable times and upon reasonable notice; provided, that if no Default or Event of Default has occurred under the Notes and no event or circumstance that would constitute a Material Adverse Effect has occurred hereunder, the Investor shall not exercise such rights more than one (1) time during any calendar year; providedfurther, that upon and during the continuation of a Default or Event of Default under the Notes or upon the occurrence of an event or circumstance that would constitute a Material Adverse Effect hereunder, the Investor may exercise such inspection rights as many times as the Investor deem necessary, in their sole discretion, to protect the rights, interests and liens of the Investor.

Section 6.3 Transactions with Affiliates. Except for transactions contemplated by this Agreement or as otherwise approved by a majority of the disinterested directors on the Company’s Board of Directors, the Company shall not enter into any transaction with any director, officer, employee or holder of more than 5% of the outstanding capital stock of the Company, or to the knowledge of the Company, any member of the family of any such person, or any corporation, partnership, trust or other entity in which any such person, or member of the family of any such person, is a director, officer, trustee, partner or holder of more than 5% of the outstanding capital stock thereof, except for transactions on customary terms related to such person’s employment or service as a director of the Company. Except as specifically disclosed on Schedule 6.3 attached hereto or as otherwise required by this Agreement, the Company shall not use any proceeds of Purchased Securities to make distributions or loans to any shareholders of the Company or repay existing indebtedness for borrowed money obligations.

Section 6.4 Conditions to Closing. The Company shall use commercially reasonable efforts to cause the conditions set forth in Article VIII to be satisfied with respect to the Initial Closing or Subsequent Closing as soon as practicable.

Section 6.5 Reserve for Shares. The Company shall at all times reserve and keep available such number of its duly authorized but unissued shares of Common Stock as is necessary to comply with the terms of this Agreement and the Conversion Notes and Conversion Shares. The Company shall at all times reserve and keep available out of its duly authorized but

unissued shares of Common Stock such number of its duly authorized shares of Common Stock as is necessary to comply with the terms of this Agreement, its Certificate of Incorporation, as amended, and the Conversion Shares. If at any time the number of shares of authorized but unissued Common Stock are not sufficient to comply with the terms of this Agreement, the Convertible Notes and the Conversion Shares, the Company will promptly take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares of Common Stock as are sufficient for such purpose. The Company will obtain any authorization, consent, approval or other action by or make any filing with any court or administrative body that may be required under applicable securities laws in connection with the issuance of any shares issued by it in order to comply with the terms of this Agreement, the Convertible Notes and the Conversion Shares.

Section 6.6 Compliance with Law. The Company will conduct its business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, including, without limitation, all applicable local, state and federal environmental laws and regulations, the failure to comply with which would have a Material Adverse Effect.

Section 6.7 Use of Proceeds. The Company shall use the cash proceeds of the Purchased Securities to pay down any outstanding principal amount remaining under the Term Loan.

Section 6.8 Dividends; Subsequent Equity Sales.

(a)The Company shall not make any issuance whatsoever of Common Stock or Common Stock Equivalents which would cause any adjustment of the Conversion Price to the extent the holder(s) of the Notes and Conversion Shares would not be permitted to convert the outstanding Notes in full, ignoring for such purposes the conversion or exercise limitations therein. The Investor shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

(b)Notwithstanding the foregoing, this Section 6.8 shall not apply with respect to an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. “Variable Rate Transaction” means a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price.

Section 6.9 Transfer Restrictions.

(a)The Conversion Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Conversion Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of an Investor or in connection with a pledge as contemplated in Section 6.9(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Conversion Shares under the Securities Act. As a condition of transfer of Conversion Shares other than pursuant to an effective registration statement or Rule 144, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of an Investor under this Agreement and the Registration Rights Agreement.

(b)The Investor agrees to the imprinting, so long as is required by this Section 6.9, of a legend on any of the Conversion Shares in the following form:

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that the Investor may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Conversion Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, the Investor may transfer pledged or secured Conversion Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company, and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the Investor’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or

secured party of Conversion Shares may reasonably request in connection with a pledge or transfer of the Conversion Shares, including, if the Conversion Shares are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Shareholders thereunder.

(c)Certificates evidencing the Conversion Shares shall not contain any legend (including the legend set forth in Section 6.9(b) hereof): (i) following any sale of such Conversion Shares pursuant to the Registration Statement or Rule 144 or (ii) if such Conversion Shares are eligible for sale under Rule 144(k), or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC). The Company shall cause its counsel to issue a legal opinion to its transfer agent promptly after the Effective Date if required by the transfer agent to effect the removal of the legend hereunder. If all or any portion of a Note is converted or exercised (as applicable) at a time when such Conversion Shares may be sold pursuant to the Registration Statement or under Rule 144(k) or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the SEC), then such Conversion Shares shall be issued free of all legends. The Company agrees that at such time as such legend is no longer required under this Section 6.9(c), it will, no later than three Trading Days following the delivery by the applicable Investor to the Company or the transfer agent of a certificate representing Conversion Shares, as applicable, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Investor a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the transfer agent that enlarge the restrictions on transfer set forth in this Section 6.9(c). Certificates for Conversion Shares subject to legend removal hereunder shall be transmitted by the transfer agent to the applicable Investor by crediting the account of the Investor’s prime broker with the Depository Trust Company System.

(d)In addition to the Investor’s other available remedies, the Company shall pay to the Investor, in cash, as liquidated damages and not as a penalty, for each $1,000 of Conversion Shares (based on the VWAP of the Common Stock on the date such Conversion Shares are submitted to the transfer agent) delivered for removal of the restrictive legend and subject to Section 6.9(c), $10 per Trading Day (increasing to $20 per Trading Day 3 Trading Days after such damages have begun to accrue) for each Trading Day after the second Trading Day following the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit any Investor’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Conversion Shares as required by the Transaction Documents, and the Investor shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

(e)The Investor agrees that the removal of the restrictive legend from certificates representing Conversion Shares as set forth in this Section 6.9 is predicated upon the

Company’s reliance that such Investor will sell any Conversion Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Conversion Shares are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein.

Section 6.10 Securities Law Disclosure; Publicity. The Company shall, by 5:30 p.m. (New York City time) on the fourth Trading Day following the date hereof (or such shorter time period as shall be required by Form 8-K or otherwise agreed to by the parties), issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby and attaching the Transaction Documents as exhibits thereto. The Company and the Investor shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor the Investor shall issue any such press release or otherwise make any such public statement with respect to the transactions contemplated hereby without the prior consent of the Company, with respect to any press release of the Investor, or without the prior consent of the Investor, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not include the name of the Investor in any filing with the SEC or any regulatory agency or Trading Market, without the prior written consent of the Investor, except (i) as required by federal securities law in connection with (A) any registration statement contemplated by the Registration Rights Agreement and (B) the filing of final Transaction Documents (including signature pages thereto) with the SEC and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Investor with prior notice of such disclosure permitted under this clause (ii).

Section 6.11 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the offering described herein as required under Regulation D and to provide a copy thereof, promptly upon request of the Investor. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Notes and Conversion Shares for, sale to the Investor at the Initial Closing or Subsequent Closing, as applicable, under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of the Investor.

Section 6.12 Listing of Shares. The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market on which the Common Stock is then listed or designated, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing on such Trading Market as soon as possible thereafter, (iii) provide to the Investor evidence of such listing, and (iv) maintain the listing of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market; provided that such listing shall include any additional shares that may be issuable under the Notes as a result of any adjustments to the Conversion Price that would affect the number of Conversion Shares issuable to the Investor.

Section 6.13 Seniority of Notes. The Company hereby acknowledges that any Notes issued pursuant to this Agreement shall be senior to the 1.50% Convertible Subordinated Debentures due 2024 (the “Subordinated Debentures”) issued pursuant to that certain Indenture, dated as of September 22, 2004 (the “Indenture”), by and between the Company and U.S. Bank National Association, as Trustee.

ARTICLE VII

CONDITIONS TO OBLIGATION OF THE COMPANY

The obligation of the Company to sell the Notes to the Investor at the Initial Closing or any Subsequent Closing, as applicable, is subject to the satisfaction, on or before such Initial Closing or Subsequent Closing, as applicable, of the conditions set forth in this Article VII.

Section 7.1 Representations and Warranties. The representations and warranties contained in Article V shall be true, complete and correct as of the date hereof and, as of the Initial Closing Date or Subsequent Closing Date, as applicable, as though such representations and warranties had been made on and as of such date, and an officer of the Investor shall have certified to such effect to the Company in writing.

Section 7.2 Performance. The Investor shall have performed and complied in all material respects with all agreements contained herein, and in the agreements, documents and instruments contemplated hereby which are required to be performed or complied with by them prior to or at the date of the Initial Closing or any Subsequent Closing, as applicable, and an officer of the Investor shall have certified to such effect to the Company in writing.

Section 7.3 Required Consents. The Company shall have obtained the written consent or approval of each person whose consent or approval is required in connection with this Agreement.

Section 7.4 Litigation. No suit, action or other proceeding shall be pending or, to the knowledge of Company, threatened by any third party or by or before any court or governmental agency in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby, and no investigation that might result in any such suit, action or other proceeding shall be pending or, to the knowledge of the Company, threatened.

Section 7.5 Legislation. No statute, rule, regulation, order, or interpretation shall have been enacted, entered or deemed applicable by any domestic or foreign government or governmental or administrative agency or court which would make the transactions contemplated by this Agreement illegal.

ARTICLE VIII

CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR

The obligation of the Investor to purchase the Notes at the Initial Closing or any Subsequent Closing, as applicable, is subject to the satisfaction, on or before the Initial Closing or Subsequent Closing, as applicable, of the conditions set forth in this Article VIII.

Section 8.1 Representations and Warranties. The representations and warranties contained in Article IV shall be true, complete and correct as of the date hereof and, as of the Initial Closing Date or Subsequent Closing Date, as applicable (as though such representations and warranties had been made on and as of such date, subject to the items in the new Disclosure Schedules delivered by the Company at the Initial Closing or Subsequent Closing, as applicable), and the Chief Executive Officer and Chief Financial Officer of the Company shall have certified to such effect to the Investor in writing.

Section 8.2 Performance. The Company shall have performed and complied in all material respects with all agreements contained herein, and in the agreements, documents and instruments contemplated hereby which are required to be performed or complied with by it prior to or at the date of the Initial Closing or Subsequent Closing, as applicable, and the Chief Executive Officer and Chief Financial Officer of the Company shall have certified to the Investor in writing to such effect and to the further effect that all of the conditions set forth in this Article VIII have been satisfied.

Section 8.3 All Proceedings to be Satisfactory. All corporate and other proceedings to be taken by the Company in connection with the transactions contemplated hereby and all documents incident thereto shall be reasonably satisfactory in form and substance to the Investor and its counsel, and the Investor and its counsel shall have received all such counterpart originals or certified or other copies of such documents as they reasonably may request.

Section 8.4 Supporting Documents.

(a)The Company shall have delivered to the Investor an opinion of counsel in form reasonably satisfactory to the Investor and covering the matters set forth in Exhibit C hereto.

(b)The Investor and its counsel shall have received copies of the following documents:

(i)a certificate of the Secretary of State of the State of Delaware for the Company and the state of formation or incorporation for each of its Subsidiaries dated as of a recent date prior to the Initial Closing Date or Subsequent Closing Date, as applicable, as to the corporate existence of the Company and each of its Subsidiaries and listing all documents of the Company and each of its Subsidiaries on file with such Secretary of State;

(ii)a certificate of the Secretary of the Company dated the Initial Closing Date or Subsequent Closing Date, as applicable, and certifying: (A) the Company’s and each Subsidiary’s then-current Articles or Certificate of Incorporation and Bylaws; (B) that attached thereto is a true and complete copy of all resolutions adopted by the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement and the Transaction Documents, and the issuance, sale and delivery of the Notes and the Conversion Shares, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated by this

Agreement and the Transaction Documents; and (C) to the incumbency and specimen signature of each officer of the Company executing this Agreement, the Transaction Documents, and any certificate or instrument furnished pursuant hereto, and a certification by another officer of the Company as to the incumbency and signature of the officer signing the certificate referred to in this subsection (ii);

(iii)in connection with the Initial Closing Date, evidence of the closing of the transactions contemplated by the Loan Agreement; and

(iv)such additional supporting documents and other information with respect to the operations and affairs of the Company as any Investor or such Investor’s counsel reasonably may request.

Section 8.5 Required Consents. The Company shall have obtained the written consent or approval, in form and substance reasonably satisfactory to the Investor, of each person whose consent or approval is required in connection with this Agreement.

Section 8.6 Litigation. No suit, action or other proceeding shall be pending or, to the knowledge of the Company, threatened by any third party or by or before any court or governmental agency in which it is sought to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby, and no investigation that might result in any such suit, action or other proceeding shall be pending or, to the knowledge of Company, threatened.

Section 8.7 Legislation. No statute, rule, regulation, order, or interpretation shall have been enacted, entered or deemed applicable by any domestic or foreign government or governmental or administrative agency or court which would make the transactions contemplated by this Agreement illegal.

Section 8.8 No Material Adverse Changes. Since the date of this Agreement, no events shall have occurred or circumstances arisen which are reasonably expected, individually or in the aggregate, to have or result in a Material Adverse Effect upon the Company. The Company shall fully cooperate as reasonably requested by the Investor to enable the Investor to determine that this condition has been satisfied.

Section 8.9 Transaction Documents. The Company and the Investor shall have executed and delivered each of the Transaction Documents to which it is a party. Each such document or agreement shall constitute the valid and binding obligation of such party, enforceable against such party in accordance with its terms.

Section 8.10 Prior Preemptive Rights. All of the Company’s obligations regarding preemptive or first refusal rights with respect to the issuance of its securities shall have been terminated in their entirety or duly waived pursuant to a written instrument in form and content satisfactory to the Investor and the Investor’s counsel with respect to (a) the issuance of the Notes and (b) the issuance of the Conversion Shares.

Section 8.11 No Default. Since the date hereof, no default (or event which, with the passage of time and/or the giving of notice, would constitute a default) of the Company shall have occurred under this Agreement or any of the Transaction Documents.

Section 8.12 Payment of Fees. The Company shall have paid the fees and expenses of the Investor’s legal counsel as required under Section 11.7.

ARTICLE IX

INDEMNIFICATION

Section 9.1 Indemnification of Investor. The Company shall indemnify, defend and hold harmless the Investor and their respective subsidiaries, officers, directors and stockholders from and against and in respect of any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, interest and penalties, costs and expenses (including, without limitation, reasonable legal fees and disbursements incurred in connection therewith and in seeking indemnification therefor, and any amounts or expenses required to be paid or incurred in connection with any action, suit, proceeding, claim, appeal, demand, assessment or judgment) (“Indemnifiable Losses”), resulting from, arising out of, or imposed upon or incurred by any person to be indemnified hereunder by reason of any breach of any representation, warranty, covenant or agreement of the Company contained in this Agreement or any agreement, certificate contemplated by this Agreement or any agreement, certificate, or document executed and delivered by the Company pursuant hereto or in connection with any of the transactions contemplated by this Agreement. Any indemnification provided under this Article IX shall be limited to the aggregate principal amount of the Notes.

Section 9.2 Indemnification of the Company. The Investor shall indemnify, defend and hold harmless the Company and each of its subsidiaries, officers, directors and stockholders from and against and in respect of any and all Indemnifiable Losses resulting from, arising out of, or imposed upon or incurred by any person to be indemnified hereunder by reason of any breach of any representation, warranty, covenant or agreement by the Investor contained in this Agreement or any agreement, certificate or document executed and delivered by the Investor pursuant hereto or in connection with any of the transactions contemplated by this Agreement. Any indemnification provided under this Article IX shall be limited to the aggregate principal amount of the Notes.

Section 9.3 Third-Party Claims. If a claim by a third party is made against an indemnified party and if the indemnified party intends to seek indemnity with respect thereto under this Article IX, such indemnified party shall promptly notify the indemnifying party of such claim; provided, however, that failure to give timely notice shall not affect the rights of the indemnified party so long as the failure to give timely notice does not adversely affect the indemnifying party’s ability to defend such claim against a third party. The indemnified party shall not settle such claim without the consent of the indemnifying party, which consent shall not be unreasonably withheld or delayed. If the indemnifying party acknowledges in writing its indemnity obligations for Indemnifiable Losses resulting therefrom, the indemnifying party may participate at its own cost and expense in the settlement or defense of any claim for which indemnification is sought.

Section 9.4 Cooperation as to Indemnified Liability. Each party hereto shall cooperate fully with the other parties with respect to access to books, records, or other documentation within such party’s control, if deemed reasonably necessary or appropriate by any party in the defense of any claim which may give rise to indemnification hereunder.

ARTICLE X

TERMINATION AND DEFAULT

Section 10.1 Termination. The obligation of the parties hereto to consummate the remaining transactions contemplated hereby may be terminated and abandoned at any time at or before the Initial Closing or Subsequent Closing, as applicable, if any of the following events occurs:

(a)by and at the written option of the Investor or the Company if (i) the Initial Closing shall not have occurred on or before 10 Trading Days after the Investor notifies the Company pursuant to Section 3.1(a) that it plans to purchase all or any portion of the Initial Notes described in this Agreement or (b) the Subsequent Closing shall not have occurred on or before 5 Trading Days after the Investor notifies the Company pursuant to Section 3.1(b) that it plans to purchase all or any portion of the Additional Notes described in this Agreement, provided that the terminating party shall not have breached in any material respect its obligations under this Agreement in any manner that shall have been the proximate cause of or resulted in, the failure to complete the Initial Closing or Subsequent Closing, as applicable, by such date; or

(b)by the Investor if there shall have occurred any event that would constitute a Material Adverse Effect for the Company; or

(c) by the mutual written consent of each of the parties;

(d)if the Loan Agreement shall have been terminated in accordance with its terms prior to the Initial Closing; or

(e)by and at the option of the Investor or the Company if any governmental authority shall have issued an order, decree, or ruling or taken any other action restraining, enjoining or otherwise prohibiting in any material respects the transactions contemplated hereby and such order, decree, ruling or other action shall have become final and nonappealable.

Section 10.2 Effect.

(a)Upon termination of this Agreement, the Investor’s rights and obligations to purchase any Convertible Notes or Conversion Shares pursuant to Article II hereof shall terminate.

(b)Termination of this Agreement by a party shall not relieve any other party hereto of any liability for breach of representation, warranty, covenant or agreement by such other parties including liability for monetary damages and/or specific performance.

ARTICLE XI

OTHER PROVISIONS

Section 11.1 Further Assurances. At such time and from time to time on and after the date hereof upon request by the Investor, the Company will execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, certificates and assurances that may be reasonably required for the better conveying, transferring, assigning, delivering, assuring and confirming to the Investor, or to such Investor’s successors and assigns, all of the Conversion Shares or to otherwise carry out the purposes of this Agreement and the agreements, documents and instruments contemplated hereby.

Section 11.2 Complete Agreement. The Schedules and Exhibits to this Agreement shall be construed as an integral part of this Agreement to the same extent as if they had been set forth verbatim herein. This Agreement and the Schedules and Exhibits hereto constitute the entire agreement between the parties hereto with respect to the subject matters hereof and thereof and supersede all prior agreements whether written or oral relating hereto.

Section 11.3 Survival of Representations, Warranties and Agreements. The representations, warranties, covenants and agreements contained herein shall survive the Initial Closing or any Subsequent Closing and remain in full force and effect; provided, however, that the representations and warranties shall expire on the second anniversary of the date of the Initial Closing hereunder. No independent investigation of the Company by the Investor, its counsel, or any of its agents or employees shall in any way limit or restrict the scope of the representations and warranties made by the Company in this Agreement.

Section 11.4 Consent, Waiver, Amendment, Etc. The failure of any party hereto to enforce at any time any of the provisions of this Agreement shall not, absent an express written waiver signed by the party making such waiver specifying the provision being waived, be construed to be a waiver of any such provision, nor in any way to affect the validity of this Agreement or any part thereof or the right of the party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to be a waiver of any other or subsequent breach. Except as otherwise specifically provided herein, in each case in which approval of the Investor is required by the terms of this Agreement, such requirement shall be satisfied by a vote or the written consent of the Investor. With the written consent of the Investor, the obligations of the Company under this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), and with the same approval the Company may amend or eliminate any of the provisions of this Agreement; provided, however, that no such waiver or amendment shall, without the written consent of the holders of the Notes at the time outstanding, amend this Section 11.4. Written notice of any such waiver, amendment, or consent shall be given to the record holders of the Notes who have not previously consented thereto in writing. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this Section 11.4.

Section 11.5 Notices. All notices or other communications to a party required or permitted hereunder shall be in writing and shall be delivered personally or by facsimile (receipt

confirmed electronically) to such party (or, in the case of any entity, to an executive officer of such party) or shall be sent by a reputable express delivery service or by certified mail, postage prepaid with return receipt requested, addressed as follows:

if to the Investor to:

Whitebox VSC, Ltd.

Suite 300

3033 Excelsior Boulevard

Minneapolis, MN 55416

Attn: Dale Willenbring

with a copy to:

Theodore C. Cadwell, Jr., Esq.

Dorsey & Whitney LLP

50 South 6^th Street

Suite 1500

Minneapolis, Minnesota 55402

if to the Company to:

Vitesse Semiconductor Corporation

741 Calle Plano

Camarillo, California 93012

Attn: __________________

with a copy to:

Richard A. Boehmer

O’Melveny & Myers LLP

400 South Hope Street

Los Angeles, California 90071-2899

Any party may change the above-specified recipient and/or mailing address by notice to all other parties given in the manner herein prescribed. All notices shall be deemed given on the day when actually delivered as provided above (if delivered personally or by facsimile) or on the day shown on the return receipt (if delivered by mail or delivery service).

Section 11.6 Public Announcement. Subject to the provisions of Section 6.10, in the event any party proposes to issue any press release or public announcement concerning any provisions of this Agreement or the transactions contemplated hereby, such party shall so advise the other parties hereto, and the parties shall thereafter use their reasonable best efforts to cause a mutually agreeable release or announcement to be issued. No party will publicly disclose or divulge any provisions of this Agreement or the transactions contemplated hereby without the other parties’ written consent, except as may be required by applicable law (including applicable

rules and regulations of the SEC) or stock exchange regulation, and except for communications to employees.

Section 11.7 Expenses. Subject to the following sentence, the Company and the Investor shall each pay their own expenses incident to this Agreement and the preparation for, and consummation of, the transactions provided for herein. Whether or not an Initial Closing or any Subsequent Closing occurs, the Company shall reimburse the Investor for its legal fees and expenses incurred in connection with the drafting, negotiation, due diligence and execution of this Agreement and the Transaction Documents and the consummation of the transactions contemplated herein and therein, less any amounts previously paid by the Company or any of its representatives and received by the Investor. The Company shall also reimburse the Investor for all legal fees and expenses incurred in connection with the drafting, negotiation and execution of any waivers or amendments to this Agreement or any Transaction Document.

Section 11.8 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement and the other Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) may be commenced in the state and federal courts sitting in the State of New York. Each party hereby irrevocably submits to the jurisdiction of the state and federal courts sitting in the State of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

Section 11.9 Titles and Headings; Construction. The titles and headings to the Articles and Sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or other rule requiring construction hereof against the party causing this Agreement to be drafted.

Section 11.10 Benefit. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

Section 11.11 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed as original and all of which together shall constitute one instrument.

Section 11.12 Parties in Interest. All representations, covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether so expressed or not, and, in particular, shall inure to the benefit of and be enforceable by the holder or holders at the time of any of the Purchased Securities.

Section 11.13 Severability. If any provision of this Agreement is held invalid by a court of competent jurisdiction, the remaining provisions shall nonetheless be enforceable according to their terms. Further, if any provision is held to be overbroad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision enforceable according to applicable law and shall be enforced as amended.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the undersigned has executed this Agreement to be effective as of the date first written above.

VITESSE SEMICONDUCTOR CORPORATION

a Delaware corporation

By: /s/ RICHARD C. YONKER

Name: Richard C. Yonker

Title: CFO

IN WITNESS WHEREOF, the undersigned has executed this Agreement to be effective as of the date first written above.

INVESTOR:

WHITEBOX VSC, LTD.

By: /s/ JONATHAN WOOD

Name: Jonathan Wood

Title: Director-COO

Address: Suite 300

3033 Excelsior Boulevard

Minneapolis, MN 55416

EXHIBIT A

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). ACCORDINGLY, THIS SECURITY MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A SENIOR UNSECURED CONVERTIBLE NOTE PURCHASE AGREEMENT, DATED AS OF AUGUST 23, 2007, BY AND BETWEEN THE COMPANY AND THE INVESTORS REFERRED TO THEREIN (THE “PURCHASE AGREEMENT”), AND THE HOLDER OF THE NOTE, BY ACCEPTANCE OF THIS NOTE, AGREES TO BE BOUND BY ALL APPLICABLE PROVISIONS OF THE PURCHASE AGREEMENT. THE SECURITIES REPRESENTED HEREBY ARE ALSO SUBJECT TO A REGISTRATION RIGHTS AGREEMENT, DATED AS OF _____________, 2007, BY AND BETWEEN THE COMPANY AND THE INVESTORS REFERRED TO THEREIN (THE “REGISTRATION RIGHTS AGREEMENT”) AND THE HOLDER OF THIS NOTE, BY ACCEPTANCE OF THIS NOTE, AGREES TO BE BOUND BY ALL APPLICABLE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT.

Original Issue Date: ____________, 20__

Original Conversion Price (subject to adjustment herein): $2.00

$[__________]

SENIOR UNSECURED CONVERTIBLE PROMISSORY NOTE

DUE _________________

FOR VALUE RECEIVED, Vitesse Semiconductor Corporation, a Delaware corporation with its principal place of business at 741 Calle Plano, Camarillo, California 93012 (the “Company”), hereby promises to pay in lawful money of the United States to the order of Whitebox VSC, Ltd. or its registered successors or assigns (the “Holder”), at the office of such Holder at 3033 Excelsior Boulevard, Suite 300, Minneapolis, Minnesota 55416, or at such other place as the Holder may from time to time designate in writing, the principal sum of [__________ MILLION AND NO/100 DOLLARS ($_____)] (the “Principal”) on the twentieth

anniversary of the Original Issue Date (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder, and to pay interest on any outstanding Principal at the rate of LIBOR plus three percent (LIBOR + 3.0%) per annum, subject to periodic adjustment pursuant to Section 2 (the “Interest Rate”), from the Original Issue Date until the same becomes due and payable, whether upon an Interest Payment Date (as defined below), the Maturity Date, acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof); provided, however, that in no event shall the Interest Rate be less than 7.50%. This Note is being issued in connection with the Purchase Agreement, and this Note is subject to the following additional provisions:

Section 1. Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalized terms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement and (b) the following terms shall have the following meanings:

“Additional Notes” has the meaning set forth in the Purchase Agreement.

“Additional Shares” has the meaning set forth in Section 6.

“Alternative Consideration” has the meaning set forth in Section 6(a).

“Affiliate” of a specified Person means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, that Person, as such terms are used in and construed under Rule 405 under the Securities Act. With respect to the Holder, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as the Holder will be deemed to be an Affiliate of the Holder.

“Base Conversion Price” has the meaning set forth in Section 5(b).

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Change in Control Optional Redemption” has the meaning set forth in Section 8(a).

“Change in Control Put” has the meaning set forth in Section 8(a).

“Change of Control Transaction” means the occurrence after the date hereof of any of the following: (i) an acquisition by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of 40% of the voting securities of the Company (other than by means of conversion or exercise of the Notes), or (ii) the Company merges into or consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the Company or the successor entity of such transaction,

or (iii) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders of the Company immediately prior to such transaction own less than 50% of the aggregate voting power of the acquiring entity immediately after the transaction, or (iv) the first day on which a majority of the members of the board of directors of the Company are not Continuing Directors or (v) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth in clauses (i) through (iv) above.

“Closing Sale Price” of a share of Common Stock on any date means the closing per share sale price (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on such date as reported in composite transactions for the principal United States securities exchange on which the Common Stock is traded or, if the Common Stock is not listed on a United States national or regional securities exchange, as reported by the Nasdaq System or by the National Quotation Bureau Incorporated.

“Common Stock” means the common stock, par value $.01 per share, of the Company and stock of any other class of securities into which such securities may hereafter be reclassified or changed into.

“Common Stock Equivalents” means any securities of the Company or its Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Continuing Directors” means, as of the date of determination, any member of the board of directors of the Company who: (a) was a member of such board of directors on the date hereof; or (b) was nominated for election or elected to such board of directors with the approval of a majority of the Continuing Directors who were members of such board of directors at the time of such nomination or election.

“Conversion Date” has the meaning set forth in Section 4(a).

“Conversion Price” has the meaning set forth in Section 4(d)(i).

“Conversion Rate” means 50 shares of Common Stock per $100 of the amount of Principal of this Note being converted, subject to adjustment in certain events described in this Note.

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of this Note in accordance with the terms hereof.

“Conversion Value” has the meaning set forth in Section 4(d)(i).

“Current Market Price” has the meaning set forth in Section 5(f)(i).

“Dilutive Issuance” has the meaning set forth in Section 5(b).

“Dilutive Issuance Notice” has the meaning set forth in Section 5(b).

“Effectiveness Period” has the meaning set forth in the Registration Rights Agreement.

“Effective Date” means the effective date of any registration statement filed with the SEC covering all or such portion of the Conversion Shares as may be specified in such registration statement.

“Event of Default” has the meaning set forth in Section 9.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, consultants or directors of the Company pursuant to the Company’s employee benefit plans (provided that any such issuances of shares of Common Stock (other than pursuant to options) and options shall not exceed, in the aggregate, 15% of the Company’s outstanding shares and/or options, in the aggregate, in any five-year period (based on the number of outstanding shares of Common Stock at the beginning of each such five-year period, with the first period commencing on the date hereof), (b) securities upon the exercise or exchange of or conversion of any securities issued pursuant to the Purchase Agreement and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities and (c) securities issued pursuant to a Permitted Acquisition, provided any such issuance shall only be to a person which is, itself or through its subsidiaries, an operating company in a business synergistic with or complementary to the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

“Fair Market Value” has the meaning set forth in Section 5(f)(ii).

“Fundamental Transaction” has the meaning set forth in Section 6.

“Fundamental Transaction Effective Date” has the meaning set forth in Section 6.

“Indebtedness” when used with respect to any Person, and without duplication means:

a) all indebtedness, obligations and other liabilities (contingent or otherwise) of such Person for borrowed money (including obligations of the Company in respect of overdrafts, foreign exchange contracts, currency exchange agreements and any loans or advances from banks, whether or not evidenced by notes or similar instruments) or evidenced by bonds, debentures, notes or other instruments for the payment of money, or

incurred in connection with the acquisition of any property or assets (whether or not the recourse of the lender is to the whole of the assets of the borrower or to only a portion thereof), other than any account payable or other accrued current liability or obligation to trade creditors incurred in the ordinary course of business in connection with the obtaining of materials, or incurred in connection with the acquisition of any services (whether or not the recourse of the lender is to the whole of the assets of such Person or to only a portion thereof), other than any account payable or other accrued current liability or obligation to trade creditors incurred in the ordinary course of business in connection with the obtaining of such services;

(b) all reimbursement obligations and other liabilities (contingent or otherwise) of such Person with respect to letters of credit, bank guarantees, bankers’ acceptances, surety bonds, performance bonds or other guaranty of contractual performance;

(c) all obligations and liabilities (contingent or otherwise) in respect of (a) capital leases; and (b) any lease or related documents (including a purchase agreement) in connection with the lease of real property which provides that such Person is contractually obligated to purchase or cause a third party to purchase the leased property and thereby guarantee a minimum residual value of the leased property to the landlord and the obligations of such Person under such lease or related document to purchase or to cause a third party to purchase the leased property;

(d) all obligations of such Person (contingent or otherwise) with respect to an interest rate or other swap, cap or collar agreement or other similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement;

(e) all direct or indirect guarantees or similar agreements by such Person in respect of, and obligations or liabilities (contingent or otherwise) of such Person to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of, indebtedness, obligations or liabilities of another Person of the kind described in clauses (a) through (d);

(f) any indebtedness or other obligations described in clauses (a) through (d) secured by any mortgage, pledge, lien or other encumbrance existing on property which is owned or held by such Person, regardless of whether the indebtedness or other obligation secured thereby shall have been assumed by such Person; and

(g) any and all deferrals, renewals, extensions and refundings of, or amendments, modifications or supplements to, any indebtedness, obligation or liability of the kind described in clauses (a) through (f).

“Interest Payment Date” has the meaning set forth in Section 2(a).

“LIBOR” means, for any day, the London Inter-Bank Offer Rate for deposits in U.S. dollars for the six-month period ending on the last business day of the month preceding the determination date, as such rates are published on Moneyline Telerate page 3750 as of 11:00 a.m., London time on such day (or such other page as may replace that page on that service, or such other service as may be nominated by the Holders as the information vendor, for the purpose of displaying rates comparable to LIBOR); provided that if any such day is not a day on which dealings in U.S. dollar deposits are transacted in the London interbank market, the LIBOR for such day shall be the LIBOR for the immediately succeeding day on which dealings in U.S. dollar deposits are transacted in the London interbank market.

“Liens” means liens, mortgages, charges, security interests, claims, voting trusts, pledges, encumbrances, options, assessments, restrictions, or third-party or spousal interests of any nature.

“Loan Agreement” means that certain Loan Agreement, dated as of August 23, 2007, by and between the Company and the Holder.

“Make-Whole Amount” means, in connection with any conversion of this Note or hange in Control Put, the sum of the present value as of the date of such conversion of each interest payment that would have otherwise been paid from such conversion date through and including the fifth anniversary of the Original Issue Date determined by discounting each interest payment at a rate of (i) the then-applicable one-year United States treasury rate if in connection with a Change in Control Put or if such conversion occurs after a Fundamental Transaction, or (ii) 10%.

“Mandatory Default Amount” means the sum of (a) the outstanding principal amount of this Note, plus all accrued and unpaid interest hereon and (b) all other amounts, costs, expenses and liquidated damages due in respect of this Note.

“New York Courts” has the meaning set forth in Section 10(d).

“Note” means this Senior Unsecured Convertible Promissory Note.

“Notes” means this Note and any Additional Notes.

“Note Register” has the meaning set forth in Section 2(c).

“Notice of Conversion” has the meaning set forth in Section 4(a).

“Original Issue Date” means the date of the first issuance of this Note, regardless of any transfers of any Notes and regardless of the number of instruments which may be issued to evidence such Notes.

“Permitted Acquisition” shall mean an acquisition by the Company that meets the following criteria: (i) the acquisition is not a hostile acquisition or takeover and the acquired business is in the same line of business as the Company and (ii) no Event of Default or Default

(as such terms are defined in the Loan Agreement) has occurred and is continuing or would be caused thereby under the Loan Agreement.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Public Acquirer Change of Control” means a Fundamental Transaction as defined in clause (ii) in the definition of Change of Control in which the acquirer has a class of common stock traded on a U.S. national or regional securities exchange or quoted on The Nasdaq National Market or which will so be traded or quoted when issued or exchanged in connection with such Fundamental Change (the “Public Acquirer Common Stock”).

“Purchase Agreement” means that certain Senior Unsecured Convertible Note Purchase Agreement, dated as of August 23, 2007, between the Company and the original Holder, as the same may be amended, modified or supplemented from time to time in accordance with its terms.

“Record Date” has the meaning set forth in Section 5(f)(iii).

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, between the Company and the original Holder, as the same may be amended, modified or supplemented from time to time in accordance with its terms.

“Registration Statement” means a registration statement that registers the resale of such number of Conversion Shares of the Holder as shall be permitted or required to be registered under the terms of the Registration Rights Agreement, names such Holder as a “selling stockholder” therein, and meets all other requirements of the Registration Rights Agreement.

“SEC” means the United States Securities and Exchange Commission.

“SEC Reports” means all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) and 15(d) thereof.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Stock Price” has the meaning set forth in Section 6.

“Subsidiary” has the meaning set forth in the Purchase Agreement.

“Trading Day” means any day on which any Trading Market on which the Common Stock is then listed or quoted is open for trading.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock

Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“Transaction Documents” has the meaning set forth in the Purchase Agreement.

“Trigger Event” has the meaning set forth in Section 5(b).

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by the Holder in a commercially reasonable manner in consultation with the Company and a nationally recognized investment banking firm reasonably acceptable to the Company.

Section 2. Interest.

(a)Payment of Interest. Interest shall accrue on the outstanding principal amount at the Interest Rate, payable semiannually in arrears on _______________ and _______________ of each year (if any such date is not a Business Day, then the applicable payment shall be due on the next succeeding Business Day), beginning on the first such date after the Original Issue Date (each such date, an “Interest Payment Date”); provided, however, that in no event shall the Interest Rate be less than 7.50% per annum. Interest shall be payable on each Interest Payment Date and on the Maturity Date.

(b)Accrued Interest. Except as otherwise provided in this Note, the Company shall pay to the Holder of this Note all accrued interest on the Maturity Date. Interest shall accrue on any Principal payment due under this Note until such time as payment therefor is actually delivered to the Holder of this Note.

(c)Interest Calculations. Interest shall be calculated on the basis of a 365-day year, and shall accrue daily commencing on the Original Issue Date until payment in full of the Principal, together with all accrued and unpaid interest, liquidated damages and other amounts which may become due hereunder, has been made. Interest shall cease to accrue with respect to any principal amount converted, provided that the Company actually delivers the Conversion Shares within the time period required by Section 4(d)(ii) herein. Interest hereunder will be paid to the Person in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note (the “Note Register”). Except as otherwise provided herein, if at any time the Company pays interest in cash to the Holders of Notes, then such payment of cash shall be distributed ratably among the Holders of the then-outstanding Notes

based on their (or their predecessor’s) initial purchases of Notes pursuant to the Purchase Agreement.

(d)Prepayment. The Company may not prepay any portion of the Principal without the prior written consent of the Holder until the fifth anniversary of the Original Issue Date. After the fifth anniversary of the Original Issue Date, the Company may call the Notes at par, together with any accrued and unpaid interest thereon.

Section 3. Registration of Transfers and Exchanges.

(a)Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration, transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration, transfer or exchange.

(b)Investment Representations. This Note has been issued subject to certain investment representations of the original Holder set forth in the Purchase Agreement and may be transferred or exchanged only in compliance with the Purchase Agreement and applicable federal and state securities laws and regulations.

(c)Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, the Company and any agent of the Company may treat the Person in whose name this Note is duly registered on the Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

Section 4. Conversion.

(a)Voluntary Conversion. At any time and from time to time after the Original Issue Date until this Note is no longer outstanding, this Note shall be convertible, in whole or in part, into shares of Common Stock at the option of the Holder (subject to the conversion limitations set forth in Section 4(c) hereof). The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (a “Notice of Conversion”), specifying therein the principal amount of this Note to be converted and the date on which such conversion shall be effected (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. To effect conversions hereunder, the Holder shall physically surrender this Note to the Company, and if this Note is converted in part, the Company shall issue another note to the Holder with respect to the amount of Principal that is not being converted. The Holder and the Company shall maintain records showing the principal amount(s) converted and the date of such conversion(s).

(b)Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $2.00, subject to adjustment as described herein (the “Conversion Price”).

(c) Conversion Limitations.

(i)Notwithstanding anything herein to the contrary, the Company may not issue, upon conversion o this Note, a number of shares of Common Stock which, when aggregated with any shares of Common Stock issued on or after the Original Issue Date and prior to such Conversion Date in connection with any Notes issued pursuant to the Purchase Agreement, would exceed 19.99% of the Company’s issued and outstanding shares of Common Stock as of the closing date of the transactions contemplated by the Loan Agreement (subject to adjustment for forward and reverse stock splits, recapitalizations and the like) (such number of shares, the “Issuable Maximum”).

(ii)Holder’s Restriction on Conversion. The Company shall not effect any conversion of this Note, and the Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any other Person or entity acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of this Note with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted principal amount of this Note beneficially owned by such Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other Notes) beneficially owned by such Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 4(c)(ii), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(c)(ii) applies, the determination of whether this Note is convertible (in relation to other securities owned by such Holder together with any Affiliates) and of which principal amount of this Note is convertible shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether this Note may be converted (in relation to other securities owned by such Holder together with any Affiliates) and which principal amount of this Note is convertible, in each case subject to such aggregate percentage limitations. To ensure compliance with this restriction, each Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any “group” status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 4(c)(ii), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (A) the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be; (B) a more recent public announcement by the Company; or (C) a more recent notice by the Company or the Company’s transfer agent setting forth the

number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note held by the Holder. The limitations contained in this paragraph shall apply to a successor holder of this Note.

(d) Mechanics of Conversion.

(i)Conversion Shares Issuable Upon Conversion of Principal Amount. Subject to and in compliance with the provisions of this Note and the Purchase Agreement, the Holder has the right, at its option, to convert the Principal or any portion thereof, into, subject to Section 4(a), an amount of shares of Common Stock (the “Conversion Value”) equal to (a) the amount of Principal plus any accrued interest thereon being converted; multiplied by (b) the Conversion Rate. The initial Conversion Rate is 50 shares of Common Stock per $100 of the amount of Principal and accrued interest thereon of this Note being converted (i.e., one (1) share of Common Stock per $2.00 Principal and accrued interest thereon), and is subject to adjustment in certain events described in this Note. Upon conversion, the Company will issue shares of Common Stock based on the Conversion Value.

(ii)Delivery of Certificate Upon Conversion. Not later than three Trading Days after each Conversion Date, the Company shall deliver, or cause to be delivered, to the Holder a certificate or certificates representing the Conversion Shares which prior to the Effective Date with respect to such Conversion Shares, shall contain such restrictive legends as may be required pursuant to the Securities Act. Such certificate or certificates shall represent the number of shares of Common Stock being acquired upon the conversion of this Note. On or after the Effective Date with respect to such Conversion Shares, the Company shall use its best efforts to deliver any certificate or certificates required to be delivered by the Company under this Section 4 electronically through the Depository Trust Company or another established clearing corporation performing similar functions.

(iii)Failure to Deliver Certificates. If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the applicable Holder by the seventh Trading Day after the Conversion Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate or certificates, to rescind such conversion, in which event the Company shall promptly return to such Holder any original note delivered to the Company and such Holder shall promptly return the Common Stock certificates representing the principal amount of this Note tendered for conversion to the Company.

(iv)Obligation Absolute; Liquidated Damages. The Company’s obligations to issue and deliver the Conversion Shares upon conversion of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by any Holder to enforce the same, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Company of any such action the Company may have against the Holder. In the event the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof, the Company may not refuse conversion based on any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all or part of this Note shall have been sought and obtained. In the absence of such injunction, the Company shall issue Conversion Shares upon a properly noticed conversion. If the Company fails for any reason to deliver to the Holder such certificate or certificates pursuant to Section 4(d)(ii) by the seventh Trading Day after the Conversion Date and the Holder has not elected to rescind such conversion option as specified in Section 4(d)(iii) above, the Company shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such seventh Trading Day until such certificates are delivered. Nothing herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 9 hereof for the Company’s failure to deliver Conversion Shares within the period specified herein, and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

(v)Payment of Make-Whole Payments upon Conversion. In the event of a conversion of this Note on or before the fifth anniversary of the Original Issue Date, the Company shall pay the Holder, in addition to the Conversion Shares, an amount equal to the Make-Whole Amount within twenty (20) Business Days of the receipt of a Notice of Conversion from the Holder. The Make-Whole Amount will be paid in cash or Common Stock, at the option of the Company, to the Person in whose name this Note is registered on the Note Register. If the Company chooses to pay the Make-Whole Amount in shares of Common Stock, then the number of shares will be calculated by dividing the Make-Whole Amount by 95% of the average VWAP for the ten (10) Trading Days prior to the date of the Notice of Conversion.

(vi)Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other Holders of the Notes), not less than such

aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 5) upon the conversion of the outstanding principal amount of this Note. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if the Registration Statement is then effective under the Securities Act, shall be registered for public sale in accordance with such Registration Statement.

(vii)Fractional Shares. Upon a conversion hereunder, the Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based on the VWAP at such time. If the Company elects not, or is unable, to make such a cash payment, the Holder shall be entitled to receive, in lieu of the final fraction of a share, one (1) whole share of Common Stock.

(viii)Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge to the Holder hereof for any documentary, stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of this Note so converted, and the Company shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

Section 5. Certain Adjustments. The Conversion Rate shall be adjusted from time to time by the Company as follows, except that the Company shall not make any adjustment if holders of Notes may participate, as a result of holding the Notes, in the transaction described without having to convert their Notes.

(a)Stock Dividends and Stock Splits. If the Company, at any time while this Note is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon conversion of, or payment of interest on, the Notes); (B) subdivides outstanding shares of Common Stock into a larger number of shares; (C) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or (D) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Company, then the Conversion Rate shall be adjusted based on the following formula:

where,
CR0	=	the Conversion Rate in effect immediately prior to such event
CR'	=	the Conversion Rate in effect immediately after such event
OS0	=	the number of shares of Common Stock outstanding immediately prior to such event
OS'	=	the number of shares of Common Stock outstanding immediately after such event

Such adjustment shall become effective immediately after the opening of business on the day following the Record Date for such dividend or distribution, or the date fixed for determination for such share split or share combination. If any dividend or distribution of the type described in this Section 5(a) is declared but not so paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate which would then be in effect if such dividend or distribution had not been declared.

(b)Subsequent Equity Sales. If, at any time while this Note is outstanding, the Company or any Subsidiary, as applicable, sells or grants any option, warrant or other right to purchase or sells or grants any right to reprice, or otherwise disposes of or issues, any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Rate shall be adjusted based on the the following formula:

where,
CR0	=	the Conversion Rate in effect immediately prior to such event
CR'	=	the Conversion Rate in effect immediately after such event
OS0	=	the number of shares of Common Stock outstanding on the close of business on the next Business Day following such event
OS'	=	the number of shares of Common Stock outstanding immediately after such event
X	=	the total number of shares of Common Stock issuable pursuant to such rights
Y	=	the number of shares of Common Stock equal to the aggregate offering price that the total number of shares so offered would purchase at such Closing Sale Price of Common Stock on the date of such issuance determined by multiplying such total number of shares so offered by the exercise price of such rights or warrants and dividing the product so obtained by such Closing Sale Price

Such adjustment shall become effective immediately after the opening of business on the day following the date of announcement of such issuance.

To the extent that shares of Common Stock (or securities convertible into or exchangeable or exercisable for shares of Common Stock) are not delivered pursuant to such rights or warrants, upon the expiration or termination of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of shares of Common Stock (or securities convertible into or exchangeable or exercisable for shares of Common Stock) actually delivered. In the event that no shares of Common Stock (nor securities convertible into or exchangeable or exercisable for shares of Common Stock) are delivered pursuant to such rights or warrants, upon the expiration or termination of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect had such rights or warrants not been issued. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Closing Sale Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received for such rights or warrants and the value of such consideration, if other than cash, to be determined in good faith by the Board of Directors of the Company.

For the purposes of this Section 5(b), rights or warrants distributed by the Company to all holders of its Common Stock entitling them to subscribe for or purchase shares of the Company’s capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events (“Trigger Event”): (1) are deemed to

be transferred with such shares of Common Stock; (2) are not exercisable; and (3) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 5(b) (and no adjustment to the Conversion Rate under this Section 5(b) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 5(b). If any such right or warrant, including any such existing rights or warrants distributed prior to the date of this Note, are subject to events, upon the occurrence of which such rights or warrants become exercisable to purchase different securities, evidences of Indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Record Date with respect to new rights or warrants with such rights (and a termination or expiration of the existing rights or warrants without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 5(b) was made, (1) in the case of any such rights or warrants which shall all have been redeemed or repurchased without exercise by any Holder thereof, the Conversion Rate shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all applicable holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants which shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights and warrants had not been issued.

Adjustments under this Section 5(b) shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 5(b) in respect of an Exempt Issuance. The Company shall notify the Holder in writing, no later than five (5) Business Days following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 5(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, Base Conversion Price and other pricing terms (such notice, the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 5(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance in the manner calculated above, regardless of whether the Holder accurately refers to the Base Conversion Price in the Notice of Conversion.

(c)Subsequent Rights Offerings. If the Company, at any time while this Note is outstanding, shall issue rights, options or warrants, including securities but excluding those items described in Sections 5(a), (b) and (d) to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share that is lower than the VWAP on the record date referenced below, then the Conversion Rate shall be adjusted based on the following formula:

where,
CR0	=	the Conversion Rate in effect immediately prior to such distribution
CR'	=	the Conversion Rate in effect immediately after such distribution
SP0	=	the Current Market Price of Common Stock on the Record Date for such distribution
FMV	=	the fair market value (as determined by the Board of Directors of the Company) of the shares of capital stock of the Company, evidences of Indebtedness, assets or property distributed with respect to each outstanding share of Common Stock on the Record Date for such distribution

Such adjustment shall become effective immediately prior to the opening of business on the day following the Record Date for such distribution. If the Board of Directors of the Company determines the fair market value of any distribution for purposes of this Section 5(c) by reference to the actual or when issued trading market for any securities, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price of the Common Stock.

To the extent that the Company has a rights plan in effect upon conversion of the Notes into Common Stock, a Holder shall receive, in addition to the Common Stock, the rights under the rights plan unless the rights have separated from the Common Stock at the time of conversion, in which case the Conversion Rate will be adjusted as if the Company distributed to all holders of Common Stock, shares of capital stock of the Company, evidences of Indebtedness or assets, subject to readjustment in the event of the expiration, termination or redemption of such rights.

(d)Pro Rata Distributions. If the Company, at any time while this Note is outstanding, distributes to all holders of Common Stock (and not to the Holder) evidences of its Indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security (other than the Common Stock, which shall be subject to Section 5(b)), then in each such case the Conversion Rate shall be adjusted based on the following formula:

where,
CR0	=	the Conversion Rate in effect on the Record Date for such distribution

CR'	=	the Conversion Rate in effect immediately after the Record Date for such distribution
SP0	=	the Current Market Price of a share of Common Stock on the Record Date for such distribution
C	=	the amount in cash per share the Company distributes to holders of Common Stock.

Such adjustment shall become effective immediately after 5:00 p.m., New York City time, on the Record Date for such dividend or distribution; provided that if such dividend or distribution is not paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(e)Tender or Exchange Offers. If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for Common Stock to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the Current Market Price per share of Common Stock on the Trading Day immediately preceding the date such tender offer or exchange offer is announced, the Conversion Rate shall on the following formula:

where,
CR0	=	the Conversion Rate in effect on the date such tender or exchange offer expires
CR'	=	the Conversion Rate in effect on the day next succeeding the date such tender or exchange offer expires
AC	=	the fair market value (as determined by the Board of Directors) of the aggregate consideration paid or payable for shares purchased in such tender or exchange offer
OS0	=	the number of shares of Common Stock outstanding on the Trading Day immediately preceding the date such tender or exchange offer is announced
OS'	=	the number of shares of Common Stock outstanding less any shares purchased in the tender or exchange offer at the time such tender or exchange offer expires

SP' = the Current Market Price of Common Stock on the Trading Day immediately preceding the date such tender or exchange offer is announced.

If the Company is obligated to repurchase shares pursuant to any such tender or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such tender or exchange had not been made.

(f) For purposes of this Section 5, the following terms have the meaning indicated:

(i)“Current Market Price” on any date means the average of the Closing Sale Prices per share of Common Stock for the ten consecutive Trading Days immediately preceding the day before the Record Date with respect to any issuance or other event requiring such computation.

(ii)“fair market value” means the amount which a willing buyer would pay a willing seller in an arm’s length transaction.

(iii)“Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or, with respect to any transaction in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise).

(g) [Reserved.]

(h)To the extent permitted by applicable law, the Company from time to time may increase the Conversion Rate by any amount for any period of time if the period is at least 20 days, the increase is irrevocable during the period and the Board of Directors has made a determination that such increase would be in the best interests of the Company, which determination shall be conclusive. Whenever the Conversion Rate is increased pursuant to the preceding sentence, the Company shall mail to the holders of record of the Notes a notice of the increase at least 15 days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.

(i) [Reserved.]

(j)No adjustment in the Conversion Rate shall be required unless such adjustment would require an increase or decrease of at least 1% in such rate; provided, however, that any adjustments which by reason of this Section 5(j) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. Interest will not accrue on the cash.

(k)In any case in which this Section 5 provides that an adjustment shall become effective immediately after a Record Date for an event, the Company may defer until the occurrence of such event (i) issuing to the Holder of any Notes converted after such Record Date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such Holder any amount in cash in lieu of any fraction of a share of Common Stock.

(l)For purposes of this Section 5, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

(m)No adjustment to the Conversion Rate shall be made pursuant to this Section 5 if the Holders of the Notes may participate in the transaction that would otherwise give rise to an adjustment pursuant to this Section 5.

(n)Calculations. All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 5, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock issued and outstanding.

(o) Notice to the Holder.

(i)Adjustment to Conversion Rate. Whenever the Conversion Rate is adjusted pursuant to any provision of this Section 5, the Company shall promptly mail to each Holder a notice setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(ii)Notice to Allow Conversion by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address as it shall appear upon the Note Register, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not

to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to convert this Note during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice.

Section 6. Fundamental Transactions.

(a)If, at any time while this Note is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one transaction or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one (1) share of Common Stock (the “Alternative Consideration”); provided, however, the Conversion Rate for the Notes shall be increased by an additional number of shares of Common Stock (the “Additional Shares”) as described below. Any conversion occurring at a time when the Notes would be convertible in light of the expected or actual occurrence of a Fundamental Transaction will be deemed to have occurred in connection with such Fundamental Transaction notwithstanding the fact that a Note may then be convertible because another condition to conversion has been satisfied. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new Note consistent with the foregoing provisions and evidencing the Holder’s right to convert such Note into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 6(a) and ensuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

(b)The number of Additional Shares will be equal to the amount set forth in the table attached as Schedule A hereto, based on the date on which the Fundamental Transaction occurs or becomes effective (the “Fundamental Transaction Effective Date”) and the price (the “Stock Price”) paid per share of Common Stock in the Fundamental Transaction. If the Fundamental Transaction is a transaction described in clause (ii) of the definition of Change in Control Transaction, and holders of Common Stock receive only cash in the Fundamental Transaction, the Stock Price shall be the cash amount per share. Otherwise, the Stock Price shall be the average of the Closing Sale Prices of Common Stock over the five Trading-Day period ending on the Trading Day preceding the Fundamental Transaction Effective Date.

(c)The Stock Prices set forth in Schedule A attached hereto shall be adjusted as of any date on which the Conversion Rate of the Notes is otherwise adjusted. The adjusted Stock Prices shall equal the Stock Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to such adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Additional Shares set forth in such table will be adjusted in the same manner as the Conversion Rate as set forth in Section 5.

(d)The table in Schedule A hereto sets forth the hypothetical stock price and the number of Additional Shares to be received per $100.00 of the amount of Principal of the Notes. The exact Stock Prices and Fundamental Transaction Effective Dates may not be set forth in the table in Schedule A, in which case, if the Stock Price is between two Stock Price amounts in the table or the Fundamental Transaction Effective Date is between two Effective Dates in the table, the number of Additional Shares will be determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Stock Price amounts and the two dates, as applicable, based on a 365-day year.

Section 7. Conversion After a Public Acquirer Change of Control.

(a)In the event of a Public Acquirer Change of Control, the Company may, in lieu of increasing the Conversion Rate by Additional Shares pursuant to Section 6, elect to adjust the Conversion Rate and the related conversion obligation such that from and after the Effective Date of such Public Acquirer Change of Control, Holders shall be entitled to convert their Notes into a number of shares of Public Acquirer Common Stock, still subject to the arrangements for payment upon conversion in Section 4. The adjusted Conversion Rate shall be the Conversion Rate in effect immediately before the Public Acquirer Change of Control multiplied by a fraction:

(i)the numerator of which will be the average of the Closing Sale Prices of the Common Stock for the five consecutive Trading Days prior to but excluding the Effective Date of such Public Acquirer Change of Control, and

(ii)the denominator of which will be the average of the Closing Sale Prices of the Public Acquirer Common Stock for the five consecutive Trading Days commencing on the Trading Day next succeeding the Effective Date of such Public Acquirer Change of Control.

(b)In order to make the election pursuant to this Section 7, the Company and the issuer of the Public Acquirer Common Stock shall agree that each Note shall be exchangeable into Public Acquirer Common Stock and execute an amendment to the Registration Rights Agreement (to the extent any Registrable Securities (as defined therein) remain outstanding) to make the provisions thereof apply to the Public Acquirer Common Stock. Such agreement shall provide for provisions and adjustments which shall be as nearly equivalent as may be practicable to the provisions and adjustments provided for in Sections 4, 5, 6 and 7.

(c)Within 10 Trading Days prior to but not including the expected effective date of a Fundamental Transaction that is also a Public Acquirer Change of Control, the Company will provide to all Holders a notification stating whether the Company will:

(i)elect to adjust the Conversion Rate and related conversion obligation as set forth in this Section 7, in which case the Holders will not have the right to receive Additional Shares upon conversion, as described in Section 6; or

(ii)not elect to adjust the Conversion Rate and related conversion obligation, in which case the Holders will have the right to convert Notes and, if applicable, receive Additional Shares upon conversion as described above in Section 6.

Section 8. Redemption.

(a)Redemption Upon a Change of Control. At any time after the date hereof, in the event of a Change of Control Transaction, in addition to any other rights hereunder, the Holder shall have the right (the “Change in Control Optional Redemption”) to put the then-outstanding principal amount to the Company (the “Change in Control Put”). The Holder shall notify the Company of its exercise of the Change in Control Put not less than 10 Business Days prior to the date on which such Change in Control Transaction is scheduled to occur. Upon the exercise of the Change in Control Put, the Company shall be required to pay to the Holder an amount in cash equal to (i) 101% of the unpaid Principal, plus (ii) the Make-Whole Amount if the Change in Control Put occurs on or before the fifth anniversary of the Original Issue Date, plus (iii) all accrued interest and other amounts due hereunder to be immediately due and payable.

(b)Put Option. On the fifth, tenth and fifteenth anniversary of the Issuance Date (the “Put Option Dates”), the Holder shall have the option to put the Note back to the Company (the “Put Option”). The Holder shall notify the Company of its exercise of the Put Option not less than 20 Business Days prior to any such Put Option Date; provided, however, that the Holder shall have the right to rescind its exercise of the Put Option during such 20 Business Day period. Upon the exercise of the Put Option, the Company shall be required to pay to the Holder an amount in cash equal to (i) all unpaid Principal, plus (ii) all accrued interest and other amounts due hereunder on the Put Option Date. Notice of the Put Option shall be deemed given, without further action on behalf of the Holder, if (A) the VWAP for the Common Stock on the 20th Business Day prior to the first Put Option Date, multiplied by (B) the Conversion Rate on such Business Day, is less than $70 per $100 principal amount of the Notes.

(c)Optional Redemption. On and after the fifth anniversary of the Issuance Date, the Company may, at its option, redeem the Notes in whole or in part, upon not less than 10

Business Days’ nor more than 30 Business Days’ prior written notice to the Holders of the Notes to be redeemed, at an amount in cash equal to the Principal amount of the Notes to be redeemed plus accrued and unpaid interest on such Principal amount to but excluding the date of redemption.

(d)Redemption Procedure. Any amounts required to be paid pursuant to Sections 8(a), (b) or (c) above shall be payable by the Company in cash on the date of such redemption or put option set forth in the foregoing sections. If any portion of the payment(s) required to be paid pursuant to Sections 8(a), (b) or (c) above shall not be paid by the Company by the applicable due date, interest shall accrue thereon at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law until such amount is paid in full. Notwithstanding anything herein contained to the contrary, if any portion of such payments remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter, to invalidate such Change in Control Optional Redemption or Put Option, ab initio, and, with respect to the Company’s failure to honor the Change in Control Optional Redemption or Put Option, the Company shall have no further right to exercise such Change in Control Optional Redemption or Put Option. Notwithstanding anything to the contrary in this Section 8, any payments shall be applied ratably among the Holders of Notes.

Section 9. Events of Default.

(a)“Event of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)any default in the payment of (A) the principal amount of any Note or (B) interest, liquidated damages and other amounts owing to a Holder on any Note, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise) which default, in the case of a principal payment or other default under (A) above or an interest payment or other default under clause (B) above, is not cured within 3 Trading Days;

(ii)the Company shall fail to observe or perform any other covenant or agreement contained in the Notes (other than a breach by the Company of its obligations to deliver shares of Common Stock to the Holder upon conversion, which breach is addressed in Section 9(a)(vii)) which failure is not cured, if possible to cure, within the earlier to occur of (A) 30 calendar days after notice of such failure sent by the Holder or by any other holder of Notes and (B) 30 calendar days after the date on which the Company has become or should have become aware of such failure and the Holder or any other holders of the Notes sends notice to the Company of such failure;

(iii)an event of default by the Company shall occur under (A) any of the Transaction Documents, which default is not cured, if possible to cure, within the lesser of (a) thirty days from such default or event of default or (b) such lesser period as may be provided in the applicable agreement, document or instrument;

(iv)any representation or warranty made in this Note, any other Transaction Documents, any written statement pursuant hereto or thereto or any other report, financial statement or certificate made or delivered to the Holder or any other holder of Notes shall be untrue or incorrect in any material respect as of the date when made or deemed made;

(v)(A) the Company or any Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency, liquidation or similar law of any jurisdiction relating to the Company or any Subsidiary thereof; (B) there is commenced against the Company or any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement; (C) the Company or any Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (D) the Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment; (E) the Company or any Subsidiary thereof makes a general assignment for the benefit of creditors; (F) the Company or any Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (G) the Company or any Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing;

(vi)the maturity of any Indebtedness greater than $1,000,000 of the Company or any Subsidiary (other than the Notes) shall be accelerated, or the Company or a Subsidiary shall fail to pay any Indebtedness (other than the Notes) greater than $1,000,000 when due (after the lapse of any applicable grace period), or in the case of any Indebtedness greater than $1,000,000 payable on demand, when demanded (after the lapse of any applicable grace period);

(vii)the Company shall fail for any reason to deliver certificates to a holder of any Notes prior to the seventh Trading Day after a Conversion Date or the Company shall provide at any time notice to such holder, including by way of public announcement, of the Company’s intention to not honor requests for conversions of any Notes in accordance with the terms hereof;

(viii)any monetary judgment, writ, or similar final process shall be entered or filed against the Company, any Subsidiary or any of their respective property or other assets for more than $1,000,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 60 calendar days.

(b)Remedies Upon Event of Default. If any Event of Default shall have occurred, the Mandatory Default Amount shall become immediately due and payable in cash. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note to or as directed by the Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace

period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder of this Note until such time, if any, as the Holder receives full payment pursuant to this Section 9(b). No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

Section 10. Miscellaneous.

(a)Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, facsimile number __________________, Attention: Chief Financial Officer or such other facsimile number or address as the Company may specify for such purpose by notice to the Holder delivered in accordance with this Section 10. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile number or address of such Holder appearing on the books of the Company, or if no such facsimile number or address appears, at the principal place of business of the Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 10 prior to 5:30 p.m. (California time), (ii) the date immediately following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 10 between 5:30 p.m. (California time) and 11:59 p.m. (California time) on any date, (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

(b)Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Principal of, liquidated damages and accrued interest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is a direct debt obligation of the Company. This Note ranks paripassu with all other Notes now or hereafter issued under the terms set forth herein.

(c)Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.

(d)Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation,

enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in New York, New York (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

(e)Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver by the Company or the Holder must be in writing.

(f)Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such power as though no such law has been enacted.

(g)Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(h)Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.

(i)Assumption. Except as otherwise provided in Section 6, any successor to the Company or any surviving entity in a Fundamental Transaction shall (i) assume, prior to such Fundamental Transaction, all of the obligations of the Company under this Note and the other Transaction Documents pursuant to written agreements in form and substance satisfactory to the Holder (such approval not to be unreasonably withheld or delayed) and (ii) issue to the Holder a new Note of such successor entity evidenced by a written instrument substantially similar in form and substance to this Note, including, without limitation, having a principal amount and interest rate equal to the Principal and the Interest Rate of this Note and having similar ranking to this Note, which shall be satisfactory to the Holder (any such approval not to be unreasonably withheld or delayed). The provisions of this Section 10(i) shall apply similarly and equally to successive Fundamental Transactions and shall be applied without regard to any limitations of this Note.

* * * * * * * * * * *

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.

VITESSE SEMICONDUCTOR CORPORATION

By:       __________________________________

Name: ____________________________

Title: _____________________________

ANNEX A

NOTICE OF CONVERSION

The undersigned hereby elects to convert principal under the Senior Unsecured Convertible Note due ____________ of Vitesse Semiconductor Corporation, a Delaware corporation (the “Company”), into shares of common stock, par value $.01 per share (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of the Note, as determined in accordance with Section 13(d) of the Exchange Act.

The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.

Conversion calculations:	Date to Effect Conversion:
	Number of shares of Common Stock to be issued:
	Signature:
	Name:
	Address:

Schedule A

CONVERSION SCHEDULE

The Senior Unsecured Convertible Notes due on ____________ in the aggregate principal amount of [$_____] are issued by Vitesse Semiconductor Corporation. This Conversion Schedule reflects conversions that will be made in the event of a Fundamental Transaction as described in Section 6 of the above referenced Note.

Additional Shares to Be Issued in the

Event of a Fundamental Transaction per $100 Principal Amount of Notes

Stock Price		Amount of Time Remaining Between the Fundamental Transaction Effective Date and the Fifth Anniversary of the Original Issue Date
		5 YEARS	4 YEARS	3 YEARS	2 YEARS	1 YEAR
	$1.60 or less	0.0	0.0	0.0	0.0	0.0
	$1.80	5.5	5.1	4.5	3.6	2.3
	$2.00	9.9	9.4	8.7	7.6	5.9
	$2.20	9.0	8.5	7.7	6.4	4.6
	$2.40	8.3	7.7	6.9	5.6	3.7
	$2.60	7.7	7.1	6.2	4.9	3.1
	$2.80	7.2	6.6	5.7	4.4	2.7
	$3.00	6.8	6.2	5.3	4.0	2.4
	$4.00	4.5	4.0	3.4	2.5	1.5
	$5.00	3.2	2.9	2.4	1.8	1.1
	$6.00	2.5	1.8	1.4	0.9	0.7
	Over $6.00	0.0	0.0	0.0	0.0	0.0

EXHIBIT B

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of ______________, 2007, by and between Vitesse Semiconductor Corporation, a Delaware corporation (the “Company”) and Whitebox VSC, Ltd., a British Virgin Islands limited partnership (including its successors and assigns, the “Holder”).

This Agreement is made pursuant to that certain Senior Unsecured Note Purchase Agreement, dated as of the date hereof, between the Company and the Holder (the “Purchase Agreement”).

The Company and the Holder hereby agree as follows:

1. Definitions.

Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms have the following meanings:

“Advice” has the meaning set forth in Section 6(d).

“Common Stock” means the Company’s common stock, par value $0.01 per share.

“Conversion Shares” means the shares of Common Stock issued or issuable upon conversion of any of the Convertible Notes.

“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 90th calendar day following the Filing Date (or, in the event of a “review” by the SEC, the 120th calendar day following the Filing Date) and with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 90th calendar day following the date on which an additional Registration Statement is required to be filed hereunder (or, in the event of a “review” by the SEC, the 120th calendar day following the date on which an additional Registration Statement is required to be filed hereunder); provided, however, that in the event the Company is notified by the SEC that one of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates required above.

“Effectiveness Period” has the meaning set forth in Section 2(a).

“Effective Date” means the date that the initial Registration Statement filed by the Company pursuant to this Agreement is first declared effective by the SEC.

“Event” has the meaning set forth in Section 2(b).

“Event Date” has the meaning set forth in Section 2(b).

“Exchange Act” means the Securities Exchange Act of 1934, as amended to date.

“Filing Date” means, with respect to the Initial Registration Statement required hereunder, the 90th calendar day following the SEC Eligibility Date, and, with respect to any additional Registration Statements which may be required pursuant to Section 3(c), the 90th calendar day following the date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.

“Holder” means Whitebox VSC, Ltd., a British Virgin Islands limited partnership, and its successors and assigns.

“Indemnified Party” has the meaning set forth in Section 5(c).

“Indemnifying Party” has the meaning set forth in Section 5(c).

“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

“Losses” has the meaning set forth in Section 5(a).

“Note” has the meaning set forth in the Purchase Agreement.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Plan of Distribution” has the meaning set forth in Section 2(a).

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus.

“Registrable Securities” means (i) all of the shares of Common Stock issuable upon conversion in full of the Notes, (ii) any additional shares of Common Stock issuable

in connection with any anti-dilution provisions in the Notes (in each case, without giving effect to any limitations on conversion set forth in the Note) and (iii) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

“Registration Statement” means the registration statements required to be filed hereunder and any additional registration statements contemplated by Section 3(c), including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.

“Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.

“Rule 424” means Rule 424 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.

“Rule 461” means Rule 461 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.

“SEC” means the United States Securities and Exchange Commission.

“SEC Eligibility Date” means the first date following the date of this Agreement that the Company is eligible to file a Registration Statement under the Securities Act with the SEC as evidenced by the filing of the requisite outstanding audited financial statements by the Company with the SEC or any other indication from the SEC that the Company is then eligible to file registration statements under the Securities Act.

“SEC Guidance” means (i) any publicly available written or oral guidance, comments, requirements or requests of the SEC staff and (ii) the Securities Act.

“Securities Act” means the United States Securities Act of 1933, as amended, and all regulations promulgated thereunder.

“Selling Shareholder Questionnaire” has the meaning set forth in Section 3(a).

“Trading Day” means a day on which the Trading Market on which the Company’s Common Stock is then listed or quoted for trading is open for trading.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“Transaction Documents” means this Agreement, the Purchase Agreement, the Notes, the Term Note, the Security Agreement, and such other documents, instruments and agreements executed in connection with the consummation of the transactions contemplated hereby.

“Subsidiary” means any subsidiary of the Company as set forth on Schedule 4.1 and shall, where applicable, include any subsidiary of the Company formed or acquired after the date hereof.

2. Shelf Registration.

(a)On or prior to each Filing Date, the Company shall prepare and file with the SEC a Registration Statement covering the resale of all or such portion of the Registrable Securities as permitted by SEC Guidance (provided that the Company shall use diligent efforts to advocate with the SEC for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, the Manual of Publicly Available Telephone Interpretations D.29) that are not then registered on an effective registration statement for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith) and shall contain (unless otherwise directed by the Holder, or, if there are multiple Holders, by a majority in interest of such Holders) substantially the “Plan of Distribution” attached hereto as Annex A; provided, that such Plan of Distribution section of the Registration Statement shall be amended to the extent required to respond to comments received by the Company from the SEC; and provided, further, that any such amendments shall be reasonably acceptable to the Holder(s). Subject to the terms of this Agreement, the Company shall use its commercially reasonable efforts to cause a Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event prior to the applicable Effectiveness Date, and shall use its commercially reasonable efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration Statement have been sold, or may be sold without volume restrictions pursuant to Rule 144(k), as determined by the counsel to the Company and evidenced by a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and the affected Holder(s) (the “Effectiveness Period”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. New York City time on a Trading Day. The Company shall without delay notify the Holder via facsimile of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the SEC, which shall be the date requested for effectiveness of a Registration Statement. The

Company shall, by 12:00 p.m. (noon) New York City time on the Trading Day after the Effective Date, file a final Prospectus with the SEC as required by Rule 424. Failure to file a final Prospectus as foresaid shall be deemed an Event under Section 2(b). Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration Statement (and notwithstanding that the Company used diligent efforts to advocate with the SEC for the registration of all or a greater number of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced by Registrable Securities represented by the Conversion Shares (applied, in the case that some Conversion Shares may be registered, to the Holder(s) on a pro rata basis based on the total number of unregistered Conversion Shares held by such Holder(s)).

(b)If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration Statement without affording the Holder the opportunity to review and comment on the same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the SEC a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated under the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be “reviewed,” or not subject to further review, or (iii) prior to the Effectiveness Date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the SEC in respect of such Registration Statement within 15 calendar days after the receipt of comments by or notice from the SEC that such amendment is required in order for a Registration Statement to be declared effective, or (iv) after the Effectiveness Date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required to be effective, or the Holder is otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than 30 consecutive calendar days or more than an aggregate of 60 calendar days during any 12-month period (which need not be consecutive calendar days) (any such failure or breach described in clauses (i) through (iv) being referred to as an “Event,” and for purposes of clause (i) or (iv) the date on which such Event occurs, or for purposes of clause (ii) the date on which such five Trading Day period is exceeded, or for purposes of clause (iii) the date which such 15 calendar day period is exceeded, or for purposes of clause (iv) the date on which such 30 or 60 calendar day period, as applicable, is exceeded being referred to as an “Event Date”), then, in addition to any other rights the Holder may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to the Holder an amount in cash, as liquidated damages and not as a penalty, equal to 1% of the aggregate purchase price paid by such Holder(s) pursuant to the Purchase Agreement for any Registrable Securities then held by such Holder(s) (calculated as if all convertible securities had been fully converted). The parties agree that (1) in no event shall the Company be liable for liquidated damages under this Agreement in excess of 1% of the aggregate amount paid by such Holder(s) in any 30-day period pursuant to the Purchase Agreement and (2) the maximum aggregate liquidated damages payable to the Holder(s) under this Agreement shall be 12% per annum of the aggregate amount paid by such Holder(s) pursuant to the Purchase Agreement. If the Company fails to pay any liquidated

damages pursuant to this Section in full within ten days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder(s), accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event.

3. Registration Procedures.

In connection with the Company’s registration obligations hereunder, the Company shall:

(a)Not less than five Trading Days prior to the filing of each Registration Statement and not less than one Trading Days prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than (A) those incorporated or deemed to be incorporated by reference and (B) prospectus supplements that contain nothing other than information that the Company has included or will include in its prior or simultaneous current or periodic report filings with the SEC) will be subject to the review of such Holder(s) and (ii) cause its officers, directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to the Holder(s), to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement, Prospectus or any amendments or supplements thereto to which the Holder(s) shall reasonably object in good faith, provided that the Company is notified of such objection in writing no later than three Trading Days after the Holder has been so furnished copies of a Registration Statement or one Trading Day after the Holder has been so furnished copies of any related Prospectus or amendments or supplements thereto. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Agreement that the selling shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be reasonably required to effect the registration of their Registrable Securities and to execute such documents in connection with such registration as the Company may reasonably request, including providing the Company with a completed questionnaire in the form attached to this Agreement as Annex B (a “Selling Shareholder Questionnaire”) not less than two Trading Days prior to the Filing Date or by the end of the third Trading Day following the date on which such Holder receives draft materials in accordance with this Section.

(b)(i) Prepare and file with the SEC such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the SEC with respect to a Registration

Statement or any amendment thereto and provide as promptly as reasonably possible to the Holder true and complete copies of all correspondence from and to the SEC relating to a Registration Statement (provided that the Company may excise any information contained therein which would constitute material non-public information as to any Holder which has not executed a confidentiality agreement with the Company); and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holder thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

(c)If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock then registered in a Registration Statement, file as soon as reasonably practicable, but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holder of not less than the number of such Registrable Securities.

(d)Notify the Holder(s) of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the SEC notifies the Company whether there will be a “review” of such Registration Statement and whenever the SEC comments in writing on such Registration Statement; and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; (iii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (vi) the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided that any and all of such information shall remain confidential to each Holder until such information otherwise

becomes public, unless disclosure by a Holder is required by law; provided, further, that notwithstanding each Holder’s agreement to keep such information confidential, such Holder makes no acknowledgement that any such information is material, non-public information.

(e)Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

(f)Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC.

(g)Subject to the terms of this Agreement, hereby consent to the use of such Prospectus and each amendment or supplement thereto by the selling Holder in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).

(h)Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holder in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

(i)If requested by any Holder, cooperate such Holder(s) to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.

(j)Upon the occurrence of any event contemplated by this Section 3, as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such

Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holder in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holder shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of liquidated damages pursuant to Section 2(b), for a period not to exceed 90 calendar days (which need not be consecutive days) in any 12-month period.

(k) Comply with all applicable rules and regulations of the SEC.

4. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses) (A) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holder.

5. Indemnification.

(a)Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members,

shareholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (i) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (A) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or such form of prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (B) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). The Company shall notify the Holder(s) promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.

(b)Indemnification by Holder. The Holder shall (or, if there are multiple , each Holder shall, severally and not jointly) indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company specifically for inclusion in such Registration Statement or such Prospectus or (ii) to the extent that such information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), Prospectus, form of Prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by

such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d). In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(c)Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is judicially determined to be not entitled to indemnification hereunder.

(d)Contribution. If the indemnification under Sections 5(a) or (b) is otherwise applicable and unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

6. Miscellaneous.

(a)Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

(b)No Piggyback on Registrations. Except as set forth on Schedule 6(b) attached hereto or as otherwise specified in Section 6(e) below, neither the Company nor any of its security holders (other than the Holder(s) in such capacity pursuant hereto) may include securities of the Company in the Registration Statement(s) other than the Registrable Securities. Except for registration statements on Form S-4 or Form S-8 (or their successors) promulgated

under the Securities Act, the Company shall not file any other registration statements under the Securities Act until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the SEC, provided that this Section 6(b) shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement; provided, however, that if the Initial Registration Statement shall have been declared effective by the SEC and the then-current SEC Guidance shall not permit the filing of one or more registration statement(s) to register the remainder of the Registrable Securities (if any), then the Company may file any other registration statements it deems necessary or appropriate in the ordinary course of its business until such time as the then-current SEC Guidance permits the filing of one or more additional registration statement(s) to register the remainder of the Registrable Securities.

(c)Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to a Registration Statement.

(d)Discontinued Disposition. By its acquisition of Registrable Securities, the Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(b).

(e)Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock options or other employee benefit plans, then the Company shall send to each Holder a written notice of such determination and, if within fifteen days after the date of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144(k) promulgated under the Securities Act or that are the subject of a then effective Registration Statement.

(f)Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holder, or if there are multiple Holders at such time, by Holders of a majority of the then outstanding Registrable Securities. To the extent applicable,

if a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for the Holder(s) shall be reduced pro rata among the Holder(s) and each such Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of any given Holder and that does not directly or indirectly affect the rights of any other Holder(s) may be given by Holder(s) of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence.

(g)Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.

(h)Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the of the then-outstanding Registrable Securities. The Holder(s) may assign its or their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement.

(i)No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holder(s) in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 6(i), neither the Company nor any of its subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

(j)Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

(k)Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.

(l)Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

(m)Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(n)Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.

(o)Independent Nature of Holders’ Obligations and Rights. If and to the extent there are multiple Holders hereunder, the obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any Proceeding for such purpose.

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

VITESSE SEMICONDUCTOR CORPORATION

By:       ____________________________________

Name: ______________________________

Title:   ______________________________

[SIGNATURE PAGE OF HOLDER FOLLOWS]

[SIGNATURE PAGE OF HOLDER TO VITESSE REGISTRATION RIGHTS AGREEMENT]

Name of Holder: WHITEBOX VSC, LTD.

Signature of Authorized Signatory of Holder: _____________________________________

Name of Authorized Signatory: ________________________________________________

Title of Authorized Signatory: _________________________________________________

ANNEX A

Plan of Distribution

The Selling Stockholder (the “Selling Stockholder”) of the common stock and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on the OTC Bulletin Board or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholder may use any one or more of the following methods when selling shares:

• ordinary brokerage transactions and transactions in which the broker dealer solicits purchasers;

• block trades in which the broker dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• purchases by a broker dealer as principal and resale by the broker dealer for its account;

• an exchange distribution in accordance with the rules of the applicable exchange;

• privately negotiated transactions;

• settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;

• broker dealers may agree with the Selling Stockholder to sell a specified number of such shares at a stipulated price per share;

• through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

• a combination of any such methods of sale; or

• any other method permitted pursuant to applicable law.

The Selling Stockholder may also sell shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.

Broker dealers engaged by the Selling Stockholder may arrange for other brokers dealers to participate in sales. Broker dealers may receive commissions or discounts from the Selling Stockholder (or, if any broker dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission.

In connection with the sale of the common stock or interests therein, the Selling Stockholder may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The Selling Stockholder may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Stockholder may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The Selling Stockholder and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholder against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

Because Selling Stockholder may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the Selling Stockholder.

We agreed to keep this prospectus effective until the earlier of (i) the date on which the shares may be resold by the Selling Stockholder without registration and without regard to any volume limitations by reason of Rule 144(k) under the Securities Act or any other rule of similar effect or (ii) all of the shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation

M, prior to the commencement of the distribution. In addition, the Selling Stockholder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the Selling Stockholder or any other person. We will make copies of this prospectus available to the Selling Stockholder and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

ANNEX B

VITESSE SEMICONDUCTOR CORPORATION

Selling Securityholder Notice and Questionnaire

The undersigned beneficial owner of common stock (the “Registrable Securities”) of Vitesse Semiconductor Corporation, a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “SEC”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

Certain legal consequences arise from being named as a selling securityholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Registration Statement and the related prospectus.

NOTICE

The undersigned beneficial owner (the “Selling Securityholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

QUESTIONNAIRE

1. Name.

(a) Full Legal Name of Selling Securityholder

________________________________________________________________________

(b) Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:

________________________________________________________________________

(c) Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire):

________________________________________________________________________

2. Address for Notices to Selling Securityholder:

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

Telephone: ______________________________________________________________

Fax: ___________________________________________________________________

Contact Person: _________________________________________________________

3. Broker-Dealer Status:

(a) Are you a broker-dealer?

Yes o No o

(b) If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company.

Yes o No o

Note:If no, the SEC’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

(c) Are you an affiliate of a broker-dealer?

Yes o No o

(d) If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

Yes o No o

Note:If no, the SEC’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

4.Beneficial Ownership of Securities of the Company Owned by the Selling Securityholder.

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.

(a) Type and Amount of other securities beneficially owned by the Selling Securityholder:

________________________________________________________________________

________________________________________________________________________

5. Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

________________________________________________________________________

________________________________________________________________________

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus.

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated: __________________________	Beneficial Owner: _____________________
	By: _________________________________
	Name: _________________________
	Title: __________________________

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO: